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Summarize this legal judgement text concisely | Civil Appeal No. 32 of 1954.
227 On appeal from the judgment and order dated the 26th September 1951 of the Madras High Court in Case Referred No. 18 of 1949.
C. K. Daphtary, Solicitor General of India (C. N. Joshi and R. R. Dhebar, with him) for the appellant.
R. Ganapathy Iyer, for the respondent.
March 14.
DAS C.J.
In the year 1945 the respondent company (hereinafter called the "assessee") received a payment of a sum of Rs. 26,000 (rupees twenty six thousand) from Jupiter Pictures Ltd. of Madras (hereinafter referred to as Jupiter Pictures) pursuant to the terms of an agreement between the assessee and Jupiter Pictures dated the 31st October 1945.
In the course of the proceedings for the assessment of the assessee 's income tax for the year 1946 47 and the excess profits tax for the chargeable accounting period from 1st April 1945 to 31st March 1946, the following question arose: "Whether on the facts and in the circumstances of the case, the sum of Rs. 26,000 received by the assessee from Jupiter Pictures Ltd., is a revenue receipt assessable under the Indian Income Tax Act?" The Income Tax Officer took the view that the sum was in the nature of a revenue 'receipt and was liable to be brought to account for purposes of calculating the tax.
The Appellate Assistant Commissioner upheld this decision.
On further appeal by the assessee the Income Tax Appellate Tribunal held that the case was governed by the decision of the Judicial Committee in Commissioner of Income Tax vs Shaw Wallace and Company(1) and that the sum received by the assessee was a capital receipt.
Accordingly on 26th August 1948 the Tribunal reversed the decision of the Appellate Assistant Commissioner.
At the instance of the Commissioner of Income Tax and (1) [1932] L.R. 59 I.A. 206; A.I.R. 1932 P.C. 138; 6 I.T.C. 178.
228 Excess Profits Tax, Madras the Tribunal under section 66(1) of the Indian Income Tax Act, 1922 referred to the High Court of Madras the question of law quoted above.
The High Court agreed with the Income Tax Appellate Tribunal and answered the question in the negative.
The present appeal is directed against this decision of the High Court.
[After stating the facts of the case which gave rise to the present point in controversy and which have been stated above His Lordship proceeded as follows:] As already indicated the question for consideration is whether this payment constituted a capital receipt or a revenue receipt.
It may be mentioned here that the answer to this question will be relevant and helpful only in respect of assessments of other assessees for assessment years prior to the date when the new sub section (5 A) was, by the Finance Act of 1955, added to section 10 of the Indian Income Tax Act, 1922.
It is not always easy to decide whether a particular payment received by a person is his income or whether it is to be regarded as his capital receipt.
Income, said Lord Wright in Raja Bahadur Kamakshya Narain Singh of Ramgarh vs Commissioner of Income Tax, Bihar and Orissa(1), is a word of the broadest connotation and difficult and perhaps impossible to define in any precise general formula.
Lord Macmillan said in Van Den Berghs, Ltd. vs Clark (Inspector of Taxes)(2) that though in general the distinction between an income and a capital receipt was well recognized and easily applied, cases did arise where the item lay on the border line and the problem had to be solved on the particular facts of each case.
No infallible criterion or test can be or has been laid down and the decided cases are only helpful in that they indicate the kind of consideration which may relevantly be borne in mind in approaching the problem.
The character of the payment received may vary according to the circumstances.
Thus the amount received as consideration for the sale of a (1) , 521; L.R. 70 I.A. 180, 192.
(2) ; ; 3 I.T.R. (Suppl.) 17.
229 plot of land may ordinarily be a capital receipt but if the business of the recipient is to buy and sell lands, it may well be his income.
The problem that confronts us has to be approached keeping in mind the different kinds of consideration taken into account in the different cases.
The assessee before us is a company carrying on a business and it received the sum in question in connection with that business.
We have, therefore, to ask ourselves as to what is the substance of the matter from the point of view of a businessman.
The assessee contends that in receiving this sum it was not carrying on its business,/which was to distribute films, but that it received this amount as and by way of compensation for not distributing those films, that is to say for not carrying on its business.
The sum was, according to the assessee, received by it in return for its ceasing to engage in the business of distributing those three films.
We do not think that is the intrinsic business of the matter.
Here was the assessee whose business was to distribute films, purchased or produced by itself or in respect of which it secured the distribution rights under agreements with the producers.
For the purpose of this distribution business the assessee obviously,had arrangements with the proprietors of different/cinema halls.
If any producer failed to deliver an film as agreed then the exigencies of the assessee 's business would certainly have required the assessee to treat that agreement as terminated by breach and to enter into another agreement for securing the distribution right in some other film so as to enable it to fulfil its engagement with the proprietors of the cinema halls by distributing the new film in the place of the one that had not been supplied.
Likewise if a particular film secured by the assessee failed to attract public enthusiasm, business exigencies might well have required the assessee to enter into an arrangement with the producers concerned to cancel the agreement for distribution of that film and to enter into another agreement with the same or other producers for acquiring the distribution right in another film likely to bring a better 230 box office collection.
The termination of the agreement in each of the circumstances hereinbefore mentioned could well be said to have been brought about in the ordinary course of business and money paid or received by the assessee as a result of or in connection with such termination of agreements would certainly be regarded as having been so paid or received in the ordinary course of its business and therefore a trading disbursement or trading receipt.
There was no covenant made by the assessee with Jupiter Pictures not to enter into agreements with other producers or not to distribute films secured from other producers.
In fact in the accounting year the assessee had distribution rights in respect of eleven films including these three.
These three agreements would have come to an end on the expiration of the period of five years from the respective dates of release of the films and had only a part of the period to run, a fact which may also be relevantly borne in mind.
The cancellation of these agreements must have left the assessee free, if it so chose to secure other films which could be distributed in the place of these films and/which might have brought in better box office collections, In the language of Lord Hanworth, M. R. in Short Bros., Ltd. vs The Com missioners of Inland Revenue(1) the sum paid to the assessee was not truly compensation for not carrying on its business but was a sum paid in ordinary course, of business to adjust the relation between the assesse and the producers of the films.
The agreements which were cancelled were by no means agreements on which the whole trade of the assessee bad for all practical purposes been built and the payment received by the assessee was not for the loss of such a fundamental asset as was the ship managership of the assessee in Barr, Crombie & Co., Ltd. vs Commissioners of Inland Revenue(2).
Nor can one say that the cancelled agreements constituted the framework or whole structure of the assessee 's profit making apparatus in the sense the agreement between the two margarine dealers concerned in Van Den Berghs (1) , 973.
(2) , 231 Ltd. vs Clark (Inspector of Taxes) (supra) was.
Here ' were three agreements entered into by the assessee in the ordinary course of his business along with several similar agreements.
These three agreements were by mutual consent put an end to.
The termination of these three agreements did not radically or at all affect or alter the structure of the assessee 's business.
Indeed the assessee 's business of distribution of films proceeded apace notwithstanding the cancellation of these three agreements.
Learned counsel for the assessee has, as did the High Court, strongly relied on the decision of the Privy Council in Shaw Wallace 's case (supra).
In that case there was no fixed period within which the distributing agency was to continue, whereas in the case before us the agreement was only for a fixed period of five years out of which a considerable part had already expired.
In Shaw Wallace 's case the entire distributing agency work was completely closed, whereas the termination of the agreements in question did not have that drastic effect on the assessee 's business at all.
His business of distribution of films continued notwithstanding the cancellation of these three agreements.
In Shaw Wallace 's case, therefore, it could possibly be said that the amount paid there represented a capital receipt.
It is pointed out that in Shaw Wallace 's case there were other agencies also which were continuing.
A reference to that case reported sub nom Shaw Wallace & Co. vs Commissioner of Income Tax, Bengal(1) will show that Shaw Wallace and Co. carried on business as merchants and managing agents of various companies and that they were also the distributing agents of the two oil companies as well.
The business of managing agency of a company is quite different from the business of distributing agency of the products of oil companies.
The different managing agencies in that case were entirely different from and independent of the distributing agency of the two oil companies and this aspect of the matter was emphasised (1) 31 232 by Sir George Lowndes towards the end of his judgment where he said: "It is contended for the appellant that the "business" of the respondents did in fact go on throughout the year, and this is no doubt true in a sense.
They had other independent commercial interests which they continued to pursue, and the profits of which have been taxed in the ordinary course without objection on their part.
But it is clear that the sum in question in this appeal had no connection with the continuance of the respondent 's other business.
The profits earned by them in 1928 were the fruit of a different tree, the crop of a different field".
If Shaw Wallace and Co. had other distributing agencies similar to those of the two oil companies then it would be difficult to reconcile the decision in that case with the later decisions in Kelsall all Parsons & Co. vs
Commissioners of Inland Revenue(1) and other cases.
It has been urged that the agreements did not create merely an agency for the distribution of the films but were composite agreements consisting partly of a financing agreement creating a security on the films for the monies to be advanced and conferring the right even to complete the films in case the producers failed to do so and partly of a distributing agency agreement giving the assessee the utmost latitude in the matter of the terms and conditions on which it could exploit and distribute the films.
It was argued that the rights acquired by the assessee under the agreements were in the nature of capital assets of the assessee 's business and the amounts received by the assessee were the prices or considerations for the sale or surrender of such capital assets or were received by way of compensation for the sterilization or destruction of those capital assets.
Kelsall Parsons & Co. 's case and Short Bros. ' case referred to above were sought to be distinguished on the ground that there the payments were made in respect of the cancellation of contracts directed to result in the making of the trading profits, whereas in the present case the cancelled agreements were directed to the acquisition (1) ; 233 of rights in the films which when worked were to yield profits.
The terms of the agreements summarised above clearly show that they constitute a financing agreement and a distributing agency agreement.
In so far as they were only financing agreements they gave the assessee a charge on the films to be produced with moneys advanced by it but gave it no right to distribute the films or otherwise work them for making income, profits or gains.
Therefore, it can hardly be said that by the financing agreements the assessee acquired capital assets for carrying on its distributing agency business.
In this respect the case differs from the case of Glenboig Union Fireclay Co. Ltd. vs Commissioners of Inland Revenue(1), for in that case the lease of the fire clay fields authorised the assessee who was a manufacturer of fire clay goods to extract fire clay and manufacture fire clay goods and consequently was a capital asset of the assessee 's business.
Further, in the present case there is no suggestion that any part of the moneys advanced by the assessee for the production of the films was outstanding.
Assuming that to start with the films constituted capital assets, the entire capital outlay had been recovered and the security had been extinguished and that part of the agreements which constituted financing agreements had been fully worked out and bad come to an end and the three films ceased to be capital assets and the assessee was holding the films only under that part of the agreements which consti tuted the distributing agency agreements which only were subsisting.
In the premises the amount received by the assessee was only so received "towards commission", that is to say, as compensation for the loss of the commission which it would have earned bad the agreements not been terminated.
In our opinion, in the events that had happened, the amount was not received by the assessee as the price of any capital assets sold or surrendered or destroyed or sterilized but in the language of Rowlatt J. in Short Bros. ' case (supra) the amount was simply received (1) 234 by the assessee in the course of its going distributing agency business from that going business.
In our judgment, on the facts and in the circumstances of the present case, it falls within the principles laid down in Short Bros. ' and Kelsall Parsons & Co. 's cases rather than within those laid down in Shaw Wallace 's case or Van Den Bergh 's case or Barr Crombie 's case.
Reference was made to section 10 (5 A) of the Indian Income Tax Act, 1922, and it was urged that the language of that sub section impliedly indicated that the sum of Rs. 26,000 (rupees twenty six thousand) was a capital receipt.
We are unable to accept this suggestion.
That sub section was obviously introduced to prevent the abuse of managing agency agreements being terminated on payment of huge compensation and to nullify the application of the decision in Shaw Wallace 's case to such cases.
But that sub section does not necessarily imply that if that sub section were not there the kind of payment referred to therein would have been treated as capital receipt in all cases.
For the reasons stated above the referred question should in our opinion have been answered in the affirmative and we answer it accordingly.
The appeal is, therefore, allowed with costs throughout.
WHAGWATI J.
I had the privilege of reading the judgment just delivered by my Lord the Chief Justice but I regret I cannot agree with the same.
The facts leading up to the present appeal have been fully set out in that judgment and it is not necessary to repeat the same.
The relevant portions of the agreement dated the 17th September 1941 which is the sample of the three agreements entered into between the Jupiter Pictures and the assessee may be, however, set out herein: "Whereas the producer has taken on hand the production of a Tamil talkie picture 'Kannagi ' hereinafter called the said picture. . and whereas for the purpose of the said production the producer has approached the distributors for financial assistance and 235 for the distribution and exploitation of the said picture by the distributors through their organization and the distributors have agreed to render such financial assistance by advancing to the producer altogether a sum of Rs. 57,000 on the terms and in the manner hereinafter appearing and.
to distribute and exploit the said picture through their organization as requested by the producer. . . . Cl. 1.
The distributors shall advance to the producer a sum of Rs. 57,000 only altogether in the manner hereinafter set out: (a) a sum of Rs. 7,000 only should be advanced on the execution of these presents; (b) a further sum of Rs. 5,000 should be advanced as soon as 5,000 feet of film shall have been completed and roughly edited, rushprint thereof shown; (c) a further sum of Rs. 10,000 should be advanced as soon as a further 10,000 feet of film shall have been completed; (d) a further sum of Rs. 10,000 should be advanced as soon as a further 15,000 feet of film shall have been completed; (e) a further sum of Rs. 12,000 should be advanced on the last shooting day of the picture; (f) a further sum of Rs. 10,000 should be advanced as soon as the picture is passed by the Board of Censors and 12 copies of the film delivered to the distributors; and the balance of Rs. 3,000 to be retained by the distributors to be utilised for the purpose of Press Publicity in regard to the said picture to be made by the distributors on behalf of the producer from time to time.
The distributors may utilise the said sum for publicity as they think fit and proper and at their sole discretion.
Cl. 3.
The distributors shall from the realisations of the said picture made by them: (a) pay themselves all amounts spent by them for publicity in respect of the said picture such an expenditure having been incurred only after obtaining the consent of the producer; (b) pay themselves their distribution commis 236 sion in respect of the said picture as hereinafter provided; and (c) pay themselves the available balance until the entire advance of Rs. 57,000 should be completely discharged and satisfied.
If the distributors should fail to realise the full amount due to them as aforesaid from the realisation of the said picture in the manner hereinbefore set out on or before the expiry of one and a half years from the date of the first release of the said picture, the producer shall be liable to pay to the distributors whatever balance may be then due by them with compound interest at 12 per cent.
per annum the said interest to be calculated on the said balance amount from the date of expiry of the said one and a half years and the said payment to be made before the expiry of one month therefrom.
Cl. 15.
And it is hereby expressly agreed by and between the distributors and the producer that until the entire amount of Rs. 57,000 to be advanced by the distributors should be repaid and discharged in full and all other claims of the distributors arising hereunder completely satisfied the negative and positive copies of the said picture shall constitute the security for whatever amount may be due to the distributors and shall, if in the possession of the producer or any one on his behalf, be held by them only as trustees for the distributors.
Cl. 19.
In the event of the producer failing to deliver the said copies of the said picture duly passed by the Board of Censors as hereinbefore provided before the said period, namely 1 5 1942, the producer shall become liable to pay to the distributors at the letters ' option such amount as has been advanced by the distributors to the producer including monies ,spent by the distributors in respect of publicity with interest thereon at 12 per cent.
per annum.
But if the said picture be not delivered within two months thereafter, viz., on or before 1 7 1942 the distributors may at their option complete the picture at their own cost and in such case the producer shall be liable to the distributors for all the expenses with compound 237 interest thereon at 12 per cent.
per annum and the distributors shall have all rights as to the distribution, sale, etc., as aforesaid.
Cl. 20.
On the expiry of the period of five years mentioned in this agreement, the distributors shall return to the producer all copies of films and balance stock of loan and saleable publicity materials of the said picture, subject to usual wear and tear and subject to the distributors receiving back from the producer such unrealised amount, if any, as mentioned in clause (6) above".
The said three agreements *were dated 17th September 1941, 16th July 1942 and 10th May 1945, each having a period of five years to run ending with 16th September 1946, 15th July 1947 and 9th May 1950 respectively.
The only question which falls to be determined by us herein is whether the payment of Rs. 26,000 received by the assessee from the Jupiter Pictures on the cancellation of the said three agreements on the 31st October 1945 is a capital receipt or income, profits or gains liable to tax in the assessment year 1946 47.
The assessee was no doubt carrying on the business of distributors which involved as a necessary corollary the acquisition of films for the purpose of distribution.
Those films could either be produced by it or could be acquired by it from the producers who hired them out to it for the purpose of distribution.
There was, however, an activity in this business of distributors which consisted of advancing monies to the producers to enable the producers to produce the films and the agreements which were entered into between the producers and the assessee as distributors were composite agreements incorporating therein the terms in regard to the financial assistance as also the distribution and exploitation of the films thus produce by the producers with the financial assistance rendered to them by the assessee.
They were not mere agreements for distribution and exploitation of the pictures which by themselves would not require any investment of capital but would 238 merely involve the work of distribution and exploitation of the pictures.
The terms above set out were designed for the purpose of protecting the interests of the assessee in so far as it advanced considerable sums to the producers for the purpose of producing the films.
Apart from the commission which the assessee derived from the distribution and exploitation of the pictures which would certainly be its revenue receipt in the course of the carrying on of its business as distributors, it was entitled under the terms of the agreements to repay itself the amounts of the advances which it made for the production of the pictures as also the interest thereon and the agreements also provided that the negative and positive".
, copies of the pictures should constitute the security for whatever amount might be due to the assessee not only in respect of the amounts advanced by it to the producers but also in respect of all other claims arising under the agreements.
The negative and positive copies of the pictures if in possession of the producers or any one on their/behalf would only be held by them as trustees of the assessee and the assessee was invested with a species of proprietary rights over the same.
If the pictures were not delivered within the specified period the assessee was at liberty to complete the same and in such a case the producers were liable to it for all the expenses with compound interest at 12 per cent.
per annum and all the rights as distributors were to fasten upon the same.
The copies of the films and all the other publicity materials were to be returned by the assessee to the producers after the expiry of the period of five years mentioned in the agreements subject to its receiving from the producers all unrealised amounts under the agreements.
What is it that the assessee was, acquiring from the producers under the terms of these agreements? Was it acquiring capital assets which it would work upon by way of distribution and exploitation in order to earn its income, profits or gains or was it acquiring stock in trade of its business as distributors? If it was capital assets which it thus acquired the monies 239 which it advanced to the producers for acquiring the same would necessarily be capital expenditure and would not be debited by it in its accounts as trading expenses which would be the position if what it, acquired under the terms of the agreements was mere stock in trade of its/business.
The realisations which it made by distribution and exploitation of the pictures would be undoubted trade receipts and, therefore, income, profits or gains and no part of the same would go to its capital account.
The monies which it had advanced for the production of the pictures would, however, as and when realised, be./ credited by it in its accounts as capital receipts and they would certainly not be liable to be treated as trading receipts.
There was thus a sharp distinction between the capital account and the trading account, the amounts advanced towards the production of the pictures being capital expenditure and the repayments of these advances as and when made being capital receipts, as distinct from the monies spent by it in the distribution and exploitation of the pictures being trading expenses and the commission realised by it from such distribution and exploitation being trading receipts.
As in the cases of mining leases and other species of proprietary rights obtained by an assessee being capital assets available to the assessee for working upon the same and earning income, profits or gains, so in the case of these pictures which it acquired by advancing monies to the producers to be available to it for distributing and exploiting the same, what it would be acquiring under the terms of the agreements would be capital assets and if an agreement was subsequently entered into by it either transferring these capital assets or surrendering them for value, whatever payment would be realised out of the same would be capital receipts and, not trading receipts.
The nomenclature of that receipt as commission for distribution and exploitation under the agreements would not make any difference to the position nor would the fact that, at the time when the said three agreements were.
cancelled.
, no part of the monies which had been advanced at the commence 32 240 ment remained outstanding and the only activity of the assessee qua these pictures was then confined to the distribution and exploitation of the same.
The agreements were composite agreements and what we have got to look to is what were the rights in these pictures which the assessee had acquired under the terms of the agreements.
It had a species of proprietary rights in these pictures all throughout the period of the agreements not only in respect of advances which it had made for producing the same but also in respect of all other claims under the terms of the agreements and the nature of those rights would not be changed by the accident of the full amount of the advances being repaid to it at a particular period of time during the currency of the agreements.
If it acquired capital assets those assets continued in its possession as such all throughout the period of the agreements and it would not be legitimate at any intermediate period of time to see what was the position obtaining at that time for the purpose of converting what were acquired as capital assets at the dates of the agreements into stock in trade of its business of distribution and exploitation of the pictures.
If this be the true position on the construction of the agreements it follows that what was done by the assessee on the 31st October 1945 was to surrender these capital assets to the producers for a consideration.
These capital assets qua the agreements of the 17th September 1941, 16th July 1942 and 10th May 1945 were to endure up to 16th September, 1946, 15th July 1947 and 9th May 1950 respectively.
A sum of Rs. 8,666 10 8 was fixed as the consideration for the surrender of each and the capital assets which had been acquired were all of them surrendered by the assessee to the producers with effect from the 31st October 1945.
The payment thus received by the assessee could only be a capital receipt being the price of the surrender of the capital assets and could not be considered a trading receipt at all.
It is well recognised that the problem of discriminating between an income receipt and a capital receipt 241 and between an income disbursement and a capital disbursement is not always easy to solve.
Even, though the distinction is well recognised and easily applied in general, cases do arise from time to time , where the item lies on the border line and the task of assigning it to income or capital becomes one of much refinement.
"While each case is found to turn upon its own facts, 'and no infallible criterion emerges, nevertheless the decisions are useful as illustrations and as affording indications of the kind of considerations which may relevantly be borne in mind in approaching the problem. . . . . .
The nature of a receipt may vary according to the nature of the trade in connection with which it arises.
The price of the sale of a factory is ordinarily a capital receipt, but it may be an income receipt in the case of a person whose business it is to buy and sell factories" (Per Lord Macmillan in Van Den Berghs, Ltd. vs Clark (H. M. Inspector of Taxes(1)).
It may also be borne in mind that the provisions of the Indian Income tax Act are not in pari materia with those of the English Income tax Statutes so that the decisions on the English Acts are in general of no assistance in construing the Indian Acts (Vide the observations of the Privy Council in Commissioner of Income tax vs Shaw Wallace & Co.(2) and in Raja Bahadur Kamakshya Narain Singh of Ramgarh vs Commissioner of Income tax, Bihar & Orissa(3)).
The authorities which were cited at the Bar may, however, be shortly referred to.
Counsel for the appellant particularly relied upon the decisions in Short Brothers, Ltd. vs The Commissioners of Inland Revenue(4) and Kelsall Parsons& Co. vs Commissioners of Inland Revenue(5) in support of the position that the cancellation of the agreements in the present case and the receipt of Rs. 26,000 by the assessee was in the ordinary course of business in order to adjust the relations between the producers and the assessee and was simply a receipt in the course of a (1) ; , 428, 431.
(2) [1932] L.R. 59 I.A. 206, 212.
(3) [1943] L.R. 70 I.A. 180, 188.
(4) (5) ; 242 going business from that going business and nothing else.
It was submitted that it was an essential part of the assessee 's business to enter into agreements of the nature in question and that it was an ordinary incident of its business that such agreements may be altered or terminated front , time to time.
It was therefore a normal incident of the business such as that of the assessee that the agreements might be modified and in parting with the benefits of the agreements the assessee could not be said to be parting, with something which could be described as an enduring asset of its business.
This position would have been tenable if the agreements in question were merely distributing agreements without anything more.
It would then have been an essential part of the assessee 's business to enter into such agreements and also it would have been a normal incident of its business to modify or terminate the same and to adjust the relations between the parties.
In neither of these cases was there any question of any capital asset having depreciated in value or become of less use for the purpose of the assessee 's business.
Rowlatt, J. observed in Short Brothers, Ltd. vs The Commissioners of Inland Revenue (supra) at page 968 that the money was not received in respect of the termination of any part of the assessee 's business nor was it received in respect of any capital asset as was the sum in the Glenboig 's case(1).
Lord Fleming also emphasized this aspect of the matter in Kelsall Parsons and Co. vs Commissioners of Inland Revenue (supra) at page 622 that there was no finding that in consequence of the termination, any capital asset was depreciated in value or became of less use for the purpose of the assessee 's business.
If the assessees in those cases bad by virtue of the agreements in question acquired capital assets which they could work in order to earn income, profits or gains, the payments received on termination of the said agreements would certainly not have been held to be trading receipts but capital receipts and as such not liable to tax.
(1) 243 Reliance was placed on behalf of the assessee on the decisions in Glenboig Union Fireclay Co. Ltd. vs Commissioners of Inland Revenue(1) and Van Den Berghs Ltd. vs Clark (H.M. Inspector of Taxes) (supra), for showing that, if the capital asset of the assessee was sterilized or destroyed, the payment would be a capital receipt.
Lord Buckmaster, in Glenboig Union Fireclay Co. Ltd. vs The Commissioners of Inland Revenue (supra) at page 463, expressed the opinion that "it made no difference whether it be regarded as the sale of the asset out and out, or whether it be treated as a means of preventing the acquisition of profit that would otherwise be gained.
In either case, the capital asset of the company was to that extent sterilized and destroyed and it was in respect of that action that the sum had been paid".
Lord Wrenbury also, at page 464 stated that "the mining leases were capital assets of the company, the company 's objects were to acquire profits by working the mines under and by virtue of the titles and rights which they hold under the leases and the payment was made to the assessee for abstaining from seeking to make a profit".
Put it in another way: "The right to work the area in which the working was to be abandoned was part of the capital asset consisting of the right to work the whole area demised.
Had the abandonment extended to the whole area all subsequent profit by working would.
, of course, have been impossible but it would be impossible to contend that the compensation would be other than capital.
It was the price paid for sterilising the asset from which otherwise profit might have been obtained.
What is true of the whole must be equally true of the part" ' (Page 465).
In Van Den Berghs Ltd. vs Clark (H. M. Inspector of Taxes) (supra) it was held that the payment in question was the payment for the cancellation of the assessee 's future rights under the agreements which constituted a capital asset of the assessee and that it was accordingly a capital receipt.
Justice Finlay, whose judgment was ultimately restored by the House of Lords, observed at page 413: (1) 244 The ground is not very easy to express, but the ground upon which I desire to put this part of the case is this, that the true view here is that the agreement which was cancelled was just a capital asset of, the Company and, if that is right, it seems to me to follow that, distinguishing such cases as Short Brothers(1), one ought to hold that the sum received was not an income receipt at all".
Lord Macmillan, after discussing the various authorities which according to him were useful as illustrations and as affording in dications of the kind of considerations which maybe relevantly borne in mind in approaching the problem, construed the agreements in question as not ordinary commercial contracts made in the course of the carrying on of the assessee 's trade.
The agreements in the facts and circumstances of the case before him related to the whole structure of the assessee 's profit making apparatus, they regulated the assessee 's activities, defined what they might and might not do and affected the conduct of their business and he had difficulty in seeing how money laid out to secure, or money received for the cancellation of, so fundamental an organization of a trader 's activities could be regarded as an income disbursement or an income receipt.
He expressed the opinion that the asset, the congeries of rights which the appellants enjoyed under the agreements and which for a price they surrendered, was a capital asset.
They provided a means of making profits but they themselves did not yield profits.
Applying the same ratio here, could it not be said that the pictures which were acquired by the assessee from the producers were capital assets of the assessee, the object of the assessee being to acquire profits by distributing and exploiting the pictures under and by virtue of the titles and rights which the assessee acquired under the agreements or that they provided the means of making profits though they themselves did not yield profits? That being the true position on the construction of the agreements, the only result would be that the pictures constituted capital assets (1) 245 of the company and the payment in question was one for the cancellation of the assessee 's rights under the agreements and was accordingly a capital receipt.
The distinction between capital assets on the one hand and the stock in trade on the other was sought to be supported by reference/to the decisions in Shad bolt (H. M. Inspector of Taxes) vs Salmon Estate (1) and Johnson (H. M. Inspector of Taxes) vs W. section Try Ltd. (2).
These were cases of assessees which carried on the business of building and selling houses or building and development business and in the course of their business acquired plots of land which they utilised for, the purpose of constructing buildings thereupon, which buildings together with the plots of land on which they stood were sold by them for a consideration.
The question which arose was whether the acquisition of the plots of land on which the buildings were thus constructed was the acquisition of a capital asset or a trading asset ,by the assessees.
Justice Macnaghten, whose judgment in the King 's Bench Division was the final judgment in Shadbolt (H. M. Inspector of Taxes) vs Salmon Estate (supra) remarked at page 57 that "it was not disputed that in the course of such a trade as this, the trade of building houses for sale, the land on which the houses were " built was part of the stock in trade of the business and was not a capital asset.
The land being thus a part of their stock in trade, the payment in question for the bit sold by the assessees would have been a trading receipt and the right to build on the plots was likewise a trading asset".
In Johnson (H. M. Inspector of Taxes) vs W. section TryLtd.
(supra), also, the judgment of the same learned Judge was the final judgment on the point in issue.
The following observations of the learned Judge at page 172 are very instructive: "Although in most cases land belonging to a trading company was part of its capital assets, in the case of a company engaged in ribbon development the land which is acquired for the purposes of such development is not part of its capital.
In such a case the land forms part of its stock in trade.
, just (1) (2) 246 as much as the materials which it buys for the purpose of erecting the buildings on it.
The cost of the land must come into its trading account as a trading expense.
If it sells the land the price must come into its trading account as a trading receipt.
And, likewise, compensation for injurious affection must also, in my opinion, be regarded as a trading receipt".
In the instant case also, the pictures, if produced by the assessee itself would have been capital assets of the assessee.
What the assessee did was that instead of producing the pictures itself it advanced monies to the producers for the purpose of producing the pictures which it acquired for the purpose of distribution and exploitation.
Nonetheless, the pictures thus acquired were capital assets of the assessee which it worked upon in carrying on its business of distribution and exploitation, the monies it spent on the acquisition of the pictures were thus capital expenditure and whatever monies were realised by it by working these capital assets were its capital receipts except of course the commission which it earned by distribution and exploitation of the pictures which certainly would be its trading receipts.
Having regard to the terms of these agreements it could certainly not be predicated of these pictures that they were its stock in trade so as to constitute the payment in question a trading receipt of the assessee.
Both the Income tax Appellate Tribunal and the High Court relied upon the decision of the Privy Council in commissioner of Income tax, Bengal vs Shaw Wallace & Co. (supra), and were of the opinion that the present case was covered by that decision.
On the facts of the case as set out in the above appeal it does not appear to be clear whether the two selling agencies there were the only selling agencies which had been acquired and worked by Shaw Wallace & Co., and it, is debatable under the circumstances whether the authority of that decision is not shaken by the decisions in Short Brothers ' case (supra) and Kelsall Parsons & Co. 's case (supra).
It is sufficient to observe that the agreements in the case of Shaw Wallace & Co. were not deemed to constitute capital 247 assets of the assessee and that aspect of the question was not at all considered by the Privy Council.
It is not, therefore, necessary to express any opinion on the correctness or otherwise of that decision in this case.
Having regard to all the circumstances adverted to above, it is, therefore, clear that the payment of Rs. 26,000 received by the assessee from the producers was in consideration of the surrender by the assessee of the capital assets which it had acquired from the producers under the three agreements in question and constituted a capital receipt not liable to tax for the assessment year 1946 47.
The answer given by the High Court to the referred question was, therefore, correct and I would dismiss the appeal with costs.
ORDER.
BY THE COURT: In accordance with the Judgment of the majority, the appeal is allowed with costs throughout.
| The assessee a private limited company carried on the busi ness of distribution of films.
In some instances the assessee used to produce or purchase films and then distribute the same for exhibition in different cinema halls and in other cases the assessee used to advance monies to producers of films and secure the right of distribution of the films produced with the help of the monies so advanced by the assessee.
In the course of such business it advanced monies to Jupiter Pictures for the production of three films and acquired the right of distribution of these three films under three agreements in writing dated the September 1941, July 1942 and May 1945.
The said agreements expressed in similar language contained similar provisions.
In the accounting year ending 31st March 1946 and in the previous years the assessee bad exploited its rights of distribution of the three pictures.
On 31st October 1945 the assessee and Jupiter Pictures entered into an agreement cancelling the three agreements relating to the distribution rights in respect of the three :films and in consideration of such cancellation the assessee was paid Rs. 26,000, in all by the Jupiter Pictures during the accounting period as compensation.
The question for determination was whether on the facts and in the circumstances of the case the sum of Rs. 26,000, received by the assessee from the Jupiter Pictures was a revenue receipt assessable under the Indian Income Tax Act.
Held, per section R. DAS C. J. and VENKATARAMA AYYAR J., (BHAGWATI J. dissenting) that the sum received by the assessee was a revenue receipt (and not a capital receipt) assessable under the Indian Income Tax Act inasmuch as: (i) the sum paid to the assessee was not truly compensation for not carrying on its business but was a sum paid in ordinary course of business to adjust the relation between the assessee and the producers of the films; 30 224 (ii) the agreements which were cancelled were by no means agreements on which the whole trade of the assessee had for all practical purposes been built and the payment received by the assessee was not for the loss of such a fundamental asset as was the ship managership of the assessee in Barr Crombie & Co. Ltd. vs Commissioners of Inland Revenue ([1945] ; and (iii) one cannot say that the cancelled agreements constituted the framework or whole structure of the assessee 's profit making apparatus in the sense the agreement between the two margarine dealers concerned in Van Den Berghs Ltd. vs Clark ; was.
It is not always easy to decide whether a particular payment received by a person is his income or whether it is to be regarded as his capital receipt.
Income is a word of the broadest connotation and difficult and perhaps impossible to define in any precise general formula.
Though in general the distinction between an income and a capital receipt was well recognised and easily applied, cases did arise where the item lay on the border line and the problem had to be solved on the particular facts of each case.
No infallible criterion or test can be or has been laid down and the decided cases are only helpful in that they indicate the kind of consideration which may relevantly be borne in mind in approaching the problem.
The character of the payment received may vary according to the circumstances.
BHAGWATI J. (dissenting): that in the instant case, the pictures, if produced by the assessee itself would have been capital assets of the assessee.
What the assessee did was that instead of producing the pictures itself it advanced monies to the producers for the purpose of producing the pictures which it acquired for the purpose.
of distribution and exploitation.
Nonetheless, the pictures thus acquired were capital assets of the assessee which it worked upon in carrying on its business of distribution and exploitation, the monies it spent on the acquisition of the pictures were thus capital expenditure and whatever monies were realised by it by working these capital assets were its capital receipts except of course the commission which it earned by distribution and exploitation of the pictures which cer tainly would be its trading receipts.
Having regard to the terms of these agreements it could certainly not be predicated of these pictures that they were its stock in trade so as to constitute the payment in question a trading receipt of the assessee.
Commissioner of Income tax vs Shaw, Wallace & Co. ([1932] L.R. 59 I.A. 206; A.I.R. 1932 P.C. 138; , Baja Bahadur Kamakshya Narain Singh of Ramgarh vs Commissioner of Income tax, Bihar and Orissa ([1943) , 521; L.R. 70 I.A. 180), Short Brothers, Ltd. vs The Commissioners of Inland Revenue ([1927] , Kelsall Parsons & Co. vs Commissioners of Inland Revenue ([1938] 21 T. C. 608), Glenboig Union Fireclay Co. Ltd. vs The Commissioners of Inland Revenue ([1922] , Shadbolt 225 (H. M. Inspector of Taxes) vs Salmon Estate ([1943] 25 T.C. 52), Johnson (H.M. Inspector of Taxes) vs W.S. Try, Ltd. ([1945] , Commissioner of Income Tax, Bengal vs Shaw Wallace and Company (A.I.R. , Van Den Berghs, Ltd. vs Clark (Inspector of Taxes) (L.R. [1935] A.C. 431; ; ; 3 I.T.R. (Suppl.) 17) and Barr Crombie & Co. Ltd. vs Commissioners of Inland Revenue ([1945] 26 T.C. 406), referred to.
The facts of the case as taken from the judgment of the Hon 'ble The Chief Justice are shortly as follows: The assessee is a private limited company.
It carried on the business of distribution of films.
In some instances the assessee used to produce or purchase films and then distribute the same for exhibition in different cinema halls and in other cases the assessee used to advance monies to producers of films and secure the right of distribution of the films produced with the help of the monies so advanced by the assessee.
In the course of such business it advanced monies to Jupiter Pictures for the production of three films and acquired the right of distribution of these three films under three agreements in writing dated the 17th September 1941, 16th July 1942 and 5th May 1945.
The said several agreements were expressed in similar language and contained similar provisions.
The assessee bound itself to advance a certain sum in instalments specified therein and retain the balance to be utilised for the purpose of press publicity in such way as it thought fit and proper and at its sole discretion.
Jupiter Pictures in its turn bound itself to arrange for the delivery to the assessee of twelve copies of the film to be produced after it would be passed by the Board of Censors (clause 1).
The territories within which the assessee was to have the right of distribution and exploitation of the film was specified in clause 2 and such right was to enure for a period of five years from the date of the release of the film.
The assessee was given the right, at its sole discretion, to distribute the films at such rates and on such terms and conditions and in such manner as it might deem fit (clause 2).
The amounts realised by the distribution of the films was to be utilised by the assessee in the following way: namely, in paying itself its distribution commission and in retaining the available balance until the entire amount of advance would be discharged (clause 3) and after the entire amount of the advance would be discharged, in paying to Jupiter Pictures the net realisations from the film after deducting its commission (clause 4).
In case the full amount of advance could not be recouped from the realisations of the film on or before the expiry of one and half years from the date of the first release of the film Jupiter Pictures would be liable to pay to the assessee whatever balance would remain due with compound interest at twelve per cent.
per annum calculated in the manner men tioned in clause 6.
The assessee 's commission for distribution and 226 exploitation of the film through its Organisation was, by clause 8, fixed at 15 per cent.
of the net realisations.
In case of sale of district or territorial rights of the film made by consent of both parties the assessee alone would be entitled to put through such sales and receive the proceeds and would be entitled to a commission of ten per cent.
thereon and to appropriate the balance towards the payment and discharge of the advance made by it (clause 9).
The assessee was to submit to Jupiter Pictures a monthly statement of account and show all books of account to Jupiter Pictures (clauses 11 and 12).
The assessee was given liberty to appoint sub agents and sub distributors at its sole discretion (clause 13).
The amount advanced by the assessee was made immediately repayable in the event of the film being banned or not passed by the Board of Censors (clause 14).
Clause 15 gave the assessee a charge by way of security on the negative and positive copies of the film for whatever amount might be due to the assessee on account of the advance made and in case the negative and positive copies were in possession of Jupiter Pictures the same were to be held by the latter as trustee of the assessee.
The burden of insuring the negative copies of the film was placed on Jupiter Pictures at its own cost (clause 16).
Jupiter Pictures agreed to indemnify the assessee against all claims or demands of any nature whatsoever by any person or agency in or upon the film and against all claims of any person or agency on account of any infringement of copyright (clause 17).
If Jupiter Pictures failed to deliver the film within the time specified therein, the assesses was given the right, at its option, to complete the picture at its own cost and in such event, Jupiter Pictures was to be liable to the assessee for all such expenses with compound interest thereon at 12 per cent.
per annum and the assessee would have all the rights of distribution, sale, etc.
as aforesaid (clause 19).
The last clause provided that on the expiry of the period of 5 years the assessee would return to Jupiter Pictures all copies of the film and balance stock of loan and saleable publicity materials subject to wear and tear.
In the accounting year ending 31st March 1946 and in the previous years the assessee had exploited its right of distribution of the three pictures.
On 31st October 1945 the assessee and Jupiter Pictures entered into an agreement cancelling the three several agreements relating to the distribution rights in respect of the three films and in consideration of such cancellation Jupiter Pictures agreed to pay to the assessee towards commission the sum of Rs. 8,666 10 8 (rupees eight thousand six hundred and sixty six annas ten and pies eight) for each of the three pictures aggregating in all to Rs. 26,000 (rupees twenty six thousand).
It is this sum of Rs. 26,000 (rupees twenty six thousand) which was paid during the accounting year which forms the subject matter of the question that has arisen between the assessee and the department.
|
Summarize this legal judgement text concisely | ON: Criminal Appeal No. 133 of 1955.
Appeal by special leave from the judgment and order dated the 10th January 1955 of the High Court of Judicature at Jodhpur in Criminal Appeals Nos.
57 & 83 of 1953 arising out of the judgment and order dated the 26th May 1953 of the Court of 289 Sessions Judge at Merta in Criminal Original Case No. 1 of 1952.
Jai Gopal Sethi, K. R. Krishnaswami and K. R. Chaudhry for the appellants.
Porus A. Mehta and P. G. Gokhale, for the respondent.
April 5.
The Judgment of the Court was delivered by BOSE J.
Four persons were killed about 11 p.m. on the night of the 21st July 1951 and a number of others injured.
This was said to be the result of a riot that occurred in the village Dhankoli.
Thirty six persons were committed for trial.
Of these, two died during the course of the proceedings.
The remainder were all charged under section 325/149 of the Indian Penal Code and eleven were also charged under section 302/149.
The learned Sessions Judge acquitted twenty five of the charge under section 325/149 and convicted nine.
He acquitted all the eleven who were charged under section 302/149 but convicted nine of them under section 325/149.
The State did not appeal against the acquittals of the twenty five under section 325/149 nor did it appeal against the acquittals of two of the eleven who were charged under section 302/149 but it appealed against the acquittals of the remaining nine who had been convicted under section 325/149.
These nine convicts also appealed.
The High Court therefore had two appeals before it, one against the acquittals of nine persons under section 302/149 and the other by the same persons against their convictions under section 325/149.
The High Court dismissed the appeal of the convicts and allowed that of the State.
The convictions of these nine persons were accordingly altered to ones under section 302/149 of the Indian Penal Code and the lesser sentence of transportation was given to each.
It is admitted on both sides that there was bad 290 blood in the village Dhankoli between a caste known as Baories on one side and three other castes of the village namely, Jats, Dhobis and Khaties on the other.
The case for the prosecution is that this was due to a dispute over a field that belonged to some of the Jats.
There were some court proceedings about the field in which Parsia (one of the Baories who was killed) had appeared against the Jats.
The accused Sukha, Gumana, Begla and Govinda were in particular interested in this field and so bore a grudge against Parsia.
The defence also allege enmity.
Their case is that the enmity is due to the fact that the villagers decided not to employ the Baories for watch and ward work in the village as they suspected that the Baories were responsible for certain thefts that had occurred there.
The other castes in the village therefore did this work themselves by turns.
This was resented by the Baories and the allegation is that the Baories were responsible for the fight and attacked some of the others in the village and that led to a fight; but none of the appellants was concerned with it.
From this point it will be convenient to divide the narrative into a series of numbered steps.
1.On the day in question, two of the Baories, Chhotiya and Parsia, bad been to a neighbouring village to bid at an auction where the field, which according to the prosecution engendered the dispute, was being sold.
They returned to their village about 11 p.m. and ran into the accused Sukha and Gumana (both Jats).
They were challenged and when they disclosed who they were, Sukha and Gumana cried out "kill them.
They had gone for the auction of the field.
" On that Sukha fired a gun which he had with him and hit Parsia on the legs.
Parsia fell down and Gumana bit him over the head with a sword.
He also hit Chhotiya over the head with a sword and Chhotiya also fell down.
2.Parsia and Chhotiya at once cried out for help and their cries, coupled with the sound of the gun fire, brought a number of persons to the scene.
The 291 number varies widely.
Chhotia (P.W. 8) says 30 to 35, Ruga (P.W. 1) says 50 or 60, Bedu (P.W. 2) puts it at 30 or 40 and so does Lachhuri (P.W. 10), while Ladia (P.W. 11) thinks there were as many as 100 to 150.
There are other estimates too, mostly in the neighbourhood of 30 to 40, but the exact number does not matter because it is evident that a crowd assembled.
Those who did the attacking are said to have been about 30 or 40 but it is clearly proved that several Baories were there and that some of them were assaulted.
The point of stressing these facts is to bring out the fact that most of the persons there did not assemble for an unlawful purpose and so did not form an unlawful assembly.
The problem is to sort out those who formed an unlawful assembly from those who did not.
Mr. Sethi argued that there is no evidence to support a finding that there was an unlawful assembly because it is impossible to determine who came to attack and who did not.
But we will deal with this later.
For the present, we will continue our narrative outlining the prosecution case.
3.After the gun was fired and Parsia and Chhotiya struck down, a large number of persons rushed to the scene and, among them, some 30 or 40 were armed with various kinds of weapons.
Of these, Kamla, Balia, Todia and Bhawana (all Jats) had pharsies, Gumana, Govinda and Jodbiya (also Jats) had swords and the rest (Jats, Dhobis and Khaties) had lathis.
These persons also attacked Chhotiya and Parsia.
4.The cries of Chhotiya and Parsia attracted Mana, Govinda, Pemla, Rambuxa and Gangli and some others.
These persons are Baories.
This crowd of 30 or 40 turned on Mana and Govinda and attacked them.
Sukha then fired his gun a second time and hit Mana on his left hand.
5.In the meanwhile, Ganesh and his wife Seruri (Baories) arrived and said "don 't beat, don 't beat".
Sukha and Gumana said that they should also be beaten and thereupon these 30 or 40 persons started to beat them too and they fell down.
After this, Parsia 's wife Lacbhuri came there 292 and some 10 or 1 1 persons out of the original 30 or 40 started to chase her.
But she ran away and managed to escape with only a slight beating.
7.While this was happening, the five Baories who had been felled to the ground (Parsia, Ganesh, Mana, Govinda and Seruri) started to cry out.
The ten or eleven who had chased Lachhuri came back and on hearing the cries of these five on the ground, Sukha and Gumana said that they were crying and should be killed outright.
On that these eleven persons divided into three groups and attacked the five on the ground as follows: Parsia was beaten by Sukha (with a pharsi), Jeewana (dangri) and Chokla (dangri).
Mana and Govinda were beaten by Gumana (sword), Balia (pharsi) and Jankiya and Naraina (lathis).
Ganesh was beaten by Bhawana (dangri), Govinda (sword), Kumla (pharsi) and Begla (dangri).
All four died on the spot.
The accused were charged as follows.
One group consisting of 25 persons were charged under section 325/149 of the Indian Penal Code for intentionally beating, along with the other accused, 1.
Chhotiya 2.
Seruri 3.
Parsia 4.
Mana 5.
Govinda and 6.
Ganesh.
At a later stage, the following sentence was added to the charge: "which you inflicted as a member of an unlawful assembly in prosecution of its common intention".
These twenty five were acquitted and we are not concerned with them except to note that they were not concerned with that part of the occurrence which we have set out as steps 6 and 7 above.
The charge against the remaining eleven can be divided into two parts.
Under the first, each, except Sukha, is charged with beating the Baories Parsia, Mana, Govinda, Ganesh, Chhotiya, Seruri, etc. "along with other accused".
Five of the eleven are said to 293 have beaten them with "swords and lathis"; another five "with lathis, etc." while the eleventh, Sukha, is said to have fired at Parsia and Mana "as a result of which they fell down".
Then each charge continues "and when all had fallen down as a result of these injuries".
After that the charges divide off into three groups: One group charges (1) Gumana, (2) Naraina, (3) Balia and (4) Jankiya with beating Govinda and Mana, "who were groaning, with lathis with intent to kill them till they were actually killed".
The next group charges (1) Jeewana, (2) Sukha and (3) Chokhla with hitting Parsia with lathi blows "with intent to murder him till he died".
The third group charges (1) Begla, (2) Govinda, (3) Kumla and (4) Bhawana with as saulting Ganesh with lathis with intent to murder till he died.
The following sentence was also added in the end of each of these charges: "And you did this as a member of an unlawful assembly in prosecution of its common intention".
There has been some confusion in both the Sessions Court and the High Court between "common intention" and "common object".
It is true the two sometimes overlap but they are used in different senses in law and should be kept distinct.
In a case of unlawful assembly or riot we are concerned with a common object.
However, we are satisfied that has not caused any prejudice.
But the reason why we have set out these charges at some length is because counsel for the appellants argued that the prosecution case is that there were two separate assemblies, one of twenty five persons to beat six specific persons and another of eleven to kill them in three groups.
He argued that the twenty five who constituted the first assembly have all been acquitted; that the only material from which an unlawful assembly can be inferred in the other case is the instigation of Sukha and Gumana for a second time after they bad returned from chasing Lachhuri.
That story, he said, has been disbelieved, so all must be acquitted.
It will be necessary at this stage to set out the 294 findings of the two lower courts.
The learned Sessions Judge starts by rejecting the evidence of Ruga (P.W. 1), Bodu (P.W. 2) and Bhagwatia (P.W. 3) on the question of identification of any of the accused and the evidence of Arjun (P.W. 4) about the conspiracy to beat up the Baories.
But he finds that the evidence of the Baori witnesses, Chhotiya (P.W. 8), Lachhuri (P.W. 10), Ladia (P.W. 11), Seruri (P.W. 12), Gangli (P.W. 13) and Pemla (P.W. 14) is consistent "so far as these II accused are concerned regard ing their beating 4 persons to death and causing injuries to Lachhuri, Ganesh 's wife, Seruri and Chhotiya " Later, he states "From the evidence of these Baori witnesses. . . . it is found that these eleven accused were involved in the beating of the injured persons.
Whether they formed part of a bigger assembly is not now material because I have already discussed the cases of other accused and given them benefit of doubt.
These eleven accused even amongst themselves being more than five in number could be regarded as members of an unlawful assembly".
But the learned Judge only accepted this story in part.
He believed Chhotiya (P.W. 8), Seruri (P.W. 12), Gangli (P.W. 13) and Pemla (P.W. 14) in so far as they stated that Sukha had a gun and that Sukha used it against Parsia and Mana, but he did not accept the evidence of Chhotiya (P.W. 8) in so far as he said that Gumana hit Chhotiya with a sword.
He also rejected the prosecution version that the incidents occurred in two parts, first with a bigger assembly that beat all the accused and next with a smaller one that ran after Lachhuri and beat her and then returned to beat the others to death at the instigation of Sukha and Gumana.
On this part of the case, the learned Sessions Judge found that " whatever beating was done was done immediately after the scuffle between Chhotiya and Parsia and Sukha and Gumana and Gumana and Naraina, and those accused who had arrived on the spot.
Nobody instigated anybody".
(Para 103).
It was argued on behalf of the defence that the learned Sessions Judge discarded the evidence about 295 instigation in toto.
Counsel for the State, however, contended that this passage refers to the second instigation which is said to have been given after the eleven had chased and beaten Lacbhuri and returned to finish off the others who were lying on the ground.
We think that is right.
In paragraph 101 of his judgment the learned Sessions Judge set out the fact that the prosecution witnesses divide the incidents into two parts: one in which a larger assembly beat all the injured persons and the other in which eleven killed the four deceased persons at the instigation of Sukha and Gumana.
In paragraph 102 be set out reasons why he was not able to believe this story.
The first was because "Ladia (P.W. 11) did not state in his statement before the police that after beating Lachhuri, when ten or eleven persons had returned then at the instigation of Sukha and Gumana the injured were again beaten to death".
Then, after setting out four more reasons, the learned Judge reached the conclusion just enumerated in paragraph 103.
In paragraph 117 he said "Leaving Begla and Govinda, I am fully convinced that Sukha, Gumana, Naraina, Kumla, Balia, Jeewana, Chokhla, Bhawana Khati and Jankiya did commit rioting with the common object of beating the Baories".
In paragraph 118 he said "I am not convinced that the intention of all these accused was to murder the whole lot of Baories. . . " In para 119 "The accused did give sound beating to the injured".
He concluded that no common object to kill could be deduced but held that a common object to beat was clear.
As he was unable to determine which accused gave the fatal blows be convicted all under section 302 read with section 149 of the Indian Penal Code.
We think it is clear from this judgment, read as a whole, that the learned Sessions Judge disbelieved 296 the story of instigation at any stage because if he had believed even the first instigation, a common object to kill would have emerged.
We are unfortunately not able to obtain much assistance from the judgment of the learned High Court Judges.
They have not analysed the evidence and have not reached clear findings about a common object due in some measure to the fact that they do not appear to have appreciated the difference between a common object and a common intention.
They hold that six witnesses can be relied on to the extent that "the villagers were armed with guns, swords, farsies and lathis".
They do not believe all that these witnesses say because they hold "Though, therefore, we do not believe that these eleven persons deliberately murdered the four injured Baories who were lying there saying that they should be killed, there is no doubt in our minds that these eleven persons who have all been mentioned by these six witnesses were certainly seen taking more active part in this incident".
Then they hold "We are, therefore, satisfied on the statements of these witnesses that the incident took place in the main as stated by them and that the prosecution has given the right version of the affair".
Next, they hold that the fact that a large number of villagers, including the nine appellants, turned up armed with various weapons immediately they beard the quarrel between Chhotiya and Parsia on the one side and Gumana on the other "shows that there must have been some consultation from before and that these persons arrived in prosecution of the common object. . . " And they add this reason: "There is also the evidence of the prosecution witnesses that as the Baories came, some one or the other of these accused incited the rest of the villagers to beat up the Baories".
From this they conclude that there was an unlawful assembly with the common object of beating up the Baories.
297 This is very unsatisfactory.
The learned Judges were dealing with an appeal against an acquittal and though they have allowed the appeal they have not been specific about which part of the evidence they rely on in support of their findings nor do their conclusions follow logically from the premises on which they are based.
Take, for example, the finding about prior consultation.
In the first place, no prior consultation is required when a common object is in question.
The essence of the distinction between common object and common intention lies there.
In the next place, the six witnesses, who are relied on, say that a crowd of 30 or 40 persons assembled.
Among that crowd were Baories because three Baories (other than Parsia and Chhotiya) were killed and others injured.
It is also evident that some of these Baories must have had some sort of weapons because three of the accused had slight injuries on their person and one a fracture.
The evidence discloses that there had been thefts in t the village.
The uproar occurred at 11 in the night.
In those circumstances, it would be natural for the villagers to rush to the scene and arm themselves with whatever came to band.
Some may have been motivated by an unlawful motive but many would not, and to deduce a common intention with prior concert in such circumstances is impossible.
A common object is different and courts of fact are entitled to conclude on the evidence that has been accepted that some of those who rushed to the scene went there with the object of beating up persons whom they thought to be thieves and not merely to apprehend them or defend their properties; in other words, that some of those persons individually had an unlawful object in view.
If each bad the same object, then their object would be common and if there were five or more with this object, then they would form an unlawful assembly without any prior concert among themselves.
Next, take the High Court 's finding about incitement.
They have rejected the version given by the prosecution witnesses because they hold that the 298 story about the second beating is an improvement and also because they disbelieve the evidence that indicates that these eleven persons deliberately murdered the four injured Baories.
But the only evidence about incitement is that Sukha and Gumana called on the others to kill Barsia, and later to kill the others.
The incitement was quite clearly to kill and not merely to beat.
If this is rejected, then there is no evidence about incitement, so we are left in the dark to know what the learned Judges based their conclusion on.
That has left us with the task of finding whether there is, or could be, any proper basis for these convictions.
Now, as we understand the learned Sessions Judge, he has believed the first part of the story which we have set out as step No. I except the portion that speaks about an incitement to kill.
He finds that there was the meeting between Sukha and Gumana on the one side and Parsia and Chhotiya on the other.
He says "It can safely be deduced from the incidents as related by the witnesses in this case that in the beginning the fighting was between a couple of persons only and on hearing their cries their relatives, friends and relations and other villagers reached the spot and some of the villagers did beat the Baories".
Pausing there, it is evident that there was no unlawful assembly when the beating started; nor can it be deduced that all the persons who rushed to the scene, whether the number was 30 or 150, formed an unlawful assembly.
We therefore have to scan the evidence carefully to see what happened after that.
The finding is that the eleven accused who were charged for the murder were all involved in the beating of the injured persons.
That satisfies one of the ingredients of rioting, namely the presence of five or more persons.
But that of course is not enough.
There must in addition, be an "assembly" and that assembly must have a "common object" and the object must be "unlawful".
But a common object is different from a common intention in that it does not require prior concert and 299 a common meeting of minds before the attack, and an unlawful object can develop after the people get there.
It is not for us to re assess the evidence in special leave.
All we can say is that there are circumstances from which courts of fact could deduce that an unlawful object developed with more than five to share it once the marpit bad started; and as two courts of fact are satisfied that it did, there is no reason for us to interfere.
Persons who had come there quite lawfully, in the first instance, thinking there were thieves could well have developed an intention to beat up the "thieves" instead of helping to apprehend them or defend their properties; and if five or more shared the object and joined in the beating, then the object of each would become the common object.
This is not to say that all those present were members of that assembly.
The presumption of innocence would preclude such a conclusion.
Those who rushed to the scene in the circumstances disclosed must be presumed to have gone there for a lawful purpose even if they were armed.
The apprehension of marauders who prowl the town at night and the defence of person and property are lawful objects.
But when that object is exceeded and persons begin to beat up the suspects the act of beating becomes unlawful, for private persons are no more entitled to beat and illtreat thieves than are the police, especially at a time when there is nothing beyond suspicion against them.
But if five or more exceed the original lawful object and each has the same unlawful intention in mind and they act together and join in the beating, then they in themselves form an unlawful assembly.
There is no difference in principle between this and a case in which the original object was unlawful.
The only difference is that a case like this is more difficult to establish and must be scrutinised with greater care.
But that scrutiny is here and we are satisfied that there is evidence in this case on which courts of fact could base the conclusion that they have reached.
Now, did these eleven persons constitute an assembly or were they there individually without any 300 common factor to link them together? That, we think, is easily answered.
It is clear that each (barring Sukha and Gumana who were already there) assembled at the spot because of the cries of Parsia and Chhotiya and because of the noise of the fight.
That imports a common factor into their meeting and links them together as an assembly.
Their object in assembling may have been innocent but the fact that a common factor like this induced them to come together constitutes them into an "assembly" though not, on that evidence alone, into an unlawful assembly.
We next have to see whether any of them had an unlawful object in view.
The object of Sukha and Gumana was clearly unlawful.
Now the evidence which has been believed shows that the other nine actually joined in the beating and that they did this after Sukha had fired his gun at Parsia and Parsia had fallen to the ground.
It also shows that these others turned on Parsia 's relations and friends when they came to their support.
Therefore, whatever the original object of each may have been, it achieved a unity of purpose the moment the others joined in and continued to assist Sukha and Gumana and helped them to beat up the other Baories who came to Parsia 's help.
It is not a case of stray sporadic acts but indicates a certain continuity of purpose, each striving to achieve the same end, namely either to help Sukha and Gumana in beating up Parsia and Chhotiya and those who came to help them or to join in the beating for ends of their own.
But the commonness of purpose is an inference of fact which courts of fact would be entitled to make.
It does not matter whether the others joined in because of an initial instigation or whether, seeing the assault in progress, they joined in on their own account, because so long as each bad the object of beating up Parsia and Chhotiya and those who came to their assistance, that would make their object common.
The distinction between the common intention required by section 34 of the Indian Penal Code and the common object set out in section 149 lies just 301 there.
In a case under section 149 there need not be a prior meeting of minds.
It is enough that each has the same object in view and that their number is five or more and that they act as an assembly to achieve that object.
All these features are to be found in that part of the evidence which has been believed.
Therefore, on these findings which the courts of fact are entitled to reach, the object of the assembly was unlawful, but up to this point the highest common denominator was merely to beat and not to kill.
Up to that point, the convictions of the learned Sessions Judge under section 325/149, Indian Penal Code, are unassailable.
The next question is whether, that being the case, the convictions by the High Court under section 302/149 can be upheld.
Neither the Sessions Judge nor the High Court believe that there was any common intention to kill, therefore the convictions for the more serious offence can only be sustained under section 149 if it can be shown (1) that an actual killing of some of the persons attacked was likely to result from the beating which formed the common object and (2) that each person so convicted knew that might be a likely result.
Now so far as Sukha and Gumana are concerned, there can be no doubt.
They started the fight with deadly weapons.
Sukha fired at least twice and bit two persons.
He himself may not have had an intention to kill and indeed the fact that the wounds are on non vital parts must be used as a factor in his favour, but any person who carries a fire arm at that hour of the night and uses it and then continues a fight after an excited crowd has assembled and when at least nine of them rush in to join in the beating after his first shot must know either that somebody is likely to deal a fatal blow or at least that the cumulative effect of blows inflicted by a number of persons armed with lathis is likely to cause death from shock.
Riots of this kind are common and death frequently results, therefore, not only was a killing a likely consequence of such an assault conducted in this fashion but Sukha and Gumana as men of ordinary intelligence must have known that.
302 Much the same considerations apply in the case of the other appellants.
They rushed in to hit persons who had already been fired on and who had been felled to the ground.
They were in the midst of a crowd which could hardly have been calm and impassive and they joined in with several others to beat them up.
Any man of reasonable intelligence would have known that somebody would be likely to be killed in a melee like that.
Therefore, the requisite knowledge can be imputed to them also.
Two questions remain.
One was directed against the reliability of that part of the evidence that has been believed.
The argument, for all its repetition, length and eloquence, was the hackneyed one that when one part of a witness ' evidence is disbelieved, it is unsafe to act on the rest of his testimony.
The answer is equally hackneyed, namely that judges of fact have the right to do this and that this is not a court of appeal when it acts under article 136.
The findings about this are concurrent, so, following our usual practice, we decline to review the evidence.
The other is that the absence of this in the charge occasioned prejudice.
We have recently decided that we will be slow to entertain question of prejudice when details are not furnished; also the fact that the objection is not taken at an early stage will be taken into account.
There is not a hint of prejudice in the petition filed by the appellants here in the High Court for leave to appeal to this Court; nor was this considered a ground for complaint in the very lengthy and argumentative petition for special leave filed in this Court.
The only complaint about prejudice was on the score that there was no proper examination under section 342 of the Criminal Procedure Code.
We decline to allow this matter to be raised.
The appeal fails and is dismissed.
| Common intention required by section 34 of the Indian Penal Code and common object set out under section 149, though they sometimes overlap, are used in different senses and should be kept distinct.
In a case under section 149 there need not be a prior concert and meeting of minds, it is enough that each has the same object in view and their number is five or more and they act as an assembly to achieve that object.
When a crowd assembles and there is an uproar and people are killed and injured, it is only natural for others to rush to the scene with whatever arms they can snatch.
Some may have an unlawful motive but others may not, and in such circumstances it is impossible to say that they were all motivated by a common intention with prior concert.
What a court of fact should do in such a case is to find from the evidence which of them individually had an unlawful object in view, or having originally a lawful object in view deve loped it later on into an unlawful one and if it finds that there were five or more such persons who acted together there would be an unlawful assembly.
Consequently, in a case where there were circumstances from which the courts of fact could deduce that an unlawful object developed with more than five to share it after the fighting started and they were satisfied that it did, there was no reason why their concurrent decisions should be set aside.
This court will be slow to entertain a question of prejudice when details are not furnished; also, the fact that the objection was not taken at an early stage will be taken into account.
|
Summarize this legal judgement text concisely | on No. 271 of 1955.
Under article 32 of the Constitution for the enforcement of fundamental rights.
S.C. Isaacs (D. N. Mukerji, with him) for the petitioner.
M.C. Setalvad, Attorney General for India, (B. Sen and R. H. Dhebar, with him) for the respondents.
March 20.
DAS C.J. This is an application under article 32 of the Constitution praying for an appropriate writ and order restraining the Income tax Officer, Special Circle, Ranchi (respondent No. 3) from taking up and proceeding with the assessment of the petitioner to income tax and other ancillary reliefs.
The facts shortly are as follows: The petitioner is a firm carrying on business as manufacturer and seller of Bidi.
In 1948 it was registered as a firm under the Indian Partnership Act.
It has its head office in Calcutta, where its books of account are said to be kept and maintained and 270 where it is said to have its banking account.
It has its factories near Chakradharpur in the State of Bihar but it has no banking account there.
The members of the firm are citizens of India.
It is said that since its inception the firm has all along been assessed to income tax by the Income tax Officer, District III, Calcutta.
Thus assessments for the years 1948 49 and 1949 50 were made by the Income tax Officer, District 111, Calcutta.
Notices under section 22(2) of the Income tax Act were issued to the petitioner on different dates by the Income tax Officer, District III, Calcutta, calling upon the petitioner to submit returns for the assessment years 1950 51, 1951 52, 1952 53, 1953 54 and 1954 55, the notice for the last mentioned year being dated 23rd August 1954.
In compliance with these notices the petitioner duly submitted its returns for those respective years to the Income tax Officer, District III, Calcutta.
In the course of assessment proceedings for the year 1950 51 a question was raised regarding the location of the principal place of business of the petitioner.
Eventually the income tax authorities seem to have been satisfied that it was in Calcutta and on 18th December 1954 the Income tax Officer, District III, Calcutta, made assessment for the year 1950 51.
On the 25th January, 1955 the petitioner received a letter from the Income tax Officer, District III, Calcutta informing it "that in pursuance to orders under section 5(7 A) of the Income tax Act your assessment records are transferred from this office to the Income tax Officer, Special Circle, Ranchi with whom you may correspond in future regarding your assessment proceedingS".
The order referred to in the above communication was as follows: No. 55(70)IT/54.
Central Board of Revenue.
New Delhi, dated the 13th December, 1954.
ORDER.
No. 87.
Under sub section (7 A) of section 5 of the Indian Income tax Act, 1922 (XI of 1922) the Central Board of Revenue hereby transfers 271 the case of Biri Supply Company, 3/1, Madan Street, Calcutta from the Income tax Officer., District III(1) Calcutta to the Income tax Officer, Special Circle, Ranchi.
(K. B. Deb), Under Secretary, Central Board of Revenue.
It is alleged and not denied by the respondent that the petitioner had no previous notice of the intention of the Income tax authorities to transfer the assessment proceedings from Calcutta to Ranchi nor had it any opportunity to make any representation against such decision.
Thereafter on the 2nd May 1955 the Income tax Officer, Special Circle, Ranchi called upon the petitioner to submit its return for the assessment year 1955 56.
It is then that the present petition was filed under article 32 of the Constitution challenging the validity of the Order of transfer dated the 13th December 1954 and the law under which such order was purported to have been made.
The con tention is that sub section (7 A) of section 5 of the Indian Income tax Act, 1922 and the said Order of transfer made thereunder are unconstitutional in that they infringe the fundamental rights guaranteed to the petitioner by articles 14, 19 (1) (g) and 31 of the Constitution.
Article 14 of the Constitution enjoins that the State shall not deny to any person equality before the law or the equal protection of the laws within the territories of India.
The expression "the State" used in Part III of the Constitution which deals with fundamental rights includes, unless the context otherwise requires, the Government and Parliament of India and the Government and the legislatures of each of the States and all local or other authorities within the territory of India or under the control of the Government of India.
The scope and effect of article 14, in so far as it protects all persons against discriminatory and hostile legislation, have been discussed and explained by this court in a series of cases beginning with Chiranjit Lal Chowdhury vs The Union 36 272 of India(1) and ending with Budhan Chowdhry and others vs The State of Bihar(2).
In the last mentioned case a Full Bench of this court summarised the result of the earlier decisions on this point in the words following: "It is now well established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation.
In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (2) that differentia must have a rational relation to the object sought to be achieved by the statute in question.
The classification may be founded on different bases; namely, geographical, or according to objects or occupations or the like.
What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration.
It is also well established by the decisions of this court that article 14 condemns discrimination not only by a substantive law but also by a law of procedure".
We have, therefore, to approach the problem posed before us bearing in mind the above principles laid down by this court in so far as they may be applicable to the facts of the present case.
Turning now to the Indian Income tax Act, 1922 we find that section 64 makes provision for determining the place of assessment.
By sub section (1), where an assessee carries on a business, profession or vocation at any place, he shall be assessed by the Income tax Officer of that area in which that place is situate or where the business, profession, or vocation is carried on at more than one place by the Income tax Officer of the area in which the principal place of business, profession or vocation is situate.
In all other cases, according to sub section (2), an assessee shall be assessed by the Income tax Officer of the area in which he resides.
If any question arises as to the (1) ; (2) ; 273 place of assessment such question shall be decided, after giving the assessee an opportunity to represent his views by the Commissioner or Commissioners concerned or in case of disagreement between them by,, the Board of Revenue (sub section (3)).
It is quite clear from the aforesaid provisions of section 64 that the Legislature considered the question of the place of assessment to be of some importance to the assessee.
The provisions of section 64 of the Indian Income tax Act, 1922 came up for discussion before the Bombay High Court in Dayaldas Kushiram vs Commissioner of Income tax, Central(1).
At pages 657 to 658 Beaumont, C.J. observed as follows: "In my opinion section 64 was intended to ensure that as far as practicable an assessee should be assessed locally, and the area to which an Income tax Officer is appointed must, so far as the exigencies of tax collection allow, bear some reasonable relation to the place where the assessee carried on business or resides.
There is Do evidence that there was any difficulty in restricting the area to which the Income tax Officer, Section II (Central), was appointed to something much narrower than the Bombay Presidency, Sind and Baluchistan.
Therefore, in my opinion, Income tax Officer, Section II (Central), is not the Income tax Officer of the area in which the applicant 's place of business is situate, and as there is such an officer in existence, namely, the Officer of Ward C, Section II, in my opinion, it is only the latter officer who can assess the assessee".
Kania, J. (as he then was) said at pages 660 661: "A plain reading of the section shows that the same is imperative in terms.
It also gives to the assessee a valuable right.
He is entitled to tell the taxing authorities that he shall not be called upon to attend at different places and thus upset his business".
It will be noticed from the above passages that the learned judges treated the provisions of section 64 more as a question of right than as a matter of convenience only.
It was for the above decision that the (1) I.L.R. ; 274 Indian Income tax Act, 1922 was amended by the Indian Income tax (Amendment) Act, 1940 (Act XL of 1940), by adding to clause (b) of sub section (5) of section 64 the words "in consequence of any transfer made under sub section (7 A) of section 5" and by adding sub section (7 A) to section 5.
The relevant portion of sub section (5) of section 64 so amended reads as under: "(5) The provisions of sub section (1) and subsection (2) shall not apply and shall be deemed never at any time to have applied to any assessee (a) . . . . . . . . . : . . . . . . . . . . (b)where by any direction given or any distribution or allocation of work made by the Commissioner of Income tax under sub section (5) of section 5, or in consequence of any transfer made under sub section (7 A) of section 5, a particular Income tax Officer has been charged with the function of assessing that assessee, or (c) . . . . . . . . . .
It is thus clear from this amendment that the benefit conferred by the provisions of sub section (1) and sub section (2) are taken away and is to be deemed and not to have existed at any time as regards the assessee with regard to whom a transfer order is made under sub section (7 A) of section 5.
In order, however, to deprive a particular assessee of the benefits of sub sections (1) and (2) of section 64, there must be a valid order under section 5(7 A) and he will lose the benefit only to the extent to which that right is taken away by a valid order made under sub section (7 A) of section 5.
This takes us to the new sub section (7 A) of section 5.
Sub section (7 A) of section 5 runs as follows: "(7 A) The Commissioner of Income tax may transfer any case from one Income tax Officer subordinate to him to another, and the Central Board of Revenue may transfer any case from any one Income tax Officer to another.
Such transfer may be made at any stage of the proceedings, and shall not render 275 necessary the reissue of any notice already issued by the Income tax Officer from whom the case is transferred".
The sub section in terms makes provisions for the, transfer of a "case".
Under the Indian Income tax Act, 1922 a case is started when the Income tax Officer issues a notice under section 22(2) of the Act calling upon the assessee to file his return of his total income and total world income during the previous year and then the assessee submits his return in the prescribed form.
It is quite clear from the section that the notice and the return are to be confined to a particular assessment year and the sub section contemplates the transfer of such a "case", i.e., the assessment case for a particular year.
The provision that such a transfer may be made "at any stage of the proceedings" obviously postulates proceedings actually pending and "stage" refers to a point in between the commencement and ending of those proceedings.
Further the provision that such transfer shall not render necessary the reissue of notice already issued by the Income tax Officer from whom the case is transferred quite clearly indicates that the transfer contemplated by the sub section is the transfer of a particular case actually pending before an Income Tax Officer of one place to the Income Tax Officer of another place.
The fact that in this case the Income tax Officer, Special Circle, Ranchi issued fresh notice under section 22(2) quite clearly shows that he did not understand that any particular pending case of this assessee had been transferred to him.
Evidently he thought that the assessment of the petitioner 's income, generally and as a whole, bad been transferred to him and that it was, therefore, for him to initiate a case, i.e., assessment proceedings for a particular year.
In our judgment such an omnibus wholesale order of transfer is not contemplated by the sub section.
It is implicit in the sub section that the Commissioner of Income Tax or the Central Board of Revenue, as the case may be, should before making an order of transfer of any case apply his or its mind to the necessity or desirability of the transfer 276 of that particular case.
The fact that it is necessary or desirable to transfer a case of assessment of a particular assessee for any particular year does not necessarily indicate that it is equally necessary or desirable to transfer another assessment case of that assessee for any other assessment year.
We are accordingly of the opinion that the impugned order of transfer, which was expressed in general terms without any reference to any particular case and without any limitation as to time, was beyond the com petence of the Central Board of Revenue.
We did not understand the learned Attorney General to contend that such was not the correct interpretation of the sub section.
We do not consider it necessary, for the purpose of this case, to pause to consider whether the constitutionality of sub section (7 A) of section 5 can be supported on the principle of any reasonable classification laid down by this court or whether the Act lays down any principle for guiding or regulating the exercise of discretion by the Commissioner or Board of Revenue or whether the sub section confers an unguided and arbitrary power on those authorities to pick and choose individual assessee and place that assessee at a disadvantage in comparison with other assessees.
It is enough for the purpose of this case to say that the omnibus order made in this case is not contemplated or sanctioned by sub section (7 A) and that, therefore, the petitioner is still entitled to the benefit of the provisions of sub sections (1) and (2) of section 64.
All assessees are entitled to the benefit of those provisions except where a particular case or cases of a particular assessee for a particular year or years is or are transferred under sub section (7 A) of section 5, assuming that section to be valid and if a particular case or cases is or are transferred his right under section 64 still remains as regards his other case or cases.
As said by Lord Atkin in Eshugbai Eleko 's case(1) the executive can only act in pursuance of the powers given to it by law and it cannot interfere with the liberty, property (1)L.R. ; , 670.
277 and rights of the subject except on the condition that it can support the legality of its action before the court.
Here there was no such order of transfer as is contemplated or sanctioned by sub section (7 A) of section 5 and, therefore, the present assessee still has the right, along with all other Bidi merchants carrying on business in Calcutta, to have his assessment proceedings before the Income tax Officer of the area in which his place of business is situate.
The income tax authorities have by an executive order,, unsupported by law, picked out this petitioner and transferred all his cases by an omnibus order unlimited in point of time This order is calculated to inflict considerable inconvenience and harassment on the petitioner.
Its books of account will have to be produced before the Income tax Officer, Special Circle, Ranchi a place hundreds of miles from Calcutta, which is its place of business.
Its partners or principal officers will have to be away from the head office for a considerable period neglecting the main business of the firm.
There may be no suitable place where they can put up during that period.
There will certainly be extra expenditure to be incurred by it by way of railway fare, freight and hotel expenses.
Therefore the reality of the discrimination cannot be gainsaid.
In the circumstances this substantial discrimination has been inflicted on the petitioner by an executive fiat which is not founded on any law and no question of reasonable classification for purposes of legislation can arise.
Here "the State" which includes its Income tax department has by an illegal order denied to the petitioner, as compared with other Bidi merchants who are similarly situate, equality before the law or the equal protection of the laws and the petitioner can legitimately complain of an infraction of his fundamental right under article 14 of the Constitution.
It has further been urged that this order indirectly C affects the petitioner 's fundamental right under article 19(1)(f) and article 31.
There can be no gainsaying the fact that the order purports to deprive the petitioner of its right under section 64 to which 278 it would otherwise be entitled.
The order of transfer is certainly calculated to inflict considerable inconvenience and harassment to the petitioner as hereinbefore mentioned.
But in the view we have taken on the construction of sub section (7 A) of section 5 and the petitioner 's rights under article 14, it is not necessary for us, on this occasion, to express any opinion on the contention that the inconvenience and harassment referred to above constitute an imposition of such an interference as amounts to an unwarranted restriction on the petitioner 's rights under article 19(1)(g) or a violation of his rights under article 31.
For the reasons stated above this petition must be allowed.
Accordingly the impugned order is set aside and an injunction is issued in terms of prayer (c) of the petition.
The petitioner is entitled to the costs of this application.
BOSE J. I agree with my Lord the Chief Justice that this petition should be allowed but for different reasons.
In my opinion, sections 5(7 A) and 64(5)(b) of the Indian Income tax Act are themselves ultra vires article 14 of the Constitution and not merely the order of the Central Board of Revenue.
The only question is whether these sections contravene article 14.
Despite the constant endeavour of Judges to define the limits of this law, I am unable to deduce any clear cut principle from the oftrepeated formula of classification.
As I have said in another case, even the learned Judges who propound that theory and endeavour to work it out are driven to concede that classification in itself is not enough for the simple reason that anything can be classified and every discriminatory action must of necessity fall into some category of classification, for classification is nothing more than dividing off one group of things from another; and unless some difference or , distinction is made in a given case no question under article 14 can arise.
It is just a question of framing a set of rules.
It is elementary that no two things are exactly 279 alike and it is equally obvious many things have features that are common.
Once the lines of demarcation are fixed, the resultant grouping is capable of objective determination but the fixing of the lines is necessarily arbitrary and to ' say that governments and legislatures may classify is to invest them with a naked and arbitrary power to discriminate as they please.
Faced with the inexorable logic of this position,, the learned Judges who apply this test are forced to hedge it round with conditions which, to my mind add nothing to the clarity of the law.
I will pass over the limitations with which the classification test is now judicially surrounded, namely that it must be "reasonable", it must not be "discriminatory" or "arbitrary", it must not be "hostile"; there must be no "substantial discrimination", and so forth, and will proceed at once to a rule that is supposed to set the matter at rest.
The rule is taken from the American decisions and was stated thus in The State of West Bengal vs Anwar Ali Sarkar(1): be fulfilled,, namely (1) that the classification must be founded on an, intelligible differentia which distinguishes those that are grouped together from others and (2) that differentia must have a rational relation to the object sought to be achieved by the Act".
Mukherjea, J. (as he then was) said at page 321 ibid that "the classification should never be arbitrary, artificial or evasive.
It must rest always upon real and substantial distinction bearing a reasonable and just relation to the thing in respect to which the classification is made; and classification made without any reasonable basis should be regarded as invalid".
In another case, Ram Prasad Narayan Sahi and Another vs The State of Bihar and Others(), the same learned Judge said at page 1139 "but such selection or differentiation must not be arbitrary and should rest upon a rational basis, having regard to the object which the legislature has in view".
(1) ; , 334.
(2) ; 37 280 Ivor Jennings puts it another way: "Among equals the law shall be equal and shall be equally administered and that like shall be treated alike".
With the utmost respect all this seems to me to break down on a precise analysis, for even among equals a large discretion is left to judges in the matter of punishment, and to the police and to the State whether to prosecute or not and to a host of officials whether to grant or withhold a permit or a licence.
In the end, having talked learnedly round and around the article we are no wiser than when we started and in the end come back to its simple phrasing "The State shall not deny to any person equality before the law or the equal protection of the laws Within the territory of India".
The truth is that it is impossible to be precise, for we are dealing with intangibles and though the results are clear it is impossible to pin the thought down to any precise analysis.
Article 14 sets out, to my mind, an attitude of mind, a way of life, rather than a precise rule of law.
It embodies a general awareness in the consciousness of the people at large of something that exists and which is very real but which cannot be pinned down to any precise analysis of fact save to say in a given case that it falls this side of the line or that, and because of that decisions.
, on the same point will vary as conditions vary, one conclusion in one part of the country and another somewhere else; one decision today and another tomorrow when the basis of society has altered and the structure of current social thinking is different.
It is not the law that alters but the changing conditions of the times and article 14 narrows down to a question of fact which must be determined by the highest Judges in the land as each case arises.
(See on this point Lord Sumner 's line of reasoning in Bowman 's case(1)).
Always there is in these cases a clash of conflicting claims and it is the core of the judicial process to arrive at an accommodation between them.
Anybody can decide a question if only a single principle (1)[1917] A.C. 406, 466, 467. 281 is in issue.
The heart of the difficulty is that there is hardly any question that comes before the Courts that does not entail more than one so called principle.
As Judge Leonard Hand of the United States Court T. of Appeals said of the American Constitution "The words a judge must construe are empty vessels into which he can pour anything he will" These rules are useful guides in some cases but they do not, in my opinion, go to the root of the matter; nor am I alone in so thinking though my approach is more direct and fundamental than is usual.
Patanjali Sastri, C.J. said in The State of West Bengal vs Anwar., Ali Sarkar(1) that the reported decisions "underline the futility of wordy formulation, of so called 'tests ' in solving problems presented by concrete cases".
I endeavoured to point out in my judgment in Anwar Ali Sarkar 's case(1) at page 361 that one can conceive of classifications that conform to all these rules and yet which are bad: classifications made in the utmost good faith;/classifications that are scientific and rational, that 'Will have direct and reasonable relation to the object sought to be achieved and yet which are bad because despite all that the object itself cannot be allowed on the ground that it offends article 14.
In such a case, the object itself must be.
struck down and not the mere classification which,, after all, is only a means of attaining the end desired; and that, in my judgment, is precisely the point here.
It is the very point that Fazl Ali J. made in Anwar Ali Sarkar 's case(1) at pages 309 310: "It was suggested that the reply to this query is that the Act itself being general and applicable to all persons and to all offences, cannot be said to discriminate in favour of or against any particular case or classes of persons or cases,, and if any charge of discrimination can be levelled at all, it can be levelled only against the act of the executive authority if the Act is misused.
This kind of argument however does not appear to me to solve the difficulty.
The result of accepting it would be that even where discrimina (1) ; , 297.
282 tion is quite evident one cannot challenge the Act simply because it is couched in general terms; and one cannot also challenge the act of the executive authority whose duty it is to administer the Act, because that authority will say: I am not to 'blame as I am acting under the Act.
It is clear that if the argument were to be accepted, article 14 could be easily defeated.
I think the fallacy of the argument lies in overlooking the fact that the 'insidious discrimina tion complained of is incorporated in the Act itself ', it being so drafted that whenever any discrimination is made such discrimination would be ultimately traceable to it".
Nor, in the past, has this Court hesitated to strike, down the Act or Order itself when it confers unrestricted power as here.
That was what happened in the Coal Control Case( '); the Order itself was struck down and not the executive action taken by virtue of the unrestricted powers conferred by that law.
See page 813 where it was said "The Order commits to the unrestrained will of a single individual the power to grant, withhold or cancel licences in any way he chooses and there is nothing in the Order which would ensure a proper execution of the power or operate as a check upon injustice that might result from improper execution of the same".
So also in the State of Madras vs V. G. Row(2).
It is true that these were cases under article 19 and not 14 of the Constitution but the principle is the same.
I need not multiply instances.
What is the position here? Here is an Act that fixes a certain venue for assessment in section 64.
That is the normal law of the land for.
these purposes.
The language in sub sections (1) and (2) is mandatory: "be shall be assessed" If there is doubt or dispute about the correct venue, it can only be decided after hearing the party concerned.
Then come the provisions for transfer.
Now it is, I think, necessary that there should be powers of transfer and the mere conferral of such (1) ; (2) ; 283 powers would not offend article 14.
But, put at its lowest, it is anomalous that when similar powers are conferred on the High Courts and even on this Court under.
, for example, the Code of Criminal Procedure, they should be hedged round with limitations, whereas, when it comes to a Commissioner of Income tax or the Central Board of Revenue, no limitations whatever are placed upon them.
Section 526 of the Criminal Procedure Code confers only limited powers of transfer on the High Court and article 136 empowers this Court to intervene should those powers be exceeded by the High Court and should this Court in its discretion feel that has led, or is likely to lead, to hardship and injustice or to a miscarriage of justice; and in the case of this Court a right to transfer is conferred under section 527 only when that is expedient in the interests of justice".
Section 24 of the Civil Procedure Code is wider but that was a law made before the Constitution and, in any case, such an order would be open to review by this Court and in a suitable case, should the High Court act arbitrarily or along non judicial lines, such as directing a transfer without recording reasons and without hearing the parties concerned when it is possible to afford them a hearing, the matter would be set right here.
There is a big difference between investing a judicial authority with such powers and other non judicial bodies because judges must act in accordance with a recognised procedure and obey the laws of natural justice unless there is express indication to the contrary in the statute.
What is the position here? There is no hearing, no reasons are recorded: just peremptory orders transferring the case from one place to another without any warning: and the power given by the Act is to transfer from one end of India to the other; nor is that power unused.
We have before us in this Court a case pending in which a transfer has been ordered from Calcutta in West Bengal to Ambala in the Punjab.
After all, for whose benefit was the Constitution enacted? What was the point of making all this 284 pother about fundamental rights? I am clear that the Constitution is not for the exclusive benefit of governments and States; it is not only for lawyers and politicians and officials and those highly placed.
It also exists for the common man, for the poor and the humble, for those who have businesses at stake.
, for the "butcher, the baker and the candlestick maker '. '.
It lays down for this land "a rule of law" as understood in the free democracies of the world.
It constitutes India into a Sovereign Democratic Republic and guarantees in every page rights and freedom to the individual side by side and consistent with the overriding power of the State to act for the common good of all.
I make no apology for turning to older democracies and drawing inspiration from them, for though our law is an amalgam drawn from many sources, its firmest foundations are rooted in the freedoms of other lands where men are free in the democratic sense of the term.
England has no fundamental rights as such and its Parliament is supreme but the liberty of the subject is guarded there as jealously as the supremacy of Parliament.
The heart and core of a democracy lies in the judicial process, and that means independent and fearless judges free from executive control brought up in judicial traditions and trained to judicial ways of working and thinking.
The main bulwarks of liberty and freedom lie there and it is clear to me that uncontrolled powers of discrimination in matters that seriously affect the lives and properties of people cannot be left to executive or quasi executive bodies even if they exercise quasi judicial functions because they are then invested with an authority that even Parliament does not possess.
Under the Constitution, Acts of Parliament are subject to judicial review particularly when they are said to infringe fundamental rights, therefore, if under the Constitution Parliament itself has not uncontrolled freedom of action, it is evident that it cannot invest lesser authorities with that power.
If the legislature itself had done here what the Central Board of Revenue 285 has done and had passed an Act in the bald terms of the order made here transferring the case of this petitioner, picked out from others in a like situation, from one State to another, or from one end of India to the other, without specifying any object and without giving any reason, it would in my judgment, have been bad.
I am unable to see how the position is bettered because the Central Board of Revenue has done this and not Parliament.
I quote Mukherjea J. (as he then was) in a case which is not in point here but in a passage whose language seems apt to the present position.
The quotation is from Ram Prasad Narayan Sahi vs The State of Bihar(1): "It is impossible to conceive of a worse form of discrimination than the one which differentiates a particular individual from all his fellow subjects and visits him with a disability Which is not imposed upon anybody else and against which even the right of complaint is taken away" and again, "It is true that the presumption is in favour of, the constitutionality of a legislative enactment and it has to be presumed that a Legislature understands and correctly appreciates the needs of its own People.
But when on the face of a statute there is no classification at all, and no attempt has been made to select any individual or group with reference to any differentiating attribute peculiar to that individual or group and not possessed by others, this presumption is of little or no assistance".
In the case of Liversidge vs Sir John Anderson(1) the learned Law Lords were at great pains to see whether the British Parliament had in fact left the matter under consideration there to the subjective satisfaction of a Secretary of State.
There was no doubt that the British Parliament could do so because it is ' supreme and its action is not fettered by a written constitution, but the encroachment on the liberty of the subject was so great that the House of Lords was reluctant to reach the conclusion which it ulti (1) ; , 1143.
(2) ; 286 mately did by a majority, that had in fact been done; and one of the learned Law Lords, Lord Atkin, read a powerful dissenting opinion.
One of his criticisms at page 226 was that the order of detention was made "by an executive minister and not by any kind of judicial officer; it is not made after any inquiry as to facts to which the subject is party, it cannot be reversed on any appeal. .
It is an absolute power which, so far as I know, has never been given before to the executive".
In my opinion, that is the very point here.
In England the power can be conferred but, because it so vitally affects the liberty of the subject, the judges there fight against any interpretation that would lead to that conclusion and in the end reach it only when compelled to do so for overwhelming reasons.
In India the fundamental freedoms conferred by the Constitution are guarded with equally jealous care and it seems to me that the whole point of having this Chapter on Fundamental Rights is to ensure that the very things that the English judges fight against in their courts will not happen here.
In England the task of the judges is to see whether their Parliament has conferred those wide powers; in India our task is to see whether the Constitution has done so.
In England the conferral of those powers is never conceded unless Parliament uses clear, express and unambiguous words.
In our Constitution I find an absence of any such clarity; on the contrary, the whole trend of the Constitution points the other way If an executive authority or a quasi judicial body, or even Parliament itself, were to be given the right to determine these matters to their subjective satisfaction, there would be no point in these fundamental rights, for the courts would then be powerless to interfere and determine whether those rights have been infringed.
The whole point of the chapter is to place a limitation on the powers of all these bodies, including Parliament, save in its constituent capacity.
Therefore, no power resting on the subjective satis 287 faction of any of these bodies can ever be conferred; the satisfaction must always be objective in the sense in which Lord Atkin explained so that its exercise is open to judicial review.
In my opinion, the power of transfer can only be conferred if it is hedged round with reasonable restrictions, the absence or existence of which can in the last instance be determined by the courts; and the exercise of the power must be in conformity with the rules of natural justice, that is to say, the parties affected must be heard when that is reasonably possible, and the reasons for the order must be reduced, however briefly, to writing so that men may know that the powers conferred on these quasi judicial bodies are being justly and properly exercised.
In a democracy functioning under the Rule of Law it is not enough to do justice or to do the right thing; justice must be seen to be done and a satisfaction and sense of security engendered in the minds of the people at large in place of a vague uneasiness that Star Chambers are arising in this land.
We have received a rich heritage from a very variegated past.
But it is a treasure which can only be kept at the cost of ceaseless and watchful guarding.
There is no room for complacency, for in the absence of constant vigilance we run the risk of losing it.
"It can happen here.
" I would hold for these reasons, and in particular for the reason given by Fazl Ali J. in the passage from one of his judgments quoted above, that section 5(7 A) is ultra vires article 14 of the Constitution and so is section 64(5)(b) in so far as it makes an order under section 5(7 A) as it now exists, inviolate.
I would allow the petition.
| The petitioners registered firm has its head office in Calcutta where its books of account are kept and maintained and where it has its banking account, the members of the firm being citizens of India.
Since its inception the firm has all along been assessed to income tax by the Income Tax Officer, District III, Calcutta.
The assessments for the years 1948 49 and 1949 50 were made by the Income Tax Officer, District III, Calcutta.
Notices under section 22(2) of the Income Tax Act were issued to the petitioner by the Income Tax Officer, District III, Calcutta to submit returns for the years 1950 51, 1951 52, 1952 53, 1953 54 and 1954 55.
The Income Tax Officer, District III, Calcutta made assessment for the year 1950 51 on 18 12 1954 being satisfied that the principal place of business of the petitioner was in Calcutta.
On the 25th January 1955 the petitioner received a letter from the Income Tax Officer, District III, Calcutta that in pursuance to orders dated 13th December 1954 under section 5(7 A) of the Income Tax Act its assessment records were transferred from that office to the Income Tax Officer, Special Circle, Ranchi with whom the petitioner was to correspond in future regarding its assessment proceedings.
The order stated that the Central Board of Revenue "hereby transfers the case of" the petitioner.
The petitioner had no previous notice of the intention of the Income Tax authorities to transfer the assessment proceedings from Calcutta to Ranchi nor bad it an opportunity to make any representation against such decision. 'When called upon to submit its return for the assessment year 1955 56 the petitioner by an application under article 32 of the Constitution contended that sub section (7 A) of section 5 of the Indian Income Tax Act, 1922 and the order of transfer made thereunder were unconstitutional in that they infringed the fundamental rights guaranteed to the petitioner under articles 14, 19(1)(g) and 31 of the Constitution.
section 64 of the Indian Income Tax Act makes provisions for determining the place of assessment.
Sub section (1) of that section provides 268 that where an assessee carried on a business, profession or vocation at any place he shall be assessed by the Income Tax Officer of that area in which that place is situate or where the business, profession, or vocation is carried on at more than one place by the Income Tax Officer of the area in which the principal place of business, profession or vocation is situate.
In all other cases, according to sub section (2), an assessee shall be assessed by the Income Tax Officer of the area in which he resides.
If any question arises as to the place of assessment such question shall be decided, after giving the assessee an opportunity to represent his views by the Commissioner or Commissioners concerned or in case of disagreement between them by the Board of Revenue.
The section is imperative in terms and gives a valuable right to the assessee.
By amending the Indian Income Tax Act 1922 by the Indian Income Tax (Amendment) Act, 1940 (Act XL of 1940) by adding to clause (b) of sub section (5) of section 64 the words "in consequence of any transfer made under sub section (7 A) of section 5" and by adding subsection (7 A) to section 5 the benefit conferred by the provisions of subsection (1) and sub section (2) of section 64 is taken away and is to be deemed not to have existed at any time as regards the assessee with regard to whom a transfer is made under sub section (7 A) of section 5.
Held that as under section 22(2) of the Act, the notice and the return are to be confined to a particular assessment years sub section (7 A) of section 5 contemplates the transfer of such a "case" i.e. the assessment case for a particular year.
The provision that such a transfer may be made "at any stage of the proceedings" obviously postulates proceedings actually pending and "stage ' I refers to a point in between the commencement and ending of those proceedings.
Further the transfer contemplated by the sub section is the transfer of a particular case actually pending before an Income Tax Officer of one place to the Income Tax Officer of another place.
Accordingly such an omnibus wholesale order of transfer dated 13th December 1954 as was made in the present case is not contemplated by the sub section and therefore the impugned order of transfer which was expressed in general terms without any reference to any particular case and without any limitation as to time was beyond the competence of the Central Board of Revenue and the petitioner was still entitled to the benefit of the provisions of subsections (1) and (2) of section 64.
The impugned order is discriminatory against the petitioner and violates the fundamental right guaranteed to it by article 14 of the Constitution in as much as the income tax authorities by an executive order unsupported by law picked out the present petitioner and transferred all his cases by an omnibus order unlimited in point of time,which order is calculated to inflict considerable inconvenience and harassment on the petitioner.
BOSE J. Section 5(7 A) of the Indian Income Tax Act is ultra vires article 14 of the Constitution and so is section 64(5)(b) in so far as it 269 makes an order under section 5(7 A) as it now exists, inviolate.
The power of transfer can only be conferred if it is hedged round with reasonable restrictions, the absence or existence of which can in the last instance be determined by the courts; and the exercise of the power must be in conformity with the rules of natural justice, that is to say, the parties affected must be heard when that is reasonably possible, and the reasons for the order must be reduced however briefly, to writing so that men may know that the powers conferred on these quasi judicial bodies are being justly and properly exercised.
Chiranjit Lal Chowdhury vs The Union of India ([1950] S.C.R. 860), Budhan Chowdhry and others vs The State of Bihar, ([1955] 1 S.C.R. 1045), Dayaldas Kushiram vs Commissioner of Income Tax Central (I.L.R. ; [1940] 8 I.T.R. 139), Eshugbai Eleko 's case ; , The State of West Bengal vs Anwar Ali Sarkar ([1952] S.C.R. 284), Ram Prasad Narayan Sahi and Another vs The State of Bihar and Others ' ([1953] S.C.R. 1129), Bowman 's case ([1917] A.C. 406), Coal Control case ([1954] S.C.R. 803), State of Madras vs V. G. Bow ([1952] S.C.R. 597), and Liversidge vs Sir John Anderson ([1942] A.C. 206), referred to.
|
Summarize this legal judgement text concisely | on No. 569 of 1954.
Under Article 32 of the Constitution for the enforcement of fundamental rights.
Purshotam Trikamdas, section N. Andley and Rameshwar Nath of M/s Rajinder Narain & Co., for the petitioners.
K. L. Misra, Advocate General of Uttar Pradesh, section P. Sinha, K. B. Asthana and C. P. Lal, for the res pondents.
April 16.
The Judgment of the Court was delivered by SINHA J.
This petition under article 32 of the Constitution on behalf of as many as 726 persons, ex 359 patwaris under the first respondent, the State of Uttar Pradesh, seeks the aid of this Court in enforcing the provisions of articles 14 and 16 of the Constitution, on the allegation mainly that they had been denied equality before the law and equal opportunity for employment under the State.
The Revenue Minister of Uttar Pradesh is the second respondent, and the Land Reforms Commissioner of that State is the third respondent.
The Collectors of Meerut, Muza ffarnagar, Aligarh, Badaun and Moradabad are respondents 4 to 8.
It appears that patwaris numbering about 28,000 in the whole of the State of Uttar Pradesh had organised themselves in 1940 into "The U.P. Patwaris Association" with a view to improving their prospects and emoluments.
They were part time servants of the Government in the Revenue Department.
After the Zamindari Abolition Act was brought into operation in that State, their services were very much in demand.
The Association held meetings and passed resolutions demanding increase in pay and allowances and betterment of their service conditions.
These matters were under the consideration of the Government, following upon representations and deputation to the Revenue Minister.
It appears, however, that under bad advice a large number of patwaris in the State went on a "pen down strike" on the 9th January 1953 with the result that the Government withdrew the official recognition of the Association on the 19th February 1953.
In the meantime the new Land Records Manual was published in January 1953 embodying new amended rules regarding recruitment, conditions of service and duties of patwaris.
This brought matters to a head and there was a special session of the Association at Lucknow on the 26th January 1953.
The Association passed resolutions protesting against the revised Land Records Manual.
It was also resolved at the special session that all patwaris should submit their resignations on the 2nd February 1953, requesting that they may be relieved of their work by the 4th March 1953 after which date they will treat themselves as free from all 360 obligations to work under the Government.
In pursuance of that resolution, about 26,000 patwaris in the whole of the State resigned.
There is no doubt that by submitting their resignations en masse the patwaris betrayed a lack of sense of discipline.
By doing so, they apparently intended to paralyse the whole revenue administration in the State and to coerce the Government to accept their demands; but they did not envisage the situation that the Government might accept their resignations and take them at their own words, The Government decided to accept their resignations and the petitioners were relieved of their duties soon after the submission of their resignations, before the 4th March 1953.
On the very next day, the 5th March, Government announced the creation of a new service of "Lekhpals" and proceeded to organise that service by recruiting the new personnel which included most of the old patwaris.
The new cadre also included all those patwaris whose record of service was free from blemishes and who had withdrawn their resignations.
Out of the petitioners also as many as 132 have been absorbed in the new cadre of Lekhpals and many more are likely to be absorbed in the service of Government.
Thus it appears that Government have been giving a locus poenitentiae to those of the ex patwaris who have realized their mistake in joining the agitation aforesaid and thus trying to force the bands of Government.
The petitioners ' grievance is that they have been prevented from re entering the Government service upon the reorganisation of the cadre under the new Dame.
But it is clear that the Government are within their rights to lay down certain qualifications for the new recruits.
They are entitled to exclude those persons who have betrayed a lack of proper sense of discipline.
It cannot therefore be said that the Government have denied an equal opportunity to those who are equal in all respects.
It appears that the Government have not permanently filled all the vacancies in the new cadre.
Those of the petitioners who are prepared to accept the discipline of Government service may approach the proper authorities 361 through the proper channel and we have no doubt that their cases will receive sympathetic consideration at the hands of the Government, consistently with the demands of the exigencies of public service.
Our attention was particularly invited to the new scheme of recruitment as laid down in the Government orders of the 5th March which contained the directions that all patwaris who bad not resigned and who had not reached the age of superannuation would be absorbed, that the patwaris who had resigned but had withdrawn their resignations by the 4th March 1953 would also be absorbed and that of those who had resigned and whose resignations had been accepted, only those will be absorbed who had an excellent record of work and who had not taken an active part in the agitation.
Besides those, fresh recruits also were to be taken in.
With reference to those directions it was contended that the petitioners who came within the category excluded from reap pointment had really been denied equal opportunity of appointment as Lekhpals and that thus article 16 of the Constitution was infringed.
In our opinion, it is open to the appointing authority to lay down the requisite qualifications for recruitment to Government service and it is open to that authority to lay down such prerequisite conditions of appointment as would be conducive to the maintenance of proper discipline amongst Government servants.
If persons already under Government employment on part time basis had shown themselves not to be amenable to proper discipline in Government offices, it was open to Government not to appoint such persons to the permanent cadre of Lekhpals because such persons could not be said to be as efficient as those who bad excellent records of service and had shown greater sense of responsibility to their employers.
Article 16 of the Constitution is an instance of the application of the general rule of equality laid down in article 14, with special reference to the opportunity for appointment and employment under the Government.
Like all other employers, Government are also entitled to pick and choose from amongst a large number of 362 candidates offering themselves for employment under the Government.
As already indicated, the old patwaris held part time jobs under the Government.
The new cadre of Lekhpals is intended to re organise a similar service on a more satisfactory basis both from the point of view of the Government and of the employees themselves.
Under the new scheme, the Lekhpals are intended to be whole time servants of the Government on a considerably higher scale of pay and with better prospects subject, of course, to the Government Ser vants Conduct Rules.
If the Government have decided to exclude all those who had proved themselves as part time servants of the Government to be lacking in a sense of discipline and of responsibility, it cannot be said that they had been denied equal opportunity of appointment and employment under the Government.
Government have not laid down rules excluding any particular group of persons from being candidates for appointment.
They bad only issued de partmental instructions not to employ those who bad not a satisfactory record of service in the past.
Selection for appointment in Government service has got to be on a competitive basis and those whose past service has been free from blemish can certainly be said to be better qualified for Government service than those whose record was not free from any blemish.
The matter thus stands on a basis similar to where the Government may make it a condition precedent to promotion to a higher rank in the same cadre of Government service that only those who had a very satisfactory record in the past would be considered for promotion.
It must therefore be held that the petitioners have failed to substantiate their contention that they had been denied equality of opportunity as contemplated by article 16 of the Constitution.
After moving this Court under article 32 of the Constitution, most of the petitioners and many others, in all 1,352 in number, also made an application for special leave to appeal (being Special Leave Petition No. 426 of 1955) from the judgment and orders of the High Court of Judicature at Allahabad dated the 363 24th August 1954 passed in Civil Miscellaneous Writ No. 45 of 1954, after their application for leave to appeal to this Court had been dismissed by that Court 's order dated the 5th August 1955.
This petition was not filed within the time limited by the rules of this Court and on their own showing there was a delay of 44 days in filing the petition for special leave.
The only ground urged in support of the application for condonation of delay (being Civil Miscellaneous Petition No. 1402 of 1955) is that they bad to collect money from amongst a large number of petitioners who were interested in the case.
In our opinion, that is not a sufficient ground for condoning the delay.
In the result, both the petition under article 32 of the Constitution and the petition for special leave to appeal are dismissed.
There will be no order as to costs.
| The petitioners Ex patwaris under the State of Uttar Pradesh brought the present petition under Article 32 of the Constitution in the Supreme Court alleging that the provisions of articles 14 and 16 of the Constitution had been violated because they bad been denied equality before the law and equal opportunity for employment under the State.
Patwaris numbering about 28,000 in the whole State of Uttar Pradesh had organized themselves into "The U.P. Patwaris Associations" with a view to improving their prospects and emoluments.
The association passed resolutions demanding increase in pay and allowances etc.
The Government was considering these matters when a large number of patwaris went on a "pen down strike" with the result that the Government withdrew the recognition of the Association.
The Government further published the new "Land Records Manual" embodying new amended rules regarding recruitment, conditions of service and duties of patwaris.
The Association protested against the revised Land Records Manual and passed a resolution that all patwaris should submit their resignations on the 2nd February, 1953 requesting that they should be relieved of their duties by the 4th March, 1953 after which date they will consider themselves as free from all obligations to work under the Government.
About 26,000 patwaris actually resigned with a view to paralyse the whole revenue administration in the State and to coerce 47 358 the Government into accepting their demands.
The Government however, accepted their resignations and relieved them of their duties before the 4th March, 1953.
On the very next date, the 5th March, 1953, the Government announced the creation of a new service of "Lekhpals" and proceeded to organize that service by recruiting the new personnel which included most of the old patwaris.
It also included all those patwaris whose record of service was free from blemishes and who had withdrawn their resignations.
Some of the petitioners were absorbed in the new cadre of Lekbpals.
The Government was thus giving a locus poenitentiae to those of the ex patwaris who had joined the agitation.
The question for consideration before the Supreme Court was whether the petitioners who came within the category excluded from re appointment had been denied equal opportunity of appointment as Lekhpals and thus article 16 of the Constitution had been infringed.
Held, that the contention of the petitioners that they bad been prevented from re entering Government service upon the re organisation of the cadre under the new name and had been denied equality of opportunity as contemplated by article 16 of the Constitution was without substance as the Government were within their rights to lay down certain qualifications for the new recruits.
They were entitled to exclude those persons who had betrayed a lack of proper sense of discipline.
Article 16 of the Constitution is an instance of the application of the general rule of equality laid down in article 14 with special reference to the opportunity for appointment and employment under the Government.
Like all other employers, Government are also entitled to pick and choose from amongst a large number of candidates offering themselves for employment under the Government.
|
Summarize this legal judgement text concisely | : Civil Appeals Nos. 191 & 192 of 1953.
Appeal from the judgment and decree dated the 27th October 1949 of the Patna High Court in Appeals from the Original Decrees Nos. 127 & 125 of 1943 arising out of the decrees dated the 30th day of April 1943 of the Court of Additional Subordinate Judge, Hazaribagh in Suits Nos. 28 & 82 of 1940 respectively.
M.C. Setalvad, Attorney General for India, N. C. Chatterjee, section Chaudhry, section N. Mukherji and B. N. Ghosh, for the appellant.
Atul Chandra Gupta and Ganpat Rai, for respondents Nos. 1 & 12.
Atul Chandra Gupta and I. N. Shroff, for respondents Nos. 2, 4, 5, 6 & 13.
Lal Narain Sinha, Bajrang Sahai and R. C. Prasad, for respondent No. 9.
Sanjib Chaudhry and R. R. Biswas, for respondent No. 10.
Sanjib Chaudhry and Ganpat Rai, for respondent No. 1 1.
Ganpat Rai, for respondents Nos.
3,7 & 8.
April 10.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
These appeals raise questions as to the validity of a prospecting license granted on 26 3 1915 in favour of Messrs Bird and Co., by the Court of Wards as representing the Ram 328 garh Estate and of two deeds dated 23 11 1917 and 1 6 1937 executed by the Court of Wards modifying the terms of the license dated 26 3 1915.
The Ramgarh Raj is an ancient principality situate in Bihar.
It has three coal fields, Bokaro Jharia, Bokaro Ramgarh and Karanpura.
Of these, the Karanpura coal fields are the largest being of the extent of 550 sq.
miles, of which about 415 sq.
miles belonged to the estate.
On 26 11 1907 Raja Ram narain Singh, the proprietor of the estate, granted in favour of Messrs Anderson Wright & Co., a prospecting license in respect of the Bokaro Ramgarh coal fields, referred to in these proceeding as the Bokaro license.
He was also negotiating for a similar license in respect of the Karanpura coal fields (vide Exhibit 155 b dated 1 12 1912), but before anything was concluded, he died on 26 1 1913 leaving him surviving his widow, Rikinath Kaur, and a minor son, Lakshminarain Singh.
At the time of his death, the debts owing by the estate amounted to about Rs. 9 lakhs.
On 20 5 1913 the Court of Wards took over the management of the estate, and its first concern was to relieve it from the pressure of creditors, and for that purpose, to arrange for a loan on easy terms.
It was at this juncture that Messrs Bird and Co., made an application for a prospecting license for the Karanpura coal fields, and in reply thereto, the manager of the Court of Wards informed them on 4 9 1913 that "the estate being involved and anxious to pay off the debts, one of the conditions of the lease would be an advance of about Rs. 8 to Rs. 11 lakhs including salami, etc., to the estate on the same terms as advanced by the Bokaro and Ramgarh Company".
Then, there were negotiations extending over several months, a good deal of correspondence and personal discussions, and eventually on 29 7 1914 the terms were finally agreed upon, and on 26 3 1915 the deed of prospecting license was actually executed.
Its main terms were as follows: It was to be in force for a period of six years.
A sum of Rs. 1,00,000 was paid as salami.
The licensees were to pay a minimum 329 ground rent of Rs. 8,000 per annum commencing from the second year of the license, and if the leases were actually taken by the licensees, this amount was to be adjusted towards royalties payable thereunder.
The terms of the leases which were to be granted in pursuance of the license were firstly, the lessees were to pay a salami at Rs. 40 per bigha, the payment to commence either when railway facilities were 'available for transport of coal from the mouth of the pit or after a lapse of six years after the period of the license, that is to say, after 26 3 1927, whichever was earlier; secondly, royalty was to be paid on coal, dust and coke at rates specified therein, subject to a minimum of Rs. 5 per bigha payable after the first year of the lease; and thirdly, the lessees were to pay the cesses payable under the law by the occupier or tenant of the land.
As consideration for the grant of the license, Messrs Bird and Co., were to advance Rs. 9 lakhs as loan to the estate.
This amount was not to carry interest and was to be discharged by adjusting the royalties which would become payable under the leases.
If no leases were taken and the license was abandoned, then the amount of the loan was to carry interest at 4 1/2 per cent per annum from that date and it had to be repaid in half yearly instalments such that the entire debt would be discharged within a period of six years.
A mortgage bond was executed on the same date as the prospecting license embodying these terms.
The next phase of the transaction begins on 3 8 1915 with Messrs Bird and Co., applying to the Court of Wards for extension of the period of the license on the ground that as the result of war conditions, new and unexpected difficulties bad cropped up and that to achieve the purpose of the license, is was necessary to extend the period of six years fixed therefor.
This proposal was subjected to close scrutiny, and there was prolonged correspondence between Messrs Bird and Co., and the Court of Wards on the expedi ency of extending the period of license and on the terms on which such extension should be granted.
Ultimately, on 23 11 1917 the manager of the Court 330 of Wards executed a deed modifying the terms of the deed dated 26 3 1915.
Under this deed, the period of license was extended in the first instance from 6 to 12 years; that is to say, it would expire on 26 3 1927 instead of on 26 3 1921 as originally fixed.
It was then provided that if within this extended period the licensee took a lease or leases of mines of the extent of at least 10,000 bighas, then the period of the license would be extended by a second term of 12 years; i.e., up to 26 3 1939.
There was a further pro vision that if before 26 3 1939 the licensees took leases of at least 20,000 bighas, the period of the license would be extended by another term of 12 years, i.e., up to 26 3 1951.
While under the prospecting license dated 26 3 1915 a minimum ground rent of Rs. 8,000 was payable from the second year, under the deed dated 23 11 1917 a minimum ground rent of Rs. 50,000 per annum at Rs. 5 per bigha on the covenanted number of 10,000 bighas was payable from the seventh to the twelfth year.
These are the salient features of the license as revised by the document dated 23 11 1917.
Raja Lakshminarain Singh, the ward, became a major on 6 4 1919, and died shortly thereafter on 10 4 1919 leaving him surviving a minor son, Raja Kamakshya Narain Singh, the main respondent in these appeals.
The Court of Wards accordingly continued in management of the estate on behalf of the Raja until 10 8 1937, when he became a major.
On 14 7 1920, the appellant Company was registered under the provisions of the Indian Companies Act, and it took over the interests of Messrs Bird & Co., under the license dated 26 3 1915 as modified by the deed of variation dated 23 11 1917.
In pursuance of these deeds, the Company took six leases covering in all an area of 17,539 bighas on divers dates between 17 7 1922 and 17 7 1933.
Under the terms of the deed dated 23 11 1917 the appellant would be entitled to extension of the licence from 26 3 1939 for the third period of 12 years only if it had taken lease of at least 20,000 bighas before 26 3 1939.
Accordingly, it applied for and obtained three leases 331 on 2 8 1937 covering an area of 2,461 bighas, thus making up along with the six leases mentioned above, the minimum area of 20,000 bighas.
There is one more deed to which reference must now be made.
Clause 6 of the deed dated 23 11 1917 provides that the minimum royalty on areas in excess of 10,000 bighas taken on lease would not be payable till 26 3 1939.
Thereafter, the appellant would under this clause become liable to pay a minimum royalty for an area in excess of 10,000 bighas.
The appellant applied to modify this term by postponing the date of payment by a further period of 12 years.
This proposal was accepted by the Court of Wards, and on 1 6 1937 a deed was executed providing in modification of clause 6, as it stood in the deed dated 23 11 1917, that the minimum royalty for the areas in excess of 10,000 bighas was not to become payable by the company until railway facilities for transport of the coal from the mouth of the pit were available or from 26 3 1951, whichever happened earlier.
These are the three transactions, which form the subject matter of this litigation.
On 10 8 1937 the Raja became, as already stated, a major, and assumed management of the estate.
On 9 3 1939 he sent a notice to the appellant repudiating the license dated 26 3 1915 and the two deeds of variation dated 23 11 1917 and 1 6 1937 as not binding on him.
The appellant in turn sent a notice on 14 5 1940 calling upon the Raja to execute a lease in respect of 250 bighas in accordance with the deeds dated 26 3 1915, 23 11 1917 and 1 6 1937, and followed it up by instituting on 8 6 1940 Title Suit No. 28 of 1940 in the court of the Subordinate Judge of Hazaribagh for compelling specific performance thereof.
On 9 8 1940 the Raja filed Title Suit No. 82 of 1940 in the Sub Court, Hazaribagh, and therein, he pleaded that the deed dated 26 3 1915 was void, because the Court of Wards had no power to grant a prospecting license and also because it had acted with gross negligence in granting the same; and that the deeds dated 23 11 1917 and 1 6 1937 were bad, because there was no sanction therefor as required by section 18 of the 332 Bengal Court of Wards Act IX of 1879, hereinafter referred to as the Act, and also because they were not for the benefit of the estate.
He accordingly prayed for a declaration that the three deeds aforesaid were void, and for possession of the properties comprised in the leases, with mesne profits, past and future.
Both these suits, which were really cross actions involving the determination of the same points, were heard together by the Subordinate Judge of Hazaribagh, and by his judgment dated 30 4 1943 he held that the deeds dated 26 3 1915 and 23 11 1917 were intra vires the powers of the Court of Wards, that they were beneficial to the estate, and were therefore valid, and he accordingly upheld the six leases granted pursuant to those deeds.
He, however, held that the deed dated 1 6 1937 was not valid, both because the Court of Wards had not sanctioned it and also because it was not for the benefit of the estate.
In view of this finding, he held that the clause in the lease deeds dated 2 8 1937 based on the deed dated 1 6 1937 postponing the payment of minimum royalty was bad, but that the leases themselves were other wise valid.
As a result of these, findings, be granted a decree for specific ' performance in Title Suit No. 28 of 1940 and in Title Suit No. 82 of 1940 he awarded reliefs consequential on the invalidity of the deed dated 1 6 1937.
Against this judgment, the Raja preferred appeals to the High Court of Patna, F. A. No. 125 of 1943 against the decree in Title Suit No. 82 of 1940 and F.A. No. 127 of 1943 against that in Title Suit No. 28 of 1940.
The company also filed cross objections in F.A. No. 125 of 1943.
The learned Judges agreed with the Subordinate Judge that the Court of Wards was competent to grant a prospecting license, but they were of opinion that it had not applied its mind to certain important aspects of the transaction, that the interests of the ward bad suffered in consequence, and that the deed dated 26 3 1915 was therefore not valid.
Dealing next with the deed dated 23 11 1917, they held that it was void, because the Court of Wards had not sanctioned it.
They also held that it 333 was not binding on the Raja, firstly because its terms were not beneficial to him, secondly because it had been obtained by Messrs Bird and Co., on false representation, and thirdly because Mr. MacGregor, the then manager of the Court of Wards, was acting in his own interests and adversely to those of the minor ward, and the Court of Wards had been misled by him into entering into the transaction.
For these reasons, the learned Judges held that the deed dated 23 11 1937 was void and inoperative as against the ward.
Then, as regards the deed dated 1 6 1937, the learned Judges agreed with the Subordinate Judge that it was invalid on both the grounds given by him.
In the result, in Title Suit No. 82 of 1940 a declaration was made that the deeds dated 26 3 1915, 26 11 1917 and 1 6 1937 as well as the leases granted pursuant thereto were void and a decree passed in favour of the Raja for possession of the demised properties with mesne profits, past and future.
Title Suit No. 28 of 1940 instituted by the appellant for specific performance and the cross objections filed by it in F.A. No. 125 of 1943 were dismissed.
Against this judgment, the present appeals have been preferred by the company, C.A. No. 191 of 1953 being directed against the decree in F.A. No. 127 of 1943 and C.A. No. 192 of 1953 against the decree in F.A. No. 125 of 1943.
The first respondent in these appeals is the Raja of Ramgarh, the other respondents being transferees from him, and he will be referred to in this judgment as the respondent.
Though the questions that were agitated by the parties in the courts below ranged over a wide area, many of them have been abandoned in the argument before us, and the scope of the controversy in these appeals has been considerably narrowed down.
Thus, the appellant does not challenge the correctness of the decision of the courts below that the deed dated 1 6 1937 is not binding on the estate.
Mr. Atul Chandra Gupta, learned counsel for the Raja, has limited his attack on the deed dated 26 3 1915 to the ground that it was not for the benefit of the ward, because the clause therein relating to the payment of 334 cess, or more compendiously, the cess clause was less advantageous to him than the corresponding clause in the Bokaro license, and the Court of Wards executed the deed in question without bestowing any thought to it.
He attacked the deed dated 23 11 1917 on the following grounds: (1) The Court of Wards had no power to enter into a transaction, which had the effect of preventing the ward from dealing with his estate for over a period of 32 years after he attained majority, and which bound him to grant leases down to the year 1951 at the rates of salami and royalties fixed in the year 1915.
(2) In granting the deed dated 23 11 1917, the Court of Wards considered only the benefit of Messrs Bird and Co., and not of the ward.
(3) The deed is void, because no sanction had been given to it by the Court of Wards, as required by section 18 of the Act.
Before dealing with these contentions on their merits, it is necessary to consider the question which was discussed at the Bar as to the grounds on which the deeds dated 26 3 1915 and 23 11 1917 are open to attack in these proceedings.
A transaction entered into by a guardian on behalf of a minor will be valid and binding on the latter, only if it is for proved necessity or benefit.
When a transaction is entered into by a Court of Wards on behalf of the ward, is its validity to be judged on the same considerations, and is it open to the ward on attaining majority to challenge it on the ground that it was not beneficial to him? The Court of Wards is not in the same position as a guardian of a minor.
It is a statutory body, and its powers are those which are conferred on it by the statute, which creates it.
Section 14 of the Act provides that the Court of Wards may, acting through its manager, do all such things requisite for the proper care and management of the property as the proprietor of such property might do, if not disqualified.
Section 18 enacts that: "The Court may sanction the giving of leases or farms of the whole or part of any property under its charge, and may direct the mortgage or sale of any part of such property, and may direct the doing of all 335 such other acts as it may judge to be most for the, benefit of the property and the advantage of the ward".
It was in exercise of the power conferred by this section that the Court of Wards executed the two impugned deeds dated 26 3 1915 and 23 11 1917.
Now,; what is the true scope of section 18? Is the exercise of the power conferred by that section conditioned on the act being in fact for the benefit of the ward, or is it sufficient that the Court of Wards judges it to be for the benefit of the property and the advantage of the ward? The contention of Mr. Gupta for the respondent is that the words "as it may judge" do not signify that the judgment could be made without reasonable grounds therefor, that they should be construed as meaning "as it may on reasonable grounds judge", and that it is therefore open to the Court to consider whether the decision of the Court of Wards was a reasonable one to come to, and that if it came to the conclusion that it was not, then to hold that it fell out side the ambit of the authority conferred by section 18.
In support of this contention, be relied on certain ob servations in Nakkuda Ali v .
M. F. De. section Jayaratne(1).
There, the Board was considering the meaning of the words "where the Controller has reasonable grounds to believe" occurring in a Regulation of Ceylon.
In an application for certiorari to quash an order of the Controller made under this enactment, it was argued for him that the words of the Regulation left the matter to his subjective satisfaction, that his decision therefore was not liable to the questioned on the ground that, in fact, there existed no reasonable ground therefor; and the decision in Liversidge vs
Sir John Anderson(2) was relied on as establishing that position.
In negativing this contention, Lord Radcliffe observed that the words "where the Controller had reasonable grounds to believe" might mean either "where it is made out to his subjective satisfaction" or "where there are reasonable grounds on which be could believe", and that whether the words were (1) , 76.
(2) ; 336 used in the one sense or the other in the enactment on question must depend upon the context.
The question then is ultimately one of construction of the words of the particular statute.
Now, what do the words "as it may judge" in section 18 mean? Do they confer on the Court of Wards a power to be exercised if the act is, in its judgment, for the benefit of the property or the advantage of the ward, or do they confer a power to be exercised only if, in fact, the act is for the benefit of the property or the advantage of the ward? In Liversidge vs Sir John Anderson(1), Lord Atkin who held that the words of Regulation 18 B of the Defence Regulations 1939 that "if the Secretary of State has reasonable cause to believe" meant "if, in fact, there was reasonable cause for the belief", discussed what words were susceptible of importing an objective standard as contrasted with subjective satisfaction, and observed: "It is surely incapable of dispute that the words "if A has X ' constitute a condition the essence of which is the existence of X and the having of it by A.
And the words do not mean and cannot mean 'if A thinks that he has '. 'If A has a broken ankle ' does not mean and cannot mean 'if A thinks that be has a broken ankle '. 'If A has a right of way ' does not mean and cannot mean 'if A thinks that he has a right of way '. 'Reasonable cause ' for an action or a belief is just as much a positive fact capable of deter mination by a third party as is a broken ankle or a legal right".
Examining the language of section 18 in the light of these observations, we are unable to construe the words "as it may judge most for the benefit of the property and the advantage of the ward" as equivalent to "as may be for the benefit of the property and the advantage of the ward" or "as might be judged to be most for the benefit of the property and the advantage of the ward".
The statute confides in clear and unambiguous terms the authority to judge whether the act is beneficial to the estate, to the Court of Wards and not to any outside authority.
(1)[1942] A.C. 206.
337 That being the true scope of the power conferred by section 18, what are the grounds on which the exercise of such a power could be impugned in a court of law? It can be attacked on the ground that the Court of Wards did not act bona fide and in the interests of the ward, and that its action amounted to a fraud on the power.
It can also be attacked on the ground that the Court of Wards did not, in fact, apply its mind to the question whether the act was for the benefit of the property or the advantage of the ward, and that though it purported to exercise the power under section 18, it did not, in fact, come to a judgment as required by the section.
But where it has applied its mind and given thought to the question whether the act is for the benefit of the property or the advantage of the ward and comes to an honest judgment in the matter, its decision is not liable to be questioned on the ground that it was erroneous on the merits, or that it was reached without con sidering some aspects which ought to have been considered, unless the failure to consider them is of such a character as to amount to there being no exercise of judgment at all.
The question as to the limits within which courts could interfere with the exercise of a power of the nature now in question was considered at some length in Allcroft vs Lord Bishop of London: Lighton vs Lord Bishop of London(1).
There, the statute provided for certain action being taken "unless the Bishop shall be of opinion that proceedings shall not be taken".
Acting under this section the Bishop of London decided not to take proceedings, and the correctness of this decision was challenged in an application for mandamus.
It was held by the House of Lords that the Bishop having acted within his jurisdiction and exercised his judgment honestly, his decision was not liable to be questioned on the ground that it was erroneous or that be had not considered all the aspects of the matter.
The following observations of Lord Bramwell may be quoted: "Then it was said that there was something he (1) 338 had considered which he ought not to have considered, and something he had not considered which he ought to have, and so he had not considered the whole circumstances and them only.
It seems to me that this is equivalent to saying that his opinion can be reviewed.
I am clearly of opinion it cannot be.
If a man is to form an opinion, and his opinion is to govern, he must form it himself on such reasons and grounds as seem good to him".
And Lord Herschell observed: "It is impossible to read the bishop 's statement without seeing that he has honestly considered what appeared to him to be all the circumstances bearing on the question whether the proceedings should be allowed to go on.
That being so, it is not for your Lordships, on this application for a mandamus; to consider whether the bishop 's reasons are good or bad; whether they ought or ought not to have led him to form the opinion he did".
Bearing these principles in mind, the question to be considered is whether the Raja has, the burden thereof being on him, established any grounds on which the deeds entered into by the Court of Wards on 26 3 1915 and 23 11 1917 could be held to be outside the power conferred on it under section 18.
That leads us to a consideration of the four contentions on which Mr. Atul Chandra Gupta attacked the two deeds aforesaid as not binding on the estate.
The first is directed against the deed dated 26 3 1915, the point of the attack being that the clause relating to the payment of cess in that deed is less advantageous to the ward than the corresponding clause in the Bokaro license dated 26 11 1907.
To appreciate this contention, it must be stated that when Messrs Bird and Co., applied to the Court of Wards for a prospecting license, negotiations were carried on the under standing that the Bokaro license granted by Raja Ramnarain Singh was to be the basis for the contract, subject to any variation on which the parties might agree, Pursuant to this understanding, there was a discussion of the terms of the license between the representatives of Messrs Bird and Co., and the 339 officers of the Court of Wards on the 1st and 2nd April 1914.
Exhibit 130(1) is a record of those discussions in the handwriting of the Deputy Commissioner, Mr. Lister.
On 11 4 1914 Messrs Bird and Co. were informed that the Board had generally approved of the proposal, and there was a further communication to them on the 17th April 1914 that "formal sanction cannot be given until the terms are embodied in a formal document.
" On 12 5 1914 Messrs Bird and Co. sent a draft agreement for the approval of the Court of Wards, and on that, there was further correspondence and personal discussion, and ultimately, the Board gave its final sanction on 29 7 1914, and the deed which was executed by the manager on 26 3 1915 is in accordance with the draft as approved.
This deed, however, differs from the Bokaro license in one respect.
Schedule A to that license contains a draft of the mining lease to be granted in pursuance thereto, and one of the covenants contained therein is that the lessee "will also pay all Government and other cesses, taxes and other imposition which now are or may at any time hereafter during the continuance of this lease be assessed or imposed on the said lands.
" In the deed dated 26 3 1915 the corresponding clause runs as follows: "The lessee covenants to bear, pay and discharge all existing and future Government and other rates, cesses, taxes, assessments, duties, impositions, out goings and burdens whatsoever imposed or charged upon the demised premises. . which may be payable by the occupier or lessees thereof." Thus, while under the Bokaro license the lessee had to pay all the cesses imposed on the land, under the deed dated 26 3 1915 the lessees had to pay only the cesses payable by the occupier or lessee of the property.
Now, the contention of the respondent is that as it was the intention of both parties that Messrs Bird and Co. should have a license on the same terms as were contained in the Bokaro license unless otherwise agreed, and as Exhibit 130(1) shows that there was no special agreement with reference to this matter, 340 the Court of Wards must be held not to have applied its mind to the cess clause when it agreed to its inclusion in its present form in the deed of 1915, and that as it related to a matter of substance going to the root of the transaction, the deed was in its entirety void.
The basic notion on which this contention rests is that the cess clause in the deed dated 26 3 1915 is, as compared with that in the Bokaro license, distinctly disadvantageous to the ward.
But this, however, is controverted by the appellant, which contends that the difference between the two deeds with reference to the cess clause is one of form rather than of substance.
To appreciate this contention, it is necessary to refer to the provisions of the Bengal Cess Act IX of 1880.
Under sections 80 and 81 of that Act, where there is a lease of a mine, the cess payable thereon is to be borne equally by the owner and the lessee.
The Government, however, is entitled to realise the whole of it from either of them, in which case the person who pays the cess has a right to recover from the other his share of it.
The cess clause of the 1915 license is in accordance with the rights of the parties as declared in section 81 of the Act.
The contention of Mr. Gupta is that it was open to the parties to contract themselves out of their rights under section 8 1, and he relied on the decisions in Ashutosh Dhar vs Amir Mollah(1) and Mahanand Sahai vs Mussmat Sayedunissa Bibi(2) in support of this position.
There, the question related to section 41 of the Act; but it is argued that the principle underlying those decisions is equally applicable to section 81 and that, in our opinion, is correct.
The next step in the argument is that the cess clause in the Bokaro license embodies a contract modifying the rights declared by section 81 of the Act by throwing the liability for the cess wholly on the tenant; but that the clause in the 1915 deed restricts it to the obligation as declared in section 81 and has therein resulted in serious disadvantage to the proprietor.
For the appellant, it is contended that the clause in the Bokaro license could (1) (2) 341 not be construed as modifying the rights declared under section 81, because it merely provides for payment by the lessee of the entire cess, which must mean that they had to pay it in the first instance and then reimburse themselves from the proprietor, and that was how the clause was understood by the Court of Wards when it was in management.
If that was the true scope of the cess clause in the Bokaro license, it cannot be said that the cess clause in the deed of 26 3 1915 differs in substance from it.
On the question as to the interpretation to be put on the cess clause in the Bokaro license, the principle applicable thereto was thus stated in Mahanand Sahai vs Mussmat Sayedunissa Bibi (1): "It is indisputable that when an exemption is claimed from statutory liability, the contract under which exemption is claimed, must be strictly construed against the claimant and it must appear from its terms, beyond the possibility of any dispute, that the parties intended to vary the liability as imposed by the statute.
This rule is especially applicable where exemption is claimed from taxation imposed by the State".
It was accordingly held that no contract to the contrary could be spelt from the clause providing generally for payment of cess, and this view has been adopted in Balwantrao Naik vs Biswanath Missir(2) and Ramkumari Devi vs Hari Das(3).
The contention of the appellant, therefore, that the cess clause in the Bokaro license cannot be construed as a clear expression of an intention on the part of the parties to contract themselves out of the statute is not without force.
It is, however, unnecessary to decide this question, as assuming that the cess clause in the deed dated 26 3 1915 is less advantageous to the ward than that in the Bokaro license, the respondent has, before he can succeed on this contention, still to establish that the Court of Wards did not apply its mind to this matter.
And what is the evidence which he has adduced to establish it? In the pleadings, he raised (1) (2) A.I.R. 1945 Patna 417.
(3) A.I.R. 1952 Patna 239.
45 842 no such question.
At a late stage, however, he applied to amend the plaint so as to raise the contention that the deed dated 26 3 1915 was not in accordance with the Bokaro license, but that application was dismissed by the Subordinate Judge on 24 12 1942.
It was contended for the appellant that the question now sought to be argued should not be allowed to be raised at this stage as it is purely one of fact, especially in view of the order dated 24 12 1942 refusing amendment of the plaint.
But it is unnecessary to say more on this objection, as we are satisfied on the evidence on record that the Court of Wards did apply its mind to the cess clause and did adopt it after giving thought to it.
The clause in its present form appears in the draft prepared by Messrs Bird and Co. and sent to the Court of Wards for approval on 12 5 1914.
Among the officers of the Court of Wards who examined the draft was Mr. Lister, the Deputy Commissioner, who took the lead ing part in settling the terms of this transaction, and there is an alteration, though formal, in his hand in this very clause.
It is also in evidence that the draft was sent for scrutiny to Sri Sarada Charan Mitra, a retired Judge of the Calcutta High Court, who was also the legal adviser of the Ramgarh Estate, and there is an endorsement of approval in his band.
And finally, the Board gave sanction on 27 7 1914 not only to the agreement but to the very draft which was sent by Messrs Bird and Co., with the cess clause, as it appears in the deed of 1915.
It is idle in the face of all this to argue that the Court of Wards gave no thought to it.
It should be observed that the stand which the respondent took with reference to the cess clause in the courts below was different from that taken in this Court.
There, his contention was that the Court of Wards had acted with gross negligence in agreeing to a term so manifestly disadvantageous to the estate.
In other words, the argument was not that the Court of Wards failed to apply its mind to the cess clause but that it failed to realise the full implications thereof, and that the minor had consequently suffered.
That 343 would have been a good ground of attack, if the Court of Wards was in the position of a guardian of the properties of the minor, but, as already stated, that is not its true character.
It is a statutory body with powers granted to it by section 18, and its action thereunder cannot be attacked on the ground that it bad erred or was mistaken in its conclusion.
As we have held that the Court of Wards did apply its mind to the question and formed its own judgment on it, its decision is not open to question, and the attack on the deed dated 26 3 1915 must in consequence fail.
Coming next to the deed dated 23 11 1917, it was attacked on three grounds.
It was firstly contended that it was, on the very face of it, beyond the competence of the Court of Wards, and was therefore void.
In support of this contention, Mr. Gupta argued that at the time of the transaction the ward had only about a year and four months to become a major, that by extending the period of the license from 6 to 36 years the agreement in question opera ted to tie his hands and to prevent him from dealing with his estate for a period of 32 years after he became a major, that the coal mines of Karanpura were known to be very valuable and the transaction had the effect of binding the proprietor to grant leases down to 1951 and on the rates of salami and royalty fixed in 1907 in the Bokaro license and adopted in the deed of 1915 and that such a transaction was not within section 18.
It was urged that section afforded protection to a transaction entered into by the Court of Wards only if it was of such a character that it was possible on the facts to take the view that it was for the benefit of the property or the advantage of the ward, but where such a possibility is ruled out as when the transaction was manifestly not for the benefit of the estate, as for example, a gift of the properties of the minor, then the section would have no application.
The agreement dated 23 11 1917 was, it was contended, in substance a gift to Messrs Bird and Co., of a license for a period of 30 years, and that therefore section 18 could not be invoked in support of it.
344 tion was beyond the competence of the Court of Wards for any of the above reasons.
It has to be remembered that the action now in question is that of a statutory body, and that its powers and limitations with reference thereto must be found within the four corners of the Act.
Section 18 which confers authority on the Court of Wards to enter into the transaction is general and unqualified in its terms.
There is no provision in the statute such as there is in section 29(b) of the (VIII of 1890) that a lease by the Court of Wards was to enure for a period related to the minority of the ward.
Such a limitation cannot be read into section 18 for the obvious reason that the wards whose estates are to be administered under the Act, may, under section 6 of the Act, be females including majors declared incompetent to manage the properties or lunatics or persons who themselves apply that their estates might be taken over by the Court of Wards.
Nor is there any substance in the contention that as the ward would shortly be attaining majority, no transaction should be entered into so as to tie his bands or prevent him from dealing with his estate after be becomes sui juris.
The Court of Wards has not only the power but is under a duty to manage the estate, so long as it continues to be in its charge in the same manner as a prudent owner will manage his own estate, and the fact that the ward would be coming of age cannot operate to divest it of its powers and duties under the Act, though it might enter as an element in judging under section 18 whether the transaction should be entered into.
We are also unable to see any force in the contention that the transaction of 1917 was incompetent because it bad the effect of binding the ward to grant leases up to 1951 at the rates of salami and royalty fixed in the deed dated 26 3 1915.
It is not in dispute that mining leases have to be and usually are for long terms, and the respondent concedes that the terms of the 1915 license providing for the grant of a lease for 999 years on the rates of salami and royalty fixed therein 345 are not themselves open to attack.
That being so, it is difficult to see how it would make any substantial difference when the lease for 999 years runs from 1951 and not from 1921 as provided in the deed of 1915.
It was argued for the respondent with reference to certain sub leases granted by the appellant in 1922 and thereafter that the rates of salami and royalty fixed therein were much higher than those settled under the 1915 deed, and that the extension of the license period under the 1915 deed must have consequently resulted in prejudice to the ward.
But then, those leases were mostly of open mines, and stand on a different footing from prospecting licenses, and even where there was a prospecting license, there was no payment of prospecting salami or advance of a loan without interest as under the deed dated 26 3 1915, and it appears that there was some prospecting by the appellant itself with reference to the areas covered by the license.
There is accordingly no evidence on which it could be held that the terms settled in 1915 were disadvantageous to the estate.
It must be observed in this connection that no contention was raised by the respondent in his pleadings that the transaction was bad for the reason that the rates of salami and royalty fixed therein were less than the current market rates.
No issue was framed on that question, and no evidence was directed towards it, and there is nothing about it in the judgment of the trial court.
The respondent did not take this point even in his grounds of appeal in the court below, and he raised it only in the course of his argument there.
The appellant objects to this point being raised at this stage, as it is essentially one of fact on which evidence would have to be adduced and it had no opportunity to do so.
This objection must, in our opinion, prevail.
(Vide Connecticut Fire Insurance Co. vs Kavanagh(1) and M. E. Moolla Sons Ltd. vs Burjorjee(2)).
The contention that the extension of the period of license was in the nature of a gift of a period of 30 (1) (2) [1932] L.R. 59 I.A. 161. 346 years, and was therefore outside the power of the Court of Wards is clearly untenable.
Under the deed dated 23 11 1917, Messrs Bird and Co. were, in consideration of the extension of the period granted under the deed dated 26 3 1915, laid under certain obligations.
They had to pay a minimum ground rent of Rs. 50,000 per annum from the seventh to the twelfth year, and successive extensions of the period were made to depend on their having taken leases of a minimum area of 10,000 bighas in each period, which of course meant payment of royalties with a minimum fixed.
The deed dated 23 11 1917 created mutual rights and obligations and cannot be regarded as a deed of gift either in form or in substance.
In the result, the deed of 1917 cannot be held to be incompetent on any of the grounds put forward by the respondent.
It is next contended for the respondent that the deed dated 23 11 1917 was bad, because in granting an extension of the period fixed in the deed dated 26 3 1915 the Court of Wards considered only the benefit of Messrs Bird and Co., and not that of the ward, and that therefore its act was not within the protection of section 18.
The facts on which this contention is sought to be supported are these: When Messrs Bird and Co. applied on 3 8 1915 to the Court of Wards for extension of the period of the license, they gave as a reason therefor that the conditions created by war bad greatly upset their arrangements and calculations, that in consequence they were unable to raise or transport capital to India, that they had paid under the license salami of Rs. 1,00,000 and advanced a loan of Rs. 9 lakhs without interest, and that it was therefore just that the period of license should be extended so as to enable them to carry out their venture.
In his note dated 13 8 1915 Mr. Lister, the Deputy Commissioner, considered that this stand was "justifiable", and on 21 6 1916 he forwarded the proposal to the Commissioner observing that "extension.
of the period could 'not equitably be refused".
In sending this application on to the Board of Revenue on 26 6 1916, the Commissioner endorsed this opinion, 347 and also added that the extension would be in the interests of the public and of the State.
On these facts, it is argued that the Court of Wards had throughout been considering the proposal from the point of view of Messrs Bird and Co., and also from the point of view of the State, but that the interests of the minor ward did not as such figure directly and prominently in judging of the propriety of the transaction, and that however equitable it might be to show concessions to Messrs Bird and Co. in view of their previous services to the estate, that was not a ground on which the Court of Wards standing in the position of trustee to the ward could legally bind his estate, as it did by the deed dated 23 11 1917.
There would have been considerable force in this contention, if the facts had been as stated by the respondent; but they, however, were not so.
The correspondence makes it abundantly clear that the Court of Wards was considering at all stages and in all its aspects the benefit of the estate as to whether there should be at all an extension, and if so, for what period and on what terms.
In their application dated 3 8 1915, Messrs Bird and Co., apart from recounting their difficulties and the services they had done to the estate by advancing the loan, also stated that as the area covered by the license was very extensive consisting of about 415 sq.
miles, it would require a much larger period of time than that fixed in the 1915 document to survey the area and work the mines in full, that if the license was to expire in 1921, they would have to work the best and the most profitable mines, leaving the other areas to be exploited under fresh licenses, and the return to the estate from them must be poor by reason of the unprofitable and un economic character of the mines which had been left unopened, and that it was accordingly in the interests of the estate to have long term licenses on the same rates.
Referring to this aspect, the Deputy Commissioner stated in his note dated 13 6 1916 that the experience gained in the Katras and Jharia coal mines pointed to the wisdom of granting long term license, so that the mines could be worked in the best 348 interests of the proprietor and the lessee.
On 21 6 1916 when he forwarded the proposal to the Commissioner, he stated: "We are convinced that the interests of the estate and of the public are equally involved in the exploitation of this field on broad principles.
And we see no prospect of this being done except by a firm prepared to take long views and undertake the heavy preliminary burdens".
The Commissioner stated in his memorandum dated 26 6 1916 that he agreed "with the Deputy Commissioner and the manager that this is essential not only in the interests of the estate but also of the public".
In view of this evidence, it is impossible to contend that in entering into the transaction dated 23 11 1917, the Court of Wards had failed to consider the interests of the estate.
In their application dated 3 8 1915, Messrs Bird and Co. also stated that if the period of the license was not extended, it would be impossible for them or for others, in view of the war conditions, to work the mines and that the license would have to be abandoned by them.
In dealing with this aspect, the Commissioner observed in his note dated 26 6 1916 as follows: "If they were to give up the agreement, the estate would not obtain such advantageous terms from others, both on account of the present conditions arising from the war and which will continue for some time after the war, and also owing to the fact that the Geological examination of the northern portion of the Coalfied has proved disappointing and not up to previous expectation".
This again shows that the Court of Wards did apply its mind to the question whether the extension was for the advantage of the estate.
The value of a mine to an owner lies not in his abstract ownership thereof but in its being worked, so that coal and coke might be sold or royalties obtained.
The estate itself was not in a position to work the mines, and it bad to get it done by others.
If, therefore, there was a license in force for the prospecting and leasing of the mines, 349 it would certainly be to the advantage of the estate to extend the life of that license on such terms as might be for the benefit of the estate and the lessee, and it was this aspect that was considered by the Commissioner in his note.
It may be mentioned that there was some difference of opinion among the officers of the Court of Wards whether if the period of the license was to be extended from 6 to 12 years, the minimum royalty from the 7th to the 12th year should be fixed at Rs. 5 per bigha or Rs. 2 8 0 per bigha.
In that connection, Mr. MacGregor, the manager, wrote a note in which he emphasised that they were dealing with the estate of a minor, that their position was that of trustees, that considerations based on equitable grounds or public interest and the like would be out of place, and that the minimum royalty should be fixed at Rs. 5 per bigba.
Thus, the attention of the Board was pointedly drawn to the very aspects which the respondent contends ought to have been considered by it, and it decided on a consideration of all the materials to grant extension on the terms set out in the deed dated 23 11 1917.
We are unable to see any ground on which its propriety could be challenged.
It was also contended by Mr. Gupta that section 18 required that the act should be for the benefit of the property and the advantage of the ward, that these conditions were cumulative and should both of them be satisfied and that even if the license dated 23 11 1917 was for the benefit of the property, it was not for the advantage of the ward, and that therefore it was not valid under section 18.
The fallacy in this argument lies in thinking that the reference to property in section 18 is by way of antithesis to the ward.
For this, however, there is no justification.
If a transaction is for the benefit of the property, the person who would reap the advantages thereof must be the owner of the property.
It is difficult to conceive of a transaction which is for the benefit of the property but not to the advantage of its owner.
If the deed dated 23 11 1917 is for the benefit of the property by reason of the fact that it yields revenue in 46 350 the form of minimum ground rent, salami and royalty, it must equally be to the advantage of the ward who will be the person who will receive this revenue.
Assuming that both the parts of the clause in section 18 have to be read cumulatively and not disjunctively, even so, the deed dated 23 11 1917 satisfies the requirements of the section, and is consequently valid.
In the result, we must hold that the deed is not open to attack on the ground that in entering into the transaction, the Court of Wards did not consider the interests of the ward.
The last ground of attack on the deed of 1917 is that it was not sanctioned by the Board as required by section 18 of the Act, and was therefore void.
It will be remembered that the application of Messrs Bird and Co. for extension dated 3 8 1915 was the subject of considerable correspondence and discussions, and that on 26 6 1916 the Commissioner for warded the proposal as finally settled for sanction to the Board of Revenue.
On this, an order was passed by the Board on 3 7 1916 that it "accepts generally the recommendations of the Deputy Commissioner" and that "the draft deeds embodying the proposed terms should be submitted to it in order that they may be scrutinised by the Legal Remembrance".
In communicating this order to Messrs Bird and Co., the manager.
wrote to them on 12 7 1916 to send a draft of the agreement, and stated the terms on which it might be drafted.
Messrs Bird and Co., then prepared a draft and sent it on for approval to the manager.
It was then examined by the officers of the Court of Wards and by Sri Sarada Charan Mitra, and on 24 4 1917 the Commissioner sent it to the Board for sanction.
By his letter dated 13 7 1917 the Secretary to the Board wrote to the Commis sioner that "the agreement however is one of such importance that the Board agrees with the Additional Legal Remembrancer that it should be referred to the Solicitor to the Government of India before final acceptance and before it can be so referred, it is necessary to clear up the four points within the extract enclosed from a note recorded by the Additional 351 Legal Remembrancer", and the note with the four points was enclosed.
Pausing here, the question is whether the letter dated 3 7 1916 constitutes sanction as contemplated by section 18 of the Act.
It is recited in the deed dated 23 11 1917 that the agreement was sanctioned by the letter dated 3 7 1916.
Is that correct? It is argued for the appellant that section 18 does not prescribe any form in which sanction has to be given, and that further, the sanction to be given is to the transaction, not to the document embodying it and that the letter dated 3 7 1916 sanctioning generally the grant of extension is sufficient to satisfy the requirements of section 18, even though there may be details remaining to be worked out.
The decision in Gulabsingh vs Seth Gokuldas(1) was relied on in support of this position.
There, the Deputy Commissioner had sent to the Commissioner a proposal to borrow Rs. 1,00,000 from the plaintiff 's firm, and on 28th January 1891 the Commissioner was informed by the secretariat that the Chief Commissioner had accepted the proposals for the liquidation of the debt.
On the authority of this letter, the Court of Wards executed a mortgage on the 10th December 1891.
In rejecting the contention that there was no proper sanction for the mortgage as required by section 18 of Act XVII of 1885, the Privy Council observed: " It was not in their Lordships ' opinion necessary under section 18 of Act XVII of 1885 that the actual mortgage to be made by the Court of Wards should be submitted to the Chief Commissioner for his sanction, nor was it necessary that the Court of Wards should have his sanction to the precise terms of the mortgage.
The sanction which is to be inferred from the letter of January 28, 1891, empowered the Court of Wards to mortgage the property under section 18 of Act XVII of 1885".
In Ramkanai Singh Deb Darpashaha vs Mathewson (2) the Commissioner had sanctioned a patni lease, but the lease deed which was actually executed had not been submitted to his approval.
In holding (1) [1913] L.R. 40 I.A. 117.
(2) [1915] L.R. 42 I.A. 97.
352 that the sanction was sufficient, the Privy Council observed: ". . their Lordships are of opinion that when it is affirmatively established that a transaction itself in all its essential particulars has obtained the sanction of the Commissioner, and when it is requisite that the transaction be carried into effect by the preparation of the appropriate deeds, a challenge merely on the ground that the document ultimately prepared had not been submitted for sanction cannot be sustained".
The position in law, therefore, is that the requirements as to sanction must be held to be satisfied if the transaction in all its essential particulars bad been sanctioned, even though there are details to be worked out in furtherance of the sanction and there is no further sanction given to the deed as finally settled.
On these principles, there is much to be said in favour of the view contended for by the appellant that the communication dated 3 7 1916 is sufficient sanction for purposes of section 18.
But such a conclusion would be inconsistent with the letter of the Secretary of the Board dated 13 7 1917 aforesaid.
It was certainly open to the authorities to indicate the lines on which the document would have to be drafted and reserve the grant of sanction until they shall have had a full picture of the transaction, as might appear on the document.
The Board might have, if that was their intention, sanctioned the transaction unconditionally by its letter dated 3 7 1916, but it chose to make it conditional on the document being again approved by them.
Under the circumstances, the letter dated 3 7 1916 cannot be construed as a final sanction of the transaction, notwithstanding that it was so recited in the deed dated 23 11 1917.
To continue the narration, in accordance with the note of the Secretary dated 13 7 1917, the draft deed was again taken up by Messrs Bird and Co., alterations were made therein, and the revised draft was submitted to the authorities for examination.
They in their turn scrutinised the document, and sent it for the opinion of the Legal Department, and obtained 353 its suggestions.
And on 9 10 1917 the revised draft with the suggestions made in the Legal Department were returned by the Board to the authorities concerned "for information and such action as may be considered necessary".
It should be noted that the Board did not again require the document to be sent to them for scrutiny, as they did by their letter dated 3 7 1916.
In due course, the suggestions of the Legal Department which were four in number, were examined; three of them were formal in character, and were carried out.
As regards the fourth, which related to the question of payment of the minimum royalty of Rs. 8,000 during the first year, it was found that under the agreement to which the parties had come, it was not payable during the first year.
The deed having been amended suitably to the suggestions made by the Law Department, it was executed as amended on 23 11 1917.
The contention of the appellant is that the order of the Board dated 9 10 1917 is a sanction to the proposal in all its essential particulars, and that this is sufficient compliance with the requirements of section 18.
The respondent contends that even on the letter dated 9 10 1917 there were four matters reserved to be considered before the deed could be engrossed, that it was only after these matters were settled that there would be a completed agreement, and that as no sanction bad been given to it after it had finally shaped itself, the requirements of section 18 bad not been satisfied.
We are unable to uphold this contention.
It is not disputed that three of the four matters were merely formal ones, and that with reference to the fourth, the suggestion of the Legal Department proceeded on a misapprehension of what had really been agreed to by the parties.
Thus, all the essential terms of the agreement must be held to have been sanctioned by the Board by its letter dated 9 10 1917, and it is of no consequence, as laid down in Gulabsingh vs Seth Gokuldas(1) and Ramkanai Singh Deb Darpashaha vs Mathewson(2) that the document as finally drafted had not been submitted again for its appro (1) [1913] L.R. 40 I.A. 117.
(2) [1915] L.R. 42 I.A. 97.
354 val.
We should accordingly construe the letter dated 9 10 1917 as sufficient sanction under section 18.
The learned Judges of the High Court were of the opinion that Rule 242 framed under section 70 of the Act required that the sanction should be recited in the deed, and they referred to the deed dated 26 3 1915 where that had been done.
But Rule 242 applies only to leases, and is in terms inapplicable to the deed dated 23 11 1917 which is an agreement.
And both sides have argued the case on the footing that the deed in question is governed by the last clause of section 18.
We have no hesitation in holding that the Board directed by its letter dated 9 10 1917 the execution of the agreement dated 23 11 1917, and that it was validly executed under section 18.
The result, therefore, is that the deed dated 23 11 1917 is not open to attack on any of the grounds urged by the respondent, and must be upheld.
One other contention of the respondent remains to be considered, and that arises on the statement of the appellant that it does not contest the finding of the High Court that the deed dated 1 6 1937 is void.
It will be recalled that under the deeds dated 26 3 1915 and 23 11 1917 the licensees would be entitled to an extension of the period for 12 years from 26 3 1939 to 26 3 1951 provided that they had taken on lease a minimum area of 20,000 bighas, and that the appellant had, in fact, taken on lease only a total extent of 17,539 bighas under six leases during the years 1922 to 1933.
It was also provided in those deeds that for the areas taken in excess of 10,000 bighas, the minimum royalty would become payable after 26 3 1939.
The appellant applied to the Court of Wards sometime in 1934 for amendment of the deeds dated 26 3 1915 and 23 11 1917 so as to provide that the payment of minimum royalty was to commence from 26 3 1951, unless railway facilities were available earlier.
This was sanctioned by the Board, and the deed dated 1 6 1937 incorporates this amendment in the deeds dated 26 3 1915 and 23 11 1917.
As a condition of the grant of this concession, the Board required the appellant to take a lease of 2,461 bighas 355 to make up the covenanted extent of 20,000 bighas.
The appellant accordingly applied for three leases of the total extent of 2,461 bighas, and the Board gave sanction to the same on 15 7 1937, and on 2 8 1937, the lease deeds were actually executed.
One of them, that relating to Mauza Saunda, contained, in accordance with the terms of the deed dated 1 6 1937, the following covenant: "Provided always that no minimum royalty shall be payable until the expiration of 36 years from the said 26th day of March 1915 or until railway facilities shall be available as aforesaid, whichever event shall first happen".
There is some dispute as to whether the other two leases contained similar covenants, but that is immaterial for the present discussion, because if the lease of Mauza Saunda is bad on account of the aforesaid clause as contended by the respondent, then the total area taken on lease will be less than the minimum 20,000 bighas, and the appellant will have no right to the benefit of the third extension, and the suit for specific performance must fail.
Now, the contention of the respondent is that the leases dated 2 8 1937 are bad on two grounds.
He firstly argues that as the deed dated 1 6 1937 has been held to be bad, the clause in the lease providing for the postponement of payment of minimum royalty based thereon must also be held to be bad and that is conceded by the appellant and that as a deed cannot be held to be partly good and partly bad, the whole of it must be held to be void.
The fact that a clause in a deed is not binding on the ground that it is unauthorised cannot ipso facto render the whole deed void, unless it forms such an integral part of the transaction as to render it impossible to sever the good from the bad.
That is not the position here.
The effect of declaring the proviso void will leave the rest of the deed whole and intact.
The leases without the proviso are perfectly valid, and indeed, they will be more advantageous to the ward.
Secondly, it is contended that the sanction that was accorded by the Board was to the lease with the 356 covenant which has been held to be void, and that the deed without that covenant has not been sanctioned.
This contention again is clearly untenable.
Section 18 only requires that the transaction should be entered into with the sanction of the Board.
When that has been done, the force of the section is spent.
Whether the transaction turns out to be good or bad on the merits can have no effect on the sanction, which had been granted before it was entered into.
If the deed is bad on the merits, it will fail on that ground and not on the ground that by reason thereof, the sanction becomes ineffective.
And the result is the same whether the deed is bad in part or in toto.
The contention therefore that the lease deeds dated 2 8 1937 are inoperative must be rejected.
The result is that the deeds dated 26 3 1915 and 23 11 1917 are valid but not the deed dated 1 6 1937, and that the leases granted to the appellant are valid, but the clause postponing the payment of minimum royalty in the lease deed or deeds of 2 8 1937 is inoperative.
The appeals must accordingly be allowed, the decrees of the court below set aside, and these of the trial court restored.
In Civil Appeal No. 191 of 1953, the appellant will have its costs both here and in the courts below.
In Civil Appeal No. 192 of 1953, the parties will bear their own costs throughout.
It must be mentioned that during the pendency of these appeals, by virtue of notifications issued under sub section (1) of section 3 of the Bihar Land Reforms Act XXX of 1950, the Estate of Ramgarh became vested in the State of Bihar, which thereafter intervened in these appeals.
At the bearing, the State filed a memo in the following terms: 'State of Bihar recognises and accepts as valid the leases granted to the appellant Company whether granted by the Court of Wards or the Raja under the license of 26th March 1915 (as extended by the supplementary documents of 1917 and 1937).
Nothing in this compromise shall preclude the State of Bihar in future from modifying the terms and conditions of the leases in accordance with law empowering the State Government to do so".
357 The respondent raised the contention that the State had no locus standi to intervene in these proceedings and at the stage of appeal, but in the view which we have taken of the rights of the parties, a discussion of this point is purely of academic interest.
It is sufficient to direct that the above memorandum be filed and included as part of the record.
Appeals allowed.
| Section 18 of the Court of Wards Act, 1879, provides that the Court of Wards "may sanction the giving of leases or farms of the whole or part of any property under its charge, and may direct the mortgage or sale of any part of such property, and may direct the doing of all such other acts as it may judge to be most for the benefit of the property and the advantage of the ward".
In exercise of the power conferred by this section the Court of Wards sanctioned a deed of prospecting license in favour of B, the predecessor in interest of the appellant, and the same was executed on 26 3 1915.
Subsequently, on 23 11 1917 the manager of the Court of Wards executed a deed modifying the terms of the deed dated 26 3 1915, by virtue of which the period of license could be extended up to 26 3 1951 under certain conditions.
On 10 8 1937 the respondent having become major assumed management of the estate and thereafter repudiated the aforesaid deeds and contested their validity on the grounds, inter alia, (1) that the deed dated 26 3 1915 was not for the benefit of the ward as the clause therein relating to the payment of the cess was less advantageous to him than the corresponding clause in the prospecting license executed by the then proprietor of the estate on 26 11 1907 in respect of another property known as the Bokaro license, and that the Court of Wards executed the deed in question without bestowing any thought to it, (2) that the Court of Wards had no power to enter into the transaction dated 23 11 1917 as it had the effect of preventing the ward from dealing with his estate for over a period of 32 years after he attained majority, (3) that in granting the deed dated 23 11 1917 the Court of Wards considered only the benefit of the grantee and not that of the ward and (4) that the deed was void because no sanction had been given to it by the Court of Wards, as required by section 18 of the Court of Wards Act, 1879.
Held, (1) that the Court of Wards is not in the same position as a guardian of the properties of a minor.
It is a statutory body with powers defined by the Court of Wards Act, 1879.
Under section 18 326 of the Act the Court of Wards is given the power to judge for itself whether a transaction entered into by it on behalf of the ward is for the benefit of the property and the advantage of the ward and its act cannot be impugned in a court of law by the ward on attaining majority unless he shows that it did not act bona fide and in the interests of the ward and that its action amounted to a fraud on the power, or that it did not, in fact, apply its mind to the question whether the act was for the benefit of the property or the advantage of theward, and that though it purported to exercise the power unders.
18, it did not, in fact, come to a. judgment as required bythe section.
Its decision cannot be questioned on the ground that it was erroneous on the merits, or that it was reached without considering some aspects which ought to have been considered, unless the failure to consider them was of such a character as to amount to there being no exercise of judgment at all; Allcroft vs Lord Bishop of London: Lighton vs Lord Bishop of London, ([1891] A.C. 666), relied on.
(2)that assuming that the cess clause in the deed dated 26 3 1915 was less advantageous to the ward than that in the Bokaro license, as the Court of Wards had applied its mind to the question and formed its own judgment on it, its decision is not open to question; (3)that the Court of Wards was competent to enter into the transaction dated 23 11 1917 and extend the period of license so as to enure for a period beyond the date of the ward coming of age, as section 18 of the Act which confers authority on the Court of Wards is general and unqualified in terms and there is no provision in the Act such as there is in section 29(b) of the , that a lease by the Court of Wards was to enure for a period related to the minority of the ward; (4)that assuming that the words in section 18 that the act should be "for the benefit of the property and the advantage of the ward" should be read cumulatively and not disjunctively, the deed dated 23 11 1917 satisfies the requirements of the section inasmuch as the benefits which the transaction conferred on the estate in the form of minimum ground rent, salami and royalty must also enure to the advantage of the ward who will be the person who will receive this revenue; (5)that the requirements as to sanction under section 18 of the Act must be held to be satisfied if the transaction in all its essential particulars had been sanctioned by the Court of Wards, even though there were details to be worked out in furtherance of the sanction and the document as finally drafted had not been submitted again for its approval.
A mere recital in the deed that the transaction was sanctioned is not conclusive and it must be shown that, as a matter of fact, sanction was given, and as the order of the Court of Wards dated 9 10 1917 contained the sanction to the proposal in 327 all its essential particulars it was sufficient compliance with the requirements of the section; Gulabsingh vs Seth Gokuldas, (40 I.A. 117) and Ramkanai Singh Deb Darpashaha vs Mathewson, (42 I.A. 97), relied on.
and (6) that section 18 only requires that the transaction should be entered into with the sanction of the Court of Wards and if the transaction subsequently turns out to be bad on the merits, either in part or in toto, it does not render the sanction originally given ineffective.
|
Summarize this legal judgement text concisely | ON: Criminal Appeal No. 147 of 1955.
Appeal by special leave from the Judgment and Order dated the 10th May 1955 of the Pepsu High Court at Patiala in Criminal Appeal No. 93 of 1954 arising out of the Judgment and Order dated the 21st June, 1954 of the Court of Sessions Judge at Barnala in Sessions Case No. 18 of 1954.
J.N. Kaushal and Naunit Lal, for the appellant.
Porus A. Mehta and P. G. Gokhale, for the respondent.
April 17.
The Judgment of the Court was delivered by CHANDRASEKHARA AIYAR J.
The appellant Basdev of the village of Harigarh is a retired military Jamadar.
He is charged with the murder of a young boy named Maghar Singh, aged about 15 or 16.
Both of them and others of the same village went to attend a wedding in another village.
All of them went to the house of the bride to take the midday meal on the 12th March, 1954.
Some had settled down in their seats and some bad not.
The appellant asked Maghar Singh, the young boy to step aside a little so that he 365 may occupy a convenient seat.
But Maghar Singh did not move.
The appellant whipped out a pistol and shot the boy in the abdomen.
The injury proved fatal.
The party that had assembled for the marriage at the bride 's house seems to have made itself very merry and much drinking was indulged in.
The appellant Jamadar boozed quite a lot and he became very drunk and intoxicated.
The learned Sessions Judge says "he was excessively drunk '? and that "according to the evidence of one witness Wazir Singh Lambardar he was almost in an unconscious condition".
This circumstance and the total absence of any motive or premeditation to kill were taken by the Sessions Judge into account and the appellant was awarded the lesser penalty of transportation for life.
An appeal to the PEPSU High Court at Patiala proved unsuccessful.
Special leave was granted by this Court limited to the question whether the offence committed by the petitioner fell under section 302 of the Indian Penal Code or section 304 of the Indian Penal Code having regard to the provisions of section 86 of the Indian Penal Code.
Section 86 which was elaborately considered by the High Court runs in these terms: "In cases where an act done is not an offence unless done with a particular knowledge or intent, a person who doe& the act in a state of intoxication shall be liable to be dealt with as if he bad the same knowledge as he would have had if he bad not been intoxicated, unless the thing which intoxicated him was administered to him without his knowledge or against his will".
It is no doubt true that while the first part of the section speaks of intent or knowledge, the latter part deals only with knowledge and a certain element of doubt in interpretation may possibly be felt by reason of this omission.
If in voluntary drunkenness knowledge is to be presumed in the same manner as if there was no drunkenness, what about those cases where mens rea is required.
Are we at liberty to place in 48 366 tent on the same footing, and if so, why has the section omitted intent in its latter part? This is not the first time that the question comes up for consideration.
It has been discussed at length in many decisions and the result may be briefly summarised as follows: So far as knowledge is Concerned, we must attribute to the intoxicated man the same knowledge as if he was quite sober.
But so far as intent or intention is concerned, we must gather it from the attending general circumstances of the case paying due regard to the degree of intoxication.
Was the man beside his mind altogether for the time being? If so it would not be possible to fix him with the requisite intention.
But if he had not gone so deep in drinking, and from the facts it could be found that he knew what he was about, we can apply the rule that a man is presumed to intend the natural consequences of his act or acts.
Of course, we have to distinguish between motive, intention and knowledge.
Motive is something which prompts a man to form an intention and knowledge is an awareness of the consequences of the act.
In many cases intention and knowledge merge into each other and mean the same thing more or less and intention can be presumed from knowledge.
The demarcating line between knowledge and intention is no doubt thin but it is not difficult to perceive that they connote different things.
Even in some English decisions, the three ideas are used interchangeably and this has led to a certain amount of confusion.
In the old English case, Rex vs Meakin(1) Baron Alderson referred to the nature of the instrument as an element to be taken in presuming the intention in these words: "However, with regard to the intention, drunkenness may perhaps be adverted to according to the nature of the instrument used.
If a man uses a stick, you would not infer a malicious intent so strongly against him, if drunk, when he made an intemperate use of it, as he would if be bad used a different kind (1) ; ; 7 Car.
& P. 295.
367 of weapon; but where a dangerous instrument is used, which, if used, must produce grievous bodily harm, drunkenness can have no effect on the consideration of the malicious intent of the party.
" In a charge of murdering a child levelled against a husband and wife who were both drunk at the time, Patteson J., observed in Regina vs Cruse and Mary his wife (1) "It appears that both these persons were drunk, and although drunkenness is no excuse for any crime whatever, yet it is often of very great importance in cases where it is a question of intention.
A person may be so drunk as to be utterly unable to form any intention at all, and yet he may be guilty of very great violence.
" Slightly different words but somewhat more illuminating were used by Coleridge J., in Reg.
vs Monkhouse(2) "The inquiry as to intent is far less simple than that as to whether an act has been committed, because you cannot look into a man 's mind to see what was passing there at any given time.
What he intends can only be judged of by what he does or says, and if he says nothing, then his act alone must guide you to your decision.
It is a general rule in criminal law, and one founded on common sense, that juries are to presume a man to do what is the natural con sequence of his act.
The consequence is sometimes so apparent as to leave no doubt of the intention.
A man could not put a pistol which he knew to be loaded to another 's bead, and fire it off, without intending to kill him; but even there the state of mind of the party is most material to be considered.
For instance, if such an act were done by a born idiot, the intent to kill could not be inferred from the act.
Sol if the defendant is proved to have been intoxicated, the question becomes a more subtle one; but it is of the same kind, namely, was he rendered by intoxication entirely incapable of forming the intent charged?" (1) ; ; (2) 368 "Drunkenness is ordinarily neither a defence nor excuse for crime, and where it is available as a partial answer to a charge, it rests on the prisoner to prove it, and it is not enough that he was excited or rendered more irritable, unless the intoxication was such as to prevent his restraining himself from committing the act in question, or to take away from him the power of forming any specific intention.
Such a state of drunkenness may no doubt exist".
A great authority on criminal law Stephen J., postulated the proposition in this manner in Beg.
vs Doherty(1) ". although you cannot take drunkenness as any excuse for crime, yet when the crime is such that the intention of the party committing it is one of its constituent elements, you may look at the fact that a man was in drink in considering whether he formed the intention necessary to constitute the crime".
We may next notice Rex vs Meade(2) where the question was whether there was any misdirection in his summing, up by Lord Coleridge, J.
The summing up was in these words: "In the first place, every one is presumed to know the consequences of his acts.
If he be insane, that knowledge is not presumed.
Insanity is not pleaded here, but where it is part of the essence of a crime that a motive, a particular motive, shall exist in the mind of the man who does the act, the law declares this that if the mind at that time is so obscured by drink, if the reason is dethroned and the man is incapable therefore of forming that intent, it justifies the reduction of the charge from murder to man slaughter".
Darling, J., delivering the judgment of the Court of Criminal Appeal affirmed the correctness of the summing up but stated the rule in his own words as follows: "A man is taken to intend the natural consequences of his acts.
This presumption may be rebutted (1) in the case of a sober man, in many ways: (1) (2) , 369 (2)it may also be rebutted in the case of a man who is drunk, by shewing his mind to have been so affected by the drink he had taken that he was incapable of knowing that what he was doing was dangerous, i.e., likely to inflict serious injury.
If this be proved, the presumption that he intended to do grievous bodily harm is rebutted".
Finally, we have to notice the House of Lord 's decision in Director of Public Prosecutions vs Beard(1).
In this case a prisoner ravished a girl of 13 years of age, and in aid of the act of rape he placed his hand upon her mouth to stop her from screaming, at the same time pressing his thumb upon her throat with the result that she died of suffocation.
Drunkenness was pleaded as a defence.
Bailhache J. directed the jury that the defence of drunkenness could only prevail if the accused by reason of it did not know what he was doing or did not know that he was doing wrong.
The jury brought in a verdict of murder and the man was sentenced to death.
The Court of Criminal Appeal (Earl of Reading C.J., Lord Coleridge J., and Sankey, J.) quashed this conviction on the ground of misdirection following Rex vs Meade(2) which established that the presumption that a man intended the natural consequences of his acts might be rebutted in the case of drunkenness by showing that his mind was so affected by the drink that he bad taken that he was incapable of knowing that what he was doing was dangerous.
The conviction was, therefore, reduced to manslaughter.
The Crown preferred the appeal to the House of Lords and it was heard by a strong Bench consisting of Lord Chancellor, Lord Birkenhead, Earl of Reading, C.J., Viscount Haldane, Lord Denedin, Lord Atkinson, Lord Sumner, Lord Buckmaster, and Lord Phillimore.
The Lord Chancellor delivered the judgment of the court.
He examined the earlier authorities in a lengthy judgment and reached the conclusion that Rex vs Meade(2) stated the law rather too broadly, though on the facts there proved the decision was right.
The position "that a person charged with a crime of violence (1) [1920] A.C. 479.
(2) 370 may show, in order to rebut the presumption that he intended the natural consequences of his acts, that he was so drunk that he was incapable of knowing what he was doing was dangerous. . . . . . which is what is said in Meade 's case, was not correct as a general proposition of law and their Lordships laid down three rules: (1)That insanity, whether produced by drunkenness or otherwise, is a defence to the crime charged; (2) That evidence of drunkenness which renders the accused incapable of forming the specific intent essential to constitute the crime should be taken into consideration with the other facts proved in order to determine whether or not he had this intent; (3)That evidence of drunkenness falling short of a proved incapacity in the accused to form the intent necessary to constitute the crime, and merely establishing that his mind was affected by drink so that he more readily gave way to some violent passion, does not rebut the presumption that a man intends the natural consequences of his acts.
The result of the authorities is summarised neatly and compendiously at page 63 of Russel on Crime, tenth edition, in the following words: "There is a distinction, however, between the defence of insanity in the true sense caused by excessive drunkenness and the defence of drunkenness which produces a condition such that the drunken man 's mind becomes incapable of forming a specific intention.
If actual insanity in fact supervenes as the result of alcoholic excess it furnishes as complete an answer to a criminal charge as insanity induced by any other cause.
But in cases falling short of insanity evidence of drunkenness which renders the accused incapable of forming the specific intent essential to constitute the crime should be taken into consideration with the other facts proved in order to determine whether or not he had this intent, but evidence of drunkenness which falls short of proving such incapacity and merely establishes that the mind of the accused was so affected by drink that he more readily gave way to some violent passion does not 371 rebut the presumption that a man intends the natural consequences of his act".
In the present case the learned Judges have found that although the accused was under the influence of drink, he was not so much under its influence that his mind was so obscured by the drink that there was incapacity in him to form the required intention as stated.
They go on to observe: "All that the evidence shows at the most is that at times he staggered and was incoherent in his talk, but the same evidence shows that he was also capable of moving himself independently and talking coherently as well.
At the same time it is proved that be came to the darwaza of Natha Singh P.W. 12 by himself, that he made a choice for his own seat and that is why he asked the deceased to move away from his place, that after shooting at the deceased be did attempt to get away and was secured at some short distance from the darwaza, and that when secured be realised what he had done and thus requested the witnesses to be forgiven saying that it bad happened from him.
There is no evidence that when taken to the police station Barnala, he did not talk or go there just as the witnesses and had to be specially supported.
All these facts, in my opinion, go to prove that there was not proved incapacity in the accused to form the intention to cause bodily injury sufficient in the ordinary course of nature to cause death.
The accused had, therefore, failed to prove such incapacity as would have been available to him as a defence, and so the law presumes that he intended the natural and probable consequences of his act, in other words, that he intended to inflict bodily injury to the deceased and the bodily injury intended to be inflicted was sufficient in the ordinary course of nature to cause death".
On this finding the offence is not reduced from murder to culpable homicide not amounting to murder under the second part of section 304 of the Indian Penal Code.
The conviction and sentence are right and the appeal is dismissed.
| So far as knowledge is concerned the court must attribute to the intoxicated man the same knowledge as if he was quite sober but so far as intent or intention is concerned, the court must gather it from the attending general circumstances of the case paying due regard to the degree of intoxication.
If the man was beside his mind altogether for the time being, it would not be possible to fix him with the requisite intention.
But if he had not gone so deep in drinking and from the facts it could be found that he knew what he was about the court will apply the rule that a man is presumed to intend the natural consequences of his act or acts, That rule of law is well settled: 1.That insanity, whether produced by drunkenness or otherwise, is a defence to the crime charged; 364 2.The evidence of drunkenness which renders the accused incapable of forming the specific intent essential to constitute the crime should be taken into consideration with the other facts proved in order to determine whether or not he had this intent; 3.That evidence of drunkenness falling short of a proved incapacity in the accused to form the intent necessary to constitute the crime, and merely establishing that his mind was affected by drink so that he more readily gave way to some violent passion, does not rebut the presumption that a man intends the natural consequences of his acts.
Director of Public Prosecutions vs Board, ([1920] A.C. 479), referred to.
On the finding in the present case that although the accused was under the influence of drink, he was not so much under its influence that his mind was obscured to such an extent that there was incapacity in him to form the required intention the offence was not reduced from murder to culpable homicide not amounting to murder under the second part of section 304 of the Indian Penal Code.
|
Summarize this legal judgement text concisely | ION: Criminal Appeal No. 15 of 1955.
Appeal by special leave from the judgment and order dated the 24th March, 1953 of the Calcutta High Court in Criminal Appeal No. 94 of 1952 arising out of the Judgment and order dated the 22nd April 1952 373 of the Court of Sessions Judge, Murshidabad in Sessions Trial No. 1 of 1952.
Jai Gopal Sethi, (C. F. Ali and P. K. Ghosh, with him) for the appellants.
B.Sen, (I. N. Shroff, for P. K. Bose, with them) for the respondent.
April 18.
The Judgment of the Court was delivered by JAGANNADHADAS J.
This is an appeal by special leave against the judgment of the High Court of Calcutta confirming the conviction and sentence of each of the two appellants before us, by the Sessions Judge of Murshidabad.
The appellants were tried on a charge under section 302/34 of the Indian Penal Code by the Sessions Judge with a jury.
The jury returned a unanimous verdict of guilty against each under the first part of section 304 read with section 34 of the Indian Penal Code.
The learned Judge accepted the verdict and convicted them accordingly and sentenced each of the appellants to rigorous imprisonment for ten years.
In order to appreciate the points raised before us, it is desirable to give a brief account of the prosecution case.
The two appellants jointly made a murderous assault on one Saurindra Gopal Roy at about 6 30 p.m. on the 3rd November, 1951.
There was, owing to litigation, previous enmity between the deceased and the appellants.
All of them belonged to a village called Mirzapur which is within the police station Beldanga, district Murshidabad.
The deceased along with two friends of his, of the same village, examined as P.Ws. 1 and 2, attended a foot ball match that evening at Beldanga.
The match was over by 5 p.m. and all the three of them were returning together to their village.
In the course of the return they were passing at about 6 30 p.m. through a field, nearly half a mile away from the village.
The two appellants each having a lathi and a Hashua (sickle) in his hand, emerged from a bush nearby and rushed towards the deceased and his companions.
P.W. 1 49 374 was first struck with a lathi and thereupon both P.Ws. 1 and 2 moved away to a distance.
The appellants assaulted the deceased and inflicted on him a number of serious injuries.
The two companions of the deceased, P.Ws. 1 and 2, ran towards the village and shouted for help whereupon a number of people from the village came and collected at the spot.
Information was also carried to the son as well as to the brother of the deceased.
They also came on the scene.
The brother, by name Radhashyam, proceeded at once to the Beldanga police station and lodged the first information report at about 7 30 p.m.
The police officer came to the scene and recorded a statement from the deceased who was then still alive.
He was thereafter taken to the hospital at Beldanga.
At the hospital the Medical Officer also took a statement from him (exhibit 4).
He died some time thereafter.
P.Ws. 1 and 2, the companions of the deceased, were the only eye witnesses to the murderous assault.
The prosecution relied also on certain statements said to have been made by the deceased after the assault.
The deceased is said to have stated to P.W. 7 one of the villagers who first came on the scene, after hearing the shouts of P. Ws. 1 and 2, that the two appellants were his assailants.
A little later, when his son and his brother, P.W. 3 came there, he is also said to have stated to P.W. 3 that the two appellants were the assailants.
Accordingly the first information report gave the names of the two appellants as the assailants.
Similar statements are said to have been made by the deceased to the police officer when he came on the spot and later to the Medical Officer when he was taken to the hospital.
The evidence, therefore, in support of the prosecution case was mainly, that of the two eye witnesses, P.Ws. 1 and 2, and of the four dying declarations, two of them oral and two written.
There was considerable scope for criticism about the evidence of the two eye witnesses.
The evidence relating to the dying declarations was also open to attack in view of the nature of the injuries inflicted on the deceased.
These included incised wounds on the occipital region and an incised wound 375 in the brain from out of which a piece of metal was removed on dissection.
This, as was urged, indicated the likelihood of the deceased having lost his consciousness almost immediately and hence the improbability of any statements by the deceased.
But the medical evidence on this point was indecisive.
There can be no doubt however that the reliability of the prosecution evidence was open to serious challenge in many respects.
But learned counsel for the appellants has not been able to raise either before the High Court or before us any objection to the verdict, on the ground of misdirection or non direction, of a material nature, in the charge to the jury by the Sessions Judge. 'On the other band, the charge brought out every point in favour of the appellants and against the prosecution evidence.
It erred, if at all.
in that the learned Judge involved himself in a great deal of elaboration.
The only flaw in the charge which, learned counsel for the appellants could attempt to make out, was that the exposition therein of the legal concept underlying section 34 of the Indian Penal Code was obscure and that it would not have been correctly appreciated by the jurors.
It may be that this could have been expressed in more lucid terms.
But we are unable to find that there was any misdirection or non direction therein.
Nor do we see any reason to think that the jury has been misled.
Thus there was no real attack either in the High Court or here as against the learned Judge 's charge to the jury.
Accordingly, the only points urged before us are the following.
1.The circumstances of the case and the nature of the charge to the jury made it incumbent on the learned Judge to disagree with the jury and to refer the case to the High Court under section 307 of the Code of Criminal Procedure.
2.In the alternative, the learned Sessions Judge having expressed himself in his charge to the jury, definitely for acquittal, he should not have accepted its verdict, though unanimous, without giving satisfactory reasons for such acceptance.
The learned Judge having, in his charge speci 376 fically cautioned the jury against communal prejudice in the following terms "your deliberations and verdict should not be influenced by any communal considerations,", should have refused to accept the verdict as having been vitiated by communal bias.
It may be stated that all the jurors were Hindus and that the accused were both Muhammadans.
The suggestion is that in view of the fact that thescene Of occurrence was near the border between West and East Bengal, it should have been appreciated that communal bias was, at the time, almost inevitable.
4.There has been virtually no examination of the accused by the Sessions Judge under section 342 of the Code of Criminal Procedure and the trial has been vitiated thereby.
In advancing the first two of the above contentions learned counsel for the appellants assumes and asserts that the Sessions Judge in his charge to the jury was unequivocally of the opinion that there was no reliable evidence on which the conviction could be based and that the appellants should be acquitted.
On this assumption, he urges that, when in the circumstances the jury gave a unanimous verdict of guilty, his obvious duty was either to express his dis agreement with the verdict of the jury and refer the whole case for the consideration of the High Court under section 307 of the Code of Criminal Procedure, or, at the least, to have placed on record his reasons why in spite of his clear opinion against the prosecution case, he did not consider it necessary to disagree from the verdict of the jury.
In order to substantiate this point of view, learned counsel took us through various portions of the charge to the jury and we have ourselves perused carefully the entirety of it.
As already stated, the learned Judge undoubtedly pointed out in his charge all the weaknesses of the prosecution evidence in great detail.
It is also likely that be was inclined for an acquittal.
But we are not satisfied that he came to a definite and positive conclusion that there should be acquittal.
While pointing out the weakness of the prosecution evidence with a leaning against its reliability he has not specifically 377 rejected every important item of the prosecution evidence.
It was only in some places that he stated categorically that he would not accept a particular item of evidence and would advise the jurors to reject it.
In other places, while pointing out the infirmities of the evidence, he was not so categorical and positive, as to what his own opinion on that item of evidence was.
For instance, out of the two eye witnesses, P.Ws. 1 and 2, the learned Judge said, so far as P.W. 2 is concerned, as follows: "Personally speaking I am not satisfied with the evidence of recognition of the accused persons as the assailants of Sourindra Gopal furnished by P.W. 2, Satyapada.
You will be advised, gentlemen, not to rely upon the evidence of P.W. 2".
As regards the evidence of the other eye witness, P.W. 1, however he summed it up as follows: "You should take a comprehensive view of all matters and then decide whether you should act upon the evidence of recognition of the accused persons as the assailants of Sourindra furnished by P.W. 1, Bhupati".
There was similar difference in the expression of his opinions with reference to the evidence of the dying declarations of the deceased.
It may be recalled that the evidence of the oral dying declarations is of statements to P.W. 7, Phani, and P.W. 3, Radhashyam.
The evidence of statement to P.W. 7 was given by a number of witnesses, viz. P.Ws. 6, 7, 8, 9, 10, 11) 12 and 13.
Out of these so far as the evidence of P. W. 9 is concerned, the learned Judge specifically stated as follows: "I should tell you that you should not believe P.W. 9 when he stated on being questioned by Phani, Sourindra mentioned Moseb and Sattar as his assailants".
But he did not rule out the evidence of the others on this item in the same manner.
Then again, when he dealt with the question whether the slip of paper, exhibit 4, is genuine the learned Judge noticed that the said paper was shown to have been taken from the medical officer P.W. 17 into the possession of the In 378 vestigating Officer, P.W. 35, about a month later and commented on it as follows: "Personally speaking I see no reasonable explanation as to why the I.O. should not have seized exhibit 4 from P.W. 17 immediately after it was recorded, if it was recorded on 3rd November, 1951, and sent it to the Magistrate forthwith".
All the same, the learned Judge also remarked thus: "You will consider very seriously whether you have any reason to disbelieve the evidence of P. Ws. 17, 32 and 33".
P.Ws. 32 and 33 are witnesses who spoke to the statement of the deceased said to have been taken by the Doctor, P. W. 17.
Taking the charge to the jury, therefore, comprehensively we are unable to find that the learned Judge rejected the prosecution evidence and arrived at a clear and categorical conclusion in his own mind that the appellants were not guilty.
We are, therefore, unable to accept the assumption of learned counsel for the appellants that the Judge agreed with the unanimous verdict of the jury against his own personal conviction, as to the guilt of the accused.
It appears to us, therefore, that there is no foundation, as a fact, for the argument that the learned Judge should have made a reference to the High Court under section 307 of the Code of Criminal Procedure or that, in any case, he should have placed on record his reasons for agreeing with the verdict of the jury notwithstanding his own personal opinion to the contrary.
Assuming however that the charge to the jury in this case can be read as being indicative of a definite opinion reached by the Sessions Judge in favour of the appellants, it does not follow that merely on that account he is obliged to make a reference under section 307 of the Code of Criminal Procedure.
What is required under that section is not merely disagreement with the verdict of the jury but the additional factor that the learned Sessions Judge "is clearly of opinion that it is necessary for the ends of justice to submit the case to the High Court".
It is now well settled, since the decision of the Privy Council in 379 Ramnugrah Singh vs King Emperor(1) that under section 307 of the Code of Criminal Procedure a Session,, Judge, even if he disagrees with the verdict of the jury must normally give effect to that verdict unless he is prepared to hold the further and clear opinion "that no reasonable body of men could have given the verdict which the jury did".
We are certainly not prepared to say that the present case satisfies that test or that the charge to the jury indicated any such clear conclusion.
Indeed it is to be noticed that on intimation by the jury of its unanimous verdict, the learned Judge has recorded that he "agreed with and accepted the verdict".
We have no doubt that it was perfectly competent for him to do so.
Learned counsel urges that this acceptance is a judicial act and that having regard to the whole tenor of the Judge 's charge to the jury, he was at least under a duty to himself and to the appellate court to record his reasons for acceptance of the verdict of the jury.
We are unable to agree with this contention.
It may be that in a case where a Judge in his charge to the jury has clearly and definitely expressed himself for acquittal, it would be very desirable, though not imperative, that he should give his reasons why be changed his view and accepted the verdict of the jury.
But we can find no basis for any such contention in this case.
The two further contentions that remain which are enumerated above as 3 and 4, were not raised before the High Court.
We are reluctant to allow any such contentions to be raised on special leave.
The point relating to the possibility of the verdict having been the result of bias has no serious basis.
It appears to us that the learned Sessions Judge had no justification in this case for imagining the possibility of such bias and giving a warning to the jury in this behalf.
This is not a case which arose out of any incident involving communal tension.
The likelihood of any such bias is not to be assumed merely from the fact of the appellants being Mubammadans and the jurors being Hindus.
Nor is it right to take it (1) [1946] L.R. 73 I.A. 174.
380 for granted merely from the fact of proximity of the place of trial to the border between West and East Bengal.
On the other hand, it is not without some relevance that when the jury was empanelled at the commencement of the trial, there was absolutely no such objection taken.
Nor was the right of challenge to the jurors exercised.
Learned counsel for the appellants has very strenuously argued before us, the point relating to the inadequacy of the examination of the appellants under section 342 of the Code of Criminal Procedure.
Now, it is true that the examination in this case was absolutely perfunctory.
The only questions put to each of the accused in the Sessions Court, and the answers thereto were the following: "Q. You have heard the charges made and the evidence adduced against you.
Now say, what is your defence? What have you got to say? A.
I am innocent.
Will you say anything more? A. No. Q. Will you adduce any evidence in defence? A. No." There can be no doubt that this is very inadequate compliance with the salutary provisions of section 342 of the Code of Criminal Procedure.
It is regrettable that there has occurred in this case such a serious lacuna in procedure notwithstanding repeated insistence of this Court , in various decisions commencing Tara Singh 's case(1) on a due and fair compliance with the terms of section 342 of the Code of Criminal Procedure.
But it is also well recognised that a judgment is not to be set aside merely by reason of inadequate compliance with section 342 of the Code of Criminal Procedure.
It is settled that clear prejudice must be shown.
This court has clarified the position, in relation to cases where accused is represented by counsel at the trial and in appeal.
It is up to the accused or his counsel in such cases to satisfy the Court that such inadequate examination has resulted in miscarriage of justice.
This Court in its judgment (1)[1951] S.C.R. 729.
381 in the latest case on this matter, viz. K. C. Mathew and Others vs The State of Travancore Cochin(1) (delivered on the 15th December, 1955) has laid down that "if the counsel was unable to say that his client had in fact been prejudiced and if all that he could urge was that there was a possibility of prejudice, that was not enough".
Learned counsel could not, before us, make out any clear prejudice.
All that learned counsel for the appellants urges is, that this might be so in a case where the trial was with the assessors and the Judge 's view on the evidence was the main determining factor.
But he contends that the same would not be the case where the trial is with the aid of a jury.
Learned counsel urges that a full and clear questioning in a jury trial does not serve the mere purpose of enabling the accused to put forward his defence or offer his explanation, which may be considered along with the entire evidence in the case.
The jury would, he suggests also, have the opportunity of being impressed one way or the other by the method and the manner of the accused, when giving the explanation and answering the questions and that the same might turn the scale.
Learned counsel urges, therefore, that the non examination or inadequate examination under section 342 of the Code of Criminal Procedure in a jury trial must be presumed to cause prejudice and that a conviction in a jury trial should be set aside and retrial ordered, if there is no adequate examination under section 342 of the Code of Criminal Procedure.
We are not prepared to accept this contention as a matter of law.
The question of prejudice is ultimately one of inference from all the facts and circumstances of each case.
The fact of the trial being with the jury may possibly also be an additional circumstance for consideration in an appropriate case.
But we see no reason to think that in the present case this would have made any difference.
We are, therefore, not Prepared to accept the argument of the learned counsel for the appellants in this behalf.
In any case, an argument of this kind which would, if accepted, (1)[1955] 2 S.C.R. 1057.
50 382 necessitate a retrial, is one that ought to be put forward at the earliest stage and at any rate at the time of the regular appeal in the High Court.
This cannot be entertained for the first time in an appeal on special leave.
For all the above reasons this appeal is dismissed.
| A Sessions Judge, even if he disagrees with the verdict of the Jury, must normally give effect to that verdict unless he is clearly of opinion that no reasonable body of men could have given the verdict which the Jury did.
Ramnugrah Singh vs King Emperor, ([1946] L.R. 73 I.A. 174), relied on.
A Sessions Judge need not record his reasons for accepting the verdict of the Jury.
In a case where a Judge in his charge to the Jury, has clearly and definitely expressed himself for acquittal, it would be desirable though not imperative, that he should give his reasons why he changed his view and accepted the verdict of the Jury finding the accused guilty.
Even where the examination of the accused under section 342 Cr.
P.C. is perfunctory the judgment cannot be set aside unless clear prejudice is shown.
Tara Singh 's case, ([1951] S.C.R. 729), referred to.
K.C. Mathew and Others vs The State of Travanore Cochin, ([1955] 2 S.C.R. 1057), relied on.
Prejudice cannot be presumed from the fact that the trial is by a jury though that is a circumstance which may be taken into consideration.
An argument which would, if accepted, necessitate a retrial, ought to be put forward at the earliest stage and at any rate before the High Court in appeal and cannot be entertained for the first time in an appeal on special leave.
|
Summarize this legal judgement text concisely | Civil Appeals Nos. 310 and 311 of 1955.
Appeals under Article 132 of the Constitution from the judgment and order dated the 6th April, 1955 of the Assam High Court in Title Suits Nos. 1 & 3 of 1955.
N. C. Chatterji, P. N. Mitter, D. N. Mukerji and R. R. Biswas, for the appellant in C. A. No. 310 of 1955.
P.K. Chatterji, for the appellant in C. A. No. 311 of 1955.
M.C. Setalvad, Attorney General for India, section M. Lahiri, Advocate General of Assam and Naunit Lal, for the respondent in both appeals.
306 1956.
April 11.
The Judgment of the Court was delivered by DAS C. J.
It is intended by this judgment to dispose of both the appeals mentioned above.
The appeals have come up before us in circumstances which may shortly be recounted.
On 6th December 1954 the appellant Raja Bhairabendra Narain Bhup of Bijni filed T. section No. 27 of 1954 in the Court of the Subordinate Judge of Lower Assam District at Dhubri praying, inter alia, for a declaration that the Assam State Acquisition of Zamindaris Act, 1951 (Assam Act XVIII of 1951) as amended by Assam Act VI of 1954 was not validly passed, was not law at all and was unconstitutional, ultra vires and void and for a declaration that the impugned Act was, at any rate, inapplicable to the plaintiff 's properties and the Notification purporting to be issued under section 3(1) of the impugned Act in respect of the plaintiff 's properties was illegal, ultra vires and void.
On the 23rd December, 1954 the appellant Sm.
Bedabala Debi wife of Sri Nripendra Narain Choudhury as the Trustee of Chapor Trust estate filed T. section No. 34 of 1954 in the Court of the Subordinate Judge of Lower Assam District at Dbubri challenging the constitutionality of the same Act.
In this suit there was no contention, as there was in the Raja 's suit, that the Act, if valid, did not apply to the estate of which she was the Trustee.
By two several orders made under article 228 by the Assam High Court on the 21st January 1955 and the 16th February 1955 respectively the said two suits were transferred to the High Court and renumbered as T. section No. 1 of 1955 and T. section No. 3 of 1955 respectively.
The State of Assam duly filed its written statements in both the suits controverting the contentions set forth in the respective plaints.
The High Court framed 11 issues in the Raja 's T.S. No. 1 of 1955.
The issues common to the two suits were as follows: (1)Whether the Assam State Acquisition of Zamindaris Act, 1951 (Assam Act XV111 of 1951) and its 307 amendments are within the competence of the State Legislature and whether they were enacted according to law? (2)Whether the Notification No. Rt./24/54/21 dated 19th July 1954 published in the Assam Gazette dated 21st July 1954 and issued under the Act aforesaid is valid? (3)Whether the said Act and its amendments infringe the fundamental rights of the plaintiff under article 31(2) and article 14 of the Constitution; or whether the legislation is protected under article 3 1 A and article 31(4) of the Constitution? (4)Whether the provisions of the Act and its amendments can be enforced against the properties in suit, even if the legislation is held to be valid? (5)To what relief, if any, is the plaintiff entitled? The parties through their respective counsel agreed that the issues of law which did not depend upon adjudication of disputed facts should be heard and decided first, leaving the other issues, if necessary, to be dealt with later.
The two cases were beard by a Full Bench of the Assam High Court.
The learned Judges answered issues 1 and 3 against the plaintiffs, although not for identical reasons.
They also answered issue 2 against the plaintiffs, subject, as to the Raja, the plaintiff in T.S. No. 1 of 1955, to the answer to issue 4.
On the last mentioned issue the Bench held that the Act and the Notification being valid they could be enforced against Sm.
Bedabala, the plaintiff in T. section No. 3 of 1955.
As regards the Raja, the plaintiff in T.S. No. 1 of 1955, the Bench held that as the question whether the properties of the Raja sought to have been notified were "estate" within the meaning of the impugned Act was one of fact, issue 4 could only be decided, as between the Raja and the defendant State, upon evidence led in the case.
In the result the Bench dismissed Sm.
Bedabala 's T.S. No. 3 of 1955 with costs and directed the records of the Raja 's T.S. No. 1 of 1955 to be sent down to the court below for trial and disposal on the determination of issue 4 and other issues.
In view of the importance of the ques 308 tion involved in the issues dealt with by the Bench they gave leave under article 132 to the plaintiffs in both the suits to appeal to this Court.
Hence the present appeals.
At the hearing before us arguments have proceeded on issues 1, 2 and 3.
It will be convenient, therefore, to deal with the issues seriatim.
Re issue 1: Issue 1, it will be observed, has two parts.
The first relates to the competence of the State Legislature in enacting the impugned law and the second part relates to the question whether the impugned Act was enacted according to law.
As a greater emphasis has been laid by learned counsel appearing in support of the appeals on the second part of this issue, we take up and deal with that part first. " The facts bearing on this part of the issue may now be summarised.
On the 11th August 1948 a Bill called Assam State Acquisition of Zamindaris Bill was published in the Assam Gazette.
On the 23rd September 1948 the Bill was introduced in the Legislative Assembly of Assam, which was its only Legislative Chamber.
The Bill was passed by the legislative Assembly on the 28th March 1949.
The Governor of Assam, acting under section 75 of the Government of India Act, 1935, reserved the Bill for the consideration of the Governor General.
In view of the then impending commencement of the Constitution, the Governor General on the 25th January 1950.
returned the Bill to the Governor of Assam with the remark that the Bill be reserved for the consideration of the President.
On the 26th of January 1950 the Constitution of India came into force.
Two days later, that is to say, on the 28th January 1950, the Governor of Assam actually received back the Bill.
The Governor of Assam then reserved the Bill for the consideration of the President and sent the Bill to the President.
In October 1950 the President returned the Bill to the Governor of Assam suggesting certain alterations.
The Bill, together with the suggested amendments, was placed before the Legis lative Assembly of Assam.
The Legislative Assembly 309 considered the suggested alterations and passed the Bill suitably amended.
The amended Bill thereupon was again forwarded to the President and on the 27th July 1951 it received the assent of the President and became Assam Act XVIII of 1951.
The Act was published in the Assam Gazette of the 8th August 1951.
On the 11th September 1951 the Legislative Assembly passed a Bill amending Assam Act XVIII of 1951 in certain particulars and this Bill, having been reserved by the Governor for the consideration of the President, received the assent of the President on the 25th March 1954 and became Assam Act VI of 1954.
The Acts were brought into force on the 15th April 1954 by a Notification issued by the Assam Government on the 9th June 1954.
On the 19th July 1954 a Notification was published in the Assam Gazette under section 3(1) of the impugned Act declaring that the properties therein mentioned, including the properties which, formed the subject matter of the two suits would vest in the State free from all encumbrances with effect from the 15th April 1955.
Two suits out of which the present appeals arise were then filed in December 1954.
The second part of issue raises the contention that the impugned Act was not enacted according to law.
The following reasons have been urged in support of this contention.
(a)The Bill was introduced in the Assembly without the sanction of the Governor which was required by section 299(3) of the Government of India Act.
(b) When the Bill was placed before the Governor General for his assent and he did not assent to it, the assent must be deemed to have been withheld.
His suggestion that it be reserved for the consideration of the President was void and of no effect.
(c)The Bill was not pending in the Legislature at the date of the commencement of the Constitution and it could not be reserved for the assent of the President.
(d)The Legislature functioning under the Constitution has no power to.
consider the amendments ' 310 suggested by the President or to pass the same.
(e)The Bill having been passed by the Legislative Assembly and thereafter having been reserved for the consideration of the Governor General under the Government of India Act, 1935 and the Governor General not having taken any constitutional action in respect of it, as prescribed/by that Act up to the time that Act was operating, ' the Bill lapsed on the repeal of the Government of India Act, 1935 and the promulgation of the Constitution.
(f)The subsequent acts of the Governor, the Legislative Assembly and the purported assent of the President are all unconstitutional and void.
The reason under beading above may be disposed of in a few words. 'The impugned Act undoubtedly provides for the compulsory acquisition of land and had, therefore, to comply with the requirements of section 299 of the Government of India Act, 1935, which was in force at the date of the introduction of the Bill in the Legislative Assembly of the province of Assam.
Sub section (3) of that section provided that no Bill making provision for the transference to public ownership of any land should be introduced in either Chamber of Federal Legislature without the previous sanction of the Governor General in his discretion or in a, Chamber of Provincial Legislature without the previous sanction of the Governor in his discretion.
It was alleged that the pre vious sanction of the Governor of Assam had not been obtained before the Bill, which eventually became the impugned Act, was introduced in the Legislative Assembly.
This allegation was controverted and the learned Advocate General of Assam produced before the High Court the minutes of the official proceedings in relation to the Bill.
The Revenue Department 's file No. RT 17/48 dated the 21st July 1948 shows that a note was put up before "H.E.", meaning obviously His Excellency the Governor, seeking, amongst other things, his sanction for the introduction of the Assam State Acquisition of Zamindaris Bill, 1948 under section 299(3) of the Government, of India Act, 1935.
At the foot of that note appear the 311 initials "A.H." over the date 21st July, 1948.
It is not disputed that the initials "A.H." stand for Akbar Hydari, who was then the Governor of Assam.
It is true that the words "sanction granted" were not endorsed on the note but there Can be no doubt that the initials were appended to the note by the Governor for no other purpose than for signifying his sanction to the introduction of the Bill in the Legislative Assembly.
Moreover under section 109 of that Act, if there were no other defect vitiating it, the impugned Act could not be challenged as invalid by reason only,, that previous sanction was not given by the Governor to the introduction of the Bill.
In our judgment the first reason urged in support of the contention that the impugned Act was not enacted according to law has no force and must be rejected.
The reasons (b) to (f) may conveniently be dealt with together.
It will be recalled that after the Bill had been passed by the Assam Legislative Assembly on the 28th March, 1949, it was presented to the Governor under section 75 of the Government of India Act, 1935.
Under that Act the Governor could do one of four things.
He could in his discretion declare that he assented in His Majesty 's name to the Bill or that he withheld assent therefrom or that he reserved the Bill for the consideration of the Governor General or he could in his discretion return the Bill together with a message requesting the Chamber or Chambers to reconsider the Bill or any specified provisions thereof.
In this case the Governor in his discretion reserved the Bill for the consideration of the Governor General and forwarded the Bill to him.
Under section 76 of that Act the Governor General could do one of four things, namely, that he could in his discretion declare that he assented in His Majesty 's name to the Bill or that he withheld assent therefrom or that he reserved the Bill for the signification of His Majesty 's pleasure thereon or he could, if in his discretion he thought fit, direct the Governor to return the Bill to the Chamber or Chambers of the Provincial Legislature together with such a message as was mentioned in the preceding section.
What happened in 41 312 this case is that, in view of the impending constitutional changes, the Governor General, on the 25th January 1950, returned the Bill to the Governor of Assam advising him to reserve the Bill for the consideration of the President.
While the Bill was in transit and before it was actually received by the Governor, which he did on the 28th January 1950, our Constitution came into force on the 26th January 1950.
Our attention is drawn to article 395 of the Constitution, whereby the Indian Independence Act, 1947 and the Government of India Act, 1935 together with all enactments, amending or supplementing the latter Act but not including the Abolition of Privy Council Jurisdiction Act, 1949, were repealed.
It is pointed out that there was no saving provision in that article and consequently it was a total repeal of the enact ments referred to therein.
Reference is made to the well known observations of Tindal, C. J. in Kay vs Godwin(1) and the dictum of Lord Tenterden, C. J. in Surtees vs Ellison(2) and to Craies ' Statute Law, 4th Edition, pp.
347 to 348 and Crawford on Statutory Construction, pp. 599 to 600, all referred to by Fazl Ali, J. in Keshavan Madhava Menon vs The State of Bombay(3) and it is contended that the effect of the repeal of the Government of India Act, 1935 was to obliterate that Act as completely as if it bad never been passed and as if it bad never existed except for the purpose of those actions commenced, prosecuted and concluded whilst it was an existing law.
The Bill in question not having become an Act before the 26th January 1950 the same, it is urged, must be regarded as having been wiped out of existence by reason of the repeal.
There might have been a good deal of force in this contention had there been no other provision in the Constitution keeping this Bill alive.
Article 389 of the Constitution provides that a Bill which immediately before the commencement of the Constitution was pending in the Legislature of the, (1) ; ; Bing.
(2)[1829] ; , 752; ; , 279.
(3) ; , 237 et seq.
313 Dominion of India or in the Legislature of any Province or Indian State may, subject to any provisions to the contrary which may be included in rules made by Parliament or the Legislature of the corresponding State under this Constitution, be continued in Parliament or the Legislature of the corresponding State, as the case may be, as if the proceedings taken with reference to the Bill in the Legislature of the Dominion of India or in the Legislature of the Province or Indian State had been taken in Parliament or in the Legislature of the corresponding State.
If, therefore, the Bill with which we are concerned was pending in the Legislature of Assam immediately before the commencement of the Constitution, then clearly it was quite properly continued in the Legislature of the corresponding State.
Two questions, therefore, arise, namely (1) whether at the commencement of the Constitution the Bill was pending at all and (2) if it was, whether it was pending in the Legislature of Assam.
As to (1) election 30 of the Government of India Act, 1935 made provision for the introduction of Bills in the Chambers of the Federal Legislature and section 73 provided for the introduction of Bills in the Chamber or Chambers of the Provincial Legislature.
Section 32 of the Act laid down provisions for presentation of the Bill passed by the Federal Legislative Chambers to the Governor General and section 75 for the presentation of the Bill passed by the Provincial Legislative Chamber or Chambers to the Governor.
Broadly speaking it may be said that a Bill begins to pend with its introduction in the Legislative Chamber and it ceases to pend (a) when it lapses under section 73(4) or (b) when the Governor declares that be assents in his Majesty 's name to the Bill in which case the Bill ripens into an Act or (c) when the Governor declares that he withholds his assent therefrom, in which case the Bill falls through or (d) when being reserved by the Governor for the consideration of the Governor General, the Governor General acting under section 76 declares that he assents in His Majesty 's name to the Bill, in which case also 314 the Bill becomes an Act or (e) when, having been so reserved by the Governor, the Governor General declares that he withholds his assent therefrom, in which case again the Bill falls through or (f) when the Bill having been reserved by the Governor General for the signification of His Majesty 's pleasure thereon under section 76(1), the Governor under section 76(2) makes known by public notification that His Majesty had assented thereto, in which case again the Bill becomes an Act and lastly (g) when no such notification is issued by the Governor within twelve months from the date on which it was presented to the Governor, in which event also the Bill comes to an end.
In short a Bill may be said to be pending as long as it does not lapse or it does not become an Act by.
receiving the assent by the appropriate authority or is not terminated by the withholding of assent by such appropriate authority.
The contention of the appellant is that when the Bill under consideration had been, under section 76, reserved by the Governor for the consideration of the Governor General and sent to the Governor General and the latter did not declare his assent in the name of His Majesty to the Bill but sent it back to the Governor, the Governor General must be deemed to have withheld his assent from the Bill.
As already stated, under section 76, the Governor General could have declared that he assented in the name of His Majesty to the Bill or that he withheld his assent therefrom, or that he reserved the Bill for the signification of His Majesty 's pleasure or he could have returned it to the Governor for being presented to the Chamber for reconsideration but he could not do anything else.
Therefore, his act of returning the Bill to the Governor with the suggestion to place it before the Presi dent was, it is urged, wholly unauthorised and amounted to his withholding his assent from the Bill.
We are unable to accept this argument as sound.
The Governor General knew that if he declared that he withheld his assent then the Bill would come to a termination and no further step could be taken in relation to that Bill.
Therefore, when the Governor 315 General returned the Bill to the Governor with the suggestion that the same Bill be reserved for the con sideration of the President, the Governor General quite clearly evinced an intention that the Bill should remain alive, for otherwise there could be no question of further reservation of the same Bill for the consideration of the President.
The very suggestion of the further reservation of the Bill for the consideration of the President makes it impossible for us to hold, inferentially or fictionally, as we are asked to do, that the Governor General had withheld his assent.
It is clear on the facts that the Governor General neither assented to, nor withheld his assent from, the Bill.
His action may have been unconstitutional, but it cannot be regarded as amounting to a declaration that he was withholding his assent from the Bill, for the assenting to, or the withholding of assent from a Bill postulates a conscious and positive declaration that the assent is so given or withheld.
The suggestion that the Bill be reserved for the consideration of the President clearly militates against the view that the Governor General had, positively or even tacitly, withheld his assent from the Bill.
The very suggestion indicates that the Governor General intended that the Bill should remain pending so that it could be reserved for the consideration of the President and receive his assent or dissent.
In the premises it cannot be held that the Bill ceased to be pending by reason of the assent of the Governor General having been withheld from it.
In our view, in the facts and circumstances of this case, the Bill was pending at the date when our Constitution came into force.
As to (2): Learned counsel for the appellant then contends that even if the Bill was pending, it was certainly not pending before the Legislature of Assam.
What, then, was the Legislature of the Province of Assam immediately before the commencement of our Constitution? This involves a consideration of the relevant provisions of the Government of India Act, 1935.
The Government of India Act, 1935 was a statute passed by the British Parliament.
The 316 Parliament of the United Kingdom of Great Britain and Northern Ireland consists of the Sovereign and the three Estates of the Realm, namely, the Lords Spiritual and the Lords Temporal, who sit together in the House of Lords and the elected representatives of the people, who sit in the House of Commons.
When a Bill is passed by both Houses of Parliament or is passed by the House of Commons in the manner provided by Parliament Act, 1911, it becomes ready to receive the Royal assent.
No Bill passed by both Houses of Parliament or in the last mentioned case by the House of Commons can become law and be entered in the Statute Book without the Royal assent.
It is thus clear that according to British Constitutional theory, the Sovereign is an integral part of Parliament.
This notion is reflected in sections 17, 55 and 56 of the British North America Act, with regard to the Canadian Parliament and sections 69, 71 and 90 of the same Act with regard to the Provincial Legislatures of that Dominion.
The same idea was adopted in the Government of India Act, 1935.
Section 18 of this Act, as it originally stood, provided for a Federal Legislature consisting of His Majesty represented by the Governor General and two Chambers to be known respectively as the Council of States and the House of Assembly.
Section 60 provided for a Legislature for every Province consisting of His Majesty represented by the Governor and in certain Provinces two Chambers and in other Provinces one Chamber.
As already stated the Province of Assam had only one Chamber, the Legislative Assembly.
The legislative procedure of the Chambers of the Federal Legislature was regulated by section 30 and of the Chamber or Chambers of the Provincial Legislatures by section 73 of the Government of India Act, 1935.
Procedure subsequent to the passing of the Bill by the Legislative Chamber or Chambers was governed by section 32 with regard to Bills passed by the Chambers of the Federal Legislature and by sections 75 and 76 with regard to those passed by the Chamber or Chambers of the Provincial Legislatures.
It is true that section 18 of the Government of 317 India Act, 1935 was adapted as contemplated by section 9 of the Indian Independence Act, 1947, but there was no adaptation of section 60 of the Government of India Act, 1935 which dealt with the Provincial Legislature.
From the language used in section 18, as it stood before its adaptation and in section 60, it is quite clear that it was His Majesty himself, who was really a constituent part of the Legislatures, Federal and Provincial, and that be was represented by the Governor General in relation to the Federal Legislature and by the Governor in the case of the Provincial Legislatures.
His Majesty being, thus, an integral part of the Legislature, Federal and Provincial, when a Bill passed by the Chambers of the Federal Legislature or by the Chamber or Chambers of Provincial Legislatures, was presented to the Governor General or the Governor under section 32 or sections 75 and 76 of that Act, the Legislative process went on and unless and until assent was given or withheld by the Governor General or the Governor in the name of His Majesty there could be no escape from the position that in law and in reality the Bill was pending before His Majesty, for the Governor General or the Governor was, under that Act, merely the agent representing His Majesty, who was an integral part of the Legislature.
This was made clear by the provision that when the Governor General or the Governor declared that be assented or that he withheld his assent, such declaration had to be made in the name of His Majesty.
Therefore, whether the Bill was in the hands of the Governor or in the hands of the Governor General or was in transit between the one and the other on either way, it must be taken to have been pending before His Majesty and, therefore, before the Legislature.
The declaration giving or withholding assent was undoubtedly a continuation of the legislative process and until such declaration was made by the appropriate agency in the name of His Majesty obviously the Bill was pending and where, in law and in reality, could it at that stage be pending except before His Majesty as an integral part of the Legislature? Such 318 being the position under article 389 read with the relevant provisions of the Government of India Act, as we apprehend it, this Bill could properly be continued in the Legislature of Assam after the commencement of our Constitution.
Under article 168 of our Constitution every State has a Legislature consisting of the Governor and in certain States two Houses and in other States, which include Assam, one House.
The Bill having been passed by the Legislative Assembly of Assam before the commencement of the Constitution, all that was required to be done under the Constitution was to continue the legislative process under article 200.
It was, therefore, competent for the Governor of Assam to reserve the Bill for the consideration of the President and it was in order for the President, under article 201, to direct the Governor to return the Bill to the Legislative Assembly of the State together with the requisite message and it was quite proper for the Legislative Assembly, when the Bill was so returned, to consider it accordingly.
It follows, therefore, that when the Bill was again passed by the Legislative Assembly of Assam, it was proper to represent the Bill to the President for his consideration and it was open to the President to give his assent to the amended Bill, as he, in fact, did.
Reliance is placed by learned counsel for the appellant on article 31(4) and to a passage in the Judgment of this court in Visweshwar Rao vs The State of Madhya Pradesh(1) and it is contended that the word "Legislature", which occurs both in article 31(4) and article 389 means only the Chamber or Chambers of the Legislature and not the Governor or the Gov ernor General.
We need not discuss the larger question as to the correct interpretation of the word "Legislature" as occurring in article 31(4) and suffice it to say that the very passage relied on by learned counsel makes it quite clear that the word "Legislature" is used in different senses in different articles and may be in different senses in different places in the same article and its meaning has to be ascertained (1) , 1034.
319 keeping in view the subject or the context.
In view of the provisions of sections 18, 30 and 32 and sections 60, 73, 75 and 76 of the Government of India Act, 1935 to which reference has been made, we are clearly of opinion that the word "Legislature" has been used in article 389 in the larger sense, namely, comprising all the units that were concerned in the entire legislative process and included His Majesty represented by the Governor General or the Governor, as the case might be.
We find no reason to think that our Constitution intended only to keep alive the Bills which were actually pending before the Legislative Chamber or Chambers but not those which having been passed by the Legislative Chamber or Chambers had been presented to the Governor General or the Governor and were undergoing the final legislative process and awaiting the assent of His Majesty represented by the Governor General or Governor, as the case might be.
We are, therefore, of opinion, although for different reasons, that the High Court properly answered the first part of issue (1).
Re. issue (2): The Act having been properly passed by the Legislature of Assam, the Government of Assam was well within their rights under section 3 of the Act to declare that the estates of the tenure holders specified in the Notification vested in the State free from all encumbrances.
There is no suggestion that the properties of Sm.
Beda Bala Devi, the plaintiff in T. section No. 3 of 1955, were not "estates" within the meaning of the Act and accordingly the High Court has correctly decided this issue in favour of the State, so far as that plaintiff is concerned.
The Raja, the plaintiff in T. section No. 1 of 1955, however, raised the contention that his properties were not "estates" as defined in the Act and that being the subject matter of issue (4), this aspect of issue (2) was also left open until the decision of issue (4).
As the High Court has sent down the suit to the court of Subordinate Judge for disposal and determination of other issues, the final answer to issue (2), as regards the Raja, will depend on the determination of issue (4) and must until then be kept open.
42 320 Re. issue (3): The Act and its amendments are challenged on the ground that they infringe the fundamental rights of the plaintiff under article 31(2) and article 14 of the Constitution.
If, however, the legislation is protected under article 31 A of the Constitution then the question of infringement of fundamental rights of the plaintiff under articles 31(2) and 14 will not arise.
Article 31(4) protects an Act falling within it only against the contravention of the provisions of clause (2) of that article but not of those of article 14.
Article 31 A, however, protects an Act falling within it even if it is inconsistent with or takes away or abridges any of the rights conferred by the provisions of Part III.
It is obvious, therefore, that article 31 A gives greater and wider protection than does article 31(4).
If, therefore, article 31 A applies no question can arise under article 31(2) or article 14 and in that case article 31(4) need not be invoked at all.
What is protected by article 31 A is a law providing for the acquisition by the State of any estate or of any rights therein or for the extinguishment or modification of any such rights.
There is no question that the impugned Act, having been reserved for the consideration of the President, has in fact received his assent and, therefore, the proviso to article 31 A does not come into play.
The only question then is is the impugned Act a law providing for the acquisition of an estate or any rights therein? The expression "estate" in relation to any local area, has been made by clause (2) (a) of this article, to have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area.
The preamble to the impugned Act recites the expediency of providing for the acquisition by the State of the interests of proprietors and tenure holders and certain other interests in the permanently settled areas and certain other estates in the districts of Goalpara, Garo Hills and Cachar in the State of Assam including their interests in forests, fisheries, hats, bazars and ferries, mines and minerals.
Section 321 3 of that Act authorizes the State Government to declare, from time to time, by Notifications that the estate or tenure of a proprietor or tenure holder specified in the Notification shall stand transferred to and vest in the State free from all encumbrances.
Section 4 lays down the consequences that are to follow.
It is thus clear that the Act purports to be a law for the acquisition by the State of estates or tenures.
The word "estate" as defined in section 2(k) means lands included under one entry in any of the general registers of revenue paving and revenue free lands prepared and maintained under the law for the time being in force by the Deputy Commissioner and includes revenue free lands not entered in any register.
Under the Assam Land and Revenue Regulation (Reg. 1 of 1886) the Deputy Commissioner of every district is, by section 48, enjoined to prepare and keep in the prescribed form and manner a general register of revenue paying estates, a general register of revenue free estates and such other registers as the Government may direct.
Section 49 provides that until such registers are prepared the Government may direct that the existing registers kept by or under the control of the Deputy Commissioner shall be deemed to be registers prepared under section 48.
It will be noticed that what are to be entered in the general registers are revenue paying or revenue free estates.
The word "estate" is defined by section 3(b) to include six kinds of lands described in the six clauses therein set out.
This definition does not purport to be an exhaustive definition of "estate" but only includes certain enumerated items within the meaning of that expression.
The word "estate" is defined in the Goalpara Tenancy Act (Assam Act 1 of 1929) exactly in the same way as it is defined in the impugned Act, namely, as meaning lands included under one entry in any of the General Registers of revenue paying or revenue free lands prepared and maintained by the Deputy Commissioner.
The properties of both the plaintiffs appellants are and have been in point of fact entered in the General Register.
An "estate" within the meaning of the 322 Assam Land and Revenue Regulation 1 of 1886 is also an "estate" within the meaning of the Goalpara Tenancy Act (Act 1 of 1929) and of the impugned Act.
The impugned Act, therefore, is a law providing for the acquisition by the State of an "estate" within the meaning of article 31 A and, that being so, its constitutionality or validity cannot be questioned on the ground of any contravention of any of the provisions of Part III of the Constitution dealing with fundamental rights.
There is no dispute that the lands comprised in the trust estate of Sm.
Beda Bala Devi, the plaintiff in T. section No. 3 of 1955 is an "estate" as defined in each of the aforesaid statutes including the impugned Act.
The question whether the amount paid by the Raja, the plaintiff in T. section No. 1 of 1955, is revenue or tribute, whether his properties have been from before 1886 entered properly in the General Register of revenue paying estate and whether such properties come within the operation of the impugned Act, are the subject matter of issue (4), but those questions have no bearing on the question whether the impugned Act is entitled to the protection of article 31 A.
If the plaintiff Raja 's properties are not "estate" as defined in the Assam Land and Revenue Regulation or the Goalpara Tenancy Act or the impugned Act, then the Notification under section 3 of the impugned Act will not affect him but that will be, not because the impugned Act is not a law providing for the State acquisition of an "estate" but, because the Raja 's properties are not "estates" within the purview of the impugned Act.
The fact that the definition of "estate" in the Assam Land and Revenue Regulation is only an inclusive and not an exhaustive definition, that the Raja 's properties have been in fact entered in the General Register of revenue paying lands and that the lands falling within any of the six categories enumerated in section 3 (b) of the Assam Land and Revenue Regulation will certainly fall within the wider ambit of the definition of "estate" given in the impugned Act cannot be overlooked.
The impugned Act is nonetheless a law providing for State acquisition of "estate" even if its 323 definition of "estate" comprises something more than what is comprised in the six categories included within that term in section 3(b) of the Assam Land and Revenue Regulation of 1886.
In our judgment the impugned Act is fully protected by article 31 A.
In the view we have taken on article 31 A) it is unnecessary to discuss the question of the applicability of article 31(4).
We have, however, to touch very briefly a few subsidiary points urged before us.
It has been said that the impugned Act constitutes a colourable exercise of legislative power, for while it purports to specify the principles on which and the manner in which the compensation is to be determined and given, it actually makes provisions which result in illusory compensation or no compensation at all.
The doctrine of colourable legislation is relevant only in connection with the question of legislative competency as explained by this Court in K. C. Gajapati Narain Deb vs State of Orissa(1).
Here there is no question of any legislative incompetency.
The gravamen of the present complaint is as to the quantum of compensation, which, in view of the article 31 A, cannot be raised.
Reference has been made to section 11 of the impugned Act according to which in the computation of the gross income is to be included the gross rent payable by the tenant immediately subordinate, for the agricultural years preceding the date of vesting.
It is argued that the Act is vague and indefinite, because of the use of the word "years" in plural.
The High Court has given cogent reasons, with which we agree, for holding that the word "years" in the plural has been retained in the Act by mistake or oversight and it should be read in the singular.
Moreover, the Act has since been amended retrospectively by section 4 of Assam Act V of 1956 and the question does not arise.
The Act is also impugned on the ground of discrimination, which offends article 14 of the Constitution.
This question again is not open to the appellant in view of our decision on article 31 A. Further (1) ; 324 article 14 does not really help the appellant.
It is said that the State can pick and choose the estate of one zamindar and leave out those of their favourite ones, as indeed they have since done by withdrawing the Notification with respect to Gouripore and Prabatjoar estates.
There is no force in this contention in view of the decisions of this court in Biswambhar Singh vs The State of Orissa and others(1) and Thakur Amar Singh vs State of Rajasthan(2).
It is said that the Act only applies to some Lakheraj estates, that is to say, Lakheraj estates within the boundaries of a permanently settled estate but not to other Lakheraj estates.
The acquisition of Lakheraj estates within the boundaries of permanently settled estates clearly facilitates the object of acquiring permanently settled areas and such Lakheraj estates within the boundaries of permanently settled estates constitute a class distinct from other Lakheraj estates not so situate and, therefore, the charge of discrimination cannot, in view of the principles laid down by this court, apply to the impugned Act.
Lastly it is said that there is discrimination because of different scales of compensation which have been prescribed for different estates.
It is not difficult to find a rational basis for such classification of proprietors of different income groups.
We need not, however, dilate on this point, for we have already held that the Act is not open to challenge on the ground of contravention of any of the provisions of Part III of the Constitution.
There was in the Raja 's T. section No. 1 of 1955, a prayer for injunction restraining the State from taking possession of his estate.
The High Court has rejected that prayer on grounds which appear to us to be quite cogent and convincing and as we see no substantial risk of irreparable loss to the Raja we do not consider it right to reverse even that order of the High Court.
For reasons stated above both these appeals are dismissed with costs.
As the two appeals were heard together there will be one set of costs of bearing to be apportioned equally between the two appellants.
(1) (1954] S.C.R. 842.
(2) ; , 316.
| The appellants by two suits, which were heard by a Full Bench of the Assam High Court, challenged the Constitutional validity of the Assam State Acquisition of Zamindaries Act of 1951 as amended by the Assam Act VI of 1954.
The Assam Legislative Assembly had passed the Bill on March 28, 1949.
It was presented to the Governor and reserved by him for the consideration of the Governor General who, in view of the impending constitutional changes, on January 25, 1950, returned the Bill to the Governor suggesting that it might be reserved for the consideration of the President.
While the Bill was in transit and before it actually reached the Governor, the Constitution came into force.
The Governor reserved the Bill for the consideration of the President and sent it to him.
The President returned the Bill suggesting certain alterations.
The State Legislative Assembly considered them and passed the Bill suitably amended.
It received the President 's assent on July 27, 1951, and became an Act.
On September 11, 1951, the State Legislative Assembly passed an amending Bill which was assented to by the President.
The Act as amended was brought into force on April 15, 1954, and a Notification was issued by the State Government under the impugned Act declaring that the properties of the appellants, along with those of others, would vest in the State.
It was contended on behalf of the appellants that the impugned Act was not within the competence of the State Legislature, it was not enacted according to law and infringed the fundamental rights of the appellants under articles 31(2) and 14 of the Constitution.
The High Court repelled these contentions and they were reiterated in appeal.
Held, that the impugned Act was passed according to law, its 40 304 provisions were constitutionally valid and the decision of the High court must be affirmed.
That the repeal of the Government of India Act, 1935, by article 395 of the Constitution could not wipe out the Bill as it was, immediately before the commencement of the Constitution, pending before the Governor General and/or the Governor who represented His Majesty the King who was a part of the Provincial Legislature and was, therefore, pending before the Provincial Legislature and, consequently, the State Legislature of Assam was competent under article 389 to continue the same.
That although the Governor General might not have acted constitutionally under section 76 of the Government of India Act, 1935, in suggesting that the Bill might be reserved for the President 's consideration, his action, in the absence of a positive declaration to that effect, could not amount to a withholding of assent under that section and effect a termination of the bill, contrary to his express intention indicated by the suggestion itself that it should remain pending.
That under the Government of India Act, 1935, His Majesty the King was an integral part of the Legislature and when the Bill was presented to the Governor or the Governor General under section 75 or section 76 of the Act, in due course of legislation, and neither of them gave or withheld assent in the name of His Majesty, it remained pending, both in law and reality, before his Majesty and, therefore, before the Legislature and could properly be continued by the State Legislature after the commencement of the Constitution.
The Governor was, therefore, within his powers in reserving it for the President and the subsequent enactment of the Bill was in accordance with the Constitution.
That the word 'Legislature ' is not used in the same sense in different articles of the Constitution, or even in different parts of the same article, and its exact meaning has to be ascertained with reference to the subject matter on the context and in article 389 it is used in the larger sense so as to comprise the entire legislative machinery including His Majesty represented by the Governor General or the Governor and does not mean merely the Legislative Chamber or Chambers.
The Constitution intended to keep alive not merely Bills which were actually pending before the Legislative Chamber but also Bills, such as the present, that had reached the final stages of the legislative process and were awaiting assent of the Governor General or the Governor representing His Majesty.
Visweshwar Rao vs The State of Madhya Pradesh, [1952] S.C.R. 1020, referred to.
That the impugned Act was a law providing for the acquisition of estates by the State within the meaning of article 31 A of the Constitution and was, as such, fully protected by it, and its validity could not be questioned on the ground of any contravention of any 305 of the provisions of Part III of the Constitution dealing with fundamental rights.
That the Act could not, in the absence of any question as to legislative incompetency, be impugned as a colourable exercise of legislative power on account of the provisions it made for payment of compensation and any question relating to the quantum of compensation would be barred under article 31 A of the Constitution.
C.Gajapati Narain Deb vs State of Orissa, ([1954] S.C.R. 1), referred to.
That article 14 of the Constitution could not really help the appellants, it being no longer open to them to contend, in view of the decisions of this Court, that the State could pick and choose and thus discriminate between one estate and another.
Biswambhar Singh vs The State of Orissa, ([1954] S.C.R. 842) and Thakur Amar Singh vs The State of Rajasthan, ([1955] 2 S.C.R. 303), referred to.
That, in view of the decisions of this Court, the Act could not be said to discriminate by reason of its application being limited to such Lakheraj estates alone as fell within the boundaries of permanently settled estates and not extending to other Lakheraj estates as the former constituted a distinct class by themselves and acquisition of them facilitated the object of the Act.
Nor could the provision for different scales of compensation prescribed for different estates amount to discrimination as there is a rational basis for such classification of proprietors of different income groups.
|
Summarize this legal judgement text concisely | ION: Criminal Appeal No. 49 of 1955.
Appeal by special leave from the order dated the 9th July, 1954 of the Punjab High Court at Simla in Criminal Revision No. 778 of 1954 arising out of the judgment and order dated the 30th June 1954 of the Court of Additional Sessions Judge, ' Amritsar in Criminal Appeal No. 409 of 1954.
477 Ram Das and Raghu Nath Pandit, for the appellants.
Jindralal and P. G. Gokhale, for the respondent.
April 26.
The Judgment of the Court was delivered by BHAGWATI J.
This appeal with special leave involves the interpretation of section 9 of the Punjab Security of the State Act, 1953 (Punjab Act XII of 1953), hereinafter called "the Act".
The appellants were members of the Amritsar District Motor Union which took out a procession on 23rd March, 1954 to protest against the policy of the Punjab Government to nationalise motor transport.
The procession started from Gul Park and was taken on lorries and jeeps.
It stopped near Chitra Talkies and then started on foot.
When it reached near Prabhat Studio, the appellants raised slogans "Jaggu mama hai hai (Jaggu, maternal uncle be dead)" and "Khachar Khota hai hai (mule cum donkey be dead)".
The first slogan was alleged to have been directed against the Hon 'ble Shri Jagat Narain, Transport Minister, Punjab State and the second slogan against the Hon 'ble Shri Bhim Sen Sachar, Chief Minister, Punjab State.
The uttering of these slogans was considered objectionable and the appellants were charged in the Court of the Magistrate, First Class, Amritsar: "that you, on or about the 23rd day of March 1954 at Amritsar, while being members of a procession, raised slogans "Jaggu mama hai hai" "Khachar Khota hai hai" which besides being indecent amounted to defamation and was pre judicial to the security of the State and the maintenance of public order and thereby committed an offence punishable under section 9 of the Security of the State Act".
The appellants pleaded not guilty and claimed to be tried.
They also led evidence in defence.
The learned Magistrate, however, disbelieved the defence and, accepting the prosecution evidence, found that the appellants did raise these slogans.
In the opinion 478 of the learned Magistrate, the slogans were in fact abuses hurled at the Transport Minister and the Chief Minister of the Punjab Government which besides being indecent amounted to defamation and were prejudicial to the maintenance of public order.
The appeal taken by the appellants before the Court of Additional Sessions Judge, Amritsar, was unsuccessful.
The learned Additional Sessions Judge also found against the appellants and observed that the slogans were highly objectionable and they fell within the ambit of section 9 of the said Act, that by raising those slogans the appellants undermined the public order as well as decency and they also amounted to defamation.
He, therefore, maintained the conviction of the appellants and the sentences of 3 months ' rigorous imprisonment which had been imposed by the learned Magistrate upon them.
The appellants filed a Revision Application before the High Court of Judicature for the State of Punjab at Simla but the same was summarily dismissed by the learned Chief Justice.
The appellants thereafter applied for and obtained from this Court Special Leave to appeal and the appeal has accordingly come on for hearing and final disposal before us.
On the evidence on record, there is no doubt that the appellants were members of the procession and did utter those slogans against the Transport Minister and the Chief Minister of the Punjab Government,.
The question, however, remains whether, in uttering these slogans, they committed an offence under section 9 of the Act.
Section 9 of the Act reads as follows "9.
Whoever (a) makes any speech, or (b) by words, whether spoken or written, or by signs or by visible or audible representations or otherwise publishes any statement, rumour or report, shall, if such speech, statement, rumour or report undermines the security of the State, friendly relations with foreign States, public order, decency or morality, or amounts to contempt of Court, defama 479 tion or incitement to an offence prejudicial to the security of the State or the maintenance of public order, or tends to overthrow the State, be punishable with imprisonment which may extend to three years or with fine or with both".
It cannot be denied that the appellants by words spoken published statements in relation to the Transport Minister and the Chief Minister of the Punjab Government.
A futile argument was advanced before us by the advocate of the appellants that this condition was not satisfied but we need not pause to consider the same.
The sole question for our determination is whether such statements (1) undermined the security of the State, friendly relations with foreign States, public order, decency or morality or (2) amounted to contempt of Court, defamation or incitement to an offence prejudicial to the security of the State or maintenance of public order, or (3) tended to overthrow the State.
The appellants were no doubt affected by the policy of the Punjab Government to nationalise motor transport and the Transport Minister and the Chief Minister were really responsible for sponsoring that policy.
Their tirade, therefore, was against both these individuals and, in the demonstration which the appellants held against that policy, they gave vent to violent expressions of opinion against them and, in the slogans which they uttered, used expres sions which were certainly objectionable.
The slogan "Jaggu mama hai hai" could be translated as "Jaggu, whose sister is my father 's wife is dead, woe betide him" and was in that sense a vulgar abuse burled against the Transport Minister.
The slogan "Khachar khota hai hai" could be translated as "mulecum donkey is dead, woe betide him" and it was directed against the Hon 'ble Shri Bhim Sen Sachar, Chief Minister, Punjab Government, whose name Sachar was caricatured into khachar being mule and was also combined with khota, a donkey.
This was again a vulgar abuse burled against the Chief Minister, Punjab Government.
The appellants ' conduct in this behalf could not at 480 all be justified.
Whatever their grievances against the Transport Minister and the Chief Minister of the Punjab Government were, they were entitled to ventilate them in a decent and dignified manner and they were certainly not justified in hurling such vulgar abuses against these individuals howsoever prejudicial to the interest of the appellants the policy of nationalised motor transport sponsored by them might have been.
No decent citizen should have uttered such slogans and the State authorities were well within their rights in proceeding against the appellants.
The difficulty, however, in the way of the State authorities is that they misconceived their remedy.
Howsoever provocative and indecent or unbefitting a responsible citizen of the State the conduct of the appellants was, the charge which was levelled against the appellants was one under section 9 of the Act and before the prosecution could succeed they bad not only to prove that what the appellants did was against decency and was defamatory of these indi viduals but also was such that it undermined public order, decency or morality or was tantamount to an incitement to an offence prejudicial to the maintenance of public order.
The learned counsel for the State very rightly conceded that the statements could not be said to undermine the security of the State or friendly relations with foreign States nor did they amount to contempt of Court or defamation prejudicial to the security of the State nor did they tend to overthrow the State.
Howsoever reprehensible these slogans were, they certainly would not have that effect.
The only way in which he sought to bring these slogans uttered by the appellants within the mischief of section 9 of the Act was by urging before us that the statements undermined public order, decency or morality and that they were tantamount to an incitement to an offence prejudicial to the maintenance of public order.
In support of this contention be referred us to the evidence of Ram Rakha, P.W. 2, Sub Inspector, C.I.D., who had accompanied the procession: "There was a sufficient, number of public men 481 there and they felt annoyed over these slogans.
The police had sufficient arrangements and had there been no arrangement there might have been a dispute".
There was also the evidence of Gurdit Singh, P. W. 3: "There were many other persons of the public with the procession.
People took these slogans ill" and Sunder Singh, P.W. 4: "There were many other persons of the public.
The slogans had a bad effect on the public".
It is significant to observe that, in the initial report made by the Sub Inspector Ram Rakha as also the Diary Report prepared by him, no mention had been made by him of the members of the public having felt annoyed over these slogans.
The two other witnesses Gurdit Singh, P.W. 3 and Sunder Singh, P.W. 4, were shown in their cross examination to have been the associates of the police in the investiga tions which they used to carry on and were not at all worthy of credence.
These statements, therefore, in regard to the members of the public having felt annoyed over these slogans uttered by the appellants, were liable to be discredited.
Even assuming that some members of the public who had congregated near the Prabhat Studio felt annoyed at these slogans and took them ill it is a far cry from that annoyance to undermining of the public order, decency or morality or incitement to an offence prejudicial to the maintenance of public order.
The only offence prejudicial to the maintenance of public order which could be thought of in this context was that of rioting and there is not the slightest evidence on record to justify an inference that the effect of the utterance of these slogans by the appellants against the Transport Minister and the Chief Minister would, but for the police arrangements, have led to the undermining of the public order or would have led to rioting which would be certainly prejudicial to the mainten ance of public order.
Indecent and vulgar though these slogans were as directed against the Transport Minister and the Chief Minister of the Punjab Government, the utterance thereof by the appellants who were the members of the procession protesting against 482 the scheme of nationalised motor transport was hardly calculated to undermine decency or morality the strata of society from which the appellants came being habituated to indulge freely in such vulgar abuses without any the slightest effect on the persons hearing the same.
These slogans were certainly defamatory of the Transport Minister and the Chief Minister of the Punjab Government but the redress of that grievance was personal to these individuals and the State authorities could not take the cudgels on their behalf by having recourse to section 9 of the Act unless and until the defamation of these individuals was prejudicial to the security of the State or the mainten ance of public order.
So far as these individuals were concerned, they did not take any notice of these vulgar abuses and appeared to have considered the whole thing as beneath their notice.
Their conduct in this behalf was consistent with the best traditions of democracy.
"Those who fill a public position must not be too thin skinned in reference to comments made upon them.
It would often happen that observations would be made upon public 'men which they know from the bottom of their hearts were undeserved and unjust; yet they must bear with them and submit to be misunderstood for a time" (Per Cockburn, C.J. in Seymour vs Butterworth(1) and gee the dicta of the Judges in R. vs Sir R. Carden(2).
"Whoever fills a public position renders himself open thereto.
He must accept an attack as a necessary, though unpleasant, appendage to his office" (Per Bramwell, B., in Kelley vs Sherlock(3)).
Public men in such positions may as well think it worth their while to ignore such vulgar criticisms and abuses hurled against them rather than give importance to the same by prosecuting the persons responsible for the same.
While commending thus the conduct of the Transport Minister and the Chief Minister of the Punjab Government, we cannot help observing that the step (1) [ ; , 376, 377; ; , 168, 169.
(2) (3) , 689.
483 which the State authorities took against the appellants in prosecuting them under section 9 of the Act was unjustified as the slogans uttered by the appellants did not under the circumstances set out Above fall within the mischief of that section.
Deprecating as we do the conduct of the appellants in uttering these slogans, we cannot help feeling that the prosecution has failed to establish that the appellants were guilty of the offence with which they had been charged with the result that the appeal of the appellants will be allowed, their convictions and sentences passed upon them will be set aside and they will be set at liberty forthwith.
We only hope that the observations made by us here will be an eyeopener to the appellants and they will behave them selves better in the future.
| The appellants were members of a procession taken out to protest against the policy of the Punjab Government to nationalise motor transport and raised the slogans "Jaggu mama hai hai (Jaggu, maternal uncle be dead)" and "Khachar Khota hai hai (mule cumdonkey be dead)".
The words were directed against the Transport Minister and the Chief Minister respectively and were defamatory.
The appellants were prosecuted and convicted under section 9 of the Punjab Security of the State Act, 1953.
Held that the statements could not be said to undermine the security of the State or friendly relations with foreign States nor did they amount to contempt of Court or defamation prejudicial to the security of the State nor did they tend to overthrow the State and that the prosecution had failed to establish that the act of the appellants undermined public order, decency or morality or was tant amount to an incitement to an offence prejudicial to the maintenance of public order and consequently the prosecution under section 9 was not justified.
Public men may as well think it worth their while to ignore such vulgar criticisms and abuses hurled against them, rather than give importance to the same by prosecuting the person responsible for the same.
Seymour vs Butterworth ([1862] ; , 376, 377), B. vs Sir B. Carden ([1879] , Kelly vs Sherlock ([1866] L.R. 1 Q.B. 686, 689; referred to.
|
Summarize this legal judgement text concisely | ions Nos. 585, 599, 611, 622, 625, 565, 576 of 1954 and 48, 58, 415, 416 of 1955 and 10, 16, 37, 39 and 47 of 1956.
397 Under Article 32 of the Constitution of India for the enforcement of Fundamental Rights.
G.S. Pathak, Rameshwar Nath and K. R. Chowdhry, for petitioners in Petitions Nos. 10, 37 and 47 of 1956.
J.N. Bannerji and V. section Sawhney, for petitioners in Petition No. 622 of 1954.
S.P. Sinha and K. R. Chowdhry, for petitioners in Petition No. 585 of 1954.
B.B. Tawakley and K. P. Gupta, for petitioners in Petitions Nos.
565 and 576 of 1954.
K.R. Chowdhry, for petitioners in Petitions Nos. 599 and 611 of 1954 and 58, 415 and 416 of 1955 and 16 and 39 of 1956.
R.Patnaik and K. R. Chowdhry, for petitioners in Petition No. 48 of 1955.
R.Patnaik, for petitioners in Petition No. 625 of 1954.
K.L. Misra, Advocate General, U.P., K. B. Asthana and C. P. Lal, for the State of U.P. and the Cane Commissioner, U.P. in all the Petitions.
C.K. Daphtary, Solicitor General of India, and Jagdish Chandra, for the Cane Growers ' Co operative Development Unions in Petitions Nos. 585 and 625 of 1954 and 10 and 47 of 1956.
Jagdish Chandra, for the Cane Growers ' Co operative Development Unions in rest of the petitions except Petition No. 37 of 1956.
D.N. Mukerji, for Daurala Sugar Mills (respondent No. 4) in Petitions Nos.
611 of 1954, 58, 415 and 416 of 1955.
O.N. Srivastava, for Punjab Sugar Mills in Petitions Nos. 48 of 1955 and 47 of 1956.
A.S. Chawla, for respondent No. 3 in Petition No. 10 of 1956.
Ganpat Rai for respondent No. 9 in Petition No. 10 of 1956.
398 1956.
April 24.
The Judgment of the Court was delivered by BHAGWATI J.
These Petitions under article 32 of the Constitution impugn the validity of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 (U.P. Act XXIV of 1953) hereinafter called the impugned Act and the notifications dated 27th September, 1954 and 9th November, 1955 issued by the U.P.Government thereunder.
The petitioners are sugarcane growers in the several villages of the Districts of Meerut, Kheri, Gorakhpur and Deoria in the State of U.P. numbering 4,724 in the aggregate.
Associated with them are the President, the Vice Presidents and the Secretary of an association which is styled "the Ganna Utpadak Sangh" which is a rival body to the Co operative Development Unions established and recognised under the impugned Act.
The notification dated 27th September, 1954, issued in exercise of the powers conferred by sub section 1 (a) read with sub section 2(b) of section 16 of the impugned Act ordered that where not less than 3/4 of the cane growers of the area of operation of a Cane Growers Co operative Society are members of the Society, the occupier of the factory for which the area is assigned shall not purchase or enter into agreement to purchase cane grown by a cane grower except through such Cane Growers Co operative Society.
The notification dated 9th November, 1955 was issued in exercise of the powers conferred by section 15 of the impugned Act and reserved or assigned to the sugar factories mentioned in column 2 of the Schedule annexed thereto the cane purchasing centers (with the authorities attached to them) specified against them in column 3 for the purpose of supply of sugarcane during the crushing season 1955 56 subject to the conditions and explanations given therein.
The former relates to the agency of supply of sugarcane to the factories and the latter relates to the creation of zones for particular factories.
All the Petitions except Nos. 0 of 1956 and 37 of 1956 impugn the former notification 399 but the grounds of attack against both are common.
The impugned Act is challenged as ultra vires the powers of the State Legislature, the subject matter of the Act being within the exclusive field of Parliament and also as being repugnant to Act LXV of 1951 and Act X of 1955 passed by Parliament, and section 15 and section 16 (1) (a) and 2 (b) and the notifications issued thereunder are challenged as unconstitutional inasmuch as they infringe the fundamental rights guaranteed under article 14, article 19(1)(c), (f) and (g) and article 31 besides being in violation of article 301 of the Constitution.
All these Petitions involve common questions of law and may be disposed of by one judgment.
A short history of the legislation enacted by the Centre as well as the Province of U.P. in regard to sugar and sugarcane will be helpful for the determination of the questions arising in these Petitions.
On 8th April, 1932, the Central Legislature passed the Sugar Industry (Protection) Act, 1932 (Act XIII of 1932) to provide for the fostering and development of Sugar Industry in India in pursuance of the policy of discriminating protection of industries with due regard to the well being of the community.
As a result of the protection thus granted to the sugar industry, the number of sugar factories which was 31 prior thereto registered a rapid rise and by 1938 they were 139 in number.
There was also a large expansion in the cultivation of sugarcane and millions of cultivators in the Province of U.P. took to growing sugarcane.
In order to protect their interests and for the purpose of assuring to them a fair price for their produce, the Central Legislature enacted on 1st May, 1934 the (Act XV of 1934) to regulate the price at which sugarcane intended to be used in the manufacture of sugar might be purchased by or for factories.
Sugarcane was grown in various Provinces and the declaration of controlled areas and the fixing of minimum price for the purchase of sugarcane intended for use in any factory in any controlled area was of necessity left to the Provincial Governments and the Provincial 400 Governments were also empowered to make rules for the purpose of carrying into effect the objects of the Act including, in particular, the Organisation of growers of sugarcane into Co operative Societies for the sale of sugarcane to factories.
With the coming into operation of the Government of India Act, 1935, there was a distribution of legislative powers between the Dominion Legislature and the Provincial Legislatures and agriculture (Entry No. 20), trade and commerce within the Province (Entry No. 27) and production, supply and distribution of goods, development of industries subject to the provision in List 1 with respect to development of certain industries under Dominion control (Entry No. 29) were included in List 11, the Provincial Legislative List.
The relevant provision in List 1 was contained in Entry No. 34: "Development of industries where development under Dominion control is declared to be in the public interest".
As a result of this distribution of legislative powers, the entire subject matter of Act XV of 1934 fell within the Provincial Legislative List.
It was felt that Act XV of 1934 was not sufficiently comprehensive for dealing with the problems of the sugar industry and it was found necessary to replace it by a new measure which would provide for the better Organisation of cane supplies to sugar factories.
The Governments of U.P. and Bihar, therefore, decided in consultation with each other to introduce legislation on similar lines for both the Provinces which together accounted for nearly 85 per cent.
of production of sugar in India.
The U.P. Legislature accordingly enacted on 10th February, 1938 the U.P. Sugar Factories Control Act, 1938 (U.P. Act 1 of 1938) to provide for the licensing of the sugar factories and for regulating the supply of sugarcane intended for use in such factories and the price at which it may be purchased and for other incidental matters.
This Act provided for (a) the licensing of sugar factories, (b) the regulation of the supply of sugarcane to factories, (c) the minimum price for sugarcane, (d) the establishment of Sugar Control Board and Advisory.
Committee, and (e) a 401 tax on the sale of sugarcane intended for use in factories, and repealed Act XV of 1934.
This Act was to remain in force initially until 30th June, 1947 but the period was extended to 30th June, 1950 by U.P. Act XIII of 1947 and to 30th June, 1952 by U.P. Act XXI of 1950.
The Second World War intervened and an emergency was proclaimed by the Governor General under section 102 of the Government of India Act, 1935.
The Dominion Legislature acquired the power to make laws for the Provinces with respect to any of the matters enumerated in the Provincial Legislative List.
The result was in effect to make the Provincial Legislative List also a Concurrent Legislative List for the operation of the Dominion Legislature but if any provision of a Provincial law was repugnant to any provision of the Dominion law made in exercise of that power, the Dominion law was to prevail and the Provincial law was to be void to the extent of the repugnancy.
The proclamation of emergency was to operate until revoked by a subsequent proclamation and laws made by the Dominion Legislature as above were to have effect until the expiration of a period of six months after the proclamation had ceased to operate.
The Defence of India Act and the Rules made thereunder occupied the field, sugar was made a controlled commodity in the year 1942 and its production and distribution as well as the fixation of sugar prices were regulated by the Sugar Controller thereafter.
The proclamation of emergency was revoked on 1st April, 1946 and the laws made by the Dominion Legislature in the field of the Provincial Legislative List were to cease to have effect after 30th September, 1946.
On 26th March, 1946, the British Parliament enacted the India (Central Government and Legislature) Act, 1946 (9 & 10 Geo.
6, Chapter 39).
Section 2(1) (a) provided that notwithstanding anything in the Government of India Act, 1935, the Indian Legislature shall during the period mentioned in section 4 of the Act have power to make laws with respect to the following matters: "(a) trade and commerce (whether or not within 402 a Province) in, and the production, supply and distribution of, cotton and woollen textiles, paper (including newsprint), foodstuffs (including edible oil seeds and oils), petroleum and petroleum products, spare parts of mechanically propelled vehicles, coal, iron, steel and mica;. . " The period provided in section 4 was the period of one year beginning with the date on which the proclamation of emergency ceased to operate or, if the Governor General by a public notification directed, a period of 2 years beginning with that date.
There was a proviso to that section that if and so often as a resolution approving the extension of the said period was passed by both Houses of Parliament, the same period shall be extended for a further period of 12 months from the date on which it would otherwise expire but it was not to continue in any case for more than 5 years from the date on which the proclamation of emergency ceased to operate.
Acting under the power reserved to it under section 2(1)(a) aforesaid, the Central Legislature enacted on 19th November, 1946, the Essential Supplies (Temporary Powers) Act, 1946 (Act XXIV of 1946) to provide for the continuance during the limited period of powers to control production, supply and distribution of, and trade and commerce in, certain commodities.
Section 1(3) of the Act provided that it shall cease to have effect on the expiration of the period mentioned in section 4 of the India (Central Government and Legislature) Act, 1946.
In the absence of a notification by the Governor General, the Act remained operative until 31st March, 1947 only.
The Governor General, however, issued a notification on 3rd March, 1947 continuing its force for a period of two years from the date of the cessation of emer gency.
By virtue of this notification, the Act would have remained in force till 31st March, 1948.
On 18th July, 1947, the Indian Independence Act was passed and India became a Dominion on 15th August, 1947.
Under section 9 read with section 19(4) of the Indian Independence Act, 1947, the Governor General passed an order on 14th August, 1947 which substituted the 403 words "Dominion Legislature" for "Both Houses of Parliament" in the proviso to section 4 of India (Central Government and Legislature) Act, 1946 and also introduced a new section 4(a) by way of adaptation providing that the powers of the Dominion Legislature shall be exercised by the Constituent Assembly.
On 25th February, 1948, the Constituent Assembly passed its first Resolution extending the operation of the Act for one year up to 31st March, 1949.
On 3rd March, 1949, a second Resolution was passed by the Assembly extending the life of the Act by one year more up to 31st March, 1950.
With the advent.
of our Constitution on 26th January, 1950, Parliament was invested under article 369 with power for a period of 5 years from the commencement of the Constitution to make laws with respect to the following matters as if they were enumerated in the Concurrent List: "(a) trade and commerce within a State in, and the production, supply and distribution of foodstuffs (including edible oil seeds and oil) . . . . " The life of the Act was accordingly extended from time to time up to 26th January 1955 by Acts passed by Parliament.
Act XXIV of 1946 defined an essential commodity to mean any of the following classes of commodities: "(1) Foodstuffs . . . . " Food crops were defined as including crops of sugarcane.
Section 3 of the Act empowered the Central Government, so far as it appeared to it to be necessary or expedient for maintaining or increasing the supply of any essential commodity or for securing its equitable distribution and availability at fair prices to provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.
On 7th October, 1950, the Central Government, in exercise of the powers conferred upon it by section 3 of the Act, promulgated the Sugar and Gur Control Order, 1950, inter alia empowering it to prohibit or to restrict the export of sugarcane from any area, to direct that no gur or sugar shall be 404 manufactured from sugarcane except under and in accordance with the conditions specified in the licence issued in this behalf and to prohibit or to restrict the despatch of gur or sugar from any State or any area therein.
Power was also given to fix minimum price of sugarcane and no person was to sell or agree to sell sugarcane to a producer and no producer was to purchase or agree to purchase sugarcane at a price lower than that notified thereunder.
This power of fixing the price of sugarcane was exercised by the Central Government from time to time by issuing notifications fixing the minimum prices to be paid by the producers of sugar by vacuum pan process or their agents for sugarcane purchased by them during the 1950 51 crushing season in various States including U.P.
On 31st October, 1951, Parliament enacted the Industries (Development and RegulatiOn) Act, 1951 (Act LXV of 1951) to provide for the development and regulation of certain industries.
By section 2 of the Act it was declared that it was expedient in the public interest that the Union should take under its control the industries specified in the First Schedule which included in item 8 thereof the industry engaged in the manufacture or production of sugar.
The Province of Bihar which, along with U.P. contributed to nearly 85 per cent.
of production of sugar in India had also on its Statute Book the Bihar Sugar Factories Control Act VII of 1937.
On 10th April, 1938, a joint meeting of the U.P. and the Bihar Sugar Control Boards was held at which it was resolved that a Committee be appointed to enquire into the working of the sugarcane rules and labour conditions prevailing in the sugar factories in the two Provinces.
The Governments of the U.P. and Bihar accepted this recommendation of the Sugar Control Boards and accordingly appointed the Khaitan Committee, (1) to examine the working of the sugarcane rules, (2) to look into the complaints of malpractices received from time to time in connection with the supply of sugarcane to the sugar factories, (3) to enquire into the labour conditions of the sugar factories, and (4) to suggest remedial measures for the shortcomings as 405 noted in (1), (2) and (3) above.
Shibban Lal Saxena, the present President of the Ganna Utpadak Sangh and one of the petitioners before us was also a member of that Committee.
That Committee submitted its Report in 1940 recommending inter alia abolition of the dual system of supply and creation of a strong co operative Organisation of the sugarcane growers themselves as also creation of a zonal system.
The Indian Tariff Board had also, in the meanwhile, made its Report on the sugar industry in the year 1938 commending the advantages of a zonal system.
There was further the report of the U. P. Sugar Industry Enquiry Committee, 1951 called the Swaminathan Committee, which also recommended the abolition of dual agencies of cane supplies to factories and commended the desirability of employing the agency of the Co operative Societies for the purpose.
It also recommended that the U. P. Act I of 1938 should be amended in order to make this regulation possible.
Act LXV of 1951 was brought into force with effect from 8th May, 1952.
In view of the same, certain provisions of U. P. Act I of 1938 became inoperative.
The U.P. Legislature, therefore, passed on 29th June, 1952 the U. P. Sugar Factories Control Amendment) Act) 1952, deleting those provisions and putting the amended Act permanently on the Statute Book.
The U. P. Act I of 1938, as thus amended, continued in force till, as a result of the prior enactment of Act LXV of 1951 and the report of the Indian Tariff Board on the Sugar Industry as well as the reports of the Khaitan Committee and the Swaminathan Committee mentioned above, the U. P. Legislature enacted the impugned Act.
The object of the enactment was stated to be as follows: "With the promul gation of the Industries (Development and Regulation) Act, 1951 with effect from 8th May, 1952, the regulation of the sugar industry has become exclusively a Central subject.
The State Governments are now only concerned with the supply of sugarcane to the sugar factories.
The Bill is being introduced in order to provide for a rational distribution of sugarcane to factories, for its development on organised 406 scientific lines, to protect the interests of the cane growers and of the industry and to put the new Act permanently on the Statute Book" (Vide Statement of objects and reasons published in the U. P. Gazette Extraordinary dated 15th July, 1953).
This is the impugned Act the vires of which is challenged in these Petitions.
In exercise of the rule making power conferred by section 28 of the Act, the U.P. Government made the U.P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954.
The U. P. Government also, in exercise of the powers conferred by section 16 of the Act, promulgated the U.P. Sugarcane Supply and Purchase Order, 1954, which came into effect from 19th September, 1954.
All these related to the supply and purchase of sugarcane in U.P. Act LXV of 1951 was amended by Act XXVI of 1953 which, by adding Chapter III(b), invested the Central Government inter alia with power so far as it appeared to it necessary or expedient for securing the equitable distribution and availability at fair prices of any article or class of articles relatable to any scheduled industry to provide by notified order for regulation of supply and distribution thereof and trade and commerce therein.
On 1st April, 1955, Parliament enacted the (Act X of 1955) to provide in the interests of the general public for the control of production, supply and distribution of, and trade and commerce in, certain commodities.
The essential commodity there was defined to mean any of the following classes of commodities: "(v) foodstuffs, including edible oilseeds, and oils; . . . . . . . . (xi) any other class of commodity which the Central Government may, by notified order declare to be an essential commodity for the purposes of this Act, being a commodity with respect to which Parliament has power to make laws by virtue of Entry 33 in List III in the Seventh Schedule to the Constitution;" Food crops were defined as inclusive of crops of sugar 407 cane.
Section 3(1) empowered the Central Government, if it was of the opinion that it was necessary or expedient to do so for maintaining or increasing the supply of any essential commodity or for securing its equitable distribution and availability at fair prices, to provide by order for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.
Section 3(2) (b) inter alia provided for the making of such an order for bringing under cultivation any waste or arable land whether appurtenant to a building or not, for the growing thereon of foodcrops generally or of specified foodcrops.
Section 16 of the Act repealed (a) the Essential Commodities Ordinance, 1955, and (b) any other law in force in any State immediately before the commencement of the Act in so far as such law controlled or authorised the control of the production, supply and distribution of, and trade and commerce in, any essential commodity.
In exercise of the powers conferred by section 3 of the Act, the Central Government promulgated on 27th August, 1955 the Sugar Control Order, 1955 and the Sugarcane Control Order, 1955.
The latter empowered the Central Government, after consultation with such authorities, bodies or associations as it may deem fit by notification in the official Gazette from time to time, to fix the price of sugarcane and direct payment thereof and also to regulate the movement of sugar cane.
The power to regulate the movement of sugarcane comprised the power to prohibit or restrict or otherwise regulate the export of sugarcane from any area for supply to different factories and the power to direct that no gur (jaggery) or sugar shall be manufactured from sugarcane except under and in accordance with the conditions specified in a licence issued in this behalf Clause 7 of this order provided that the Sugar and Gur Control Order, 1950, published by the Government of India in the Ministry of Food and Agriculture, S.R.O. 735 dated 7th October, 1950, and any order made by a State Government or other authority regulating or prohibiting the production, supply and distribution of sugarcane and trade or 408 commerce therein were thereby repealed except as respect to things done or omitted to be done under any such order before the commencement of the order.
These are the respective Acts and Notifications passed by the Centre as well as the State of U. P. in regard to sugar and sugarcane.
Learned counsel for the petitioners urged before us: (1) that the State of U. P. had no power to enact the impugned Act as the Act is with respect to the subject of industries the control of which by the Union is declared by Parliament by law to be expedient in the public interest within the meaning of Entry 52 of List I and is, therefore, within the exclusive province of Parliament.
The impugned Act is, therefore, ultra vires the powers of the State Legislature and is a colourable exercise of legislative power by the State; (2)the impugned Act is repugnant to Act LXV of 1951 and Act X of 1955 and in the event of the Court holding that the impugned Act was within the legislative competence of the State Legislature, it is void by reason of such repugnancy; (3)the impugned Act stands repealed to the extent that it has been repealed by section 16 of Act X of 1955 and by clause 7 of the Sugarcane Control Order, 1955, made in exercise of the powers conferred by section 3 of Act X of 1955; (4)the impugned Act infringes the fundamental right guaranteed by article 14 inasmuch as very wide powers are given to the Cane Commissioner which can be used in a discriminatory manner; (5)the impugned Act and the notification dated 27th September, 1954, violate the fundamental right guaranteed under article 19(1) (e) in that the Co operative Societies are not voluntary organisations but a cane grower is compelled to become a member of the Society before he can sell his sugarcane to a factory; (6)the impugned Act and the notifications infringe the fundamental right guaranteed by article 19(1)(f) and (g) and article 31 of the Constitution; (7) the impugned Act is void in that it confers 409 very wide powers on executive officials and is a piece of delegated legislation; and (8) the impugned Act is destructive of the freedom of trade and commerce and thus is violative of article 301 of the Constitution.
(1): This contention relates to the legislative competence of the U.P. State Legislature to enact the impugned Act.
It was contended that, even though the impugned Act purported to legislate in regard to sugarcane required for use in sugar factories, it was, in pith and substance, and in its true nature and effect legislation in regard to sugar industry which had been declared by Act LXV of 1951 to be an industry the control of which by the Union was expedient in the public interest and was, therefore, within the exclusive province of Parliament under Entry 52 of List I.
The word 'industry ', it was contended, was a word of very wide import and included not only the process of manufacture or production but also all things which were necessarily incidental to it, viz., the raw materials for the industry as also the products of that industry and would, therefore, include within its connotation the production, supply and distribution of raw materials for that industry which meant sugarcane in relation to sugar industry.
It was also contended that in so far as the impugned Act purported to legislate in regard to sugarcane which was a necessary ingredient in the production of sugar it was a colourable exercise of legislative power by the State, ostensibly operating in its own field within Entry 27 of List II but really trespassing upon the field of Entry 52 of List I.
It was contended on behalf of the State on the other hand that.
, after the advent of war and the proclamation of emergency under section 102 of the Government of India Act, 1935 and by the combined operation of the India (Central Government and Legislature) Act, 1946 and article 369 of the Constitution taken along with the resolutions of the Houses of Parliament extending the life of Act XXIV of 1946 up to 26th January, 1955 and the Third Constitution Amendment Act of 1954 amending Entry 33 of List 410 III, the Central Legislature was operating all along on what became in effect the Concurrent field even in regard to sugarcane, that the investing of the Central Government with power to legislate in this sphere of the Provincial List did not deprive the Provincial Legislature of such power and that both the Central Legislature as well as the State Legislatures had legislative competence to legislate in regard to these fields which were for the purpose of legislative competence translated into Concurrent fields and that, therefore, the U.P. State Legislature was competent to enact the impugned Act which would be valid within its own sphere except for repugnancy with any of the provisions of the Central Legislature covering the same field.
The relevant Entries in the respective Lists of the Seventh Schedule to the Constitution are as follows: List I, Entry 52: Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest.
List II, Entry 24: Industries subject to the provisions of entry 52 of List 1.
Entry 27: Production, supply and distribution of goods subject to the provisions of entry 33 of List III.
List III, Entry 33: As it stood prior to its amendment: Trade and commerce in and production, supply and distribution of, the products of industries where the control of such industries by the Union is declared by Parliament by law to be expedient in the public interest.
Entry 33 as amended by the Constitution Third Amendment Act, 1954: Trade and commerce in, and the production, supply and distribution of (a)the products of any industry where the control of such industry by the Union is declared by Parliament by law to be expedient in the public interest, and imported goods of the same kind as such products; (b) foodstuffs, including edible oilseeds and oils; 411 (c) cattle fodder, including oilcakes and other concentrates; (d) raw cotton, whether ginned or unginned, and cotton seed; and (e) raw jute.
Production, supply and distribution of goods was no doubt within the exclusive sphere of the State Legislature but it was subject to the provisions of Entry 33 of List III which gave concurrent powers of legislation to the Union as well as the States in the matter of trade and commerce in, and the production, supply and distribution of, the products of industries where the control of such industries by the Union was declared by Parliament by law to be expedient in the public interest.
The controlled industries were relegated to Entry 52 of List I which was the exclusive province of Parliament leaving the other industries within Entry 24 of List II which was the exclusive province of the State Legislature.
The products of industries which were comprised in Entry 24 of List II were dealt with by the State Legislatures which had under Entry 27 of that List power to legislate in regard to the production, supply and distribution of goods, goods according to the definition contained in article 366(12) including all raw materials, commodities and articles.
When, however it came to the products of the controlled industries comprised in Entry 52 of List 1, trade and commerce in.
, and production, supply and distribution of, these goods became the subject matter of Entry 33 of List III and both Parliament and the State Legislatures had jurisdiction to legislate in regard thereto.
The amendment of Entry 33 of List III by the Constitution.
Third Amendment Act, 1954, only enlarged the scope of that Entry without in any manner whatever detracting from the legislative competence of Parliament and the State Legislatures to legislate in regard to the same.
If the matters had stood there, the sugar industry being a controlled industry, legislation in regard to the same would have been in the exclusive province of Parliament and production, supply and distribution of the product of sugar industry, 412 viz., sugar as a finished product would have been within Entry 33 of List III: Sugarcane would certainly not have been comprised within Entry 33 of List III as it was not the product of sugar industry which was a controlled industry.
It was only after the amendment of Entry 33 of List III by the Constitution Third Amendment Act, 1954 that foodstuffs including edible oilseeds and oils came to be included within that List and it was possible to legislate in.
regard to sugarcane, having recourse to Entry 33 of List III.
Save for that, sugarcane, being goods.
fell directly within Entry 27 of List 11 and was within the exclusive jurisdiction ' of the State Legislatures.
Production, supply and distribution of sugarcane being thus within the exclusive sphere of the State Legislatures, the U. P. State Legislature would be, without anything more, competent to legislate in regard to the same and the impugned Act would be intra vires the State Legislature.
The argument, however, was that the word 'industry ' was a word of wide import and should be construed as including not only the process of manufacture or production but also activities antecedent thereto such as acquisition of raw materials and subsequent thereto such as disposal of the finished products of that industry.
The process of acquiring raw materials was an integral part of the industrial process and was, therefore, included in the connotation of the word 'industry ' and when the Central Legislature was invested with the power to legislate in regard to sugar industry which was a controlled industry by Entry 52 of List.
I, that legislative power included also the power to legislate in regard to the raw material of the sugar industry, that is sugarcane, and the production, supply and distribution of sugarcane was, by reason of its being the necessary ingredient in the process of manufacture or production of sugar, within the legislative competence of the Central Legislature.
Each entry in the Lists which is a category or head of the subject matter of legislation must be construed not in a narrow or restricted sense but as widely as possible so as to extend to all ancillary 413 or subsidiary matters which can fairly and reasonably be said to be comprehended in it (Vide The United Provinces vs Mst.
Atiqa Begum and Others(1), Thakur Jagannath Baksh Singh vs The United Provinces (2), and Megh Raj and Another vs Allah Rakhia and Others(3)), and the topic 'industries ' should, therefore, be construed to include the raw materials which are the necessary ingredients thereof and which form an integral part of the industrial process.
Our attention was drawn in this connection to the definition of 'industry ' in section 2(j) of the (Act XIV of 1947): "Industry" means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, bandicraft, or industrial occupation or avocation of workmen" and also to the wide construction which was put upon the term 'industry ' in the Australian Insurance Staffs ' Federation vs The Accident Underwriters ' Association and Others(4) where it was construed to include "all forms of employment in which large number of persons are employed, the sudden cessation of whose work might prejudicially affect the orderly conduct of the ordinary operations of civil life".
A similarly wide interpretation was put on the word 'industry ' by our Court in D. N. Banerji vs P. R. Mukherjee and Others(5) where the dispute was between a Municipality and its employees.
These interpretations of the term 'industry ', however, do not help us because in defining the word 'industry ' in the , as also in putting the wide construction on the term industry ' in ; , as well as ; , they were concerned mainly with the question whether an industrial dispute arose between employers and employees.
Whether a particular concern came within the definition of an 'employer ' was determined with respect to the criterion ultimately adopted (1) , 134.
(2) , 119.
(3) (4) [19231 ; , (5) ; 414 which was that the sudden cessation of such work might prejudicially affect the orderly conduct of the ordinary operations of civil life and the withdrawal of service would be detrimental to the industrial system of the community and might result in its dislocation.
What we are concerned with here is not the wide construction to be put on the term 'in dustry ' as such but whether the raw materials of an industry which form an integral part of the process are within the topic of 'industry ' which forms the subject matter of Item 52 of List I as ancillary or subsidiary matters which can fairly or reasonably be said to be comprehended in that topic and whether the Central Legislature while legislating upon sugar industry could, acting within the sphere of Entry 52 of List 1, as well legislate upon sugarcane.
If both the Central Legislature and the Provincial Legislatures were entitled to legislate in regard to this subject of production, supply and distribution of sugarcane, there would arise no question of legislative competence of the Provincial Legislature in the matter of having enacted the impugned Act.
The conflict, if any, arose by reason of the interpretation which was sought to be put on the two Entries, Entry 52 of List I and Entry 27 of List II put in juxtaposition with each other.
It was suggested that Item 52 of List I comprised not only legislation in regard to sugar industry but also in regard to sugarcane which was an essential ingredient of the industrial process of the manufacture or production of sugar and was, therefore, ancillary to it and was covered within the topic.
If legislation with regard to sugarcane thus came within the exclusive province of the Central Legislature, the Provincial Legislature was not entitled to legislate upon the same by having resort to Entry 27 of List 11 and the impugned Act was, therefore, ultra vires the Provincial Legislature.
There was an apparent conflict between the legislative powers of the Centre and of the Provinces in this respect which conflict could not have been intended and, therefore, a reconciliation was to be attempted by reading the two provisions together and by inter 415 preting and where necessary modifying the language of one by that of the other.
Reliance was placed on the observations of the Judicial Committee in The Citizens Insurance Company of Canada vs William Parsons(1): "In these cases it is the duty of the Courts, however difficult it may be, to ascertain in what degree, and to what extent, authority to deal with matters falling within these classes of subjects exists in each legislature, and to define in the particular case before them the limits of their respective powers.
It could not have been the intention that a conflict should exist; and, in order to prevent such a result, the two sections must be read together, and the language of one interpreted, and, where necessary, modified, by that of the other.
In this way it may, in most cases, be found possible to arrive at a reasonable and practical construction of the language of the sections, so as to reconcile the respective powers which they contain, and give effect to all of them.
In performing this difficult duty, it will be a wise course for those on whom it is thrown, to decide each case which arises as best they can, without entering more largely upon an interpretation of the statute than is necessary for the decision of the particular question in hand".
and also at page 113: "It is enough for the decision of the present case to say that, in their view, its authority to legislate for the regulation of trade and commerce does not comprehend the power to regulate by legislation the contracts of a particular business or trade, such as the business of fire insurance in a single province. . " These observations were quoted with approval by Gwyer, C. J. in Re: The Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938 (Central Provinces and Berar Act No. XI V of 1938) (2) and it was further held that the general power ought not to be construed as to make a nullity of a particular power conferred by the same Act and operating in the same field.
The same duty of reconciling apparently conflicting provisions was reiterated in (1) [1881] L R. 7 A.C. 96,108.
(2) , 39.
416 Governor General in Council vs The Province of Madras(1): "But it appears to them that it is right first to consider whether a fair reconciliation cannot be effected by giving to the language of the Federal Legislative List a meaning which, if less wide than it might in another context bear, is yet one that can properly be given to it, and equally giving to the language of the Provincial Legislative List a meaning which it can properly bear".
Reliance was also placed on the observations of Gwyer, C. J. quoted in Subrahmanyan Chettiar vs Muthuswami Goundan(2): "As interpreted by the Judicial Committee, the British North America Act presents an exact analogy to the India Act, even to the overriding provisions in section 100(1) of the latter: "The rule of construction is that general language in the heads of section 92 yields to particular expressions in section 91, where the latter are unambiguous": per Lord Haldane in Great West Saddlery Co. vs The King(3).
The principles laid down by the Judicial Committee in a long series of decisions for the interpretation of the two sections of the British North America Act may therefore be accepted as a guide for the interpretation of similar provisions in the Government of India Act." and it was contended that Entry 27 of List II should be construed in a general manner as applying to production, supply and distribution of goods in general and Entry 52 of List I should be construed as comprehending within its scope ancillary matters in relation to the controlled industries thus excluding production, supply and distribution of goods which would be thus comprised within it as ancillary matters from the sphere of Entry 27 of List II.
If this con struction was adopted it would avoid the apparent conflict between the two Entries and would reconcile the powers of the Provincial Legislatures with those of the Central Legislature.
It was, therefore, contended that the Legislation in regard to sugarcane (1) , 191.
(2) , 201.
(3) [1921] 2 A.G. 91, 116.
417 should be considered as ancillary to the legislation in regard to sugar industry which is a controlled industry and comprised within Entry 52 of List I and should be excluded from Entry 27 of List II which should be read as covering only those categories which did not fall within Entry 52 of List I even though on a wide construction of the words "production, supply and distribution of goods" they would be capable of covering the same.
If this construction was put upon these two Entries, it would follow that the subject matter of the impugned Act was within the exclusive juris diction of Parliament being comprised in Entry 52 of List I and was ultra vires the U.P. State Legislature.
The answer of the State of U.P. was two fold: (1) after the advent of the Second World War and all throughout up to 1955 when Act X of 1955 was enacted by Parliament, the Centre was operating upon the Concurrent field of legislation and that whatever legislation in regard to sugarcane was enacted by the Centre as part of its legislative activities in regard to sugar was not under Entry 52 of List I but was in exercise of its legislative powers under Concurrent jurisdiction, and (2) that the impugned Act merely confined itself to legislation in regard to sugarcane and did not purport to legislate in regard to sugar which was exclusively dealt with by the Centre.
There was, therefore, no trespass upon the exclusive jurisdiction of the Centre and the impugned Act was within the legislative competence of the State Legislature.
As has been noted above, the entire subject matter of Act XV of 1934 came within the Provincial Legislative List on a distribution of legislative powers effected under the Government of India Act, 1935 and the U.P. Legislature enacted the U.P. Act I of 1938 covering the same field and repealing Act XV of 1934.
Entry 27 of List II related to production, supply and distribution of goods and development of industries except in regard to controlled industries, and, in so far as in 1938 sugar was not a controlled industry, the U.P. Legislature enacted provisions for the licensing of the sugar factories and for regulating the price and supply of sugarcane intended for use in 418 such factories.
With the advent of War and the proclamation of emergency under section 102 of the Government of India Act, 1935, the Centre was invested with the power to make laws for the Provinces with respect to any of the matters enumerated in the Provincial Legislative List and the Central Legislature as well as the Provincial Legislatures were thus enabled to enact measures exercising concurrent jurisdiction in regard to the topics enumerated in the Provincial Legislative List.
The emergency was about to come to an end on the 1st April, 1946 and the British Parliament, therefore, on 26th March, 1946, passed the India.
(Central Government and Legislature) Act, 1946, under which, notwithstanding anything in the Government of India Act, 1935, the Central Legislature was, for the period specified in section 4 thereof, invested with the powers to make laws with respect to (a) trade and commerce in, and the production, supply and distribution of foodstuffs, edible oilseeds and oils and this provision in effect continued the power which had been vested in the Central Legislature during the emergency under section 102 of the Government of India Act, 1935.
The period mentioned in section 4 of this Act was extended from time to time up to 31st March, 1950.
It was in pursuance of these powers that the Central Legislature enacted Act XXIV of 1946 on 16th November, 1946.
The essential commodities therein comprised inter alia foodstuffs which would include sugar as well as sugarcane and both sugar and sugarcane, therefore, came within the jurisdiction of the Centre.
Act XXIV of 1946 was continued in force up to 31st March, 1950 under the terms of section 4 of India (Central Government and Legislature) Act, 1946 by the notification of the GovernorGeneral and the resolutions passed by both the Houses of Parliament but before the expiration of this extended period the Constitution was inaugurated and under article 369 Parliament was invested with the power to make laws inter alia with respect to trade and commerce within a State and production, supply and distribution of foodstuffs, edible oilseeds 419 and oils as if they were enumerated in the concurrent list and it was by virtue of this power that Act XXIV of 1946 was extended up to 26th January, 1955 by diverse pieces of legislation enacted by Parliament.
Sugar and sugarcane thus continued within the jurisdiction of the Centre right up to 26th January, 1955.
When Entry 33 of List III was amended by the Constitution Third Amendment Act, 1954, foodstuffs including edible oilseeds and oils were included therein and both Parliament and the State Legislatures acquired concurrent jurisdiction to legislate over sugar and sugarcane Tradeand commercein, and production, supply and distribution of, sugar and sugarcane thus could be dealt with by Parliament as well as by the State Legislatures and it was in exercise of this jurisdiction that Parliament enacted Act X of 1955.
The list of essential commodities defined in section 2 of the Act comprised foodstuffs, including edible oilseeds and oils, cattlefodder, raw cotton and cotton seed and raw jute which were items (b), (c), (d) and (e) in Entry 33 of List III and the products of the controlled industries, coal, textiles, iron and steel, paper, petroleum and petroleum products and any other class of commodity which the Central Government may by notification or order declare to be an essential commodity for the purposes of the Act being a commodity with respect to which Parliament has power to make laws by virtue of Entry 33 of List III of the Seventh Schedule to the Constitution, which were amongst the products of the controlled industries specified in the First Schedule to Act LXV of 1951.
It follows that Act X of 1955 was enacted by Parliament in exercise of the legislative powers conferred upon it by Entry 33 of List III and was an exercise of concurrent jurisdiction.
It is clear, therefore, that all the Acts and the noti fications issued thereunder by the Centre in regard to sugar and sugarcane were enacted in exercise of the concurrent jurisdiction.
The exercise of such concurrent jurisdiction would not deprive the Provincial Legislatures of similar powers which they had under the Provincial Legislative List and there would, there 420 fore, be no question of legislative incompetence qua the Provincial Legislatures in regard to similar pieces of legislation enacted by the latter.
The Provincial Legislatures as well as the Central Legislature would be competent to enact such pieces of legislation and no question of legislative competence would arise.
It also follows as a necessary corollary that, even though sugar industry was a controlled industry, none of these Acts enacted by the Centre was in exercise of its jurisdiction under Entry 52 of List 1.
Industry in the wide sense of the term would be capable of comprising three different aspects: (1) raw materials which are an integral part of the in dustrial process, (2) the process of manufacture or production, and (3) the distribution of the products of the industry.
The raw materials would be goods which would be comprised in Entry 27 of List II.
The process of manufacture or production would be comprised in Entry 24 of List II except where the industry was a controlled industry when it would fall within Entry 52 of List I and the products of the industry would also be comprised in Entry 27 of List II except where they were the products of the controlled industries when they would fall within Entry 33 of List 111.
This being the position, it cannot be said that the legislation which was enacted by the Centre in regard to sugar and sugarcane could fall within Entry 52 of List I.
Before sugar industry became a controlled industry, both sugar and sugarcane fell within Entry 27 of List II but, after a declaration was made by Parliament in 1951 by Act LXV of 1951, sugar industry became a controlled industry and the product of that industry, viz., sugar was comprised in Entry 33 of List III taking it out of Entry 27 of List II. ' Even so, the Centre as well as the Provincial Legislatures had concurrent jurisdiction in regard to the same.
In no event could the legislation in regard to sugar and sugarcane be thus included within Entry 52 of List 1.
The pith and substance argument also cannot be imported here for the simple reason that, when both the Centre as well as the State Legislatures were operating in the concurrent field, 421 there was no question of any trespass upon the exclusive jurisdiction vested in the Centre under Entry 52 of List 1, the only question which survived being whether, putting both the pieces of legislation enacted by the Centre and the State Legislature together, there was any repugnancy, a contention which will be dealt with hereafter.
A more effective answer is furnished by comparison of the terms of the U.P. Act I of 1938 with those of the impugned Act.
Whereas the U.P. Act I of 1938 covered both sugarcane and sugar within its compass, the impugned Act was confined only to sugarcane, thus relegating sugar to the exclusive jurisdiction of the Centre thereby eliminating all argument with regard to the encroachment by the U.P. State Legisla ture on the field occupied by the Centre.
The U.P. Act I of 1938 provided for the establishment of a Sugar Control Board, the Sugar Commissioner, the Sugar Commission and the Cane Commissioner.
The impugned Act provided for the establishmentof a Sugarcane Board.
The Sugar Commissionerwas named as such but his functions under rules 106and 107 were confined to getting information which would lead to the regulation of the supply and purchase of sugarcane required for use in sugar factories and had nothing to do with the production or the disposal of sugar produced in the factories.
The Sugar Commission was not provided for but the Cane Commissioner was the authority invested with all the powers in regard to the supply and purchase of sugarcane.
The Inspectors appointed under the U.P. Act I of 1938 had no doubt powers to examine records maintained at the factories showing the amount of sugarcane purchased and crushed but they were there with a view to check the production or manufacture of sugar whereas the Inspectors appointed under the impugned Act were, by rule 20, to confine their activities to the regulation of the supply and purchase of sugarcane without having anything to do with the further process of the manufacture or production of sugar.
Chapter 3 of U.P. Act I of 1938, dealing with the construction and extension of sugar factories, licens 55 422 ing of factories for crushing sugarcane, fixing of the price of sugar, etc., was deleted from the impugned Act.
The power of licensing new industrial undertakings was thereafter exercised by the Centre under Act LXV of 1951 as amended by Act XXVI of 1953, vide sections 1 1 (a), 12 and 13, and the power of fixation of price of sugar was exercised by the Centre under section 3 of Act XXIV of 1946 by issuing the Sugar Control Order, 1950.
Even the power reserved to the State Government to fix minimum prices of sugarcane under Chapter V of U.P. Act I of 1938 was deleted from the impugned Act the same being exercised by the Centre under clause 3 of Sugar and Gur Control Order, 1950, issued by it in exercise of the powers conferred under section 3 of Act XXIV of 1946.
The prices fixed by the Centre were adopted by the State Government and the only thing which the State Government required under rule 94 was that the occupier of a factory or the purchasing agent should cause to be put up at each purchasing centre a notice showing the minimum price of cane fixed by the Government meanig there by the centre.
The State Government also incorporated these prices which were notified by the Centre from time to time in the forms of the agreements which were to be entered between the cane growers, the cane growers co operative societies, the factories and their purchasing agents for the supply and purchase of sugarcane as provided in the U.P. Sugarcane Supply and Purchase Order, 1954.
The only provision which was retained by the State Government in the impugned Act for the protection of the sugarcane growers was that contained in section 17 which provided for the payment of price of sugarcane by the occupier of a factory to the sugarcane growers.
It could be recovered from such occupier as if it were an arrear of land revenue.
This comparison goes to show that the impugned Act merely confined itself to the regulation of the supply and purchase of sugarcane required for use in sugar factories and did not concern itself at all with the controlling or licensing of the sugar factories, with the production or manufacture.
of sugar or with the 423 trade and commerce in, and the production, supply and distribution of, sugar.
If that was so, there was no question whatever of its trenching upon the jurisdiction of the Centre in regard to sugar industry which was a controlled industry within Entry 52 of List I and the U.P. Legislature had jurisdiction to enact the law with regard to sugarcane and had legislative competence to enact the impugned Act.
(2): It was next contended that the provisions of the impugned Act were repugnant to the provisions of Act LXV of 1951 and Act X of 1955 which were enacted by Parliament and, therefore, the law made by Parliament should prevail and the impugned Act should, to the extent of the repugnancy, be void.
Before dealing with this contention it is necessary to clear the ground by defining the exact connotation of the term "repugnancy".
Repugnancy falls to be considered when the law made by Parliament and the law made by the State Legislature occupy the same field because, if both these pieces of legislation deal with separate and distinct matters though of a cognate and allied character, repugnancy does not arise.
So far as our Constitution is concerned, repugnancy is dealt with in article 254 which provides: "254.
(1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent to enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2), the law made by Parliament, whether passed before or after the law made by the Legisla ture of such State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void.
(2)Where a law made by the Legislature of a State specified in Part A or Part B of the First Schedule with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by 424 Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State: Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State".
We are concerned here with the repugnancy, if any, arising by reason of both Parliament and the State Legislature having operated in the same field in respect of a matter enumerated in the Concurrent List, i.e., foodstuffs comprised in Entry 33 of List III and we are, therefore, not called upon to express any opinion on the controversy which was raised in regard to the exact scope and extent of article 254(1) in regard to "a law made by Parliament which Parliament is competent to enact", as to 'whether the legislative power of Parliament therein refers to List I) List III and the residuary power of legislation vested in Parliament under article 248 or is confined merely to the matters enumerated in the Concurrent List (Vide A.I.R. 1942 Cal.
587 contra, Per Sulaiman, J. in at p. 226).
Nicholas in his Australian Constitution, 2nd ed., p. 303, refers to three tests of inconsistency or repugnancy: (1)There may be inconsistency in the actual terms of the competing statutes (R. vs Brisbane Licensing Court; , (2)Though there may be no direct conflict, a State law may be inoperative because the Commonwealth law, or the award of the Commonwealth Court, is intended to be a complete exhaustive code (Clyde Engineering Co. Ltd. vs Cowburn, (3) Even in the absence of intention a conflict may arise when both State and Commonwealth seek to exercise their powers over the same subject matter (Victoria vs Common wealth; , ; Wenn 425 vs Attorney General (Vict.); , Isaacs, J. in Clyde Engineering Company, Limited vs Cowburn(1) laid down one test of inconsistency as conclusive: "If, however, a competent legislature expressly or implicitly evinces its intention to cover the whole field.
, that is a conclusive test of inconsistency where another Legislature assumes to enter to any extent upon the same field".
Dixon, J. elaborated this theme in Ex parte McLean(2): "When the Parliament of the Commonwealth and the Parliament of a State each legislate upon the same subject and prescribe what the rule of conduct shall be, they make laws which are inconsistent, notwithstanding that the rule of conduct is identical which each prescribes, and section 109 applies.
That this is so is settled, at least when the sanctions they impose are diverse.
But the reason is that, by prescribing the rule to be observed, the Federal statute shows an intention to cover the subject matter and provide what the law upon it shall be.
If it appeared that the Federal law was intended to be supplementary to or cumulative upon State law, then no inconsistency would be exhibited in imposing the same duties or in inflicting different penalties.
The inconsistency does not lie in the mere co existence of two laws which are susceptible of simultaneous obedience.
It depends upon the intention of the paramount Legislature to express by its enactment, completely, exhaustively, or exclusively, what shall be the law governing the particular conduct or matter to which its attention is directed.
When a Federal statute discloses such an intention, it is inconsistent with it for the law of a State to govern the same conduct or matter".
To the same effect are the observations of Evatt, J. in Stock Motor Plough Ltd. vs Forsyth(3): "It is now established, therefore, that State and Federal laws may be inconsistent, although obedience to both laws is possible.
There may even be incon (1) , 489.
(2) , 483.
(3) ; , 147.
426 sistency although each law imposes the very same duty of obedience.
These conclusions have, in the main, been reached, by ascribing "inconsistency" to a State law, not because the Federal law directly invalidates or conflicts with it, but because the Federal law is said to "cover the field".
This is a very ambiguous phrase, because subject matters of legislation bear little resemblance to geographical areas.
It is no more than a cliche for expressing the fact that, by reason of the subject matter dealt with, and the method of dealing with it, and the nature and multiplicity of the regulations prescribed, the Federal authority has adopted a plan or scheme which will be hindered and obstructed if any additional regulations whatever are prescribed upon the subject by any other authority; if, in other words, the subject is either touched or trenched upon by State authority".
The Calcutta High Court in G. P. Stewart vs B. K. Roy Chaudhury(1) bad occasion to consider the meaning of repugnancy and B. N. Rau, J. who delivered the judgment of the Court observed at page 632: "It is sometimes said that two laws cannot be said to be properly repugnant unless there is a direct conflict between them, as when one says 'do" and the other "don 't", there is no true repugnancy, according to this view, if it is possible to obey both the laws.
For reasons which we shall set forth presently, we think that this is too narrow a test: there may well be cases of repugnancy where both laws say "don 't" but in different ways.
For example, one law may say, "No person shall sell liquor by retail, that is, in quantities of less than five gallons at a time" and another law may say, "No person shall sell liquor by retail, that is, in quantities of less than ten gallons at a time".
Here, it is obviously possible to obey both laws, by obeying the more stringent of the two, namely the second one; yet it is equally obvious that the two laws are repugnant, for to the extent to which a citizen is compelled to obey one of them, the other, though not actually disobeyed, is nullified".
The learned Judge then discussed the various auth (1) A.I.R. 1939 Cal.
427 orities which laid down the test of repugnancy in Australia, Canada, and England and concluded at page 634: "The principle deducible from the English cases, as from the Canadian cases, seems therefore to be the same as that enunciated by Isaacs, J. in the Australian 44 hour case if the dominant law has expressly or impliedly evinced its intention to cover the whole field, then a subordinate law in the same field is repugnant and therefore inoperative.
Whether and to what extent in a given case, the dominant law evinces such an intention must necessarily depend on the language of the particular law".
Sulaiman, J. in Shyamakant Lal vs Rambhajan Singh(1) thus laid down the principle of construction in regard to repugnancy: "When the question is whether a Provincial legislation is repugnant to an existing Indian law, the onus of showing its repugnancy and the extent to which it is repugnant should be on the party attacking its validity.
There ought to be a presumption in favour of its validity, and every effort should be made to reconcile them and construe both so as to avoid their being repugnant to each other; and care should be taken to see whether the two do not really operate in different fields without encroachment.
Further, repugnancy must exist in fact, and not depend merely on a possibility.
Their Lordships can discover no adequate grounds for holding that there exists repugnancy between the two laws in districts of the Province of Ontario where the prohibitions of the Canadian Act are not and may never be in force: (Attorney General for Ontario vs Attorney General for the Dominion ) (2) ".
In the instant case, there.
is no question of any in consistency in the actual terms of the Acts enacted by Parliament and the impugned Act.
The only questions that arise are whether Parliament and the State Legislature sought to exercise their powers over the same subject matter or whether the laws enacted (1) , 212.
(2) , 369 70, 428 by Parliament were intended to be a complete exhaustive code or, in other words, expressly or impliedly evinced an intention to cover the whole field.
It would be necessary, therefore, to compare the provisions of Act LXV of 1951 as amended by Act XXVI of 1953, Act X of 1955 and the Sugar Control Order, 1955 issued thereunder with those of the impugned Act and U.P. Sugarcane Regulation of Supply and Purchase Order, 1954 passed thereunder.
Act LXV of 1951 was an Act to provide for the development and regulation of certain industries the control of which by the Union was declared by the Act to be expedient in the public interest and it embraced the various industries mentioned in the First Schedule to the Act.
The industry engaged in the manufacture or production of sugar was one of such industries and under the Act the Union acquired control over the same.
The Act provided for the establishment and constitution of a Central Advisory Council for the purposes of advising it on matters concerning the development and regulation of the scheduled industries.
It also provided for the establishment and constitution of Development Councils for any scheduled industry or group of scheduled industries.
It further provided for the regulation of scheduled industries by registration of existing industrial undertakings and licensing of new industrial undertakings and causing investigations to be made in the scheduled industries or industrial undertakings.
These provisions were evidently intended to control the scheduled industries and if the sugar industry was one of the scheduled industries the control there of involved the development and regulation of the sugar industry and the registration and the licensing as also investigation into the affairs of the undertakings which were engaged in the production or manufacture of sugar.
It did not involve the regulation of the supply and purchase of sugarcane which, though it formed an integral part of the process of manufacture of sugar.
was merely the raw material for the industry and as such not within the purview of the Act.
If the, Act had remained as originally enacted the 429 provisions of the Act would not have been in any manner whatever repugnant to the provisions of U.P. Act I of 1938 because both the Acts covered different fields.
Act XXVI of 1953, however, introduced certain amendments in the Act.
the relevant amendment for our purpose being section 18 G which provided as follows: "18 G. Power to control supply,distribution, price, etc., of certain articles. (1) The Central Government, so far as it appears to it necessary or expedient for securing the equitable distribution and availability at fair prices of any article or class of articles relatable to any scheduled industry, may, notwithstanding anything contained in any other provision of this Act, by notified order, provide for regulating the supply and distribution thereof and trade and commerce therein. ". . . . . . . . . . ." Explanation.
In this section, the expression 'article or class of articles ' relatable to any scheduled industry includes any article or class of articles imported into India which is of the same nature or description as the article or class of articles manufactured or produced in the scheduled industry".
Sugar industry being one of the scheduled industries, it was contended for the petitioners that sugarcane was an article relatable to the sugar industry and was, therefore, within the scope of section 18 G and the Central Government was thus authorised by notified order to provide for regulating the supply and distribution thereof and trade and commerce therein.
If that was so, it was next contended, the field of legislation in regard to sugarcane was covered by this provision of the Act and was taken away from the jurisdiction of the State Legislatures, the avowed in tention being to cover the whole field of such legislation.
It was, however, urged on behalf of the State of U. P. that articles relatable to scheduled industry comprised only those finished products which were of the same nature or description as the article or class of articles manufactured or produced in the scheduled industry and did not comprise the raw materials for 430 the scheduled industry.
Reliance was placed in support of this contention on the terms of the explanation to section 18 G as also to sections 15 and 16 of the Act where the same words "any article or class of articles relatable to that industry" were used.
In our opinion, the contention of the State is sound.
The structure of the whole Act LXV of 1951 related to the development and regulation of the scheduled industries and all the provisions which were contained in the Act including those which were introduced therein by Act XXVI of 1953 were designed for effectuating that purpose.
It is significant to note that, even in section 18 G, the regulation which was intended was that of the supply and distribution of the article or class of articles relatable to the scheduled industry and the production of those articles was not sought to be regulated at all.
The raw materials would certainly be essential ingredients in the process of manufacture or production of the articles in the scheduled industry but would not be of the same nature or description as the article or class of articles manufactured or produced therein,.
The whole object of enactment of section 18 G was to secure the equitable distribution and availability at fair prices of such articles which by rela tion thereof to the article or class of articles manu factured or produced in the scheduled industry would affect such manufacture or production or the supply and distribution thereof or trade and commerce therein.
Not only were the article or class of articles relatable to the scheduled industry which were themselves manufactured or produced in this country sought to be controlled in this manner but also the articles or class of articles imported into India which were of the same nature or description as the article or class of articles manufactured or produced in the scheduled industry, so that all these articles whether indigenous or imported would be controlled by the Central Government by regulating the supply and distribution thereof and trade and commerce therein with a view to develop and regulate and thus control the scheduled industries in the public interest.
See 431 tion 15 of the Act provided that where the Central Government was of the opinion that, in respect of any scheduled industry or industrial undertaking there had been or was likely to be a substantial fall in the volume of production in respect of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertakings for which, having regard to the economic conditions prevailing, there was no justification, it may make or cause to be made full and complete investigations into the circumstances of the case.
If, after making or causing to be made any such investigations, the Central Government was satisfied that action under section 16 was desirable it was to issue such directions to the industrial undertakings concerned as may be appropriate for regulating production of any article or class of articles of any industrial undertakings or fixing the standard of production, requiring the industrial undertakings to take such steps as are considered necessary to stimulate the development of the industry to which the undertakings relate, prohibiting the industrial undertakings from resorting to any act or practice which may reduce its production capacity and economic value and controlling the prices and regulating the distribution of any article or class of articles which has been the subject matter of investigation.
If any article or class of articles relatable to that industry could thus be the subjectmatter of investigation and if appropriate directions in the manner indicated in section 16 could be given in relation thereto, it is obvious that it would not be within the province of the scheduled industry or industrial undertakings to take such steps in regard to the controlling of the prices or regulating the distribution of these articles or class of articles unless they were within the sphere of the scheduled industries or industrial undertakings.
Raw materials for the manufacture or production of the article or class of articles in the scheduled industry would certainly not be within this sphere and they would not be able to control the prices or regulate the distribution thereof within the meaning of section 16.
432 These articles or class of articles relatable to the scheduled industry, therefore, were finished products and not raw materials for the manufacture or production of the articles or class of articles in the scheduled industry.
They were finished products of a cognate character which would be manufactured or produced in the very process of manufacture or production in the course of carrying on that scheduled industry.
The raw materials would certainly not be included within this category and sugarcane which is the raw material for the manufacture or production of sugar could, therefore, not be included in the category of the articles or class of articles relatable to the sugar industry.
Section 18 G, therefore, did not cover the field of sugarcane and the Central Government was not empowered by the introduction of section 18 G by Act XXVI of 1953 to legislate in regard to sugarcane.
The field of sugarcane was not covered by Act LXV of 1951 as amended by Act XXVI of 1953 and the legislative powers of the Provincial Legislatures in regard to sugarcane were not affected by it in any manner whatever.
If the two fields were different and the Central legislation did not intend at all to cover that field, the field was clear for the operation of State legislation and there was no repugnancy at all between Act LXV of 1951 and the impugned Act.
Even assuming that sugarcane was an article or class of articles relatable to the sugar industry within the meaning of section 18 G of Act LXV of 1951, it is to be noted that no order was issued by the Central Government in exercise of the powers vested in it under that section and no question of repugnancy could ever arise because, as has been noted above, repugnancy must exist in fact and not depend merely on a possibility.
The possibility of an order under section 18 G being issued by the Central Government would not be enough.
The existence of such an order would be the essential prerequisite before any repugnancy could ever arise.
Act X of 1955 included within the definition of essential commodity food stuffs which we have seen above would include sugar as well as sugarcane.
This 433 Act was enacted by Parliament in exercise of the concurrent legislative power under Entry 33 of List III as amended by the Constitution Third Amendment Act, 1954.
Foodcrops were there defined as including crops of sugarcane and section 3(1) gave the Central Government powers to control the production, supply and distribution of essential commodities and trade and commerce therein for maintaining or increasing the supplies thereof or for securing their equitable distribution and availability at fair prices.
Section 3(2)(b) empowered the Central Government to provide inter alia for bringing under cultivation any waste or arable land whether appurtenant to a building or not for growing thereon of foodcrops generally or specified foodcrops and section 3(2)(c) gave the Central Government power for controlling the price at which any essential commodity may be bought or sold.
These provisions would certainly bring within the scope of Central legislation the regulation of the production of sugarcane as also the controlling of the price at which sugarcane may be bought or sold, and in addition to the Sugar Control Order, 1955 which was issued by the Central Government on 27th August, 1955, it also issued the Sugarcane Control Order, 1955, on the same date investing it with the power to fix the price of sugarcane and direct payment thereof as also the power to regulate the movement of sugarcane.
Parliament Was well within its powers in legislating in regard to sugarcane and the Central Government was also well within its powers in issuing the Sugarcane Control Order, 1955 in the manner it did because all this was in exercise of the concurrent power of legislation under Entry 33 of List III.
That, however, did not affect the legislative competence of the U. P. State Legislature to enact the law in regard to sugarcane and the only question which remained to be considered was whether there was any repugnancy between the provisions of the Central legislation and the U. P. State legislation in this behalf.
As we have noted above, the U. P. State Government.
did not at all provide for the fixation of minimum 434 prices for sugarcane nor did it provide for the regulation of movement of sugarcane as was done by the Central Government in clauses (3) and (4) of the Sugarcane Control Order, 1955.
The impugned Act did not make any provision for the same and the only provision in regard to the price of sugarcane which was to be found in the U. P. Sugarcane Rules, 1954, was contained in Rule 94 which provided that a notice of suitable size in clear bold lines showing the minimum price of cane fixed by the Government and the rates at which the cane is being purchased by the centre was to be put up by an occupier of a factory or the purchasing agent as the case may be at each purchasing centre.
The price of cane fixed by Government here only meant the price fixed by the appropriate Government which would be the Central Government, under clause 3 of the Sugarcane Control Order, 1955, because in fact the U. P. State Government never fixed the price of sugarcane to be purchased by the factories.
Even the provisions in behalf of the agreements contained in clauses 3 and 4 of the U. P. Sugarcane Regulation of Supply and Parchase Order, 1954, provided that the price was to be the minimum price to be notified by the Government subject to such deductions, if any, as may be notified by the Government from time to time meaning thereby the Central Government, the State Government not having made any pro vision in that behalf at any time whatever.
The provisions thus made by the Sugarcane Control Order, 1955, did not find their place either in the impugned Act or the Rules made thereunder or the U.P. Sugarcane Regulation of Supply and Purchase Order, 1954, and the provision contained in section 17 of the impugned Act in regard to the payment of sugarcane price and recovery thereof as if it was an arrear of land revenue did not find its place in the Sugarcane Control Order, 1955.
These provisions, therefore, were mutually exclusive and did not impinge upon each other there being thus no trenching upon the field of one Legislature by the other.
Our attention was drawn to the several provisions contained in the 435 Sugarcane Control Order, 1955 and the U.P. Sugarcane Regulation of Supply and Purchase Order, 1954 and the agreements annexed thereto and it was pointed out that they differed in material particulars, the provisions of the latter being more stringent than those of the former.
It is not necessary to refer to these provisions in any detail.
Suffice it to say that none of these provisions do overlap, the Centre being silent with regard to some of the provisions which have been enacted by the State and the State being silent with regard to some of the Provisions which have been enacted by the Centre.
There is no repug nancy whatever between these provisions and the impugned Act and the Rules framed thereunder as also the U.P. Sugarcane Regulation of Supply and Purchase Order, 1954 do not trench upon the field covered by Act X of 1955.
There being no repugnancy at all, therefore.
, no question arises of the operation of article 254(2) of the Constitution and no provision of the impugned Act and the Rules made thereunder is invalidated by any provision contained in Act LXV of 1951 as amended by Act XXVI of 1953 or Act X of 1955 and the Sugarcane Control Order, 1955 issued thereunder.
(3): It was then contended that the impugned Act stands repealed to the extent that it has been repealed by section 16 of Act X of 1955 and clause 7 of the Sugarcane Control Order., 1955 made in exercise of the powers conferred by section 3 of Act X of 1955.
Section 16 of Act X of 1955 reads as under: "16.
(1) The following laws are hereby repealed: (a) the Essential Commodities Ordinance, 1955; (b) any other law in force in any State immediately before the commencement of this Act in so far as such law controls or authorises the control of the production, supply and distribution of, and trade and commerce in, any essential commodity".
It is submitted that the impugned Act was "any other law" in force in the State of U. P. immediately before the commencement of Act X of 1955 and stood repealed in so far as it controlled or authorised the 436 control of production, supply and distribution of, and trade and commerce in, sugarcane which was comprised within foodstuffs an essential commodity under Act X of 1955.
Clause 7 of the Sugarcane Control Order, 1955 made in exercise of the powers conferred by section 3 of the Act provided: "7.
(1) The Sugar and Gur Control Order, 1950, published with the Government of India in the Ministry of Food and Agriculture S.R.O. No. 735, dated the 7th October, 1950, and any order made by a State Government or other authority regulating or prohibiting the production, supply and distribution of sugarcane and trade or commerce therein are hereby repealed, except as respect things done or omitted to be done under any such order before the commencement of this order".
It is submitted that the U.P. Sugarcane Regulation of Supply and Purchase Order, 1954, made by the U.P. Government in exercise of the powers conferred by section 16 of the impugned Act is repealed in so far as it regulates or prohibits the production, supply and distribution of sugarcane or trade and commerce therein.
These are provisions for the express repeal of the impugned Act and the U.P. Sugarcane Regulation of Supply and Purchase Order, 1954, and if the contention of the petitioners in this behalf were accepted it would have the effect of nullifying the provisions of the impugned Act and also the impugned notifications which have been issued in exercise of the powers conferred by sections 15 and 16 of the Act.
As regards section 16 of Act X of 1955, the validity and effect thereof depends upon the construction to be put on article 254(2) and the proviso thereto.
Article 254(2) deals with repugnancy between the provisions of a law made by the State Legislature and those of an earlier law made by Parliament or an existing law with respect to one of the matters enumerated in the Concurrent List and provides that the law so made by the State Legislature shall, if it has been reserved for the consideration of the President and has received his assent, prevail in the State.
A 437 proviso, however, has been attached thereto which says that "nothing in article 254(2) shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the State Legislature".
Ordinarily Parliament would not have the power to repeal a law passed by the State Legislature even though it be a law with respect to one of the matters enumerated in the Concurrent List.
Section 107 of the Government of India Act, 1935 did not contain any such power.
As was observed by this Court in Zaverbhai Amaidas vs The State of Bombay(1), this provision contained in article 254(2) "is in substance, a reproduction of section 107 (2) of the Government of India Act, 1935, the concluding portion whereof being incorporated in a proviso with further additions.
Discussing the nature of the power of the Dominion Legislature, Canada, in relation to that of the Provincial Legislature, in a situation similar to that under section 107(2) of the Government of India Act, it was observed by Lord Watson in Attorney General for Ontario vs Attorney General for the Dominion(2), that though a law enacted by the Parliament of Canada and within its competence would override Provincial legislation covering 'he same field, the Dominion Parliament had no authority conferred upon it under the Constitution to enact a statute repealing directly any Provincial statute.
That would appear to have been the position under section 107(2) of the Government of India Act with reference to the subjects mentioned in the Concurrent List.
Now, by the proviso to. article 254(2) the Constitution has enlarged the powers of Parliament, and under that proviso, Parliament can do what the Central Legislature could not under section 107(2) of the Government of India Act, and enact a law addihg to, amending, varying or repealing a law of the State, when it relates to a matter mentioned in the Concurrent List.
The position then is that under the Constitution Parliament can, acting under the proviso to article 254(2), repeal a State law".
(1) [1955] 1 S.C.R. 799, 806.
(2) , 57 438 it is argued for the state of U.P. that, under the proviso to article 254(2),the power to repeal a law passed by the State Legislature is incidental to enacting a law relating to the same matter as is dealt with in the State legislation, and that a statute which merely repeals a law passed by the State Legislature without enacting substantive provisions on the subject would not be within the proviso, as it could not have been the intention of the Constitution that in a topic within the concurrent sphere of legislation there should be a vacuum.
There is considerable force in this contention, and there is much to be said for the view that a repeal simpliciter is not within the proviso.
But it is unnecessary to base our decision on this point, as the petitioners must, in our opinion, fail on another ground.
While the proviso to article 254(2) does confer on Parliament a power to repeal a law passed by the State Legislature, that power is, under the terms of the proviso, subject to certain limitations.
It is limited to enacting a law with respect to the same matter adding to, amending, varying or repealing a "law so made by the State Legiisla ture".
The law referred to here is the law mentioned in the body of article 254(2).
It is a law made by the State Legislature with reference to a matter in the Concurrent List containing provisions repugnant to an earlier law made by Parliament and with the consent of the President.
It is only such a law that could be altered, amended or repealed under the proviso.
The impugned Act is not a law relating to any matter, which is the subject of an earlier legislation by Parliament.
It is a substantive law covering a field not occupied by Parliament, and no question of its containing any provisions inconsistent with a law enacted by Parliament could therefore arise.
To such a law, the proviso has no application and section 16 (1)(b) of Act X of 1955 and clause 7(1) of the Sugarcane Control Order, 1955 must, in this view, be held to be invalid.
There is also a further objection to which clause 7 (1) of the Sugarcane Control Order, 1955 is open.
The 439 power of repeal, if any, was vested in Parliament and Parliament alone could exercise it by enacting an appropriate provision in regard thereto.
Parliament could not delegate this power of repeal to any executive authority.
Such delegation, if made, would be void and the Central Government had no power, therefore, to repeal any order made by the State Government in exercise of the powers conferred upon it by section 16 of the impugned Act.
The U.P. Sugarcane Regulation of Supply and Purchase Order, 1954, could not, therefore, be validly repealed by the Central Government as was purported to be done by clause (7) of the Sugarcane Control Order, 1955, and that repeal was of no effect with the result that the U.P. Sugarcane Regulation of Supply and Purchase Order, 1954 stood unaffected thereby.
The result, therefore, is that there was no repeal of the impugned Act or the U.P. Sugarcane Regulation of Supply and Purchase Order, 1954 by section 16 of Act X of 1955 or by clause (7) of the Sugarcane Control Order, 1955 as contended by the petitioners.
(4): It is pointed out that the Cane Commissioner declares the reserved or assigned areas for the factories, and also transfers particular areas from one factory to another.
He is also in sole charge and management of Cane Growers Co operative Societies.
It is contended that the powers thus conferred upon him are so wide that they are capable of being exercised in a discriminatory manner and therefore the impugned Act infringes the fundamental right guaranteed by article 14 of the Constitution.
Section 15 of the Act provides: "15.
(1) Without prejudice to any order made under clause (d) of sub section (2) of section 16 the Cane Commissioner may, after consulting the Factory and Canegrowers Co operative Society in the manner to be prescribed (a)reserve any area (hereinafter called the reserved area), and (b)assign any area (hereinafter called an assigned area), 440 for the purpose of the supply of cane to a factory in accordance with the provisions of section 16 during a particular crushing season and may likewise at any time cancel such order or alter the boundaries of an area so reserved or assigned.
(2) Where any area has been declared as reserved area for a factory, the occupier of such factory shall, if so directed by the Cane Commissioner, purchase all the cane grown in that area, which is offered for sale to the factory.
(3) Where any area has been declared as assigned area for a factory, the occupier of such factory shall purchase such quantity of cane grown in that area and offered for sale to the factory, as may be determined by the Cane Commissioner.
(4) An appeal shall lie to the State Government against the order of the Cane Commissioner passed under sub section (1)".
Rule 22 of the U.P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954, made by the U.P. Government in exercise of the rule making power conferred by section 28 (2) of the Act however lays down the factors which are to be taken into consideration by the Cane Commissioner in reserving an area for or assigning an area to a factory or determining the quantity of cane to be purchased from an area by a factory: (a) the distance of the area from the factory, (b) facilities for transport of cane from the area, (c) the quality of cane supplied from the area to the factory in previous years, (d) previous reservation and assignment orders, (e) the quantity of cane to be crushed in the factory, (f the arrangements made by the factory in previous years for payment of cess, cane price and commission, and (g) the views of the Canegroweria ' Co operative Society of the area.
441 Chapter 11 of the Rules provides for the management of the Canegrowers ' Co operative Societies by the Cane Commissioner and their supervision by him.
Rule 63 of that chapter however provides "Rule 63.
An appeal against an order of the Cane Commissioner under the provisions of this Chapter shall lie to the State Government within one month of the date of the communication of the order to the Society or management concerned".
It will be thus seen that the powers given to the Cane Commissioner under section 15 are well defined and have got to be exercised within the limits prescribed after consulting the factories and the Canegrowers 'Co operative Societies (Vide section 15(1)) and any order made by the Cane Commissioner thereunder is liable to an appeal to the State Government at the instance of the party aggrieved (Vide section 15(4)).
The same is the position in regard to the orders made by the Cane Commissioner in the course of his management and supervision of the Canegrowers ' Co opera tive Societies and any order made by him in regard thereto is subject to appeal to the State Government at the instance of the party aggrieved (Vide Rule 63).
If this is the position, it cannot be urged that wide powers are conferred on the Cane Commissioner which can be used by him in a discriminatory manner so as to violate the fundamental right guaranteed under article 14.
Any cane grower or a Canegrowers ' Cooperative Society or the occupier of a factory can, if aggrieved, take an appeal to the State Government against any order passed by the Cane Commissioner and such provision is a sufficient safeguard provided in the Act and the Rules against any arbitrary exercise of those powers by the Cane Commissioner and takes them out of the ban of article 14.
(5): It is next contended that the impugned Act and the notification dated 27th September, 1954 violate the fundamental right guaranteed under article 19 (1) (c) which is the right to form associations or unions.
It is urged that the Cane Growers Co 442 operative Societies are not voluntary organisations but a cane grower is compelled to become a member of the Society before he can sell his sugarcane to a factory.
The right to form associations or unions is a positive right but in the positive right it is urged there is necessarily implied the negative aspect which means that a citizen has the right not to form associations or unions and cannot be compelled to become a member of an association or a union or a Cane growers ' Co operative Society before be can sell his goods to the owner of a factory.
Reliance is placed in support of this contention on the following passage in the judgment of the Madras High Court in Indian Metal and Metallurgical Corporation V. Industrial Tribunal, Madras and Another(1): "In this case, however, we are concerned with a much narrower question, namely, whether an award made by the Industrial Tribunal appointed under the and published by the Government in accordance with the provisions of the Act can direct the management of an industry to continue to carry on any business against their will.
If a citizen has got a right to carry on business, we think it follows that, he must be at liberty not to carry it on if he so chooses.
A person can no more be compelled to carry on a business than a person can be compelled to acquire or hold property. .
Mr. Bhasyam was really unable to convince us how any one can be compelled to carry on a business against his will and yet be said to enjoy a right to carry on a business".
The following passage from Strong on 'American Con stitutional Law ', page 774, taken from the judgment of Mr. Justice Murphy in West Virginia State Board vs Barnette(2) is also relied upon "The freedom of thought and of religion as guaranteed by the Constitution against State action includes both the right to speak freely and the right to refrain from speaking at all, except in so far as essential operations of government.
may require it for the (1) A.I.R. 1953 Mad. 98, 101.
(2) , 646.
443 preservation of an orderly society, as in the case of compulsion to give evidence in court".
It is urged that, if the right to carry on business carries with it by necessary implication a right not to carry on business, if the right to speak freely carries with it by necessary implication the right to refrain from speaking at all, the right to form associations or unions also carries with it by necessary implication the right not to form associations or unions.
In the first place, assuming that the right to form an association implies a right not to form an association, it does not follow that the negative right must also be regarded as a fundamental right.
The citizens of India have many rights which have not been given the sanctity of fundamental rights and there is nothing absurd or uncommon if the positive right alone is made a fundamental right.
The whole fallacy in the argument urged on behalf of the petitioners lies in this that it ignores that there is no compulsion at all on any cane grower to become a member of the Canegrowers ' Co operative Society.
The very definition of a cane grower given in the impugned Act talks of "a person who cultivates cane either by himself or by members of his family or by hired labour and who is not a member of the Canegrowers ' Co operative Society".
The Sugarcane Board is to consist of inter alia 15 members to be appointed by the State Government of whom 5 are to be the representatives of canegrowers and the Canegrowers ' Co operative Societies.
The occupier of a factory has to maintain a register of all such canegrowers and Canegrowers ' Co operative Societies as shall sell cane to that factory.
The payment of commission on purchase of cane is to be made by the occupier of a factory in both cases.
, whether the purchase is made through a Canegrowers ' Co operative Society or the purchase is made direct from the canegrowers.
The U.P. Sugarcane Regulation of Supply and Purchase Order, 1954, made in exercise of the powers conferred by section 16 of the impugned Act also talks of cane growers as well as Canegrowers ' Co operative Societies and in 444 the case of reserved areas both the cane growers and the Canegrowers ' Co operative Societies are entitled within 14 days of the issue of an order reserving.
an area for a factory to offer to supply cane grown in the reserved area to the occupier of the factory and Form B in Appendix II of that Order provides the form of agreement between the cane grower and the occupier of a factory.
The cane grower as well as the Canegrowers ' Co operative Society are both within the ken of the impugned Act and it cannot be urged that the object of the Act is to promote Canegrowers 'Co operative Societies to the prejudice of the cane grower himself.
The Canegrowers ' Co operative Societies are to be fostered if at all for furthering the interests of the cane growers and there is no conflict between the interests of the cane growers on the one hand and those of the Cane growers ' Co operative Societies on the other.
Both are equally catered for by the impugned Act but it is only when the State Government feels that there are circumstances justifying the issue of an order under which the cane grown by a cane grower shall not be purchased except through a Canegrowers ' Co operative Society, the State Government, in exercise of the power reserved under section 16(2)(b) would issue an order accordingly.
The impugned notification dated 27th September, 1954 specifies the circumstances under which such a prohibitory order can be made.
If the membership of a particular Canegrowers ' Cooperative Society is not less than 75 per cent.
of the total number of cane growers within the particular area, then and then only it is considered expedient and desirable that all the cane purchased by an occupier of a factory from that area should be purchased only through the agency of the particular Canegrowers ' Co operative Society.
It is with a view to eliminate unhealthy competition between the cane growers on the one hand and the Canegrowers ' Cooperative Societies on the other and also to prevent malpractices indulged in by the occupier of a factory for the purpose of breaking up the Canegrowers ' 445 Co operative Society that such a provision is made and a notification issued prohibiting the occupier of a factory from making any purchases from the area except through the Canegrowers ' Co operative Society.
It is a reasonable provision made for the benefit of the large number of persons forming the members of the Canegrowers ' Co operative Society and cannot be impugned as in any manner violative of any fundamental right of the petitioners.
There is also another fallacy in their argument and it lies in ignoring that no canegrower is prevented from resigning his membership of a Canegrowers ' Co operative Society.
These are voluntary organisations which a canegrower is entitled to join or not at his choice.
If he has once joined it he is also entitled to resign his membership at his choice and the only obstacle to his right of resignation, as has been laid down in the bye laws of the Society, is the fact of his being indebted to the Society, or the fact of his being a surety for debt due by another member of the Society.
Until these debts are discharged and also until the crushing season during which the Canegrowers ' Co operative Society has entered into an agreement with the occupier of a factory is over, a member of a Society cannot resign his membership.
These restrictions do not fetter his right to resign his membership of the Society.
If be became a member of the Society he is bound by the bye laws of the Society and can only resign his membership after fulfilling all the conditions which are laid down in the bye laws of the Society.
The cane grower,, moreover, is not prevented absolutely from selling his sugarcane.
The only person to whom he cannot sell his sugarcane is the owner of a factory but that does not prevent him from selling his sugarcane to any other person or for any other purpose, e.g. the manufacture or production of gur or rab or khandsari or any variety of product other than sugar.
There may be of course difficulties in the matter of his being able to sell the same in 446 that manner but that does not mean that there is an absolute restriction on his power of disposal of his goods unless and until he becomes a member of a Canegrowers ' Co operative Society.
He is at perfect liberty not to become a member of a Canegrowers ' Co operative Society if he chooses not to do so and no power on earth can compel him to become such a member.
Just as he is not bound to become a member of a Canegrowers ' Co operative Society he is equally not bound to offer his sugarcane for sale to the occupier of a factory even if he happens to be a canegrower within the area reserved for that factory.
His freedom in that behalf is absolutely unrestricted and we do not see how it can be urged that the provisions of the impugned Act and the notification dated 27th September, '1954 are violative of his fundamental right under article 19(1)(c) of the Constitu tion.
(6): It is further contended that the impugned Act and the notifications infringe the fundamental right guaranteed under article 19(1) (f) and (g) and article 31 of the Constitution.
We may refer in this context to the following passage from the judgment of this Court delivered by Mukherjea, J. (as he then was) in Messrs Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh and two others (1): "Nobody can dispute that for ensuring equitable distribution of commodities considered essential to the community and their availability at fair prices, it is quite a reasonable thing to regulate sale of these commodities through licensed vendors to whom quotas are allotted in specified quantities and who are not permitted to sell them beyond the prices that are fixed by the controlling authorities.
The power of granting or withholding licenses or of fixing the prices of the goods would necessarily have to be vested in certain public officers or bodies and they would certainly have to be left with some amount of discretion in these matters.
So far no exception can be taken; but the mischief arises when the power con (1) ; , 811. 447 ferred on such officers is an arbitrary power unregulated by any rule or principle and it is left entirely to the discretion of particular persons to do anything they like without any check or control by any higher authority.
A law or order, which confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities cannot but be held to be unreasonable.
As has been held by this court in Chintaman vs The State of Madhya Pradesh, the phrase "reasonable restriction" connotes that the limitation imposed upon a person in enjoyment of a right should not be arbitrary or of an excessive nature beyond what is required in the interest of the public.
Legislation, which arbitrarily or excessively invades the right, cannot be said to contain the quality of reasonableness, and unless it strikes a proper balance between the freedom guaranteed under article 19 (1) (g) and the social control permitted by clause (6) of article 19, it must be held to be wanting in reasonableness".
The power which is given to the Cane Commissioner under section 15 of the Act for declaring reserved or assigned areas is well defined and guided by the considerations set out in Rule 22 of Chapter 6 of the U.P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954 and is further conditioned that he has to consult the factory and the Canegrowers 'Co operative Society, ,and his orders made thereunder are subject to an appeal to the State Government at the instance of the party aggrieved.
This cannot by any means be treated as an uncontrolled or an unfettered power without recourse to any higher authority in the event of his going wrong.
The power is not absolute nor is it unguided and, therefore, does not fall within the mischief of article 19(1)(f) and (g) and the notification dated 9th November, 1955 cannot be impugned on that ground.
The same is the position with regard to notification dated 27th September, 1954.
The restriction which is imposed upon the cane growers in regard to sales of their sugarcane to the occupiers of factories in areas where the membership of the 448 Canegrowers ' Co operative Society is not less than 75 per cent.
of the total cane growers within the area is a reasonable restriction in the public interest designed for safeguarding the interests of the large majority of growers of sugarcane in the area and works for the greatest good of the greatest number.
That being so, it comes well within the protection of article 19(6) and the impugned notification cannot be challenged as violative of the fundamental right guaranteed under article 19(1)(f) and (g).
If these impugned notifications are, therefore, intravires the State Legislature, they cannot be challenged also under article 31 as none of the petitioners is being deprived of his property, if any, save by authority of law.
(7): It is next contended that the impugned Act is void in that it confers very wide powers on the executive officials and is a piece of delegated legislation.
Our attention has not been drawn to any provisions of the impugned Act which would amount to a delegation of legislative power to any officials of the State Government.
The only provisions alleged to contain such delegation of legislative power are those contained in section 15 and section 16(1)(b) read with section 16 (2) (b) of the impugned Act which we have dealt with above.
They are certainly no piece of delegated legislation and the vires of the impugned Act is not affected thereby.
(8): It is lastly contended that the impugned Act is destructive of freedom of trade and commerce and is thus violative of article 301 of the Constitution.
Article 301 of the Constitution does not occur in Part III which deals with fundamental rights but it is urged that if a law was enacted in violation of the provisions of article 301 it will be no law at all and will certainly not avail the State Government.
In effect this is an argument in furtherance of the contention in regard to article 19(1)(f) and (g) dealt with above but we shall deal with it separately as it has been urged as an independent ground of attack 449 against the constitutionality of the impugned Act and the notifications issued thereunder.
It is urged that the impugned notifications are violative of the freedom of trade, commerce and intercourse embodied in article 301 of the Constitution.
The petitioners are not free to sell their sugarcane to anybody other than the occupier of a factory or even to him except through the agency of a Canegrowers ' Co operative Society and are not at all entitled to sell their sugarcane to anyone outside the State.
Assuming this is go, the short answer to this contention is furnished by the provisions of article 304 of the Constitution which provide: "304.
Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law (a). . . . . . (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest:. . . . " We may also refer in this context to the following passage from the judgment of their Lordships of the Privy Council in Commonwealth of Australia vs Bank of New South Wales(1) which was quoted with approval in the later Privy Council decision in Hughes and Vale Proprietary Ltd. vs State of New South Wales and Others(2): "Every case must be judged on its own facts and in its own setting of time and circumstance, and it may be that in regard to some economic activities and at some stage of social development it might be maintained that prohibition with a view to State monopoly was the only practical and reasonable manner of regulation, and that inter State trade, commerce and intercourse thus prohibited and thus monopolized remained absolutely free".
We have already stated in the earlier part of this judgment that the restrictions imposed by the alleged notifications are reasonable restrictions imposed on (1) , 311.
(2) 450 the petitioners in the public interest.
We are, therefore, of opinion that this contention also is of no avail to the petitioners.
The result, therefore, is that the impugned Act and the notifications dated 27th September, 1954 and 9th November, 1955 issued thereunder were intravires the State Legislature and are binding on the petitioners.
The Petitions must, therefore, stand dismissed.
In regard to costs we feel that the proper order for costs should be that Petitions Nos.
625 of 1954, 48 of 1955 and 47 of 1956 in which the President, the VicePresident and the Secretary respectively of the anna Utpadak Sangh are amongst the petitioners and Petition No. 37 of 1956 in which Saraya Sugar Factory is the petitioner will stand dismissed with costs, one set between all the petitions and between all the Respondents in those petitions.
The parties in the rest of the Petitions will bear and pay their own respective costs of those Petitions.
| The petitioners challenged the constitutional validity of the U.P. Sugarcane (Regulation of Supply and Purchase) Act of 1953, and two notifications issued by the State Government on September 27, 1954 and November 9, 1955, the former under sub sec.
1(a) read with sub sec.
2(b) of section 16 of the impugned Act providing that where not less than three fourths of the canegrowers within the area of operation of a Canegrowers ' Co operative Society were members thereof, the occupier of the factory to which that area is assigned should not purchase or enter into an agreement to purchase cane except through that society and the latter under section 15 of the Act assigning to different sugarcane factories specified cane purchasing centers for supply to them of sugarcane for the crushing season of 1955 56.
They contended that the impugned Act was ultra vires the 394 State Legislature, the subject matter of legislation being within the exclusive jurisdiction of Parliament, and repugnant to Act LXV of 1951 and Act X of 1955 passed by Parliament and that sections 15 and 16(1)(a) and (2)(b) and the two notifications infringed their fundamental rights under articles 14, 19(1)(c), (f) and (g) and 31 and violated the provisions of article 301 of the Constitution.
Held, (1) that the impugned Act and the notifications issued thereunder were intra vires the State Legislature, did not infringe any fundamental rights of the petitioners nor violated the provisions of article 301 of the Constitution and the petitions must be dismissed; (2)that the Central Acts in respect of sugar and sugarcane and the notifications thereunder having been enacted and made by the Central Government in exercise of concurrent jurisdiction under Entry 33 of List III of the Seventh Schedule to the Constitution as amended by the Constitution (Third Amendment) Act of 1954, the State Legislature was not deprived of its jurisdiction thereunder and no question of legislative incompetence of the U.P. Legislature or its trespassing upon the exclusive jurisdiction of the centre in enacting the impugned Act could arise; (3) that the provisions of the impugned Act compared to those of the Central Acts clearly showed that the impugned Act was solely concerned with the regulation of the supply and purchase of sugarcane and in no way trenched upon the exclusive jurisdiction of the Centre with regard to sugar and the U.P. Legislature was, therefore, quite competent to enact it; (4) that no question of repugnancy under article 254 of the Constitution could arise where Parliamentary Legislation and State Legislation occupied different fields and dealt with separate and distinct matters even though of a cognate and allied character, and that where, as in the present case, there was no inconsistency in the actual terms of the acts enacted by Parliament and the State Legislature, the test of repugnancy would be whether Parliament and the State Legislature, in legislating under an entry in the Concurrent List, exercised their powers over the same subject matter or whether the laws enacted by Parliament were intended to be exhaustive so as to cover the entire field; (5) that the provisions of section 18 G of Act LXV of 1951 did not cover sugarcane nor indicate the intention of the Parliament to cover the entire field of such legislation; the expression "any article or class of articles relatable to any scheduled industry" used in sections 18 G, 15 and 16 of the Act did not refer to raw materials but only to finished products of the scheduled industries the supply and distribution of which section 18 G was intended to regulate, its whole object being the equitable distribution and availability of manufactured articles at fair prices and not to invest the Central Government with the power to legislate in regard to sugarcane; 395 (6) that even assuming that sugarcane was such an article and fell within the purview of section 18 G of the Act, no order having been issued by the Central Government thereunder, no question of repugnancy could arise, as repugnancy must exist as a fact and not as a mere possibility and the existence of such an order would be an essential pre requisite for it; (7) that as the provisions of Act X of 1955, and those ' of the impugned Act and the U.P. Sugarcane Regulation of Supply and Purchase Order, 1951, made thereunder, relating to sugarcane were mutually exclusive and did not impinge upon each other and the one legislature did not trench upon the field of the other, the Centre remaining silent where the State spoke and the State remaining silent where the Centre spoke, there could be no inconsistency between them and no provision of the impugned Act and the Rules made thereunder was invalidated by any of the provisions of Act LXV of 1951 as amended by Act XXVI of 1953 or Act X of 1955 and the Sugarcane Control Order, 1955, issued thereunder; Clyde Engineering Company, Limited vs Cowburn ([1926] , Ex Parte McLean ([1930] ; , Stock Motor Plough Ltd. vs Forsyth ([1932] ; , G. P. Stewart vs B.K. Boy Chaudhury (A.I.R. and Shyamakant Lal vs Rambhajan Singh ([1939] F.C.R. 188), referred to.
(8) that the power of repeal conferred on Parliament by the proviso to article 254(2) of the Constitution was a limited power and could be exercised only by enacting a law relating to the matter dealt with by the state law and the state law must be one of the kind indicated in the body of article 254(2) itself, and as the impugned Act did not fall within that category the proviso did not apply and the impugned Act, the notifications made thereunder and the U. P. Sugarcane Regulation of Supply and Purchase Order, 1954, stood unrepealed by section 16(1)(b) of Act X of 1955 and cl.
7(1) of the Sugarcane Control Order, 1955 made thereunder; Zaverbhai Amaidas vs The State of Bombay ([1955] 1 S.C.R. 799), referred to.
(9) that the power of repeal conferred by the proviso to article 254(2) could be exercised by Parliament alone and could not be delegated to an executive authority and, consequently, the Central Government acquired no power of repeal under cl. 7 of the Sugarcane Control Order, 1955; (10) that the contention that the impugned Act infringed the fundamental right guaranteed by article 14 inasmuch as very wide powers were given to the Cane Commissioner which could be used in a discriminatory manner was without any foundation since his powers under section 15 of the impugned Act were well defined and the Act and Rules framed thereunder gave the canegrowers or a Canegrowers ' Co operative Society or the occupier of a factory the right to appeal to the State Government against any order passed by him 396 and thus provided a sufficient safeguard against any arbitrary exercise of those powers; (11) that equally unfounded was the contention that the im pugned Act and the notification dated September 27, 1954, violated the fundamental right guaranteed by article 19(1)(c) of the Constitution.
Although the right to form an association was a fundamental right, it did not necessarily follow that its negative, i.e. the right not to form an association must also be so, as all rights which an Indian citizen had were not fundamental rights.
No canegrower was compelled to become a member of the Canegrowers ' Co operative Society or prevented from resigning therefrom or selling his crops elsewhere and, consequently, the impugned Act and the notification did not violate his fundamental right; (12) that the powers given to the Cane Commissioner by section 15 of the impugned Act to declare reserved or assigned areas were well defined and controlled by higher authorities and by no means absolute and unguided and were not, therefore, bit by article 19(1)(f) and (g) and the notification dated November 9, 1955, could not, therefore, be impugned on that ground; (13) that the restriction imposed by the notification dated September 27, 1954, on canegrowers in regard to sale of sugarcane to occupiers of factories in areas where the membership of the Canegrowers ' Co operative Society was not less than 75 per cent.
of the total number of canegrowers was a reasonable restriction in the public interest, designed for the benefit of a large majority of canegrowers, and as such came within the protection of article 19(6) and did not violate article 19(1)(f) and (g) of the Constitution; (14) that the impugned notifications, being intra vires the State Legislature, could not also be challenged under article 31 as none of the petitioners was deprived of his property, if any, save by authority of law.
Messrs Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh and two others ([1954] S.C.R. 803), referred to.
(15) Nor could it be contended that the impugned Act and the notifications contravened the provisions of article 301 of the Constitution in view of the provision of article 304(b) which made it permissible for the State Legislature to impose reasonable restrictions in the public interest.
Commonwealth of Australia vs Bank of New South Wales ([1950] A.C. 235) and Hughes and Vale Proprietary Ltd. vs State of New South Wales and others ([1955] A.C. 241), referred to.
|
Summarize this legal judgement text concisely | ON: Criminal Appeal No. 140 of 1954.
Appeal by special leave from the judgment and order dated the 23rd July 1953 of the Punjab High Court.
in Criminal Revision No. 487 of 1953 arising out of the judgment and order dated the 17th April 1953 of the Court of Sessions Judge at Hoshiarpur in Criminal Appeal No. D/I of 1953.
N. section Bindra and P. G. Gokhale, for the appellant.
A. N. Chona and K. L. Mehta for, the respondent, 71 570 1956.
May 8.
The Judgment of the Court was delivered by SINHA J.
This is an appeal by special leave from the judgment of a single Judge of the High Court of Judicature of Punjab at Simla in Criminal Revision No. 487 of 1953 dated the 23rd July 1953 acquitting the respondent, a constable in the police force of the State of an offence under section 7 of the East Punjab Essential Services (Maintenance) Act, XIII of 1947 (which hereinafter will be referred to as "the Act"), for which he had been convicted by a Magistrate of the First Class at Dharamsala by his judgment dated the 30th March 1953 and sentenced to 15 days ' rigorous imprisonment, which.
orders of conviction and sentence had been affirmed by the Sessions Judge of Hoshiarpur, Camp Dharamsala, by his judgment and order dated the 17th April 1953.
The facts leading up to this appeal may shortly be stated.
The respondent was prosecuted on a complaint filed by the Superintendent of Police, Kangra District, in the Court of the 1laqa Magistrate, Dharamsala, District Kangra, for an offence under section 7 of the Act.
The allegations against the respondent were that he joined the Police Department as a constable in Jullundur District in 1947, that in December 1952 he was transferred from Jullundur District to Kangra District and posted to Police 'Lines, Kangra, as a constable on general duty at Seraj police station; that in January 1953 he came to Police Lines, Dharamsala for monthly training (refresher course), that on the 2nd February 1953 at the time of roll call at 7 p.m. the appellant was assigned the duty as sentry No. 1 without rifle behind the Police Lines Armoury,Dharamsala,from9p.m.toll.p.m.
The respondent, though informed of the assignment of the aforesaid duty to him, refused to obey that order or to perform any other duty in the Lines.
Thereupon his name was struck off from the Duty Roster and another foot constable was duly placed in that post of duty.
On the night between the 2nd and 3rd February 1953 at 11 30 p.m. a surprise roll call of the employees of the Police Lines was duly made by means 571 of an alarm sounded with a bugle which was blown continuously for about 15 minutes.
The respondent was found absent on such a roll call and another constable was deputed to search for the respondent but he could not be found.
He appeared the next morning at about 9 30 a.m. after remaining absent from the Police Lines without offering any explana tion for his unauthorised absence.
The gravamen of the charge as laid in the petition of complaint was that he refused to carry out the order of his superior officer who had assigned a duty to him and that he remained absent from his official duty in the Police Lines without obtaining permission and without any cogent reasons, from 11 30 p.m. on the 2nd February 1953 till 9 30 a.m. on the day following.
Thus he was said to have committed an offence under section 7 of the Act.
On those allegations the respondent was placed on his trial before the Magistrate of the First Class at Dharamsala.
After recording the. prosecution evidence the learned Magistrate framed a charge under section 7 of the Act under two heads, firstly, that he had on the 2nd February 1953 at Dharamsala as a foot constable in the police force of the Kangra District had disobeyed the lawful orders given by a superior officer who had assigned to him a duty as such foot constable of a sentry without rifle in the rear of the armoury in the Police Lines from 9 p.m. to 1 1 p.m. and, secondly, that on the same date and at the same place he had absented himself from duty as a foot constable without reasonable excuse and had thus remained absent from 11 30 p.m. on the 2nd February 1953 to 9 30 a.m. of the following day.
The respondent 's defence as disclosed in his answer to questions put by the court under section 342, Criminal Procedure Code was one of denial of the charge.
His substantive defence may be stated in his own words: "On 2nd February, 1953 at 7 p.m. my duty was allotted to me and I signed at exhibit P. D./I.
I then told Raghbir Singh P.W. that according to the Civil Surgeon, Jullundur I could only be given sitting or 572 office duty.
I showed him the copy Exhibit D. E.
I also told him that the Civil Surgeon, Dharamsala, had also examined that very day on 2nd February 1953.
Thereupon Raghbir Singh P.W. cancelled my said duty.
I was lying ill in the Police Lines Barracks and did not hear the bugle In the morning of 3rd February, 1953, I came to know that my absence had been noted.
Thereupon I presented myself for duty to the Head Constable and signed at Exhibit P.E./1.
My leg was burnt in rescue work at Gujranwalla when I was in the special Police Lines".
He also examined a number of defence witnesses including the Civil Surgeon of Jullundur who deposed to having examined the respondent on the 27th February 1953 "and found that he had got extensive burn scars on the back of the right thigh and leg crossing the knee.
Hence he could not perform any strenuous duty like standing for long hours.
In my opinion he could be given some light duty in the office.
exhibit D.W.
I/D is a true copy of my medico legal report of this case".
The learned Magistrate acquitted the accused in respect of the first part of the charge relating to his alleged disobedience of the lawful orders of his superior officer to perform sentry duty.
But he convicted him of the second part of the charge, namely, absence from duty and sentenced him to 15 days ' rigorous imprisonment.
On appeal by the accused, the learned Sessions Judge affirmed the findings of the trial Magistrate and held that the appellant before him was absent from duty without permission during the night between the 2nd and 3rd February 1953.
He accordingly dismissed the appeal.
On a revisional application made by the convicted person, the learned single Judge who heard the case, came to the conclusion that the accused had not offended against any provisions of the Act.
Accordingly he acquitted him.
The ratio of his decision may be given in his own words as follows: "This Act does not appear to me to apply to the kind of act which the constable is said to have done.
He had been called to Dharamsala on a refresher 573 course and on the night in question and in the early morning he appears to have been not present at the time when he according to the prosecution should have been present.
This, in my opinion, does not attract the attention of the Essential Services Maintenance Act.
It is possible that if he is guilty be is liable to some disciplinary punishment, but his prosecution under the East Punjab Essential Services Maintenance Act is in my opinion not justified.
I hold that he has not offended against the provisions of this Act and therefore he has not committed any offence under this Act".
Against this order of acquittal the State of Punjab obtained special leave to appear to this Court, apparently because the judgment of the learned Judge of the High Court involved very important questions as to the scope and effect of the Act and the question of law decided by the High Court was of great public importance.
This case was first placed on the 11th April this year before another Bench of this Court and learned counsel for the respondent raised a preliminary objection to the maintainability of the prosecution on the ground, it was alleged, that there was no proper complaint under section 7(3) of the Act and as this question bad not been raised in any of the courts below and as counsel for the appellant was taken by surprise, the Bench granted two weeks time to enable him to satisfy the court that there was a proper compliance with the provisions of section 7(3) of the Act.
When the matter came up before us for hearing, the learned counsel for the appellant placed before us the following notification.
by the Punjab Government authorising all police officers above the rank of Deputy Superintendent of Police and the Heads of the various Government Departments to make complaints in writing to a court in respect of alleged offences against the Act: " Dated Simla 2, the 20th January, 1948.
No. 1248 H Camp 48/2075.
In exercise of the powers conferred by sub section (3) of section 7 of the East Punjab Essential Services (Maintenance) Act 574 1947 the Governor of the East Punjab is pleased to authorise all police officers of and above the rank of Deputy Superintendent of Police and the Heads of the various Government Departments to make complaints in writing to a court against persons of their respective Departments, who are alleged to have committed offences against the Act.
Nawab Singh Home Secretary to Govt.
of East Punjab".
On a reference to the notification quoted above, it is clear that the complaint filed by the Superintendent of Police Kangra District; in the court of the Ilaqa Magistrate, Dharamsala in the district of Kangra, was filed in compliance with the provisions of sub section (3) of section 7 of the Act which is in these terms: "No court shall take cognisance of any offence under this Act except upon complaint in writing made by a person authorised in this behalf by the State Government".
But it was argued on behalf of the respondent that there was nothing to show that the complaint on the basis of which the prosecution had been initiated in this case had been authorised by the State Government.
The law does not require that the particular complaint should have been authorised by the State Government.
What is required is that the complaint should have been filed by a person authorised by the State Government to do so.
The notification has authorised a Superintendent of Police to file a complaint in respect of a contravention of the provisions of the Act by a person in his department.
It is not denied that the respondent was such a person.
Hence the preliminary objection must be overruled ' Coming to the merits of the decision, it is a little surprising that the learned Judge below should have completely ignored the opening words of section 3 of the Act which completely answer the ratio of the decision under appeal.
"This Act shall apply to all employment under the State Government. . (omitting words not material for the present case).
575 The learned Judge of the High Court has quoted the provisions of sections 5 and 6 of the Act in support of his conclusion that the Act is "intended to be applied in special cases of dislocation of essential services because of extraordinary events such as strikes of because of political agitation or similar circumstances".
The relevant portion of section 5 is in these terms: "Any person engaged in any employment or class of employment to which this Act applies who(a) disobeys any lawful order given to him in the course of such employment, or (b)without reasonable excuse abandons such employment or absents himself from work, is guilty of an offence under this Act".
The opening words of section 5 have reference to the opening words of section 3 so far as an employee under the State Government is concerned.
As the learned Judge missed these opening words as indicated above, he fell into the error of supposing that a person in the position of the respondent was not intended to be governed by the Act.
It is mainfest that the learned Judge has acquitted the appellant, not on a misreading of the provisions of the Act, but by ignoring the opening words of section 3.
It must therefore be held that the judgment of the High Court cannot be sustained.
But it still remains to consider whether the orders passed by the High Court acquitting the respondent should be interfered with.
The courts below have acquitted the respondent of the first part of the charge which could have come within clause (a) of section 5 which lays down offences under the Act.
The respondent had been convicted by the first two courts of an offence referred to in the second part of the charge, namely, of his, having absented himself from duty.
Under section 22 of the , V of 1861, every police officer is to be considered to be always on duty and may at any time be employed as a police officer, and on the findings of the courts of fact that the res pondent had absented himself from the Police Lines 576 during the night between the 2nd and 3rd February 1953 he may have made himself liable to the penalty for neglect of duty under section 29 of the , or may have made himself liable to departmental punishment for absence from the police lines without permission.
But we are not concerned here with these provisions.
The respondent bad been found guilty under clause (b) of section 5, that is to say, for the offence of absenting himself from work.
Neglect of duty as contemplated by section 29 of the is quite different from abandoning an employment or of absenting oneself from work without reasonable cause which is the particular offence contemplated by clause (b) of section 5.
As already indicated, on account of the respondent 's physical infirmity or deficiency the work assigned to him had been cancelled and he was expected to be in police lines during the material time without apparently doing any "work".
It is clear from the record that he had not been assigned any "work" within the meaning of clause (b) of section 5.
Hence his absence from Police Lines during the relevant time may have amounted to neglect of duty; but, in our opinion, is not synonymous with absence from work or abandonment of employment which has been made penal under clause (b) of section 5.
For the reasons aforesaid it must be held that the respondent bad been rightly acquitted, though for wholly wrong reasons.
The appeal must therefore stand dismissed.
Appeal dissmissed.
| Section 7(3) of the East Punjab Essential Services (Mainten ance) Act, 1947, provides that "no court shall take cognisance of any offence under this Act except upon complaint in writing made by a person authorised in this behalf by the State Government".
Held, that the law does not require that the particular com plaint should have been authorised by the State Government and it is sufficient if it has been filed by a person authorised by the State Government to do so.
Neglect of duty as contemplated by section 29 of the , is quite different from abandoning an employment or absenting oneself from work without reasonable cause within the meaning of section 5(b) of the East Punjab Essential Services (Maintenance) Act.
The respondent, a constable, on account of physical infirmity was not assigned any "work" in the Police Lines within the meaning of el.
(b) of section 5 of the East Punjab Essential Services (Maintenance) Act.
He absented himself from the Police Lines without permission.
Held, that his absence from Police Lines during the relevant time may have amounted to neglect of duty but he could not be convicted under section 5(b).
|
Summarize this legal judgement text concisely | ON: Criminal Appeal No. 152 of 1954.
Appeal by Special Leave from the Judgment and Order dated the 20th October 1953 of the Bombay High Court in Criminal Appeal No. 652 of 1953 arising out of the Judgment and Order dated the 9th April 1953 of the Court of Presidency Magistrate.
19th Court, Bombay in Criminal Case No. 12164/P of 1949.
H.J. Umrigar and R. A. Govind for the appellant.
Porus A. Mehta and R. H. Dhebar for P. G. Gokhale for the respondent.
May 4.
The Judgment of the Court was delivered by SINHA J.
This is an appeal by special leave directed against the concurrent orders and judgments of the courts below convicting the appellant, under section 409, Indian Penal Code and sentencing him to rigorous imprisonment for three months and a fine of Rs. 201 or in default, further six weeks rigorous imprisonment.
, As the appellant had been convicted and sentenced for a similar offence in another case tried by the same Presidency Magistrate, 19th Court, Esplanade, Bombay, he directed the sentence in this case to run concurrently with the sentence in the other case.
The charge against the accused in the, trial court is in these terms: "The Accused is charged under section 409 of the Indian Penal Code for committing criminal breach of trust in respect of property to wit 3% Government Promissory Loan Notes 1966 68 of the face value of Rs. 50,000 and 2 1/4% Government Promissory Notes 1961 of the face value of Rs. 25,000 in or about February to May 1949 entrusted to him in his capacity as Managing Director of the Exchange Bank of 486 India and Africa Ltd, and belonging to the Cambay Hindu Merchants Co operative Bank. (Detailed charge is separately framed)".
The appellant at all material times was the Managing Director of the Exchange Bank of India and Africa Ltd., with its head office at Bombay, which hereinafter will be referred to as the Exchange Bank.
He held a power of attorney to act as the Managing Director on behalf of the Directors of the Company.
By that power the accused was invested with the authority to borrow money on behalf of the Bank.
In 1944 the Cambay Hindu Merchants Co operative Bank at Cambay, which hereinafter will be referred to as the Co operative Bank., had opened a current account with the Exchange Bank.
On instructions from the Co operative Bank, the Exchange Bank purchased in August 1946 securities worth Rs. 25,000 in its own name with money belonging to the Co operative Bank and the securities were kept with the Exchange Bank as a cover for overdraft.
In March 1948 two further lots of Government security of Rs. 25,000 each of the value of Rs. 50,000 were purchased likewise and left with the Exchange Bank for the same purpose.
On the 14th May 1948 the two banks entered into a contract evidenced by three documents to be noticed in detail hereinafter.
Shortly stated, the Exchange Bank agreed to grant the Co operative Bank credit for overdraft up to a limit of Rs. 66,150 and as a security for the overdraft the Government securities of the value of Rs. 75,000 already in the custody of the Exchange Bank was pledged to the latter.
These securities of the face value of Rs. 75,000 will hereinafter be referred to as "the securities".
But it appears that the Co operative Bank had no occasion to operate on the overdraft account until the 28th February 1949 when the crucial event happened, namely the Exchange Bank finding itself in an embarrassed financial position took a loan from the Canara Bank of one lakh of rupees by pledging the securities as also other securities with which we are not concerned in this case.
On the 24th April 1949 the Exchange Bank paid off the dues of the 487 Canara Bank by taking a fresh loan of the same amount of one lakh from Messrs Merwanji Dalal & Co. and pledging the same securities as ' had been pledged to the Canara Bank.
On the 28th April 1949 Messrs Merwanji Dalal & Co. demanded back their money by the forenoon of the day following.
As the Exchange Bank could not pay the amount as demanded, the pledgees aforesaid sold those securities including the securities belonging to the Co operative Bank, for realising their dues, on the 3rd May 1949.
In the meantime, in answer to a letter from the Co operative Bank to the Exchange Bank asking for a certificate for the securities held by the latter on behalf of the former in the overdraft account, the Exchange Bank issued the certificate dated the 1st April 1949 to the effect that at the close of business on the 31st March 1949 it held Government of India securities of the total value of Rs. 75,000 as security against the overdraft facilities granted to the Co operative Bank and that there was no overdraft against the said securities on that date.
Subsequently, on the 29th April 1949 the Co operative Bank wrote to the Exchange Bank asking the latter to hand over securities of the face value of ' Rs. 50,000 to the Central Bank.
The Central Bank also on behalf of the Co operative Bank made a similar demand and as the Exchange Bank did not comply with that requisition, the Central Bank informed the Co operative Bank by a letter dated the 3rd May 1949 that the securities had not been banded over to the Central Bank as directed by the Co operative Bank.
The Co operative Bank then wrote to the Reserve Bank for stoppage of the securities of the value of Rs. 25,000.
It became clear by then that the Exchange Bank was not in a position to return the securities to the owners, that is to say, the Co operative Bank.
In spite of the best efforts of the appellant as the Managing Director of the Exchange Bank, to stave off the crisis by borrowing money from different sources, the run on the bank became so great that the directors applied for and obtained from the Com 488 pany Judge of the Bombay High Court a moratorium of 15 days.
On the 18th May 1949 a provisional liquidator was appointed in respect of the Exchange Bank on a creditor 's application and on the ' 24th June 1949 the Official Liquidator was appointed to wind up the bank.
On the 25th June 1949 one M. N. Raijee as agent of the Official Liquidator lodged information with the police charging the appellant with breach of trust in respect of a number of securities including the securities belonging.
to the Co operative Bank.
On the 31st October 1949 a charge sheet was submitted by the police under section 409, Indian Penal Code against the appellant in respect of the securities of the face value of Rs. 75,000 belonging to the Cooperative Bank.
On the 4th April 1952 the charge as quoted above was framed against the appellant.
The delay of about two and a half years in placing the appellant on trial is attributable to the fact that at the request of the accused the trial in respect of this charge was stayed pending the disposal of the other case against him.
At the trial the prosecution examined the Manager of the Co operative Bank as P.W. 1.
He proved the transactions between that Bank and the Exchange Bank.
The second witness for the prosecution was a partner in the firm of Messrs Merwanji Bomanji Dalal during the material time.
He proved the transaction of the loan by his firm to the Exchange Bank of one lakh of rupees on the pledge of the securities belonging to the Co operative Bank, as also other securities.
He deposed to the fact that it was the appellant who finalised the transaction on behalf of the Exchange Bank.
He also proved that in default of payment by the Exchange Bank on demand by his firm, it sold the securities including the securities in question and realised the dues from the Bank from the sale proceeds of securities of the value of one lakh of rupees.
The third witness for the prosecution was ' the Chief Accountant of the Exchange Bank who functioned as such till the 2nd May 1949 when the Bank closed down.
He also had a power of attorney from the Bank to act jointly with another person 489 with a similar power of attorney.
According to this witness, the appellant as the Managing Director exercised the powers of borrowing, raising money, purchasing, selling and pledging of bonds.
, scrips and other forms of securities on behalf of the Bank and its constituents during the relevant period.
and that no one else exercised those powers.
He also testified to the fact that there was a crisis in the affairs of the Bank from about the middle of February 1949 and that there was a rush on the Bank which continued till it closed down.
He also proved the fact that during the material time the Co operative Bank had a credit balance in its favour and that there was no overdraft by that Bank from the Exchange Bank.
He proved Exhibits E, F and G which are the documents evidencing the contract between the two banks in respect of the pledge of the security.
He corroborated the previous witness that it was the appellant who negotiated and finalised the loan of one lakh of rupees from the Canara Bank and that the securities in question along with others had been pledged to the Canara Bank.
It was he who had endorsed the securities to the Canara Bank.
He stated that the Exchange Bank had submitted to the Canara Bank a declaration to the effect that the said securities belonged absolutely to the Exchange Bank.
As there was a heavy rush of depositors on the bank,the loan from the Canara Bank was taken to satisfy the demand of the depositors.
The most important witness examined on behalf of the prosecution is P.W. 4, Ganpati Venkatrao Kini.
He was an accountant in the Exchange Bank during the relevant period.
He was also working with the Official Liquidator of the Bank after its liquidation was ordered by court.
Like the previous witness, he also had a power of attorney to act only in conjunction with another per son holding a similar power.
He supports the previous witness in saying that the power of borrowing money or of purchasing, selling or pledging or repledging securities was exercised by the appellant and by no other person on all material dates.
He also corroborates the previous witness and ' states that 490 there was a crisis in the bank from about the middle of February 1949 and that there was a heavy rush on the bank from that time till it closed down.
He also proves Exs.
E, F and G and states that from the 14th May 1948 when these documents were executed between the two banks till the 2nd May 1949 when the Exchange Bank closed its doors there was no overdraft by the Co operative Bank which always had a credit balance.
He also gives the details of the transaction of the loan of one lakh between the Exchange Bank and the Canara Bank and the details of the securities pledged by way of security for that loan.
He makes the following very significant statement: "I had handed over the two securities belonging to the Cambay Co operative Bank to the accused for being handed over to the Canara Bank against the loan.
The accused actually asked me for these securities and I handed them to the accused".
To a court question as to why he did not bring it to the notice of the appellant that the securities in question belonged to the Co operative Bank and not to the Exchange Bank, his answer is in these words. "In fact, the accused himself told me to bring securities pleged by the Cambay Co operative Bank with the Exchanage Bank".
He also proves exhibit L, which is a very important document in this case and proves that it was signed by the accused.
He further states that the declaration in that document that the securities rep I resented the Exchange Bank 's investments was not correct.
He also makes detailed statements as to the different kinds of interest which the appellant had in the Exchange Bank.
He was drawing Rs. 2,500 as monthly salary as the Managing Director.
He was also drawing a salary of Rs. 1,000 from the Union Life Assurance Co. Ltd., is its Managing Director.
The Insurance Company and its branches had a current account with the Exchange Bank and had advanced to the latter six to seven lakhs of rupees as "call deposits".
The appellant was also connected with Messrs L. A, 491 Stronach Ltd., Advertising Agents, which had been given overdraft facilities by the Exchange Bank.
The appellant was also getting Rs. 2,000 per month as salary from the aforesaid Advertising Agents.
The appellant and his wife were the principal shareholders in Akhaney & Sons Ltd., who were the Secretaries and Treasurers of the Indian Overseas Airlines.
The Exchange Bank had advanced to the aforesaid Indian Overseas Airlines a loan of one crore and ten lakhs of rupees and Messrs Akhaney & Sons Ltd. aforesaid were getting a remuneration of Rs. 2,500 per month from the Indian Overseas Airlines Ltd. It would thus appear that the appellant along with his wife in one way or another was getting about Rs. 8,000 per mensem as remuneration from the different companies referred to above which were closely associated with one another from the financial point of view and that the, appellant was the chief person concerned with them and the connecting link between them.
It was naturally his interest to see that the Exchange Bank continued its existence as long as could be arranged even by borrowing large sums of money when there was already a run on the bank.
It is in the background of all these facts and circumstances that the appellant 'sacts of commission and omission had to be judged.
The other four witnesses, P.Ws. 5 to 8 are more or less formal witnesses in the sense that they have proved certain documents and letters which need not be noticed.
The evidence of P.W. 2 had to be set aside as he was not available for cross examination after charge, being out of the country.
The appellant 's defence is disclosed in a long written statement running into twenty paragraphs and seven closely typed pages submitted on the 3rd October 1952.
Shortly stated, it is to the effect that the charge framed against him is bad in law and extremely vague; that the vagueness of the charge had "considerably handicapped" his defence, that the prosecution had not been fair in that it had not exa mined the first informant, M. N. Raiji, that if he had been examined 'by the prosecution, the appellant would have shown from the records in his possession 64 492 that the Co operative Bank had not suffered any loss and that the Bank in the hands of the Liquidator had more than sufficient funds to pay the dues of the former; that the prosecution bad not been launched with the sanction of the Company Judge who was in seisin of the liquidation proceedings in respect of the Exchange Bank and that therefore the provisions of sections 179 and 237 of the Indian Companies Act had not been complied with; that the securities in question had not been entrusted to the appellant but to the Exchange Bank, ' if at all there was any entrustment, and that as a matter of fact and law, the Ex change Bank had not been entrusted with the securities, that the Exchange Bank "Court legally deal with the securities in any manner it liked", as provided in the documents, Exs.
E, F and G, between the two banks; that the sub pledging of the securities with the Canara Bank or with Messrs Merwanji Bomanji Dalal was "perfectly.
within the four corners of the law", and that the essential ingredients of an offence under section 409, Indian Penal Code had not been made out.
Grievance was also sought to be made of the fact that Inspector Milburn who had investigated the case had not been called as a. prosecution witness, with the result that the appellant had been deprived of the right of challenging the prosecution evidence with reference to the police diary.
The learned Magistrate after a very fair and full examination of the evidence in the case and the points raised by the appellant in his defence came to the conclusion that the appellant was guilty of the offence of criminal breach of trust under section 409, Indian Penal Code and passed a lenient sentence, as stated above, *in view of the, consideration that "not a pie went to the pocket of the accused", and that "the accused had not taken up any dishonest defence".
The learned Magistrate held that the charge as framed was not vague in view of the provisions of section 222, Criminal Procedure Code, with special reference to the terms of sub section (2) of that section.
On the question of the non examination of the first informant, M. N. Raiji, and of the investigating police officer, 493 the learned Magistrate observed that they were formal witnesses inasmuch as the facts of the case were not in dispute.
Furthermore, the court observed that if the accused or his lawyer who defended him at the later stage of the prosecution, had applied to the ' court for their being examined, they could have been called as witnesses and subjected to cross examination by the accused.
But no such, application had been made.
As regards want of sanction of the Company Judge, he held that section 179 of the lndian Companies Act had no application to the facts of the present case, as it was not a prosecution under the Companies Act and that therefore no such sanction as is contemplated by that section was necessary.
Dealing with the appellant 's contention that there was no entrustment within the meaning of section 405, Indian Penal Code the learned Magistrate observed that the accused held delegated powers from the Board of Directors and he held the property in trust on behalf of the Directors of the Exchange Bank.
He further held that the contract of pledge dated the 14th May 1948 between the two banks did not vest any right in the Exchange Bank absolutely to deal with the securities and that at any rate, the Exchange Bank could not deal with the securities so long as the Cooperative Bank had not taken an overdraft from the former.
In dealing with the question whether the appellant had dealt with the securities dishonestly, he held that in all the circumstances of the case there was no doubt that wrongful loss was caused to the Co operative Bank and wrongful gain not to the accused personally but to the Exchange Bank which he represented during the transactions in question.
On appeal to the Bombay High Court, a Division Bench of that court dismissed the appeal.
substantially agreeing with the findings of the trial court.
Dealing with a new point raised before the appeal court, namely, that the appellant was under a mistake of fact or law as to the indebtedness of the Cooperative Bank to the Exchange Bank or as to its powers to deal with the security, the High Court held 494 that there was no possibility of the appellant having made any mistake of fact in good faith.
The court also pointed out that the appellant himself had not raised this plea of mistake either about the facts of the case or about any doubtful question of law.
The court also pointed out the declarations made by the appellant on behalf of the Exchange Bank that the securities belonged absolutely to the bank and represented its investments statements which he knew were false.
While dealing with the appeal on the question of sentence, the High Court pointed out that there was good evidence to support the inference that the appellant had been actuated by motives of personal benefit also.
In that view of the matter the High Court maintained the conviction and the sentence passed by the trial Magistrate.
The appellant then moved the High Court for a certificate that the case was a fit one for appeal to this Court.
The cer tificate was refused by that court.
Thereafter the.
appellant moved this Court and obtained special leave to appeal.
In support of the appeal the learned counsel for the appellant has raised a number of questions of law and at the forefront of his argument contended that both in law and on a proper construction of the contract between the two banks the appellant was fully entitled to pledge the securities as long as the overdraft agreement subsisted, irrespective of whether or not there was an actual overdraft by the Co operative Bank on the date of the pledge, that is to say, on the 28th February 1949.
Examining the position with reference to the contract between the two banks, we find that Exhibits E, F and G, all dated the 14th May 1948, are parts of the same transaction and evidence the terms of the contract between them.
exhibit E is a promissory note executed by the Co operative Bank in favour of the Exchange Bank for the sum of Rs. 66,150 with interest at three per cent.
per annum with half yearly rests.
exhibit F is a letter addressed by the Cooperative Bank to the Exchange Bank enclosing exhibit E, and exhibit G is the bond pledging all marketable 495 securities and goods to the Exchange Bank in consideration of its promise to grant credit for overdraft limited to the amount aforesaid in favour of the Cooperative Bank from time to time with interest at three per cent.
per annum as aforesaid.
The significant portion of the bond is in these terms: ". . . . . and we agree and undertake that in the event of our failure to maintain the margin on the said movable property marketable securities and goods in the manner hereinafter provided or failing repayment on demand to you by us of the amount of such advance or credit with interest cost charges and expenses as aforesaid you shall be entitled, but not bound, to sell or otherwise dispose of all or any of the said movable property marketable securities and goods by public auction or private contract in such manner and upon such terms and subject to such conditions as you may think fit without any reference to us or obtaining our consent, and the proceeds of such sale or disposal shall be applied first in payment of all costs charges and expenses of and incident to such sale or disposal and the enforcement of the pledge and charge in your favour hereby created, secondly in repaying the amount of such advance or credit with interest as aforesaid and all costs charges and expenses incurred by you in relation thereto not otherwise met including loss in exchange (if any) and all other debts and monies however due to you by us and lastly in payment to us of the surplus if any thereafter remaining, declaring as it is hereby expressly provided agreed and declared that this shall be continuing security to cover the amount of any advance or credit which you have allowed to us Or may from time to time allow us with interest costs, charges and expenses and all other debts and monies due as aforesaid. . . . " Reading Exhibits E, F and G together, it is clear that the securities of the face value of Rs. 75,000 were pledged to the Exchange Bank as security for overdraft up to the limit of Rs. 66,150 for which the Cooperative Bank had given the promissory note to the Exchange Bank.
It was further stipulated that in 496 the event of the pledgor making a default in payment on demand of the amount advanced by way of overdraft with outstanding interest it may be realised by the Exchange Bank by sale of those securities and after satisfying the pledgee 's dues against the pledgor, if there was any outstanding amount the surplus of the sale proceeds shall be paid back to the pledgor.
Thus it is clear that according to the terms of the contract the Exchange Bank was not entitled, as contended on behalf of the appellant, to sell the securities even though there may not have been any outstanding dues from the Co operative Bank.
The securities were to be kept by the Exchange Bank charged with the payment of such amount as may from time to time have been advanced or be advanced under the overdraft arrangement.
But that charge was not an absolute one without reference to the state of accounts between the two banks; in other words, there would be a charge only when there was an adverse balance against the Co operative Bank.
We know that at all material times the Co operative Bank had not drawn any sum from the Exchange Bank in pursuance of the agreement referred to above.
The right of the Exchange Bank to deal with the securities under the agreement would arise only on the happening of certain events, namely, that the pledgor either had failed to maintain the proper margin or had made a default in repayment of the outstanding amount on demand by the Exchange Bank.
So long as those contingencies did not arise, and it is nobody 's case that any of those contingencies had arisen, the pledgee bank had no right to deal with the securities by way of pledge, sub pledge or assignment.
In this connection our attention was invited to the provisions of section 179 of the Indian Contract Act in support of the contention that as the securities had been agreed between the two banks to be a cover for overdraft not exceeding Rs. 66,150, up to that amount the pledgee bank bad an interest in those securities which it could have dealt with.
It was further argued that as there was nothing to show that the appellant had dealt with the securities for 497 a larger amount than that, he could not be said to have contravened the terms of the contract.
In our opinion, there is no substance in this contention.
Section 179 predicates that the pledgor has a limited interest which he can deal with and his transaction to that extent would be valid.
If the Co operative Bank had as a matter of fact operated upon the overdraft account and bad drawn any sum with in the limit aforesaid, the Exchange Bank would have an interest pro tanto in those securities and might then have been entitled to pledge or sub pledge the securities with a third party.
But so long as there was no overdraft by the pledgor, the pledgee bad no such interest as it could in its turn pledge or sub pledge to a third party.
Furthermore, it is clear from the narrative of events given above that the appellant dealt with the securities with third parties on the footing, after an express declaration had been made by him, that those securities were the absolute property of the Exchange Bank.
We are not here concerned with the question of the extent of interest acquired by such third party.
We are only concerned with determining the legal position as between the two banks the Exchange Bank being represented by its Managing Director, the appellant.
Hence there is no difficulty in holding that on the terms of the contract between the two banks the appellant was not entitled to transfer any interest in those securities and if be did so he did it in contravention of the terms of the contract.
We will now deal with the legal position, apart from the terms of the contract.
On the facts stated above the Exchange Bank had become the bailee in respect of the securities.
The securities had been delivered by the Co operative Bank to the Exchange Bank for the express purpose, as disclosed in the contract set out above, that they shall be disposed of in ,accordance with the terms contained in Exhibit G set out above.
By the very fact of the delivery of the securities to the bailee the latter became a trustee in terms of the contract, not for all purposes, but only for the, limited purpose indicated by the agreement 498 between the parties.
The pledgor has in the present case only transferred his possession of the property to the pledgee who has a special interest in the property of enforcing his charge for payment of an overdraft, if any, whereas the property continues to be owned by the pledgor.
The special interest of the pledgee comes to an end as soon as the debt for which it was pledged is discharged.
It is open to the pledgor to redeem the pledge by full payment of the amount for which the pledge had been made at any time if there is no fixed period for redemption, or at any time after the date fixed and such a right of redemption continues until the thing pledged is lawfully sold.
Hence the Co operative Bank in this case could have asked for a return of the securities at any time, because there never was any overdraft.
As the pledge had been terminated neither by redemption,, nor by a lawful sale on the happening of such contingencies as the parties contemplated in their agreement or the law allowed, the securities continued to be the property of the Co operative Bank and the Exchange Bank, or the appellant as its Managing Director., bad no right to deal with them.
It was next contended, alternatively, that assuming that the Exchange Bank had dealt with the securities in contravention of the terms of the agreement, the appellant had, as representing the bank, only committed a breach of contract, the remedy for which was a suit for damages and not a criminal prosecution.
This argument assumes that the same set of facts cannot give rise both to a civil liability and a criminal prosecution.
It is manifest that such an argument in its bald form cannot be acceptable.
If there is no mens rea, or if the other essential ingredients of an offence are lacking, the same facts may not sustain a criminal prosecution, though a civil action may lie.
We have therefore to examine whether or not there was mens rea in this case or whether the necessary element of a criminal.
offence have been made out.
It has been contended that no offence under section 409, Indian Penal Code has been brought home to the appellant for the reasons, (1) that there 499 was no entrustment, (2) that there was no mens rea, and (3) that there was no dishonesty on the part of the appellant.
For an offence under section 409, Indian Penal Code, the first essential ingredient to be proved is that.
the property was entrusted.
It has been argued that in this case there was no such entrustment as is contemplated by that section; and that the securities were pledged with the Exchange Bank by the Co operative Bank which was in the position of a debtor to the former. 'The contention is that the parties never contemplated the creation of a trust in the strict sense of the term.
But when section 405 which defines "criminal breach of trust" speaks of a person being in any manner entrusted with property, it does not contemplate the creation of a trust with all the technicalities of the law of trust.
It contemplates the creation of a relationship whereby the owner of property makes it over to another person to be retained by him until a certain contingency arises or to be disposed of by him on the happening of a certain event.
The person who transfers,, possession of the property to the second party still remains the legal owner of the property and the person in whose favour possession is so transferred has only the custody of the property to be kept or disposed of by him for the benefit of the other party, the person so put in possession only obtaining a special interest by way of a claim for money advanced or spent upon the safe keeping of the thing or such other incidental expenses as may have been incurred by him.
In the present case the Co operative Bank entrusted the Exchange Bank with the securities for the purpose of keeping them as a security for the overdrafts if and when taken by the former.
In law those securities continued to be the property of the Co operative Bank and as it never borrowed any money from the Exchange Bank, the latter had no interest in those,securities which it could transfer in any way to a third party so far as the two banks are concerned.
The entrustment was to the Exchange Bank itself But it being a non natural person, its business had to be transacted by someone who was authorised 500 to do so on its behalf The appellant held the power of attorney on behalf of the directors of the bank to transact business on behalf of the bank.
In that capacity the appellant had dominion over the securities.
Hence the appellant can be said either to have been entrusted with the property in a derivative 'sense or to have dominion over the securities as a banker , and thus in either case, the first essential condition for the application of section 409, Indian Penal Code is fulfilled.
On the question of mens rea, it has to be determined whether or not the appellant dishonestly disposed of those securities in violation of any of the terms of the agreement aforesaid.
As already indicated, the appellant did dispose of these securities in violation of the terms of the contract between the two banks.
But still the question remains whether he did so dishonestly; in other words, whether when disposing of those securities the appellant had the intention of causing wrongful gain to the Exchange Bank or wrongful loss to the Co operative Bank.
In our opinion, he intended both and, as.
a matter of fact, he caused wrongful loss to the pledgor bank and wrongful gain to the pledgee bank. 'The Exchange Bank raised money on those securities which it was not entitled to do and the Co operative Bank was deprived of those securities, even though not for all times.
It is settled law that a deprivation even for a, short period is within the meaning of the expression.
If he disposed of those securities with the intention of causing wrongful loss to the one and wrongful gain to the other, there can be no question but that the ap pellant had the necessary mens rea.
It was next argued that assuming that the essential ingredients of an offence under section 409, Indian Penal Code had been made out, the appellant may have made a mistake of fact in assuming that the Co operative Bank was indebted to the Exchange Bank or may have made a mistake of law in mistakenly believing that the Exchange Bank had the right as the pledgee to sub pledge those securities for raising money for its own purposes.
We know as a fact that 501 the Co operative Bank had not taken any overdraft from the Exchange Bank.
But it was argued that it had not been proved that the appellant had that knowledge.
The appellant in his long written statement has not tried to take shelter behind any such mistake.
He was in full control of the bank accounts and as pointed out by the courts below, it is impossible to believe that in the circumstances in which the bank had found itself and when the appellant was hard put to it to collect all the bank 's resources to stave off the severe crisis through which it was passing, the appellant would not have known the fact that the Co operative Bank did not owe his bank any money by way of overdraft.
Hence, in our opinion, there is no room for the supposition that the appellant was not aware of the true state of accounts bet ween the two banks.
But then it was argued that the appellant may have made a mistake of law in thinking that he was justified by law in dealing with those securities.
The attempt is to bring the case within one of the general exceptions contained in Chapter IV of the Indian Penal Code and set out in section 79 in these terms "Nothing is an offence which is done by any person who is justified by law, or who by reason of a mistake of fact and not by reason of a mistake of law in good faith, believes himself to be justified by law, in doing it".
In considering a matter of this kind the attitude of the accused is an important consideration.
We note that here the appellant made no attempt in the trial court to set up such a defence.
If he had ever said that he made a mistake of fact after exercising due care and caution that there was an overdraft against the Co operative Bank in favour of the Exchange Bank, he may have been able to take advantage of the exception.
But as in this case there was no mistake of fact and as the court was in a position to find that the appellant must have known that there was no such overdraft, there is no room for the application of section 79 quoted above.
The appellant cannot avail himself of the exception of section 79 simply by 502 saying that he believed that in law he was entitled to deal with the securities as the property of the Exchange Bank, as he attempted to do in his written statement.
If he had further proved that he believed in good faith that the Co operative Bank was indebted to his bank, his belief that he was justified by law in dealing with the securities as the property of the bank may have helped to bring him within the exception.
But as there was no mistake about the basic fact, the provisions of section 79, Indian Penal Code are not attracted to this case.
It now remains to deal with certain objections relating to the illegality or irregularity in the procedure followed in the trial of this case.
It was argued that this prosecution was incompetent for the reason that no sanction of the Company Judge had been obtained under section 179 of the Indian Companies Act.
The relevant portion of section 179 is as follows: "The official liquidator shall have power, with the sanction of the Court to do the following things: (a) to institute or defend any suit or prosecution, or other legal proceeding, civil or criminal, in the name and on behalf of the company;. . . . " In terms the section lays down the powers of the official liquidator.
Such a liquidator has to function under the directions of the court which is in charge of the liquidation proceedings.
One of his, powers is to institute prosecutions in the name and on behalf of the company under liquidation with the sanction of the court.
This section does not purport to impose any limitations on the powers of a criminal court to entertain a criminal prosecution launched in the ordinary course under the provisions of the Code of Criminal Procedure.
Where a prosecution has to be launched in the name of, or on behalf of, the company, it naturally becomes the concern of the Judge to see whether or not it was worthwhile to incur expenses on behalf of the company and therefore, the section requires the sanction of the Judge before the liquidator can undertake the prosecution or defence in the name of and on behalf of the company.
The 503 present case is not a prosecution in the name or on behalf of the company; nor is the official liquidator interested in prosecuting the case.
The prosecution was started on a charge sheet submitted by the police, though the first information report had been lodged by an official under the official liquidator.
This was not a prosecution initiated or instituted by the official liquidator.
This is not a case which can come even by analogy within the rule laid down by the Federal Court in the case of Basdeo Agarwalla vs King Emperor(1), that a prosecution launched without the previous sanction of the Government within the meaning of clause 16 of the Drugs Control Order, 1943, was completely null and void.
In that case their Lordships of the Federal Court had to consider the effect of the following words of clause 16 aforesaid: "No prosecution for any contravention of the provisions of this Order shall be instituted without the previous sanction of the Provincial Government. .".
It will be noticed that section 179 of the Companies Act does not contain any words similar in effect to those quoted above.
Where the legislature intended to place a limitation on the powers of the court to take cognisance of an offence unless certain conditions were fulfilled, like the provisions of sections 196 and 197, Criminal Procedure Code, it has used words such as these: "No court shall take cognisance There is nothing in section 179 of the Companies Act which can be construed as restricting the powers of the court to take cognisance of an offence or the powers of the police to initiate prosecution or even of a private citizen to move the machinery of the criminal courts to bring an offender like the appellant to justice.
For a prosecution for breach of trust even by a director of a company no such condition precedent as the previous sanction of any authority is contemplated by law, unless it is a prosecution in the name and on behalf of the company by the official liquidator who has to incur expenses out of the funds of the company.
Section 179 is an (1) 504 enabling provision to enable the liquidator to do certain things with the sanction of the court.
It does not control the general law of the land.
It was next contended that the charge as framed by the trial court was illegal and vague and had caused material prejudice to the appellant.
The charge as framed has already been set out.
The learned trial magistrate had stated at the end that a detailed charge was to be separately framed.
But no such charge is before us and the appeal has proceeded on the assumption that no such detailed charge was as a matter of fact framed by the trial court.
The question therefore is whether the charge, such as it is, complies with the requirements of the law.
It has been argued on behalf of the appellant that the charge is materially defective in so far as the nature of the breach of trust, the facts constituting the breach, the exact date and manner of the breach have not been set out.
The charge as framed fulfils the requirements of section 221, Criminal Procedure Code, because it has mentioned the name of the offence, namely, criminal breach of trust and specified section 409, Indian Penal Code, which impliedly gives notice to the accused of every legal condition required by law to be fulfilled in order to constitute the offence of criminal breach of trust.
It has also fulfilled the requirements of section 222(1) of the Code in so far as it has specified the securities in respect of which and the Co operative Bank against which a criminal breach of trust had been committed.
Those particulars, in our opinion, were sufficient to give the accused notice of the matter with which he was charged.
The trial court has made reference to the provisions of sub section (2) of section 222.
But it was in error in relying upon those provisions which relate to the offence of criminal breach of trust or dishonest misappropriation of money, which was not the present case.
It is true that the manner of the commission of the offence as required by section 223 of the Code has not been set out.
But that has to be set out only when the nature of the case is such that the particulars required by sections 221 and 222 had not given the accused suffi 505 cient notice of the matter with which he is charged.
In our opinion, though the charge could have been more detailed as was intended by the learned Magistrate, as framed, it gives the accused sufficient notice of the nature of the offence alleged against him.
Even assuming that there were certain omissions in the charge, they cannot be regarded as material unless in terms of section 225 of the Code it is shown by the accused that he had in fact been misled by such omission or that there had been a failure of justice as a result of such error or omission. 'The illustrations under that section show that each case has got to be judged on its own particular facts and there cannot be any general presumption that every error or omission in a charge has materially affected a trial or occasioned a failure of justice.
In this case from the long written statement filed on behalf of the appellant it is clear that he was aware of the gravamen of the charge against him and that he tried to meet it in all its bearings.
We are not therefore impressed by, the argument advanced on his behalf that the omissions in the charge are material and that the case should be tried over again on a fresh charge.
The learned Judges of the High Court constituting the Division Bench which heard the appeal have written separate but concurring judgments, but they did not notice any argument, having been advanced before them on the question of the illegality or irregularity in the charge.
That also would show that the appellant did not make it a grievance at the time of the argument of the appeal, though a ground had been taken in the memorandum of appeal that the charge as framed was vague and defective and as such bad in law.
In our opinion, this is not a case in which it can be said that the omission in the charge has materially affected the trial of the case or prejudiced the appellant in his defence or has occasioned a failure of justice.
As all the grounds raised in support of the appeal fail, it is accordingly dismissed.
| The appellant was the Managing Director of a bank and held a power of attorney to act on behalf of its Directors and authorising him to borrow money on behalf of the bank.
Certain Government Promissory Notes were pledged with the bank by another bank to cover an overdraft account up to a specified amount.
There was, however, no overdraft by the pledgor.
The pledgee bank was in a precarious financial condition.
The appellant pledged the securities with a third party to get a loan for the bank 's use and on its failure 484 to repay the same on demand, the creditors sold the securities for realising their dues.
The pledgee bank was thus no longer in a position to return the securities on demand made by the pledgor.
Information.
was lodged with the police at the instance of the Official Liquidator appointed to wind up the bank and the appellant was put up for trial under section 409 of the Indian Penal Code.
Held, that the appellant was guilty of the offence charged and the appeal must be dismissed.
Held further, that in the absence of any overdraft by the pledgor, the pledgee bank acquired no interest in the securities which it could deal with and section 179 of the Contract Act had no application.
That the delivery of the securities by the pledgor made the pledgee a trustee for him and he remained the owner subject to any especial interest created in favour of the pledgee by the agreement and in a case, such as the present, where there was no question of redeeming the securities by the pledgor, there having been no overdraft, or sale by the pledgee in enforcement of any especial interest, as none had accrued to it, the pledgee bank had no right to deal with the securities.
That the question whether the remedy of the pledgor was by way of a suit for damages for breach of contract or by way of a criminal prosecution would depend on whether or not there was mens rea and.
other elements constituting the offence.
That although the offence of criminal breach of trust presupposes an entrustment, such entrustment need not conform to all the technicalities of the law of trust, and, consequently, in a case such as the present where the accused had the necessary power and exercised dominion over the securities and caused wrongful loss to the pledgor and wrongful gain to the pledgee by dealing with the securities, he was guilty of the offence.
That the provisions of section 79 of the Indian Penal Code were of no avail to him as it was never pleaded in his written statement nor found by the courts below that he Was unaware of the fact that there had been no overdraft at all.
That no sanction under section 179 of the Companies Act was re quired for the prosecution.
The provisions of that section were of a permissive character enabling the court Liquidator to do certain things with the permission of the court and did not in any way control the general law so as to restrict the power of the court to take cognisance of an offence or of the Police to initiate a prosecution or even of a private citizen to move the machinery of the criminal courts to bring an offender to justice.
Basdeo Agarwalla vs King Emperor, ([1946] F.C.R. 93), distinguished and held inapplicable.
That the charge framed against the accused fulfilled the requirements of sections 221 and 222(1) of the Code of Criminal Procedure and 485 as the particulars mentioned in the charge were sufficient to give him notice of the matter he was being charged with it was not necessary to set out also the manner of the commission of the offence as required by section 223 of the Code.
|
Summarize this legal judgement text concisely | civil Appeal No. 353 of 1955.
On appeal by special leave from the judgment and order dated the 22nd August 1955 of the Labour Appellate Tribunal of India at Lucknow in Misc.
Case No. 111 C 650 of 1954.
Veda Vyas, (section K. Kapur and N. H. Hingorani, with him) for the appellant.
J. N. Bannerji, (P. C. Agarwalla, with him) for the respondent.
561 1956.
May 8.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
The appellant is a company registered under the Indian Companies Act, and owns a factory called Modi Oil Mills in the district of Meerut.
The respondents are workmen employed in the Mills.
The business of the Mills consists in the manufacture of oils and paints.
On 12 7 1954 the management put up the following notice: "Notice is hereby given that due to non availability of groundnut seed and neem seed at the parity with the ruling prices of the groundnut oil and neem oil, the Management is reluctantly compelled to close the Groundnut Crushing Section and Neem Section till the next groundnut season and thus the workers in the attached list are surplus and their services are laid off with effect from 14th July, 1954.
Workers, thus affected, shall be paid compensation according to Industrial Disputes (Amendment) Act, 1953, subject to conditions laid therein.
It is further notified that the time of the attendance as provided in Section 25(D) and (E) shall be 10 a.m. for all the laid off workers".
Pursuant to this notice, 142 workmen mentioned therein, being the respondents in this appeal, were laid off from the 14th July 1954.
On 26 7 1954 the workmen acting through their Union sent a notice to the management demanding full wages for the period of lay off on the ground that it was unjustified and illegal.
The management denied these alle gations, and.
refused the demand.
This being an industrial dispute as defined in section 2(k) of the Industrial Disputes Act XIV of 1947, in the ordinary course, proceedings would have been taken with reference thereto under the provisions of that Act.
But there was at that time another industrial dispute between the parties pending final adjudication.
That dispute had been referred under section 10 of the Industrial Disputes Act for adjudication to the Regional Conciliation Officer, Meerut.
He had pro nounced his award, and against that, both the parties 562 had preferred appeals to the Labour Appellate Tribunal, and they were pending at the date of the, notice.
The Industrial Disputes (Appellate Tribunal) Act XLVIII of 1950, hereinafter referred to as the Act, contains special provisions with reference to certain disputes which might arise between parties, when there is already pending adjudication between them another industrial dispute.
They are sections 22 and 23, which are as follows: "22.
During the period of thirty days allowed for the filing of an appeal under section 10 or during the pendency of any appeal under this Act no employer shall (a)alter, to the prejudice of the workmen concerned in such appeal, the conditions of service applicable to them immediately before the filing of such appeal, or (b)discharge or punish, whether by dismissal or otherwise, any workmen concerned in such appeal, save with the express permission ' in writing of the Appellate Tribunal.
Where an employer contravenes the provisions of section 22 during the pendency of proceedings before the Appellate Tribunal, any employee aggrieved by such contravention, may make a complaint in writing, in the prescribed manner to such Appellate Tribunal and on receipt of such complaint, the Appellate Tribunal shall decide the complaint as if it were an appeal pending before it, in accordance with the provisions of this Act and shall pronounce its decision thereon and the provisions of this Act shall apply accordingly" '.
On 24 8 1954 the respondents filed an application before the Labour Appellate Tribunal under section 23 of the Act.
Therein, they alleged that the lay off was not bona fide, because the ground given therefor, namely, non availability of groundnut and neem seeds at parity with ruling prices was not true; that further in view of the pendency before the Labour Appellate Tribunal of an industrial dispute between the parties, the lay .off was in contravention of section 22(a) of the Act, and they accordingly prayed 563 that they might be awarded by way of compensation full wages for the entire period of the lay off.
The appellant contested the claim.
It contended that the non availability of groundnut and neem seeds as ,mentioned in the notice was true, and that the lay off was bonafide.
It also claimed that section 22(a ) of the Act had no application to the dispute, as the notice distinctly stated that the workmen would be paid compensation as provided in section 25 C of the Industrial Disputes Act as amended by Act XLIII of 1953.
It also contended that under that section compensation was payable only for the first 45 days at the rate mentioned in the body of the section and not for any period subsequent thereto.
The Tribunal held that the lay off was justified.
It further held on a construction of section 25 C that the workmen were entitled to half the basic wages and dearness allowance not merely for the first 45 days but for the entire period, and that as the appellant did "not observe them provisions 'of that section", there was an alteration of the conditions of service within section 22(a) of the Act.
It accordingly awarded compensation for the whole of the period at 50 per cent.
of the basic wages and dearness allowance.
Against this decision, the management has preferred this appeal by special leave.
On behal of the appellant, Sri Veda Vyas contended firstly, that on its finding that the lay off was justified, the only order which the Tribunal could have passed was one of dismissal of the petition filed by the respondents and that the award of compeneation was in consequence, without jurisdiction; and secondly, that on a true construction of section 25 C of the industrial Disputes Act, the workmen were entitled to compensation only for a period of 45 days as provided in proviso (a) to section 25 C.
We are of opinion that both these contentions are well founded.
On the first question, the jurisdiction of the Tribunal to grant relief under section 23 of the Act arises only if it is made out that there was contravention of section 22 by the management.
The respondents ,understood this position quite correctly, and with 564 view to bring themselves within section 23, they alleged that the lay off was not bona. ' fide, inasmuch as, in fact, groundnut and neem seeds were available.
This contention rests on the supposition that the conditions under which workmen could be laid off are conditions as to their service, 'and that when the employer lays off workmen without proper grounds therefor, it is a violation of the conditions of service within section 22(a) of the Act.
There was some argument before ' us whether lay off, whether justifiable or otherwise, could be brought within section 22(a) of the 'Act as amounting to breach of the conditions of service.
On the one hand, the argument was that the expression "conditions of service" would include only such conditions as would operate when the workmen were actually in service ,such as the quantum of wages, hours of work, provision for leave and so forth, and that when there was a lay off, these conditions could by their very nature have no application, and that if the lay off 'was unjustified, that would give the workmen a right to take proceedings under the 'provisions of the Industrial Disputes Act, but that they could make no claim under section 23 as for a breach of the provisions of section 22(a).
The contention on the other side, was that the workmen and the management ,should be deemed to have agreed that there would be lay off only for good and proper reasons and under conditions permitted by law, and that if those conditions were not satisfied, the lay off would be an alteration of the conditions of service within section 22(a).
The question is one of some importance, but it is unnecessary to express any opinion on it, as counsel for the appellant conceded after some argu ment that conditions under which the workmen could be laid off would be conditions of service.
On this footing, he contended that as the lay off *as, in fact, justified, there Was no breach of those conditions, and that, in consequence, section 22(a) of the Act had no application.
On behalf of the respondents, it is argued that the lay off must, by its very nature, be temporary and of short duration, and that if it is for 565 a long or indefinite period as in the present case, it could not be said to be a proper lay off such as could be deemed to have been agreed to by the workmen, and that section 22(a) of the Act would, therefore, be applicable.
It is common ground that there are no statutory rules prescribing the conditions under which there could be a lay off.
If there had been, they would operate as conditions of service between the parties, and then the question would simply have been whether there had been a compliance with them.
Under the provisions of the Industrial Employment (Standing Orders) Act XX of 1946, certain Standing Orders had been framed with reference to this matter.
Counsel on both sides state that after the enactment of the Industrial Disputes (Amendment) Act XLIII of 1953, they are no longer in force, and that there are no statutory provisions applicable to the present dispute.
We must, therefore, decide the question on the footing that the only condition which the parties might be taken to have agreed to is that the lay off should be for adequate grounds and for a reasonable period.
On this question, there is a clear finding in favour of the appellant.
The Tribunal has found that groundnut and neem seeds were not available at parity prices, and that for that reason, the work had to be stopped.
It is not likely that businessmen would cut their profits to spite the workmen.
The period of the lay off was expressed to be until the next groundnut season and we have been told that the season for groundnut begins sometime in November December.
In fact, all the respondents have been reemployed in relays from September onwards, and by the first week of December all of them had been absorbed.
On the finding of the Tribunal that the lay off was justified, it follows that the application of the respondents under section 23 of the Act was liable to be dismissed on the ground that there had been no contravention of section 22(a).
But., notwithstanding this finding, the Tribunal went on to hold that the application under section 23 of the Act was maintainable.
To appreciate the 566 reasoning 'behind this decision, it is necessary to refer to section 25 C of the Industrial Disputes Act, which runs as follows: "Right of workmen laid off for compensation: Whenever a workman (other than a badli workman or a casual workman) whose name is borne on the muster rolls of an industrial establishment and who has completed not less than one year of continuous service under an employer is laid off, he shall be paid by the employer for all days during which he is so laid off, except for such weekly holidays as may intervene, compensation which shall be equal to fifty per cent.
of the total of the basic wages and dearness allowance that would have been payable to him bad he not been so laid off: Provided that (a)the compensation payable to a workman during any period of twelve months shall not be for more than forty five days except in the case specified in clause (b); (b)if during any period of twelve months, a workman has been paid compensation for forty five days and during the same period of twelve months he is again laid off for further continuous periods of more than one week at a time, he shall, unless there is any agreement to the contrary between him and the employer, be paid for all the days ' during such subsequent periods of lay off compensation at the rate specified in this section".
The appellant does not dispute the right of the respondents to compensation, and, in fact, they were informed by the very notice dated 12 7 1954 under which they were laid off, that compensation would be paid to them in accordance with section 25 C.
It is as regards the quantum of compensation payable under that section that the parties are disagreed.
It will be remembered that the lay off commenced on 14 7 1954 and was to continue until the next groundnut season, and that the workers were actually absorbed in batches from September, and that by the first week of December, they had all of them been employed.
There was thus one continuous lay off 567 for periods varying from 57 to 121 days.
The contention of the appellant is that, on these facts, the workmen were entitled to compensation only in accordance with proviso (a) to section 25 C, and that they would therefore be entitled to 50 per cent.
of the basic wages and dearness allowance for the first 45 days and for the rest of the period, no compensation was payable.
The respondents agree that proviso (a) to section 25 C applies to the first period of 45 days; but they contend that for the remaining period of the lay off, the governing provision is proviso (b) to sec tion 25 C, and that under that proviso, they would ,be entitled to compensation as provided in the body of the section, i.e. 50 per cent.
of the basic wages and dearness allowance, for the remaining period also.
This contention was accepted by the Tribunal, and holding that the compensation awarded by the appellant was not in accordance with section 25 C, it decided, as already mentioned, that there was an alteration of the conditions of service, and accordingly awarded compensation under section 23 of the Act.
It is contended for the appellant that the construction which the Tribunal has put on section 25 C is erroneous, and that the amount of compensation offered by the appellant was the correct amount payable under that section.
As already stated, there is no dispute that the compensation payable for the first 45 days has to be determined in accordance with proviso (a) to section 25 C.
The dispute is only as to whether for the rest of the period of lay off the workmen are entitled to compensation under proviso (b) to section 25 C. That proviso would apply only if the workmen had been paid compensation for 45 days, and were again laid off for further periods of more than one week at a time.
On the wording of the section, it is clear that the lay off which falls within proviso (b) to section 25 C must be distinct from that for which compensation had been paid in accordance with proviso (a) to section 25 C and subsequent thereto in point of time.
And as, in the present case, there was one continuous lay off for the entire period, proviso (b) could have no application.
568 Counsel for the respondents contends that though there was only one lay off, it should notionally be split up into two, the first period being the 45 days covered by proviso (a) to the section and the rest of the period, by proviso (b) It is arguable that there could be a second and distinct lay off following the first without a break, as for example, when the management first notifies lay off for a period of 45 days and pays compensation therefor, and again issues a fresh notification at the end of the period declaring a further lay off for a period exceeding 7 days in continuation of the notified lay off, and that that would fall within proviso (b).
But, in the present case, there was only one notification.
, and the period specified therein was up to the next season.
By no straining of the language.
of proviso (b) to section 25 C can such a lay off be brought within its purview.
The respondents rely in support of their contention on the decision in Automobile Products of India Ltd. vs Their Workmen(1).
But that decision gives no effect whatever to the words "again laid off", and moreover, if the construction adopted therein is correct, there would be no need for the provisos (a) and (b), as what would be payable under them, according to the respondents, would become payable under the body of the section itself.
If, as observed in the above decision, this conclusion leads to an anomalous position, it is for the legislature, if it thinks fit, to amend the section and not for the Tribunal to construe it otherwise than what it plainly means.
We are accordingly of opinion that the respondents are entitled to compensation only for the 45 days as provided in proviso (a), and that as the appellant had offered to pay the same by its notice dated 12 7 1954, there was no aIteration of the conditions of service within section 22 of the Act, and that, in consequence, the petition of the respondents was liable to be rejected.
We accordingly allow the appeal, set aside the order of the Tribunal, and dismiss the petition of the respondents.
The parties will bear their own costs.
(1) [19551 1 Labour Law Journal 67.
| During the pendency of an appeal before the Labour Appellate Tribunal in respect of a prior industrial dispute between the same parties the management laid off certain workmen and offered to pay compensation equal to half the basic wages and dearness allowance for the first 45 days in accordance with the provisions of proviso (a) to section 25 C, Industrial Disputes Act.
The workmen made an application to the Tribunal under section 23 of the Industrial Disputes (Appellate Tribunal) Act, 1950 alleging that there was a breach of section 22(a) of the same Act, and that the lay off was not bona fide and claimed full wages for the entire period of the lay off as compensation.
The Tribunal held that the lay off was justified but that the workmen were entitled to half the basic wages and dearness allowance not merely for the first 45 days but for the entire period under proviso (b) to section 25 C. Held, that on the finding of the Tribunal that the lay off wag justified the application under section 23 was liable to be dismissed.
Proviso (b) to section 25 C, Industrial Disputes Act, is only applicable in case of a second and distinct lay off and does not apply to a period subsequent to the first 45 days of one continuous lay off.
|
Summarize this legal judgement text concisely | Civil Appeal No. 6 of 1954.
Appeal from the judgment and order dated the 8th day of June 1951 of Calcutta High Court in Income tax Reference No. 1 of 1951.
R. J. Kolah and P. K. Ghosh, for the appellant.
552 G. N. Joshi, Porus A. Mehta and R. H. Dhebar, for the respondent.
May 8.
The Judgment of the Court was delivered by BHAGWATI J.
This is an appeal with certificate under section 66 A(2) of the Indian Income tax Act, 1922 from the judgment and order passed by the High Court of Judicature at Calcutta on a reference under section 66(1) of the Act, whereby the High Court answered the referred question in the negative.
The appellant is a timber merchant.
On 5th February 1930.
he obtained a loan of Rs. 1 lakh from the Bank of India on the joint security of himself and one Mamraj Rambhagat.
On the same day Mamrai Rambhagat obtained a loan of Rs. 1 lakh from the Imperial Bank of India.
, Bombay on the joint security of himself and the appellant.
The appellant paid off his loan of Rs.
I lakh to the Bank of India but Mamraj Rambhagat failed to make good the amount of his loan to the Imperial Bank of India, Bombay.
This sum of Rs. 1 lakh was realised by the Imperial Bank of India from the appellant with interest thereon of Rs. 626 on 24th March 1930.
Mamraj Rambhagat failed in his business and his estate went into the hands of the receivers on 25th April 1930.
The appellant opened a ledger account in the name of Mamraj Rambhagat and the total amount of Rs. 1,00,626, was debited to this account.
The appellant received the dividends from the receivers: Rs.31,446 on 30th October 1930, Rs. 9,434 on 25th April 1934 and Rs. 4,716 on 17th May 1938, aggregating to Rs. 45 596 leaving a balance of Rs. 55,030 unpaid, which sum he wrote off as bad debt in the assessment year 1941 42 (the account year being 1997 Ramnavmi) and claimed as an allowable deduction under section 10 of the Act.
The Income tax Officer disallowed the claim holding that the said loss was a capital loss, and so did the Appellate Assistant Commissioner.
It was argued on behalf of the appellant before the Appellate Assis 553 tant Commissioner that it was the usual custom in Bombay to secure loans on joint security from Banks by persons carrying on business.
It was stated that this manner of securing loans on joint security was preferred by the Banks and it was also in the interest of the traders as lower rate of interest was charged, if the loan was on joint security.
It was also stated that the appellant used to borrow money on joint security frequently and certain old pro notes jointly executed were submitted before the Appellate Assis tant Commissioner.
Reference was made to the case of Commissioner of Income tax, Madras vs section A. section Ramaswamy Chettiar(1), where it was held that it was a custom amongst Nattukottai Chettiars to stand surety for one another for borrowing from ' Banks for the purpose of lending out at higher rates of interest and that the loss incurred under the agreement of guarantee by the Chettiar firm should be allowed as a deduction.
The Appellate Assistant Commissioner, however, distinguished the case on facts and held that even though the appellant stood surety for Mamraj Rambhagat in course of securing finance for his business of timber, it was the loss of a sum borrowed by another, the sum borrowed was capital in its nature and the loss suffered by the appellant on account of Mamraj Rambhagat 's failure to pay was a capital loss.
On appeal taken by the appellant before the Income Tax Appellate Tribunal, the Tribunal was of the opinion that the Appellate Assistant Commissioner had not expressed any opinion in his order as to whether there was such custom or not nor had he asked the appellant to establish the custom.
The Tribunal in these circumstances held that the custom was accepted by the Department.
The Tribunal did not see any distinction between the money lending business and timber business which were both financed by this type of borrowing and differing from the Appellate Assistant Commissioner followed the decision in Commissioner of Income tax, Madras V. section A. section Ramaswamy Chettiar (supra)., and came to (1) 554 the conclusion that the loss suffered by standing surety was an allowable loss and upheld the contention of the appellant.
At the instance of the respondent the Tribunal stated a case to the High Court under section 66(1) of the Act and referred the following question for its decision: "Whether on the facts found the sum of Rs. 55,030 is allowable as a bad debt under the provisions of section 10(2)(xi) of the Indian Income tax Act".
The said reference was heard by the High Court and in its judgment the High Court held that the Tribunal had proceeded on an erroneous assumption as to the facts of the case and the application of the money. ' Since ' no part of the loan, which had been taken from the Imperial Bank of India by Mamraj Rambhagat on the joint security of himself and the appellant, was applied to the appellant 's own business, there was no question of an allowable deduction in relation to the business of the appellant.
The High Court held that the Tribunal was in error even in law inasmuch as under section 10(2) (xi) it is only a trading.
or business debt of the trade or business of the appellant, which could be claimed as a loss and as the debt claimed was not in respect of the business of the appellant, which was the business of trading in timber and not of a person carrying on the business of standing surety for other persons, the loss suffered by the appellant was a capital loss and not a business loss at all.
Regarding the decision relied upon by the Tribunal, the High Court referred to a later decision in Commissioner of Income tax, Madras vs section R. Subramanya Pillai(1), which held that the earlier decision must be read as confined to its peculiar facts and not applicable to business other than money lending business of Nattukottai Chettiars.
The High Court, therefore, answered the referred question in the negative.
Hence this appeal.
The sole question for our determination in this appeal is whether the loss of Rs. 55,030 suffered by the appellant in this transaction was a capital loss or (1) 555 was a trading loss or a bad debt incurred by the appellant in the course of carrying on his business of timber.
It is clear that no part of the monies borrowed on the joint security of the appellant and Mamraj Rambhagat from the Imperial Bank of India, Bombay went to finance the timber business of the appellant, but they were all utilised by Mamraj Rambhagat in his own business.
These monies were not required to finance the timber business of the appellant, nor was the debt due by Mamraj Rambhagat and in respect of which the account was opened by the appellant in his ledger in the name of Mamraj Rambhagat a debt due by Mamraj.
Rambhagat to the timber business of the appellant.
If any monies had been borrowed by the appellant in his timber business, they would certainly have been his capital and whatever loss he incurred therein would have been his capital loss.
The manner in which these monies were sought to be connected with the timber business and treated as a trading loss or bad debt of the timber business was by showing that it was the custom amongst the persons carrying business in Bombay to borrow monies from Banks on joint security and if A wanted monies for financing his business, he could do so by asking B to join him as surety, but he could not ask B to join him as such unless he stood surety for B in the loans which B borrowed in his turn from the Bank.
A s joining B as surety was thus a consideration for B 's joining A as surety in his transaction with the Bank and, therefore, although no part of the monies borrowed by B came into the business of A, A joined B as surety for the purpose of financing his own business, which he could not do without B joining him as surety in the loan which he himself obtained from the Bank for the purpose of financing his own business.
The transaction of A 's joining B as surety in the matter of B 's procuring a loan for the financing of his business was thus an essential operation of the financing of A 's business and was, therefore, an incident of A 's business and any loss incurred by A in the transaction could thus be treated as a trading loss in the course of carrying on of A 's 72 556 business.
The loss incurred by the appellant in the transaction of his joining Mamraj Rambhagat as surety in the loan which Mamraj Rambhagat procured from the Imperial Bank of India could, it was urged, thus be treated as a trading loss or bad debt of the appellant 's timber business.
It is necessary, therefore, to see what is the exact nature and scope of the custom said to have been accepted by the Department.
The custom stated ' before the Appellate Assistant Commissioner was that persons carrying on business in Bombay used to borrow monies on joint security from the Banks in order to facilitate getting financial assistance from the Banks and that too at lower rates of interest.
A businessman could procure financial assistance from the Banks on his own, but he would in that case have to pay a higher rate of interest.
He would have to pay a lower rate of interest if he could procure as surety another businessman, who would be approved by the Bank.
This, however, did not mean that mutual accommodation by businessmen was necessarily an ingredient part of that custom.
A could procure B, C or D to join him as surety in order to achieve this objective, but it did not necessarily follow that if A wanted to procure B, C or D to thus join him as surety, he could only do so if he in his own turn joined B, C or D as surety in the loans, which B, C of D procured in their turns from the Banks for financing their respective businesses.
Unless that factor was established, the mere procurement by A of B, C or D as surety would not be sufficient to establish the custom sought to be relied upon by the appellant so as to make the transaction of his having joined Mamraj Rambhagat as surety in the loan procured by Mamraj Rambhagat from Imperial Bank of India, a transaction in the course of carrying on his own timber business and to make the loss in the transaction a trading loss or a bad debt of the timber business of the appellant.
The old pronotes jointly executed by the appellant and others, which were submitted before the Appellate Assistant Commissioner did not carry the case of the appellant far enough and stopped 557 short of proving the custom alleged by the appellant in, its entirety.
The transaction in question could not, 'therefore, be.
deemed to be one entered into by the appellant in the course of or in carrying on his timber business.
Procuring finances for his timber business would no doubt be an essential operation in the course of his carrying.
on his business, but the same thing could not be predicated of this transaction of his joining Mamraj Rambhagat as surety for procuring Rs. 1 lakh from the Imperia Bank of India, which was wholly to finance Mamraj Rambhagat 's business and not the timber business of the appellant.
Learned counsel for the appellant laid particular emphasis on the finding by the Appellate Assistant Commissioner that "it was in the course of securing finance for the business of timber that he stood surety with Mamraj Rambhagat".
This finding merely records the statement of fact, but does not go so far as to establish the custom sought to be relied upon by the appellant.
The old pronotes submitted by the appellant before the, Appellate Assistant Commissioner merely related to his own transactions, where he had been joined by others as surety and did not establish that the others had been similarly accommodated by him in the matters of loans which they had in their turn procured from the Banks.
The solitary instance of the appellant 's having joined Mamraj Rambhagat in the transaction in question could not be sufficient to establish the custom sought to be relied upon by him and we do not see any reason to enlarge the scope of the so called custom beyond what is warranted by the facts as set out in the order passed by the Appellate Assistant Commissioner.
The custom among the Nattukottai Chettiars held proved in Commissioner of Income tax, Madras vs section A. section Ramaswamy Chettiar (supra) was that they stood surety for one another, when they borrowed from Banks for the purpose of lending out at higher rates of interest.
It was, moreover, an essential element in the carrying on of a money lender 's business that 558 money, which Was thus lent out should be procured and that could not be done unless it was borrowed on the joint security of Nattukottai Chettiars, who stood surety for one another.
Unless that type of suretyship was resorted to, a Nattukottai Chettiar by himself could never procure any monies which he could invest in his money lending business.
The following passage from the judgment at page 238 is every apposite: "It is their custom to borrow from banks for the purpose of lending out the sums so obtained at higher rates of interest.
The banks require such overdrafts to be guaranteed by other Chettiars.
The Chettiars stand surety for one another in these borrowings.
If a Chettiar refused to accommodate another moneylender in this way, he would not be able to obtain a guarantor for his own essential borrowings.
The assessee in this case borrowed money on the guarantee of others and in turn stood surety for other Chettiars".
There were thus elements of mutuality and the essential ingredient in the carrying on of the money lending business, which were elements of the custom proved in that case, both of which are wanting in the present case before us.
It is significant to note that this case was distinguished by the learned Judges of the Madras High Court in Commissioner of Income tax, Madras V. section B. Subramanya Pillai (supra), where it was held that that decision must be confined to its own peculiar facts and does not apply to businesses other than Nattukottai Chetty money lending business.
In that case the assessee was a bookseller, who borrowed from time to time jointly with one L a sum of Rs. 16,200 out of which the assessee took a sum of Rs. 10,450 for his business needs and L took the balance.
The joint borrowing was necessitated by the business needs of both the borrowers and by the insistence of money lenders, who required the joint security of the two persons.
L failed in his business and the assessee had to repay the creditors the whole of the joint borrowing.
The assessee had also to 559 spend a sum of Rs. 658 in an unsuccessful attempt to recover the amount due from L.
The assessee 'Claimed to deduct the sum of Rs. 658 and also the sum of Rs. 520495 which he had to pay the creditors on account of L 's share of the joint loan; in the computation of his business profits.
It was held that the assessee was not entitled to deduct these sums in the computation of his business profit either under sec tion 10 (2) (xi) or section 10 (2) (xv) or as business loss.
This case furnishes the proper analogy to the present case and points to the right conclusion in regard to the claim of the appellant.
The following passage from the judgment of the learned C. J. under appeal correctly sums up, in our opinion, the whole position: "The debt must therefore be one which can properly be called a trading debt and a debt of the trade, the profits of which are being computed.
Judged by that test, it is difficult to see how The debt in the present case can be said to be a debt in respect of the business of the assessee.
The assessee is not a person carrying on a business of standing surety for other persons.
Nor is he a money lender.
He is simply a timber merchant.
There seems to have been some evidence before the Appellate Assistant Commissioner that he had from time to time obtained finances for his business by procuring loans on the joint security of himself and some other person.
But it is not established, nor does it seem to have been alleged, that he in his turn was in the habit of standing surety for other persons along with them for the purpose of securing loans for their use and benefit.
Even if such, had been the case, any loss suffered by reason of having to pay a debt borrowed for the benefit of another, would have been a capital loss to him and not a business loss at all.
The result, therefore, is that the appeal fails and must stand dismissed with costs.
Appeal dismissed.
| The appellant who was a timber merchant obtained a loan from the Bank of India on the joint security of himself and a third party, M.
On the same day M obtained a loan from the Imperial Bank of India on the joint security of himself and the appellant.
M failed in his business and the Imperial Bank of India realised the amount of the loan from the appellant who after getting some dividends from the receivers, wrote off the balance as bad debt in the assessment year in question and claimed it as an allowable deduction under section 10 of the Indian Income tax Act, 1922 on the footing that it was in the course of securing finances for the business of timber that he stood surety with M and that it was the usual custom to secure loans on the joint security from Banks by persons carrying on business.
It was not established that the appellant was in the habit of standing surety for other persons along with them for the purpose of securing loans for their use and benefit.
Held, that the debt in question could not be considered a debt in respect of the.
business of the assesses who was not a person carrying on a business of standing surety for other persons and that, in any event, the loss suffered by reason of having to pay a debt borrowed for the benefit of another would be a capital loss and not a business loss and was not an allowable deduction under section 10(2) (xi) of the Indian Income tax Act.
Commissioner of Income tax, Madras vs section A. section Bamaswamy Chettiar ([1946] , distinguished.
Commissioner of Income tax, Madras vs S, B. Subramanya Pillai ([1950] , approved.
|
Summarize this legal judgement text concisely | Appeal No. 313 of 1955.
Appeal by special leave from the judgment and order dated the 12th May 1955 of the Punjab High Court at Chandigarh in Liquidation Miscellaneous No. 72 of 1954.
J. B. Dadachanji.
and Rameshwar Nath, for the appellant.
M. C. Setalvad, Attorney General for India and Ratanlal Chowla, for the respondent.
1956 May 9.
The Judgment of the Court was delivered by JAGANNADHADAS J.
This is an appeal by special leave against an order of the High Court of Punjab dated the 12th May, 1955, in the following circumstances.
The appellant was a resident of Lahore who came over to India in or about November, 1947, and took up residence at Banaras as a displaced person.
He 605 had, prior to the 15th August, 1947, a fixed deposit of Rs. 1,00,000 in the Lahore Branch of the Simla Banking and Industrial Co. Ltd. (hereinafter referred to as the Bank) which had its head office at Simla.
He had also at the time a cash credit account in the Bank.
The fixed deposit matured in 1948.
The Bank did not pay the amount to the appellant in spite of repeated demands but seems to have adjusted it towards part payment of a sum of Rs. 4,00,000 which is alleged to have been due from the appellant to the Bank in his cash credit account and which the appellant disputed and denied.
On the 7th November, 1951, the (LXX of 1951) was passed providing certain facilities and reliefs to displaced debtors and displaced creditors.
Section 4 of that Act empowered the State Government to specify any civil court or class of civil courts, ,As the Tribunals having authority to exercise jurisdiction under the Act for areas to be defined therein.
Section 13 of the Act enabled a displaced creditor claiming a debt from any person who is not a displaced person to make an application for recovery thereof to the Tribunal having local jurisdiction in the place where the said creditor resides, and provided for the purpose a special limitation of one year from the date when the Act came into force.
Admittedly the appellant is a displaced person, and the Bank is not a displaced Bank, within the meaning of those expressions as defined in the said Act.
Taking advantage of these provisions, the appellant filed on or about the 24th April, 1952, an application (Case No. I of 1952) to the Tribunal at Banaras constituted under section 4 of the Act, claiming the fixed deposit amount of Rs. 1,00,000 as a debt due from the Bank.
During the pendency of this proceeding there was an appli cation on the 27th December, 1952, under the Indian Companies Act, 1913 (VII of 1913) in the High Court of 'Punjab by some creditors for the winding up of the Bank.
On the 29th December, 1952, an ex parte interim order was passed by the High Court under section 171 of the Indian Companies Act staying proceedings in all suits and applications pending against 606 the Bank, at the time.
The application Case No. I of 1952 filed by the appellant before the Banaras Tribunal was also specified therein.
It would appear however that before the order was communicated to the Tribunal, the said case before it was disposed of and a decree was passed on the 3rd January, 1953, against the Bank for the sum claimed with future interest at three per cent.
per annum.
On the 6th January, 1953, the appellant filed an application before the Tribunal for execution of the decree and it was numbered as Execution Case No. 8 of 1953.
It appears that on or about the 27th January, 1953, one Mr. D. D. Dhawan was appointed by the Punjab High Court as a Provisional Liquidator of the Bank.
On the application of certain petitioning creditors in the winding up proceedings, the High Court passed another order under section 171 of the Indian Companies Act on the 30th January, 1953, staying execution of the decree against the Bank obtained by the appellant.
This order also does not appear to have been communicated to the Tribunal by the Court.
But the Tribunal was informed generally about the situation by a letter of the Provisional Liquidator dated the 13th March, 1953.
Thereby, the attention of the Tribunal was invited to section 171 of the Indian Companies Act which enacted that pending proceedings could not be proceeded with except with the leave of the Court.
The Tribunal was accordingly requested by this letter of the Liquidator to stay further proceedings before it in Case No. I of 1952.
In view of this intimation, the Tribunal passed an order dated the 20th March, 1953, staying execution, notwithstanding a further application by the appellant dated the 16th March, 1953, to proceed with the execution.
On the 21st March, 1953, the Provisional Liquidator filed an appeal in the Allahabad High Court against the decree of the Tribunal obtained by the appellant against the Bank.
That appeal is said to be still pending.
On the 24th September, 1953, the winding up of the Bank was finally ordered by the Company Judge and the Provisional Liquidator was appointed as the Official Liquidator for the purpose.
607 It is said that as against this order of a single Judge, there is a Bench appeal now pending in the High Court of Punjab.
At this stage the Banking Companies (Amendment) Ordinance, 1953, (Ordinance No. 4 of 1953), was promulgated on the 24th October, 1953.
This was repealed and substituted, on the 30th December, 1953, by the Banking Companies (Amendment) Act, 1953 (LII of 1953).
On the 17th February, 1954, the appellant filed a further application before the Tribunal asking that the execution case filed be fore the Tribunal on the 6th January, 1953, which was stayed in view of the letter of the Liquidator dated the 13th March, 1953, should now be proceeded with having regard to the various reasons set out in that application.
Curiously enough two of the reasons alleged were (1) that section 171 of the Indian Companies Act was overridden and varied by section 45 C of the Banking Companies (Amendment) Ordinance (Act), and (2) that the Tribunal Under the is not a Court and hence the stay under section 171 of the Indian Companies Act or under section 45 C of the Banking Companies Act has no application to proceedings pending before the Tribunal.
The application of the 17th February, 1954, above mentioned also prayed for an order to send the case for execution to the Bombay High Court on the ground that the Bank had property within the local limits of the jurisdiction of the said High Court against which it was intended to seek execution.
On this application, notice was issued to the Official Liquidator to appear and show cause by the 24th April, 1954.
The Liquidator however did not appear.
The Tribunal made an order on the 24th April, 1954, transferring to the Bombay High Court under section 39 of the Code of Civil Procedure the said decree for execution.
On the 8th June, 1954, the appellant filed an application for execution before the Bombay High Court (Application No. 123 of 1954) and asked for attachment and sale of the right, title and interest of the Bank in certain shares and securities belonging to the Bank and lying with the Central Bank of India Ltd., Bombay subject to the charge if 608 any on the said Bank.
The attachment was ordered on the 18th June, 1954 and was affected on or about the 19th June, 1954.
At this stage the Official Liquidator obtained an order on the 26th June, 1954, from the Punjab High Court purporting to be one under section 45 C of the Banking Companies Act, transferring from the Court of the Banaras Tribunal, the proceedings before it for execution of the decree in Case No. 1 of 1952, obtained.
against the Bank by the appellant.
It would appear that the Tribunal, on receipt of this order, informed the High Court by letter dated the 14th July, 1954, that the execution proceedings had already been transferred to the High Court of Bombay and that no proceedings relating to the execution case were at the time pending before it.
Thereafter the Liquidator made an application dated the 28th October, 1954, to the Punjab High Court for setting aside the order of the Bombay High Court dated the 18th June, 1954, directing attachment of the shares and securities be longing to the Bank in the possession of the Central .Bank of India Ltd. Bombay.
The main grounds on which this application was made are (1)That the order of the Tribunal at Banaras in execution Case No. 8 of 1953, transferring the decree for execution to the Bombay High Court more than six months after the passing of the winding up order, without obtaining leave from the Punjab High Court,was null and void.
(2)That the proceedings taken in execution against the Bank in the Bombay High Court were also null and void in view of sections 171 and 232 of the Indian Companies Act.
(3)That in view of the Banking Companies (Amendment) Act, 1953, it is only the Punjab High Court that has exclusive jurisdiction to entertain and decide all claims between the Bank and the appellant and to deal with the execution proceedings initiated by the appellant against the Bank.
(4)That the execution proceeding was in fact transferred by the Punjab High Court to itself by its order dated the 25th June, 1954, and all questions 609 arising therefrom have to be dealt with and disposed of by the Punjab High Court itself.
The appellant contested this application in the Punjab High Court on various grounds.
The main contentions were (1)That the provisions of the Banking Companies Act could not override the provisions of the , and that the proceedings thereunder are not affected by the Banking Companies Act.
(2)That in any case there was no valid order of transfer to the Punjab High Court of the execution proceeding relating to the decree obtained by him against the Bank in the Banaras Tribunal.
These contentions were negatived by the Punjab High Court.
It was held that the provisions of the Banking Companies Act of 1953 had an overriding effect and that exclusive jurisdiction was vested thereby in the appropriate High Court notwithstanding anything in.
It was also held that there was a valid order of transfer to the Punjab High Court, of the execution proceedings taken by the appellant in respect of his decree.
It was therefore held that the order of attachment obtained by the appellant from the Bombay High Court was invalid.
The said order was accordingly set aside.
It is against this order that the present appeal has been brought.
Both the above contentions have been strenuously urged before us on behalf of the appellant and equally strenuously opposed on behalf of the Bank.
The learned Attorney General for the Bank placed reliance on section 232 of the Indian Companies Act at the forefront of his argument and pointed out that under the said section no attachment could have been made without leave of the Court when the Bank was in the process of being wound up by order of the Court.
On the other side it has been suggested that neither section 171 nor section 232 of the Indian Companies Act are applicable to these proceedings in view of the Banking Companies Act as amended in 1953.
This suggestion,proceeds on a misconception and ignores 610 section 2 of the Banking Companies Act which specifically provides that the provisions of the Act shall be in addition to and not in derogation of the Indian Companies Act as expressly provided.
Hence no leave under section 232 of the Indian Companies Act having been obtained, this might have been enough to dispose of the case against the appellant if the order of attachment had been set aside by the Bombay High Court itself, on the application of the Liquidator to it.
Since in this case the order to set aside attachment was passed by the Punjab High Court, the question has to be gone into as to the jurisdiction of that Court to interfere with the order of the Bombay High Court or to declare it to be void.
That jurisdiction can only be supported on the view, that exclusive jurisdiction over the matter was vested in the Punjab High Court, under the Banking Companies Act, and that a valid order of transfer of the execution proceeding to the said Court had been made in exercise of the powers under that Act.
These questions have, therefore, to be dealt with.
On the facts above stated one matter is clear, viz., that the attempt of the appellant is to realise the amount due to him under the decree by getting at the assets of the Bank which is under liquidation ignoring the purported adjustment of the deposit made by the Bank towards its alleged dues from him under his cash credit account.
His proceeding to execute the decree by attachment is in substance an attempt to constitutes himself an independent preferential creditor.
So far as the decree is concerned, we wish to say nothing about its validity or otherwise since the matter is pending in appeal before the Allahabad High Court.
What we are concerned with now is the proceeding in execution of that decree and the appellant 's attempt to get at the assets of the Bank in satisfaction thereof.
There can be no doubt that,, apart from any argument available under the , which will be considered presently, the matters which must necessarily arise in the course of such an execution proceeding are matters which would directly fall 611 within the scope of section 45 B of the Banking Companies Act as amended in 1953 which runs as follows: "The High Court shall, save as otherwise expressly provided in section 45 C, have exclusive jurisdiction to entertain and decide any claim made by or against a banking company which is being wound up (including claims by or against any of its branches in India) or any application made under section 153 of the Indian Companies Act, 1913 (VII of 1913) by or in respect of a banking company or any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in the course of the winding up of a banking company, whether such claim or question has arisen or arises or such application has been made or is made before or after the date of the order for the winding up of the banking company or before or after the commencement of the Banking Companies (Amendment) Act, 1953".
There has been some faint argument before us that the questions that arise in execution in this case and particularly the question relating to attachment which has been effected by the Bombay High Court, are not questions which fall ' within the scope of section 45 B.
In our opinion this contention is so obviously untenable, in view of the very wide and comprehensive language of the section that, it requires no more than to be mentioned and rejected.
If, therefore, the proceeding to execute the decree obtained by the appellant in this case and the claims and matters which must necessarily arise in the course of that execution fall within the scope of section 45 B, the execution proceeding in this case would prima facie be within the exclusive jurisdiction of the High Court under section 45 B subject to the two questions that have been raised in the case which are (1) whether there is anything in the , which overrides this jurisdiction, and (2) whether in view of the fact that the original execution application to the Tribunal was made before the Banking Companies (Amendment) Ordinance and Act of 1953, came into force.
, there has been any valid order under section 45 C of 612 the Banking Companies Act by the Punjab High Court transferring the pending execution proceeding to it self.
So far as the first of the above questions is concerned, learned counsel for the appellant relies on sections 3 and 28 of the .
Section 28 declares that the civil court which passed the decree as a Tribunal shall be competent to execute it.
Section 3 runs as follows: "3.
Overriding effect of Act, rules and orders:Save as otherwise expressly provided in this Act, the pro visions of this Act and of the rules and orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force, or in any decree or order of a court, or in any contract between the parties".
On the strength of these sections learned counsel for the appellant argues that the jurisdiction, which the Tribunal has under section 28 for executing the decree must prevail over the jurisdiction of the High Court in respect of this matter under section 45 B of the Banking Companies Act.
On the other hand, the respondent relies on section 45 A of the Banking Companies Act, which runs as follows: "The provisions of this Part and the rules made thereunder shall have effect notwithstanding anything inconsistent therewith contained in the Indian Companies Act, 1913 (VII of 1913), or the Code of Civil Procedure, 1908 (Act V of 1908), or the Code of Criminal Procedure, 1898 (Act V of 1808), or any other law for the time being in force or any instrument having effect by virtue of any such law but the provisions of any such law or instrument in so far as the same are not varied by, or inconsistent with, the provisions of this Part or rules made thereunder shall apply to all proceedings under this Part".
Now the question as to which of the provisions of these two Acts has got overriding effect in a given case, where a particular provision of each is equally applicable to the matter is not altogether free from difficulty.
In the present case, prima facie by virtue 613 of section 28 of the the jurisdiction to execute the Tribunal 's decree is in the Tribunal.
But it is equally clear that the jurisdiction to decide any of the claims which must necessarily arise in the execution of the decree is vested in the High Court by virtue of section 45 B of the Banking Companies Act.
Each of the Acts has a specific provision, section 3 in the and section 45 A in the Banking Companies Act, which clearly indicates that the relevant provision, if applicable, would have overriding effect as against all other laws in this behalf.
Each being a special Act, the ordinary principle that a special law overrides a general law does not afford any clear solution in this case.
In support therefore of the overriding effect of the of 1951 as against section 45 B of the Banking Companies Act, learned counsel for the appellant called in aid the rule that a later Act overrides an earlier one.
(See Craies on Statute Law, pages 337 and 338).
He urged that the Banking Companies (Amendment) Act of 1953 should be treated as part of the 1949 Banking Companies Act and hence overridden by the of 1951 and relied on the case in Shamarao V. Parulekar vs The District Magistrate, Thana, Bombay(1) and on the passage therein at page 687 which is as follows: "The rule is that when a subsequent Act amends an earlier one in such a way as to incorporate itself, or a, part of itself, into the earlier, then the earlier Act must thereafter be read and construed (except where that would lead to a repugnancy, inconsistency or absurdity) as if the altered words had been written into the earlier Act with pen and ink and the old words scored out so that thereafter there is no need to refer to the amending Act at all".
Now there is no question about the correctness of this dictum.
But it appears to us that it has no application to this case.
It is perfectly true as stated therein that whenever an amended Act has to be (1) (1952) S.O.R. 683.
614 applied subsequent to the date of the amendment the various unamended provisions of the Act have to be read along with the amended provisions as though they are part of it.
This is for the purpose of determining what the meaning of any particular provision of the Act as amended is, whether it is in the unamended 'part or in the amended part.
But this is not the same thing as saying that the amendment itself must be taken to have been in existence as from the date of the earlier Act.
That would be imputing to the amendment retrospective operation which could only be done if such retrospective operation is given by the amending Act either expressly or by necessary implication.
the facts of that case the question that was considered arose in the following circumstances.
There was an order of detention under the Preventive Detention Act of 1950.
That Act was due to expire on the 1st April, 1951.
But there were subsequent amendments of the Act which extended the life of the Act up to 1st October, 1952.
The amending Act provided inter alia that detention orders which had been confirmed previously and which were in force immediately before the commencement of the amending Act "shall continue to remain in force for so long as the principal act is in force".
The question for consideration was whether this indicated the original date of expire of the principal Act or the extended date of the principal Act.
The Court had no difficulty in holding that it obviously related to the latter, notwithstanding that the principal Act was defined as meaning "Act of 1950".
It was pointed out that the phrases "principal Act" and "Act of 1950" have to be understood after the amendment as necessarily meaning the 1950 Act as amended, i.e., which was to expire on the 1st October, 1952.
In the present case what we are concerned with is not the meaning of any particular phrase or provision of the Act after the amendment but the effect of the amending provisions in their relation to and effect on other statutory provisions outside the Act.
For such a purpose the amendment cannot obviously be treated as having been part of the original Act itself so as to 615 enable the doctrine to be called in aid that a later Act overrides an earlier Act.
On the other hand, if the rule as to the later Act overriding an earlier Act is to be applied to the present case, it is the Banking Companies (Amendment) Act, 1953,.
that must be treated as the later Act and held to override the provisions of the earlier .
It has been pointed out, however, that, section 13 of the , uses the phrase "notwithstanding anything inconsistent therewith in any other law for the time being in force" and it was suggested that this phrase is wide enough to relate even to a future Act if in operation when the overriding effect has to be determined.
But it is to be noticed that section 45 A of the Banking Companies Act has also exactly the same phrase.
What the connotation of the phrase " 'for the time being" is and which is to prevail when there are two provisions like the above each containing the same phrase, ate questions which are not free from difficulty.
It ;Is, therefore, desirable to determine the overriding effect of one or the other of the relevant provisions in these two Acts, in a given case, on much broader considerations of the purpose and policy underlying the two Acts and the clear intendment conveyed by the language of the relevant provisions therein.
Now so far as the Banking Companies Act is concerned its purpose is clearly, as stated in the heading of Part III A, for speedy disposal of winding up proceedings.
It is a permanent statutory measure which is meant to impart speedy stability to the financial credit structure in the country in so far as it may be effected by banks under liquidation.
It was pointed out in Dhirendra Chandra Pal vs Associated Bank of Tripura Ltd.(1) that the pre existing law relating to the winding up of a company.
involved considerable delay and expense.
This was sought to be obviated so far as Banks are concerned by vesting exclusive jurisdiction in the appropriate High Court in respect of all matters arising in relation to or in the course of (1) 616 winding up of the company and by investing the provisions of the Banking Companies Act with an overriding effect.
This result was brought about first by the Banking Companies (Amendment) Act, 1950 and later by the Banking Companies (Amendment) Act, 1953.
Sections 45 A and 45 B of Part III brought in by the 1950 Act vested exclusive jurisdiction in, the appropriate High Court to decide all claims by or against a Banking Company relating to or arising in the course of winding up.
But sections 45 A and 45 B of the Part III A substituted by 1953 Act are far more comprehensive and vest not.
merely exclusive jurisdiction but specifically provide for the overriding effect of other provisions also.
Now, the is one of the statutory measures meant for relief and rehabilitation of displaced persons.
It is meant for a temporary situation brought about by unprecedented circumstances.
It is possible, therefore, to urge that the provisions of such a measure are to be treated as being particularly special in their nature and that they also serve an important national purpose.
It is by and large a measure for the rehabili tation of displaced debtors.
Notwithstanding that both the Acts are important beneficial measures, each in its own way, there are certain relevant differences to be observed.
The first main difference which is noticeable is that the provisions in the are in a large measure enabling and not exclusive.
There is no provision therein which compels either a displaced debtor or a displaced creditor to go to the Tribunal, if he is satisfied with the reliefs which an ordinary civil court can give him in the normal course.
It is only if he desires to avail himself of any of the special facilities which the Act gives to a displaced debtor or to a displaced creditor and makes an application in that behalf under sections 3, or 5(2), or 13, that the Tribunal 's jurisdiction comes into operation.
At this point it is necessary to notice the further difference that exists in the between applications by displaced debtors and ap 617 plications by displaced creditors against persons who are not displaced persons.
So far as the applications by displaced debtors are concerned, section 15 in terms provides for certain consequences arising, when the application is made to the Tribunal by a displaced debtor under section 3 or section 5(2), i.e., stay of all pending proceedings, the cessation of effect of any interim orders or attachments, etc.
and a bar to the institution of fresh proceedings and so forth.
But the terms of section 13 relating to the entertainment of an execution proceeding by the said Tribunal on a decree so obtained, do not appear to bring about even the kind of consequences which section 15 contemplates as regards applications by displaced debtors.
Section 13 is, in terms, only an enabling section and section 28 merely says that "it shall be competent for the civil court to execute the decree passed by it as a Tribunal".
They are not couched in terms vesting exclusive jurisdiction in the Tribunal.
Whatever, therefore, may be the inter se, position, in a given case, between the provisions of the Banking Companies Act and the provisions of the , in so far as such provisions relate to displaced debtors, we are unable to find that the jurisdiction so clearly and definitely vested in the High Court by the very specific and comprehensive wording of section 45 B of the Banking Com panies Act with reference to the matters in question, can be said to be overridden or displaced by anything in the , in so far as they relate to displaced creditors.
It is also desirable to notice that so far as a claim of a displaced creditor against a non displaced debtor is concerned the main facilities that seem to be available are (1) the claim can be pursued within one year after the commencement of the Act (presumably even though it may ' have been time barred), (2) a decree can be obtained on a mere application, i.e., without having to ' incur the necessary expenses byway of court fee which would be payable if he had to file a suit, (3) the creditor has the facility of getting his claim adjudicated upon by a Tribunal which has 80 618 jurisdiction over the place where he resides, i.e., a place more convenient 'to him than if be had to file a suit under the ordinary law in which case he would have to file a suit at the place where the defendant resides or part of the cause of action arises.
There may also be a few other minor facilities.
But what is necessary to notice is that the overriding provision of the Banking Companies Act, so far as a displaced creditor is concerned, is substantially only as regards jurisdiction.
Section 45 A thereof, while providing that the provisions of Part III A and the rules made there under shall have effect notwithstanding anything in consistent therewith in any other law for the time being in force, specifically provides that "the provisions of any such law in so far as the same are not varied by or inconsistent with, the provisions of that part or rules made thereunder, shall apply to all proceedings under that Part".
Therefore, in the present case the overriding effect of section 45 B of the Banking Companies Act deprives him only of the facility of pursuing his execution in the jurisdiction of the Tribunal.
But there is no reason why he should not get the benefit of other provisions, if any, which may give him an advantage and are not inconsistent with any of the other specific provisions of the Banking Companies Act.
Having regard to all the above con siderations and the wide and comprehensive language of sections 45 A and 45 B of the Banking Companies Act, we are clear that a proceeding to execute the decree obtained by the appellant from the Tribunal against the Bank in Case No. I of 1952 and all other incidental matters arising therefrom such as attachment and so forth are matters within the exclusive jurisdiction of the Punjab High Court subject to the provisions of section 45 C of the Banking Companies Act as regards pending matters.
This leads us to the question whether in terms of section 45 C there has been a valid transfer of the execution proceeding to the Punjab High Court.
Before dealing with this question it is necessary to notice the argument that section 45 C of the Banking Companies Act has no application at all to a pro 619 ceeding pending before the Tribunal.
The argument is that section 45 C applies only to a proceeding pending in any other Court immediately before the commencement of the Banking Companies (Amendment) Act.
It is urged that the Tribunal under the is not a Court.
In support thereof the judgment of one of the learned Judges in Parkash Textile Mills Ltd. vs Messrs Muni Lal Chuni Lal(1) has been cited to show that the Tribunal constituted under this Act is not a Court.
The question that arose in that case was a different one, viz., as to whether the Tribunal had the exclusive jurisdiction to determine for itself the preliminary jurisdiction on facts and it is for that purpose the learned Judge attempted to make out that a Tribunal was a body with a limited jurisdiction, which limits were open to be determined by a regular court when challenged.
It is unnecessary for us to consider whether the view taken by the learned Judge was correct.
No such question arises in this case and we are quite clear that the Tribunal which is to exercise the jurisdiction for executing the decree in question is "a Court" within the scope of section 45 C of the Banking Companies Act.
Section 28 of the itself is reasonably clear on that point.
That section runs as follows: "It shall be competent for the civil court which has been specified as the Tribunal for the purposes of this Act to execute any decree or order passed by it as the Tribunal in the same manner as it could have done if it were a decree or order passed by it as a civil court".
It is quite clear on the wording of this section that it is a civil court when it executes the decree, whatever may be its status when it passed the decree as a Tribunal.
There is, therefore, no substance in this argument.
Now coming to the question whether there has been a valid transfer of the execution proceedings to the Punjab High Court, there can be no doubt that the (1) 620 execution proceeding filed by the appellant before the Tribunal on the 6th January, '1953, continued to remain pending by the date when the Banking Companies (Amendment) Act, 1953, came into operation.
This appears from the subsequent applications dated the 16th March, 1953, and the 17th February, 1954, which always relied on the earlier application of the 6th January, 1953, as the main pending application.
This application was, therefore, a pending application for the purposes of section 45 C of the Banking Companies Act.
The jurisdiction of the Punjab High Court with reference to this execution proceeding must depend upon whether or not there was a valid order of transfer of this proceeding to itself under section 45 C.
This section contemplates, in respect of pending proceedings that (a) the Official Liquidator is to make a report to the High Court concerned within the time specified in sub section (2) thereof, (b) the High Court is to consider which out of these pending proceedings it should transfer to itself, and (c) the High Court should pass orders accordingly.
It further provides by sub section (4) thereof that as regards such of the pending proceedings in respect of which no such order of transfer has been made the said proceeding shall continue in the Court in which it is pending.
It is with reference to these provisions that on the 23rd November, 1953, the Official Liquidator appears to have submitted a report to the Punjab High Court, requesting that certain proceedings mentioned in lists A and B attached to the said report should be transferred to the High Court under section 45 C(3).
List A pertains to suits and List B to applications under the Displaced Persons 'Debts Adjustment) Act, 1951.
It is pointed out that list B which shows an application before the Tribunal under section 19 of the , does not show the execution application under section 28 of that Act then pending in the Banaras Tribunal and with which we are concerned.
It is strenuously urged that this shows that there was no application for transfer of this proceeding to the Punjab High Court and that, therefore, there could 621 have been no transfer thereof and that accordingly by virtue of section 45 C(4) of the Banking Companies Act the jurisdiction in respect of the execution proceeding continued to be with the Tribunal.
It is urged that since sub section (4) of section 45 C enjoins that such proceeding "shall be continued" in the Court in which the proceeding was pending, there can be no question of any transfer thereafter.
It is pointed out that the view of the High Court that there has been a valid transfer to itself is based on an order passed on an alleged supplementary report by the Liquidator on the 25th June, 1954, which is beyond the three months ' time provided in section 45 C (2) and that such an.
order of transfer is invalid.
It is also urged that the transfer so made was without notice to the appellant.
That there was in fact an order of transfer made by the Punjab High Court specifically of this execution proceeding with which we are concerned admits of no doubt as a fact.
This is also admitted by the appellant in his application for special leave.
The order itself is not before us nor are the exact circumstances under which this order came to be made, clearly on the record.
So far as one can gather from the papers before us the position seems to be this.
When the appellant filed his application to the Tribunal on the 17th February, 1954 (by which he asked that its order dated the 20th March, 1953, staying execution proceedings should be vacated for reasons shown therein) notice to show cause against it and for appearance therefor on the 24th April, 1954, was sent to the Official Liquidator by the Tribunal.
The Official Liquidator not having appeared on that date, the Tribunal, as already stated, passed the order as prayed for on the 24th April 1954, transferring the execution to the Bombay High Court.
It may be mentioned at this stage that an argument has been advanced that the Liquidator, not having appeared on notice, can no longer challenge the validity of the continuance of the execution proceeding by the Tribunal and of the subsequent attachment by the Bombay High Court.
The question, however, is one 622 of jurisdiction depending on the validity of transfer made by the High Court under statutory power.
The argument is without substance.
To resume the narrative, the Official Liquidator on receiving notice, addressed a letter dated the 19th March, 1954, to the Company Judge of the Punjab High Court mentioning the fact that he, received a notice from the Banaras Tribunal to appear and show cause on the 24th April, 1954.
He mentioned therein his doubt as to the jurisdiction of the Tribupal to entertain the application and requested that in order to avoid inconvenience and expenditure an immediate transfer of the execution case together with the appellant 's application to the Tribunal for vacating the stay order should be made by the High Court in exercise of the powers conferred on it by section 45 C of the Act.
On this the learned Judge appears to have passed an order dated the 22nd March, 1954, issuing notice to the appellant for appearance on the 2nd April, 1954.
This appears to have been adjourned from time to time and it would appear that on the 25th June, 1954, to which date the matter stood adjourned, the Liquidator addressed another letter to the Company Judge, which is referred to in the record as the supplementary report of the Liquidator.
Therein he only narrated the entire history of the suit and of the execution proceeding and the circumstances which rendered it necessary that an order of transfer should be made immediately.
Probably this was meant for opposing any further adjournment.
It appears at any rate that it was on this date that the order of transfer was passed.
All the facts stated above can be gathered from the two letters of the Liquidator dated the 19th March, 1954, and the 25th June, 1954, and a further note of the Liquidator put up to the Company Judge with reference to the letter dated the 14th July, 1954, received from the Tribunal which is all the relevant material included in the paper book before us.
The actual date of the note does not appear from the record.
Unfortunately neither the original order of the Judge made on the report of the Liquidator dated the 23rd November, 1953, nor the order of 623 transfer relating to this particular case, which appears to have been made on the 25th June, 1954, on the letter of the Liquidator dated the 19th March, 1954, are before us.
We do not know the exact terms in which those orders were made and the reason why no specific order of transfer was made on the first report and why an additional order of transfer was made as appears so late as on the 25th June, 1954.
In any case the argument on behalf of the appellant on this part of the case seems to be based on a misapprehension of the facts.
If, as appears, the order of the 25th June, 1954, was made with reference to the letter of the Liquidator dated the 19th March, 1954, a fact which appears ears to be admitted by the appellant in para 16 of his application for leave to appeal to this Court and what is called supplementary report dated the 25th June, 1954, was nothing more than bringing additional facts to the notice of the Court by way of the history of the execution proceeding, there appears to be no foundation in fact for the contention that the order was made on a report filed beyond three months provided under section 45 C(2) of the Banking Companies Act.
Sub section (2) of section 45 C provides that "the Official Liquidator shall, within three months from the date of the winding up order or the commencement of the Banking Companies (Amendment) Act, 1953, whichever is later, or such further time as the High Court may allow, submit to the High Court a report containing a list of all such pending proceedings together with particulars thereof".
The letter of the Official Liquidator dated the 19th March, 1954, is within three months of the commencement of the Banking Companies (Amendment) Act, 1953, which came into force on the 30th December, 1953, and there is nothing in subsection (2) of section 45 C that two or more successive reports may not be made within the prescribed period of three months.
It appears also from the papers above referred to that notice was issued to the appellant with reference to this letter of the 19th March, 1954, of the Liquidator to transfer the execution application to itself.
It appears to us, therefore, 624 from such record as is before us, that the contention of the appellant raising objection to the validity of the order of transfer is untenable on the facts. ' Nor, are we satisfied that even if the facts as to how the order of transfer dated the 25th June, 1954, came to be made are shown to be otherwise than above stated, there is any reason to think that sections 45 C(2), (3) and (4) are to be construed so as to make the power of the Court to transfer dependent on the filing of a report by the Liquidator strictly within three months.
The various sub sections, taken together seem to imply the contrary.
Section 45 C(1) definitely imposes a bar on any pending matter in any other court being proceeded with except in the manner provided therein.
The jurisdiction of that other Court to proceed with a pending proceeding is made to depend on the fact that its pendency is brought to the notice of the appropriate High Court and its decision, express or implied, to leave it out without transferring it to itself.
Having regard to the scheme and policy of sections 45 B and 45 C of the Banking Companies Act, it appears more reasonable to think that in respect of a pending matter which was not in fact brought to the notice of the Court by the Liquidator within the three months, there is nothing to prevent the Court exercising its power of transfer at such time when, it is brought to the notice of the Court.
It is, however, unnecessary to decide that point finally in this case since, to gay the least, all the facts and the requisite records have not been properly placed before us.
We have been asked to send for all the relevant records in order to ascertain the facts correctly or to give an opportunity for the purpose.
We do not think it right to do so in the circumstances of this case.
It is necessary to point out, as admitted by the appellant in his application for special leave that there has been an application to this Court dated the 16th October, 1954, for the grant of special leave specifically as against the order of transfer of the Punjab High Court made on the 25th June, 1954, but that application 'Was rejected.
It 625 has been suggested that while so rejecting, this Court left the matter open.
There is nothing to substantiate it.
Therefore, an argument as to the invalidity of the order of transfer cannot be entertained at this stage.
For all the above reasons we are satisfied that the view taken by the High Court that it bad exclusive jurisdiction in respect of the present matter and that there was a valid transfer to itself by its order dated the 25th June, 1954, is correct.
In the proceedings before the High Court a good deal has been made as to the alleged suppression of .material facts by the appellant from the Bombay High Court, in obtaining the impugned order of attachment from that Court and the learned Judge 's order also indicates that be was to some extent influenced thereby.
It appears to us that the alleged suppression has no bearing on the questions that arose for decision before the learned Judge, on this appli cation.
The learned Attorney General frankly conceded the same.
We have been told that there has been some application for contempt in the Court on the basis of the alleged suppression.
We do not, therefore, wish to say anything relating to that matter which may have any bearing on the result of those proceedings.
In the result this appeal is dismissed with costs.
Appeal dismissed.
| The appellant, a displaced person, bad a fixed deposit in the Lahore Branch of the respondent Bank which had its head office at Simla, and he also had at the time a cash credit account in the Bank.
As the Bank refused to pay the amount of fixed deposit on its maturity but adjusted it towards part payment of the amount said to be due from him, he filed an application to the Tribunal at Banaras under section 4 of the , claiming the amount of the fixed deposit as a debt due from the Bank.
During the pendency of the application there were proceedings taken for winding up the Bank in the High Court of Punjab.
On the 3rd January 1953 a decree was passed by the Tribunal and the appellant filed an application before it for execution of the decree, which, ultimately, was transferred to the Bombay High Court under the provisions of the Code of Civil Procedure.
The appellant 's application before the Bombay High Court for the attachment of the property belonging to the Bank and situate in Bombay was ordered on the 18th June 1954.
On the 26th June 1954 the Official Liquidator of the Bank obtained an order from the Punjab High Court purporting to be one under section 45 C of the Banking Companies Act, transferring to itself from the Court of the Banaras Tribunal the proceedings before it for execution of the decree obtained against the Bank by the appellant, and subsequently the order of attachment passed by the Bombay High Court was set aside by the High Court of Punjab on the ground that (1) the provisions of the Banking Companies Act as amended in 1953 had an overriding effect, and that exclusive jurisdiction was vested in the Punjab High Court notwithstanding anything in the Displaced Persons (Debts Adjustment) Act, 1951 and (ii) there was a valid order of transfer to the Punjab High Court, of the execution proceedings taken by the appellant in respect of his decree.
The appellant appealed to the Supreme Court.
Held, that (1) in view of the wide and ' comprehensive language of sections 45 A and 45 B of the Banking Companies Act, 1949, as 604 amended in 1953, the proceeding to execute the decree obtained by the appellant from the Tribunal against the Bank and all other incidental matters arising therefrom are within the exclusive jurisdiction of the Punjab High Court; (ii) whatever may be the inter se position between the provisions of the Banking Companies Act and those of the in so far as such provisions relate to displaced debtors, the jurisdiction clearly and definitely vested in the High Court by the very specific and comprehensive wording of section 45 B of the Banking Companies Act cannot be said to be overridden or displaced by anything in the , in so far as they relate to displaced creditors; (iii) the Tribunal which is to exercise the jurisdiction for executing the decree in question is a "court" within the meaning of section 45 C of the Banking Companies Act, whatever may be its status when it passed the decree as a Tribunal; (iv) having regard to the scheme and policy of sections 45 B and 45 0 of the Banking Companies Act, in respect of pending matters which have not been brought to the notice of the Court by the Liquidator within three months, there is nothing to prevent the Court exercising its power of transfer at such time when it is brought to the notice of the Court.
|
Summarize this legal judgement text concisely | on No. 272 of 1955.
66 508 Petition under.
Article 32 of the Constitution of India for the enforcement of Fundamental Rights.
Purshottam Trikamdas, V. R. Upadhya, J. B. Dadachanji and section N. Andley, for the petitioner.
M.C. Setalvad, Attorney General for India, B. Sen and R. H. Dhebar, for the respondents.
May 8.
The Judgment of section R. Das C.J. and Venkatarama Ayyar, B. P. Sinha and Jafer Imam JJ.
was delivered by Sinha J. Jagannadhadas J. delivered a separate judgment.
SINHA J.
This petition under article 32 of the Constitution challenges the vires of certain provisions of the Bombay Police Act, XXII of 1951, which hereinafter will be referred to as "The Act" with particular reference to section 57 under which the externment order dated the 8th November 1954 was passed against the petitioner by the first respondent, the Deputy Commissioner of Police, Crime Branch (1), C.I.D., Greater Bombay.
The second respondent is the State of Bombay.
The petitioner, who claims to be a citizen of India, was born in Bombay and had been, before the order of externment in question, residing in one of the quarters of the City of Bombay.
He keeps bullock carts for carrying on his business of transport and cows for selling milk.
The petitioner alleges that the Prohibition Police of the City instituted twelve prohibition cases against him which all ended either in his discharge or acquittal.
An "externment order" was passed against him in August 1950.
That order was set aside by the Government in December 1950, on appeal by the petitioner.
In December 1953 an order of detention was passed against him under the , and he was detained in the Thana District prison.
He moved the High Court of Bombay under article 226 of the Constitution against the said order of detention.
He was released from detention before the said petition was actually heard by the High Court.
Thereafter, the petitioner along with others was charged with possession of liquor.
The case went 509 on for about two years when he was ultimately discharged by the Presidency Magistrate on the 24th February 1955 as the prosecution witnesses were not present on the date fixed for hearing of the case.
On the night of the 9th October 1954 the petitioner was arrested along with his companions a little after midnight by members of the police force designated "Ghost Squad", which was a special wing of the Crime Branch of the C.I.D., on the allegation made by the police that they were seen running away on the sight of a police van and that they were chased and arrested and were found in possession of knives and other weapons.
In October 1954 the petitioner was served with a notice under section 57 read with section 59 of the Act.
It is convenient at this stage to set out the said notice in extenso, which is Exhibit A to the petition filed in this Court: "Notice under section 59 of the Bombay Police Act, 1951.
Name, address & age: Hari alias Dada Khemu Gawali, Hindu aged about 37 years.
" Occupation: Bullock cart owner.
Residence: Room No. 45, 1st floor, Haji Kassam Chawl, Lamington Road.
Under section 59 of the Bombay Police Act, 1951 (Bombay Act XXII of 1951), you are hereby informed that the following allegations are made against you in proceedings against you under section 57 of the said Act.
In order to give you opportunity of tendering your explanation regarding the said allegations, I have appointed 11 a.m. on 25 10 1954 to receive your explanation and to hear you and your witnesses, if any, in regard to the said allegations.
I, N. P. Paranjapye, Superintendent, C.B.I., C.I.D., therefore require you to appear before me at H. P. 0.
Annexe I (place) on the said date viz. 25 10 1954 at 11 a.m. for the said purpose and to pass a bond in the sum of Rs. 500 with ' one surety in like amount for your attendance during the inquiry of the said proceedings.
Should you fail to appear before me and to pass the 510 bond as directed above, I shall proceed with the inquiry in your absence.
Take note: Allegations: 1.
That you have been convicted of offences as per particulars mentioned below: serial Court & date of section sentence police no District convinction of law station & case No. 1.
H. C. 14 10 1938 304/109 6 yrs.
Nagpada Ps Bombay I. P. C. R.I.
C. R. No. 324/109 2 yrs.
127/38 I.P. C. R.I. (Con currently).
That you were arrested on 29 3 1948 in connection with Nagpada P.S.C.R. No. 273 of 1948 u/s 143, 147, 148, 149, 353, I.P.C. wherein you along with one Ramchandra Ishwarbhai and others committed rioting and criminal assault on a public servant, viz. a police constable No. 4459/D to deter him from the execution of his lawful duties but you were discharged in the said case due to lack of sufficient evidence.
That you were again arrested on 2 5 1948 in connection with Nagpada P.S.C.R. No. 353 u/s 143, 144, 146, 147, 148, 149, 324, I.P.C. wherein you along with one Rajaram Khemu Gawli and 7 others committed rioting armed with deadly weapons, viz., lathis, sodawater bottles etc.
and caused hurt to one Gopal Khemu Gawli but you were discharged in the said case for want of sufficient evidence.
That you were again arrested on 3 6 1949 in connection with Nagpada P.S.C.R. No. 336 of 1949 u/s 143, 147, 149, 225, 225 B, 332, I.P.C. wherein you along with one Shri Vithal Baloo and others committed rioting, assaulted a public servant, viz. a police officer (Shri section K. Kothare) to deter him from the lawful discharge of his duties and made 3 persons in the lawful custody of the police to escape, but were discharged in the said case for want of sufficient evidence.
That now you have been arrested on 9 10 1954 at about 12 50 a.m. in the company of 7 others, viz. 511 (1)Amir Masud (2) Francis Sherao & China (3) Antoo Narayan (4) Abdul Wahab Abdul Gafoor (5) Laxman Rama (6) Narayan Tukaram and (7) Rajaram Vishnoo out of whom persons mentioned at Nos.
I and 6 are, previous convicts and that at the time of arrest you and persons mentioned at Nos. 1, 2, 3 and 4 were, armed with deadly weapons to wit, clasp knives, iron bar and a lathi, and thus you were reasonably suspected to be out to commit an offence either against property or person; And that you are likely again to engage yourself in the commission of a similar offence falling either under Chapter XVI or XVII of the Indian Penal Code.
N. P. Paranjapye Superintendent of Police, Crime Branch (I), C.I.D. L.T.I. of Hari Dada Khemu Gawli.
The petitioner appeared before the Superintendent on the 8th November 1954 with his counsel and filed a long petition containing allegations running into 16 paragraphs showing cause against the order of externment proposed to be passed against him.
That petition is exhibit B. The petitioner accepted the correctness of the allegation contained in the first paragraph of exhibit A set out above, but denied the truth of the other allegations made therein against him which he characterised as based on "old prejudice and sus picion".
As regards his conviction referred to in the first paragraph aforesaid, he stated: "I had unfortunately a conviction in 1938 when was a mere youth.
I have lived a clean and honourable life ever since.
" Then he goes on to make reference to the other cases charged against him and claimed that he had been "discharged in those cases for want of sufficient evidence".
The first respondent aforesaid ultimately passed the order of externment which is Exhibit C to the petition, on the 8th November 1954.
After reciting the previous conviction which was for offences under Chapter XVI, Indian Penal Code and that the petitioner was likely again to engage in the commission 512 of similar offences and saying that he was satisfied about the matters contained in the previous notice, the first respondent directed the petitioner under section 57 of the Act to remove himself outside the limits of Greater Bombay within two days from the date of the final order in the case pending against him, as noted in the order, for a period of two years from the date of the order, and not to enter or return to the said area of Greater Bombay without the permission in writing of the Commissioner of Police, Greater Bombay, or the Government of Bombay.
The petitioner preferred an appeal to the Government of Bombay against the said order of externment.
But the appeal was dismissed.
Substantially on those allegations this Court has been moved under article 32 of the Constitution.
The first respondent has sworn to the affidavit filed in this Court to the effect that the petitioner has been fully heard by the authorities before the order impugned in this case was passed.
It is further stated in the affidavit that in the previous case in which the petitioner had been convicted be bad been found guilty along with his brother Rajaram of having caused the death of a person who had given evidence against them in a previous trial.
The first respondent further stated in the affidavit that the material examined by him before passing the order impugned showed that since 1948 the petitioner had been resorting to violence and was concerned in a number of cases involving acts of violence, namely: 1.
In March 1948 a police constable was assaulted.
Though the petitioner was one of the persons concerned with the crime, he was not charge sheeted because sufficient evidence was not forthcoming against him.
In April 1948 the petitioner 's brother had charged him and eight others with having thrown sodawater bottles and used lathis.
The Presidency Magistrate, 17th Court, Mazgaon, Bombay, had to adjourn the case several times for recording evidence of witnesses who remained absent and ultimately the court refused to grant further adjournment for the 513 production of witnesses and the case ended in a discharge for want of evidence.
In May 1949 the police had arrested three persons including Rajaram aforesaid, the petitioner 's brother for being concerned in sale of illicit liquor.
While those arrested persons were being taken to the police lorry for being taken to the police station, the petitioner and other persons forcibly rescued those arrested persons from the custody of the police.
But the case ultimately failed in August 1950 because the witnesses failed to turn up to give evidence against the accused including the petitioner.
At about 12 50 a.m. on 9th October 1954, the Special Squad, Crime Branch, C.I.D., Bombay, while proceeding on their rounds noticed the petitioner and seven others armed with an iron bar and lathi.
On seeing the police van, they started running away and were chased and arrested by the police force.
On arrest the petitioner and his other associates were found carrying "clasp knives".
The petitioner and three of the seven arrested persons were found smelling of alcohol.
The petitioner was placed on his trial for offences under the Bombay Prohibition Act and the Bombay Police Act.
He was acquitted by the learned trial Judge because of discrepancies in the evidence of some of the prosecution witnesses.
The respondent further averred that after examining all the material against him in the light of his previous conviction under sections 304/109 and 324/109, Indian Penal Code, he was satisfied that the petitioner.
was likely again to engage in the commission of offences similar to those for which he had been previously convicted.
Accordingly he passed the order of externment against the petitioner, as set out above.
In support of the petition which was heard along with Petitions Nos. 439 and 440 of 1955 (in which the orders impugned had been passed under section 56 of the Act and which are being disposed of by a separate judgment) the leading argument by Shri Purshotham raised the contentions, (1) that section 57 of the Act contravened clauses (d) and (e) of article 19(1) of the Constitution and that the provisions 514 of that section imposed unreasonable restrictions on the petitioner 's fundamental rights of free movement and residence; and (2) that the order passed under section 57 against the petitioner is illegal inasmuch as it is based on vague allegations and inadmissible material, for example, on orders of discharge or acquittal.
Each of the two broad grounds has been elaborated and several points have been sought to be made under each one of those heads.
It has been contended that the police have been vested with un limited powers in the sense that any person whom they suspect or against whom they have their own reasons to proceed can be asked to remove, not only from any particular area, like Greater Bombay, but from the entire State of Bombay.
Even if one order does not ask a person to remove himself out of the entire State, each authority within its respective local jurisdiction can ask a particular person to go out of that area, so that that person may find himself wholly displaced without any place to go to.
Unlike the law relating to preventive detention, there is no provision for an Advisory Board which could examine the reasonableness of the order proposed to be passed or already passed, so that there is no check on the exercise of power by the police authorities under the Act, however flagrant the abuse of the power may have been.
It is also contended that the provisions as regards hearing by the police authorities and appeal to the State Government are illusory.
The police is both the prosecutor and the judge and the remedy provided by the Act is a mere eye wash.
It is also pointed out that all kinds of offences have been clubbed together which have no rational connection with one another.
Reliance was placed on certain observations made by this Court in a number of decisions,, viz., Chintaman Rao vs The State of Madhya Pradesh(1); The State of Madras V. V. G. Row(2); Thakur Raghubir Singh vs Court of Wards, Ajmer(3); Messrs Dwarka Prasad Laxmi Narain vs State of U. P.(4); and Ebrahim Vazir Mavat vs State of Bombay(5).
(1)[19SO] S.C.R. 759.
(2) [1952] S.C.]&.
(3) (1953] S.C.R. 1049.
(4) (1954] section CB.
(5) 515 Section 57 of the Act which is particularly impugned in this case is in these terms: "Removal of persons convicted of certain offences.
If a ,person has been convicted (a) of an offence under Chapter XII, XVI or XVII of the Indian Penal Code, or (b) twice of an offence under section 9 of the Bombay Beggars Act, 1945, or under the Bombay Prevention of Prostitution Act, 1923, or (c) thrice of an offence within a period of three years under section 4 or 12 A of the Bombay Prevention of Gambling Act, 1887, or under the Bombay Prohibition Act, 1949, the Commissioner, the District Magistrate or the Sub Divisional Magistrate specially empowered by the State Government in this behalf, if he has reason to believe that such person is likely again to engage himself in the commission of an offence similar to that for which he was convicted, may direct such person to remove himself outside the area within the local limits of his jurisdiction, by such route and within such time as the said officer may prescribe, and not to enter or return to the area from which he was directed to remove himself.
Explanation For the purpose of this section Can offence similar to that for which a person was convicted ' shall mean (i) in the case of a person convicted of an offence mentioned in clause (a), an offence falling under any of the Chapters of the Indian Penal Code mentioned in that clause, and (ii) in the case of a person convicted of an offence mentioned in clauses (b) and (c), an offence falling under the provisions of the Acts mentioned respectively in the said clause&".
In order to attract the provisions of this section, two essential conditions must be fulfilled, viz.; (1) that there should have been a previous conviction under Chapter XII, XVI or XVII, Indian Penal Code, or two previous convictions under the Acts mentioned 516 in clause (b), or three previous convictions within a period of three years under the Acts mentioned in clause (c); and (2) that the authority named should have reason to believe that a person coming within the purview of any of the clauses (a), (b) and (c) is likely again to engage himself in the commission of an offence similar to that for which he had been previously convicted; that is to say, for an offence falling under any of the three chapters mentioned in clause (a), or if he had been twice convicted under the Beggars Act, or the Prevention of Prostitution Act, or thrice convicted under the Prevention of Gambling Act or the Prohibition Act; so that, a previous conviction for "offences relating to coin and Government stamps" has been equated with one for "offences affecting the human body" (chapter XVI) or "offences against property" (chapter XVII) of the Indian Penal Code.
I Chapter XII contains sections 230 to 263(A).
Chapter XVI contains section 299 to section 377 and Chapter XVII contains section 378 to section 462 of the Code.
In other words, one convicted for counterfeiting coin may in terms of the impugned section 57 be said to have engaged himself in the commission of a similar offence if he is likely to use criminal force or to commit theft or extortion or robbery or dacoity or criminal misappropriation of property or criminal breach of trust.
It has therefore been rightly pointed out on behalf of the petitioner that the range of the offences referred to in clause (a) of section 57 is very wide indeed and that it is difficult to point out any rational basis for clubbing them together.
A person convicted under Chapter XII, Indian Penal Code of counterfeiting Indian Coin or Government stamps may rightly be called the enemy of public finance and revenue, but is far removed from a person who may be convicted of murder or other offences against human body or against private property.
But the legislature in its wisdom has clubbed all those offences together and it is not for this Court to question that wisdom provided the provisions of the Act do not impose unreasonable restrictions on right to freedom.
Conviction 517 under the Bombay Beggars Act and the Bombay Prevention of Prostitution Act have been clubbed together under clause (b).
and similarly previous convictions under the Bombay Prevention of Gambling Act and Bombay Prohibition Act have been clubbed together.
So the previous convictions under the three clauses aforesaid have been placed in three different categories.
Article 19 of the Constitution has guaranteed the several rights enumerated under that article to all citizens of India.
After laying down the different rights to freedom in clause(1), clauses (2) to (6) of that article recognise the right of the State.
to make laws putting reasonable restrictions on those rights in the interest of the general public, security of the State, public order, decency or morality and for other reasons set out in those sub clauses, so that there has to be a balance between individual rights guaranteed under article 19(1) and the exigencies of the State which is the custodian of the interests of the general public, public order, decency or morality and all other public interests which may compendiously be described as social welfare.
For preventing a breach of the public peace or the invasion of private rights the State has sometimes to impose certain restrictions on individual rights.
It therefore becomes the duty of the State not only to punish the offenders against the penal laws of the State but also to take preventive action.
"Prevention,is better than cure" applies not only to individuals but also to the activities of the State in relation to the citizens of the State.
The impugned section 57 is an instance of the State taking preventive measures in the interest of the public and for safeguarding individual 's rights.
The section is plainly meant to prevent a person who has been proved to be a criminal from acting in a way which may be a repetition of his criminal propensities.
In doing so the State may have to curb an individual 's activities and put fetters on his complete freedom of movement and residence in order that the greatest good of the greatest number may be conserved.
The law is based on the principle that it is desirable in the larger 518 interests of society that the freedom of movement and residence of a comparatively fewer number of people should be restrained so that the majority of the community may move and live in peace and.
harmony and carry on their peaceful avocations untrammelled by any fear or threat of violence to their person or property.
The individual 's right to reside in and move freely in any part of the territory of India has to yield to the larger interest of the community.
That the Act is based on sound principle cannot be gainsaid.
Now the only question is whether the provisions of the impugned section are not justified in the larger interest of the community, or, in other words, whether they impose a larger restriction than is reasonably necessary to meet the situation envisaged by the section.
From that point of view we shall now examine the other arguments advanced to show that the provisions of the impugned section are unreasonable restrictions on individual right to reside in and move freely in any part of India.
It has been observed by this Court in the case of 'Gurbachan Singh vs The State of Bombay(1) at p. 742, as per Mukherjea, J. (as he then was): "It is perfectly true that the determination of the question as to whether the restrictions imposed by a legislative enactment upon the fundamental rights of a citizen enunciated in article 19 (1) (d) of the Constitution are reasonable or not within the meaning of clause (5) of the article would depend as much upon procedural part of the law as upon its substantive part; and the court has got to look in each case to the circumstances under which and the manner in which the restrictions have been imposed".
In this case the attack against ' section 57 of the Act is directed both against the procedural part of the law and the substantive part.
It has been contended that the person dealt with under section 57 may be directed to remove himself altogether outside the limits of the State of Bombay because the Act extends to the whole of the State of Bombay.
The provisions of section 57 can be applied either by the Commis (1) ; 519 sioner of Police for Greater Bombay and other areas for which a Commissioner may be appointed under section 7 or by the District Magistrate or a Sub Divisional Magistrate specially empowered by the State Government in that behalf.
Any one of the aforesaid authorities.
has power to direct an individual dealt with under section 57 to remove himself outside the area within the local limits of his jurisdiction.
Hence none of those authorities has the power to direct that person to remove himself outside the entire State of Bombay.
The situation envisaged by the argument that a person may be called upon to remove himself out of the limits of the entire State of Bombay would not ordinarily arise because the idea underlving the provisions of sections 55 to 57 is the "dispersal of gangs and removal of persons convicted of certain offences" as would appear from the sub heading II in chapter V, which is headed "special measures for maintenance of public order and safety of State".
A gang of criminals or potential criminals operates or may intend to operate within certain local limits and the idea behind the provisions of section 57 is to see to it that a person with previous conviction who may have banded together with other such persons should be disbanded and hounded out of the limits of his ordinary activities, his associates also are to be similarly dealt with, so that the gang is broken up and the different persons constituting it may be removed to different parts of the State so as to reduce their criminal activities to the minimum.
Unless a person makes himself so obnoxious as to render his presence in every part of the Bombay State a menace to public interest including public peace and safety, every Commissioner of Police or ' district Magistrate or Sub Divisional.
Magistrate would not think of acting in the same way in respect of the same person.
Hence, in our opinion, there is no substance in this argument.
It may be mentioned in this connection that previous to the enactment of the impugned Act there was the Bombay District Police Act IV of 1890 which applied to the whole Presidency of Bombay except the Greater Bombay (omitting all references to Sind) and the City 520 of Bombay Police Act, IV of 1902, applied to the City of Bombay except certain specified sections which applied to the whole of the Presidency of Bombay; so that the two Acts aforesaid covered the whole of the State of Bombay as it was constituted after Independence.
The two Acts aforesaid were repealed by the impugned Act which consolidated the law for the regulation of the Police Force in , the State of Bombay which appears from the following preamble of the Act . "Whereas it is expedient to amalgamate the District and Greater Bombay Police Forces in the State of Bombay into one common Police Force and to introduce uniform methods regarding the working and control of the said Force throughout the State".
Broadly speaking, section 46 of Act IV of 1890 and.
section 27 of Act IV of 1902 correspond to the provisions of sections 56 and 57 of the Act.
It was next contended that unlike Preventive Detention laws there was no provision in the impugned law for an Advisory Board which could scrutinise the material on which the officers or authorities contemplated by section 57 had taken action against a person.
It cannot be, and has not been laid down, as a universal rule that unless there is a provision for such an Advisory Board such a legislation would necessarily be condemned as unconstitutional.
The very fact that the Constitution in article 22(4) has made specific provision for an Advisory Board consisting of persons of stated qualifications with reference to the law for Preventive Detention, but has made no such specific provision in article 19 Would answer this contention.
In this connection reference may also be made to the decision of this Court in the case of N. B. Khare, vs State, of Delhi(1) which dealt with the constitutionality of the East Punjab Public Safety Act of 1949 with reference to the provisions of article 19 of the Constitution.
In that legislation there was a provision for an Advisory Board whose opinion, however, had no binding force.
The Act was not struck down by this Court.
On the other hand, in the case (1) ; 521 of State of Madras vs V. G. Row(1), section 15(2)(b) of the Indian Criminal Law (Amendment) Act, 1908, as amended by the Indian Criminal Law Amendment (Madras) Act, 1950, was held to be unconstitutional as the restrictions imposed on the fundamental right to form associations were not held to be reasonable in spite of the fact that there was a provision for an Advisory Board whose opinion was binding on the Government.
Hence it cannot be said that the existence of an Advisory Board is a sine qua non of the constitutionality of a legislation such as the one before us.
It was next ' contended that the proceedings are initiated by the police and it is the police which is the judge in the case and that therefore the provisions of the Act militate against one of the accepted principles of natural justice that the prosecutor should not also be the judge.
In order to appreciate this argument reference has to be made to the provisions of section 59 of the Act; It provides that before action is taken under sections 55, 56 or 57 of the Act, the authority entrusted with the duty of passing orders under any one of those sections or any officer above the rank of an Inspector authorised by that officer or authority shall inform the person proceeded against in writing "of the general nature of the material allegations against him" in order to give him a reasonable opportunity ' of explaining his conduct.
If that person wishes to examine any witnesses, be has to be given an opportunity of adducing evidence.
That person has the right to file a written statement and to appear in the proceeding by an advocate or attorney for the purpose of tendering his explanation and adducing evidence.
If the person fails to appear or to adduce evidence, the authority or officer has the right to proceed with the enquiry and to pass such order as may appear fit and proper.
It is thus clear that the criticism against the procedure laid down in section 59 is not entirely correct.
The evidence or material on 'the basis of which a person may be proceeded against under any one of the sections 55, (1) (1952] S.C.R. 597.
522 56 or 57 may have been collected by police officers of the rank of an Inspector of Police or of lower rank.
The proceedings., may be initiated by a police officer above the rank of Inspector who has to inform the person proceeded against of the general nature of the material allegations against him.
But the order of externment can be passed only by a Commissioner of Police or a District Magistrate or a Sub Divisional Magistrate specially empowered by the State Government in that behalf.
Hence the satisfaction is not that of the person prosecuting, if that word can at all be used in the context of those sections.
The person proceeded against is not prosecuted but is put out of the harm 's way.
The legislature has advisedly entrusted officers of comparatively higher rank in the police or in the magistracy with the responsible duty of examining the material and of being satisfied that such person is likely again to engage himself in the commission of an offence similar to that for which he had previously been convicted.
The proceedings contemplated by the impugned section 57 or for the matter of that.
, the other two sections 55 or 56 are not prosecutions for offences or judicial proceedings, though the officer or authority charged with the duty aforesaid has to examine the information laid before him by the police.
The police force is charged with the duty not only of detection of offences and of bringing offenders to justice, but also of preventing the commission of offences by persons with previous records of conviction or with criminal propensities.
As observed by Patanjali Sastri, C. J. in the case of State of Madras V. V. G. Row(1), "externment of individuals, like preventive detention, is largely precautionary and based on suspicion".
To these observations may be added the following words in the judgment of Patanjali Sastri, C. J., (supra) with reference to the observations of Lord Finlay in Rex vs Halliday(2): "The court was the least appropriate tribunal to investigate into circumstances of suspicion on which such anticipatory action must be largely based".
(1) (1952] section C.R, 597, 609.
(2) [1917] A.G. 260, 269.
523 It is thus clear that in order to take preventive action under section 57 of the Act the legislature has entrusted police officers or magistrates of the higher ranks to examine the facts and circumstances of each case brought before them by the Criminal Investigation Department.
But the legislature has provided certain safeguards against tyrannical or wholly unfounded orders being passed by the higher ranks of the police or the magistracy.
It was next contended that the provisions relating to hearing any evidence that may be adduced by the police or by the person proceeded against and right of appeal to the State Government conferred by section 60 of the Act are illusory.
We cannot agree that the right of appeal to the State Government granted to the person proceeded against by an order under section 57 is illusory because it is expected that the State Government which has been charged with the duty of examining the material with a view to being satisfied that circumstances existed justifying a preventive order of that nature, will discharge its functions with due care and caution.
Section 61 has provided a further safeguard to a person dealt with under section 57 by providing that though an order passed under section 55, section 56 or section 57, or by the State Government under section 60 on appeal shall not be called in question in any court, he may challenge such an order in a court on the ground (1) that the authority making the order or any officer authorised by it had not followed the procedure laid down in section 57, or (2) that there was no material before the authority concerned upon which it could have based its order, or (3) that the said authority was hot of opinion that witnesses were unwilling to come forward to give evidence in public against the person proceeded against.
In this connection it was argued on behalf of the petitioner that section 59 only required the general nature of the material allegations against the person externed to be disclosed and that, as it did not further provide for particulars to be supplied to such a person, it would be very difficult for him to avail of at least the second ground 68 524 on which section 61 permits him to get the matter judicially examined.
But in the very nature of things it could not have been otherwise.
The grounds available to an externee had necessarily to be very limited in their scope because if evidence were available which could be adduced in public, such a person could be dealt with under the preventive sections of the Code of Criminal Procedure, for example, under section 107 or section 110.
But the special provisions now under examination proceed on the basis that the person dealt with under any of the sections 55, 56 or 57 is of such a character as not to permit the ordinary laws of the land being put in motion in the ordinary way, namely, of examining witnesses in open court who should be cross examined by the party against whom they were deposing.
The provisions we are now examining are plainly intended to be used in special , cases requiring special treatment, that is, cases which cannot be dealt with under the preventive sections of the Code of Criminal Procedure.
Reliance was placed on a number of decisions of this Court referred to above on behalf of the petitioner to show that the terms of section 57 impugned in this case could not come within the permissible limits laid down by the Constitution in clause (5) of article 19.
But arguments by analogy may be misleading.
It has been repeatedly said by this Court that it is not safe to pronounce on the provisions of one Act with reference to decisions dealing with other Acts which may not be in pari materia.
The case nearest to the present one is the decision of this Court in Gurbachan Singh vs State of Bombay(1), where section 27(1) of the City of Bombay Police Act was under challenge and the Court upheld the constitutionality of that section.
If anything, section 57 impugned in this case provides a surer ground for proceeding against a potential criminal in so far as it insists upon a previous conviction at least.
At least in clauses (b) and (c) it insists upon more than one previous order of conviction against the person proceeded against, thus showing that the authority dealing with such a (1) (1952] S.C.R. 737.
525 person had some solid ground for suspecting that he may repeat his criminal activities.
It has not been contended before us that the decision of this Court referred to above does not lay down the correct law or that it was open to challenge in any way.
We do not think it necessary therefore to consider in detail the other cases relied upon on behalf of the petitioner.
It now remains to consider the legality of the order itself.
The bona fides of the order have not been questioned.
What has been urged against the legality of the order impugned is that it is based on previous orders of discharge or acquittal.
It is said that those orders were passed because there Was not sufficient evidence to bring the charge home to the accused.
The insufficiency of the evidence itself may have been due to witnesses not being available to depose in open court or they may have been overawed and their testimony tampered with.
These are all matters which cannot be examined by this Court in an objective way, when the legislature has provided for the subjective satisfaction of the authorities or officers who have been entrusted with the duty of enforcing those special provisions of the Act.
It cannot be laid down as a general proposition of law that a previous order of discharge or acquittal cannot be taken into account by those authorities when dealing with persons under any one of the provisions we have been examining in this case.
it is not for us to examine afresh the materials and to be satisfied that the order impugned is correct.
But the materials placed on the record of this case in the affidavit sworn to by the officer who was responsible for the order impugned show at least one thing, namely, that the petitioner has not been a victim of an arbitrary order.
For the reasons aforesaid, in our opinion, no grounds have been made out for issuing any writ or direction to the authorities concerned or for quashing the orders impugned.
The application is therefore dismissed.
526 JAGANNADHADAS J. I regret 'I am unable to persuade myself to agree with the view, which has commended itself to the majority of the Court, as to the constitutional validity of section 57(a) of the Bombay Police Act, 1951 (Bombay Act XXII of 1951) (hereinafter referred to as the Act).
This is a provision which prima facie infringes the fundamental right of a citizen under article 19(1)(d) and (e) of the Constitution.
It can be supported only if, having regard to all the circumstances, it is possible to reach a satis factory conclusion that the imposition of the restrictions as provided thereunder is in the interests of the general public and reasonable.
The fact that our Constitution which declares fundamental rights also permits a law of preventive detention under very limited safeguards and that such laws have taken the pattern of the exercise of power by the Government or by its officers for specified purposes on the basis of their subjective satisfaction, has made us prone to reconcile ourselves to other kinds of restrictive laws affecting personal liberty though based on the subjective satisfaction of executive officers, if only they provide for certain minimum safeguards such as supply of grounds, right of representation, and the scope for review by a superior authority or by an advisory body.
If one is to adopt this standard as furnishing the sine qua non of what is a reason able law of preventive restriction of personal liberty, it may be possible to say that the provision under question satisfies the test.
But the law of preventive detention stands on a very exceptional footing in our Constitution inasmuch as it is specifically provided for in the Constitution.
The same Constitution has left the imposition of other restrictions on personal liberty to be judged by the courts with reference to the standards of reasonableness, in the interests of the public.
While undoubtedly the above three safeguards may be taken as the minimum required to satisfy the standard of reasonableness, I am not prepared to assume that they are sufficient.
It appears to me that the constitutional validity of laws of preventive restriction, as opposed to the laws of 527 preventive detention, have to be judged with reference to standards which this Court has generally accepted as regards the validity of restrictions on the other fundamental rights under article 19(1) of the Constitution.
As repeatedly held by this Court, a proper balance must be struck between the fundamental right of the citizen and the social control by the State in order to evolve the permissible restriction of the fundamental right under the Constitution.
Now there can be no doubt that the ordinary provisions in the Criminal Procedure Code enabling the executive to take preventive measures are often enough felt inadequate, particularly in large cities and towns wherein there are loose congregations of population.
In a general way therefore it may be said that to arm the executive officers with powers for preventive action against commission of offences is not in itself unreasonable.
Section 57 of the Act appears in Chapter V of the Act beaded "Special measures for maintenance of public order and safety of State" and is under the sub head II "Dispersal of gangs and removal of persons convicted of certain offences".
The substantive provisions under head II are sections 55, 56 and 57.
Section 55 relates to control and dispersal of gangs.
Section 56 relates to removal of persons about to commit offences and section 57 relates to removal of persons previously convicted of certain offences.
Sections 56 and 57 of the Act run as follows: "56.
Whenever it shall appear in Greater Bombay and other areas for which a Commissioner has been appointed under section 7 to the Commissioner and in other area or areas to which the State Government may, by notification in the Official Gazette, extend the provisions of this section, to the District Magistrate, or the Sub Divisional Magistrate specially empowered by the State Government in that behalf (a) that the movements of acts of any person are causing or calculated to cause alarm, danger or harm to person or property, or (b) that there are reasonable grounds for believing that such person is engaged or is about to be engaged in the commission of an offence involv 528 ing force or violence or an offence punishable under Chapter XII, XVI or XVII of the Indian Penal Code, or in the abetment of any such offence, and when in the opinion of such officer witnesses are not willing to come forward to give evidence in public against such person by reason of, apprehension on their part as regards the safety of their person or property, or (c) that an outbreak of epidemic disease is likely to result from the continued residence of an immigrant, the said officer may, by an order in writing duly served on him or by beat of drum or otherwise as he thinks fit, direct such person or immigrant so to conduct himself as shall seem necessary in order to prevent violence and alarm or the outbreak or spread of such disease or to remove himself outside the area within the local limits of his jurisdiction by such route and within such time as the said officer may prescribe and not to enter or return to the said area from which he was directed to remove himself.
If a person has been convicted (a) of an offence under Chapter XII, XVI or XVII of the Indian Penal Code, or (b) twice of an offence under section 9 of the Bombay Beggars Act, 1945, or under the Bombay Prevention of Prostitution Act, 1923, or (c) thrice of an offence within a period of three years under section 4 or 12 4 of the Bombay Prevention of Gambling Act, 1887, or under the Bombay Prohibition Act, 1949, the Commissioner, the District Magistrate or the Sub Divisional Magistrate specially empowered by the State Government in this behalf, if be has reason to believe that such person is likely again to engage himself in the commission of an offence similar to that for which he was convicted, may direct such person to remove himself outside the area within the local limits of his jurisdiction, by such route and within such time as the said officer may prescribe and not to enter or return to the area from which he was directed to remove himself.
Explanation: For the purpose of this section "an 529 offence similar to that for which a person was convicted" shall mean (i)in the case of a person convicted of an offence mentioned in clause (a), an offence falling under any of the Chapters of the Indian Penal Code mentioned in that clause, and (ii) in the case of a person convicted of an offence mentioned in clauses (b) and (c), an offence falling under the provisions of the Acts mentioned respectively in the said clauses".
Section 58 of the Act provides that a direction made under sections 56 and 57 not to enter a particular area shall be for such period as may be specified thereunder and shall in no case exceed a period of two years from the date on which it is made.
This Court has, in Gurbachan Singh vs The State of Bombay(1) pronounced on the constitutional validity of section 27(1) of the City of Bombay Police Act of 1902 (Bombay Act IV of 1902) which, word for word, is almost the same section 56 of the Act above quoted omitting (c) thereof.
As I understand that judgment, the view of the Court as to the reasonableness of that provision is based on the fact that under the said section it is essential for the exercise of the power, that in the opinion of the officer concerned, witnesses are not willing to come forward to give evidence in public against the person concerned by reason of apprehension on their part as regards the safety of their own person or property.
This is clear from the following passage at page 743 of the report: "The law is certainly an extraordinary one and has been made only to meet those, exceptional cases where no witnesses for fear of violence to their person or property are willing to depose publicly against certain bad characters whose presence in certain areas constitutes a menace to the safety of the public residing therein".
The provisions of section 57 of the Act are totally diff erent.
This section can be invoked without the requirement of non availability of witnesses or of any opinion in that behalf being arrived at by the officer concerned.
(1) ; 530 All that is sufficient for the use of this section is that the person concerned should have been previously convicted of certain specified offences and that the officer concerned has reason to believe that such person is likely again to engage himself in the commission of a similar offence.
The powers under this section can, therefore, be invoked in every case where there is likelihood of repetition of offence by a person who has been previously convicted of a similar offence if the offence is of the specified categories, even though witnesses may be willing to come forward.
I am not prepared to accept the idea that in such a situation it would be right or reasonable to clothe executive officers with the power to take preventive action restraining the liberty of the citizen instead of taking the chance of the offence being committed and leaving the deprivation of his liberty to the ordinary channels of criminal prosecution and punishment.
It is true that in some matters anticipatory prevention is better than ex post facto punishment.
But in a State where personal liberty is a guaranteed fundamental right, the range of such preventive action must be limited to a narrow compass.
What may be called the police power of the State in this behalf must be limited by the consideration that the offence likely to be committed is of a serious nature, that the likelihood of its commission is very probable, if not imminent, and that the perpetrator of the crime, if left to commit, it, may go unpunished under the normal machinery on account of witnesses not being willing to come forward.
Section 151 of the Criminal Procedure Code authorises a police officer to arrest any person when he knows of his design to commit any cognizable offence and to send him to the nearest Magistrate for such action which he considers fit or as may be feasible under sections 107 to 110 of the Criminal Procedure Code.
Section 57 of the Act constitutes a very wide departure from such a provision and there must be clear justification for so serious an encroachment on personal liberty as is contemplated therein.
A provision of the kind might not only be justified but may be called for, if confined to serious offences 531 serious either because of their nature or of the attendant circumstances and if witnesses are likely to be terrorised.
I am unable to see why a person who may have previously committed any offence of a minor character and in ordinary circumstances, under Chapters XII, XVI or XVII of the Indian Penal Code, should not be left alone to the ordinary channels of prosecution.
It appears to me that the proper balance between the fundamental right and social control is not achieved by vesting the power in executive officers in such wide terms as in section 57 of the Act.
Such a provision would lead to serious encroachment on the personal liberty of a citizen.
While, of course, abuse of power is not to be assumed to test its reasonableness, neither is a power given in wide terms and prima facie unreasonable, to be considered reasonable on an assumption of its proper use.
I am also unable to see that the fact of previous commission of any such offence without any limitation as to the period of time that way have elapsed, or the circumstances with reference to which such an ,offence may have been committed, is any relevant consideration to justify restriction on personal liberty by way of preventive action.
I am not aware that, there is any accepted theory of criminology which justifies the view that a person who has committed an offence has any inherent tendency to repeat a similar offence apart from environment, heredity or the like.
In a trial for the commission of an offence prior conviction is ruled out as inadmissible.
On an evaluation of the tendency to repeat a crime, I. do ' not see how it is permissible material except in cases where repeated previous commission of offences indicates a habit.
It has been said that the power under section 57 of the Act will be exercised only when the officer concerned has before him not merely the fact ' of previous conviction but other material on the basis of which he has reason to believe that the person con cerned is likely to engage himself in the commission of the offence.
But this ultimately is a question of subjective satisfaction.
It is not open to review by a Court It would be difficult to postulate how far 69 532 such a factor, as previous conviction, might have prejudiced a fair consideration of the other material before the officer.
To my mind the law which permits subjective satisfaction to prevail on such material must be considered unreasonable.
In my view, therefore., though the procedural portion of the law as provided in sections 59 and 61 of the Act may not be open to serious criticism, the substantive portion of the law relating to content of the power as provided under section 57 of the Act cannot be held to be in the nature of reasonable restriction of the fundamental right, for three reasons.
Clause (a) of section 57 of the Act not being confined to offences serious in their nature or with reference to the attendant circumstances within the Chapters specified therein, prevention of the repetition thereof cannot be considered a reasonable restriction.
It is in excess of what may be considered justifiable.
The previous commission of an offence ,of the category specified, without any reference to the time, environment and other factors has no rational relation to the criterion of "reasonableness in the interest of public".
The exercise of the power not being limited by the consideration of non availability of witnesses is also not rationally related to the criterion of "reasonableness in the interest of the public".
For all the above reasons I consider that section 57 of the Act is constitutionally invalid.
ORDER.
BY THE COURT In accordance with the Judgment of the majority this Petition is dismissed.
Petition dismissed.
| Section 57, of the Bombay Police Act, 1951 provides that if a person has been convicted of certain offences detailed therein, "the Commissioner, the District Magistrate or the Sub Divisional Magistrate specially empowered by the State Government in this behalf, if he has reason to believe that such person is likely again to engage himself in the commission of an offence similar to that for which he was convicted, may direct such person to remove himself outside the area within the local limits of his jurisdiction, by such route and within such time as the said officer may prescribe and not to enter or return to the area from which he was directed to remove himself".
Under the provisions of the said section an order of externment was passed against the petitioner who challenged the order on the grounds that section 57 contravened clauses (d) and (e) of Article 19(1) of the Constitution, that the provisions of the said section imposed unreasonable restrictions on the petitioner 's fundamental rights of free movement and residence and that the order passed against him was illegal inasmuch as it was based on vague allegations and inadmissible material.
Hold, per section R. DAS C.J., VENKATARAMA AYYAR, B. P. SINHA and JAFER IMAM JJ.
(JAGANNADHADAS J. dissenting) (1) Section 57 of the Bombay Police Act, 1951 is not uncon stitutional, because, it is an instance of the State taking preventive measures in the interests of the public and for safeguarding individual rights, by preventing a person, who has been proved to be a criminal from acting in a way which may be a repetition of his criminal propensities, and the restrictions that it imposes on the individual 's right to reside in and move freely in any part of India are reasonable within the meaning of clause (5) of article 19 of the Constitution.
(2) The restrictions cannot be said to be unreasonable on the ground that the person dealt with under section 57 of the Act may be 507 directed to remove himself altogether outside the limits of the State of Bombay as the Act extends to the whole of the State, because, unless the person makes himself so obnoxious as to render his presence in every part of the State a menace to public peace and safety, every District authority would not think of acting in the same way in respect of the same person.
(3)It cannot be laid down as a universal rule that unless there isa provision for an Advisory Board which could scrutinise the material on which the officers or authority contemplated by section 57 had taken action against a person, such a legislation would be unconstitutional.
(4) The provisions in sections 55, 56, 57 and 59 of the Act are not invalid on the ground that only the general nature of the material allegations against the person externed are required to be disclosed and that it would be difficult for him to get the matter judicially examined.
The provisions are intended to be used in special cases requiring special treatment, that is, cases which cannot be dealt with under the preventive sections of the Code of Criminal Procedure.
(5)The legality of the order of externment cannot be im pugned on the ground that there was not sufficient evidence to bring the charge home to the petitioner, because these are all matters which cannot be examined by this Court in an objective way, when the legislature has provided for the subjective satisfaction of the authorities or officers who have been entrusted with the duty of enforcing the special provisions of the Act.
Gurbachan Singh vs The State of Bombay ([1952] S.C.R. 737), followed.
Per JAGANNADHADAS J: Section 57 of the Act is constitu tionally invalid because: (1)Clause (a) of section 57 of the Act not being confined to off" serious in their nature or with reference to the attendant circumstances within the Chapters specified therein, prevention of the repetition thereof cannot be considered a reasonable restriction.
It is in excess of what may be considered justifiable.
(2)The previous commission of an offence of the category specified, without any reference to the time, environment and other factors has no rational relation to the criterion of "reasonableness in the interest of public".
(3)The exercise of the power not being limited by the consideration of non availability of witnesses is also not rationally related to the criterion of "reasonableness in the interest of the public".
Gurbachan Singh vs The State of Bombay ([1952] S.C.R. 737), distinguished.
|
Summarize this legal judgement text concisely | ons Nos. 439 & 440 of 1955.
Petitions under Article 32 of the Constitution of India for the enforcement of Fundamental Rights.
H. J. Umrigar and R. A. Govind, for the petitioner in Petition No. 439 of 1955.
J. B. Dadachanji, for the petitioner in Petition No. 440 of 1955, M. C. Setalvad, Attorney General of India, B. Sen and R. H. Dhebar, for the respondents.
May 8.
The judgment of section R. Das C. J. and Venkatarama Ayyar, B. P. Sinha and Jafer Imam JJ. was delivered by Sinha J. Jagannadhadas J. delivered a separate judgment, SINHA J.
These petitions under article 32 of the Constitution challenge the constitutionality of some of the provisions of the Bombay Police Act, XXII of 1951, (which hereinafter will, be referred to as "The Act"), with special reference to section 56, as also of the orders passed against them externing them under that section of the Act.
In Petition No. 439 of 1955 Babubhai Dullabhbhai Bhandari is the petitioner and the District Magistrate of Thana, the Deputy Superintendent of Police and Sub Divisional Police Officer, Bhivandi Division, Bhivandi, District Thana, and the State of Bombay are respondents 1, 2 and 3.
The petitioner is a citizen of India and carries on trade in grass at Bhilad, a railway station on the Western Railway.
On 21st January 1955 the Deputy Superintendent of Police and Sub Divisional Police Officer, Bhiwandi Division, served a notice under section 56 of the Act in the following terms: 535 No. Ext.
3/1 of 1955 Office of the S.D.P.O. Bhiwandi, Bhiwandi, dated 21 1 1955.
(I) I, Shri C. V. Bapat, Deputy Superintendent of Police and Sub Divisional office Bhiwandi Division, District Thana, do hereby issue a notice to you, Shri Bhagu Dubai Bhandari alias Bhagwanbhai Dulla Bhai Jadhav of Bhilad District Thana, that it is proposed that you should be removed outside the District of Thana and you should not enter or return to the said district for a period of two years from the date of the order to be made under section 56 of the Bombay Police Act, 1951 for the following reasons: (II) Evidence is forthcoming that your following activities have caused and are calculated to cause alarm, danger and harm to person and property in Bhilad and the surrounding areas: (III) You have been dealing in smuggled foreign liquor and maintained a veil of secrecy by criminal intimidation and physical violence to the villagers and other right thinking persons.
(2) Your activities have been in continuation of your similar activities for the.
last five years, given as under: (a) You criminally assaulted persons with the help of your associates and did violent acts in order to strike terror into the hearts of the villagers, so that they should not challenge you or your men.
(b) You have been criminally assaulting and intimidating Central Excise and Custom officials with the help of your gang, so as to stop them from looking into your anti national, anti social and illegal activities.
As a result of your unlawful and dangerous activities you are held in terrific awe by the Central Excise and Custom Officers and men and villagers in Bhilad area who are continuously labouring under grave apprehension of danger to their per son and property.
(c) You and your associates were and are making use of criminal intimidation against the villagers in order to prevent them from having recourse to legal means.
536 (III) That you and ' your associates are also understood to be in possession of unlicensed firearms which has been causing considerable alarm and spreading a feeling of insecurity of life and property in the mind of villagers from Bhilad and neighbouring villages and Central Excise and Customs employees.
(IV) The witnesses are not willing to come forward and to give evidence against you by reason of apprehension of danger and harm to their person and property.
(V) Now, I Shri C. V. Bapat, Deputy Superintendent of Police and Sub Divisional Police Officer, Bhiwandi Division, District Thana in exercise of the authority conferred upon me under section 59 of the Bombay Police Act, 1951 by the District Magistrate Thana under his number,MAG.
2/ EX dated 17 1 1955 do hereby direct you to appear before me at 11 a.m. on 27 1 1955 at Dahanu in the office of the Sub Divi sional Police Office Dahanu for tendering your explanation regarding the said allegation.
You are also entitled to appear before me by advocate for the purpose of tendering your explanation and examining witnesses, produced by you.
Signed and sealed this day of 21st Jan. 1955. Sd. . . . .
Deputy Superintendent of Police & Sub Divisional Police Officer, Bhiwandi.
To Shri Bhagu Dubal Bhandari @ Bhagwanbhai Dullabhai Jadhav of Bhilad, District Thana".
By that notice the petitioner was called upon to appear before the said police officer on the 27th January 1955 in order to enable the former to offer such explanation and examine such witnesses as he may be advised.
In pursuance of that notice the petitioner appeared, before the police officer aforesaid and the hearing of his case took place on different dates.
The petitioner claims to have examined seven "respectable persons" to testify on his behalf.
Ulti mately on the 11th July 1955 an order was passed by the District Magistrate of Thana externing the petitioner outside the Thana District.
The order of 537 externment is exhibit D to the petition and contains the recitals that after considering the evidence before him and the explanation offered by the petitioner the District Magistrate of Thana (the 1st respondent), was satisfied that the petitioner "engages in giving threats and assaulting Central Excise and Customs Officials men and residents of Bhilad and surrounding villages and indulges in illicit traffic of foreign liquor from Daman" and that in his opinion "witnessess are not willing to come forward to give evidence in public against the said Shri Bhagubhai Dul labhbhai Bhandari alias Bhagwanbhai Dullabhbhai Jadhav of Bhilad by reason of apprehension on their part as regards the safety of their person and property".
It is this order which is challenged as illegal and ultra vires and against which the petitioner has moved this Court for an appropriate writ, direction or order against the respondents " prohibiting them, their servants and agents from acting upon or taking any steps in enforcement, furtherance or pursuance of the said order and from interfering in any manner with the petitioner 's right to reside in Bhilad and carry on his business.
The petitioner had preferred an appeal to the Government against the said order of externment.
But the appeal was dismissed on the 9th September 1955.
Against the said order the petitioner moved the High Court of Judicature at Bombay under article 226 of the Constitution, but the said application was also dismissed in limine by the High Court by its order dated the 7th November 1955, The District Magistrate of Thana, the 1st respondent has sworn to the affidavit filed in this Court in answer to the petition.
He swears that he had passed the externment order complained against after perusing the police reports and going through the explanation offered by the petitioner and the statements of the witnesses produced by him and on hearing his advocate.
He further states in the affidavit that the general nature of the material allegations against the petitioner was given to him, that the material given to him was clear and by no means vague.
Only the names of the persons who had given the, 538 information against the petitioner were not disclosed to him inasmuch as those persons were not prepared to.
come out in the open and depose against him in public as witnesses.
He was satisfied that witnesses were unwilling to come forward to give evidence in public against the petitioner.
He also affirms that the petitioner 's movements and acts were not only causing alarm, danger or harm to personal property of the general public round about Bhilad, but also that his movements and acts were causing danger and alarm to public servants of the police force and the Central Excise who were doing very responsible work at Bhilad which is on the borderline of the Indian territory adjoining Daman area which is Portuguese territory.
He admits that the petitioner was discharged by 'the Judicial Magistrate, First Class, Umbergaon because the witnesses did not appear and depose against 'him for fear of the petitioner.
In Petition No. 440 of 1955, Kunwar Rameshwar Singh is the petitioner and the respondents are 1.
Shri W. K. Patil, Deputy Commissioner of Police, Crime Branch (I) C.I.D., Greater Bombay, 2.
The Commissioner of Police, Greater Bombay, and 3.
The State of Bombay.
The petitioner is a citizen of India and claims to be a "social worker" connected with several social organisations.
He alleges that his main social activity has been the improvement of the lot of prostitutes and singing girls in certain quarters 'of Bombay On the 2nd November, 1954 the petitioner was served with a notice under section 56 read with section 59 of the Act (exhibit A to the petition) setting out the allegations against him and calling upon him to ex plain those matters.
In pursuance of the said notice the petitioner appeared before the Superintendent of Police to show cause against the proposed action against him.
Ultimately on the 4th January, 1955 the Commissioner of Police, the second respondent, passed an order to the effect that the petitioner should remove himself from the limits of Greater Bombay 539 within seven days.
That order is marked exhibit H and is to the following effect.
" Order of Externment (Section 56 of the Bombay Police Act, 1951) Police Station: Nagpada No. 7/c/43/1955.
Whereas the Commissioner of Police, Greater Bombay, has directed by his order, dated the 13th August, 1954 and 11th December 1954, made under sub section (2) of section 10 of the Bombay Police Act, 1951 (Bombay Act XXII of 1951) that the powers, functions and duties under the said Act shall also be exercised by the Deputy Commissioners of Police, Greater Bombay.
And whereas evidence has been placed before me, Deputy Commissioner of Police, Crime Branch (1), against the person known as Kunwar Rameshwar Singh, to the following effect: I.
That since October, 1953 in the locality known as Falkland Road, Foras Road, Sukhalaji Street, Bapty Road, Kamathipura and the areas adjoining thereto in Greater Bombay his movements and acts are causing alarm and harm to the persons residing in, carrying 'on business in, or visiting the said locality in that: (i) He with assistance of his associates some of them being Sk.
Makbool Sk.
Hussain, Abdul Rahiman, Suleman alias Sapad, Ahmad Yusuf alias Ahmed Dalal, Shafi and others, extort Money from women residing in and carrying on business either as prostitutes or singing girls in the said locality on threats of assault and of causing bodily injury to them; (ii) That he with the assistance of the said associates assault or threaten with assault the aforesaid women who do not comply with his demands for money; (iii) That in order to compel the aforesaid women to pay him the money demanded by him he also posts his associates at or near the places of business of the aforesaid women and prevent customers from entering the rooms of, such women; 70 540 (iv) That he with the assistance of his associates extort money from shopkeepers, hotel keepers, merchants and hawkers carrying on business in the said locality and from rent collectors of buildings occupied by the aforesaid prostitutes and singing girls by assaulting them or threatening them with assault and dislocation of business; (v) That he causes damage to the property of the said hotelkeepers and hawkers of the said locality who do not pay him money demanded by him; (vi) That he accosts persons visiting the rooms of singing girls in the said locality for the purpose of entertainment and demand money from them under threats of assault and of preventing them from visiting the said locality; (vii) That he has committed several acts of the nature mentioned above.
That witnesses to the above incidents are not willing to come forward to give evidence in public against him as they apprehend that they will be assaulted by him and/or by his associates if they do so.
And whereas I have heard the said person and considered the explanation tendered by him and also the evidence given by the witnesses produced by him and have heard his counsel.
And whereas after considering all the evidence and explanation detailed above, I am satisfied that: The Movements and acts of Kunwar Rameshwar Singh since October, 1953, are causing alarm and harm to the persons residing in carrying on business in or Visitin the locality known as Falkland Road, Foras Road Sukhalaji Street, Bapty Road, Kamathipura and the areas adjoining thereto in Greater Bombay and that he indulges in activities mentioned above.
And whereas in my opinion witnesses are unwilling to come forward to give evidence in public against the said person by reason of apprehension on their part as regards the safety of their persons; Now, therefore, in exercise of the powers vested in me under section 56 of the said Act, 1, Shri W. K. Patil, Deputy Commissioner of Police, Crime Branch 541 (1) C.I.D., Greater Bombay himself hereby direct that the said Kunwar Rameshwar Singh shall remove outside the limits of Greater Bombay by Central Rly.
(route) within seven days from the date of service of this order and I further direct that he shall not enter the said area of Greater Bombay for a period of two years from the date of this order without a permission in writing from the Commissioner of Police Greater Bombay, or the Government of Bombay.
W. K. Patil, Dy.
Commissioner of Police, Crime Branch (I) C.I.D. Greater Bombay".
The order quoted above is a self contained one and discloses the nature of the allegations against him which he bad been called upon to explain.
The petitioner preferred an appeal to the third respondent, the State of Bombay.
But his appeal was dismissed on the 17th January 1955.
The petitioner challenged the validity of the said order passed by the respondents by a petition under article 226 of the Constitution to the Bombay High Court, but it was dismissed on the 14th March 1955 after hearing.
The judgment of the High Court is Exhibit D.
The learned Judge of the Bombay High Court who dealt with the petition has set out briefly the main allegations of the petitioner and the affidavit in answer to the petition sworn to by the 1st respondent here.
The learned Judge observed in the course of his judgment that in view of the averments in the petition and those in the affidavit in reply it was impossible for him to hold that the Deputy Commissioner of Police knew that witnesses were willing to give evidence against the petitioner.
The petitioner went up on Letters Patent Appeal and a Division Bench consisting of the Chief Justice and another Judge of the Bombay High Court dismissed the appeal holding that once the opinion has been formed by the authority that witnesses were unwilling to give evidence in public against the petitioner, the court could not go behind that opinion.
They also negatived the plea of want of bona fides in the 1st respondent who had initiated the proceedings.
542 The petitioner removed himself outside the limits of Greater Bombay.
Having come to know that a warrant of arrest had been issued Against him in a certain pending case before the Presidency Magistrate, Fourth Court, at Girgaum, Bombay, on the 6th April 1955, the petitioner entered Greater Bombay to attend court but he was arrested under the Act for committing a breach of the externment order.
He was prosecuted before the Presidency Magistrate, Sixth Court at Mazgaon, Bombay, for an offence under section 142 of the Act.
He was convicted by the Magistrate and sentenced to nine months rigorous imprisonment by a judgment dated the 8th September 1955.
The Magistrate 's judgment is Exhibit to the petition.
The learned Magistrate overruled the petitioner 's contention that the order of externment passed against him was illegal, relying chiefly upon the judgments of the High Court referred to above, upholding the constitutionality of that order.
As regards his defence that he had entered Greater Bombay in obedience to the warrant issued against him, the learned Magistrate observed that as a matter of fact, according to the statement of the petitioner 's counsel before him he had taken that step "to test the validity of the order".
Secondly, the learned Magistrate has rightly pointed out that the petitioner should have obtained the previous permission of the Police Commissioner before returning to Bombay, as otherwise the order of externment would be rendered nugatory.
The learned Magistrate also observed in the course of his judgment that no allegations of mala fides had been made against the police officers who bad initiated the proceedings against the petitioner.
The petitioner went up in appeal to the High Court of Bombay which by its judgment dated the 5th October 1955 upheld the conviction and the sentence.
The judgment of the High Court is Exhibit G to the petition.
A Division Bench of the Bombay High Court repelled the contention on behalf of the appellant that the order of externment was invalid, relying chiefly upon the previous judgment of that very court upholding the constitutionality of the very order 543 impugned.
Another matter referred to in the judgment of the High Court is rather significant.
On behalf of the appellant reliance had been placed upon a letter alleged to have been sent to the petitioner by the Secretary to the Chief Minister granting permission to him to return to Bombay in order to see the Home Secretary.
It was found on enquiry by the learned Government Pleader who intimated to the court that the alleged letter had not been signed by the Secretary to the Chief Minister and that no such letter had actually been sent to him.
On that statement being made, the petitioner 's counsel did not press his contention that his return was after permission.
The petitioner moved this Court for special leave to appeal against the said judgment of the High Court in Petition No. 601 of 1955.
One of the grounds in the petition was that the High Court should have held that the externment order was illegal and that therefore the petitioner 's entry was lawful.
A Constitution Bench of this Court by its order dated the 21st November 1955 dismissed the petition for special leave to appeal.
This completes the statement of the case made on behalf of the petitioner.
In answer to this petition the first respondent has sworn to the affidavit filed in this Court.
It is necessary to state in some detail the facts stated in this affidavit which furnish the background to the whole case against the petitioner.
The petitioner is said to be a native of Balrampur, District Gonda, Uttar Pradesh.
After passing his school examination in 1940, he joined the then Royal Indian Navy in 1942.
In the year 1946 while he was attached to section section Talwar in Bombay, be was "released from service".
In 1947 he joined the B. B. & C. 1.
Railway as a clerk and was removed from his post in July 1947 for having made baseless allegations against his superior officer.
In 1949 he made an attempt to enter the police force of Greater Bombay, but that failed as he was found to be unreliable.
Subsequently, in August 1950 he joined the State Transport Department as a clerk but had again to be removed from that post in April 1951.
Later on, the petitioner obtained accommodation in 544 Bombay on a false representation that he was a refugee from Pakistan.
He was prosecuted and convicted and sentenced to pay a fine of Rs. 30 or three months rigorous imprisonment in default.
His appeal from that order of conviction and sentence to the High Court of Bombay was dismissed by a Division Bench in September 1954.
On a similar false repre sentation he had obtained from the Custodian of Evacuee Property two shops in Bombay.
Necessary proceedings had to be taken against him for evicting him from those shops.
After his removal from Government jobs as aforesaid, the petitioner "came forward" as a social worker directing his activities mainly to "the redlight district" in certain quarters of Greater Bombay inhabited by over 10,000 public women.
Along with his associates he started a norent campaign and resorted to violence with the help of so called volunteers who were themselves bad characters, externees, drunkards and persons with previous convictions.
With the help of associates like those he moved in the "redlight district" and realised money from his victims by threat and intimidation.
Thus by all questionable means the petitioner started extorting moneys by harassing the inmates of that district and those who frequented those quarters.
The rest of the long affidavit running into 29 paragraphs is devoted to denying the allegations made by the petitioner that he had been a victim of police combination against him or that the procedure laid down by the law had not been followed or that the petitioner had not a fair and full opportunity of explaining his case to the authorities.
The affidavit further asserts that witnesses who had given their statements to the police against the petitioner were not willing to come forward openly to depose against him and some of those witnesses who did turn up were prevailed upon by the petitioner to change their original statements made during the preliminary inquiries.
On those averments it was submitted by the 1st respondent that the proceedings against him were regular and in accordance with the provisions of 545 the Act and that there was no merit in his contentions.
These two petitions were heard along with Petition No. 272 of 1955 which is being disposed of by a separate judgment.
In that case the order impugned had been passed under section 57 of the Act.
Sections 56 to 59 of the Act are closely connected.
The common arguments addressed to us by Shri Purshotham challenging the validity of sections 56 to 59 have been dealt with in that judgment and need not be repeated here.
It is only necessary to deal with the provisions of the section impugned in these two cases, namely, section 56 of the Act, which is in these terms: "Whenever it shall appear in Greater 'Bombay and other areas for which a Commissioner has been appointed under section 7 to the Commissioner and in other area or areas to which the State Government may, by notification in the Official Gazette, extend the provisions of this section to the District Magistrate, or the Sub Divisional Magistrate specially empowered by the State Government in that behalf (a) that the movements or acts of any person are causing or calculated to cause alarm, danger or harm to person or property, or (b) that there are reasonable grounds for believing that such person is engaged or is about to be engaged in the commission of an.
Offence involving force or violence or an offence punishable under Chapter XII, XVI or XVII of the Indian Penal Code, or in the abetment of any such offence, and when in the opinion of such officer witnesses are not willing to come forward to give evidence in public against such person by reason of apprehension on their parts as regards the safety of their person or property, or (c) that an outbreak of epidemic disease is likely to result from the continued residence of an immigrant, the said officer may, by an order in writing duly served on him or by beat of drum or otherwise as he thinks fit., direct such person or immigrant so to conduct himself as shall seem necessary in order to prevent violence and alarm or the, outbreak or spread of such disease or to remove himself outside the area Within the local limits of his jurisdiction by 546 such route and within such time as the said officer may prescribe and not to enter or return to the said area from which he was directed to remove himself".
In order to attract the operation of the section quoted above with special, reference to the portions relevant to these cases, it is necessary (1) that the Commissioner, the District Magistrate or the Sub Divisional Magistrate specially empowered by the State Government in that behalf, as the case may be, should be satisfied that the movements or acts of any person are causing or calculated to, cause alarm, danger or harm to person or property, or that there are reasonable grounds for believing that such person is engaged or is about to be engaged in the commission of an offence involving force of violence or an offence punishable under Chapter XII, XVI or XVII, Indian Penal Code, or in the abetment of any such offence, and (2) that in the opinion of such officer witnesses are not willing to come forward to give evidence in public against such person by reason of apprehension on their parts as regards the safety of their person or property.
When the officer concerned is satisfied about these two essential matters, he may direct such person to remove himself outside the local limits of his jurisdiction and not to return to the said area for a period not exceeding two years as laid down in section 58.
But before passing such orders the person proceeded against under section 56 has to be given an opportunity of explaining matters against him by adducing such evidence as he may tender after he has been informed in writing as to the "general nature of the material allegations against him".
Such a person is entitled to appear before the officer by an advocate or attorney for the purpose of tendering his explanation.
and evidence.
It has not been contended on behalf of the petitioners that they had not been given the opportunity contemplated by section 59.
But grievance was sought to be made of the fact that particulars of the evidence against the petitioners and of their alleged activities have not been given to them.
That argument has 547 been dealt with in the judgment in the other case.
It is necessary therefore to deal only with the particular arguments advanced on behalf of each petitioner peculiar to his case.
In Petition No. 439 of 1955, it was said that this Court had laid down in the case of Gurbachan Singh vs State of Bombay(1) as follows: "The law is certainly an extraordinary, one and has been made only to meet those exceptional cases where no witnesses for fear of violence to their person or property are willing to depose publicly against certain bad characters whose presence in certain areas constitutes a menace to the safety of the public residing therein".
The words "no witnesses" have been emphasized as supporting the argument that unless all the witnesses before the police are unwilling to give evidence in open court the provisions of section 56 cannot be taken recourse to.
In our opinion, it is reading too much into the observations of this Court quoted above, made by Mukherjea, J. (as he then was).
The learned Judge did not mean to lay down, and we do not understand him as having laid down, that unless each and every witness is unwilling to give evidence in open court, the provisions of section 56 are not available to the police.
The words of section 56 quoted above do not lend themselves to that extreme contention.
If such an extreme interpretation were to be put on that part of section 56, it is not difficult to imagine a situation where it will become almost impossible to apply that section to any case.
It was next contended on behalf of the petitioner in this case that the section contemplates witnesses other than members of the police force and employees and officers of the Customs Department.
It is said that it is the duty of the police force as of the employees of the Customs Department to brave all danger and to come out in the open even against desperate criminals to give evidence against them in court and to subject themselves to cross examination.
That is a counsel of perfection which every member (1) 71 548 of the police force or every employee of the Customs Department may not be able to act up to.
Furthermore, the terms of the section do not justify any such restricted meaning being given to the word "witness".
Hence, in our opinion, there is no justification for the contention that members of the police force and employees and officers of the Customs Department must always come in the open and give evidence against criminals or potential criminals.
If the officer concerned is satisfied that witnesses of whatever description they may be, are not willing to come out in the open, one of the essential conditions of the application of section 56 is fulfilled and it is no more necessary for them to stop to consider as to which class of persons those witnesses may come from.
In Petition No. 440 of 1955 the learned counsel for the petitioner had a more uphill task in view of the fact that this very order impugned bad been examined in the criminal prosecution against the petitioner by the Presidency Magistrate and by the High Court on appeal and the petition for special leave to appeal to this Court had been refused.
But it was argued on behalf of the petitioner that section 56 itself wag invalid as contravening the provisions of article 19 of the Constitution an argument which has already been dealt with by this Court in Gurbachan Singh vs State of Bombay(1) referred to above.
In that case, Mukherjea, J. (as he then was) delivered the judgment of the court after examining the constitutionality of section 27(1) of the City of Bombay Police Act, (Bombay Act IV of 1902).
The operative words of that section are almost exactly the same as those of section 56 of the Act.
It is not therefore necessary to re examine the constitutionality of those very provisions in this case.
It is enough to point out that no attempt was made in this Court to ;bake the authority of that decision.
Shri Dadachanji, who appeared on behalf of the petitioner in this case faintly suggested that the petitioner had been proceeded against under the penal sec (1) ; 549 tion of the Act notwithstanding the fact that he had entered Greater Bombay in order to look after the case pending against him in which a warrant of arrest had been issued.
But that is a closed chapter so far as the courts including this Court also are concerned inasmuch as his conviction stands conformed as a result of the refusal of this Court to grant him special leave to appeal from the, judgment of the Bombay High Court.
He further contended that his conviction for his ' having entered Greater Bombay itself is an indication of the unreasonableness of the restriction and of the law under which the order of externment had been passed against him.
But if the petitioner had only taken the course indicated by the law, namely, of obtaining the previous permission of the prescribed authority, he could have avoided the prosecution and the conviction.
It must therefore be held that there is no merit in this contention also.
For the reasons aforesaid it must be held that section 56 of the Act is not unconstitutional and that the orders passed against the petitioners are not invalid.
These applications must stand dismissed.
JAGANNADHADAS J.
In view of the decision of this Court in Gurbachan Singh vs The State of Bombay(1), I agree that these petitions should be dismissed.
But I think it right to add that if the matter were res integra I should have felt difficulty in upholding the validity of section 56(b) of the Bombay Police Act, 1951 (Bombay Act XXII of 1951) in so far as it did not demarcate the application thereof to the more serious classes of offences falling within the specified Chapters, serious either because of the nature of the offence contemplated or the circumstances under which it is to be committed and so forth.
I should also have felt difficulty in holding a provision to be reasonable which clothes the executive officers with an authority to extern a person for so long a (1) ; 550 period as two years.
it has been said that there is a power of cancellation at any time vested in the officer concerned.
Even so, I should have thought that the vesting of a power to extern, a person out of his home for so long a period without the obligation to review the order at some stated periodical intervals, say once in three months or six months, is prima facie unreasonable.
Externment might appear on the surface not to be as serious an interference with personal liberty as detention.
But in actual practice it may be productive of more serious injury to the person concerned or the rest of his family if he is the earning member.
An externed person is virtually thrown on the streets of another place where be has got to seek his livelihood afresh.
He has to start in a new society with the black mark of externment against him and may be driven thereby to more criminality.
On the other hand, in the case of a person under detention, the State normally takes or is bound to take care of him, and in appropriate cases provides also for his family.
In view, however, of the previous decision of this Court which is binding on me, I am prepared to accept the validity of section 56 of the Bombay Police Act, 1951, and of the orders of externment passed thereunder in these two cases.
Petition dismissed.
| Section 56 of the Bombay Police Act, 1951, is not unconstitutional and does not contravene the provisions of article 19 of the Constitution.
Gurbachan Singh vs State of Bombay ( ; , followed.
In order to attract the operation of the section the Officer concerned should be satisfied that the witnesses are not willing to come forward to give evidence in public, but it is not necessary to show that all the witnesses are unwilling to give evidence.
The terms of the section do not justify any restricted meaning being given to the word "witnesses" and it is applicable to members of the police force and employees and officers of the Customs Department also.
Gurbachan Singh vs State of Bombay ( ; , explained.
Under the provisions of section 56 of the Bombay Police Act, 1951, an order of externment was passed against the petitioner by which he was directed to remove himself outside the limits of Greater Bombay and not to enter the said area for a period of two years without the prescribed permission; and subsequently he entered Greater Bombay in order to attend Court in a case pending against him in which a warrant of arrest had been issued.
He was convicted for committing the breach of the externment order and he contended that his conviction was in itself an indication of the unreasonableness of the restriction.
Held, that the restrictions cannot be said to be unreasonable, as the petitioner could have avoided the prosecution.
and the conviction by obtaining the previous permission of the prescribed authority.
Per JAGANNADHADAS J.
If the matter were res integra should have felt difficulty in upholding the validity of section 56(b) of 534 the Bombay Police Act, 1951, in so far as it did not demarcate the application thereof to the more serious classes of offences falling within the specified Chapters.
I.should also have felt difficulty in holding a provision to be reasonable which clothes the executive officers with an authority to extern a person for so long a period as two years.
|
Summarize this legal judgement text concisely | Appeal No. 81 of 1954.
Appeal from the judgment and order dated the 10th March 1953 of the Bombay High Court in Income tax Reference No. 35 of 1952.
B. J. Kolah and I. N. Shroff for the appellant.
G. N. Joshi, Porus A. Mehta and R. H. Dhebar for the respondent.
May 10.
The following Judgments were delivered.
BHAGWATI J. Two questions were referred by the Income tax Appellate Tribunal to the High Court of Bombay under section 66(1) of the Indian Income tax Act.
(1) Whether there is any material to justify the assessment of Rs. 30,000 (Rupees thirty thousand) from out of the sum of Rs. 61,000 (Rupees sixtyone thousand) (for Income tax and Excess Profits Tax and Business Profits Tax purposes) representing the value of high denomination notes which were encashed on the eighteenth day of January one thousand nine hundred and forty six, and (2) Whether in any event by reason of the orders of the Revenue Authorities not having found *at the alleged item was from alleged undisclosed business profits the assessment of Rs. 30,000 (Rupees thirty thousand) is in law justified for Excess Profits Tax and Business Profits Tax purposes? The High Court answered the first question in the affirmative but refused to answer the second question, being of the opinion that even though it had asked the Tribunal to refer that question under section 66 (2) of the Act, it had no jurisdiction to do so inasmuch as the appellants had not asked the Tribunal to refer 629 the second question and, therefore, no question arose of the Tribunal refusing to raise that question or to submit it for the decision of the High Court.
The appellants area partnership firm doing business in Mill Stores at Ahmedabad.
Their head office is in Ahmedabad and their branch office is in Bombay.
The Governor General on 12th January 1946 promulgated the High Denomination Bank Notes (Demonetisation) Ordinance, 1946 and High Denomination Bank Notes ceased to be legal tender on the expiry of 12th day of January 1946.
Pursuant to clause 6 of the Ordinance the appellants on 18th January 1946 encashed high denomination notes of Rs. 1,000 each of the face value of Rs. 6 1,000.
This was done in the calendar year 1946 being the account year corresponding with assessment year 1947 48.
During the assessment proceedings for the year 1947 48 the Income tax Officer called upon the appellant to prove from whom and when the said high denomination notes of Rs. 61,000 were received by the appellants and also the bona fides of the previous owners thereof.
After examining the entries in the books of account of the appellants and the position of the Cash Balances on various dates from 20th December 1945 to 18th January 1946 and the nature and extent of the receipts and payments during the relevant period, the Income tax Officer came to the conclusion that in order to sustain the contention of the appellants he would have to presume that there were 18 high denomination notes of Rs. 1,000 each in the Cash Balance on 1st January 1946 and that all cash receipts after 1st January 1946 and before 13th January 1946 were received in currency notes of Rs. 1,000 each, a presumption which he found impossible to make in the absence of any evidence.
He, therefore, added the sum of Rs. 61,000 to the assessable income of the appellants from undisclosed sources.
On appeal to the Appellate Assistant Commissioner the appellants produced before him affidavits of three persons to show that the appellants had received Rs. 20,000 in 1,000 rupees currency notes on 28th 630 December 1945, Rs. 15,000 in 1,000 rupees currency notes on 6th January 1946 and Rs. 8,500 in 1,000 rupees currency notes (making Rs. 8,000) on 8th January 1946, thus aggregating to Rs. 43,500 during the relevant period.
The Appellate, Assistant Commissioner did not accept the statements contained in the said affidavits and dismissed the appeal and confirmed the order of the Income tax Officer.
An appeal was taken by the appellants before the Income tax Appellate Tribunal.
The Tribunal after taking into consideration all the materials which bad been placed before the Appellate Assistant Commissioner, including the said affidavits, was of the opinion that if it was to accept the appellants ' contention, it would mean that practically every payment above Rs. 1,000 was received by the appellants in high denomination notes, which was almost impossible.
The Tribunal could not say that the appellants bad no high denomination notes with them.
It accepted the books of account of the appellants but thought that the cash balance on 18th January 1946 could not have sixtyone high denomination notes.
It came to the conclusion that the appellants appeared to have put in high denomination notes in the cash balance and taken the other notes away.
It accepted the appellants ' explanation only in regard to 31 notes and directed that the appellants ' assessment for the year under reference be reduced by that amount and dismissed the rest of the appeal.
The appellants applied to the Tribunal for stating a case and referring the first question of law to the High Court for its opinion under section 66(1) of the Act.
The Tribunal rejected the said application holding that no question of law arose from its order.
The appellants thereupon applied to the High Court under section 66(2) of the Act for an order directing the Tribunal to state a case and refer the questions set out in the application.
The High Court directed the Tribunal to state a case and refer the two questions of law set out hereinabove to it for its decision under section 66(2) of the Act.
In stating the case and referring the said questions of law to the High 631 Court, the Tribunal pointed out that the second question was not urged before the Tribunal at any stage and hence it was not dealt with by it in its original order.
The reference was heard by the High Court and the High Court answered the first referred question in the affirmative, but did not answer the second referred question.
The High Court held that there were materials before the Tribunal to hold that the sum of Rs. 30,000 represented the income of the appellants from undisclosed sources and that the finding of the Tribunal was a finding of fact based on materials before it and even if it was an inference drawn by the Tribunal, the inference was based on the facts and materials before the Tribunal.
The High Court observed that it was impossible to say that the inference drawn by the Tribunal from the circumstances was an unreasonable inference or an arbitrary and capricious inference or an inference which no judicial tribunal could ever draw.
It, therefore, answered the first referred question in the affirmative.
As regards the second referred question, the High Court held that question was not raised by the appellants in their application for reference under section 66(1) of the Act and, therefore, it bad no jurisdiction to ask the Tribunal to state a case on a particular question of law, where the appellants themselves had never asked the Tribunal to refer such a question to the High Court and that even though it had directed the Tribunal under section 66(2) to refer the said question, as it had no jurisdiction to ask the Tribunal to refer the said question, it was not open to it to answer the second question which had been raised by the Tribunal at its instance and refused to answer it.
On a petition made by the appellants for leave to appeal to this court, the High Court granted a certificate that this was a fit case for appeal to this court and hence this appeal.
It may be mentioned at the outset that the assessment of the appellants by the Income tax Officer was under section 23(3) and section 26 A of the Act.
The 632 books of account of the appellants were accepted by the Income tax Officer and the only scrutiny made by the Income tax Officer was whether at the relevant date, i.e. on 12th January 1946, the appellants had in their cash 61 notes of high denomination of Rs. 1,000 each.
The cash book entries from 20th December 1945 up to 18th January 1946 were put in before the Income tax Officer and they showed that on 28th December 1945 Rs. 20,000 were received from the Anand Textiles, and there was an opening balance of Rs. 18,395 on 2nd January 1946.
Rs. 15,000 were received by the appellants on 7th January 1946 from the Sushico Textiles and Rs. 8,500 were received by them on 8th January 1946 from Manihen, widow of Shah Maneklal Nihalchand.
Various other sums were also received by the appellants from 2nd January 1946 up to and inclusive of 1 1 th January 1946, which were either multiples of Rs. 1,000 or were over Rs. 1,000 and were thus capable of having been paid to the appellants in high denomination notes of Rs. 1,000.
There was a cash balance of Rs. 69,891 2 6 with the appellants on 12th January 1946, when the High Denomination Bank Notes (Demonetisation) Ordinance 1946 was promulgated and it was the case of the appellants that they had then in their custody and possession 61 high denomination notes of Rs. 13000, which they encashed through the Eastern Bank, on 18th January 1946.
The appellants further sought to support their contention by procuring before the Appellate Assistant Commissioner the affidavits of Kuthpady Shyama Shetty, General Manager of Messrs Shree Anand Textiles, in regard to payment to the appellant is of a sum of Rs. 20,000 in Rs. 1,000 currency notes on 28th December 1945, Govindprasad Ramjivan Nivetia, proprietor of Messrs Shusiko Textiles, in regard to payment to the appellants of a sum of Rs. 15,000 in Rs. 1,000 currency notes on 6th January 1946 and Bai Maniben, widow of Shah Maneklal Nihalchand, in regard to payment to the appellants of a sum of Rs. 8,500 (Rs. 8,000 thereout being in Rs. 1,000 currency notes) on 8th January 1946.
The appellants were not in a position to give further 633 particulars of Rs. 1,000 currency notes received by them during the relevant period, as they were not in the habit of noting these particulars in their cash book and therefore relied upon the position as it could be spelt out of the entries in their cash book coupled with these affidavits in order to show that on 12th January 1946 they had in their cash balance of Rs. 69,891 2 6, the 61 high denomination currency notes of Rs. 1,000 each, which they encashed on 18th January 1946 through the Eastern Bank.
Both the Income tax Officer and the Appellate Assistant Commissioner discounted this suggestion of the appellants by holding that it was impossible that the appellants had on hand on 12th January 1946, the 61 high denomination currency notes of Rs. 1,000 each, included in their cash balance of Rs. 69,891 2 6.
The calculations.
, which they made involved taking into account all payments received by the appellants from and after 2nd January 1946, which were either multiples of Rs. 1,000 or were over Rs. 1,000.
There was a cash balance of Rs. 18,395 6 6 on band on 2nd January 1946, which could have accounted for 18 such notes.
The appellants received thereafter as shown in their cash book several sums of monies aggregating to over Rs. 45,000 in multiples of Rs. 1,000 or sums over Rs. 1,000, which could account for 45 other notes of that high denomination, thus making up 63 currency notes of the high denomination of Rs. 1,000 and these 61 currency notes of Rs. 1,000 each, which the appellants encashed on 18th January 1946 could as well have been in their custody on 12th January 1946.
This was, however, considered impossible by both the Income tax Officer and the Appellate Assistant Commissioner as they could not consider it within the bounds of possibility that each and every .payment received by the appellants after 2nd January 1946 in multiples of Rs. 1,000 or over Rs. 1,000 was received by the appellants in high denomination notes of Rs. 1,000 each. ' It was by reason of their visualisation of such an impossibility that they negatived the appellants ' contention.
It has to be noted, however, that beyond there 82 634 calculations of figures, no further scrutiny was made by the Income tax Officer or the Appellate Assistant Commissioner of the entries in the cash book of the appellants.
The cash book of the appellants was raccepted and the entries therein were not challenged.
No further documents or vouchers in relation to those entries were called for, nor was the presence of the deponents of the three affidavits considered necessary by either party.
The appellants took it that the affidavits of these parties were enough and neither the Appellate Assistant Commissioner, nor the Incometax Officer, who was present at the hearing of the appeal before the Appellate Assistant Commissioner, considered it necessary to call for them in order to cross examine them with reference to the statements made by them in their a affidavits.
Under these circumstances it was not open to the Revenue to challenge the correctness of the cash book entries or the statements made by those deponents in their affidavits.
This being the position, the state of affairs, as it ob tained on 12th January 1946, had got to be appreciated, having, regard to those entries in the cash books and the affidavits filed before the Appellate Assistant Commissioner, taking them at their face value.
The entries in the cash books disclosed that, taking the number of high denomination notes at 18 on 2nd January 1946, there came in the custody or possession of the appellants after 2nd January 1946 and up to 12th January 1946, 49 further notes of that high denomination, making 67 such notes in the aggregate, out of which 61 such notes could be encashed by the appellants on 18th January 1946 through the Eastern Bank.
A mere calculation of the nature indulged in by the Income tax Officer or the Appellate Assistant Commissioner was not enough, without any further scrutiny, to dislodge the position taken up by the appellants, supported as it was, by the entries in the cash book and the affidavits put in by the appellants before the Appellate Assistant Commissioner.
The Tribunal also fell into the same error.
It could 635 not negative the possibility of the appellant being in possession of a substantial number of these high deno mination currency notes.
It, however, considered that it was impossible for the appellants to have bad 61 such notes in the cash balance in their hands on 12th January 1946 and then it applied a rule of the thumb treating 31 out of such 61 notes as within the bounds of possibility, excluding 30 such notes as not covered by the explanation of the appellants.
This was pure surmise and had no basis in the evidence, which was on the record of the proceedings.
The High Court treated this finding of the Tribunal as a mere finding of fact.
The position in regard to all such findings of fact, as to whether they can be questioned in appeal, is thus laid down by the House of Lords in Cameron vs Prendergast (Inspector of Taxes) (1): "Inferences from facts stated by the Commissioners are matters of law and can be questioned on appeal.
The same remark is true as to the construction of documents.
If the Commissioners state the evidence and hold upon that evidence that certain results follow, it is open to the Court to differ from such a holding".
To the same effect are the observations of the House of Lords in Bomford vs Osborne (H. M. Inspector of Taxes) (2): "No doubt there are many cases in which Commissioners, having had proved or admitted before them a series of facts, may deduce therefrom further conclusions which are themselves conclusions of pure fact.
But in such cases the determination in point of law is that the facts proved or admitted provide evidence to support the Commissioners ' conclusions".
The latest pronouncement of the House of Lords on this question is to be found in Edwards (Inspector of Taxes) vs Bairstow and Another(3).
Viscount Simonds observed at page 586: "For it is universally conceded that, though it is (1) [1940]8I.T.R.(Suppl.)75,81.
(2) [1942] 10 I.T.R. (Suppl.) 27, 34.
(3) 636 a pure finding of fact, it may be set aside on grounds which have been stated in various ways but are, I think, fairly summarised by saying that the court should take that course if it appears that the Commissioners have acted without any evidence or upon a view of the facts which could not reasonably be entertained".
and Lord Radcliffe expressed himself as under at page 592: "If the case contains anything ex facie which is bad law and which bears upon the determination, it is, obviously erroneous in point of law.
But, without any such misconception appearing ex facie, it may be that the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal.
In those circumstances, too, the court must intervene".
It follows, therefore, that facts proved or admitted may provide evidence to support further conclusions to be deduced from them, which conclusions may themselves be conclusions of fact and such inferences from facts proved or admitted could be matters of law.
The court would be entitled to intervene if it appears that the fact finding authority has acted without any evidence or upon a view of the facts, which could not reasonably be entertained or the facts found are such that no person acting judicially and properly instructed as to the relevant law would have come to the determination in question.
The High Court recognised this position in effect but went wrong in applying the true principles of interference with such findings of fact to the present case.
The attempt which was made by the High Court to probe into the mind of the Tribunal by trying to discard the affidavit of Govindprasad Ramjivan Nivetia in regard to the payment of Rs. 15,000 to the appellants in 15 currency notes of Rs. 1,000 each on 6th January 1946 and thus reducing the aggre gate sum of Rs. 43,500 to Rs. 28,500 and justifying the figure of Rs. 31,000 arrived at by the Tribunal was really far fetched and contrary to the terms of 637 the tribunal ' s order itself,the Tribunal not having given any inkling, whatever, of what was at the back of its mind when it fixed upon the figure Rs. 31,000.
Really speaking the Tribunal had not indicated upon what material it held that Rs. 30,000 should be treated as secret profit or profits from undisclosed sources and the order passed by it was bad.
The appellants had furnished a reasonable explanation for the possession of the high denomination notes of the face value of Rs. 61,000 and there was no justification for having accepted it in part and discarded it in relation to a sum of Rs. 30,000.
The case was analogous to the one before the Patna High Court in Chunilal Ticamchand Coal Co. Ltd. vs Commissioner of Income tax, Bihar and Orissa(1) and should have been similarly decided in favour of the appellants.
For the reasons indicated above, we are of the opinion that the High Court was in error in answering the first referred question in the affirmative.
It ought to have answered it in the negative and held that there were no materials to justify the assessment of Rs. 30,000 from out of the sum of Rs. 61,000, for Income tax and Excess Profits Tax and Business Profit Tax purposes representing the value of the high denomination notes which were encashed on 18th January 1946.
In view of the above it is not necessary for us to go into the question whether the High Court ought to have answered the second referred question also.
The answer to the first referred question being in the ' negative, the very basis for Excess Profits Tax and Business Profits Tax disappears and the second referred question becomes purely academical.
The result, therefore, is that the appeal is allowed and the first referred question is answered in the negative.
The appellants will have their costs here as well as in the High Court.
VIMNKATARAMA AYYAR J.
I agree to the order just proposed; but I prefer to rest my decision on the (1) 638 ground that the finding of the Tribunal that high denomination notes of the value of Rs. 30,000 represented the concealed* profits of the appellant is not supported by any evidence, and is, in consequence, erroneous in point of law and liable to be set aside.
The evidence on record has been exhaustively reviewed in the judgment just delivered, and there is no need to traverse the same ground again.
To put the matter in anut shell, the accounts of the appellant have been accepted by the Tribunal as genuine, and it is impossible to say, having regard to the cash balance as shown therein, that the notes in question could not have been included therein.
The Tribunal observes that it is unlikely that so many high denomination notes would have been held as part of the cash on hand for such a large number of days.
That, no doubt, is highly suspicious; but the decision of the Tribunal must rest not on suspicion but on legal testimony.
For the respondent, Mr. Joshi con.
tended that the cash balance shown in the books could not be accepted as true, because the appellant had ample time to rewrite the accounts, as the Ordinance was issued on 12th January 1946 and the year of account of the assessee was the Calendar year.
Whether the accounts are genuine or not is a pure question of fact, and a finding on a question of fact is as much binding on the Revenue as on the subject.
| The appellants, a partnership firm assessed under sections 23(3) and 26 A of the Income tax Act, were called upon by the Income tax Officer during the assessment year 1947 48 to explain how and when they came to possess 61 thonsand rupee currency notes which they had encashed on the 18th January, 1946, after the promulgation of the High Denomination Bank Notes (Demonetisation) Ordinance of 1946, under which such notes ceased to be legal tender on the expiry of the 12th of January, 1946.
The assessees produced their cash book entries from the 20th December, 1946, to the 18th January, 1946, which were accepted as correct by the Income tax Officer, who, however, made no further scrutiny of the accounts, and,the entries showed that on the 12th of January, 1946, the cash balance in hand was Rs. 69,891 2 6.
The case of the appellants was that the said notes were a part of the cash balance and in further support of their case they filed before the Appellate Assistant Commissioner three affidavits by persons actually making the payments, in respect of certain entries in the cash book to prove that Rs. 20,000 on the 28th December, 1946, Rs. 15,000 on the 6th of January, 1946, and Rs. 8,000, out of a sum of Rs. 8,500, on the 6th of January, 1946, were paid in thousand rupee notes.
The Income tax Officer and the Appellate Assistant Commissioner in appeal, on a calculation of their own, held that the possession by the appellants of so many thousand rupee notes was an impossibility and that these notes must represent income from, undisclosed sources and as such be added to the assessable income of the appellants.
Neither the Appellate Assistant Commissioner nor the Income tax Officer, who was present at the hearing of the appeal, called for the deponents in order to cross examine them with reference to their statement in the affidavits.
The Appellate, Tribunal on appeal accepted the explanation of the assesses in respect of 31 of the notes but not with regard to the rest and rejected their application for a reference of the matter to the High Court.
The assessees moved the High Court and the Tribunal was directed under section 66(2) to state 627 a case for its decision.
In answering the main question, the High Court was of the opinion that the finding of the Tribunal was a finding of fact or an inference based on such finding and it was not possible to say that such finding or inference was unreasonable or arbitrary.
Held (per curiam), that the High Court was in error in refusing to interfere with the finding of the Tribunal which was based on no evidence and the appeal must succeed.
Per C.J. and BHAGWATI J. Conclusions based on facts proved or admitted may be conclusions of fact but whether a particular inference can legitimately be drawn from such conclusions may be a question of law.
Where, however, the fact finding authority has acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found, the court is entitled to interfere.
Chunilal Ticamchand Coal Co. Ltd. vs Commissioner of Income tax, Bihar and Orissa, ([1955]) , applied.
Cameron vs Prendergast (Inspector of Taxes), ([1940] 8 I.T.R. (Suppl.) 75), Bomford vs Osborne (H. M. Inspector of Taxes), ([1942] 10 I.T.R. (Suppl.) 27) and Edwards (Inspector of Taxes) vs Bairstow and Another, ([1955] , referred to.
The High Court was in error in treating the finding of the Tribunal as a finding of fact and failed to apply the true principles of interference applicable to such cases.
The entries in cash book and the statements made in the affidavits in support of the explanation.
which were binding on the Revenue and could not be questioned, clearly showed that it was quite within the range of possibility that the appellants had in their possession the 61 high denomination notes on the relevant date and their explanation could not be assailed by a purely imaginary calculation of the nature made by the Income tax Officer or the Appellate Assistant Commissioner.
The Tribunal made a wrong approach and while accepting the appelants ' explanation with regard to 31 of the notes, it had absolutely no reason to exclude the rest as not covered by it in absence of any evidence to show that the excluded notes were profits earned by the appellants from undisclosed sources.
The appellants having given a reasonable explanation the Tribunal could not, by applying a rule of thumb, discard it so far as the rest were concerned and act on mere surmise.
Per VENKATARAMA AYYAR J.
The finding of the Tribunal that high denomination notes of the value Rs. 30,000 represented concealed profits of the appellants being unsupported by any evidence amounted to an error of law and was liable to be set aside.
That so many notes of high denomination should have been held as part of 628 the cash for so long a time, might be highly suspicious but decisions must be founded on legal testimony and not on suspicion.
The question whether the accounts were genuine or not was a pure question of fact and a finding that they were genuine was binding both on the Revenue and the subject.
|
Summarize this legal judgement text concisely | iminal Appeal No. 86 of 1954.
Appeal under Article 134(1)(C ) of the Constitution of India from the judgment and order dated the 27th May 1954 of the Calcutta High Court in Criminal Appeal No. 158 of 1953.
640 Sukumar Ghose for the appellant D. N. Mukerjee for P. K. Bose for respondent No. 1.
K. L. Arora for respondent No. 2. 1956.
September 5.
The Judgment of the Court was delivered by BHAGWATI J.
The Appellant was charged under Section 411, Indian Penal Code with Dishonestly receiving or retaining in his possession one Hillman Car number WBD 4514 bearing Engine and Chassis No. A1178482 WSO knowing, or having reason to believe the same to be stolen property.
The learned Presidency Magistrate, Calcutta, convicted him of this offence and sentenced him to rigorous imprisonment for 2 years.
The Appellant took an appeal to the High Court at Calcutta and a Division Bench of the High Court constituted by Mr. Justice Jyoti Prokash Mitter and Mr. Justice Sisir Kumar Sen dismissed the appeal confirming the conviction and sentence passed upon him.
The Appellant filed a peti tion for leave to appeal to this Court and that petition according to what we are told is the practice obtaining in the Calcutta High Court came before a Division Bench differently constituted a Bench constituted by the learned Chief Justice and Mr. Justice section C. Lahiri.
This Bench allowed the petition and ordered that a certificate for leave to appeal under article 134(1)(c) of the Constitution may be drawn up.
In an elaborate judgment the learned Chief Justice observed: "In my view a certificate of fitness ought to issue in this case, although the question involved is one of fact".
After discussing in detail the various circumstances in the case which did not meet with his approval, he wound up by saying: "In my view it is impossible not to feel in this case that there has not been as full and fair a trial as I ought to have been held.
In the circumstances, it appears to me that the petitioner is entitled to have 641 his case further considered and since such further consideration can only be given by the Supreme Court, I would grant the certificate prayed for".
Contrary to what we had in the previous case before us, viz., Criminal Appeal No. 146 of 1956 (Om Prakash vs The State of Uttar Pradesh), where no reasons were given as to why the Court exercised its discretion in granting the certificate, in this judgment we have an elaborate discussion as to why such discretion was being exercised.
by the Court.
The reasoning, however, does not, appeal to us.
Whatever may have been the misgivings 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 bad 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.
The mere disability of the High Court to remedy this circumstance and vouchsafe a full and fair trial could not be any justification for granting a certificate under article 134(1) (c) and converting this Court into a Court of Appeal on facts.
No High Court has the jurisdiction to pass on mere questions of fact for further consideration by this Court under the relevant articles of the Constitution.
We no doubt possess that power and in proper cases have exercised it under article 136(1).
If there has been a gross miscarriage of justice or a departure from legal procedure such as vitiates the whole trial we would certainly intervene and we would also intervene if even the findings of fact were such as were shocking to our judicial conscience and grant in such cases special leave to appeal under article 136(1).
That is, how ' ever, a special jurisdiction which we can exercise under article 136(1), but no High Court can arrogate that function to itself and pass on to us a matter which in its view is purely one involving questions of fact, because it finds itself helpless to redress the grievance.
In such a case, the High Court should 83 642 refuse to give a certificate under article 134(1)(c) and ask the parties to approach us invoking our special jurisdiction under article 136(1) of the Constitution.
We are, therefore, of the opinion that the discretion that was so elaborately exercised by the Calcutta High Court in this case was wrongly exercised.
The certificate purporting to have been granted under article 134(1)(c) was no certificate at all and it does not avail the appellant before us.
Following our decisions in Narsingh and another vs The State of Uttar Pradesh(1), Baladin & Others vs The State of Uttar Pradesh(2) and Sunder Singh vs The State of Uttar Pradesh(3), Mr. Sukumar Ghose for the appellant urged that this was a fit case where we should exercise our discretion and grant the appellant special leave to appeal under article 136(1) of the Constitution.
He pointed out that even though the appellant had led no evidence in defence there were on the record of the case certain documents which if taken as proved would have been sufficient to demolish the prosecution case.
These were commented upon by the learned Chief Justice in the judgment which he delivered when certificate for leave to appeal under article 134(1) (c) was grunted by him.
These documents, it was urged, went to show that sometime before the car in question was stolen, an application had been made by the appellant to the police authorities in Chandarnagore for registration of Hillman Minx 1951 Model car which bore the same number on the engine, chassis and tin plate as the car in question and on that application, investigation had been made by the A.S.I. police, who made his report, the contents of which would go to establish the case which was put forward by the appellant in his defence.
It is no doubt true that the prosecution has got to prove its case beyond reasonable doubt and the accused need not open his mouth nor lead any evidence.
If the prosecution succeeds in establishing its case, the conviction would follow, but if the prosecution fails to discharge the burden which lies upon it to prove the charge which (1) ; (2) A.I. R. (3) A.I.R. 1956 S.C. 411.
643 has been framed against the accused he is entitled to an acquittal.
In this case both the Courts below held that the prosecution bad proved its case by the evidence of the witnesses who were called including the motor expert, who on applying chemicals discovered on the engine the very number which was the number on the stolen car.
On this state of the evidence, it was the bounden duty of the appellant if he wanted to prove his defence to adduce evidence in support of his contentions and if he did not do so, he had only to thank himself for it.
The prosecution could not be blamed for that lacuna and if both the Courts below went on the record as it stood and came, to the conclusion, finding it as a fact, that the prosecution had established its case, it could not be urged, as was sought to be done in the judgment delivered by the learned Chief Justice in the petition for leave to appeal to this Court, that evidence, if forthcoming, would have demolished the case of the prosecution.
If those who represented the appellant did not take counsel within themselves and put forward the defence as they should have done, there was no blame on the prosecution nor on the learned Presidency Magistrate who tried the case and came to the conclusion adverse to the appellant.
Whatever sentiment appears to have been imported in the Matter has been simply out of place and even if one may have a lurking suspicion at the back of his mind and might feel that there has not been a full and fair trial as ought to have been held, that is no justification for going behind the concurrent findings of fact reached by both the Courts below to the effect that the prosecution had succeeded in establishing the guilt of the appellant.
We see nothing in this case to warrant an interference under article 136(1) of the Constitution.
This application will, therefore, be rejected and the appeal will stand dismissed.
Bail bond cancelled and the appellant to surrender his bail.
| The High Court has no jurisdiction to grant certificate under article 134(1)(c) of the Constitution on mere question of fact, and is not justified in passing on such question to the Supreme Court for further consideration, thus converting the , Supreme Court into a Court of Appeal on facts.
No doubt the Supreme Court, in case of gross miscarriage of justice or departure from legal procedure such as vitiates the whole trial, possesses the power and has special jurisdiction to intervene under article 136(1) of this Constitution and also if the findings of fact were such as were shocking to judicial conscience; but no High Court can arrogate that function to itself because it finds itself helpless to redress the grievance.
Certificate granted on mere question of fact would be no certificate at all; High Court should refuse such certificates under article 134(1)(c) and should ask the parties to approach the Supreme Court to invoke its special jurisdiction under article 136(1) of the Constitution.
The accused and not the prosecution is to be blamed for the lacuna in the defence in not adducing evidence in support of his contentious, which if forthcoming would have demolished the case of the prosecution.
Narsingh and another vs The State of Uttar Pradesh, ([1955] 1 S.C.R. 238), Baladin & Others vs The State of Uttar Pradesh, (A.I.R. and Sunder Singh vs The State of Uttar Pradesh, (A.I.R. , referred to.
|
Summarize this legal judgement text concisely | Appeal No. 139 of 1953.
Appeal by special leave from the judgment and order dated the 22nd day of August 1950 of the Nagpur High Court in Miscellaneous Petition No. 67 of 1950.
Radhey Lal Agarwala and B. P. Maheshwari, for the appellant.
C. K. Daphtary, Solicitor General of India (G. N. Joshi and R. H. Dhebar, with him) for the respondents.
February 15.
VENKATARAMA AYYAR J.
The firm of Bhagat Ram Mohanlal, which is the appellant before us, was constituted on 23 8 1940, and registered under section 26 A of the Indian Income tax Act, The partners of 146 the firm, according to the registration certificate, were (1) Bhagat Ram Mohanlal, Hindu undivided family, (2) Richpal and (3) Gajadhar, their shares being respectively 8 annas, 4 annas and 4 annas Mohan lal was the, karta of the aforesaid joint family, which consisted of himself and his two brothers, Chhotelal and Bansilal, and he entered into the partnership as such karta.
The firm carried on business at Drug in Madhya Pradesh as the agent of the Government for the purchase of foodgrains, and during the accounting years ending 1943 and 1944, it made profits on which it was assessed to excess profits tax respectively of Rs. 10,023 5 0 and Rs. 13,005 5 0.
During the year 1944 1945 it sustained a loss of Rs. 15,771, and adding it to the sum of Rs. 37,800 which was the standard profits for the business, the Excess Profits Tax Officer determined the deficiency of profits for the year at Rs. 53,571.
Section 7 of the Excess Profits Tax Act, hereinafter referred to as the Act, provides that when there is a deficiency of profits in any chargeable accounting period in any business, the profits of that business during the previous years shall be deemed to be reduced eo extanti, and that the relief necessary to give effect to the reduction shall be given by repayment of the tax paid or otherwise.
Acting under this section, the Excess Profits Tax Officer passed an order on 23 12 1946 whereby after setting off the profits of the firm for the years ending 1943 and 1944 against the deficiency of profits during the year ending 1945, he directed a refund of Rs. 23,028 10 0 which had been paid by the appellant as excess profits tax for those years.
It should be mentioned that at the commencement of the assessment year 1944 1945 there was a partition in the joint family of which Mohanlal was the erstwhile karta, as a result of which he and his brothers, Chhotelal and Bansilal, became divided in status.
Consequent on this disruption of the joint family, the appellant firm was reconstituted under an agreement dated 17 10 1944.
Under this agreement, the partners of the firm were five in number, Richpal .Gajadhar Mohanlal, Chhotelal and Bansilal, the two 147 former being entitled to 5 annas share each and the latter three to 2 annas each.
There was thus a reconstitution of the firm both with reference to the persons who were its partners and the shares which were allotted to them.
Now, section 8(1) provides, omitting what is not material, that "as from the date of any change in the persons carrying on a business, the business shall be deemed to have been discontinued and a new business commenced".
If this section applied, then no relief could have been granted to the appellant under section 7 of the Act.
The facts relating to the reconstitution of the firm having come to the knowledge of the Commissioner of Excess Profits Tax on examination of the record, he issued a notice on 19 2 1948 calling upon the appellant to show cause why the order of the Excess Profits Tax Officer dated 23 12 1946 should not be set aside on the ground of mistake.
This notice was issued under section 20 of the Act, which confers on the Commissioner authority to rectify "any mistake apparent from the record".
The mistake, according to the Commissioner, consisted in the Excess Profits Tax Officer failing "to take into consideration the change in the constitution of the firm which took place on 17 10 1944, consequent on the disruption of the joint Hindu family of one of the partners".
The appellant appeared in response to the notice, and contended that on the facts the proceedings under section 20 were misconceived.
The facts on which the proceedings were taken were not themselves disputed.
By his order dated 15 3 1950 the Commissioner held that on the facts disclosed on the record, there was a change in the persons carrying on the business, and that the award of relief under section 7 by the Excess Profits Tax Officer was a mistake.
He, however, maintained the order dated 23 12 1946 with reference to Richpal and Gajadhar, and set it aside only so far as "Bhagat Ram Mohanlal, Hindu.
undivided family" which was registered as partner on 23 8 1940, was concerned.
He further directed that Rs. 11,514 5 0 which had been refunded to it should be collected.
148 The appellant thereupon moved the High Court of Nagpur under article 226 for a writ of certiorari quashing the order of the Commissioner dated 15 3 1950 and for a writ of prohibition restraining the authorities from collecting Rs. 11,514 5 0 under that order.
By their judgment dated 22nd August 1950, the learned Judges agreed with the Commissioner that by reason of the partition there was a change in the persons who carried on the business, and that the order dated 23 12 1946 was contrary to section 8(1) of the Act.
They also held that as the mistake appeared on the face of the record, the Commissioner had jurisdiction under section 20 of the Act to pass the order which he did.
In the result, the writs were refused.
Against this judgment, the appellant prefers this appeal by special leave.
Two questions have been raised for our determination in this appeal: (1) whether by reason of the partition of the joint family and the reconstitution of the firm under the deed dated 17 10 1944 there was a change in the persons carrying on business within section 8(1) of the Act; and (2) whether the order of the Commissioner dated 15 3 1950 is bad on the ground that there was no mistake apparent from the record, as required by section 20 of the Act.
On the first question, the contention of the appellant is that when Mohanlal entered into partnership with Richpal and Gajadhar on 23 8 1940 as karta of the joint family, the other members of that family, Chhotelal and Bansilal, also became in substance partners of the firm, and that when they were mentioned eo nominee as partners in the deed dated 17 10 1944 the change was more formal than substantial, and that further the fact that there was a re allotment of shares among the partners would not amount to a change in the persons who carried on the business.
We agree that if all the five persons who were mentioned as partners in the deed of 1944 were partners of the old firm, there would be no change in the persons carrying on the business within section 8(1) of the Act by the mere fact of reshuffling of shares among them.
But the real question that has to be decided 149 is whether Chhotelal and Bansilal were partners in the firm, which was constituted on 23 8 1940.
The appellant contends that they were, both according to the Hindu law and even apart from it, under the general law relating to partnerships.
It is not in dispute that Mohanlal was the karta of the joint family, and that he entered into the partnership on 23 8 1940 as such karta.
It is well settled that when the karta of a joint Hindu family enters into a partnership with strangers, the members of the family do not ipso facto become partners in that firm.
They have no right to take part in its management or to sue for its dissolution.
The creditors of the firm would no doubt be entitled to proceed against the joint family assets including the shares of the nonpartner co parceners for realisation of their debts.
But that is because under the Hindu law, the karta has the right when properly carrying on business to pledge the credit of the joint family to the extent of its assets, and not because the junior members become partners in the business.
In short, the liability of the latter arises by reason of their status as copartners and not by reason of any contract of partnership by them.
It would therefore follow that when Mohanlal became a partner of the firm on 23 8 1940, Chhotelal and Bansilal could not be held by reason of that fact alone, to have become partners therein.
It is argued that when that firm was constituted on 23 8 1940 the persons who entered into the contract of partnership were not merely Mohanlal as karta of the joint family but also Chhotelal and Bansilal in their individual capacity, and that therefore they became partners under the ordinary partnership law.
But the registration certificate of the firm while showing "Bhagat Ram Mohanlal, Hindu undivided family" as a partner, makes no mention of either Chotelal or Bansilal as partners.
The contention that they also became in their individual capacity partners appears therefore to be an afterthought, and is opposed to the findings of the learned Judges of the High Court.
This is sufficient, without more, to dispose of this contention.
But even apart from this, 20 150 it is difficult to visualise the situation which the ap pellant contends for, of a Hindu joint family entering into a partnership with strangers through its karta and the junior members of the family also becoming at the same time its partners in their personal capacity.
In Lachhman Das vs COmmissioner of Incometax(1), it was held by the Judicial Committee that the karta of a joint Hindu family could enter into partnership with an individual member of the coparcenary quoad his separate property.
It was also held by the Privy Council in Sundar Singh Majithia vs Commiss ioner of Income tax(2) that there was nothing in the Income tax Act to prohibit the members of a joint Hindu family from dividing some properties, while electing to retain their joint status, and carrying on business as partners in respect of those properties.
treating them as its capital.
But in the present case, the basis of the partnership agreement of 1940 is that the family was joint and that Mohanlal was its karta and that he entered into the partnership as karta on behalf of the joint family.
It is difficult to reconcile this position with that of Chhotelal and Bansilal being also partners in the firm in their individual capacity, which can only be in respect of their separate or divided property.
If members of a coparcenary are to be regarded as having become partners in a firm with strangers, they would also become under the partnership law partners inter se, and it would cut at the very root of the notion of a joint undivided family to hold that with reference to coparcenary properties the members can at the same time be both coparceners and partners.
To get over this difficulty, it was suggested that all the three coparceners might be regarded as having entered into the contract of partnership as kartas of the joint family.
But even if that could be done consistently with the principles of Hindu law, the very pleadings of the appellant are against such a supposition being made, affirming as they do that it was only Mohanlal that was the karta, not the others.
(1) [1948]16 I.T.R 35.
(2) 151 The contention, therefore, that Chhotelal and Bansilal should be held to have become partners in the old firm under the agreement dated 23 8 1940 cannot be maintained.
The question whether there was a change in the persons carrying on the business may now be considered independently of the principles of Hindu Law or the general law of Partnership and with special reference to the provisions of the Indian Excess Profits Tax Act.
Section 2(17) of the Act defines a 'person ' as including a joint family.
Applying this definition.
, who were the members of the firm when it was constituted on 23 8 1940? Richpal, Gajadhar and "Bhagat Ram Mohanlal, Hindu undivided family" consisting of three coparceners, Mohanlal, Chhotelal and Bansilal, it being immaterial for the present purpose whether the karta of the family was only Mohanlal, or all the three of them.
Then, the family became divided in 1944, and the result of it was that one of the three persons who were partners in the old firm, "Bhagat Ram Mohanlal" ceased to exist.
On 17 10 1944, the two surviving partners of the old firm, Richpal and Gajadhar, entered into a contract of partnership with Mohanlal, Chhotelal and Bansilal.
The erstwhile joint family of which they were members not being a partner in the new firm, it having ceased to exist by reason of the partition, there was, having regard to the definition in section 2(17) of the Act, a change in the persons who carried on the business.
That was the view taken in Shanmugavel Nadar and Sons V. Commissioner of Income tax(1), and we agree with it.
Whether the question is considered on the principles of Hindu law or on the provisions of the Excess Profits Tax Act, there was a change in the personnel of the firm on 17 10 1944, and the matter falls within section 8(1) of the Act.
(2) The next question for determination is whether the order of the Commissioner dated 153 1950 is not justified by the provisions of section 20 of the Act for the reason that there was no mistake apparent from the record.
The argument in support of this conten (1) [1948]16 I.T.R. 355, 152 tion is that the record in the Excess Profits Tax pro ceedings consisted in the present case of only the order dated 23 12 1946, that the facts on which the proceedings were taken under section 20, namely, the constitution of the firm on 23 8 1940 and the changes effected therein on 17 10 1944 were not recited therein, and that, in consequence, there were no materials on which an order could have been passed under that section.
It is true that the order of the Excess Profits Tax Officer dated 23 12 1946 does not mention these facts, but they appear from the record of the income tax proceedings which included the registration certificates of the firm under section 26 A of the Income tax Act and the returns made by the firm disclosing the names of the partners and their respective shares.
It is argued for the appellant that these records were inadmissible for the purpose of proceedings under section 20 of the Act, because the record referred to and contemplated by that section must be the record of the excess profits tax proceedings, and that the records of the income tax proceedings could not be used under that section.
We are unable to agree with this contention.
Section 22(1) of the Act provides that: "Notwithstanding anything contained in the Indian Income tax Act, 1922, all information contained in any statement or return made or furnished under the provisions of that Act or obtained or collected for the purposes of that Act may be used for the purposes of this Act".
Section 22(2) similarly makes the record of the excess profits tax proceedings admissible in proceedings under the Indian Income tax Act.
The fact is that the proceedings under the two Acts are interdependent.
Assessments under the Excess Profits Tax Act are, subject to the special provisions of that Act, made on the basis of the assessments made under the provisions of the Indian Income tax Act.
The same officers are in chargev of the proceedings under both the enactments.
The order of the Excess Profits Tax Officer dated 23 12 1946 refers in terms to the order dated 28 9 1946 passed in the proceedings for assess 153 ment of income tax on the appellant, and the deficiency of profits is worked out on the basis of the loss of Rs. 15,771 as ascertained therein.
We see no substance in this contention, which must accordingly be rejected.
It was finally contended that the particulars recited in the registration certificate as to who were all partners of the firm were not conclusive, and that the appellant was not estopped from proving that even on 23 8 1940 the real partners were all the five persons mentioned in the deed dated 17 10 1944, and the decision in Shapurji Pellonji vs Commissioner of Income tax(1) was relied on in support of the position.
It is undoubted law that the income tax authorities are not estopped by the fact of registration from going behind the certificate, and deciding who the real partners of the firm are.
But can the assessee whose statement is the basis on which the registration is made and who has possibly been benefited thereby deny its correctness, when the facts mentioned therein turn out to his disadvantage? It is unnecessary to consider this point, in view of our decision that on the facts as pleaded by the appellant, Chhotelal and Bansilal could not be regarded as partners in the old firm.
We may add that this contention does not appear to have been put forward before the Commissioner when notice was issued to the appellant under section 20 of the Act.
If any such contention had been raised, it would have been open to the Commissioner to have taken action under section 19 of the Act.
In the result, the appeal fails, and is dismissed with costs.
| The firm of Bhagat Ram Mohan Lal Appellant constituted on 23 8 1940 was registered under section 26 A of the Indian Income tax Act, the partners of the firm according to the registration certificate being (1) Bhagat Ram Mohan Lal (Hindu undivided family), (2) Richpal and (3) Gajadhar, their shares being respectively 8 annas, 4 annas and 4 annas.
Mohan Lal was the karta of the aforesaid family, which consisted of himself and his two brothers, Chhotelal and Bansilal.
The firm made profits during the accounting years ending 1943 and 1944 on which it was assessed to excess profits tax respectively of Rs. 10,023/5/ and Rs. 13,005/5/ .
During the year 19441945 it sustained a loss of Rs. 15,771 and adding thereto Rs. 37,800 the standard profits for the business, the Excess Profits Tax Officer determined the deficiency of profits for the year at Rs. 53,571 .
Acting under section 7 of the Excess Profits Tax Act the Excess Profits Tax Officer passed an order on 23 12 1946 whereby after setting off the profits of the firm for the years ending 1943 and 1944 against the deficiency of profits during the year ending 1945, he directed a refund of Rs. 23,028/10/ which had been paid by the appellant as excess profits tax for those years.
At the commencement of the assessment year 1944 1945 there was a partition in the joint family of which Mohan Lal was erstwhile karta, he and his two brothers becoming divided in status.
As a result thereof the appellant firm was reconstituted under an agreement dated 17 10 1944, the partners of the firm being five in number.
There was a reconstitution of the firm with respect to persons 144 and their shares.
According to section 8(1) of the Excess Profits Tax Act the change in the persons is deemed to bring about a discontinuation of the old business and the commencement of a new one and if that section applied no relief could have been granted to the appellant under section 7 of the Act.
The facts as to the reconstitution of the firm having come to the knowledge of the Commissioner of Excess Profits Tax he issued a notice under section 20 of the Excess Profits Tax Act calling upon the appellant why the order of Excess Profits Tax Officer dated 23 12 1946 should not be set aside on the ground of mistake as he had failed to take into consideration the change in the constitution of the firm which took place on 17 10 1944.
After hearing the appellant the Commissioner held by his order dated 15 3 1950 that on the facts disclosed there was a change in the persons and that the award of relief under section 7 of the Act by the Excess Profits Tax Officer was a mistake.
He set aside order only so far as Bhagat Ram Mohan Lal was concerned maintaining it with regard to two others.
On an application for a writ of certiorari and for a writ of prohibition under article 226 of the Constitution the High Court upheld the order of the Commissioner.
On an appeal by Special Leave to the Supreme Court: Held (1) that by reason of the partition of the joint family and the reconstitution of the firm under the deed dated 17 10 1944 there was a change in the persons carrying on business within section 8(1) of the Act.
If all the five persons who were mentioned as partners in the deed of 1944 were partners of the old firm, there would be no change in the persons carrying on the business within section 8(1) of the Act by the mere fact of reshuffling of the shares among them but the real question for determination was whether Chhotelal and Bansilal were partners in the firm constituted on 23 8 1940.
It is not in dispute that Mohanlal was the karta of the joint family, and that he entered into the partnership on 23 8 1940 as such karta.
It is well settled that when the karta of a joint Hindu family enters into a partnership with strangers, the members of the family do not ipso facto become partners in that firm.
They have no right to take part in its management or to sue for its dissolution.
The creditors of the firm would no doubt be entitled to proceed against the joint family assets including the shares of the non partner copareeners for realisation of their debts.
But that is because under the Hindu Law, the karta has the right when properly carrying on business to pledge the credit of the joint family to the extent of its assets, and not because the junior members become partners in the business.
The liability of the junior members arises by reason of their status as coparceners and not by reason of any contract of partnership and it would follow therefore that when Mohanlal became a partner of the firm on 23 8 1940 Chhotelal and Bansilal could not be held by reason of that fact alone to have become partners therein, 145 Accordingly whether the question was to be considered on the principles of Hindu law or on the principles of the Excess Profits Tax Act there was a change in the personnel of the firm on 17 10 1944 and the matter fell within section 8(1) of the Act.
(2) That there was a mistake apparent on the record as required by section 20 of the Act and the Commissioner had jurisdiction to pass the order dated 15 3 1950 which he did.
There was no force in the contention that the record in Excess Profits Tax proceedings consisted in the present case of the only order dated 23 12 1946 and that the facts on which the proceedings were taken under section 20, namely, the constitution of the firm on 23 8 1940 and the changes effected therein on 17 10 1944 were not recited therein and that in consequence there were no materials on which an order could have been passed under that section because though the order of the Excess Profits Tax Officer dated 23 12 1946 does not mention these facts these facts appear from the record of the income tax proceedings which included the, registration certificate of the firm under section 26 A of the Income Tax Act and the returns made by the firm disclosing the names of the partners and their respective shares.
Fur ther the fact is that the proceedings under the two Acts, namely, the Excess Profits Tax Act and the Income Tax Act, are interdependent.
Lachman Das vs Commissioner of Income Tax ([1948] 16 I. T.R. 35), Sundar Singh Majithia vs Commissioner of Income tax ([1942] , Shanmugavel Nadar and Sons vs Commissioner of Income tax ([1948] and Shapurji Pellonji vs Commissioner of Income tax ([1945] , referred to.
|
Summarize this legal judgement text concisely | Appeal No. 249 of 1953.
On appeal from the judgment and decree dated the 1st day of September, 1949, of the Bombay High Court in Appeal No. 23 of 1947 from original decree arising out of the decree dated the 28th September 1946 of the Civil Judge, Session Division at Belgawn in Suit No. 360 of 1945.
K.R. Beneri, J. B. Dadachanji and Sri Narain Andley for A. C. Dave for the appellants.
H.B. Datar and Naunit Lal for respondent No. 1.
676 1956.
September 20.
The Judgment of the Court was delivered by SINHA J.
This is an appeal by leave of the High Court of Judicature at Bombay from the decision of a Division Bench of that Court reversing that of the trial court in respect of items 3, 4 and 6 in the list of the properties attached to the plaint as the subject matter of the dispute.
In respect of the other items of property in dispute the courts below have given concurrent decisions and that part of their judgments is no more in controversy at this stage.
The three items aforesaid of the property along with the others in dispute had been decreed in favour 'of the original plaintiffs 2 and 3 as Watan property.
But on appeal by the third defendant, the High Court reversed the decision of the trial court only in respect of those three items and confirmed the decision of the trial court in respect of the rest of the plaint properties.
The propositus was one Shreemant who died on the 23rd November, 1941 leaving him surviving his wife Radhabai.
Radhabai died on the 9th May 1945 and on her death the dispute arose between the reversioners on the one hand including the plaintiffs 2 and 3, appellants in this Court, and the defendants on the other who claimed by virtue of alleged adoptions said to have been made by Radhabai aforesaid.
The first plaintiff is out of the picture now on the concurrent finding by the courts below that he had no right to the state left by the propositus by virtue of the adoption found in his favour, inasmuch as before he was adopted the estate had already vested in the actual reversioners, plaintiffs 2 and 3, the agnatic relations of Shreemant.
The estate of Shreemant, so far as it related to Watan lands, vested in plaintiffs 2 and 3 aforesaid under the provisions of Bombay Act v of 1886.
If either defendant 2 or defendant 3 bad proved his alleged adoption by Radhabai aforesaid, he would have been entitled to the estate as the adopted son of the propositus, thus excluding the agnatic relations, namely, plaintiffs 2 and 3.
But both the courts below have concurrently found that 677 neither of the two defendants 2 and 3 had succeeded in proving the adoption respectively pleaded by them.
The trial court had substantially decreed the suit in respect of all the items of property in dispute including the three items which, as indicated above, are the only properties now in controversy in this Court, on the finding that these also were Watan properties which like the rest of the plaint properties were inherited by the reversioners aforesaid, namely, plaintiffs 2 and 3., The High Court on appeal held that the three items of property now in dispute, though originally Watan properties, had lost their character as such by reason of the fact that they had been resumed by Government after dispensing with the service and after levying full assessment on those lands.
Those lands have been called "Japti Sanadi Inam lands" in the records of the courts below and it is by that name that we.
shall refer to the disputed lands in the course of this judgment.
It would thus appear that the controversy has narrowed down to the question whether the Japti Sanadi Inam lands still retain their character as Watan lands as held by the trial court, or have lost their character as such in view of the events that had happened as decided by the High Court.
It is not disputed that in the former case the plaintiff appellants will be entitled to them also even as they gave been adjudged to be entitled to the rest of the properties in dispute which were admittedly Watan lands.
It is equally undisputed that, if the Japti Sanadi Inam lands are no more Watan lands, this appeal must fail.
On this question both the courts below have been rather cryptic in their remarks.
The trial court held them to be Watan lands, with the following observations: "The lands at serial Nos. 3, 4 and 6 are Japti Sanadi lands.
They still retain the character of Sanadi lands inspite of the fact that services have been temporarily dispensed with and full assessment levied.
Sanadi lands have been held to be Watan lands governed by the Watan Act".
The trial court has made no attempt to support its conclusions with reference to any statutory rules or 678 precedents.
The lower appellate court has disposed of this question in these words: "Now it is conceded before us that there is no evidence to support the observation made by the learned trial Judge, that the services were temporarily dispensed with by the government.
If therefore,the Record of Rights show that the full assessment is being levied in respect of these lands, and that services are not required to be performed and they are described as Japti Sanadi Inam lands, meaning thereby that they were once Sanadi lands, but in respect of which there has been resumption by the Government, the conclusion must inevitably follow that these lands have ceased to be lands held on Sanadi tenure and are held in ordinary occupancy rights".
The learned counsel for the appellants has vehemently argued that the High Court was in error in concluding that the lands in question had ceased to be Watan lands simply because the service attaching to them had been dispensed with and full assessment levied by Government.
This argument was based on the provisions of the Bombay Hereditary Offices Act (Bombay Act III), 1874.
Apart from authority, therefore, we have to examine the relevant provisions of that Act in order to determine whether those provisions support the conclusions of the High Court.
In section 4, "Watan property", "Hereditary office" and "Watan" have been defined as follows: "Watan Property means movable or immovable property held, acquired or assigned for providing remuneration for the performance of the duty appertaining to an hereditary office.
It includes a right to levy customary fees or perquisites, in money or in kind, whether at fixed times or otherwise.
It includes cash payments in addition to the original watan property made voluntarily by Government and subject periodically to modification or withdrawal. 'Hereditary office ' means every office held hereditarily for the performance of duties connected with the administration or collection of the public revenue, or with the village police, or with the settlement of boundaries, or other matters of civil administration, 679 The expression includes such office even where the services originally appertaining to it have ceased to be demanded.
The watan property, if any, and the hereditary office and the rights and privileges attached to them together constitute the watan".
From these definitions it is clear that in order that there may be a Watan it is necessary that there should be a hereditary office and Watan property which is assigned to the "Watandar" by way of remuneration for the performance of the duty appertaining to his office.
But it has been argued on behalf of the appellants that it is common ground, that the Sanadi Inam lands were once Watan property and that once the property is impressed with the character of inam lands, they continue to bear that character, because the Government have not been authorised by any law to change their character.
No precedent or statutory provisions directly supporting this wide proposition have been brought to our notice.
But our attention was called to the provisions of section 15 which make it permissible for the Collector to commute the service and relieve the bolder of the Watan and his heirs and successors in perpetuity of their liability to perform the service on such conditions as may be agreed upon.
If we have been able correctly to appreciate the argument based upon section 15, it was sought to be made out that the service in respect of the Watan lands in question may have been commuted, but even after the commutation of the service the Watan remained and the lands continued to retain the character of Watan lands.
This argument assumes that even upon the service being entirely dispensed with in perpetuity, the Watan character of the land continued.
That is begging the question.
Furthermore, clause (1) of section 15 contemplates commutation "upon such conditions, whether consistent with the provisions of this Act or not, as may be agreed upon by the Collector and such bolder".
Thus the conditions to be agreed upon between the holder of land which was once part of a Watan and the Government at the time of the commutation may be of 680 so many varieties that in some cases the Watan character of the land may be maintained, whereas in others the conditions agreed between the parties may themselves contemplate the cessation of that character.
In the present case, apart from the entries in the Record of Rights, we have no other evidence to indicate as to on what terms the service bad been completely dispensed with in perpetuity and the full assessment levied upon those lands.
, It is not therefore clear upon the findings of the courts below that there were any such conditions attaching to the holding of the lands in question which could be consistent with the continuance of the original Watan tenure.
It is possible to conceive of a case where the conditions agreed upon provide for the continuance of the Watan tenure in spite of the fact that the holders have been excused the performance of the customary service.
On the other hand, it may be that there were no conditions agreed between the parties continuing the Watan character of the land after dispensing with the service.
On the findings of the courts below there was no hereditary office any more and therefore the question of remunerating any service with the usufruct of Watan property or otherwise did not arise.
On the other hand, the provisions of section 22 of the Act clearly predicate that a Watan may lapse in part or in whole or may be confiscated or otherwise lawfully resumed by Government and that in such cases it is lawful for Government to attach such land to a newly created Watan in favour of such persons as may be appointed by Government.
That being so, it is impossible to contend that Government have not the power to destroy the Watan character of a Watan land.
Such an argument completely ignores the legal position that an authority which has the power to create an office and to provide for its remuneration in cash or in kind has also the power to revoke the grant, and upon such revocation, if any land has been assigned for remunerating the office so abolished it must revert to the source from which it came; that is to say, ryotwari land subject to land revenue assess 681 ment.
That is what appears to have happened in the present case.
The very description of the land as Japti Sanadi Inam land would mean that which was once the subject matter of an inam grant by virtue of a sanad has been resumed or confiscated by Government and the land left in possession of the holder as ryotwari holding.
As pointed out by the courts below, there is no evidence as to the original character of the grant or as to how and when the grant was resumed and the land thus became subject to ordinary occupancy rights.
But they have proceeded on the basis that it was the subject matter of a Watan by sanad which has been subsequently resumed by Government as service was no more required and the necessity for the grant was no more there.
They have only differed on the legal result of the resumption.
A similar question arose for decision in the Bombay High Court in the case of Ramijyabi Muktum Saheb vs Gudusaheb(1) after the present case had been decided by that Court.
In that case property which was originally Watan was continued with the holder thereof but without the obligation to render any service and with the full levy of assessment in respect of the land.
The question arose whether such land continued to be Watan land with its special incidents as regards alienation, etc., or whether it was ordinary occupancy holding.
A single Judge of that Court who heard the appeal in the first instance came to the conclusion that the land continued to be Watan land.
On Letters Patent Appeal, the Division Bench after a very elaborate examination of the relevant rules and precedents came to the contrary conclusion and held that the land had ceased to have the character of Watan and was subject to the ordinary law of land tenures in that State.
We are in agreement with the conclusion reached by the Letters Patent Bench in that case, the facts of which were similar to those of the present case.
Hence it must be held that there is neither authority nor principle in favour of the contention raised on behalf of the appellants.
The appeal is accordingly dismissed with costs.
| Certain lands which were originally Watan lands were resumed by the Government after dispensing with the services that were being rendered and full assessment was levied thereon.
Thelands were subsequently described as "Japti Sanadi Inam" lands.
Held, that the lands had lost their character as Watan lands and had become ryotwari lands of the holder.
Ramijyabi Muktum Saheb vs Gudusaheb, , approved.
The very description of the lands as Japti Sanadi Inam lands means that the lands were once the subject matter of an Inam grant by virtue of a Sanad and have been resumed or confiscated by the Government and have been left in the hands of the holder as ryotwari holding.
The Government may commute the services to be rendered and it will then depend on the terms of the agreement between the holder of the Watan lands and the Government entered into at the time of the commutation whether the lands are to retain their character as Watan lands or not.
|
Summarize this legal judgement text concisely | Civil Appeals Nos.
56 & 57 of 1954.
Appeal from the judgment and order dated the 25th day v of March 1951 of the Madras High Court in Case Referred Nos. 32 of 1948 and 31 of 1950.
K.S. Krishnaswami Iyengar, (K. R. Choudhry, with him) for the appellants.
G.N. Joshi and P. G. Gokhale, for, the respondent.
May 9.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
The appellant is a firm which was constituted under a deed of partnership dated 10 2 1941, and consists of two partners, Subba Rao and Hariprasada Rao.
On 21 3 1942 it was registered under section 26 A of the Indian IncomeTax Act No. XI of 1922, hereinafter referred to as the Act, for the assessment year 1942.
Sometime thereafter, one of the partners, Subba Rao, is stated to have left on a long pilgrimage, and the affairs of the partnership were then managed by Hariprasada Rao as his agent under a general power of attorney dated 1 7 1940.
Hariprasada Rao then applied under rules 2 and 6 of the rules framed under section 59 of the Act, for renewal of the registration certificate for the year 1942 43, and the application was signed by him for himself and again as the attorney of Subba Rao.
Those rules provide that an application for registration of a firm under section '26 A and for renewal of registration certificate "shall be signed personally by all the partners" '.
The Income tax Officer rejected the application for renewal on the ground that it was not personally signed by one of the partners, Subba Rao, and that the signature of Hariprasada Rao as his agent was not valid The order was taken in appeal, and was ultimately the subject of a reference under section 66(1) of the Act to the High Court of Madras, which held that the word "personally" in rule 6 required that the partner 579 should himself sign the application, and that the principles of agency under the general law were exclude.
(Vide Commissioner of Income tax vs Subba Rao(1)).
While these proceedings were pending, Hariprasada Rao filed the two applications, out of which the present appeals arise, for renewal of the registration certificate for the assessment years 1943 44 and 1944 45.
Both of them were signed by him for himself and as attorney for Subba Rao.
At the hearing of these petitions the appellant, apart from maintaining that rules 2 and 6 did not, on their true construction, exclude signature by an agent on behalf of a partner, raised a further contention that the rules themselves were ultra vires the powers of the rulemaking authority.
The Income tax Officer overruled both these contentions, and rejected the applications, and his orders were confirmed on appeal by the Appellate Assistant commissioner and then by the Appellate Tribunal.
Thereafter, on the application of the appellant, the Tribunal referred the following questions for the decision of the High Court: "(1) Whether the word 'personally ' in the Income tax Rules, as framed under section 59 of the Income tax Act would exclude a duly authorised agent of a partner from signing an application on behalf of the partner under section 26 A of the Income tax Act? (2)If the answer to the above question is in the affirmative, whether rules 2 and 6 are ultra vires the rule making authority?" The reference was heard by Satyanarayana Rao and Viswanatha Sastry, JJ.
Following the decision in Commissioner of Income tax vs Subba Rao(1), they answered the first question in the affirmative.
On the second question, however, they differed.
Satyanarayana Rao, J. held that the rules were ultra vires, and that the applications were in order, and ought to have been granted.
Viswanatha Sastry, J. was of the contrary opinion, and held that the rules were intra vires, and that the applications were properly (1) I.L R. ; 580 rejected as not being in accordance with them.
The learned Judges, however, granted a certificate under section 66 A of the Act, and that is how the appeals come before us.
The first question whether the word "personally" would exclude signature by an authorised agent on behalf of the partner was answered in the affirmative by the Madras High Court in Commissioner of Incometax vs Subba Rao(1).
This was one of the decisions quoted with approval by this Court in Commissioner of Agricultural Income tax vs Keshab Chandra Mandal(2), where the question was whether a rule framed under the Bengal Agricultural Income tax Act that the declaration in the return should be signed by the individual himself required that he should sign it personally, and it was held that it did so require.
Sri K. section Krishnaswami Ayyangar, learned counsel for the appellant, did not urge any grounds for differing from the above conclusion, and we must therefore hold, in agreement with the views expressed in the above decisions, that the signature which is pres cribed by the rules is that of the partner himself, and that they are not complied with by the agent signing on his behalf.
Then we come to the second question and that is the substantial question that arises for our determination in this appeal whether rules 2 and 6 are ultra Vires the rule making authority.
The argument of the appellant in support of its contention that the rules are ultra Vires may thus be stated: Under the common law of England, a person has the right to do through an agent whatever he can do himself, and that right has also been conferred on him in this country by section 2 of the Powers of Attorney Act VII of 1882, which runs as follows: "The donee of a power of attorney may, if he thinks fit, execute or do any assurance, instrument or thing in and with his own name and signature, and his own seal, where sealing is required, by the authority of the donor of the power; and every assurance, (1) I.L.R. I.T.R. 232.
(2) ; 581 instrument and thing so executed and done, shall be as effectual in law as if it had been executed or done by the donee of the power in the name, and with the signature and seal, of the donor thereof "This section applies to powers of attorney created by instruments executed either before or after this Act comes into force".
Section 26 A of the Act confers on a partner the right to apply for registration of the firm, and that right could be 'exercised both under the common law and under section 2 of the Powers of Attorney Act through an authorised agent.
The sovereign legislature might, if it so chooses, abrogate the rule of common law, and repeal section 2 of the Powers of Attorney Act,.
and enact that the application to be presented under section 26 A should be signed by the partner himself and not by any other person; but it has not done so either expressly or by necessary implication, and, therefore, the application which was signed by Hariprasada Rao is as good as if it had been signed by Subba Rao.
The Rules no doubt require that the signature should be that of the partner and not that of ' his agent.
But in prohibiting what would be lawful under the section, the Rules go beyond the ambit of the authority conferred by section 26 A on the rule making authority, which is limited to framing Rules for giving effect to the principles laid down in the statute.
They are therefore ultra vires.
In the alternative, assuming that the mandate given to the rule Making authority under section 26 A is of sufficient amplitude to authorise the making of the Rules in question, even then, they must be held to be ultra vires, as they have the effect of abrogating the common law and of repealing section 2 of the Powers of Attorney Act, which confer on a person the right to act through an agent, and that being a legislative function cannot be delegated to a rule making authority.
and section 26 A, if it is to be construed as conferring such power on an outside authority, must be struck down as constituting an unconstitutional delegation by the legislature of its legislative function.
582 It is the correctness of these contentions, that now falls to be considered.
According to the law of England and that is also the law under the Indian Contract Act, 1872 "every person who is sui juris has a right to appoint an agent for any purpose whatever and that be can do so when he is exercising a statutory right no less than when he is exercising any other right".
Per Stirling, J. in Jackson and Co. vs Napper: In re Schmidts ' Trade Mark(1).
This rule is subject to certain well known exceptions as when the act to be performed is personal in character, or is annexed to a public office, or to an office involving fiduciary obligations.
But apart from such exceptions, the law is well settled that whatever a person can do himself, he can do through an agent.
It has accordingly been held that "at common law.
, when a person authorizes another to sign for him, the signature of the person so signing is the signature of the person authorizing it".
Per Blackburn, J. in The Queen V. Justices Of Kent(").
The appellant is therefore right in his contention that unless the statute itself enacts otherwise, an application which a partner has to sign would be in order and.
valid, if it is signed by his authorised agent.
The question then is whether there is anything in the Act, which requires that an application under section 26 A should be signed by the party personally.
Section 26 A is as follows: "(I) Application may be made to the Incometax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income tax or super tax.
(2) The application shall be made by such person or persons, and at such times and shall contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed; and it shall (1) , 172.
(2) , 307.
583 be dealt with by the Income tax Officer in such manner as may be prescribed".
The section does not, it should be noted, provide that the application for registration should be signed by the partner personally, and it is this that forms the foundation of the contention of the appellant that the right which a person has under the general law and under section 2 of the Powers of Attorney Act to act through an agent has not been taken away or abridged by the section.
He relies in support of his contention on the following rules of construction: (1) Statutes which encroach on the rights of a subject should be interpreted if possible so as to respect such rights.
[Vide Maxwell on Interpretation of Statutes, 10th Edition, page 285; Craies on Statute Law,, 5th Edition, pages Ill to 114).
The law is thus stated by Lord Justice Bowen in In re Cuno: Mansfield vs Mansfield(1): "In the construction of statutes, you must not construe the words so as to take away rights which already existed before the statute was passed, unless you have plain words which indicate that such was the intention of the legislature".
(2)In the absence of clear and unambiguous language, an intention to alter the existing law should not be imputed to the legislature.
(Vide Craies on Statute Law, 5th Edition, pages 114 and 115).
(3)The law does not favour repeal of a statute by implication, and therefore a later statute should not be construed as repealing an earlier one without express words or by necessary implication.
(Vide Maxwell on Interpretation of Statutes, 10th Edition, page 170;.
Craies on Statute Law, 5th Edition, page.
"If it is possible", observed Farwell, J., "it is my duty so to read the section as not to effect an implied repeal of the earlier Act": Be Chance(2).
"Unless two Acts are so plainly repugnant to each other, that effect cannot be given to both at the same time, a repeal will not be implied".
Per A. L. Smith, J. in Kutner vs Phillips(3).
(1) , 17.
(2) , 270.
(8) , 272.
584 In the light of these principles, it is contended that the true scope of section 26 A is that it confers a right on a partner to register the firm, and leaves the modus of the exercise thereof to be regulated by the existing law, and that, therefore, far from showing an intention either to alter the general law as to the right of a person to act through his agent or to repeal section 2 of the Powers of Attorney Act, the section depends on their continued operation for its implementation.
Now, the rules of construction on which the appellant relies are well established.
But then, it should not be overlooked that they are only aids to ascertain the true intention of the legislature as expressed in the statute., and the question ultimately is, what in the context do the words of the enactment mean? The following passage from Crawford on "The Construction of Statutes", 1940 Edition, page 454 cited by the appellant may be usefully referred to in this connection: "Why should a statute be subjected to a strict or a liberal construction, as the case may be? The only answer that can possibly be correct is because the type of construction utilized gives effect to the legislative intent.
Sometimes a liberal construction must be used in order to make the legislative intent effective.
, and sometimes such a construction will defeat the intent of the legislature.
If this is the proper conception concerning the rule of construction to be adhered to, then a strict or a liberal construction is simply a means by which the scope of a sta tute is extended or restricted in order to convey the legislative meaning.
If this is the proper position to be accorded strict and liberal constructions, it would make no difference whether the statute involved was penal, criminal, remedial or in derogation of common right, as a distinction based upon this classification would then mean nothing".
That being the correct position, the question is whether on its true interpretation, the statute intended that an application under section 26 A should be ' signed by the partner personally, or whether it could 585 be signed by his agent on his behalf To decide that, we must have regard not only to the language of section 26 A but also to the character of the legislation, the scheme of the Act and the nature of the right conferred by the section.
The Act is, as stated in the preamble, one to consolidate and amend the law relating to income tax.
The rule of construction to be applied to such a statute is thus stated by Lord Herschell in Bank of England v: Vagliano(1): "I think the proper course is in the first instance to examine the language of the statute, and to ask what is its , natural meaning, uninfluenced by any considerations derived from the previous state of the law and not to start with inquiring how the law previously stood, ' and then, assuming that it was probably "intended to leave it unaltered. . . . . " We must therefore construe the provisions of the Indian Income tax Act as forming a code complete in itself and exhaustive of the matters dealt with therein, and ascerta in what their true scope is.
Turning then to the provisions of the Act, considerable light is thrown on their true import by the decision of this Court in Commissioner of Agricultural Income tax vs Keshab Chandra Mandal(2).
There, the question was as to the meaning of Rule I 1 framed under the Bengal Agricultural Income tax Act, 1944 read with Form No. 5, which required that the declaration in the return should be signed "in the case of an individual, by the individual himself".
It was held by this Court on a review of the provisions of the statute that the intention of the legislature as expressed therein was to exclude the common law rule, qui facit per alium facit per se, and the declaration to be valid must be signed by the assessee personally.
It is argued for the appellant that Commissioner of Agricultural Income tax vs Keshab Chandra Mandal(2) was a decision only on the interpretation of Rule No. 11 and not on its validity, and that the question whether the rule was ultra vires or not was not in issue.
That is so, but the materiality of the (1) , 141.
(2) ; , 76 586 decision to the present controversy lies in this that the interpretation which was put on Rule 11 as requiring personal signature was based on the conclusion which this Court reached on a consideration of the relevant provisions of the Bengal Agricultural Income tax Act that the intention of the legislature was to exclude the rule of the common law on the subject.
Now, the provisions of the Bengal Act which were construed in Commissioner of Agricultural Income tax vs Keshab Chandra Mandal(1) as indicative of the above intention, are identical in terms with the corresponding provisions in the Indian Income tax Act, and are, in fact, based on them and it would therefore be logical to construe the latter as expressing an intention to discard the rule of common law on the subject.
The relevant provisions of the Bengal Agricultural Income tax Act may now be noticed.
Section 25(1) of the Bengal Act provides that if.
the Income tax Officer is not satisfied that the return made is correct and complete, he may require the assessee by notice either to attend at the Income tax office or to produce or cause to be produced any evidence on which he might rely.
This corresponds to section 23(2) of the 'Indian Income tax Act.
The point to be noted with reference to this section is that it contains an express provision for production of evidence by the assessee through his agent, a provision which would have been wholly unnecessary if the common law was intended to apply.
Sections 35 and 36 of the Bengal Act contain provisions as to who can represent the assessee and in what proceedings, and they follow section 61 of the Indian Income tax Act and form a code complete in themselves.
Then again, both the Bengal Act and the Indian Income tax Act provide that certain provisions of the Civil Procedure Code are applicable to the proceedings under the Act.
The provisions of Order 3 of the Civil Procedure Code enacting that parties may appear and act through recognised agents are not among them.
To cut the discussion short, the effect of the provisions of the (1) ; 587 Bengal Act is thus summarized in Commissioner of Agricultural Income tax vs Keshab Chandra Manda`(1): "The omission of a definition of the word 'sign ' as including a signature by an agent, the permission under section 25 for production of evidence by an agent and under sections 35 and 58 for attendance by an agent and the omission of any provision in the Act applying the provisions of the Code of Civil Procedure relating to the signing and verification of pleadings to the signing and verification of the return while expressly adopting the provisions of that Code relating to the attendance and examination of witnesses, production of documents and issuing of commission for examination and for service of notices under sections 41 and 60 respectively, cannot be regarded as wholly without significance".
This reasoning applies with equal force to the provisions of the Indian Income tax Act, and goes far to support the contention of the respondent that the common law is not intended to apply to proceedings under the Act.
Another factor material for the determination of this question is the nature of the right conferred by section 26 A. Under the common law of England, a firm is not a juristic person, the firm name being only a compendious expression to designate the various partners constituting it.
But, as pointed out by this Court in Dulichand Laxminarayan vs Commissioner of Income tax, Nagpur(2), inroads have been made by statute s into this conception, and firms have been regarded as distinct entities for the purpose of those statutes.
One of those statutes is the Indian IncomeTax Act, which treats the firm as a unit for purposes of taxation.
Thus, under section 3 of the Act the charge is imposed on the total income of a firm, the partners as such being out of the picture, and accordingly under section 23 of the Act, the assessment will be on the firm on its total profits.
Section 23(5) enacts an exception to this in the case of firms registered under the Act, and provides that, "(a). . the sum payable by the firm itseIf shall (1) ; (2) A.I.R. 1956 S.C. 354.
588 not be determined but the total income of each partner of the firm, including therein his share of its income, profits and gains of the previous year, shall be assessed and the sum payable by him on the basis of such assessment shall be determined".
Thus, if a firm is registered, it ceases to be a unit for purposes of taxation and the profits earned by it are taken, in accordance with the general law of partnership, to have been earned by the individual partners according to their shares, and they are taxed on their individual income including their share of profits.
The advantages of this provision are obvious.
The rate of tax chargeable will not be on the higher scale provided for incomes on the higher levels but on the lower one at which the income of the individual partner is chargeable.
Thus, registration confers on the partners a benefit to which they would not have been entitled but for section 26 A, and such a right being a creature of the statute, can 'be claimed only in accordance with the statute which confers it, and a person who seeks relief under section 26 A must bring himself strictly within its terms before he can claim the benefit of it.
In other words, the right is regulated solely by the terms of the statute, and it would be repugnant to the character of such a right to add to those terms by reference to other laws.
The statute must be construed as exhaustive in regard to the conditions under which it can be claimed.
Thus, considering the question with reference to the character of the legislation, the scheme of the statute and the nature of the right conferred by section 26 A, the conclusion is irresistible that rules of common law were not intended to be saved, and that the right to apply for registration.
under that section is to be determined exclusively by reference to the prescriptions laid down therein.
If that is the true construction, in authorising the rule making authority to frame rules as to who can apply for registration under section 26 A, and when and how, the statute has.
merely directed that authority to fill in details in the field of legislation occupied by it, and it is not denied that Rules a and 6 are within the mandate conferred 580 by the section.
In this view, section 59 (5) of the Act which enacts that "Rules made under this section shall be published in the official Gazette, and shall thereupon have effect as if enacted in this Act" directly applies, and the vires of the Rules is beyond question.
Vide the observations of Lord Herschell in Institute of Patent Agents vs Lockwood(1).
Then, there is the contention of the appellant that the Rules in question are repugnant to section 2 of the Powers of Attorney Act VII of 1882, and are therefore ultra wires.
In addition to the reasons given above in support of the conclusion that the rule of the common law was not intended to operate in the field occupied by section 26 A, there is a further and a more compelling reason why this contention should not be accepted.
It is that there is, in fact, no conflict between the two statutory provisions.
To un derstand the scope of section 2 of the Powers of Attorney.
Act, it is necessary to refer to the history of this legislation.
Under the common law of England, an agent having authority to execute an instrument must sign in the name of the principal if he is to be bound.
If the agent signs the deed in his name albeit as agent, he is the person who is regarded as party to the document and not the principal. , It is the agent alone that can enforce the deed, and it is be that will be liable on it.
Vide In re International Contract Company(2); Schack vs Antony(3), Halsbury 's Laws of England, 3rd Edition, Volume 1, page 217, and Bowstead on Agency, 10th Edition, page 93.
To remove the hardships resulting from this state of the law, the Conveyancing and Law of Property Act, 1881 (44 and 45, Vict, Chapter 41) enacted section 46, which is as follows: "(1) The donee of a power,of attorney may, if he thinks fit execute or do any assurance, instrument, or thing in and with his own name and signature and his own seal, where sealing is required, by the authority of the donor of the power; and every assurance, instrument, and thing so executed and done shall be (1) , 351.
(2) (3) I M. & section 573; ; 590 as effectual in law, to all intents, as if it had been executed or done by the donee of the power in the name and with the signature and seal of the donor thereof (2) This section applies to powers of attorney created by instruments executed either before or after the commencement of this Act".
The Indian Legislature immediately followed suit, and enacted the Powers of Attorney Act VII of 1882 incorporating in section 2 therein word for word, section 46 of the English Act.
The object of this section is to effectuate instruments executed by an agent but not in accordance with the rule of the common law and the enactment is more procedural than substantive.
It does not confer on a person a right to act through agents.
It presupposes that the agent has the authority to act on behalf of the principal, and protects acts done by him in exercise of that authority but in his own name.
But where the question is as to the existence or the validity of authority, the section has no operation.
Thus., the fields occupied by the two enactments are wholly distinct.
Section 26 A says that a partner cannot delegate the exercise of his rights under that section to an agent.
Section 2 of the Powers of Attorney Act says that if there can be and, in fact there is, delegation, it can be exercised in the manner provided therein.
There is accordingly no conflict between the two sections, and no question of repeal arises.
To sum up, the Indian Income tax Act is a self contained code exhaustive of the matters dealt with therein, and its provisions show an intention to depart from the common rule, qui facit per alium facit per se.
Its intention again is that a firm should be given benefit of section 23(5) (a), only if it is registered under section 26 A in accordance with the conditions laid down in that section and the rules framed thereunder.
And as those rules require the application to be signed by the partner in person, the signature by an agent on his behalf is invalid.
In the view which we have taken, the further queson raised by the appellant that the power to repeal 591 a law being a legislative function, can be exercised only by the legislature duly constituted and not by any outside authority, and that the delegation of such a power to an outside authority is unconstitutional.
, does not arise for decision.
In the result., we agree with Viswanatha Sastry, J. that rules 2 and 6 are intravires the powers of the rule making authority, and dismiss the appeals with costs.
| Rules 2 and 6 of the Rules framed under section 59 of the Indian Income Tax Act provide that an application for registration of a firm under section 26 A of the Act and for renewal of registration certificate "shall be signed personally by all the parties".
Held that the word 'personally ' in the Income Tax Rules, as framed under section 59 of the Income Tax Act would exclude a duly authorised agent of a partner of a firm signing an application on behalf of the partner under section 26 A of the Income Tax Act.
(2) That Rules 2 and 6 are not ultra vires the rule making authority.
To decide the question whether on its true interpretation the Indian Income Tax Act intended that an application under section 26 A should be signed by the partner personally, or whether it could be signed by his agent on his behalf the Court must have regard not only to the language of section 26 A but also Lo the character of the legislation, the scheme of the Act and the nature of the right conferred by the section.
The Indian Income Tax Act is a self contained code exhaustive of the matters dealt with therein, and its provisions show an intention to depart from the common rule, qui facit per alium tacit per se.
Its intention again is that a firm should be given benefit of section 23(5)(a), only if it is registered.
under section 26 A in accordance with the conditions laid down in that section and the rules framed thereunder.
And as those rules require the application to be signed by the partner in person, the signature by an agent on his behalf is invalid.
Commissioner of Agricultural Income tax vs Keshab Chandra Mandal, ([1950] S.C.R. 435), relied upon.
commissioner of Income tax vs Subba Rao, ([1947] I.L.R. Mad.
167) approved.
Other case law referred to.
75 578
|
Summarize this legal judgement text concisely | Appeal No. 250 of 1953, Appeal from the judgment and decree dated July 14, 1948 of the Chief Court of Audh, Lucknow in Second Appeal No. 365 of 1945 arising out of the decree dated May 30, 1945 of the Court of District Judge, Sitapur in Appeal No. 4 of 1945 against the decree dated November 25, 1944 of the Court of Additional Civil Judge, Sitapur in Regular Civil Suit No. 14 of 1944.
A. D. Mathur, for the appellant.
Jagdish, Chandra, for respondent No. 1. 758 1956.
October 4.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
The point for decision in this appeal is whether a Thakurdwara of Sri Radhakrishnaji in the village of Bhadesia in the District of Sitapur is a private temple or a public one in which all the Hindus are entitled to worship.
One Sheo Ghulam, a pious Hindu and a resident of the said village, had the Thakurdwara constructed during the years 1914 1916, and the idol of Shri Radhakrishnaji ceremoniously installed therein.
He was himself in management of the temple and its affairs till 1928 when he died without any issue.
On March 6, 1919, he had executed a will whereby he bequeathed all his lands to the Thakur.
The provisions of the will, in so far as they are material, will presently be referred to.
The testator had two wives one of whom Ram Kuar, had predeceased him and the surviving widow, Raj Kuar, succeeded him as Mutawalli in terms of the will and was in management.
till her death in 1933.
Then the first defendant who is the nephew of Sheo Ghulam, got into posses sion of the properties as manager of the endowment in accordance with the provisions of the will.
The appellant is a distant agnate of Sheo Ghulam, and on the allegation that the first defendant bad been mismanaging the temple and denyinng the rightg of the public therein, he moved the District Court of Sitapur for relief under the Religious and Charitable Endowments Act XIV of 1920, but the court declined to interfere on the ground that the endowment was private.
An application to the Advocate General for sanction to institute a suit under section '92 of the Code of Civil Procedure was also refused for the same reason.
The appellant then filed the suit, out of which the present appeal arises, for a declaration that the Thakurdwara is a public temple in which all the Hindus have a right to worship.
The first defendant contested the suit, and claimed that "the Thakurdwara an d the idols were private", and that "the general public had no right to make any interference".
759 The Additional Civil Judge, Sitapur, who tried the suit was of the opinion that the Thakurdwara had been built by Sheo Ghulam "for worship by his family", and that it was a private temple.
He accordingly dismissed the suit.
This judgment was affirmed on appeal by the District Judge, Sitapur, whose decision again was affirmed by the Chief Court of Oudh in second appeal.
The learned Judges, however, granted a ' certificate under section 109(c) of the Code of Civil Procedure that the question involved was one of great importance, and that is how the appeal comes before Us.
The question that arises for decision in this appeal whether the Thakurdwara of Sri Radhakrishnaji at Bhadesia is a public endowment or a private one is one of mixed law and fact.
In Lakshmidhar Misra vs Rang alal(1), in which the question was whether certain lands had been dedicated as cremation ground, it was observed by the Privy Council that it was "essentially a mixed question of law and fact", and that while the findings of fact of the lower appellate court must be accepted as binding, its "actual conclusion that there has been a dedication or lost grant is more properly regarded as a proposition of law derived from those facts than as a finding of fact itself".
In the present case, it was admitted that there was a formal dedication; and the controversy is only as to the scope of the dedication, and that is also a mixed question of law and fact, the decision of which must depend on the application of legal concepts of a public and a private endowment to the facts found, and that is open to consideration in this appeal.
It will be convenient first to consider the principles of law applicable to a determination of the question whether an endowment is public or private, and then to examine, in the light of those principles, the facts found or established.
The distinction between a private and a public trust is that whereas in the former the beneficiaries are specific individuals, in the latter they are the general public or a class thereof.
While in the former the beneficiaries are persons who are (1) [1949] L.R. 76 I.A. 271.
761 laid down in the Sanskrit Texts.
Thus, in his Bhashya on the Purva Mimamsa, Adhyaya 9, Pada 1, Sahara Swami has the following: "Words such as 'village of the Gods 'land of the Gods ' are used in a figurative sense.
That is property which can be said to belong to a person, which he can make use of as he desires.
God however does not make use of the village or lands, according to its desires.
Therefore nobody makes a gift (to Gods).
Whatever property is abandoned for Gods, brings prosperity to those who serve Gods".
Likewise, Medhathithi in commenting on the expression "Devaswam" in Manu, Chapter XI, Verse 26 writes: "Property of the Gods, Devaswam, means whatever is abandoned for Gods, for purposes of sacrifice and the like, because ownership in the primary sense, as showing the relationship between the owner and the property owned, is impossible of application to Gods.
For the Gods do not make use of the property according to their desire nor are they seen ' to act for protecting the same".
Thus, according to the texts, the Gods have no beneficial enjoyment of the properties, and they can be described as their owners only in a figurative sense (Gainartha), and the true purpose of a gift of properties to the idol is not to confer any benefit on God, but to acquire spiritual benefit by providing opportunities and facilities for those who desire to worship.
762 In Bhupati Nath Smritititha vs Ram Lal Maitra(1), it was held on a consideration of these and other texts that a gift to an idol was not to be judged by the rules applicable to a transfer to a 'sentient being ', and that dedication of properties to an idol consisted in the abandonment by the owner of his dominion over them for the purpose of their being appropriated for the purposes which he intends.
Thus, it was observed by Sir Lawrence Jenkins C. J. at p. 138 that "the pious purpose is still the legate, the establishment of the image is merely the mode in which the pious purpose is to be effected" and that "the dedication to a deity" may be "a compendious expression of the pious purposes for which the dedication is designed".
Vide also the observations of Sir Ashutosh Mookerjee at p. 155.
In Hindu Religious Endowments Board vs Yeeraraghavachariar(2), Varadachariar J. dealing with this question, referred to the decision in Bhupati Nath Smrititirtha vs Ram Lal Maitra (supra) and observed: "As explained in that case, the purpose of making a gift to a temple is not to confer a benefit on God but to confer a benefit on those who worship in that temple, by making it possible for them to have the worship conducted in a proper and impressive manner.
This is the sense in which a temple and its endowments are regarded as a public trust".
When once it is understood that the true beneficiaries of religious endowments are not the idols but the worshippers, and that the purpose of the endowment is the maintenance of that worship for the benefit of the worshippers, the question whether an endowment is private or public presents no difficulty.
The cardinal point to be decided is whether it was the intention of the founder that specified individuals are to have the right of worship at the shrine, or the general public or any specified portion thereof.
In accordance with this theory, it has been held that when property is dedicated for the worship of a family idol, it is a private and not a public endowment, as the persons who are entitled to worship at the shrine of the deity can only be the members of the family, (1) Cal.
(2) A.I.R. 1937 Macl.
763 and that is an ascertained group of individuals.
But where the beneficiaries are not members of a family or a specified individual, then the endowment can only be regarded as public, intended to benefit the general body of worshippers.
In the light of these principles, we must examine the facts of this case.
The materials bearing on the question whether the Thakurdwara is a public temple or a private one may be considered under four heads:(1) the will of Sheo Ghulam, Exhibit A 1, (2) user of the temple by the public, (3) ceremonies relating to the dedication of the Thakurdwara and the installation of the idol with special reference to Sankalpa and Uthsarga, and (4) other facts relating to the character of the temple.
(1) The will, Exhibit A 1, is the most important evidence on record as to the intention of the testator and the scope of the dedication.
Its provisions, so far as they are material, may now be noticed.
The will begins with the recital that the testator has two wives and no male issue, that he has constructed a Thakurdwara and installed the idol of Sri Radhakrishnaji therein, and that he is making a disposition of the properties with a view to avoid disputes.
Clause I of Exhibit A 1 provides that after the death of the testator "in the absence of male issue, the entire immovable property given below existing at present or which may come into being hereafter shall stand endowed in the name of Sri Radhakrisbnan, and mutation of names shall be effected in favour of Sri Radhakrishnan in the Government papers and my wives Mst.
Raj Kuer and Mst.
Ram kuer shall be the Muta wallis of the waqf".
Half the income from the properties is to be taken by the two wives for their maintenance during their lifetime, and the remaining half was to "continue to be spent for the expenses of the Thakurdwara".
It is implicit in this provision that after the lifetime of the wives, the whole of the income is to be utilised for the purpose of the Thakurdwara.
Clause 4 provides that if a son is born to the testator, then the properties are to be divided between the son and the Thakurdwara in a specified 764 proportion; but as no son was born, this clause never came into operation.
Clause 5 provides that the Mutawallis are to have no power to sell or mortgage the property, that they are to maintain accounts, that the surplus money after meeting the expenses should be deposited in a safe bank and when funds permit, property should be purchased in the name of Sri Radhakrishnaji.
Clause 2 appoints a committee of four persons to look after the , management of the temple and its properties, and of these, two are not relations of the testator and belong to a different caste.
It is further provided in that clause that after the death of the two wives the committee "may appoint my nephew Murlidhar as Mutawalli by their unanimous opinion".
This Murlidhar is a divided nephew of the testator and he is the first defendant in this action.
Clause 3 provides for filling up of vacancies in the committee.
Then finally there is cl. 6, which runs as follows: "If any person alleging himself to be my near or remote heir files a claim in respect of whole or part of the waqf property his suit shall be improper on the face of this deed".
The question is whether the provisions of the will disclose an intention on the part of the testator that the Thakurdwara should be a private endowment, or that it should be public.
The learned Judges of the Chief Court in affirming the decisions of the courts below that the temple was built for the benefit of the members of the family, observed that there was nothing in the will pointing "to a conclusion that the trust was a public one", and that its provisions were not "inconsistent with the property being a private endowment".
We are unable to endorse this opinion.
We think that the will read as a whole indubitably reveals an intention on the part of the testator to dedicate the Thakurdwara to the public and not merely to the members of his family.
The testator begins by stating that he had no male issue.
In Nabi Shirazi vs Province of Bengal (supra), the question was whether a wakf created by a deed of the year 1806 was a public or a private 765 endowment.
Referring to a recital in the deed that the settlor had no children, Khundkar J. observed at p. 217: "The deed recites that the founder has neither children nor grandchildren, a circumstance which in itself suggests that the imambara was not to remain a private or family institution".
Vide also the observations of Mitter J. at p. 228.
The reasoning on which the above view is based is, obviously, that the word 'family ' in its popular sense means children, and when the settlor recites that he has no children, that is an indication that the dedication is not for the benefit of the family but for the public.
Then we have clause 2, under which the testator constitutes a committee of management consisting of four persons, two of whom were wholly unrelated to him.
Clause 3 confers on the committee power to fill up vacancies; but there is no restriction therein on the persons who could be appointed under that clause, and conceivably, even all the four members might be strangers to the family.
It is difficult to believe that if Sheo Ghulam intended to restrict the right of worship in the temple to his relations, he would have entrusted the management thereof to a body consisting of strangers.
Lastly, there is clause 6, which shows that the relationship between Sheo Ghulam and his kinsmen was not particularly cordial, and it is noteworthy that under clause 2, even the appointment of the first defendant as manager of the endowment is left to the option of the committee.
It is inconceivable that with such scant solicitude for his relations, Sheo Ghulam would have endowed a temple for their benefit.
And if he did not intend them to be beneficiaries under the endowment, who are the members of the, family who could take the benefit thereunder after the lifetime of his two wives? If we are to hold that the endowment was in favour of the members of the family, then the result will be that on the death of the two wives, it must fail for want of objects.
But it is clear from the provisions of the will that the testator contemplated the continuance 766 of the endowment beyond the lifetime of his wives.
He directed that the properties should be endowed in the name of the deity, and that lands are to be purchased in future in the name of the deity.
He also provides for the management of the trust after the lifetime of his wives.
And to effectuate this intention, it is necessary to hold that the Thakurdwara was dedicated for worship by members of the public, and not merely of his family.
In deciding that the endowment was a private one, the learned Judges of the Chief Court failed to advert to these aspects, and we are unable to accept their decision as correct.
In the absence of a deed of endowment constituting the Thakurdwara, the plaintiff sought to establish the true scope of the dedication from the user of the temple by the public.
The witnesses examined on his behalf deposed that the villagers were worshipping in the temple freely and without any interference, and indeed, it was even stated that the Thakurdwara was built by Sheo Ghulam at the instance of the villagers, as there was no temple in the village.
The trial Judge did not discard this evidence as unworthy of credence, but he held that the proper inference to be drawn from the evidence of P.W. 2 was that the public were admitted into the temple not as a matter of right but as a matter of grace.
P.W. 2 was a pujari in the temple, and be deposed that while Sheo Ghulam 's wife was doing puja within the temple, he stopped outsiders in whose presence she used to observe purdah, from going inside.
We are of opinion that this fact does not afford sufficient ground for the conclusion that the villagers did not worship at the temple as a matter of right.
It is nothing unusual even in well known public temples for the puja hall being cleared of the public when a high dignitary comes for worship, and the act of the pujari in stopping the public is expression of the regard which the entire villagers must have had for the wife of the founder, who was a pardanashin lady, when she came in for worship, and cannot be construed as a denial of their rights.
The learned Judges of the Chief Court also relied on the decision 767 of the Privy Council in Babu Bhagwan Din vs Gir Har Saroon(1) as an authority for the position that "the mere fact that the public is allowed to visit a temple or thakurdwara cannot necessarily indicate that the trust is public as opposed to private".
In that case, certain properties were granted not in favour of an idol or temple but in favour of one Daryao Gir, who was maintaining a temple and to his heirs in perpetuity.
The contention of the public was that subsequent to the grant, the family of Daryao Gir must be held to have dedicated the temple to the public for purpose of worship, and the circumstance that members of the public were allowed to worship at the temple and make offerings was relied on in proof of such dedication.
In repelling this contention, the Privy Council observed that as the grant was initially to an individual, a plea that it was subsequently dedicated by the family to the public required to be clearly made out, and it was not made out merely by showing that the public was allowed to worship at the temple "since it would not in general be consonant with Hindu sentiments or practice that worshippers should be turned away".
But, in the present case, the endowment was in favour of the idol itself, and the point for decision is whether it was a private or public endowment.
And in such circumstances, proof of user by the public without interference would be cogent evidence that the dedication was in favour of the public.
In Mundancheri Koman vs Achuthan(2), which was referred to and followed in Babu Bhagwan Din v Gir Har Saroon(1), the distinction between user in respect of an institution which is initially proved to have been private and one which is not, is thus expressed: "Had there been any sufficient reason for holding that these temples and their endowment were originally dedicated for the tarwad, and so were private trusts, their Lordships would have been slow to hold that the admission of the public in later times possibly owing to altered conditions, would affect the private character of the trusts.
As it is, they are of (1) [1939] L.R. 67 I.A. 1.
(2) [1984] L.R. 61 I.A. 405.
768 opinion that the learned Judges of the High Court were justified in presuming from the evidence as to public user which is all one way that the temples and their endowment were public religious trusts".
We are accordingly of opinion that the user of the temple such as is established by the evidence is more consistent with its being a public endowment.
It is settled law that an endowment can validly be created in favour of an idol or temple without the performance of any particular ceremonies, provided the settlor has clearly and unambiguously expressed his intention in that behalf.
Where it is proved that ceremonies were performed, that would be valuable evidence of endowment, but absence of such proof would not be conclusive against it.
In the present case, it is common ground that the consecration of the temple and the installation of the idol of Sri Radhakrishnaji were made with great solemnity and in accordance with the Sastras.
P. W. 10, who officiated as Acharya at the function has deposed that it lasted for seven days, and that all the ceremonies commencing with Kalasa Puja and ending with Sthapana or Prathista were duly performed and the idols of Sri Radhakrishnaji, Sri Shivji and Sri Hanumanji were installed as ordained in the Prathista Mayukha.
Not much turns on this evidence, as the defendants admit both the dedication and the ceremonies, but dispute only that the dedication was to the public.
In the court below, the appellant raised the contention that the performance of Uthsarga ceremony at the time of the consecration was conclusive to show that the dedication was to the public, and that as P. W. 10 stated that Prasadothsarga was performed, the endowment must be held to be public.
The learned Judges considered that this was a substantial question calling for an authoritative decision, and for that reason granted a certificate under section, 109(c) of the Code of Civil Procedure.
We have ourselves read the Sanskrit texts bearing on this question, and we are of opinion that the contention of the appellant proceeds on a misapprehension.
The ceremonies relating to dedication are Sankalpa, Uthsarga and Pra 769 thista.
Sankalpa means determination, and is really formal declaration by the settlor of his intention to dedicate the property.
Uthsarga is the formal renunciation by the founder of his ownership in the property, the result whereof being that it becomes impressed with the trust for which he dedicates it.
Vide The Hindu Law of Religious and Charitable Trust by B. K. Mukherea, 1952 Edition, p. 36.
The formulae to be adopted in Sankalpa and Uthsarga are set out in Kane 's History of Dharmasastras, Volume 11, p. 892.
It will be seen therefrom that while the Sankalpa states the objects for the realisation of which the dedication is made, it is the Uthsarga that in terms dedicates the properties to the public (Sarvabhutebyah).
It would therefore follow that if Uthsarga is proved to have been performed, the dedication must be held to have been to the public.
But the difficulty in the way of the appellant is that the formula which according to P. W. IO was recited on the occasion of the foundation was not Uthsarga but Prasadoasarga, which is something totally different.
Prasada ' is the 'mandira ', wherein the deity is placed before the final installation or Prathista takes placer ' and the Prathista Mayukha prescribes the ceremonies that have to be performed when the idol is installed in the Prasada.
Prasadothsarga is the formula to be used on that occasion, and the text relating to it as given in the Mayukha runs as follows: It will be seen that this is merely the Sankalpa without the Uthsarga, and there are no words therein showing that the dedication is to the public.
Indeed, according to the texts, Uthsarga is to be performed only for charitable endowments, like construction of tanks, rearing of gardens and the like, and not for religious foundations.
It is observed by Mr. Mandlik in the Vyavahara Mayukha, Part 11, Appendix II, II,p.
339 770 that "there is no utsarga of a temple except in the case of repair of old temples".
In the, History of Dharmasastras, Volume II, Part II, p. 893, it is pointed out by Mr. Kane that in the case of temples the proper word to use is Prathista and not Uthsarga.
Therefore, the question of inferring a dedication to the public by reason of the performance of the Uthsarga ceremony cannot arise in the case of temples.
The appellant is correct in his contention that if Uthsarga is performed the dedication is to the public, but the fallacy in his argument lies in equating Prasadothsarga with Uthsarga.
But it is also clear from the texts that Prathista takes the place of Uthsarga in dedication of temples, and that there was Prathista of Sri Radhakrishnaji as spoken to by P.W. 10, is not in dispute.
In our opinion, this establishes that the dedication was to the public.
(4)We may now refer to certain facts admitted or established in the evidence, which indicate that the endowment is to the public.
Firstly, there is the fact that the idol was installed not within the precincts of residential quarters but in.
a separate building constructed for that very purpose on a vacant site.
And as pointed out in Delroos Banoo Begum vs Nawab Syud Ashgur Ally Khan(1), it is a factor to be taken into account in deciding whether an endowment is private or public, whether the place of worship is located inside a private house or a public building.
Secondly, it is admitted that some of the idols are permanently installed on a pedestal within the temple precincts.
That is more consistent with the endowment being public rather than private.
Thirdly, the puja in the 'temple is performed by an archaka appointed from time to time.
And lastly, there is the fact that there was no temple in the village, and there is evidence on the side of the plaintiff that the Thakurdwara was built at the instance of the villagers for providing a place of worship for them.
This evidence has not been considered by the courts below, and if it is true, that will be decisive to prove that the endowment is public.
(1) [1875] 16 Ben.
L.R. 167,186.
771 It should be observed in this connection that though the plaintiff expressly pleaded that the temple was dedicated "for the worship of the general public", the first defendant in his written statement merely pleaded that the Thakurdwara and the idols were 'private.
He did not aver that the temple was founded for the benefit of the members of the family.
At the trial, while the witnesses for the plaintiff deposed that the temple was built with the object of providing a place of worship for all the Hindus, the witnesses examined by the defendants merely deposed that Sheo Ghulam built the Thakurdwara for his own use and "for his puja only".
The view of the lower court that the temple must be taken to have been dedicated to the members of the family goes beyond the pleading, and is not supported by the evidence in the case.
Having considered all the aspects, we are of opinion that the Thakurdwara of Sri Radhakrishnaji in Bhadesia is a public temple.
In the result, the appeal is allowed, the decrees of the courts below are set aside, and a declaration granted in terms of para 17 (a) of the plaint.
The costs of the appellant in all the courts will come out of the trust properties.
The first defendant will himself bear his own costs throughout.
Appeal allowed.
| The issue whether a religious endowment is a public or a private one is a mixed question of law and fact the decision of which must depend on the application of legal concepts of a public and a private endowment to the facts found and is open to consideration by the Supreme Court.
Lakshmidhar Misra vs Bangalal ([1949] L.R. 76 I.A. 271), re ferred to.
The distinction between a private and a public endowment is that whereas in the former the beneficiaries are specific individuals, in the latter they are the general public or a class thereof.
757 Though under Hindu law an idol is a juristic person capable of holding property, and the properties endowed for the temple vest in it, it can have no beneficial interest in the endowment, and the true beneficiaries are the worshippers, as the real purpose of a gift of properties to an idol is not to confer any benefit on God, but the acquisition of spiritual benefit by providing opportunities and facilities for those who desire to worship.
Prosunno Kumari Debya vs Golab Chand Baboo ([1875] L.R. 2 I A. 145), Maharaja Jagadindra Nath Boy Bahadur vs Bani Hemanta Kumari Debi ([1904] L.R. 31 I.A. 203), Pramatha Nath Mullik vs Pradhyumna Kumar Mullik ([1924] L.R. 52 I.A. 245) and Bhupati Nath Smrititirtha vs Bam Lal Maitra ([1910] I.L.R. , referred to.
A pious Hindu who was childless constructed a temple and was in management of it till his death.
He executed a will whereby he bequeathed all his lands to the temple and made provision for its proper management.
The question was whether the provisions of the will disclosed an intention on the part of the testator to dedicate the temple to the public or merely to the members of the family.
Hold that the recital in the will that the testator had no sons coupled with provisions for the management of the trust by strangers was an indication that the dedication was to the public.
Nabi Shirazi vs Province of Bengal (I.L.R. [1942] 1 Cal. 211), referred to.
Held further, that the performance of ceremonies at the con secration of the temple (Prathista), the user of the temple and other evidence in the case showed that the dedication was for worship by the general public.
|
Summarize this legal judgement text concisely | os. 102,105 to 110 of 1956.
Petitions under Article 32 of the Constitution for writs in the nature of Habeas Corpus.
N. C. Chatterjee, Sadhan Chandra Gupta and janardhan Sharma; for petitioners in Petitions Nos. 102, 105 to 108 of 1956.
Sadhan Chandra Gupta and Janardhan Sharma, for petitioners in Petitions Nos. 109 and 110 of 1956.
C.K.Daphtary, SoliCitor General for India, Porus A. Mehta and R. H Dhebar, for respondents in Petitions Nos. 102 and 105 of 1956.
Porus A. Mehta and R. H. Dhebar, for respondents in Petitions Nos. 106 to 110 of 1956.
September 17.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
These are petitions filed under article 32 of the Constitution for the issue of writs in the nature of habeas corpus.
They arise on the same facts and raise the same questions.
On 13 1 1956 the Commissioner of Police, Bombay, passed orders under section 3(2) of the IV of 1950 (hereinafter referred to as the Act), directing the detention of the present petitioners, and pursuant thereto, they were actually arrested on 16 1 1956.
The grounds on which the orders were made were formulated on 19 1 1956, and communicated to the petitioners the next day.
On 21 1 1956 the Commissioner reported the fact of the order and the grounds therefor to the State Govern 655 ment, which approved of the same on 231 1956.
The contention of the petitioners before us is that when the Commissioner passed the orders for detention on 13 1 1956, it was his duty under section 3(3) to report that fact forthwith to the State Government and as be did not do so until 21 1 1956, he had acted in contravention of the statute, and that the detention was therefore illegal.
That raises the question as to what "forthwith" in section 3 (3) of the Act signifies, and whether on the facts the report was made "forthwith", within the meaning of that word in that sub section.
The word "forthwith", it has been observed, is of elastic import.
In its literal sense, it might be construed as meaning that the act to be performed forth;with in relation to another should follow it automatically without any interval of time, or, as held in some of the American.
authorities, should be performed at one and the same time as the other.
But even in America, the preponderance of judicial opinion does not favour this construction.
In Corpus Juris, Volume 26, page 998 the position is thus stated: "Although the term has received a strict conStruction, ordinarily it is not to be strictly construed, but should receive a liberal or reasonable construction .
Some regard must be had to the nature of the act or thing to be performed and the circumstances of the case".
In England, there is a long catena of decisions interpreting the word "forthwith" occurring in statutes, rules and contracts, and their trend has been to construe it liberally.
As early as 1767, discussing the meaning of the word 'immediately ' and the word "forthwith" his been held to have the same significance Lord Hardwicke observed in Rex vs Francis "But then the word immediately, is strongly insisted on, as, a word which excludes all mesne acts and time; and therefore, that this taking away the money must necessarily be 'in the presence of Cox.
(1) Cun. 165; ; , 1183.
656 But all the nine Judges held this word immediately, to be of so loose a signification, and not to imply necessarily, that the money was taken away in Cox 's presence.
For this word does neither in its use and application, nor in its grammatical construction, exclude all mesne acts or time But it is more necessary and proper in this case, to consider the signification of this word in the legal, way.
And it is plain, that in this acceptation, it is not understood to exclude mesne acts or time And on the Statute Hue and Cry, 27 Eliz. c. 13, section 11, where ' the words with as much convenient speed as may be, are made use of, all the precedents have expressed these words, by the word immediate, as may be seen in the books.
The last case which I shall mention on this point, is that of the writs of habeas corpus, issuing out of this Court, which are most frequently made returnable immediately; and in this case the word is never understood either to exclude mesne acts or time, but only means, with convenient speed In Beg.
vs The Justices of Worcester(1), where the question was as to the meaning of the word "forthwith" in section 50 of 6 Will.
IV, Coleridge, J. observed: "I agree that this word 'forthwith ' is not to receive a strict construction like the word 'immediately ',, so that whatever follows, must be done immediately after that which has been done before.
By referring to section 50, it seems that whatever is to be done under it, ought to be done without any unreasonable delay.
I think that the word 'forthwith ' there used, must be considered as having that meaning ' The meaning of the word "immediately" came up for consideration in Thompson vs Gibson(2).
Holding that it was not to be construed literally, Lord Abinger C. B. observed: "If they" (acts of Parliament) "could be construed literally, consistently with common sense and justice, undoubtedly they ought; and if I could see, (1) [1889] 7 Dowl.
789 791: 54 R.R. 902 (903).
(2) (1841] 8 M. & NV. 282 ; ,1047.
657 upon this act of, Parliament, that it was the intention of the legislature that not a single moment 's interval should take place before the granting of the certificate, I should think myself bound to defer to that declared intention.
But it is admitted that this cannot be its interpretation; we are therefore to see how, consistently with common sense and the principles of justice, the words 'immediately afterwards ' are to be construed.
If they do not mean that it is to be done the very instant afterwards,do they mean within ten minutes, or a quarter of an hour, afterwards? I think we should interpret them to mean, within such reason able time as will exclude the danger of intervening facts operating upon the mind of the Judge, so as to disturb the impression made upon it by the evidence in the cause".
In agreeing with this opinion, Alderson, B. expressly approved of the decision of Lord Hardwicke in Rex vs Francis(1).
This construction of the word 'immediately ' was adopted in Page vs Pearce(), Lord Abinger C. B. observing: "It has already been decided, and necessarily so, that the words 'immediately afterwards 'in the statute, cannot be construed literally; and if you abandon the literal construction of the words, what can you substitute but 'within a reasonable time? '. " In The Queen vs The Justice 3 of Berkshire(3), where the point was as to the meaning of "forthwith" in section 52 of 35 & 36 Vict., Chapter 94, Cockburn C. J. observed: "The question is substantially one of fact.
It is impossible to lay down any bard and fast rule as to what is the meaning of the word 'immediately ', in all cases.
The words 'forthwith ' and 'immediately ' have the same meaning.
They are stronger than the expression within a reasonable time ', and imply prompt, vigorous action, without any delay, and whether there has been such action is a question of fact, having regard to the circumstances of the particular case".
(1) dun.
165: ; , 1188.
(2) ; (678): (1212).
(3) (471).
658 The same construction. has been put on the word "forthwith " occurring in contracts.
In Hudson and others vs Hill and others(1) which was a case of charterparty, it was observed at page 280: " Forthwith ' means without unreasonable delay.
The difference between undertaking to do something 'forthwith ' and kithin a specified time is familiar to everyone conversant with law.
To do a thing 'forthwith ' is to do it as soon as is reasonably convenient".
In Reg.
vs Price(2), it was held by the Privy Council that the word "forthwith" in a bail bond meant within a reasonable time from the service of notice.
On these authorities, it may be taken, an act which is to be done forthwith must be held to have been so done, when it is done with all reasonable despatch and without avoidable delay.
But it is argued by Mr. N. C. Chatterjee that the view taken in the above decisions as to the meaning of the word "forthwith" has been abandoned in the later decisions, and that under the law as it stands, when an act has to be performed forthwith in relation to another, what has to be decided is not whether it was done within a reasonable time, but whether it was done so closely upon the other as to form together one continuous act.
He relied in support of this opinion on the decision in Be Muscovitch(3), affirming that in Re Muscovitch(1).
That was a decision on rule 132 of the Bankruptcy Rules which provided that "Upon entering an appeal, a copy of the notice of appeal shall forthwith be sent by the appellant to the registrar of the court appealed from".
The facts were that the appeal was lodged in time on 25 10 1938 but the notice was served on 28 10 1938, and it was found that there was "no satisfactory reason or no reason at all, why there was any delay in the matter" (Re Muscovitch(4)).
On that, it was held that the requisition that "the notice shall forthwith be sent" was not satisfied.
This is authority only for the position that when an Act is done after an interval of time and there is no explanation forthcoming for (1) (280).
(2) ; 8 Moore P.C. 208: (3) (4) , 659 the delay, it cannot be held to have been done "forthwith".
That is made clear by Sir Wilfrid Greene M. R. in the following passage in Re Muscovitch(1) at page 139: "Having regard to the construction which was put upon the word 'forthwith ' which is peremptory, and. admits of no interval of time between the entry of the appeal and the sending of the notice save such as may be imposed by circumstances, which cannot be avoided, I find it impossible in the present case to say that the notice was sent forthwith within the meaning of the rule".
Reliance is also placed for the petitioners on the decision in Ex parte Lamb: In re Southam(2), which was followed in Re Muscovitch(1).
There, construing the word "forthwith" in rule 144 of the Bankruptcy Rules, 1870, which corresponds to rule 132, which was the subject of interpretation in Re Muscovitch(1), Jessel M. R. observed at page 173: "Ithink that the word 'forthwith ' must be construed according to the circumstances in which it is used Where, as in Hyde vs Watt8(3), there is a covenant to insure a man 's life, there must of necessity be some delay, for the act could not be done in a moment.
But where an act which is required to be done 'forthwith ' can be done without delay, it ought to be so done".
In that case also, the learned Judges found that the delay was not explained.
And the observation of Lush L. J. in the same case was that "the word 'forthwith ' has not a fixed and an absolute meaning; it must be construed with reference to the objects of the rule and the circumstances of the case".
There is nothing in the decisions in Re Muscovitch(1) and Ex parte Lamb: In re Southam(2) which can be considered as marking a departure from the construction put on the word "forthwith" in the earlier authorities that it meant only that the act should be performed with reasonable speed and expedition, and that any delay in the matter should be satisfactorily explained.
(1) (2) (3) ; 660 It is argued for the petitioners that even if the con.
struction put on the word "forthwith" in the above decisions is accepted as correct, it must, in any event, yield to any contrary intention expressed in the statute, and that the provisions of the Act afforded clear indication of such an intention.
It is co intended that the legislature while providing in section 7 that the grounds should be communicated to the detenu "as soon as may be" has enacted that the report under section 3(3) should be sent "forth with", that the use of two different expressions in the two sections is a clear indication that they do not mean the same thing, that as the words "as soon as may be" import that the act might be performed in a reasonable time, the word "forthwith" which is more peremptory must be construed as excluding it.
The decisions in Emperor vs Phuchai(1) and in K. U. Kulkarni vs Ganpat Teli(2) were quoted in support of the position that when two different expressions are used in different parts of the same clause or section, they should be construed as used in different senses.
We agree that "forthwith" in section 3(3) cannot mean the same thing as "as soon as may be" in section 7, and that the former is more peremptory than the latter.
The difference between the two expressions lies, in our opinion, in this that while under section 7 the time that is allowed to the authority to send the communication to the detenu is what is reasonably convenient, under section 3(3) what is allowed is only the period during which he could not, without any fault of his own, send the report.
Under section 7 the question is whether the time taken for communicating the grounds is reasonably requisite.
Under section 3(3) it is whether the report has been sent at the earliest point of time possible, and when there is an inter val of time between the date of the order and the date of the report, what has to be con sidered is whether the delay in sending the report could have been avoided.
(1) I.L.R. 50 All.
909: A.I.R. 1929 All.
(2) I.L.R. [1942] Bom.
287: A.I.R. 1942 Bom.
661 It was contended that as section 7 required that the communication should be made not later than 5 days from the date of the order, and as section 3(3) was more peremptory than section 7 in that it required that the report should be made forthwith, the period allowable under section 3(3) could not exceed 5 days, and that as in these cases the reports were sent 8 days later, they could not be held to have been sent forthwith.
This argument mixes up two different matters contained in section 7.
The period of 5 days provided therein is an absolute one and is independent of the period which is permissible under the expression "as soon as may be", which must, by its very nature, be indefinite depending on the facts and circumstances of the case.
It will be as erroneous to read 5 days into the period allowable under the expression "as soon as may be" as to read the 12 days within which the State has to approve the order under section 3(3) into the period which is allowable under the expression "forthwith".
The result then is that the report sent by the Commissioner to the State on 21 1 1956 could be held to have been sent "forthwith" as required by section 3(3), only if the authority could satisfy us that, in spite of all diligence, it was not in a position to send the report during the period from 13th to 21st January 1956.
We must now examine the facts from the above standpoint.
The Commissioner of Police has filed an affidavit explaining why the reports were not sent till 21,st January 1956, though the orders themselves had been made as early as 13th January 1956.
Ever since the publication of the proposal to form a State of Maharashtra without the city of Bombay, there ,had been considerable agitation for the establishment of a Samyuktha Maharashtra with the city of Bombay included in it.
An action committee had been set up on 15 11 1955 for the purpose, and there had been hartal and morchas resulting in outbursts of lawlessness and violence and in the burning of a police chowki.
The final decision on the question was expected to be taken and announced in the middle of January 1956, and the atmosphere was highly sur charged.
It was in this situation that the Commis 662 sioner decided to take action under section 3(2) of the Act against the leading spirits of the movement, and passed the present orders for detention against the petitioners on 13 1 1956.
In his affidavit the Commissioner states that he decided first "to locate the persons against whom orders of detention were made by me on the 13th January 1956 and after having done so, to arrest all of them simultaneously so that none of them may go underground or abscond or evade execution of the detention orders".
Then the affidavit goes on to state: "It was not possible for me to send the report earlier as the situation in the City of Greater Bombay was tense, pregnant with danger on the 13th January 1956, and continued to be so till 16th January 1956, and actual rioting occurred during that night and those riots continued till 22nd January 1956.
I and my staff were kept extremely busy all throughout in maintaining law and order and simultaneously taking steps to round up miscreants.
In this unusual and tense situation, it was not possible to make a report earlier than the day on which it was made".
We see no reason for not accepting these statements.
What happened on the 16th and the following days are now matters of history.
The great city of bombay was convulsed in disorders, which are among the worst that this country has witnessed.
The Bombay police had a most difficult task to perform in securing life and property, and the authorities must have been working at high pressure in maintaining law and order.
It is obvious that the Commissioner was not sleeping over the orders which he had passed or lounging supinely over them.
The delay such as it is due, to causes not of his making, but to causes to which the activities of the petitioners very largely contributed.
We have no hesitation in accepting the affidavit, and we bold that the delay in sending the report could not have been avoided by the Commissioner and that when they were sent by him, they were sent "forthwith" within the meaning of section 3(3) of the Act.
663 Mr. section C. Gupta put forward some special contentions on behalf of the petitioners in C.M.Ps.
109 and 110 of 1956.
He contended that as the order originally made against the petitioner in C.M.P. No. 109 of 1956 was that he should be detained in Arthur Road Prison, Bombay the subsequent order of the Commissioner by which he was detained in Nasik Prison was without jurisdiction.
It is clear from the affidavit of the Commissioner that the petitioner was not ordered to be detained in Arthur Road Prison but in Nasik Road Central Prison, and that he was kept temporarily in Arthur Road Prison, pending arrangements to transport him to Nasik.
It was next contended that the materials on which the orders of detention were made and set out in the communications addressed to the petitioners all related to their past activities, and that they could not constitute grounds for detention in future.
This contention is clearly unsound.
What a person is likely to do in future can only be a matter of inference from various circumstances, and his past record will be valuable, and often the only, record on which it could be made.
It was finally contended that what was alleged against the petitioners was only that they advocated hartal, and that was not a ground for making an order of detention.
But the charge in these cases was that the petitioners instigated hartal bringing about a complete stoppage of work, business and transport with a view to promote lawlessness and disorder, and that is a ground on which an order could be made under section 3(2).
All the contentions urged by the petitioners therefore fail, and these petitions must be dismissed.
| Section 3(3) of the , provides that when an order of detention is made by an officer mentioned in section 3(2) he shall forthwith report the fact to the State Government together with the grounds on which the order has been made. . and no such order. shall remain in force for more than twelve days after the making thereof unless in the meantime it has been approved by the State Government.
On 13th January 1956 the Commissioner of Police, Bombay, passed orders under section 3(2) of the directing the detention of the petitioners and in pursuance thereof ' they were arrested on 16th January 1956 The grounds on which the orders were made were furnished to the petitioners on 20th January 1956 and the next day the Commissioner reported the fact of the order and the grounds therefor to the State Government which approved of the same on 23rd January 1956.
The petitioners contested the validity of the detention on the ground that when the Commissioner passed the orders for detention on 13th January 1956 it was his duty under section 3(3) to report that fact forthwith to the State Government, and as he did not do so until 21st January '1956 he had acted in contravention of the statute and that the detention was therefore illegal.
It was found that the delay in sending the report could not have been avoided by the Commissioner and that it was due to causes to which the petitioners had very largely con tributed.
Held, that the word "forthwith" in section 3(3) of the , has not a fixed and an absolute meaning and it must be construed with reference to the object of the section and the circumstances of the case.
It cannot mean the same thing as "as soon as may be" in section 7 of the Act and the former is more peremptory than the latter.
The difference between the two .
expressions lies in this that while under a. 7 the time that is allowed to the authority to send the communication to the detenu is what is reasonably convenient, under section 3(3) what is allowed is only the 654 period during which he could not, without any fault of his own, send the report.
An act which is to be done forthwith must be held to have been so done when it is done with all reasonable despatch and without avoidable delay.
The Queen vs The Justices of Berkshire ([1878 79] 4 Q.B.D. 469), Hudson and others vs Hill and others ([1874] 43 L. J. C.P. 273), and Beg.
vs Price, ; , relied on.
|
Summarize this legal judgement text concisely | Appeal No. 144 of 1955.
Appeal by special leave from the judgment and order dated September 25, 1953, of the Labour Appellate Tribunal of India, Calcutta in Miscellaneous Case No. C 112 of 1953.
C. K. Daphtary, Solicitor General of India, A. B. N. Sinha and B. P. Maheshwari, for the appellant.
section P. Sinha, R. Patnaik and A. D. Mathur, for the respondents.
801 1956.
October 11.
The Judgment of the Court was delivered by section K. DAS J.
, This is an appeal by special leave from a decision of the Labour Appellate Tribunal, Calcutta, dated the 25th September, 1953.
The relevant facts lie within a narrow compass.
On the 4th of May 1953 the appellant, the Rohtas Industries Limited, Dalmianagar, made an application to the said Labour Appellate Tribunal under section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950 (XLVIII of 1950), hereinafter referred to as the Act, for permission to discharge ninety six temporary employees in the following circumstances.
The appellant company have a number of factories at Dalmianagar including a cement factory, power house, pulp mill, paper factory, chemical factory, factory for the manufacture of certain acids and an asbestos cement factory.
The company had a number of temporary employees who were engaged temporarily in connection with certain erection works for the extension and enlargement of those factories.
The terms of employment of these employees were embodied in a temporary appointment form which was signed by the employees as well as the management.
The said terms stated, inter alia, that "the company could discharge the employee at any time without notice, compensation and giving any reason therefor, whether on completion of the work on which the employee was engaged or earlier"; the terms also made it clear that whether the employee was on the same job or some other job, in the same department or some other, either on temporary work or permanent work, he would remain a temporary employee until the Works Manager issued a written letter expressly making him a permanent employee.
As and when the various erection works were completed, the temporary employees were first put on a list of spare men and then discharged.
Some time prior to the 3rd of July 1952, sixty nine of these temporary employees were spared for being discharged.
The names of these sixty nine employees were given in two lists, Appendix 802 A and Appendix B.
It was alleged that on the 3rd of July 1952, a number of these employees headed by one Brij Nandan Pandey entered the office of Shri L. C. Jain, Manager of the Cement Factory, and Brij Nandan Pandey assaulted the Manager.
A serious situation resulted from that 'incident and the company stopped the sixty nine temporary employees from coming to their factories or to their Labour Office and issued a notice to them stating that the company were applying to the Industrial Tribunal for permission to terminate their services.
At that time an industrial dispute relating to, among other things, the payment of bonus to the employees was pending adjudication in the Court of the Industrial Tribunal, Bihar.
On the 5th of July 1952, the appellant company made an application to the said Tribu nal for permission to discharge the sixty nine employees.
The application was made under section 33 of the .
On the 12th of July 1952, forty nine out of the said sixty nine employees made an application, under section 33 A of the , to the Chairman, Industrial Tribunal, Bihar, on the allegation that the appellant company had discharged sixty nine employees on the 5th July 1952 and had thereby contravened section 33 of the .
On the 20th of August 1952, thirty six more temporary employees were put on the spare list and an application was made to the Industrial Tribunal Bihar, for including these thirty six persons also in the application which had been made for permission to discharge the temporary men; thus, all told, the application related to one hundred and five temporary men.
The case of the appellant company was that the completion of the erection works for which these temporary men were originally employed was a gradual process and so far as the Cement Factory erection work was concerned, it was completed by the end of March 1952 except for certain minor additions and alterations.
Therefore, the appellant company no longer required the services of the temporary employees and they were put on the spare list as and 803 when their services were no longer required.
The two applications which had been made to the Industrial Tribunal, Bihar, the one under section 33 of the and the other under section 33 A of the said Act, remained pending with the Industrial Tribunal till the 17th of December 1952 on which date the application under section 33 A filed by forty nine of the sixty nine temporary employees, was dismissed.
On the 3rd of January 1953, the Chairman of the Industrial Tribunal, Bihar, intimated to the appellant company that the Tribunal was no longer competent to pass any orders on the application under section 33 of the , as the adjudication proceedings on the main reference had already concluded.
Two appeals were taken to the Labour Appellate Tribunal, one from the award made on the main adjudication and the other from the order made on the application under section 33 A of the .
On the 20th May 1953, the appeal from the order under section 33 A was dismissed.
As we are not concerned with that appeal in any way, nothing further need be said about it in this judgment.
The appeal from the main award was pending on the 4th of May 1953 on which date the appellant company made their application under section 22 of the Act to the Labour Appellate Tribunal for permission to discharge ninety six of the temporary employees.
Though there were one hundred and five temporary employees originally, with regard to whom an application had been made to the Industrial Tribunal, Bihar, nine out of them voluntarily left the service of the company; therefore, the number of temporary employees regarding whom the application under section 22 of the Act was made was ninety.
six only.
, The application was contested by forty two of the temporary employees, and in their affidavit they denied that any of the sixty nine workmen were originally recruited as temporary workmen and they further denied that they were involved in the incident relating to the assault on Shri L.C. Jain on the 3rd of July 1952.
They said that in effect they were 804 permanent employees and enjoyed all the benefits of permanent employees.
They further stated.
: "The erection work of the cement plants of the petitioners was completed towards the end of 1950 and it is therefore patently false to suggest that we became redundant as a result of the completion of the erection of the cement plants.
It is significant to note that a large number of workmen who had worked on the job of erecting the cement plants were discharged shortly after the completion of the said work on the ground that they were surplus.
The cement plants started to Work in full swing from about the first quarter of 1951 and we were working in the said cement plant producing cement from the very beginning.
right up to 5th July 1952, when we were informed that we were surplus.
In fact the real reason for the proposed retrenchment is the petitioner 's desire to increase the rate of exploitation of its workmen by increasing the workload".
With regard to the terms embodied in the appointment form, it was alleged that on or about the 3rd of December 1948 the employees of the appellant company were forced to go on strike on account of an industrial dispute; towards the end of the strike the workmen became exhausted and drifted back to work.
The strike was ultimately called off and the appellant company taking full advantage of their victory compelled a section of the workmen, who did not return to work until the strike was called off, to sign the ap pointment form with the purpose of humiliating and terrorising them.
The Labour Appellate Tribunal gave its decision on the 25th September 1953 which is the decision under appeal.
It dismissed the application of the appellant.
company on a finding which the Tribunal expressed in the following words: "It is thus clear that these 96 workmen had been working in the production departments from as far back as the beginning of the year 1951 and so the completion of the erection work cannot be put forward as the ground for their retrenchment".
805 Referring to the Directors ' Report dated the 10th of July 1951, the Tribunal came to the conclusion that the workmen 's version that the erection works had been completed by the end of 1950 was supported by the said report.
In other words, the decision of the Labour Appellate Tribunal was primarily based on the finding that the erection works were completed by the end of 1950 and therefore there was no ground for discharging the ninety six temporary men.
Learned counsel for the appellant has contended before us that (1) the Appellate Tribunal did not correctly appreciate the true scope and effect of section 22 of the Act; (2) the Appellate Tribunal gave attention to only one point, namely, the completion of erection works, and did not consider the other circumstances put forward on behalf of the appellant in support of their application; (3) instead of considering the real point which arose for determination on an application under section 22 of the Act, the Appellate Tribunal confined its attention to a point which was not decisive of the question before it; and (4) by reason of its failure to consider the real point for determination, the order of the Appellate Tribunal has resulted in manifest injustice.
In our opinion, these contentions are correct and should be upheld.
It was pointed out in The Automobile Products of India Ltd. vs Rukmaji Bala(1) that section 22 of the Act confers on the Appellate Tribunal a special jurisdiction which is in the nature of original jurisdiction and the Tribunal being an authority of limited jurisdiction must be confined to the exercise of such functions and powers as are actually conferred on it.
With regard to the scope of section 22 of the Act, it was observed: "The object of section 22 of the 1950 Act like that of section 33 of the 1947 Act as amended is to protect the workmen concerned in disputes which form the subject matter of pending proceedings against victimisation by the employer on account of their having raised industrial disputes or their continuing the (1) ; 105 105 806 pending proceedings.
It is further the object of the two sections to ensure that proceedings in connection with industrial disputes already pending should be brought to a termination in a peaceful atmosphere and that no employer should during the pendency of those proceedings take any action of the kind mentioned in the sections which may give rise to fresh disputes likely to further exacerbate the already strained relation between the employer and the workmen.
To achieve this object a ban has been imposed upon the ordinary right which the employer has under the ordinary law governing a contract of employment.
Section 22 of the 1950 Act and section 33 of the 1947 Act which impose the ban also provide for the removal of that ban by the granting of express permission in writing in appropriate cases by the authority mentioned therein.
The purpose of these two sections being to determine whether the ban should be re moved or not, all that is required of the authority exercising jurisdiction under these sections is to accord or withhold permission".
The earlier decision of this Court in Atherton West & Co. Ltd. vs Suti Mill Mazdoor Union(1) dealt with clause 23 of the U. P. Government Notification dated the 10th March 1948 made in exercise of the powers conferred by sections 3 and 8 of the U. P. , and it was there observed that the scope of the enquiry was to come to a conclusion whether there was a prima facie case made out for the discharge or dismissal of the workman and the employer, his agent or manager was not actuated by any improper motives or did not resort to any unfair practice or victimisation in the matter of the proposed discharge or dismissal of the workman.
That being the scope of the enquiry on an application under section 22 of the Act, what the Labour Appellate Tribunal had to decide in the present case was whether the appellant company had made out a Prima facie,case for the proposed discharge and whether they were resorting to any unfair practice or victimisation in the matter of the proposed discharge.
(1) ; 807 Instead of doing that, the Labour Appellate Tribunal dismissed the application of the appellant company on the only ground that the version of the workmen that the erection works had been completed by the end of 1950 was supported by the Report of the Directors dated the 10th July 1951.
Learned counsel for the appellant has rightly pointed out that even in respect of the completion of erection works the conclusion of the Appellate Tribunal is a complete non sequitur.
First of all, the Directors ' Report was dated the 10th July 1951 though the balance sheet of the company with which the report was dealing related to the period ending on the 31st October 1950 The report naturally referred to such works as were completed on or before the 10th of July 1951.
It should be obvious that the completion of erection works must be a gradual process, and while some of the erection works might have been completed by the end of 1950 or July 1951, some were still in the process of completion.
Under their terms of employment, temporary employees could be moved from one work to the other and the mere circumstance, that they were employed in a production department for some time, even if true, did not make them permanent employees; nor did the circumstance that they enjoyed some of the benefits of permanent employees make them permanent.
These are circumstances which have been completely ignored by the Labour Appellate Tribunal.
It is worthy of note that in their application dated the 12th of July 1952, the forty nine workmen admitted: "though most of us were originally recruited for erection work in the Cement Factory, many of us were later on transferred as permanent workers to sugar and paper factories and some of us were absorbed as permanent workers in the maintenance section of the Cement Factory".
(Vide paragraph 3 of the application).
In the joint affidavit filed on the 12th August, 1953, in reply to the appellant 's application under section 22 of the Act, the said workmen denied however that 808 they were at any time engaged temporarily for temporary work vide paragraphs 3 and 6 of the affidavit.
Obviously, they were shifting from the position which they had originally taken up.
No evidence was given that the men who were employed temporarily were afterwards made permanent.
They filed a schedule, marked 'A ', to their affidavit wherein they showed their period of service and the name of the factory or plant from where their duties stopped.
On an ex amination of the schedule (Annexure A) it appears that a number of them were put on the spare list when the erection work was completed some time in 1952. 'Annexure 'A ' therefore supports the case of the appellant company that the completion of the erection works was a gradual process, some were completed in 1950, some in 1951 and some in 1952.
The first batch of sixty nine employees with whom we are concerned were put on the spare list between March and July 1952 and the second batch were put on the spare list in August 1952 when the relevant erection works were completed.
The finding of the Labour Appellate Tribunal with regard to the completion of erection works was vitiated by reason of the failure to take into consideration the circumstances stated above.
With regard to the terms of employment embodied in the temporary appointment form, the respondents ' case was that the appointment forms were signed as a result of the strike in 1948; it was never suggested that these forms were never signed at all and the comment of learned counsel for the respondents that the appellant company have not produced the appointment forms has very little force.
The respondents gave no evidence in support of the allegation that the appointment forms were taken from them for the purpose of humiliating or terrorising them, nor did the Appellate Tribunal come to any such finding.
None of the affidavits filed on behalf of the respondents suggested, even in a remote way, that the appellant company were resorting to any unfair practice or victimisation in the matter of the pro posed discharge.
809 Learned counsel for the respondents has contended before us that the finding of the Labour Appellate Tribunal is a finding on a question of fact, namely, whether the respondents were temporary or permanent employees.
He has argued that this Court should not interfere even though the finding is based on reasons which may not appear convincing to us.
We have, however, pointed out that the Labour Appellate Tribunal gave no finding on the question whether the respondents were temporary employees or not.
The only finding which the Tribunal gave related to a different matter, namely, the completion of erection works.
Secondly, learned counsel for the respondents has contended that under section 22 of the Act the Appellate Tribunal had a discretion either to lift the ban or not to lift it and in a matter of discretion this Court should not interfere.
It is true that this Court does not sit upon the decisions of Industrial Tribunals like an ordinary Court of appeal, and there must be special circumstances to justify the exercise of our special power under article 136 of the Constitution.
In our opinion, such special circumstances exist in the present case where the Labour Appellate Tribunal has not directed its mind to the real question to be decided on an application under section 22 of the Act and has passed an order on the basis of a somewhat irrelevant finding which has resulted in manifest injustice.
The discretion which an Industrial Tribunal has must be exercised in accordance with well recognised principles.
There is undoubtedly a distinction between commercial and industrial arbitration.
As has been pointed out by Ludwig Teller (Labour Disputes and Collective Bargaining) Vol. 1, page 536: "Industrial arbitration may involve the extension of an existing agreement, or the making of a new one, or in general the creation of new obligations or modifications of old ones, while commercial arbitration generally concerns itself with interpretation of existing obligations and disputes relating to existing agreements".
810 A Court of law proceeds on the footing that no power exists in the courts to make contracts for people; and the parties must make their own contracts.
The courts reach their limit of power when they enforce contracts which the parties have made.
An Industrial Tribunal is not so fettered and may create new obligations or modify contracts in the interests of industrial peace, to protect legitimate trade union activities and to prevent unfair practice or victimisation.
We cannot, however, accept the extreme position canvassed before us that an Industrial Tribunal can ignore altogether an existing agreement or existing obligations for no rhyme or reason whatsoever.
It has been necessary for us to go into the facts and circumstances of this case in greater detail than is usual with this Court, because the Labour Appellate Tribunal did not do so.
The Act under which the Appellate Tribunal purported to pass its order has now been repealed by the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956.
A question of some nicety as to the correct interpretation of section 33 of the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956 might have arisen if we had thought fit to remand this case.
We do not, however, think it necessary to pass an order of remand in this case and therefore abstain from expressing any opinion as to the correct position in law under subsection (2) of section 33 of that Act.
No new facts need investigation in this case.
Learned counsel for the parties have taken us through all the affidavits filed and the facts necessary for an enquiry under section 22 of the Act clearly emerge from those affidavits.
We are satisfied Prima facie that the respondents were temporary employees and were put on the spare list as and when the erection works were gradually completed.
The appellant company have made out a prima facie case for the permission which they have asked for and there is no suggestion even of any unfair practice or victimisation.
In these circumstances, we would allow the appeal, set aside the decision of the Labour Appellate Tribunal dated the 25th September 1953 and pass the order 811 Which that Tribunal should have passed in this case, namely, that permission be granted to the appellant to discharge ninety six temporary workmen.
In the circumstances of this case, we think that the parties must bear their own costs throughout.
Appeal allowed.
| The scope of an enquiry under section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950, is whether there is a prima facie case made out for the proposed discharge of the workman and the employer has not resorted to any unfair practice or victimisation.
Though an Industrial Tribunal can create new obligations or modify contracts in the.
interests of industrial peace or to prevent unfair practice or victimisation, its discretion has to be exercised in accordance with well recognised principles and it cannot ignore altogether an existing agreement or existing obligations.
The Automobile Products of India Ltd. vs Rukmaji Bala ([1955] 1 S.C.R. 1241) and Atherton West & Co. Ltd. vs Suti Mill Mazdoor Union, ([1953] S.C.R. 780), relied on.
Where, as in the present case, the Labour Appellate Tribunal did not direct its mind to the real question to be decided on an application under section 22 of the Act for permission to discharge the temporary employees and without deciding whether the workmen were temporary employees or not, passed an order dismissing the application on the basis of a finding which was not determinative of the real point or question at issue, held that the decision must be set aside and the proper order passed.
|
Summarize this legal judgement text concisely | Appeal No. 224 of 1955.
665 Appeal by special leave from the judgment and order dated the 7th May 1954 of the Allahabad High Court in Civil Miscellaneous Writ No. 133 of 1952.
Naunit Lal for the appellant.
G. C. Mathur and C. P. Lal for respondents Nos.
I & 2. 1956.
September 20.
The Judgment of the Court was delivered by section K. DAS J.
This is an appeal by special leave from the judgment and order of the High Court of Judicature at Allahabad dated the 7th of May 1954 by which the High Court dismissed an application of the appellant for the issue of a writ of certiorari under the provisions of article 226 of the Constitution.
The appeal raises the question of the validity of the assessment of a tax on the appellant for the year 1950 51 by the Town Area Committee of Karbal under the provisions of clause (f) of sub section (1) of section 14 of the United Provinces Town Areas Act, 1914 (U. P. Act II of 1914), hereinafter referred to as the Act.
The appellant resides in the town of Mainpuri and carries on the business of plying a motor bus on hire.
The appellant 's bus plies on.
alternate days between Etawah and.
Mainpuri, and the town of Karhal falls on the route between Etawah and Mainpuri.
It is not now disputed that passengers travelling in the appellant 's bus used to get down or get in at a bus stand within the town area of Karhal; the appellant had a booking office situate within the Town Area and tickets were issued to passengers and an account of the business was maintained in the said booking office.
The Town Area Committee of Karhal imposed a tax of Rs. 25 on the appellant for the year 1950 51 under the provisions of clause (f) of sub section (1) of section 14 of the Act, being a tax on 'circumstances and property ' and assessing the income of the appellant from his business within the 86 666 Town Area of Karhal at a sum of Rs. 800 for the year.
The appellant preferred an appeal against the assessment of the tax under section 18 of the Act, and the grounds taken by the appellant were (1) that he did not reside within the limits of the Town Area and (2) that he did not carry on any trade or business within that Area.
By his order dated the 20th October 1951 ' the Appeal Officer held that the appellant carried on his trade or business within the limits of the Town Area and was therefore rightly assessed to tax under clause (f) of sub section (1) of section 14 of the Act.
He accordingly dismissed the appeal.
It may be stated here that the appellant was asked to submit an account of his income, but no such account was submitted and the assessing officer worked out the income of the appellant at about Rs. 67 a month, that is, about Rs. 800 a year.
No question about the amount of the tax has been raised before us, and it is not necessary to say anything further with regard to the quantum of assessment.
The appellant then filed a writ application in the High Court of Judicature at Allahabad and the ground taken by him was that there could be no assessment under clause (f) of sub section (1) of section 14 of the Act, because he resided outside the jurisdiction of the Town Area.
The learned Judge, who dealt with the.
application of the appellant, took the view that the tax imposed on the appellant could clearly be imposed under clause (d) of sub section (1) of section 14 of the Act; therefore it was unnecessary to consider whether the tax could be legally imposed under clause (f) of sub section (1) of section 14.
The learned Judge also expressed the view that residence within the Town Area was not a pre requisite condition for the imposition of the tax under clause (d), and it was enough if the appellant carried on a trade or business within the Town Area.
On these views, the learned Judge dismissed the writ application.
The main point which has been urged before us by 667 learned counsel for the appellant is that the assessment of a tax under clause (f) of sub section (1) of section 14 on the appellant was.
not valid, because residence within the Town Area was a necessary condition for the assessment of a tax under clause (f).
Learned counsel also argued before us that the.
assessing authority having assessed a tax on the appellant under clause (f), it was not open to the High Court to say that the tax was legally valid under a 'different clause, namely clause (d) of sub section (1) of section 14.
With regard to his second point, learned counsel has drawn our attention to sections 15 to 17 of the Act.
He has pointed out that under section 15 of the Act a list of persons liable to pay the tax imposed under section 14 and of the amounts to be paid respectively by such persons, has to be prepared; the list may be revised by the District Magistrate and has to be submitted to him for confirmation.
When so confirmed.
, the list can only be altered under sub section (2) of section 15 by the District Magistrate or in pursuance of an order passed in appeal under the provisions of section 18.
We think that learned counsel has rightly submitted that, so far as the present appellant is concerned, the list prepared under section 15 must have shown him as assessed to a certain amount of tax under clause (f) of sub section (1) of section 14 and the assessment must have been confirmed on that basis by the District Magistrate.
Therefore, the legality of the tax imposed on the appellant must be considered with reference to the clause under which the assessment was actually made, and a different clause under which the assessment might have fallen cannot be called in aid of the assessment.
We proceed therefore to consider the legality of the tax imposed on the appellant with reference to clause (f) of sub section (1) of section 14 of the Act.
The short point for consideration in that context is whether residence within the Town Area is a necessary condition for the imposition of the tax under clause 668 (f).
It is necessary to read here section 14 of the Act so far as it is relevant to the point in question.
"14 (1) Subject to any general rules or special orders of the State Government in this behalf, the taxes which a Committee may impose are the following: (d) A tax on trades, callings or professions not exceeding such rates as may be prescribed.
(f) A tax on persons assessed according to their circumstances and property not exceeding such rate and subject to such limitations and restrictions as may be prescribed: , Provided that such a person is not already assessed under clauses (a) to (e) above".
It will be noticed that the power of the Town Area Committee to impose a tax under clause (f) is subject to, ' first, 'any general rules or special orders of the State Government in this behalf ' and, secondly, to (such limitations and restrictions as may be prescribed '.
These restrictions and limitations are to be found in the Rules made by the State Government under section 39(2) of the Act, which are called Rules regarding the Limitations, Restrictions and Rate sub ject to which the Circumstances and Property Tax shall be levied by the Town Area Committee.
These rules were notified by Notification No. 681 T/IX 79T 50 dated July 20, 1950.
Two of the rules are important for our purpose, viz., rules 2 and 3.
They are in these terms: "2.
The tax shall be assessed on every person on whom it is imposed, in two separate parts, namely (1) on his circumstances and (2) on the property, if any, owned by him, and the aggregate of the sums so determined on both the counts shall constitute the total composite amount payable by him as circumstances and property tax: Provided that nothing shall render it irregular 669 to assess a person on only one ' of the two 'counts aforementioned if he does not fulfil the conditions for liability in respect of that count on which he is not assessed.
(1) The tax assessed on the circumstances of an assessee may be imposed on any person residing or carrying on business within the limits of the town area: Provided that such person has so resided or carried on business for a total period of at least six months in the year of assessment.
(2) No tax shall be imposed on any person whose total taxable income is less than Rs. 200 per annum.
(3) The rate of the tax shall not exceed one anna in a. rupee on total taxable income.
(4) The total amount of tax assessed on any person shall not, in any year, exceed a sum of section 250.
Explanation. (1) For purposes of this rule 'taxable income ' means gross income accruing within the limits of the town area.
(ii) The words 'carrying on business ' mean the carrying on of any trade, profession, calling or other practice or activity which yields or is capable of yielding income but do not include service under Government or a local body".
The important point which emerges out of these Rules is that under Rule 3 the tax assessed on the circumstances of an assessee may be imposed on any person residing or carrying on business within the limits of the town area; in other words, two, conditions in the alternative are laid down in Rule 3, either the person must reside within the limits of the town area or he must be carrying on business within the limits of the said area.
There is a third condition that the residence or carrying on of business must be for a total period of at least six months in the year of assessment.
No question regarding the third condition has been raised in this case and it is not necessary to consider that condition here.
Therefore, it is 670 clear that if Rule 3 is valid, then the imposition of the tax on the appellant under clause (f) is also valid, because on the finding not now in dispute the appellant carried on a trade or business within the limits of the Town Area of Karhal.
It has been argued before us that Rule 3 is invalid because, under clause (f) of sub section (1) of section 14, residence within the Town Area of the person to be taxed under that clause is a necessary condition.
We are unable to accept this argument.
Clause (f) of sub section (1) of section 14 does not say in express terms that residence within the Town Area is a necessary condition for the imposition of the tax.
The Rules make it quite clear that for each of the clauses of sub section (1) of section 14 there is a 'nexus ' between the territorial jurisdiction of the Town Area Committee and the imposition of the tax.
So far as clause (d) is concerned, the 'nexus ' is that the trade, calling or profession must be carried on within the limits of the Town Area.
So far as clause (f) is concerned, Rule 3 makes it quite clear that the 'nexus ' is either resi dence within the limits of the Town Area or carrying on business within the same limits.
It is to be remembered that clause (f) was inserted by an Amending Act, namely, the Uttar Pradesh Town Areas (Validation and Amendment) Act, 1950.
Section 1(2) of the Amending Act gave retrospective effect to the amendments.
The proviso to clause (f) makes it quite clear that a person who is already assessed under clauses (a) to (e) cannot be assessed again under clause (f).
The proviso is intended to avoid multiple taxation, but it is manifest from the proviso that ,there may be overlapping of the different clauses in sub section (1) of section 14; for example, a person may come under clause (d) as well as clause (f) if he carries on a trade within the limits of the Town Area.
Therefore, the proviso was necessary to prevent the same person being taxed more than once under the different clauses of sub section (1) of section 14.
If residence within the limits of the Town Area were a 671 sine qua non for the imposition of a tax under clause (f), no question of overlapping between clauses (d) and (f) would arise unless the person to be taxed resided as well as carried on a trade within the limits of the Town Area.
If the argument of learned counsel for the appellant is correct, then the proviso to clause (f) is meaningless in so far as it envisages an overlapping between clause (d) and clause (f) in other cases.
On a proper construction of clause (f), read with the limitations and restrictions embodied in the Rules made under section 39 of the Act, it cannot be held that residence within the Town Area of Karbal was a necessary condition for the imposition of the tax on the appellant.
A reference, was made to sub.;section (4) of section 15 A of the Act.
Section 15 A provides for preliminary proposals for the imposition of taxes under section 14, publication of such proposals and the submission of draft rules.
Sub section (4) states: "(4) Any, inhabitant of the Town Area may, in the prescribed manner, file an objection in writing on such proposals and the committee shall take into consideration the objections so filed and finally settle its proposals." Under sub section (4) any inhabitant of the Town Area may file an objection to the preliminary proposals for the imposition of taxes under section 14.
The argument before us was that if an inhabitant of the Town Area alone was entitled to file an objection to preliminary proposals for taxation, then in all the, clauses of sub section (1) of section 14 residence within the Town Area must be read as a necessary condition for the imposition of the taxes under section 14.
This contention appears to us to be unsound.
Firstly, the objection as, to preliminary proposals for taxation is not the same thing as objection to an assessment, and it may well be that the legislature in their wisdom thought fit to confine the filing of objections to preliminary proposals for taxation to the inhabitants of the Town Area.
Secondly, there are several other 672 sections of the Act, such as section 20 and section 21, which show that the imposition of a tax on persons not resident within the Town Area.
but having some other nexus within that Area, was permissible.
Thirdly, the question of the validity of sub section (4) of section 15 A does not arise in this case.
The appellant was assessed to a tax and he had a right to file an appeal which right he exercised.
No grievance was made of the failure to exercise the right under subsection (4) of section 15 A.
It is therefore un necessary for us to make any pronounce ment on the validity or otherwise of sub section (4) of section 15 A All that is necessary for us to state is that by reason of sub section (4) of section 15 A, it cannot be held that residence within the Town Area is a necessary condition for the imposition of a tax in all the clauses of sub section (1) of section 14 of the Act.
Learned counsel for the appellant referred us to two decisions of 'the Allahabad High Court: District Board, Farrukhabad vs Prag Dutt(1) and District Board, Dehra Dun vs Damodar Dutt(2).
The second decision, which was earlier in point of time, arose out of a suit for recovery of 'circumstances and property tax under the U. P. District Boards Act (Local Act X of 1922).
The question there was whether the District Board of Dehra Dun could impose a tax on the defendants who were not residents within the area of the District Board.
It is worthy of note that under section 114 of the U. P. District Boards Act, the power of a Board to impose a tax on circumstances and 'property is subject to the condition that the tax may be imposed on any person residing or carrying on business in the rural area within the District Board.
The only question in that Allahabad case was whether the defendants resided within the rural area of the District Board so as to make them liable for the. tax.
The finding Was that they did not reside within the rural area and therefore the imposition of (1) A.I.R. 1948 All. 382.
(2) I.L.R. [1944] All.
673 the tax was illegal, and section 131 of the U. P. District Boards Act did not bar the suit.
This decision does not help the appellant.
If it shows anything, it shows that it was open to the District Board to impose a circumstances and property ' tax on any person residing or carrying on business in the rural area.
In the 1948 Allahabad decision, the main question was whether the provisions of section 2, Professions Tax Limitation Act (20 of 1941) affected the powers conferred upon the District Board by section 108 of the U.P. District Boards Act to levy a tax on circumstances and property '.
A subsidiary question was also raised, whether section 131 of the U. P. District Boards Act barred the suit.
With regard to the main question, it was pointed out that the name given to a tax did not matter; what had to be considered was the pith and substance of it.
It was held that in pith and substance the tax was one which attracted the provisions of section 2, Professions Tax Limitation Act (20 of 1941).
A tax on 'circumstances and property ' is a composite tax and the word 'circumstances '.
means a man 's financial position, his status as a whole depending, among other things, on his income from trade or business.
From militating against the principle that in considering the circumstances of a person his income from trade or business within the Town Area may be taken into consideration, the decision approves of the principle.
In the course of his judgment, Bind Basni Prasad J. referred to section 128, U.P. Municipalities Act, 1916, where 'taxes on circumstances and property ' appear as a head distinct from the 'taxes on trades, callings and vocations and employments ' and the argument was that the taxes being under different heads should be treated as being entirely different, one from the other 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.
The meanings of words and expressions used in an Act must take their colour from the context in which 87 674 they appear.
It is true that in the Act under our consideration the taxes which the Town Area Committee may impose appear under different heads in Sub section (1) of section 14.
We have already stated that though the clauses are different, the words used in the section show that there may be overlapping between the different clauses, and to prevent the same person being subjected to multiple taxation, a 'proviso was incorporated in clause (f).
In view of the words and expressions used in section 14 of the Act, we cannot accept the argument that clause (f) should be read as entirely independent of and unconnected with the other clauses and a different condition, namely residence within the Town Area, must be read as a necessary part of clause (f).
To do so will be to read in clause (f) words which do not occur there.
The limitations for the imposition of a tax under clause (f) are given in Rule 3 and 'residence 'is only one of the alternative conditions for the imposition of the tax not a line qua non as is contended by learned counsel for the appellant.
In the result, we hold that the assessment of the tax on the appellant under clause (f) of subjection (1) of section 14 of the Act was legally valid.
The appeal fails and is dismissed with costs.
| The appellant was carrying on business, but was not residing within the Town Area of Karhal.
The Town Area Committee imposed a tax of Rs. 25 on him under clause (f) of a. 14(1) of the U.P. Town Areas Act, 1914, being a tax on 'circumstances and property '.
The appellant filed a writ application in the High Court on the ground that there could be no assessment under clause (f) because he resided outside the jurisdiction of the Town Are& Committee.
The High Court dismissed the application taking the view that it was unnecessary to consider whether the tax could be legally imposed under clause (f) as the tax imposed could clearly be justified under clause (d) of section 14(1) which authorised the imposition of a tax on trades, callings or professions.
Held, that residence was not a sine qua non for the imposition of the tax under clause (f), that the carrying on of 'business within the Town Area was a sufficient nexus for the imposition of the tax under clause (f) and that the assessment of the tax on the appellant under clause (f) was legally valid.
The legality of the tax imposed must be considered with ref erence to the clause under which the assessment was actually made and a different clause under which the assessment might have fallen cannot be called in aid of the assessment.
Rule 3 of the 'Rules regarding the Limitations, Restrictions and Rate subject to which the Circumstances and Property Tax shall be levied by the Town Area Committees ' framed under section 39(2) of the Act does not go beyond section 14(1)(f) and is not invalid.
|
Summarize this legal judgement text concisely | Civil Appeal No. 216 of 1953.
On appeal from the judgment and decree dated the 8th March, 1951 of the Mysore High Court in Regular Appeal No. 123 of 1947 48 arising out of the decree dated the 23rd June 1947 of the Court of District Judge, Bangalore in Original Suit No. 84 of 1945 46.
K. section Krishnaswami Iyengar and M. section K. Sastri for the appellants.
R. Ganapathy Iyer and K. R. Krishnaswamy for the respondent No. 1. 1956.
April 26.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
This appeal arises out of a suit instituted by one Krishna Rao, since deceased, and now represented by his son and heir, the respondent herein, for a declaration of his title to certain building sites situate in Bangalore in the State of Mysore, and for consequential reliefs.
These properties belonged to one Munuswami, who died leaving him surviving his third wife Chellammal.
, three sons by his predeceased wives, Keshavananda, 454 Madhavananda and Brabmananda, and three minor daughters, Shankaramma, Srikantamma and Devamma.
On 1 9 1918 the three brothers executed a usufructuary mortgage for Rs. 16,000 in favour of one Abdul Huq over a bungalow and vacant sites in cluding the properties concerned in this litigation.
A period of three years was fixed for redemption.
There was a lease back of the properties by the mortgagee to the mortgagors on 3 9 1918, and it was also for a period of three years.
On 6 9 1918 the three brothers effected a partition under a deed, Exhibit K, which provided inter alia that they were to pay each a sum of Rs. 8 per mensem to their step mother, Chellammal, for her maintenance, and that their step sisters should be under their protection.
On 6 6 1919 Chellammal presented a plaint in forma pauperis claiming maintenance and praying that it might be charged on the properties specified in the plaint.
That was Miscellaneous Case No. 377 of 1918 19.
At the same time, she also presented as the next friend of her minor daughters, Srikantamma and Devamma, two plaints in forma pauperis, Miscellaneous Cases Nos. 378 and 379 of 1918 19 claiming maintenance and marriage expenses for them, and praying that the amounts decreed might be charged on the schedule mentioned properties.
The properties which are involved in this suit are included in item 8 in schedule A annexed to all the three plaints.
On 17 6 1920 permission to sue in forma pauperis was granted in all the three cases, and they were registered as Suits Nos. 98 to 100 of 1919 20.
We are concerned in this appeal with only one of them, the suit of Devamma which was Miscellaneous Case No. 379 of 1918 19, subsequently registered as Suit No. 100 of 1919 20.
The suits were contested, and decreed after trial on 12 12 1921.
The decree in 0.
section No. 100 of 1919 20 directed the defendants each to pay to the plaintiff a sum of Rs.6 per mensem for maintenance until her marriage and Rs. 1,500 for marriage expenses, and the payment of the amount was made a first charge on the properties.
In execution of this decree, the 455 properties with which we are now concerned, were sold on 2 8 1928 and purchased by Devamma, the decree holder.
A sale certificate was issued to her on 21 11 1930 (Exhibit J 5).
Proceedings were also taken in execution of the decrees obtained by Chellammal and Srikantamma and of one Appalaraju, and all the properties comprised in the mortgage were sold and purchased by third parties.
It must be mentioned that all the three brothers were adjudicated insolvents on their own application, Brahmananda by an order dated 23 3 1923 in Insolvency Case No. 7 of 1921 22 and Keshavananda and Madhavananda by an order dated 19 2 1926 in Insolvency Case No. 4 of 1925 26.
It also appears from the evidence of D.W. 5 that at about this time all of them left the place.
While these proceedings were going on, Abdul Huq, the mortgagee, filed on 16 8 1921, O.S. No. 27 of 192122 against Keshavananda and his two brothers for recovery of arrears of rent due by them under the lease deed, and obtained a decree on 21 10 1921 but was unable to realise anything in execution thereof, and the execution petition was finally dismissed on 22 1 1926.
He then filed a second suit against the mortgagors, O.S. No. 86 of 1931 32, for arrears of rent for a period subsequent to that covered by the decree in O.S. No. 27 of 1921 22 and for possession of the properties on the basis of the lease dated 3 9 1918, and obtained a decree on 22 3 1932 but was unable to get possession, as the properties were in the occupation of third parties under claims of right.
Abdul Huq died on 20 3 1933, and thereafter, his legal representatives filed on 30 8 1933 O.S. No. 8 of 1933 34 to enforce their rights under the mortgage deed dated 1 9 1918.
Among the defendants who were impleaded in this suit were the mortgagors Keshavananda and Madhavananda, Gururaja, son of Brabmananda who bad died, the Official Receiver and the purchasers of the mortgaged properties in execution of the maintenance decrees and the decree of Appalaraju.
Devamma was the third defendant in this action.
The plaint alleged that the mortgagors had failed to 456 pay rent as provided in the lease deed dated 3 9 1918, and had suffered collusive decrees to be passed against them in the maintenance suits and other actions, and that properties had been sold fraudulently in execution of those decrees.
On the basis of these allegations, the plaintiffs prayed for a decree for possession as against the purchasers including Devamma, and for a sum of Rs. 5,000 as damages.
In the alternative, they prayed for a decree for sale of the mort gaged properties for the amount due under the mortgage.
The suit was contested, and issues raised as to whether the sales were collusive, and whether the plaintiffs were entitled to possession and damages, and alternatively, as to what amounts were payable under the mortgage and to what reliefs the plaintiffs were entitled.
At the trial, the plaintiffs abandoned the relief as to possession and damages, and it accordingly became unnecessary to go into the question as to the collusive character of the maintenance decrees and the execution sales.
On 26 9 1935 a decree was passed determining the amount payable to the plaintiffs on redemption, providing for payment thereof on or before 26th January 1936, and in default, directing the sale of the properties.
In execution of this decree, the properties were sold in court auction sometime in 1936, and purchased by one Chapman, and possession was taken by him through court on 18 2 1937.
On 25 1 1938, Saldhana, who was the agent of Chapman, and became his executor on his death, sold the building sites now in dispute and forming part of the properties purchased in court auction, to Krishna Rao, the plaintiff in the present action.
When Krishna Rao attempted to take possession of the sites, he was obstructed by one Garudachar, claiming title under a sale deed dated 1 12 1932 executed by one Lokiah, the husband of Srikantamma, sister of Devamma, and be accordingly filed O.S. No. 92 of 1938 39 in the court of the Subordinate Judge, Bangalore for establishing his title to the suit properties, and for an injunction restraining Garudachar from interfering with his possession.
The 457 suit was decreed on 23 7 1940, and the matter having been taken in appeal to the High Court by Garudachar, the parties entered into a compromise, and a decree, Exhibit E 1, was passed in terms thereof on 18 9 1942.
Under this decree.
, the title of the plaintiff to the suit properties was recognised.
After obtaining this decree, Krishna Rao started building on the sites, when he met with fresh obstruction, this time from the appellants who set up that they were in possession under a claim of title.
Under the partition deed entered into by the mortgagors on 6 9 1918 (Exhibit K), Keshavananda was allotted two plots, Nos. 3 and 4 to the west of East Lal Bagh Road in the plan, Exhibit G. These are the very plots, which form the subject matter of the present suit.
On 30 1 1920 Keshavananda con veyed these properties to Dr. Nanjunda Rao under a deed of sale, Exhibit VI.
There was on the same date a sale by Brahmananda of plots Nos. 1 and 2 to Dr. Nanjunda Rao, but those properties are not involved in this litigation.
On the death of Dr. Nanjunda Rao, his sons partitioned the properties, and in the division the suit properties fell to the share of one Raghunatha Rao, and on his death in 1938) his estate devolved on his widow, Nagubai, who is the first appellant.
On 28 5 1939 she executed a trust deed settling a moiety of these properties on the Anjaneyaswami Temple at Karaikal, and the trustees of that institution are the other appellants in this appeal.
In view of their obstruction, Krishna Rao instituted the suit out of which the present appeal arises, for a declaration of his title to the sites in question, and for an injunction restraining the defen dants from interfering with his possession, or in the alternative, for a decree in ejectment if they were held to be in possession.
The claim made in the plaint is a simple one.
It is that the title of Chapman as purchaser in execution of the decree passed on the mortgage dated 1 9 1918 prevailed against all titles created subsequent to that date, and that accordingly Dr. Nanjunda Rao and his successors acquired under the sale deed dated 30 1 1920 no title which could be 458 set up as against that of the plaintiff.
The defendants contested the suit on the ground, firstly, that as they were not impleaded as parties in the suit on the mortgage, O.S. No. 8 of 1933 34, their right of redemption remained unaffected by the decree passed therein or the sale in execution thereof; and secondly, that the suit was barred by limitation, because the plaintiff was not in possession within 12 years of the suit, and also because the defendants had acquired title to the suit properties by adverse possession for over 20 years.
The District Judge of Bangalore, who tried the suit, held that the title of Dr. Nanjunda Rao to the suit properties under the sale deed dated 30 1 1920 was, under section 52 of the Transfer of Property Act, subject to the result of the maintenance suit of Devamma (O.S. No. 100 of 1919 20), and was in consequence extinguished by the purchase by her in execution of the charge decree in that suit.
On the ques tion of limitation, the learned Judge held that the plaintiff had established possession of the properties within 12 years of the suit, and that the defendants had failed to establish title by adverse possession.
In the result, he granted a decree in favour of the plaintiff for possession of the suit properties.
The defendants appealed to the High Court, Mysore and by their judgment dated 8 3 1951 the learned Judges agreed with the District.
Judge that by reason of section 52 of the Transfer of Property Act, the title of Dr. Nanjunda Rao based on the deed dated 30 1 1920 came to an end when Devamma purchased the proper ties in execution of her maintenance decree, and dismissed the appeal, but granted a certificate under article 133(1) of the Constitution, and that is how the appeal comes before us.
Notwithstanding the tangle of legal proceedings extending over 30 years, which forms the background of the present litigation, the single and sole question that arises for decision in this suit is whether the sale deed dated 30 1 1920 under which the appellants claim is subject to the result of the sale dated 2 8 1928 in execution of the decree in O.S. No.100 of 459 1919 20 by reason of the rule of lis pendens enacted in section 52 of the Transfer of Property Act.
If it is, it is not in dispute that it becomes avoided by the purchase by Devamma on 2 8 1928.
If it is not, it is equally indisputable that the appellants as purchasers of the equity of redemption from Keshavananda have a right to redeem the mortgage dated 1 9 1918, and not having been impleaded in O.S. No. 8 of 1933 34 are not bound either by the decree passed therein or by the sale in execution thereof.
On this question, as the plaint in O.S. No. 100 of 1919 20 praying for a charge was presented on 6 6 1919, the sale to Dr. Nanjunda Rao subsequent thereto on 30 1 1920 would prima facie fall within the mischief of section 52 of the Transfer of Property Act, and would be hit by the purchase by Devamma on 2 8 1928 in execution of the charge decree.
Sri K. section Krishnaswami Ayyangar, learned counsel for the appellants, did not press before us the contention urged by them in the courts below that when a plaint is presented in forma pauperis the lis commences only after it is admitted and registered as a suit, which was in this case on 17 6 1920, subsequent to the sale under Exhibit VI a contention directly opposed to the plain language of the Explanation to section 52.
And he also conceded and quite rightly, that when a suit is filed for maintenance and there is a prayer that it be charged on specified properties, it is a suit in which right to immovable property is directly in question, and the lis commences on the date of the plaint and not on the date of the decree, which creates the charge.
But he contends that the decision of the courts below that the sale deed dated 30 1 1920 is hit by section 52 is bad on the following three grounds: (1) The question of lis pendens was not raised in the pleadings, and is not open to the plaintiff.
(2 The suit for maintenance, O.S. No. 100 of 1919 20 and the sale in execution of the decree passed therein are all collusive, and section 52 has accordingly no application.
(3) The purchase by Devamma in execution of the decree in O.S. No. 160 of 1919 20 on 2 8 1928 is void and inoperative, as the Official Receiver in whom 60 460 the estate of Keshavananda had vested on 19 2 1926 was not a party to the sale proceedings.
The e contentions must now be considered.
We see no substance in the contention that the plea of lis pendens is not open to the plaintiff on the ground that it had not been raised in the pleadings.
It is true that neither the plaint nor the reply statement of tile plaintiff contains any averment that the sale is affected by the rule of lis pendens.
Nor is there any issue specifically directed to that question.
It is argued for the respondent that the allegations in para 4 of the plaint and in.
para 5 of the reply statement that Dr. Nanjunda Rao being a transferee subsequent to the mortgage could claim no right "inconsistent with or superstar to those of the mortgagee and the auction purchaser" are sufficiently wide to embrace this question, and reference was made to issue No. 3 which is general in character.
Even if the plaintiff meant by the above allegations to raise the plea of lis pendens, he has not expressed himself with sufficient clearness for the defendants to know his mind, and if the matter had rested there, there would be much to be said in favour of the appellant 's contention.
But it does not rest there.
The question of lis pendens was raised by the plaintiff at the very commencement of the trial on 8 3 1947 when he went into the witness box and filed in his examination in chief Exhibit J series, relating to the maintenance suits, the decrees passed therein and the proceedings in execution thereof, including the purchase by Devamma.
This evidence is relevant only with reference to the plea of lis pendens, and it is significant that no objection was raised by the defendants to its reception.
Nay, more.
On 13 3 1947 they cross examined the plaintiff on the collusive character of the proceedings in Exhibit J series, and filed documents in proof of it, The trial went on thereafter for nearly three months, the defendants adduced their evidence, and the bearing was concluded on 2 6 1947.
In the argument before the District Judge, far from objecting to the plea of lis pendens being permitted to be raised, the defendants argued 461 the question on its merits, and sought a decision on the evidence that the proceedings were collusive in character, with a view to avoid the operation of section 52 of the Transfer of Property Act.
We are satisfied that the defendants went to trial with full knowledge that the question of lis pendens was in issue, had ample opportunity to adduce their evidence thereon, and fully availed themselves of the same, and that, in the circumstances, the absence of a specific pleading on the question was a mere irregularity, which resulted in no prejudice to them.
It was argued for the appellants that as no plea of lis pendens was taken in the pleadings, the evidence bearing on that question could not be properly looked into, and that no decision could be given based on Exhibit J series that the sale dated 30 1 1920 was affected by lis; and reliance was placed on the observations of Lord Dunedin in Siddik Mahomed Shah vs Mt. Saran and others(1) that "no amount of evidence can be looked into upon a plea which was never put forward".
The true scope of this rule is that evidence let in on issues on which the parties actually went to trial should not be made the foundation for decision of another and different issue, which was not present to the minds of the parties and on which they bad no opportunity of adducing evidence.
But that rule has no application to a case where parties go to trial with knowledge that a particular question is in issue,tbough no specific issue has been framed thereon, and adduce evidence relating thereto.
The rule applicable to this class of cases is that laid down in Rani Chandra Kunwar vs Chaudhri Narpat Singh: Rani Chandra Kunwar vs Rajah Makund Singh(2).
There, the defendants put forward at the time of trial a contention that the plaintiff had been given away in adoption, and was in consequence not entitled to inherit.
No such plea was taken in the written statement; nor was any issue framed thereon.
Before the Privy Council, the contention was raised on behalf of the plaintiff that in view of the pleadings, the question of adoption was not open to the defendants.
It was (1) A.I.R. 1930 P.C. 57.
(2) [1906 07] L.R. 34 I A. 27.
462 held by Lord Atkinson overruling this objection that as both the parties had gone to trial on the question of adoption, and as the plaintiff had not been taken by surprise, the plea as to adoption was open to the defendants, and indeed, the defendants succeeded on that very issue.
This objection must accordingly be overruled.
2.It is next contended that section 52 of the Transfer of Property Act does not operate to extinguish the title of Dr. Nanjunda Rao and his successors under the sale dated 30 1 1920, because the proceedings which resulted in the decree in 0.
section No. 100 of 1919 20 and the sale in execution thereof on 2 8 1928 were all collusive.
Whether they were so or not is essentially a question of fact, and both the courts below have concurred in answering it in the negative.
It is contended for the appellants that this finding is the result of an error into which the learned Judges of the High Court fell as to the incidence of burden of proof, and it should not therefore be accepted.
The argument is that Abdul Huq, his legal representatives and the plaintiff himself bad admitted again and again in judicial proceedings taken with reference to the suit properties that the decree and sale in 0.
section No. 100 of 1919 20 were collusive, and that, in consequence, even if the initial onus of establishing this fact was on the defendants, that was shifted on to the plaintiff on proof of the abovementioned admissions, and as there was no evidence worth the name on his side to explain them, he must fail.
We must now examine the several statements which are relied on by the appellants as admissions, ascertain what their true import is, and determine what weight should be attached to them.
On 27 6 1932 Abdul Huq moved the insolvency court for a direction to the Official Receiver to take possession of the mortgaged properties, which were stated to be in the occupation of one Lokiah.
This Lokiah, it has been already mentioned, is the husband of Srikantamma, the sister of Devamma, he having married her after the maintenance suits had been decreed and sometime 463 prior to the court auction in 1928.
In his petition, Abdul Huq alleged that Lokiah conducted proceedings in execution of the decree in O.S. No. 100 of 1919 20 in collusion with the insolvents and without notice to the Official Receiver, and purchased the properties in court auction on 2 8 1928 on behalf of the decree holder.
The decree itself was not attacked as collusive, and as for the sale dated 2 8 1928 it was distinctly alleged in para 3 of the petition that the purchase by Lokiah was for the benefit of Devamma.
The substance of the complaint of Abdul Huq was that the execution proceedings and the sales were fraudulent, and intended to defeat his rights to the rents and profits from the properties.
In other words, the ground of attack on the sale dated 2 8 1928 was not that it was unreal and collusive, but that it was real but fraudulent.
Now, there is a fundamental distinction between a proceeding which is collusive and one which is fraudulent.
"Collusion in judicial proceedings is a secret arrangement between two persons that the one should institute a suit against the other in order to obtain the decision of a judicial tribunal for some sinister purpose".
(Wharton 's Law Lexicon, 14th Edition, page 212).
In such a proceeding, the claim put forward is fictitious, the contest over it is unreal, and the decree passed therein is a mere mask having the similitude of a judicial determination and worn by the parties with the object of confounding third parties.
But when a proceeding is alleged to be fraudulent, what is meant is that the claim made therein is untrue, but that the claimant has managed to obtain the verdict of the court in his favour and against his opponent by practising fraud on the court.
Such a proceeding is started with a view to injure the opponent, and there can be no question of its having been initiated as the result of an understanding between the parties.
While in collusive proceedings the combat is a mere sham, in a fraudulent suit it is real and earnest.
The allegations in the petition of Abdul Huq set out above show that the suit itself was not attacked as collusive, but that the execution 464 proceedings were impeached as fraudulent.
It should be mentioned that on this petition the District Judge passed an order on 30 6 1932 directing the Official Receiver to take the necessary steps and report.
But nothing came out of this.
We next come to a petition filed after the death of Abdul Huq by his legal representatives asking for permission of the insolvency court to institute a suit on the mortgage dated 1 9 1918 impleading the Official Receiver as party.
The allegations made in the petition are on the same lines as those made by Abdul Huq in his petition dated 27 6 1932, and they do not carry the matter any further.
This petition was ordered, and on 30 8 1933 O.S. No. 3 of 1933 34 was instituted.
In this suit, as already stated, the plaintiffs sought to recover possession of the properties on foot of the usufructuary mortgage, and ancillary to that relief, they claimed damages from the defendants who were in possession, on the ground that the execution proceedings under which they got into possession were collusive and fraudulent.
Thus far, the allegations are a mere repetition of what bad been stated in the prior proceedings.
But the plaint in the suit went further, and stated for the first time that the proceedings in O.S. No. 100 of 1919 20 and the decree passed therein were collusive.
But these allegations were made only as the basis of the claim for damages for non payment of rent under the lease deed dated 3 9 1918 and non surrender of possession of the properties, and their true import is that the suit was fraudulent and intended to deprive the mortgagee of the rents and profits to which be was entitled.
At the trial, as already stated, the relief for possession and damages was given up, the question as to the collusive character of the sale was abandoned, and a decree for sale was passed.
These proceedings are open to the same comment as was made on the petition of Abdul Huq, and do not assist the defendants.
It remains to deal with a proceeding to which the present plaintiff was a party.
It will be remembered that after his purchase be was obstructed in his 465 possession by one Garudachar, and he had to file O.S. No. 92 of 1938 39 to establish his title against him.
In his plaint in that suit he stated, obviously adopting what Abdul Huq and his legal representatives had previously alleged, that the decree in O.S. No. 100 of 1919 20 and the execution sale on 2 8 1928 were collusive.
On behalf of the appellants, a contention is urged that as the plaintiff obtained a decree in O.S. No. 92 of 1938 39 on the strength of the above allegations, it is not open to him in these proceedings to go back on them, and plead the contrary.
That is a contention which will be presently considered.
But apart from that, the statements of the plaintiff in his plaint in O.S. No. 92 of 1938 39 considered purely as admissions, do not carry the matter beyond the point to which the statements made by Abdul Huq and his legal representatives in the prior proceedings take us.
The question then is, what is the effect to be given to these statements? An admission is not conclusive as to the truth of the matters stated therein.
It is only a piece of evidence, the weight to be attached to which must depend on the circumstances under which it is made.
It can be shown to be erroneous or untrue, SO long as the person to whom it was made has not acted upon it to his detriment, when it might become conclusive by way of estoppel.
In the present case, there is no question of estoppel, as the title of Dr. Nanjunda Rao arose under a purchase which was long prior to the admissions made in 1932 and in the subsequent years.
It is argued for the appellants that these admissions at the least shifted the burden on to the plaintiff of proving that the proceedings were not collusive, and that as he gave no evidence worth the name that these statements were made under a mistake or for a purpose and were, in fact, not true, full effect must be given to them.
Reliance was placed on the well known observations of Baron Park in Slatterie vs Pooley(1) that "what a party himself admits to be true may reasonably be presumed to be so", and on the decision in Rani Chandra Kunwar vs Chaudhri (1) ; , 669; ; , 581.
466 Narpat Singh: Rani Chandra Kunwar vs Rajah Makund Singh(1), where this statement of the law was adopted.
No exception can be taken to this proposition.
But before it can be invoked, it must be shown that there is a clear and unambiguous statement by the opponent, such as will be conclusive unless explained.
It has been already pointed out that the tenor of the statements made by Abdul Huq, his legal representatives and the plaintiff was to suggest that the proceedings in 0.
section No. 100 of 1919 20 were fraudulent and not collusive in character.
Those statements would not, in our opinion, be sufficient, without more, to sustain a finding that the proceedings were collusive.
But assuming that they are sufficient to shift the burden on to the plaintiff of proving that the decree and sale in 0.
section No. 100 of 1919 20 were not collusive, the evidence adduced by him is, in our opinion, ample to discharge that burden.
He has filed Exhibit J series, which give a complete picture of the proceedings in 0.
section No. 100 of 1919 20.
Under the partition deed, Exhibit K,it will be remembered, the brothers agreed to pay a monthly maintenance of Rs. 8 each to their step mother, Chellammal.
This, however, was not charged on the family properties.
With reference to their step sisters, Srikantamma and Devamma, the provision was simply that the brothers should protect them.
It will also be remembered that under the partition Keshavananda and Brahmananda each got two vacant sites in full quit of their shares.
It appears from Exhibit J 10, paragraph 2, that the two brothers were contemplating the disposal of their plots, in which case the claim of Chellammal and the step sisters to maintenance would be defeated.
It became accordingly necessary for them to safeguard their rights, and for that purpose, to file suits for maintenance and claim a charge therefor on the family properties.
That the apprehensions of Chellammal were well founded is established by the fact that the two brothers entered into agreements for the sale of their vacant sites to Dr. Nanjunda Rao on 20 10 1919, and sale deeds were actually executed (1) [1906 07] L.R. 34 I.A. 27.
467 pursuant thereto on 30 1 1920.
There cannot be any doubt, therefore, that the suits were bona fide.
This conclusion is further reinforced when regard is had to the conduct of the litigation.
Two of the brothers contested the suit.
It underwent several adjournments, and was heard finally in December 1921.
At the trial, a number of witnesses were examined on either side, and the judgment, Exhibit J 6, shows that the contest centred round the quantum of maintenance payable to the plaintiffs, and it was keen, even bitter.
When at last the plaintiffs obtained decrees, they had no easy time of it in realising the fruits thereof.
The troubles of a creditor, it has been said, begin after he obtains a decree, and so it was with the plaintiffs.
Exhibit J 4 shows that Devamma had to file several applications for execution, before she could finally bring the properties to sale and in view of the heavy encumbrances to which they were subject, she had herself to purchase them on 2 8 1928.
The sale was confirmed on 21 11 1930, and the sale certificate, Exhibit J 5, was issued, and she got into possession.
To sum up, the claim on which the suit was laid was true and honest; it was hotly contested by the defendants, and prolonged proceedings in execution had to be taken for realising the fruits of the decree.
These are facts which are eloquent to show that the suit in O.S. No. 100 of 1919 20 and the sale on 2 8 1928 were not collusive.
The plaintiff also went into the box, and stated in cross examination that though when he filed 0. section No. 92 of 1938 39 he had thought that the proceedings were collusive, he now thought otherwise.
Counsel for the appellants strongly criticised this evidence, and contended that in the absence of facts as to why he chanced his mind, the statement of the plaintiff that he now thought otherwise was worthless.
But then, the plaintiff as also Abdul Huq and his legal representatives were utter strangers, and their statement about the collusive character of the proceedings, in O.S. No. 100 of 1919 20 could only be a matter of inference.
If on the materials then before him the plaintiff could have thought that those proceedings 468 were collusive, there is no reason why on the materials now before him he could not think otherwise.
It was open to the defendants to have further crossexamined him about the materials which led him to change his opinion, but they chose not to pursue the matter.
Both the courts below have, on a careful consideration of the record, come to the conclusion that the proceedings in O.S. No. 100 of 1919 20 were not collusive, and we do not see sufficient grounds for disturbing that finding, which must be affirmed.
We shall now deal with the contention of the appellants that in view of what happened in O.S. No. 92 of 1938 39 it is not open to the plaintiff to plead in these proceedings that the decree and sale in O.S. No. 100 of 1919 20 are not collusive.
It is argued that in his plaint in O.S. No. 92 of 1938 39 the plaintiff alleged that the proceedings in O.S, No. 100 of 1919 20 were collusive, adduced evidence in proof of these allegations, persuaded the court to give a finding to that effect, and obtained a decree on the basis of that finding, and he cannot therefore be permitted in this litigation to change his front and plead that the pro ceedings in O.S. No. 100 of 1919 20 are not collusive and succeed on it.
This bar arises, it is argued, on the principle that a person cannot both approbate and reprobate.
Now, the facts relating to the litigation in O.S. No. 92 of 1938 39 are that Garudachar set up title to the suit properties under a purchase dated 1 12 1932 from Lokiah, and it was the truth and validity of this sale that was really in question in that suit.
Lokiah purchased these and other properties in execution of the money decree of one Appalaraju, and therefore his title cannot prevail as against that of Devamma under the purchase under the charge decree on 2 8 1928.
In his plaint in O.S. No. 92 of 1938 39, the plaintiff attacked the purchases of both Devamma and of Lokiah as fraudulent and collusive.
But, in fact, as Garudachar did not claim any title under Devamma, there was no need to attack the purchase by her on 2 8 1928.
The suit was contested, 469 and in the judgment that was given, Exhibit E, the title of the plaintiff was upheld and a decree granted in his favour.
There was an appeal against the decree by Garudachar, R.A. No. 101 of 1940 41, and that was disposed of on a compromise by the parties, under which the title of the plaintiff to the suit properties was affirmed and Garudachar was granted some other vacant sites in satisfaction of his claim.
It is difficult to say on these facts that the allegation of the plaintiff that the proceedings in O.S. No. 100 of 1919 20 were collusive was either the foundation of his claim, or that he obtained any benefit under the decree on that basis.
Counsel for the appellants sought to rely on the findings in Exhibit E, as establishing that the proceedings in O.S. No. 100 of 191920 were collusive.
But as that judgment was not inter parties, the findings therein are inadmissible in this litigation, and, moreover, there having been an appeal against that judgment, the findings in Exhibit E lost their finality, and when the parties settled their claim by granting to Garudachar another property in substitution, they ceased to possess any force even inter parties.
But it is argued by Sri Krishnaswami Ayyangar that as the proceedings in 0.
section No. 92 of 1938 39 are relied on as barring the plea that the decree and sale in 0.
section No. 100 of 1919 20 are not collusive, not on the ground of resjudicata or estoppel but on the principle that a person cannot both approbate and reprobate, it is immaterial that the present appellants were not parties thereto, and the decision in Verschures Creameries Ltd. vs Hull and Netherlands Steamship Company Ltd.(1), and in particular, the observations of Scrutton, L.J., at page 611 were quoted in support of this position.
There, the facts were that an agent delivered goods to the customer contrary to the instructions of the principal, who thereafter filed a suit against the purchaser for price of goods and obtained a decree.
Not having obtained satisfaction, the principal next filed a suit against the agent for damages on the ground of negligence and (1) (1921] 2 K B. 608.
470 breach of duty.
It was held that such an action was barred.
The ground of the decision is that when on the same facts, a person has the right to claim one of two reliefs and with full knowledge he elects to claim one and obtains it, it is not open to him thereafter to go back on his election and claim the alternative relief.
The principle was thus stated by Bankes, L. J.: "Having elected to treat the delivery to him as an authorised delivery they cannot treat the same act as a misdelivery.
To do so would be to approbate and reprobate the same act".
The observations of Scrutton, L. J. on which the appellants rely are as follows: "A plaintiff is not permitted to 'approbate and reprobate '.
The phrase is apparently borrowed from the Scotch law, where it is used to express the principle embodied in our doctrine of election namely, that no party can accept and reject the same instrument: Ker vs Wauchope(1): Douglas Menzies vs Umphelby(2).
The doctrine of election is not however confined to instruments.
A person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage.
That is to approbate and reprobate the transaction".
It is clear from the above observations that the maxim that a person cannot 'approbate and reprobate ' is only one application of the doctrine of election, and that its operation must be confined to reliefs claimed in respect of the same transaction and to the persons who are parties thereto.
The law is thus stated in Halsbury 's Laws of England, Volume XIII, page 454, para 512: "On the principle that a person may not approbate and reprobate, a species of estoppel has arisen which seems to be intermediate between estoppel by record and estoppel in pais, and may conveniently be referred to here.
Thus a party cannot, after taking advantage under an order (e.g. payment of costs), (1) , 21.
(2) , 232, 471 be heard to say that it is invalid and ask to set it aside, or to set up to the prejudice of persons who have relied upon it a case inconsistent with that upon which it was founded; nor will he be allowed to go behind an order made in ignorance of the true facts to the prejudice of third parties who have acted on it".
The plaintiff obtained no advantage against the appellants by pleading in 0.
section No. 92 of 1938 39 that the proceedings in 0.
section No. 100 of 1919 20 were collusive; nor did they acting on those pleadings acquire rights to the suit properties.
Nor is there any question of election, because the only relief which the plaintiff claimed in 0.
section No. 92 of 1938 39 and which he now claims is that he is entitled to the suit properties.
Only, the ground on which that relief is claimed is different and, it is true, inconsistent.
But the principle of election does not forbid it, and there being no question of estoppel, the plea that the proceedings in 0.
section No. 100 of 1919 20 are not collusive is open to the plaintiff.
3.It was finally contended that the purchase by Devamma in execution of the decree in 0.
section No. 100 of 1919 20 was void and conferred no title on her, because the Official Receiver in whom the estate of Keshavananda, the mortgagor, had vested on his adjudication as insolvent on 19 2 1926 had not been made a party to those proceedings, and that, in conse quence, the title of Dr. Nanjunda Rao and his successors under the sale deed dated 30 1 1920 continued to subsist, notwithstanding the court auction sale on 2 8 1928.
The obvious answer to this contention is that the properties which were sold on 2 8 1928 did not vest in the Official Receiver on the making of the order of adjudication on 19 2 1926.
, as they had been transferred by the mortgagor, long prior to the presentation of Insolvency Case No. 4 of 1925 26 under the very sale deed dated 30 1 1920, which forms the root of the appellants ' title.
That sale was no doubt pendente lite, but the effect of section 52 is not to wipe it out altogether but to subordinate it to the rights based.
on the decree in the suit.
As between the 472 parties to the transaction, however, it was perfectly valid, and operated to vest the title of the transferor in the transferee.
Under section 28(2) of the Insolvency Act, what vests in the Official Receiver is only the property of the insolvent, and as the suit properties had ceased to be his properties by reason of the sale deed dated 30 1 1920, they did not vest in the Official Receiver, and the sale held on 2 8 1928 is not liable to be attacked on the ground that he bad not been impleaded as a party thereto.
But it is argued for the appellants that having regard to the words of section 52 that pendente lite "the property cannot be transferred", such a transfer must, when it falls within the mischief of that section, be deemed to be non est, that in consequence Keshavananda must, for purposes of lis pendens, be regarded as the owner of the properties, notwithstanding that he bad transferred them, and that the Official Receiver who succeeded to his rights had a right to be impleaded in the action.
This contention gives no effect to the words "so as to affect the rights of any other party thereto under any decree or order which may be made therein", which make it clear that the transfer is good except to the extent that it might conflict with rights decreed under the decree or order.
It is in this view that transfers pendente lite have been held to be valid and operative as between the parties thereto.
It will be inconsistent to bold that the sale deed dated 30 1 1920 is effective to convey the title to the properties to Dr. Nanjunda Rao, and that, at the same time, it was Keshava nanda who must be deemed to possess that title.
We are, therefore, unable to accede to the contention of the appellants that a transferor pendente lite must, for purposes of section 52, be treated as still retaining title to the properties.
But assuming that Keshavananda had still some interest in the properties left even after he had sold them on 30 1 1920 and that it would vest in the Official Receiver on the making of the order of adjudication on 19 2 1926, what is its effect on the title of Devamma as purchaser in court auction in execu 473 tion of her charge decree? It has been held by the Privy Council in Kala Chand Banerjee vs Jagannath Marwari(1) that when in execution of a mortgage decree properties are sold without notice to the Official Receiver in whom the equity of redemption had vested prior to the sale, such sale would not be binding on him.
But here, it is not the Official Receiver, who impeaches the sale as bad.
In fact, he was a party to O.S. No. 8 of 1933 34 and would be bound by the sale in execution of the decree therein, under which the plaintiff claims.
It is the purchaser pendente lite in the charge suit, O.S. No. 100 of 1919 20, that now attacks the sale held on 2 8 1928 as null and void.
Is he entitled to do so? Counsel for the respondent has invited our attention to the decision in Wood vs Surr(2).
There, the mortgagor filed a suit for redemption in 1838.
A preliminary decree for accounts was passed in 1843 and pursuant thereto, a final decree was made in 1848 declaring the amount payable, and time for payment was given till 1849.
The amount not having been paid, the mortgage became foreclosed.
During the pendency of these proceedings, the mortgagor was adjudicated bankrupt in 1844, but the Official Assignee, in whom the equity of redemption had vested, was not impleaded in the mortgage action.
In 1841, the mortgagor bad created a further mortgage in favour of one Mrs. Cuppage, and she was not made a party in the redemption suit.
After the foreclosure of the mortgage in 1849, one Mr. Wood claiming in the rights of Mrs. Cuppage instituted an action to redeem the mortgage.
The question was whether being transferee pendente lite he was bound by the foreclosure proceedings.
The contention on his behalf was that as the official assignee was not a party to those proceedings, there had been no proper foreclosure, and that the whole matter was at large.
In negativing this contention, Sir John Romilly, M. R. observed: "There can be no question but that the suit (Davis 's suit) was defective by reason of no notice having been taken of the insolvency.
The proceeding (1) [1927] L, R. 54 T.A. 190, (2) ; ; , 474 having gone on exactly as if no insolvency had taken place, the subsequent proceedings would, in my opinion, be wholly inoperative against the assigneein insolvency and if he thought fit to contest the validity of the decree of foreclosure against Davis, it could not be held to be binding on such assignee.
But that does not conclude the question, which really is, whether the plaintiff who, but for this, would in truth have been bound, can take advantage of this objection.
I am of opinion that although the suit was undoubtedly defective, by reason of this insolvency, the assignee alone could take advantage of this defect.
It is obvious that Davis himself could not take advantage of it, or if from any subsequent cause, or any subsequent circumstance, the insolvency or bankruptcy had been superseded or annulled, he could not have said that the foreclosure was not absolute against him".
These observations directly cover the point now in controversy, and they embody a principle adopted in the law of this country as to the effect of a sale in execution of a decree passed in a defectively constituted mortgage suit.
Such a sale, it has been held, does not affect the rights of redemption of persons interested in the equity of redemption, who have not been impleaded as parties to the action as they should have been under Order 34, Rule 1, Civil Procedure Code but that it is valid and effective as against parties to the action.
This rule has been affirmed even when the person in whom the equity of redemption had vested is the Official Receiver, and he had not been made a party to the proceedings resulting in sale.
Vide Inamullah Khan vs Shambhu Dayal(1) and Subbaiah vs Ramasami Goundan(2).
We should accordingly hold that even assuming that the equity of redemption in the suit properties vested in the Official Receiver on the adjudication of Keshavananda, his non joinder in the execution proceedings did not render the purchase by Devamma a nullity, and that under the sale she acquired a good and impeccable title, subject to any right which the Official Receiver (1) A.I.R. 1931 All.
(2) I.L.R. 475 might elect to exercise, and it is not open to attack by the transferee pendente lite under the deed dated 30 1 1920 and his representatives, the present appellants.
In the result, we agree with the courts below that the title of the appellants has been extinguished under section 52 of the Transfer of Property Act, by the court sale dated 2 8 1928.
It must be mentioned that the appellants also pleaded that the suit was barred by limitation under article 142 on the ground that the plaintiff and his predecessors had not been in possession within 12 years of the suit, and that further the defendant had acquired title by adverse possession commencing from 1920.
The learned District Judge, found on both the issues in favour of the plaintiff, and though the correctness of these findings was attacked in the grounds of appeal to the High Court, there is no discussion of the question in the judgment of the learned Judges, and we must take it that the point had been abandoned by the appellants.
We accordingly declined to hear them on this question.
We may add that the question of limitation cannot really arise on the facts of this case, inasmuch as the possession which is claimed to be adverse is stated to have commenced in 1920, and it is well settled that such possession cannot affect the right of a prior mortgagee to bring the properties to sale, and adverse possession against the purchaser under that sale cannot commence prior to the date of that sale, and the present suit was instituted on 8 1 1945 within 12 years of the sale, which took place in 1936.
The appeal fails, and is dismissed with costs.
| The appellants as defendants in a suit for declaration of title to certain building sites sought to resist the respondents ' claim, arising by purchase from a purchaser in a sale in execution of a mortgage decree passed on a mortgage deed of 1918, by a counter claim based on a purchase of the same lands made in 1920 by their pre decessor in interest from one of the mortgagors against whom was then pending a suit for maintenance and for declaration of a charge on the land in suit.
That suit was decreed in 1921 and the lands were purchased by the decreeholder in execution of her decree in 1928.
The mortgagor had been adjudged an insolvent in 1926 and the Official Receiver in whom his estate vested was not made a party to the execution proceeding.
Suit to enforce the mortgage deed of 1918 was brought in 1933 impleading the Official Receiver and the purchaser in execution of the maintenance and charge decree but not the appellants.
In execution of the decree passed in this suit, the lands in suit were sold to a third party in 1936 and in 1938 the respondent 's father purchased them.
The respondent did not specifically raise the question of lis pendens in his pleading nor was an issue framed on the point, but he raised the question at the very commencement of the trial in his deposition, proved relevant documents which were admitted into evidence without any objection from the appellants who filed their own documents, cross examined the respondent and invited the court to hold that the suit for maintenance and a charge and the connected proceedings evidenced by these documents were collusive in order to avoid the operation of section 52 of the Transfer of Property Act.
The District Judge held that the appellants ' title acquired by the purchase of 1920 was extinguished by the sale held in execution of the charge decree by the operation of section 52 of the Transfer of Property 59 452 Act and decreed the suit and his decision was affirmed by the High Court in appeal.
Hold, that the decisions of the courts below were correct and must be affirmed.
That in the facts and circumstances of the case the omission of the respondent to specifically raise the question of lis pendens in his pleading did not take the appellants by surprise and was a mere irregularity which resulted in no prejudice to them.
Rani Chandra Kunwar vs Chaudhri Narpat Singh ([1906] L.R. 34 I.A. 27), applied.
Siddik Mahomed Shah vs Mt. Saran and Others (A.I.R. , explained and held inapplicable.
That section 52 of the Transfer of Property Act did not prevent the vesting of title in a transferee in a sale pendente lite but only made it subject to the rights of other parties as decided in the suit and subsequent insolvency of the transferor could not, therefore, vest any title in the Official Receiver or make the title of the execution purchaser liable to attack on the ground that the Receiver was not made a party to the execution proceeding.
That even assuming that title could not wholly pass by a transfer pendento lite and some interest would still subsist in the transferor to vest in the Receiver, the lands in suit having been sold in execution of a charge decree, the sale would at the most be not binding on him and he could, if he so chose, move to set it aside; but the transferee pendente lite or his representative could not be allowed to make his non joinder a ground for attacking the sale.
Wood vs Surr ([1854) ; , applied.
Inamullah Khan vs Shambhu Dayal (A.I.R. 1931 All. 159), Subbaiah vs Ramasami Goundan (I.L.R. and Kala Chand Banerjee vs Jagannath Marwari ([1927] L.P. 54 I.A. 190), referred to.
That no question of limitation or adverse possession really arose in the case.
It was well settled that a claim of adverse possession could not affect the right of a prior mortgagee to bring the properties to sale and adverse possession against the purchaser under that sale could not commence prior to the date of sale.
Held further, that there was a fundamental distinction bet ween a collusive and a fraudulent proceeding in that while the former was the result of an understanding between the parties, both the claim and the contest being fictitious, and the purpose to confound third parties, in the latter the contest was real, though the claim was untrue, and the purpose to injure the defendant by a verdict of the court obtained by practising fraud in it; that an admission was a mere piece of evidence and could not be conclusive except by way of estoppel when it had been acted 453 upon to his detriment by the person to whom it was made, the weight to be attached to it depending on the circumstances of each case, and the onus of proving that it was not true could not shift to the maker of it unless it was so clear and unambiguous as to be conclusive in absence of any explanation from him.
Slatterie vs Pooley, ([1840] ; and Rani Chandra Kunwari vs Choudhri Narpat Singh ([1906] L.R. 34 I.A. 27), referred to.
That the maxim that 'a person could not approbate and repro bate ' had its origin in the doctrine of election and was confined to reliefs arising out of one and the same transaction and against the parties to it.
Where, however, there was no question of election, as the relief claimed was one and the same, although based on different and inconsistent grounds, the maxim had no application.
Verschures Creameries Ltd. vs Hull and Netherlands Steamship Company Ltd. ([1921] 2 K.B. 608), considered and distinguished.
|
Summarize this legal judgement text concisely | Appeal No. 105 of 1954.
Appeal by special leave from the judgment and order dated November 6, 1952, of the Labour Appellate Tribunal, Calcutta in Appeal No. Cal 3 of 1952 773 arising out of the award dated September 25, 1951, of the Court of District Judge, Industrial Tribunal, Calcutta in Case No. VIII 23 of 1951.
section C. Isaacs, A. K. Datt and Sukumar Ghose, for the appellants.
M. C. Setalvad, Attorney General for India, D. B. Das and section N. Mukherji, for the respondent.
B. Sen and P. k. Bose, for Intervener (State of West Bengal).
October 11.
The Judgment of the Court was delivered by GOVINDA MENON J.
This appeal is by special leave against the decision of the Labour Appellate Tribunal of India, Calcutta, which modified the award, passed by the Industrial Tribunal, Calcutta, in the matter of a dispute referred to it by the Government of West Bengal, for adjudication with regard to the rates of dearness allowance for clerks and Depot cashiers, employed by the Calcutta Tramway 's Coy.
Ltd., numbering about 600, out of a total of 10,000 workmen.
Disputes having arisen between the workmen of the Calcutta Tramways Coy, Ltd. (which may hereafter be called 'The Company ') on the one hand, and the employers on the other, relating to the dearness allowance payable to the workmen, there were two previous awards, one dated May 16, 1947, by Sri section N. Guha Roy, and the other dated October 27, 1948, by Sri P. K. Sircar.
Both of these awards related to all the employees of the Company and not to the clerks and Depot cashiers alone.
Subsequently a reference was made by the West Bengal Government on June 13, 1951, concerning a dispute relating to the dearness allowance of the workmen of the Company, excluding clerks and Depot cashiers.
There was an award and an appeal, and in that appeal the Appel.
late Tribunal increased the dearness allowance by Rs. 7/8/ for workmen in the pay ranges below Rs. 50 and up to the pay range of Rs. 250 and by a flat rate 774 of Rs. 5 in the higher pay ranges taking the cost of living index of the workmen class at 370 points.
In the present award, which relates to the clerks and the Depot cashiers alone, the Industrial Tribunal gave Rs. 47/8/ as dearness allowance for a pay range of Rs. 51 to Rs. 100 and provided for a progressive increase of Rs. 5 for each slab of Rs. 50 in the pay range.
The Appellate Tribunalincreasedthe amounts so awarded by Rs. 2/8/ more than what was granted to the other workmen of the Company.
The cost of living index for the middle class families had been fixed by an investigating body of the Bengal Chamber of Commerce during the relevant year at 382 points, whereas the index in the case of working class was fixed at 370 points.
The increased amount awarded for the various pay ranges and shown in the decision of the Labour Appellate Tribunal which need not be repeated again, was founded on these cost of living indices though the amount was not the same as recommended by the Bengal Chamber of Commerce.
Before the Labour Appellate Tribunal, as well as the Industrial Tribunal, the claim put forward on behalf of the clerks and Depot cashiers was that the dearness allowance should be on the same rates as decided upon by the Bengal Chamber of Commerce of which the company is a member and no difference should have been made between the dearness allow ance recommended by the Bengal Chamber of Commerce and that to be awarded by the Industrial Tribunal.
In fact, what was urged was that the recommendation of the Bengal Chamber of Commerce ought to have been accepted in its entirety for the reason not only that the Company is a first class member of the Chamber but also that the class of persons, namely the middle classes for whom the recommendation was intended, includes clerks and Depot cashiers of the Company as well, and the same having been accepted ,by the Mercantile Tribunal which dealt with the dearness allowance payable to the employees of the mercantile firms in Calcutta, the Industrial Tribunal, as well as the, Labour Appellate Tribunal, should have 775 followed the same.
The learned Judges of the Appellate Tribunal held that those recommendations were made to the mercantile firms where the workmen consist practically of the clerical and subordinate staff as opposed to Tramways Company where the large percentage of workmen belong to other categories, the clerks and Depot cashiers being only a small minority, though they found that the cost of living index found by the Bengal Chamber of Commerce should be accepted as the criterion for awarding the increased dearness allowance in the case of the employees of the Company as well.
On behalf of the appellants it is urged before us that a different mode of treatment than the one recommended by the Bengal Chamber of Commerce should not have been resorted to in the case of the appellants, for the reason that those recommendations are intrinsically reasonable, considering the uniformity of life and modes of habit of the middle classes to which the clerks and Depot cashiers belong.
The, respondent Company being a member of the Bengal Chamber of Commerce should, instead of ignoring the recommendation have acted upon it as a mandate, so that its action as a member should not be inconsistent with that followed by others especially since there have been no valid reasons alleged for the non acceptance of the recommendation.
It is further urged that there is no acceptable defence put forward that the abovementioned recommendation will not apply to institutions having a mixed staff as the Company in question.
On the other hand, what is stated in the written statement of the Company is that according to the previous award it had been paying a uniform sliding scale of dearness allowance for all categories of workmen as detailed in Paragraph 6(b).
It is, therefore, contended that what the Industrial as well as the Appellate Tribunal should have done was to have evolved a principle to fix the dearness allowance in relation to the ' basic salaries and the cost of living index, as that alone would satisfy the recom mendations of the Bengal Chamber of Commerce.
776 ,We have, therefore, to see whether in following the course now adopted by the Tribunals below they have ignored any legal principle or acted in violation of any statute.
There can be no doubt whatever that if the scheme adumbrated by the Bengal Chamber of Commerce is adopted in the case of clerks and Depot cashiers, they would get amounts far in excess and out of all proportion to what were awarded to the other workmen whose appeal had already been disposed of by the Appellate Tribunal though it has to be recognized that the cost of living index in the case of the appellants has to be considered to be more than the index of workmen whose avocations are the result of physical labour rather than of mental faculties.
In short, the clerks and Depot cashiers should be considered as the white collared fraternity.
In these circumstances, we have to find out whether the procedure followed by the Labour Appellate Tribunal, namely leaving out 20 points un neutralised and allowing Rs. 5 per 20 points rise in the living cost index but taking into consideration a higher living cost index of 382 in the case of the appellants as compared with the average index of the workmen of 370, is a justifiable method to be adopted.
It is difficult to hold that the middle classes in this country can be said to form a separate stratum of society even in a city like Calcutta having the same mode of life, the same necessities, uniform requirements and comforts.
There are different grades even among the middle classes and it is unwise to predicate the same degrees of comforts and necessities for everyone who is said to belong to the middle classes.
Such being the case, to say that the clerks in the mercantile firms can be considered equal in all respects to the 600 clerks and Depot cashiers of the Company, is an argument which cannot be accepted as sound.
The Labour Appellate Tribunal has not completely ignored the recommendations of the Bengal Chamber of Commerce, for it is seen that in raising the amount awarded by the Industrial 777 Tribunal the Appellate Tribunal has based its conclusion on the higher cost of living index in the case of middle class employees.
Such being the case, the point for consideration is whether any question of principle is involved, so that this court might interfere with the conclusions arrived at by the Labour Appellate Tribunal.
Wide and undefinable with exactitude as the powers of the Court are (see Dhakeswari Cotton Mills Ltd. vs Commissioner of Income Tax, West Bengal(1)), it is now well settled that generally the necessary pre requisites for this court 's interference to set right decisions arrived at by Tribunals whose conclusions on questions of fact are final can be classified under the following categories, namely, (1) where ' the Tribunal acts in excess of the jurisdiction conferred upon it under the statute or regulation creating it or where it ostensibly fails to exercise a patent jurisdiction; (ii) where there is an apparent error on the face of the decision and (iii) where the Tribunal has erroneously applied well accepted principles of jurisprudence.
It is only when errors of this nature exist, that interference is called for.
In the present case the appellants have not been able to show that there is any deviation from those principles.
If the Tribunal below had failed to resort to a basic principle, then something might have been said but what has been done is, that in computing the dearness allowance it has considered various methods and adopted one of them.
That being the case, it is ' difficult to say that there is any question of principle at all.
The report of the Central Pay Commission at page 46, in Paragraph 71, made the following recommendation: "Without adopting such a complicated procedure, we think it sufficient to provide by slabs for persons on different levels of pay, as shown in the accompanying table which also provides for diminishing rates of dearness allowance as the cost of living index falls, taking the stages by 20 points at a time".
(1) ; , 949.
778 It refrained from recommending the neutralisation of the entire higher cost of living by means of dearness allowance.
The report of the Committee on Fair Wages appointed by the Government of India in Chapter IV, dealing with Wage Adjustments considered in paragraph 43 the various modes and methods of granting relief to meet the burden of increased cost Of living and came to the conclusion that there is no practice of uniformity in the extent of compensation given to employees to meet the increased cost of living.
It observed as follows: "The Pay Commission has accepted, the principle that the lowest paid employee should be reimbursed to the full extent of the rise in the cost of living and that, higher categories of employees should receive a diminishing but graduated scale of dearness allowance.
The Pay Commission has rejected the principal of a flat rate for all categories of employees, irrespective of their basic salaries".
Finally it came to the conclusion "that for the lowest categories of employees the target should obviously be compensation to the extent of 100 per cent.
of the increase in the cost of living.
For categories above the lowest we agree that the same consideration will not apply.
A flat rate equal to the rate allowed to the leastskilled worker is not likely to satisfy higher categories".
In the analysis regarding the Industrial Awards, issued by the Government of India, Ministry of Labour, the question of dearness allowance is considered somewhat elaborately.
At page 33 there is a discussion regarding the linking of dearness allowance to the cost of index numbers and as to whether a flat rate of dearness allowance irrespective of the income group should be allowed or not.
They further considered the linking of dearness allowance to the cost of living index numbers on the scale of income groups, but at rates diminishing with the income received.
A perusal of the fairly elaborate discussion in Chapter 779 III shows that there cannot be a hard and fast rule applicable to all kinds of employees.
Very much will depend upon the conditions of labour, the nature of the locality and the mode of living.
In Buckingham and Carnatic Company Ltd., Madras vs Workers of the Company(1) the Tribunal considered the question of neutralisation of the rise of the cost of living by the grant of dearness allowance and was of the opinion that cent per cent neutralisation cannot be allowed, as it would lead to a vicious circle and add fillip to the inflatory spiral.
It further held that there was no reason why the Industrial worker should not make sacrifices line all other citizens.
We can now take it as settled that in matters of the grant of dearness allowance except tothe very lowest class of manual labourers whose income is just ' sufficient to keep body and soul together, it is impolitic and unwise to neutralise the entire rise in the cost of living by dearness allowance.
More so in the case of the middle classes.
The criterion to be adopted in the fixation of dearness allowance is also considered in Mahomad Rai Akbarali Khan vs The Associated Cement Companies Limited(2) where similar principles are discussed.
On behalf of the appellants our attention was invited to certain observations contained in The Millowners ' Association, Bombay vs The Rashtriya Mill Mazdoor Sangh(3), but we do not think that any different principle is enunciated there at all.
Mr. Isaacs, the learned counsel for the appellants, laid great stress on the decision in Workmen of the Firestone Tyre and Rubber Company of India Ltd., Bombay vs Firestone Tyre and Rubber Company of India Ltd., Bomba(4) where the Tribunal expressed the opinion that dearness allowance is intended to neutralise rise in the cost of living and as there is a well recognised difference between the clerical staff and other workmen in their cost of living, the latter are not entitled.
(1) , 519, 520.
(2) (3) (4) 101 780 to claim the allowance on the same basis.
From this the learned counsel contends that the recommendations of the Bengal Chamber of Commerce should be accepted in toto.
In our opinion, the decision does not help the point of view put forward on behalf of ' the appellants.
In fact, the Labour Appellate Tribunal has made a distinction between the physical labourers and the clerks and Depot cashiers in whose work it is not alone the physical exertion that is essential but some kind of mental and brain work as well and accordingly the higher cost of living index taken into account.
In such circumstances, it seems to us that the Labour Appellate Tribunal has, after considering the various points of view, come to the correct conclusion in awarding the dearness allowance it did.
There is no question of law or principle involved and the appeal has to be dismissed with costs of the Calcutta Tramways Coy.
Ltd. The State of West Bengal, which has intervened during the appeal, will bear its own costs.
| It is well settled that the decisions of a Tribunal on questions of fact are final and that the Supreme Court would interfere only in cases where (1) the Tribunal acts in excess of the jurisdiction conferred upon it under the statute or regulation creating it or where it ostensibly fails to exercise a patent jurisdiction; (2) there is an error apparent on the face of the decision; (3) the Tribunal has erroneously applied well accepted principles of jurisprudence.
The Bengal Chamber of Commerce of which the respondent Company was a member, had made an investigation into the cost of living index for the middle class families and, fixed the dearness allowance payable to the employees of the mercantile firms in Calcutta.
Before the Industrial Tribunal as well as the Labour Appellate Tribunal the claim was put forward on behalf of the appellants (the clerks of the respondent Company) that the dearness allowance for them should be at the same rates as those decided upon by the Bengal Chamber of Commerce in respect of the middle classes to which the appellants belonged and they contended that the procedure adopted by the Labour, Appellate Tribunal leaving out 20 points of the living cost index un neutralised was not justifiable.
Held, that in matters of the grant of dearness allowance there cannot be a hard and fast rule applicable to all kinds of employees and except in the very lowest class of manual labourers it is not proper to neutralise the entire rise in the cost of living by dearness allowance.
There are different grades among the middle classes and the appellants cannot claim to have the same rates of dearness allowance as those fixed for the clerks of the mercantile firms by the Bengal Chamber of Commerce.
|
Summarize this legal judgement text concisely | Appeal No. 74 of 1956.
Appeal by special leave from the judgment and order dated September 22, 1955, of the Nagpur High Court in Letters Patent Appeal No. 2 of 1955.
C.K. Daphtary, Solicitor General for India, J. N. Bannerji and P. C. Agarwala, for the appellant.
M.C. Setalvad, Attorney General for India and Naunit Lal, for respondent No. 1. 1956.
September 30.
The Judgment of the Court was delivered by SINHA J.
This is an appeal by special leave from the judgment and order, dated September 22, 1955, passed by the Letters Patent Bench of the Nagpur High Court reversing those of a single Judge of that Court, dated December 13, 1954, refusing to issue a writ in the nature of a certiorari.
The facts of this case lie in a short compass and may be stated as follows: The Suwarna Transport Company Limited, which will be referred to as the first respondent in the course of this judgment, held seven permits for running buses on the Buldana Malkapur route, as the 100 sole operator on that route.
It applied for another permit for the same route.
The appellant, The New Prakash Transport Co. Ltd., as also another party, called the Navjivan Transport Service (not cited in this Court) applied for a similar permit on that route.
On May 26, 1953, all the three applicants aforesaid were heard by the Regional Transport Authority of Amraoti, which is the third respondent in this Court, in connection with the permit applied for.
Consideration of the several applications was postponed, but a resolution was passed to the effect that "No one service should have monopoly on Buldana Malkapur route.
" On March 30, 1954, another meeting of the Regional Transport Authority took place and the first respondent was granted the permit.
The appellant 's application was rejected on the ground that the police report was against it.
The appellant preferred an appeal to the Appellate Authority (constituted under R. 73 of the Motor Vehicles Act), Madhya Pradesh, Nagpur, which is the second respondent to this appeal.
The appellant challenged the correctness of the police report against it and applied to the District Superintendent of Police personally to verify the facts stated in the first report on the basis of which the appellant 's application for permit had been rejected, as aforesaid.
The police made a further report, which was placed before the second respondent.
That further report by the police was read out to the parties by the Chairman of the Appellate Authority at the time of the hearing of the appeal.
At the hearing no objection appears to have been raised by any of the parties to the course adopted by the second respondent.
By its order dated July 29, 1954, the second respondent set aside the order of the third respondent, allowed the appeal and ordered the permit to be issued to the appellant.
The first respondent moved the High Court at Nagpur for a writ of certiorari under article 226 of the Constitution, substantially on two grounds, namely, (1) that the order passed by the second respondent was vitiated by an error apparent on the face of the record, and (2) that it contravened the ' principles of natural justice.
The first ground was founded on the allegation that the second 101 respondent had misread the police report, and the second on the allegation that the revised report by the police had not been shown to the petitioner who had been afforded no " real and effective opportunity to deal with the report or to meet any relevant allegations made therein, and to study that report and make his submissions in regard thereto before the appeal was decided.
" The appellant and the second respondent showed cause against the rule issued by the court.
The appellant while showing cause, admitted that the third respondent had rejected its application on the basis of the police report dated March 27, 1954, which "was full of mistakes and falsehoods," that it moved the District Superintendent of Police personally to verify the contents of the said report and that the fresh report submitted by the police after due verification had absolved the appellant from the allegations of misconduct contained in the first report.
It also controverted the ground that there was any mistake apparent on the face of the record.
The fresh report submitted by the police after verification at the appellant 's request was received by the second respondent and the Chairman read the same during the hearing of the appeal and that, therefore, it was wrong to suggest that there had been a failure of justice,.
The second respondent also showed cause and corroborated the appellant 's statement that the first police report had been subsequently modified by the District Superintendent of Police by the report dated May 13, 1954, which showed that the previous report was " based on some misunderstanding.
" It was also stated that the report was actually read out to the parties by the Chairman while the appeal was being heard.
The petition under articles 226 and 227 made, as aforesaid, by the first respondent was heard by a single Judge (Mr. Justice V. R. Sen) who by his orders dated December 13, 1954, discharged the rule with costs.
In the course of his judgment the learned Judge after ' referring in detail to the orders of the authorities under the Motor Vehicles Act, that is to say, the second and third respondents, observed that there was no substance in the contention that the procedure 102 adopted by the Appellate Authority was opposed to the principles of natural justice and had operated to the prejudice of the first respondent; and that there was no error apparent on the face of the record.
The learned Judge also pointed out that when the report was brought to the notice of the first respondent, it did not indicate that it wished to controvert the report.
The first respondent preferred an appeal under the Letters Patent and repeated its grounds of attack against the orders of the Appellate Authority.
The appeal was heard by a Division Bench consisting of Chief Justice Hidayatulla and Mr. Justice section P. Kotwal.
The Letters Patent Bench seemed to be inclined to negative the plea that there was a mistake apparent on the face of the record and pointed out that though the language used by the second respondent was ambi guous and not quite accurate, it was possible to take the view that it had in fact considered the subsequent police report when it observed that the police bad practically absolved the appellant from all blame except on a minor question, not necessary to be referred to in detail here.
On the second ground it differed from the learned single Judge and came to the conclusion "that the Appellate Authority erred in rushing through without giving a proper and effective chance to the appellant to state its case.
" In the result it granted a writ quashing the order of the Appellate Authority and directing it to rehear the appeal in the light of the observations made in the course of the judgment.
The appellant made an application to the High Court for a certificate of fitness for appeal to this Court.
Having been unsuccessful there, the appellant came up to this Court and obtained special leave to appeal.
The only question which requires determination by this Court is whether or not there has been a failure of natural justice in this case as a result of the procedure adopted by the Appellate Authority.
On this question there has been a marked difference of opinion in the two stages of the case in the High Court.
It has been 103 argued on behalf of the appellant that the Appeal Bench of the Nagpur High Court has erred in coming to the conclusion that in the circumstances of this case, there has been a failure of justice, in disagreement with the learned single Judge who was clearly of the opposite opinion.
It has also been argued that there are no well defined criteria by which this question falls to be determined.
It depends upon the terms of the legislation creating the statutory body which has to function according to its obligations laid down in the statute.
If it has done all that was required by the law to do, it cannot be said that it has failed in the discharge of its statutory duty.
In this connection reference was made to the provisions of sections 47, 48 and 64 of the Motor Vehicles Act read along with the relevant rules framed under section 68 of the Act.
On behalf of the respondents it was argued that it had no opportunity of studying the subsequent police report and of making submissions thereon with the result that there has been a failure of natural justice in the sense that the respondent had been deprived of a fair and full opportunity of being heard.
Though the High Court on appeal did not base its decision on the other question, namely, whether there was any error apparent on the face of the record, it was sought to be argued that there was an error in the order of the second respondent in so far as it made reference to only the first report and read into it the maatter contained in the subsequent report.
At the outset we may observe that, in our opinion, there is no substance in the second ground sought to be resuscitated in this Court by the learned counsel on behalf of the res .
pondent.
Error apparent on the face of the record in the context of this case must mean an assumption of facts which are not borne out by the record.
We are not concerned with other grounds which may in the context of each particular case support a contention of error apparent on the face of the record.
In this case if there was any such error, it was with reference to the two police reports.
As observed by the Appellate Bench of the High Court, though the language used by the Appellate Authority with regard to strict 104 grammatical construction may refer to the first police report, it was difficult to hold that the matters referred to in the order challenged before the High Court were not contained in the subsequent report submitted by the police at the instance of the appellant.
The judgment under appeal did not take the view that there was any such mistake apparent on the face of the record as was contended for on behalf of the first respondent.
We have been referred to the orders of the Appellate Authority as read by the Appellate Bench of the High Court and, in our opinion, no such mistake has been shown to have vitiated the orders impugned before the High Court.
Coming back to the question whether or not there has been a failure of natural justice, we may shortly review the relevant provisions of the statute in order to find out the obligations imposed upon the Appellate Authority while disposing of an appeal from the orders of the Regional Transport Authority.
The matters to be considered by a Regional Transport Authority at the time of disposing of an application for a stage carriage permit are set out in section 47.
They include the interest of the public generally, the adequacy of existing road transport service and the benefits to any particular locality.
The Authority is also enjoined to take into consideration any representations made by persons already providing road transport facilities along the proposed route or by any local authority or police authority within whose jurisdiction the proposed route lies.
Section 48 empowers a Regional Transport Authority, after taking into consideration matters set forth in section 47, to restrict the number of stage carriages and to impose conditions on stage carriage permits.
Section 64 provides for right of appeal against specified kinds of orders passed by the Provincial or Regional Transport Authority to the "prescribed authority".
It also in terms provides that on an appeal being filed to the prescribed authority, it shall give the appellant and the original authority, that is to say, the authority against whose orders the appeal had been brought., "an opportunity of being heard.
" Section 64 which creates the right of appeal does not in terms speak of a like 105 opportunity being given to the persons against whom the appeal had been filed.
But r. 73 framed by the Government in pursuance of its rule making power conferred by section 68, lays down that the authority to decide ' an appeal against the orders of a Regional Transport Authority under section 64 of the Act shall be the Chairman and two members of the Provincial Transport Authority.
The rule further provides that on receipt of an appeal, the Chairman shall appoint the time and place for hearing the appeal and shall give not less than thirty days notice to the appellant, the original authority, and "any other person interested in the appeal" and on such appointed or adjourned date the Appellate Authority "shall hear such persons as may appear and, after such further enquiry, if any, as it may deem necessary, confirm, vary, or set aside the order against which the appeal is preferred and make any consequential or incidental order that may be just or proper".
It will.
thus be seen that though the substantive section creating the right of appeal does not in terms create any right in a respondent to be heard, the rules framed providing for the procedure before the Appellate Authority contemplate that sufficient notice shall be given to " any other person interested in the appeal" which expression must include persons other than the appellant who may be interested in being heard against the points raised in support of the appeal.
Neither the sections nor the rules framed under the Act contemplate anything like recording oral or documentary evidence in the usual way as in courts of law.
Besides, the parties interested in the grant of stage carriage permits or those interested against it, the police authority of the locality is also entitled to be heard both at the original stage and at the appellate stage.
Thus the Motor Vehicles Act and the rules framed thereunder with particular reference to the Regional Transport Authority and the Appellate Authority do not contemplate anything like a regular hearing in a court of justice.
No elaborate procedure has been prescribed as to how the parties interested have to be 14 106 heard in connection with the question, who is to be granted a stage carriage permit.
The judgment of the High Court under appeal has made copious quotations from the decisions of the House of Lords and the Court of Appeal in support of its conclusion that the principles of natural justice had not been sufficiently complied with in the present case by simply reading out the subsequent police report at the time the Appellate Authority was hearing the appeal.
The learned Judges of the Appeal Court have observed that the contents of a long report such as the second report was, could not be carried in one '. , head.
They also observed that in order to present its case effectively the first respondent was entitled not only to have the report read out but also to study it so that it could understand it and state its case fully and effectively before the Appellate Authority.
We have to examine those several precedents relied upon by the High Court to see how far its conclusions are supported by authority.
But before we do that, it has got to be observed that the question whether the rules of natural justice have been observed in a particular case must itself be judged in the light of the constitution of the statutory body which has to function in accordance with the rules laid down by the legislature and in that sense the rules themselves must vary.
The Regional Transport Authority is charged with the duty of granting or refusing a stage carriage permit, only to mention the matter with which we are immediately concerned.
In that connection the statute requires that authority to have regard to the matters set forth in section 47 of the Act, as already indicated.
The police authority within whose local jurisdiction any part of the proposed route lies, has also been given the right to make representations.
But the police report submitted to the Regional Transport Authority or to the Appellate Authority, if it requires the police authority to do so, is not intended to be anything more than an expression of opinion by an authority interested in the maintenance of law and order, with particular reference to the question as to whether any of the applicants for a permit had anything to its credit or discredit as 107 supplier of transport facilities.
Such a report is meant more for the use of the authority in making or refusing a grant than for the use of the several applicants or any one of them.
In other words, it is in the nature of information supplied by the police in order to assist the authority in making up its mind.
In the present case when the subsequent police report was read out by the Chairman, neither the appellant nor the first respondent, nor for the matter of that any of the other parties, raised any objection to the use of that document or asked for an adjournment on the ground either that it had been taken by surprise or that it had materials to offer in opposition to the report.
The learned Judges of the High Court have observed in the course of their judgment under appeal that though it is the essence of the business of tribunals like the one under the Motor Vehicles Act to transact business expeditiously, the business of the authority would not have suffered much if a copy of the report had been given to the parties concerned and the case adjourned for a short time.
It appears that no such adjournment had been prayed for on behalf of any of the parties who, it appears, had been represented by counsel.
But then the High Court has observed further that "the duty is laid not upon counsel who appears but upon the tribunal which administers justice.
It is incumbent on every tribunal which acts judicially to see that justice is not only done but is seen to be done, arid that the elementary rule of natural justice of giving a fair and proper hearing to every one concerned is followed.
We think that the Appellate Authority erred in rushing through without giving a proper and effective chance to the appellant to state its case.
" In our opinion, the High Court has made a number of assumptions in making those observations which do not appear to be justified by the scheme of the legislation we are dealing with or by any a priori considerations of what has been characterized as "natural justice".
The tribunal in question was not administering justice as a court of law, though while deciding as between the rival claims of the applicants for a permit it had to deal with them in a fair and just manner.
108 But a tribunal even acting " judicially " is not obliged to grant an adjournment suo motu without any application on behalf of any of the parties interested.
We do not find that any of the parties made at that time any grievance about the procedure adopted by the Appellate Authority.
But the question appears to have been raised for the first time before the High Court after the Appellate Tribunal had decided to grant the permit to the appellant.
In this connection it has also to be observed that the subsequent police report had said nothing directly against the first respondent which it would be interested in controverting.
The subsequent police report had only withdrawn some of the adverse comments against the conduct of the appellant which had been found to have been made under a misunderstanding.
But the subsequent report still contains some minor complaints against the appellant.
Those matters were apparently considered by the Appellate Authority not to be so serious as to stand in the way of the appellant getting the permit, especially when that authority had previously decided upon the policy that monopoly of supplying transport facility should not be allowed to continue in favour of the first respondent.
Hence, in our opinion, there was nothing in the rules requiring a copy of the police report to be furnished to any of the parties, nor was there any circumstance necessitating the adjournment of the hearing of the appeal, particularly when no request for such an adjournment had been made either by the first respondent or by any other party.
At that time none of the parties appears to have made any grievance about the police report only being read at by the Chairman or any request for an adjournment in order to adduce evidence pro and con.
The rules framed under Chapter IV for "the conduct and hearing of the appeals that may be preferred under this chapter (section 68 (2) (b)) " do not contemplate any such facilities being granted to the parties, though it is open to the Appellate Authority to make any such " further enquiry, if any, as it may deem necessary.
" But the High Court Bench appears to have, taken the view that, rule or no rule, request or no request for an 109 adjournment,the rules of natural justice made it incumbent upon the Appellate Authority to stay its hands in order that " a proper and effective chance was given to the first respondent to state its case.
" There was not much of a case to state because, each party applying for the permit must be presumed to have pressed its claim upon the Appellate Authority.
We have therefore to examine the precedents discussed in detail in the judgment under appeal to see how far the Appellate Bench was justified in holding that the rules of natural justice had been contravened by the Appel late Authority.
The earliest decision of the House of Lords brought to our notice in this connection is the case of Spackman vs
Plumstead Board of Works (1).
In that case the question arose on a prosecution for infringement of an Act of Parliament making provision for fixing the " general line of buildings " in a road.
The certificate of the superintending architect as to the general line of buildings came in for discussion as to whether the architect, before deciding as to how the general line has to be fixed, had to hear the parties concerned.
In that connection the Earl of Selborne, L.C., made the following observations : " No doubt, in the absence of special provisions as to how the person who is to decide is to proceed, the law will imply no more than that the substantial requirements of justice shall not be violated.
He is not a judge in the proper sense of the word; but he must give the parties an opportunity of being heard before him and stating their case and their view.
He must give notice when he will proceed with the matter, and he must act honestly and impartially and not under the dictation of some other person or persons, to whom the authority is not given by law.
There must be no Malversation of any kind.
There would be no decision within the meaning of the statute if there were anything of that sort done contrary to the essence of justice.
But it appears to me to be perfectly consistent with reason, that the statute may have intentionally (1) , 240.
110 omitted to provide for form, because this is a, matter not of a kind requiring form, not of a kind requiring litigation at all, but requiring only that the parties should have an opportunity of submitting to the person by whose decision they are to be bound such considerations as in their judgment ought to be brought before him.
When that is done, from the nature of the case no further proceeding as to summoning the parties, or as to doing anything of that kind which a judge might have to do, is necessary.
" Another leading case on the subject is the decision of the House of Lords in the well known case of Board of Education vs Rice (1).
Their Lordships in that case had to discuss the duty of the Board of Education under section 7 of the Education Act, 1902.
Lord Loreburn, L.C., in the course of his speech referred to the provisions of the Act and made the following observations as to the duty to decide certain questions relating to nonprovided schools: " Comparatively recent statutes have extended, if they have not originated, the practice of imposing upon department.
,; or officers of State the duty of deciding or determining questions of various kinds.
In the present instance, as in many others, what comes for determination is sometimes a matter to be settled by discretion, involving no law.
It will, I suppose, usually be of an administrative kind; but sometimes it will involve matter of law as well as matter of fact, or even depend upon matter of law alone.
In such cases the Board of Education will have to ascertain the law and also to ascertain the facts.
I need not add that in doing either they must act in good faith and fairly listen to both sides, for that is a duty lying upon every one who decides anything, But I do not think they are bound to treat such a question as though it were a trial.
They have no power to administer an oath, and need not examine witnesses.
They can obtain information in any way they think best, always giving a fair opportunity to those who are parties in the controversy for correcting or contradicting any relevant statement prejudicial to their view." (1) ,182.
How far judicial opinion may vary as to the content of the rule of natural justice is amply illustrated by the case of Rex vs Local Government Board, Ex parte Arlidge (1), at different stages.
The rule nisi for a certiorari was first heard by Ridley, Lord Coleridge and Bankes, JJ.
The case related to the powers of the, Local Government Board under the Housing, Town Planning, etc.
Act, 1909 (9 Edw. 7, c. 44) refusing to terminate its orders closing a dwelling house as unfit for habitation and the procedure for hearing an appeal against such an order.
Section 29 of the Act provided that such an appeal shall be heard and disposed of according to the procedure laid down by the Local Government Board, provided that the rules shall provide that the Board shall not dismiss any, appeal without having first held a public local inquiry. , It was unanimously held by the Court discharging the rule that the Local Government Board was not bound to hear the appellant or any one on his behalf after the report of the inspector on the public local inquiry had been received, before dismissing the appeal.
At the public local inquiry the owner of the house affected by the closing order had been represented.
But at the time the appeal was finally disposed of, there was no hearing of the appellant or his representative as in a court of law.
The Court repelled the argument that the appellant had a right to be heard by the Local Government Board and to know the contents of the report made by the inspector who had held the public local inquiry.
Rely Vingmainly upon the judgment of Lord Loreburn, L.C, in the case of Board of Education vs Rice (supra), the Court decided that the procedure indicated by the rules framed under the statute in question had been followed and that there was no other or further obligation on the Board to hear the appellant either personally or through his representative or counsel, because there was no indication in the statute to that effect.
The matter was taken in appeal in Rex vs Local Government Board, Ex parte A rlidge (2), and the Court of Appeal by a majority (Vaughan Williams and Buckley, L.JJ., Hamilton, L.J. dissenting (1) (2) , 112 allowed the appeal holding that it was contrary to the principles of natural justice that the Board should have dismissed the appeal without disclosing to the appellant the contents of their inspector 's report and without giving the appellant an opportunity of being heard in support of the appeal.
They, therefore, quashed the order dismissing the appeal.
The majority judgment pointed out that the Act and the rules framed thereunder except for certain matters were silent as to the procedure and that in the absence of such specific provisions the non disclosure of the `nspector 's report was contrary to principles of natural justice on which English law is based.
It further held that the appellant before the Board was entitled to a hearing and that as the appellant had not the opportunity of seeing and considering the report and the documents which the deciding authority had before it, the appellant had been denied full opportunity of being heard.
It went to the length of observing that the nondisclosure of the report and the documents which were taken into consideration by the Board when the disclosure had been asked for, was itself inconsistent with natural justice.
Hamilton, L.J., in his dissenting judgment pointed out that the report of the inspector in the case, as in other Government departments, is only a statement of facts made for the information of the officials of the department and that it could not be assumed that the legislature meant all such reports to be communicated to those interested where it does not say the contrary.
He further pointed out that the practice was the other way, namely, to specify how and to whom such reports were to be communicated, (when they are intended to be communicated at all.) Dealing with the question how far the requirements of natural justice had been fulfilled, the Lord Justice observed at p. 199 that "It has often been pointed out that the expression (natural justice) is sadly lacking in precision.
" Then he referred to a number of precedents dealing with the question of natural justice as to how the connotation of the expression differed in different contexts.
He further observed at pp.
201 & 202: 113 " The Local Government Board here is a statutory tribunal, anomalous as compared with common law Courts, created by the Legislature for a special class of appeals and endowed by it with the power of formulating its own procedure.
" He also adopted the dictum of Loreburn, L.C., in Board of Education vs Rice (supra) that the Board must " act in good faith and fairly listen to both sides.
" Against the judgment of the majority of the Court quashing the determination of the appeal by the Board there was an appeal to the House of Lords.
The House of Lords unanimously adopted the opinion of Hamilton, L.J. (later Lord Sumner), allowed the appeal and set aside the majority decision.
[Vide Local Government Board vs Arlidge (1)].
In the course of his speech Viscount Haldane, L.C., made the following observations: " My Lords, when the duty of deciding an appeal is imposed, those whose duty it is to decide it must act judicially.
, They must deal with the question referred to them without bias, and they must give to each of the parties the opportunity of adequately presenting the case made.
The decision must be come to in the spirit and with the sense of responsibility of a tribunal whose duty it is to mete out justice.
But it does not follow that the procedure of every such tribunal must be the same.
" His Lordship adopted the dictum of Lord Loreburn, L.C., in the leading case of Board of Education vs Rice (supra).
Lord Shaw in his speech made the following observations which are very apposite to the facts and circumstances of this case: " The judgments of the majority of the Court below appear to me, if I may say so with respect, to be dominated by the idea that the analogy of judicial methods or procedure should apply to departmental action.
Judicial methods may, in many points of administration, be entirely unsuitable, and produce delays, expense, and public and private injury.
The department must obey the statute." (1) , 132.
15 114 He further observed at p. 138 as follows " And the assumption that the methods of natural justice are ex necessitate those of Courts of justice is wholly unfounded.
This is expressly applicable to steps of procedure or forms of pleading.
In so far as the term 'natural justice ' means that a result or process should be just, it is a harmless though it may be a high sounding expression; in so far as it attempts to reflect the old jus naturale it is a confused and unwarranted transfer into the ethical sphere of a term employed for other distinctions; and, in so far as it is resorted to for other purposes, it is vacuous." Lord Parmoor in his speech also reiterated the principle governing the procedure of a quasi judicial tribunal in these words: " Where, however, the question of the propriety of procedure is raised in a hearing before some tribunal other than a Court of law there is no obligation to adopt the regular forms of legal procedure.
It is sufficient that the case has been heard in a judicial spirit and in accordance with the principles of substantial justice." Another recent decision of the House of Lords in the case of General Medical Council vs Spackman (1) was relied upon by the High Court in the judgment under appeal.
In that case the General Medical Council, which had been constituted a domestic forum to determine whether a case had been made out for striking off the name of a medical practitioner from the medical register " for infamous conduct in a professional respect," was the appellant before their Lordships, and the respondent had been found guilty by the Divorce Court of having committed adultery.
In the proceedings before the Medical Council the medical practitioner proceeded against desired to call fresh evidence on the issue of adultery and requested the Council to rehear that issue.
The Council declined to reopen the issue and to hear fresh evidence and directed his name to be erased from the register.
The Court of Appeal unanimously affirmed the view of the dissenting Judge in the Court of first instance that there had been no (1) 115 " due inquiry " as required by section 29 of the Medical Act, 1858.
The Appeal Court set aside the majority decision of Viscount Caldecote, C.J., and Humphreys, J., who had held that the requirements of the law had been satisfied by adopting the judgment and decree of the Divorce Court.
On appeal by the Medical Council to the House of Lords, the House unanimously agreed with the unanimous decision of the Appeal Court and held that the requirement of due inquiry enjoined by the Act creating the Tribunal had not been satisfied.
Viscount Simon, L.C., examined the provisions of the Act and the relevant rules and pointed out that they require the practitioner proceeded against " to state his case, and to produce the evidence in support of it." The Lord Chancellor in the course of his speech observed that the General Medical Council was not a judicial body in the ordinary sense, was master of its own procedure and was not bound by strict rules of evidence.
It was bound to satisfy the requirements of the law and the rules made thereunder.
The Council had to decide on sworn testimony after due inquiry.
He also adopted the language of Lord Loreburn, L.C., in the aforesaid case of Board of Educatian vs Rice (supra).
Lord Atkin in the course of his speech pointed out that the rules under the Act provided that the Council was bound, if requested, to hear all the evidence that the practitioner charged wished to bring before them.
He also pointed out the antithesis between convenience and justice by saying " convenience and justice are often not on speakin terms." His Lordship further pointed out the difference between the procedure which may be prescribed in respect of different tribunals which were creations of statutes, in these words: " Some analogy exists, no doubt, between the various procedures of this and other not strictly judicial bodies, but I cannot think that the procedure which may be very just in deciding whether to close a ,school or an insanitary house is necessarily right in deciding a charge of infamous conduct against a professional man.
I would, therefore, demur to any suggestion that the words of Lord Loreburn, L.C., in Board of Education vs Rice (supra) afford a complete guide to 116 the General Medical Council in the exercise of their duties.
As I have said, it is not correct that I they need not examine witnesses. ' They must examine witnesses if tendered, and their own rules rightly provide for this.
Further it appears to me very doubtful whether it is true that 'they have no power to administer an oath '.
" It may be noticed that the Lords who sat on that case particularly emphasized the requirements of the law as laid down in the statute and the rules framed thereunder.
In view of those statutory provisions they found it necessary to uphold the decision of the Court of Appeal which had set aside the judgment and orders of the King 's Bench Division which had taken the con tarry view, to the effect that the decree in the Divorce Court was conclusive evidence on which the Medical Council could act.
The case is therefore authority for the proposition that the rules of natural justice have to be inferred from the nature of the tribunal, the scope of its enquiry and the statutory rules of procedure laid down by the law for carrying out the objectives of the statute.
There is another class of cases which lay down that if a person is to be deprived of his professional status, he must be heard and be given effective opportunity of meeting any allegation made against him on the question of his fitness to pursue his profession.
If the tribunal constituted by the statute in question to decide about the fitness of an individual to pursue that profession, decides against him without giving him an opportunity of meeting any allegations against him bearing on his capacity or qualification for the profefession to which he claims admission, it has been held that it was improper for the tribunal acting in a quasi judicial capacity to act to his prejudice upon evidence or adverse report without his having an opportunity of meeting such relevant allegations made against him.
To that class belongs the case of R. vs Architects Registration Tribunal (1).
In that case the King 's Bench Division issued an order of certiorari to, quash (1) 117 the tribunal 's decision refusing an application for registration as an architect.
The cases of Leeson vs General Council of Medical Education and Registration (1), and Allinson vs General Council of Medical Education and Registration (2) also belong to that category.
They deal with the power of the General Council of Medical Education under the Medical Act (21 & 22 Viet.
c. 90) to strike off a medical practitioner for unprofessional conduct.
Those were cases in which the Medical Council had to function as a quasi judicial body and had to proceed according to the procedure laid down in the rules framed under the Act aforesaid.
They had therefore to function, not exactly as courts of law, but as domestic tribunals created by the statute to function according to the statutory rules in a fair and just manner, that is to say, that they should have no personal interest in the con;, troversy and should have given a full and fair opportunity to the person proceeded against to place his case before the tribunal.
Another class of cases is illustrated by the decision of the Court of Appeal in R. vs Archbishop of Canterbury(3).
In that case the Archbishop of Canterbury reviewing the order of the Bishop refused to approve the clerk presented by the patron to a benefice.
Acting under section 3 of the Benefices (Exercise of the Rights of Presentation) Measure, 1931, the Court repelled the argument on behalf of the disappointed patron that as the decision involved a deprivation of property rights there was an obligation upon the Archbishop to act in a quasijudicial manner.
Lord Greene, M.R., who delivered the judgment of the Court, observed that there was no " justification for regarding the matter when it comes before the Archbishop as in any sense, or by any remote analogy, a his inter parties".
Hence the Court on a true construction of a. 3 of the Measure came to the conclusion that the Archbishop was not required to arrive at his decision by conducting a quasi judicial enquiry.
This case, therefore, is an authority for the (1) (2) (3) 118 proposition that simply because property rights are involved, the authorities charged with the duty of deciding claims to such rights are not necessarily, apart from the provisions of the statute, required to function as quasi judicial tribunals.
As already pointed out, the Appellate Authority had to function in a quasi judicial capacity in accordance with the rules made under the Motor Vehicles Act.
That Act has made ample provisions for safeguarding the interests of rival claimants for permits.
The provisions of the Act were examined in detail by a Bench of five Judges of this Court in the case of Veerappa Pillai vs Raman & Raman Ltd. (1).
This Court examined elaborately the provisions of the Act vis a vis the authorities created by the Act to administer its provisions relating to the grant of stage carriage permits.
It also examined how far the High Court exercising its special powers to issue writs under article 226 of the Constitution could interfere with the orders made by those authorities.
In the course of its judgment this Court made the following observations at page 596, which are very relevant to the present purpose : " Thus we have before us a complete and precise scheme for regulating the issue of permits, providing what matters are to be taken into consideration as relevant, and prescribing appeals and revisions from subordinate bodies to higher authorities.
The remedies for the redress of grievances or the correction of errors are found in the statute itself and it is to these remedies that resort must Generally be bad.
" Keeping in view the observations of this Court quoted above and the principles of natural justice discussed in the several authorities of the highest Courts in England, we have to see how far the provisions of the Motor Vehicles Act and the rules framed thereunder justify the criticism of the High Court that the Appellate Authority did not give full and effective opportunity to the first respondent to present his point of view before it.
As already indicated, the statutory (1) ; 119 provisions do not contemplate that either the Regional Transport Authority or the Appellate Authority had to record evidence or to proceed as if they were functioning as a court of law.
They had to decide between a number of applicants as to which of them was suitable for the grant of the fresh permit applied for.
They took into consideration all the relevant matters and came to their decision which has not been attacked as partial or perverse.
The only ground which survived before the Appellate Bench of the High Court was that the requirements of natural justice had not been satisfied.
The only question that we have to determine is whether the Appellate Authority was justified in using the second report made by the police, though it had not been placed into the hands of the parties.
That report did not directly contain any allegations against the first respondent.
Hence there was nothing in that report which it could be called upon to meet.
The only effect of the report was that many of the objections raised against the suitability of the appellant had been withdrawn by the police on further consideration of their records.
The police report is more for the information of the authorities concerned with the granting of permits than for the use of the several applicants for such permits.
In our opinion, therefore, the fact that the Appellate Authority had read out the contents of the police report was enough compliance with the rules of natural justice.
We have also pointed out that no grievance was made at the time the Appellate Authority was hearing the appeal by any of the parties, particularly by the first respondent, that the second report should not have been considered or that they wished to have a further opportunity of looking into that report and to controvert any matter contained therein.
They did not move the Appellate Authority for an adjournment of the hearing in order to enable it to meet any of the statements made in that report.
But the learned counsel for the respondent suggested that the requirements of natural justice could not be waived by any of the parties and that it was incumbent upon the Appellate Authority to observe the so called rules of natural justice.
In our 120 opinion, there is no warrant for such a proposition.
Even in a court of law a party is not entitled to raise the question at the appellate stage that he should have been granted an adjournment which he did not pray for in the court of first instance.
Far less, such a claim can be entertained in an appeal from a tribunal which is not a court of justice, but a statutory body functioning in a quasi judicial way.
For the reasons aforesaid, in our opinion, the judgment under appeal is erroneous and must be set aside and we are further of the opinion that the judgment of the learned single Judge of that Court had taken the more correct view of the legal position.
The appeal is accordingly allowed with costs throughout.
Appeal allowed.
| Rules of natural justice vary with the varying constitutions of statutory bodies and the rules prescribed by the legislature under which they have to act, and the question whether in a particular case they have been contravened must be judged not by any preconceived notion of what they may be but in the light of the provisions of the relevant Act.
Case law discussed.
The provisions of sections 47, 48, 64 and the rules framed under section 68 of the Motor Vehicles Act make it abundantly clear that a Regional Transport Authority and an Appellate Authority in hearing an appeal, function in a quasi judicial capacity and not as courts of law and are not required to record oral or documentary evidence and, in deciding as between the rival claims of applicants for stage carriage permits, what they are required to do is to deal with such claims in a fair and just manner.
The Act, however, amply provides for the safeguarding of their interests.
Veerappa Pillai vs Raman & Raman Ltd, ; , referred to, 99 Consequently, in a case where the Regional Transport Autho rity refused to grant a permit to an applicant on account of an adverse police report and the Appellate Authority granted the same on the basis of a further report by the police, whereby all material allegations against him were withdrawn and nothing was said against his rival which would require to be controverted by him, and the Chairman read out such report at the hearing of the appeal without any objection by any of the interested parties or any request for adjournment and a Division Bench of the High Court in appeal, reversing the decision of a single judge made under articles 226 and 227 Of the Constitution, held that the rules of natural justice had been contravened by reason of the failure on the part of the Appellate Authority to adjourn the proceeding suo motu in order to afford the rival claimant an opportunity to meet the revised police report, its decision was erroneous and must be set aside.
Held, further, that the reading out of the contents of the poiice report by the Chairman at the hearing of the appeal was enough compliance with the rules of natural justice as there was nothing in the rules requiring a copy of it to be furnished to any of the parties.
|
Summarize this legal judgement text concisely | Appeal No. 162 of 1954.
Appeal by special leave from the judgment and order dated the 21st day of July 1953 of the Labour Appellate Tribunal of India, Lucknow in Miscellane ous Case No. C III 33 of 1952.
H.J. Umrigar and R. A. Govind for the appellant B.P. Maheshwari for the respondent.
October 4.
The Judgment of the Court was delivered by BHAGWATI J.
The Labour Appellate Tribunal of India at Lucknow dismissed the application of the appellant made under section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950, for permission to dismiss the respondent, its workman, and the appellant obtained from this Court Special Leave to Appeal against that order.
The respondent has been working as a Steno typist with the appellant since 3rd December, 1946, and is also the Vice President of the Union of workers which is affiliated to the Indian National Trade Union Congress and is known as Chini Mills Mazdoor Sangh One M. P. Singh has at all relevant times been and is still the General Manager of the appellant.
The relations between the appellant and its work men are governed by the Standing Orders framed by mutual agreement between the Labour and the Sugar Mills in Uttar Pradesh which have been approved by 97 748 the Government of Uttar Pradesh.
ClauseL(1)(j)of the said Standing Orders runs as under: "Drunkenness or gambling or riotous or disorderly behaviour while on duty in factory premises, or in quarters provided by the mills or elsewhere or any act subversive of discipline".
These are among the items of misconduct which would entitle the appellant, after due enquiry, to dismiss a workman from its employ.
There were longstanding disputes between the appellant and its workmen since October, 1946, and on the 23rd February, 1949, Kedar Nath Khetan, one of the partners of the appellant, wrote to Shri Kashi Nath Pandey, General Secretary, Indian National Sugar Workers Federation, promising to remove the General Manager as soon as the season of the Chhitauni factory was over.
There was, however, an agreement arrived at between the partners of the factory and the Chini Mills Mazdoor Sangh on the 13th September, 1949, under which the demand for the removal of the General Manager was withdrawn by the workers.
The disputes, however, continued and matters came to a head in 1952.
In May, 1952, the management charged 76 members of the Union for participation in a 'Tools down 'strike.
The matter went up to the Labour Appellate Tribunal which, by its award, reinstated all the 76 workmen.
The management preferred writ petitions Nos. 402 and 409 in the Allahabad High Court but the same also were dismissed.
Special Leave was obtained from this Court against those decisions of the Allahabad High Court and the same are pending.
During the pendency of the application of the management for the discharge of the said 76 workmen before the Labour Appellate Tribunal., the workers held a meeting on the 10th June, 1952, near an old mosque outside the factory area to consider the situation arising out of the suspension of the 76 workmen and the ways and means of meeting the same.
The respondent participated in the said meeting as the Vice President of the Union and made a speech criticising the attitude of the General Manager in terms 749 which were set out in the report dated the 10th June, 1952 submitted by two workers by name Ganga Dhar Tewari and Jamuna Prasad to the General Manager.
The speech of the respondent as reported there was to the following effect: "The General Manager of this factory wants to crush the Labour movement from the very beginning.
He allowed some of his intermediaries to join strike when Shri Shibban.
Lal Saxena had served a strike notice.
His men had also persuaded some of our members to join the strike.
As a result of this we had decided to launch a strike.
On the other hand, the Manager Sahib was sitting on the phone for the permission of the Collector to dismiss all our fellow workers.
Shri Moti Lal Singh was able to discover this conspiracy and he at once prevented us from going on strike.
Then Manager Sahib could not succeed in his plan.
This time he has falsely accused 76 of our workers of resorting to Tools down strike.
These workers will surely be reinstated.
But our efforts are rendered useless due to the acts of the Government Officers; the Collector of this District is getting some thing secretly from the Manager Sahib.
We have only one alternative open to us, let us again agitate for his dismissal.
Many of the proprietors have written to me against him".
A resolution was moved at that meeting for the reinstatement of the 76 workers and dismissal of Shri Madan Pal Singh, the General Manager and the same was passed.
As stated above, the two workers Ganga Dhar Tewari and Jamuna Prasad reported the proceedings of the said meeting to the General Manager on the very same day.
The General Manager thereafter addressed a letter to the respondent on the 16th July, 1952 stating that he, the respondent, was present in and addressed a meeting held on the 10th June, 1952, wherein, among other matters, a resolution for the reinstatement of the 76 suspended workers and the removal of the General Manager was passed.
He asked the respondent to give him information regard 750 ing the above mentiond facts within 24 hours of the receipt of the letter.
The respondent replied on the 17th July, 1952, stating that he never attended any meeting whatever in his capacity as the Steno typist of the factory and expressed his inability, therefore, to say anything in the capacity in which the letter dated the 16th July, 1952, had been addressed by the General Manager to him.
Not being content with bypassing the whole issue in this manner, he proceeded to observe that it was none of the factory 's business to seek information from him for his personal, social or political activities outside the factory area.
He stated that as a matter of courtesy any information asked for would have been supplied by him, but, as the things stood, he very much regretted his inability to comply with the wishes of the General Manager.
The General Manager again addressed a letter to the respondent on the 17th July, 1952, stating that he was entitled to seek the information from him even in his personal capacity and asked him to let him have the reply to the queries contained in the letter dated the 16th July, 1952.
The respondent, in his letter dated the 17th July, 1952 in reply, observed that some of the conclusions drawn by the General Manager were "simply out of self complacency" and he respectfully begged to differ from the General Manager.
He stated that he had nothing further to add to his earlier reply dated the 17th July, 1952.
The General Manager waited for a while and on the 1st August, 1952, served upon the respondent a chargesheet calling upon the respondent to show cause why action should not be taken against him under clause L(1)(j) of the Standing Orders for making a speech in a meeting held near the local mosque on the 10th June, 1952, 'wherein, among other defamatory remarks he, the respondent, instigated the workers to take steps for the removal of the General Manager.
The respondent was asked to submit his explanation latest by 10 a.m. on the 2nd August, 1952.
The respondent submitted his written statement accordingly wherein he stated that there was absolutely no justification whatsoever for charging him with broach of 751 the Standing Orders under clause L(1)(j).
He denied the allegations contained in the charge sheet and wound up by asking the General Manager to enlighten him as to under what rules of the Factories Act, Commercial Establishments Act or the Standing Orders, written replies in the matters other than one 's daily routine work of the factory were demanded at such short notice.
The General Manager fixed 10 a.m. on Monday the 4th August, 1952, for the holding of the enquiry and the respondent was called upon to present himself in time and he was also intimated that he would be at liberty to produce oral or documentary evidence in defence against the charges framed against him.
An enquiry was accordingly (held by the General Manager on the 4th August, 1952.
The proceedings thereat were recorded in the form of questions and answers.
The respondent adopted an attitude which was consistent with the one which he had adopted in the course of the correspondence above referred to.
He refused to answer the questions which were categorically put by the General Manager to him and stated that he had nothing to add to his written statement.
He also took up the attitude that if he had taken part in any meeting held under the auspices of the Chini Mills Mazdoor Sangh outside the factory, the General Manager should write to the officials of the Sangh for necessary information.
When it was specifically put to him that no confidential work was taken from him as he had been taking active interest in the anti management activities maliciously and had been exploiting the poor labour to force himself being confirmed by the management, he said that he did not agree with it and it was not a question which needed any reply.
As a result of the enquiry, the General Manager made his report on the 24th October, 1952, wherein he found that the respondent had made a speech exhorting the workmen of the factory to pass a resotion for the removal of the General Manager, that the management was bound to lose confidence if a worker who had excited other workers against the General 752 Manager of the concern refused to give a direct reply to direct questions, that, in the absence of a Stenotypist who could enjoy the confidence of the management, it was impossible to run the factory without the risk of any trouble and that the respondent was thus guilty of misconduct and acts subversive of discipline.
As, however, there was a pendency of a proceeding before the Labour Appellate Tribunal, an application should be made to that authority for permitting his dismissal.
This report was accepted by the management and the appellant made the application under section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950, for permission to dismiss the respondent from its employ.
The Labour Appellate Tribunal embarked on the freedom of speech vouchsafed to the citizens of India under article 19(1)(a) of the Constitution, observed that the making of the speech in question at the meeting held by the respondent as the Vice President of the Union was within the scope of the legitimate activities of the Union and held that the speech said to have been made by the respondent at the meeting could not be said to be an act subversive of discipline.
The application of the appellant was accordingly dismissed.
Hence this appeal before us.
The only question for determination before us is whether the speech made by the respondent at the meeting held on the 10th June, 1952, was an act subversive of discipline.
The respondent was the Vice President of the Union and, prima facie, any resolution passed by the Union asking for the removal of the General Manager would be perfectly legitimate if the members of the Union thought that there were circum stances warranting the same.
The correctness or otherwise of the reasons given for such removal would not be liable to scrutiny by the Court, the only thing requisite being that the Union was not acting mala fide or was not actuated by any malice or illwill against the General Manager in passing such resolution.
The resolution by itself would not have the effect of harming the General Manager at all, 753 It would have to be forwarded to the management and the management would take such steps as it may be advised on receipt of the resolution.
It would then be for the management to find for itself whether the reasons given for the removal of the General Manager were such as to warrant his removal.
The management would then, if it thought necessary, institute proper enquiries and come to his own conclusion as to the desirability or otherwise of the re moval of the General Manager.
So far as the Union is concerned, apart from mala fides or malice or illwill, the act of its passing the resolution would be innocuous and would not be liable to be visited with any punishment and the members of the Union would no be committing any breach of the Standing Orders nor would they be guilty of any act subversive of discipline.
The gravamen of the charge made by the management against the respondent, however, was that the latter was not merely responsible for the passing of such resolution, but, in the speech which he made in support, he gave vent to such expressions as were quite false and defamatory and was actuated by malice against the General Manager.
He Edited the members of the Union who were there assembled against the General Manager with the result that his act was thus subversive of discipline.
The speech had the effect of lowering the General Manager in the esteem of the workmen and subjecting him to hatred or ridicule and the necessary effect of making such speech before the workmen would be that they would look down upon the General Manager and would not be amenable to discipline and it would be impossible to conduct the management with efficiency with such disgruntled workmen in the factory.
The words used by the respondent were, therefore, it was urged, calculated to undermine the discipline in the factory and his act was, therefore, subversive of discipline bring ing him well within the mischief of clause L(1) (j).
of the Standing Orders.
It was further urged that the conduct of the respondent in the course of the correspondence which took place between the General Manager and himself 754 was, to say the least, impudent.
He relied upon his dual personality distinguishing between his capacity as the Steno typist and his capacity as the Vice President of the Union.
The act complained of was attributed to his capacity as the Vice President of the Union and he refused to give any reply to the queries addressed to him because in the letter; addressed by the General Manager to him he was described as the Steno typist.
He refused to give any information to the General Manager and asked him to communicate with the Sangh or the Union if any information was required by the General Manager in the matter of what took place at the meeting of the Union on the 10th June, 1952.
In the enquiry also, he adopted a similar attitude and refused to answer the direct questions addressed to him by the General Manager in regard to the proceedings of that meeting.
It was strenuously urged before us by the learned counsel for the appellant that this conductor the respondent was subversive of discipline and amounted to such misconduct as would entitle the appellant to dismiss him from its employ.
There is considerable force in this argument and we are of the opinion that the respondent adopted an attitude unbecoming an employee of the appellant.
He adopted a truculent attitude in the course of the correspondence and resorted to the theory of his dual personality refusing to answer the queries addressed to him by the General Manager.
This attitude was, to say the least, reprehensible.
Even though he happened to occupy what he considered to be the august position of the Vice President of the Union he did not cease to be an emPloyee of the appellant and the attempt to distinguish between his capacity as the Steno typist and his capacity as the Vice President of the Union was absolutely puerile.
He ought to have realised that he was first and foremost an employee of the appellant and owed a duty to the appellant to answer all the queries which had been addressed to him by the General Manager.
His evasion to give such replies on the pretext of shielding himself under his capacity as the Vice President of the Union was absolutely 755 unjustifiable and if such insubordination and breach of discipline had been the subject 'Matter of the charges made against him, we do not see how the respondent could have escaped the punishment of dismissal.
Similar is the position in regard to the attitude which the respondent adopted at the enquiry.
He refused to answer the direct questions which were addressed to him and had the temerity to ask the General Manager to see his written statement and find out for himself the answers to the same.
To say the least, the respondent was guilty of insubordina tion and if his attitude was such as would not conduce to the maintenance of discipline in the factory, here also we would have found it difficult to resist the appellant 's claim for his dismissal if he had been charged with having been guilty of such misconduct.
The charge sheet, however, only complained about the speech which he had made on the 10th June, 1952, wherein, among other defamatory remarks, he, the respondent, had instigated the workers to take steps for the removal of the General Manager.
The enquiry which was held on the 4th August, 1952, also concentrated on this particular charge and the report which was made by the General Manager on the 24th October, 1952, also found that the respondent had made a speech exhorting the workers to pass the resolution for the removal of the General Manager.
The acts of insubordination calculated to undermine the discipline in the factory which we have adverted to above were neither the subject matters of the charge nor were they relied upon by the General Manager in his report as the grounds of misconduct entitling the management to dismiss the respondent ' from its employ.
The passing of the resolution for the removal of the General Manager by itself was not, as already stated, an act subversive of discipline and would not entitle the management to dismiss him and we are of the opinion that, on the record as it stood, the Labour Appellate Tribunal was justified in refusing to the appellant the permission to dismiss the respondent from its employ.
The charge sheet which was furnished by the appel 98 756 lant to the respondent formed the basis of the enquiry which was held by the General Manager and the appellant could not be allowed to justify its action on any other grounds than those contained in the chargesheet.
The respondent not having been charged with the acts of insubordination which would have really justified the appellant in dismissing him from its employ, the appellant could not take advantage of the same even though these acts could be brought home to him.
We have, therefore, come to the conclusion 'that the order made by the ' Labour Appellate Tribunal was correct even though we have done so on grounds other than those which commended themselves to it.
We accordingly dismiss this appeal but having regard to the conduct of the respondent which We have characterised above as reprehensible we feel that the ends of justice will be met if we ordered that each party do bear and pay its own costs of this appeal.
Appeal dismissed.
| The respondent, a stenotypist and the Vice President of the Labour Union, was charged by the appellant with misconduct and indiscipline under clause L(1)(j) of the Standing Orders of the Government of Uttar Pradesh for instigating the workmen to pass a resolution for the removal of the General Manager by a defamatory speech delivered at a meeting of the Union.
The question in issue was whether the respondent by doing so had committed "any act subversive of discipline" within the meaning of that clause.
In course of the correspondence with the General Manager over the matter, as also during the enquiry made by him, the respondent took up the attitude that he, as a stenotypist, was not answerable to his employers for his activities as Vice President of the Union outside the factory area and persistently refused to answer questions categorically put to him by the General Manager.
The appellant applied to the Labour Appellate Tribunal under section 22 of the Industrial Disputes (Appellate Tribunal) Act of 1960 for permission to dismiss the respondent.
That application having been refused the appellant obtained Special Leave to appeal to the Supreme Court and it was contended that the passing of the resolution and the refusal to answer questions in course of the correspondence,and the enquiry amounted to acts subversive of discipline and the respondent was liable to be dismissed.
Hold, that it was perfectly legitimate for the Union to pass the, resolution they did and no guilt either of a breach of the Standing Orders or of committing an act subversive of discipline could attach to the respondent for what part he took in the meeting as Vice President of the Union and the order of dismissal passed by the Labour Appellate Tribunal must be affirmed.
That where, as in the present case, the members of the Union were of opinion that the circumstances warranted the resolution, it 747 was not for the court to scrutinies the correctness or otherwise the reasons for it.
Held further, that the respondent was primarily an employ of the appellant before he could be anything else and was in dut bound to answer such queries as were put to him by the Gener Manager and his persistent refusal to do so, on the pretext of a dual capacity, amounted to insubordination which would have justifie his dismissal but the appellant having omitted to include this as ground in the charge sheet, which was served on the responds and formed the basis of the enquiry, could not be allowed to rel on it.
|
Summarize this legal judgement text concisely | Appeals Nos. 124 to 126 of 1954.
Appeals by special leave from the judgment and order dated the 10th day of March 1952 of the Madras High Court in C.M.P. Nos.
10427, 10425 and 10426 of 1951 arising gut of the order dated the 23rd day of February 1951 of the Income Tax Appellate Tribunal, Madras Bench in Reference Applications Nos. 312, 310 and 311 of 1950 51.
P. R. Das, B. Sen, V. Sethuraman and section Subramaniam for the appellant.
C. K. Daphtary, Solicitor Generalfor India, Porus A. Mehta and R. H. Dhebar for P. G. Gokhale for the respondent.
September 26.
The judgment of the Court was delivered by VENKATARAMA AYYAR J.
These appeals arise out of orders of assessment made on the appellant by the Appellate Tribunal, Madras Bench, for the years of account 1941 42, 1942 43 and 1943 44.
The appellant applied under section 66(1) of the Indian Income tax Act (hereinafter referred to as the Act) to refer to the High Court certain questions which according to it arose out of the orders; but the Tribunal rejected the applications.
The appellant then moved the High Court under section 66(2) of the Act for an order requiring the Tribunal to refer those questions to the court, but the learned Judges held that the questions on which reference was sought by the appellant were pure questions of fact, and dismissed the applications.
The matter now comes before us by way of special appeal.
695 The facts material for the purpose of these appeals may shortly be stated.
The assessee is a public company registered under the Indian Companies Act, and its Managing Agents are the firm of Messrs K. R. Thyagaraja Chettiar and Co., whose partners are Mr. Thyagaraja Chettiar and his two sons.
The company is resident and ordinarily resident in British India, its head office being at Madurai in the Madras State.
It carries on business in the manufacture and sale of yarn, and for the purpose of that business it purchases cotton and occasionally sells it.
Its profits arise for the most part from the sale of yarn and to some extent from the re sale of cotton.
According to the account books of the company, its profits from business for the account year 1941 42 were Rs. 9,25,364, for 1942 43 Rs. 24,09,832 and for 1943 44 Rs. 29,13,88 1.
In its returns, the appellant showed these amounts as its income chargeable to tax for the respective years.
The Department did not accept the correctness of the figures as shown in the accounts.
It contended that the Company had earned more profits than were disclosed in its accounts, and that it had contrived to suppress them by resort to certain devices.
According to the Department, the scheme evolved by the appellant for this purpose was this: Suppose the Company sold 25 bales of yarn to X for.
Rs. 50,000 at the then market rate and received the full amount of the price.
The books of the Company would show neither the sale to X nor its receipt of Rs. 50,000.
Instead, there will be an entry in its books showing the sale of these very bales to A for Rs. 20,000 which will be about the cost price and in the books of A these goods will be shown as sold by it to X for Rs. 50,000.
If the sale by the Company to A and the connected sale by A to X were genuine, the Company would have made no profit on the sale, whereas A would have made a profit of Rs. 30,000 on it.
But in fact,both these sales were sham transactions; the only sale that took place was that by the Company to X and the price actually received by it was not Rs. 20,000 but Rs. 50,000.
As a result of these paper transactions and manipulations, the 696 profit of Rs. 30,000 made by the Company was suppressed.
This process was reversed when the Company purchased cotton.
The appellant purchased, let us say, 100 bales of cotton from X for a price of Rs. 5,000, and paid that amount to X. Neither this purchase from X nor the payment of Rs. 5,000 to him would appear in the books of the Company.
Instead, the books of A will show these goods as purchased by it from X for Rs. 5,000, and the books of the appellant will show a purchase from A of those very goods for Rs. 8,000.
Both these sales were fictitious, the only real transaction was the sale by X to the Company and the price actually paid therefor by the Company was only Rs. 5,000.
By the device of sale by X to A and by A to the Company, the cost price had been inflated by Rs. 3,000, and the real profit had been concealed to that extent.
The accounts of the Company, therefore, did not reflect the true position as to the profits actually made by the appellant.
The names of the intermediaries who according to the Department played the role of A in the above illustration and they will hereafter be referred to simply as intermediaries are given below with the amount of profits made on the sale of yarn in their names and concealed, or the extent of the cost price inflated on the purchase of cotton from them, as found by the Tribunal: 1941 42 1.
Meenakshi & Co. Sale of yarnRs.
35,830 2.
Sivagami & Co. do.
Rs. 35,443 3.
Mangayarkarasi & Co. do.
Rs. 34,579 4.
Alagu & Co. Purchase of cotton Rs. 34,003 1942 43 1.
Meenakshi & Co. Sale of yarnRs.
53,635 2.
Sivagami and Co. do.
Rs. 58,103 3.
Rukmani & Co. Ltd. & Sale of yarn Rs. 3,97,467 4.
Sivagami & Co. Ltd. 5.
Rukmani & Co., Ltd. Purchase of cotton Rs. 33,533 697 1943 44 1.
Pudukottah&Co.,Ltd.
Sale of yarn Rs. 18,99,488 Do.
Purchase of cotton Rs. 12,703 2.
Rukmani & Co., Ltd. do.
Rs. 22,504 3.
Rajendra Ltd. Sale of yarn Rs. 1,06,436 The contention of the Department was that the amounts shown as profits made by the intermediaries and mentioned above represented in fact the profits actually earned by the appellant, and that they should be added to the figures shown in its accounts as its profits.
The appellant contested this position, and maintained that the state of affairs disclosed by its accounts was true, that its sales in favour of the intermediaries were genuine, and that, in fact, little or no profits were made by it in those transactions, that it purchased cotton only from the intermediaries and, did pay them the amounts as shown in the accounts.
These contention were closely examined by the Income tax Officer in the first instance, then again by the Appellate Assistant Commissioner on appeal, and finally by the Appellate Tribunal, and on an elaborate consideration of the materials placed before them, they held that the following facts were established: 1.
The sale of yarn by the appellant to the intermediaries mentioned above was for a price very much below the market rate, often for the cost price and some times for even less.
No acceptable explanation had been given for this unusual feature.
The yarn was in that period a scarce commodity, and it was a seller 's market.
The amounts lost by the Company on these transactions during the three years, if they were genuine, would far exceed Rs. 25 lakhs.
The sales therefore were not bonafide.
The firms of Meenakshi and Co., Sivagami and Co. Mangayarkarasi and Co., and Alagu and Co., who were the intermediaries for the year 1941 42 were all newly started for the first time in 1941.
The partners of the firm were men of no means, and were all relations of Mr. Thyagaraja Chettiar, the chief 698 partner of the Managing Agents firm and a dominant figure in charge of the Company 's affairs.
None of them had done any business in yarn before.
The personnel of these firms was drawn in different combinations from a group of half a dozen persons who were all the creatures of Mr. Thyagaraja Chettiar.
During the year 1942 43, two of the ' firms, Mangayarkarasi and Co., and Alagu and Co., were closed, and their place was taken by two private limited companies called Rukmani and Co., Ltd. and Sivagami and Co., Ltd. The shareholders of these companies were again drawn from the small group of persons who were partners of the firms, and they were all Mr. Thyagaraja Chettiar 's men.
These companies declared no dividends, even though they made con siderable profits and the shareholders received no dividends nor even statements of accounts.
In truth, they had no beneficial interest in the concerns.
The business of the intermediaries, both firms and the companies, consisted solely in the purchase of yarn from the appellant and not from any other person, and the entirety of the yarn purchased was sold by them en bloc to constituents of the appellant.
Thus, the business of the intermediaries was, in fact, only a part of the business carried on by the appellant.
The sales by the appellant in favour of these intermediaries were of large quantities of yarn and sometimes on a scale far higher than other genuine commercial transactions, as for example, the sale of 1850 bales on 17 4 1942 to Rukmani and Co. No securities were taken from the intermediaries for this transaction.
Having regard to the magnitude of the business, the capital of the intermediaries even on paper was negligible.
The intermediaries bad most of them no offices of their own.
Even when they had offices, these were arranged by the officers of the appellant.
The concerns had no godowns, and their staff was meagre and recruited from the employees and servants of the appellant.
Apart from signing the contracts, the intermediaries did nothing.
699 7.
The profits earned by the firms were shown in their books as cash in their possession, but on a surprise raid the authorities were unable to discover any cash with them.
The amount shown as profits in their accounts was, in fact, in the possession of the appellant Company.
The intermediaries had, in fact, never to pay to the appellant for any of the purchases made by them, the course of the business being that they sold the goods purchased from the appellant to its old customers, who paid therefor.
The intermediaries did not issue any delivery orders on the appellant in favour of the customers to whom they ostensibly sold the goods, but the goods were despatched directly by the appellant to the customers and delivered to them.
The customers to whom the goods were delivered by the appellant as aforesaid paid the full price for which they purchased them from the intermediary firms not to those firms with whom alone they had privity of contract but to the appellant direct, and these payments appear as receipts in the books of the appellant.
After the Limited Companies were started in 1942 43 and 1943 44, the course of business adopted by the appellant showed a further mystification.
There was firstly a sale of certain quantity of yarn by the appellant to company A, which sold it in turn to company B which in turn sold it to C, which ultimately sold it to the usual customers of the appellant.
In spite of the number of links between the appellant and the customers, the goods were directly despatched by the former to the latter, who paid by cheques the full amount due by them to their seller C, who straightaway endorsed them, in favour of the appellant.
The intermediaries A and B did no act, and took no part in the ultimate payment of the price by the purchasers.
Some of the intermediaries, firms and companies had been ' formed in Pudukottah State.
At that time, that Sta was foreign territory, and the profit 700 earned there would become taxable only if it was remitted to British India.
Pudukottah is neither a cotton producing area, nor was a market for cotton there.
The object with which the intermediaries had been set up in Pudukottah was obviously to screen portions of the profit earned by the appellant.
On these facts, the Tribunal came to the conclusion that the contentions of the Department had been fully established, namely , that the intermediaries were dummies brought into existence by the appellant for concealing its profits, that the sales standing in their names were sham and fictitious, and that the, profits ostensibly earned by them on those transactions were, in fact, earned by the appellant, and should be added ,to the amounts shown as profits in its accounts.
The point for decision is whether there arises out of the order of the Tribunal any question which can be the subject of reference under section 66(1) of the Act.
Under that section, it is only a question of law that can be referred for decision of the court, 'and it is impossible to argue that the conclusion of the Tribunal is anything but one of fact.
It has been held on the corresponding provisions in the English Income tax statutes that a finding on a question of fact is open to attack as erroneous in law only if it is not supported by any evidence, or if it is unreasonable and perverse, but that where there is evidence to consider, I the decision of the Tribunal is final even though the court might not, on the materials, have come to the same conclusion if it had the power to substitute its own judgment.
In Great Western Railway Co. vs Bater(1), Lord Atkinson observed: "Their (Commissioners ') determination of questions of pure fact are not to be disturbed, any more than are the findings of a jury, unless it should appear that there was no evidence before them upon which they, as reasonable men, could come to the conclusion to which they have come: and this even though the Court of Review would on the evidence have come to a conclusion entirely different from theirs".
(1) , 244.
S.C.R. SUPREME COURT REPORTS 701 There is no need to further elaborate this position, because the law as laid down in these observations is well settled and has been adopted in the construction of section 66 of the Act.
Now, the determination of the Tribunal in the present proceedings being, one of fact, it is open to review by the court only on the ground that it is not supported by any evidence or that it is perverse.
The appellant understood this position quite correctly, and in its application under section 66(1) it stated the only question which it wanted the Tribunal to refer to the court with reference to the present controversy in the following terms: "Whether on the facts and in the circumstances of the case there is any legal evidence to support the finding that the four firms, Meenakshi and Co., Sivagami and Co., Mangayarkarasi and Co., and Alagu and Co., were benamidars for the appellant and that the profits made by these firms were profits made by the appellant".
This was for the accounting year 1941 42.
The question was similarly worded for the subsequent years also except that the names of the intermediaries were different for the different years.
The question as framed assumes, it will be noted, that the Tribunal had held that the intermediaries were benamidars for the appellant, and on this assumption were grounded several contentions which were pressed on behalf of the appellant.
Whether this assumption and the contentions based thereon are well founded is a different matter, and will be considered in due course.
But apart from that, it will be seen that the only ground of attack which was directed against the finding of the Tribunal was that there was no legal evidence.
This is of course a contention open to the appellant; but has that been substantiated? Mr. P. R. Das, learned counsel for the appellant, did, at the start, put his contention as high as that.
But it became abundantly clear when his argument began to unfold itself that it amounted to no more than this that the conclusion drawn by the Tribunal from the facts found by it was unsound and erroneous.
He did not, it must be stated, dispute the facts them 702 selves, but he took them one after another, and contended that they were susceptible of inferences other than those drawn by the Tribunal.
He next offered explanations for them which would 'Make them consistent with the contention of the appellant.
And he finally wound up by saying that the conclusion reached by the Tribunal was not justified.
This clearly is an erroneous approach to the whole question.
When a conclusion has been reached on an appreciation of a number of facts established by the evidence, whether that is sound or not must be determined not by considering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all the facts in their setting in the picture as a whole.
In Edwards (Inspector of Taxes) vs Bairstow(1).
Lord Radcliffe stated: I think that it is rather misleading to speak of there being no evidence to support a conclusion when in cases such as these many of the facts are likely to be neutral in themselves, and only to take their colour from the combination of circumstances in which they are found to occur".
This furnishes the corrective to the course adopted by counsel for the appellant in his argument.
And a more serious objection to it, and one of substance is that it relates merely to matters of appreciation of evidence, and does not support the position that there is no legal evidence in support of the finding of the Tribunal.
For example, one of the facts on which the Tribunal relied for its conclusion was that the partners of the intermediary firms were new to yarn business and came on the scene for the first time in 1941.
The appellant contends that no significance could be attached to this, as the partners belonged to the Nattukkottai Chetti caste, which was a trading community.
But surely this does not render the evi dence irrelevant or inadmissible.
It only affects the weight to be attached to it. ' Then again, the Tribunal has made a point of it that the goods were sold by the appellant to the intermediaries for a price far below the market price, sometimes even below the (1) 703 cost price.
The answer of the appellant to this was that they were forward contracts and that the price of yarn on the dates of those contracts was low.
But the Tribunal declined to accept this explanation for the reason and that, a good one that there were no contract registers from which the dates on which the contracts were entered into could be verified, and that the contract notes themselves were not serially numbered.
If this is not a matter of pure appre ciation of evidence, it is difficult to see what else is.
The Tribunal also referred to the fact that the only business which the intermediaries did was to purchase yarn from the appellant and sell it to its own constituents.
The answer of the appellant to this was that there was no need for the intermediaries to purchase from other manufacturers when all their needs were met by the appellant and that there was nothing unusual in their selling all their yarn to its customers.
it is unnecessary to say anything about the worth of this contention, for that is a matter exclusively for the Tribunal to assess.
What has now to be considered is whether this circumstance on which the Tribunal relied is or is not cogent evidence in support of its conclusion.
It will be preposterous to contend that it is not.
No useful purpose will be served by examining the contentions of the appellant with reference to the other facts on which the Tribunal relied for its conclusion.
They are of the same pattern as the above, and bear, at their best, on the weight to be attached to the facts and not to their relevancy or admissibility, and there is no question of want of legal evidence in support of the conclusion of the Tribunal.
Reference should also be made in this connection to another contention which wag pressed by Mr. P. R. Das at a later stage of the argument.
He contended that the facts found showed that the intermediaries were benamidars not for the appellant but for Mr. Thyagarajan Chettiar of the Managing Agents firm.
The significance of this contention lies in this that it grants and Mr. P. R. Das was quite frank about it that the facts found did point to the fact that the 704 intermediaries were dummies, leaving outstanding for decision only the question whether on the evidence they were benamidars for the appellant or for Mr. Thyagarajan Chettiar.
That is a question which will be separately considered.
But it is manifest that this argument is destructive of the contention of the appellant that there is no legal evidence to support the conclusion of the Tribunal that the intermediaries were mere dummies.
The result then is that the finding of the Tribunal viewed as one of fact, which in truth it is supported by evidence, and is not unreasonable and is not open to attack on any of the grounds on which such a finding could be assailed in a reference under section 66(1).
It was next contended for the appellant that inference from facts was a question of law, and that as the conclusion of the Tribunal that the intermediaries were dummies and that the sales standing in their names were sham and fictitious was itself an inference from several basic facts found by it was a question of law and that the appellant had the right under section 66(1) to have the decision of the court on its correctness, and support for this position was sought from certain observations in Edwards (Inspector of Taxes) vs Bairstow(1), Bomford vs Osborne(2), Thomas Fattorini (Lancashire), Ltd. vs Commissioners of Inland Revenue(3), Cameron vs Prendergast(" and The Gramophone and Typewriter Company, Ltd. vs Stanley(5).
At the first blush, it does sound somewhat of a contradiction to speak of a finding of fact as one of law even when that finding is an inference from other facts, the accepted notion being that questions of law and of fact form antithesis to each other with spheres distinct and separate.
When the Legislature in terms restricts the power of the court to review decisions of Tribunals to questions of law, it obviously intends to shut out questions of fact from its jurisdiction.
If the contention of the appellant is (1) (2) 1942 I.T.R. Supplt, 27.
(3) (4) 8 I.T.R. Supplt.
(5) ; correct.
, then a finding of fact must, when it is an inference from other facts, be open to consideration not only on the ground that it is not supported by evidence or perverse but also on the ground that it is not a proper conclusion to come to on the facts.
In other words, the jurisdiction in such cases is in the nature of a regular appeal on the correctness of the finding.
And as a contested assessment and it is only such that will home up before the Tribunal under section 33 of the Act, must involve disputed questions of fast, the determination of which must ultimately depend on findings on various preliminary or evidentiary facts, it must result that practically all orders of assessment of the Tribunal could be brought up for review before courts.
That will, in effect, be to wipe out the distinction between questions of law and questions of fact and to defeat the policy underlying sections 66(1) and 66(2).
One should hesitate to accept a contention which leads to consequences so startling, unless there are compelling reasons therefor.
Far from that being the case, both principle and authority are clearly adverse to it.
Considering the question on principle, when there is a, question of fact to be determined it would usually be necessary first to decide disputed facts of a subsidiary or evidentiary character, and the ultimate conclusion will depend on an appreciation of these facts.
Can it be said Chat a conclusion of fact, pure and simple, ceases to be that when it is in turn a deduction from other facts? What can be the principle on which a question of fact becomes transformed into a question of law when it involves an inference from basic facts? To take an illustration, let us suppose that in a suit on a promissory note the defence taken is one of denial of execution.
The court finds that the disputed signature is unlike the admitted signatures of the defendant.
It also finds that the attesting witnesses who speak to execution were not, in fact, present at the time of the alleged execution.
On a consideration of these facts, the court comes to the conclusion that the promissory note is not genuine, 706 Here, there are certain facts which are ascertained, and on these facts, a certain conclusion is reached which is also one of fact.
Can it be contended that the finding that the promissory note is not genuine is one of law, as it is an inference from the primary facts found? Clearly not.
But it is argued against this conclusion that it conflicts with the view expressed in several English decisions, some of them of the highest authority, that it is a question of law what inference is to be drawn from facts.
The fallacy underlying this contention is that it fails to take into account the distinction which exists between a pure question of fact and a mixed question of law and fact, and that the observations relied on have reference to the latter and not to the former, which is what we are concerned with in this case.
In between the domains occupied respectively by questions of fact and of law, there is a large area in which both these questions run into each other, forming so to say, enclaves within each other.
The questions that arise for determination in that area are known as mixed questions of law and fact.
These questions involve first the ascertainment of facts on the evidence adduced and then a determination of the rights of the parties on an application of the appropriate principles of law to the facts ascertained.
To take an example, the question is whether the defendant has acquired title to the suit property by adverse possession.
It is found on the facts that the land is a vacant site that the defendant is the owner of the adjacent.
residential house and that he has been drying grains and cloth and throwing rubbish on the plot.
The further question that has to be determined is whether the above facts are sufficient to constitute adverse possession in law.
Is the user continuous or fugitive? Is it as of right or permissive in character? Thus, for deciding whether the defendant has acquired title by adverse possession the court has firstly to find on an appreciation of the evidence what the facts are.
So far, it is a question of fact.
It has then to apply the principles of law regarding acquisition of title by adverse possession, and decide whether on the facts 707 established by the evidence, the requirements of law are satisfied.
That is a question of law.
The ultimate finding on the issue must, therefore, be an inference to be drawn from the facts found, on the application of the proper principles of law, and it will be correct to say in such cases that an inference from facts is a question of law.
In this respect, mixed questions of law and fact differ from pure questions of fact in which the final determination equally with the finding or ascertainment of basic facts does not involve the application of any principle of law.
The proposition that an inference from facts is one of law will be correct in its application to mixed questions of law and fact but not to pure questions of fact.
The following observations of Lord Atkinson ' in Herbert vs Samuel Fox and Co., Ltd.(1) clearly bring out the principle above stated: ".
Your Lordships were pressed with the usual argument, that as the County Court judge though a judge of law and facts, is the sole judge of fact, his findings cannot be disturbed if there was any evidence before him upon which he, as a reasonable man, could find as he has found.
That argument is quite sound if it be applied to pure findings of fact.
It is utterly unsound if it be applied either to findings on, pure questions of law or on mixed questions of law and fact .
It is wholly illegitimate, in my view, in cases such as the present, by finding in the words of the statute to endeavor to secure for 'a finding on a pure question of law, or on a mixed question of law and fact, that unassailability which properly belongs only to a finding on a question of pure fact".
These observations were made in a case under the Workmen 's Compensation Act, 1904.
But the same principles have been applied to revenue cases, and it has consistently been held that inferences from facts may themselves be inferences of fact and not of law, and that such inferences are not open to review by the court.
In the Queen vs Special Commissioners of Income tax(2) Esher M. R. observed: (1) , 413.
(2) , 290 291.
92 708 ". . it seems to me that is a question of fact.
It is a question of the true inference which they (Commissioners) had to draw as a matter of evidence upon the facts which they had in evidence before them.
But to draw an inference of fact from evidence before you is not a question of law at all.
The inference is a question of fact just as much as the direct evidence of fact, and it would be an appeal against facts, which we are not entitled to entertain and consequently there can be no Mandamus".
A clearer and more, emphatic refutation of the appellant 's contention cannot be found.
The law is thus summed up in Simon 's Income Tax, 1952 Edition, Volume I, page 281: "There can be no doubt that it is for the Commissioners, and for the Commissioners alone, to discover and state the basic or 'primary ' facts of the case .
From the primary facts the Commissioners will almost always need to draw some inference or inferences by the exercise of reasoning, and it is this process of inference which may, according to its nature, be a finding of law or of fact, or mixed finding of law and fact".
The result of the authorities then is that inference from facts would be a question of fact or of law according as the point for determination is one of pure fact or mixed question of law and fact.
Is there anything in the authorities cited by the appellant which militates against this conclusion? In Edwards (Inspector of Taxes) vs Bairstow(1), the point for determination was whether the transaction entered into by the assessee was an adventure in the nature of trade.
The finding of the Commissioner was that it was not.
But that was reversed by the House of Lords who held that on the facts found it was an adventure in the nature of trade.
The very expression "in the nature of trade" requires that the adventure should possess certain elements which in law would invest it with the characteristics of a trade.
The question is, therefore, one of a mixed law and fact.
That is precisely how the matter is dealt with by (1) 709 Lord Radcliffe.
He observes at page 589: "My Lords, I think that it is a question of law what meaning is to be given to the words of the Income Tax Act 'trade, manufacture, adventure or concern in the nature of trade ' and for that matter what constitutes 'profits or gains ' arising from it.
Here we have a statutory phrase involving a charge of tax and it is for the courts to interpret its meaning having regard to the context in which it occurs and to the principles which they bring to bear upon the meaning of 'income ' ".
Lord Somervell agreed with the opinion expressed by Lord Radcliffe.
The Lord Chancellor, dealing with this aspect of the case, referred to the decisions in Cooper vs Stubbs(1) and Jones vs Leeming(2), where it had been held that whether trading activities amounted to carrying on business was a pure question of fact, and observed at page 587: "Yet it must be clear that to say that such an inference is one of fact postulates that the character of that act which is inferred is a matter of fact.
To say that a transaction is or is not an adventure in the nature of trade is to say that it has or has not the characteristics which distinguish such an adventure.
But it; is a question of law, not of fact, what are those characteristics, or in other words, what the statutory language means ".
In the view of Viscount Simonds, therefore, the question was one of mixed law and fact.
But be was also prepared to decide the case on the footing that it was a question of fact and observed at pp.
585 586: "This appeal must be allowed and the assessments must be confirmed, For it is universally conceded that though it is a pure finding of fact, it may be set aside on grounds which have been stated in various ways but are, I think, fairly summarised by saying that the court should take that course if it appears that the Commissioners have acted without any evidence or upon a view of the facts which could not reasonably be entertained".
That is to say, even if the question was one of pure (1) (2) 710 fact, the finding of the Commissioners was liable to be set aside on the ground that there was no evidence in support of it or that on the evidence it was perverse.
What is of significance in this is that the Lord Chancellor dealing with the question whether the adventure was in the nature of trade as one of fact does not hold that the ultimate finding was one of law by reason of its being one of inference from facts but treats it only as a finding of fact and open to attack as such.
This decision, therefore, is no authority for the position that where a findig is given on a question of fact based upon an inference from facts, that is always a question of law, and the following observation of Lord Radcliffe at page 592 is directly against it: "I do not think that inferences from other facts are incapable of being themselves findings of fact although there is value in the distinction between primary facts and inferences drawn from them".
In Bomford vs Osborne(1), the Commissioners had held that 230 acres out of a plot of 550 acres belonging to the assessee should be separately assessed as "gardens for the sale of produce", while the remaining lands should be taxed on the basis of their annual value.
The assessee disputed the correctness of this finding, and contended that the 230 acres in question were not gardens as contemplated by Rule 8 of Schedule B of the Income tax Act, 1918.
The House of Lords agreed with this contention, and discharged the assessment.
One of the points raised on behalf of the Crown was that the finding of the Commissioner was one of fact and was therefor& final.
This contention was repelled on the ground that whether the lands were gardens within rule 8 was not a pure question of fact.
The following observations in the speech of Lord Wright at page 38 may be quoted: "It has been strenuously contended as a main argument on behalf of the Crown that the questions here to be discussed are questions of 'fact and degree '.
But, in my opinion, the true effect of the facts found cannot be ascertained until the true construction of r. 8 has been examined and its true application to (1) [1942] I.T.R. Supplt.
711 the facts ascertained.
There are, in addition to incidental questions, two main questions of law, namely, what is the meaning of "gardens for the sale of produce" and how is that meaning to be applied to acreage which is worked as a single mixed farm in one unit".
Thus, the basis of the judgment was that the question decided by the Commissioners was one of mixed law and fact, and that their determination was open to review by the courts.
There is nothing in this decision again which supports the contention of the appellant that findings on questions of fact based on inference from other facts should be regarded as questions of law.
On the other hand, the following observations of Viscount Simon at page 22 are really against this contention: "No doubt, there are many cases in which Commissioners, having bad proved or admitted before them a series of facts, may deduce therefrom further conclusions which are themselves conclusions of pure fact, but in such cases the determination in point of law is that the facts proved or admitted provide evidence to support the Commissioner 's conclusions".
These observations clearly establish that inferences from facts found need not necessarily be inferences of law but may be conclusions of fact, and such conclusions of fact could be attacked on grounds on which findings of fact could be attacked, namely, there is no evidence to support them as for example, if the conclusion does not follow even if all the facts found are accepted.
That does not certainly support the contention of the appellant.
In Thomas Fattorini (Lancashire), Ltd. vs Inland Revenue Commissioners(1), the point for decision was whether the appellant company bad failed to declare within a reasonable time dividend out of the profits earned by it, in which case under section 21 of the Finance Act, 1922 the income is deemed to be income of the members and chargeable to super tax.
The finding of the Board of Referees was that distribution of profits had not been made within a reasonable time, (1) ; 712 but their decision was reversed by the House of Lord& on the ground that there was no evidence in support of it.
Thus, there is nothing in the decision itself which has any bearing on the present controversy.
The appellant, however, relies on the following observations in the speech of Lord Porter at page 667: "I. think that the final conclusion is not a fact but an inference from facts previously set out, and that, therefore, that conclusion is not binding upon the tribunal to which the case is referred unless it appears from the previous findings that there are facts which support it.
In the present case I cannot find such support.
" In the context, what these remarks mean is that when the final conclusion is one of fact and is itself an inference from other facts, it is open to attack on the ground that the basic facts themselves do not constitute evidence in support of the final conclusion a position which does not arise here.
Then there is the observation of Lord Maugham in Cameron vs Prenderga8t(1) that "inferences from facts stated by the Commissioners are matters of law and can be questioned on appeal".
Does this remark mean that inferences from facts found are questions of law in all cases, whether these inferences are inferences of facts or of law? There.
being nothing in the observation to throw any light on this question, we must examine the facts of the case to ascertain its true import.
There, the assessee who had been a Director in a building company for 44 years wanted to resign his office, but be was persuaded to continue as an advisory Director on a reduced remuneration and a payment of C45,000, and this arrangement was embodied in a deed.
The question was whether these amounts were taxable as profits arising from an office.
The Commissioners had held that the consideration for the payments was the promise of the assessee not to resign his office, and that therefore they were not profits arising from any office.
The House of lords held, affirming the judgment of the majority of the Court of Appeal that the amounts were paid to (1) 8 I.T.R. Supplt.
75, 81.
713 the assessee in consideration of his continuing as a Director, and were therefore taxable.
Thus, the only point for determination in the case was as to the character of the payments made to the appellant, and that depended on the true interpretation to be put on the agreement, and that really was a question of law.
There was no question of the Commissioners recording findings on primary facts and then of drawing further inferences therefrom.
The dictum relied on by the appellant therefore could have no reference to the question now under consideration.
It is possible that having regard to the observations follow 'ing the one quoted above that "the same remark is true as to the construction of documents", what was meant to be conveyed was that the legal effect of facts stated in the deed of agreement was a question of law.
In the context, it is impossible to construe the observation as an authority in support of the present contention of the appellant, and it should be mentioned that there is nothing about this in take judgments of the other members of the court.
One other argument advanced on behalf of the appellant must now be considered.
This is based on the following observations of Cozens Hardy M.R. in The Gramophone and Typewriter Ltd. vs Stanley(1): "It is undoubtedly true that if the Commissioners find a fact, it is not open to this court to question that finding unless there is no evidence to support it.
If, however, the Commissioners state the evidence which was before them, and add that upon such evidence they hold that certain results follow, I think it is open, and was intended by the Commissioners that it should be open, to the court to say whether the evidence justified what the Commissioners held.
I am satisfied that the case stated by the Commissioners falls under the latter head".
these observations, the argument of the appellant was that whenever the Tribunal found certain basic facts and stated its conclusions thereon,, its determination was open to review by court, and that it was immaterial whether these conclusions were of fact or (1) 714 of law.
The answer to this contention is furnished by the decision in The American Thread Company vs Joyce(1), wherein the true scope of these observations has been fully considered and authoritatively settled.
There, Hamilton J. pointed out that what the observations meant was Chat if the Commissioners merely stated certain findings of fact and while expressing what according to them was their effect, did not intend that the expression should be taken as their finding thereon, then it must be taken that they had referred to the decision of the court the question as to what inference should be drawn from the basic findings, but that if they had not merely stated the basic findings but had also stated their conclusions thereon intending that they should be their determinations on the question, then those determinations, if conclusions of fact, would be binding on the court and that the assessee would then have been stated out of court.
Dealing with the statement of the Commissioners which was under reference before him, the learned Judge observed at page 22: "It appears to me, therefore, that it is quite clear that the Commissioners have done this: they have stated their determination, with which the appellants are dissatisfied; they have stated the facts as found upon which they so determined.
The facts as found they have stated in the first part of paragraph 17, and then they have stated in the previous paragraphs the materials on which they so found, and in so doing they have invited, and only invited, the de termination in point of law of the question whether there was evidence upon which they could reasonably arrive at the conclusion at which they did arrive".
The decision in.
The Gramophone and Typewriter Company Ltd. vs Stanley(2) is thus really not a pronouncement on what is a question of law but on what construction was to be put on the statement of the Commissioners which was before the court.
It should be added that the situation envisaged by Cozens Hardy M. R. in The Gramophone and Typewriter Company (1) (2) 715 Ltd. vs Stanley(1) cannot arise under section 66 of the Act, as the Tribunal is itself charged with the duty to decide whether a question of law arises out of its order, and it cannot therefore merely pass it on for the determination of the court.
The decision in The American Thread Company vs Joyce (2) was taken on appeal and confirmed by the Court of Appeal, of which it may be noted two of the members, Fletcher Moulton L.J. and Buckley L.J. were.
parties to the decision in The Gramophone and Typewriter Company Ltd. vs Stanley(1), and they expressed themselves in agreement with the view taken by Hamilton J.
There was a further appeal to the House of Lords, which in confirming the decision of the courts below expressly approved of the observations of Hamilton J.
The Earl of Halsbury observed: "It is enough to say that they (the Commissioners) have found it and that there was evidence upon which they might find it, and if they did find it and if there was evidence upon which they might find it, there is no question of appeal here at all .
I should have been contented absolutely to say that I entirely agree with every word of Mr. Justice Hamilton 's iudgment".
(The American Thread Company vs Joyce).
This decision is particularly important as the finding in that case was itself, as appears from the judgment of Hamilton J., an inference from facts found and, nevertheless, it was decided that it was a question of fact on which the finding of the Commissioners was final.
I must now refer to another catena of cases relied on by the appellant in support of its contention that inferences from facts are questions of law.
They are decisions of the Privy Council as to when a court of second appeal having authority to review decisions of the lower appellate court on a question of law could interfere with its findings of fact.
In Ramgopal vs Shamskhaton(4), one Daud Rao was sought to be made liable on a mortgage to which he was not a (1) ; (3) , 165.
93 (2) (4) [1891] 921 19 I. A. 228, 716 party on the ground that be had knowledge of it and had accepted it.
In holding that the acts found did not establish any ground of liability, Sir Richard Couch observed: "A finding that the bond shewed that the mortgage deed was accepted by the defendant, as binding obligation upon him, would be an inference of law, an inference which, in their Lordships ' opinion is not a just one from the facts which the Commissioner held to be proved.
The knowledge of the mortgage and saying that the money due upon it was repayable, do not amount to an agreement by him to be bound byit.
As the mortgage did not purport to be made in any way on behalf of Daud Rao it was not a case for ratification.
A new agreement was necessary to bind him".
Then, after referring to the observations of Lord Watson in Ramratan Sukal vs Mussumat Nandu(1) that "it has now been conclusively settled that the third Court, which was in this case the court of the Judicial Commissioner, cannot entertain an appeal upon any question as to the soundness of findings of ' fact by the second court; if there is evidence to be considered, the decision of the second Court, however unsatisfactory it might be if examined, must stand final", Sir Richard Couch continued: ". . the present case does not come within that rule.
The facts found need not be questioned.
It is the soundness of the conclusion from them that is in question, and this is a matter of law".
It is this last observation that is relied upon for the appellant.
But when read along with the other passages quoted above, it clearly recognises the distinction between findings of pure questions of fact and of mixed question of law and fact.
In, Nafar Chandra Pal vs Shukur(2), Lord Buckmaster observed: "Questions of law and of fact are sometimes difficult to disentangle.
The proper legal effect of a proved fact is essentially a question of law, so also is the question of admissibility of evidence and the (1) [1891 92] 19 I.A. 1.
(2) [1917 18] 45 I.A. 183, 187.
717 question of whether any evidence has been offered by one side or the other; but the question whether the fact has been proved, when evidence for and against has been properly admitted, is necessarily a pure question of fact".
The expression "the proper legal effect of a proved fact" is itself indicative that inferences from facts are not all of them questions of law open to consideration in second appeal but only those which involve the application of some legal principle.
The actual decision in that case was that the question as to the character of land was one of fact not open to consideration in second appeal.
In Dhanna Mal vs Motisagar(1), the point for determination was whether the facts proved were sufficient to establish a right of permanent occupancy.
Discussing how far a finding on that question by the lower appellate court could be disturbed in second appeal, Lord Blanesburgh observed at page 185: "It is clear, however, that the proper effect of a proved fact is a question of law, and the question whether a tenancy is permanent or precarious seems to them, in a case like the present, to be a legal inference from facts and not itself a question of fact.
The High Court has described the question here as a mixed question of law and fact a phrase not unhappy if it carries with it the warning that, in so far as it depends upon fact, the finding of the court of first appeal must be accepted".
These observations again emphasise the distinction between inferences which are themselves questions of fact and inferences on mixed questions of law and fact.
This question was the subject of further consideration by the Privy Council in Wali Mohammad vs Mohammad Baksh(2), Secretary of State for India in Council vs Rameswaram Devasthanam(3) and Lakshmidhar Misra vs Rangalal(1).
In, Wali Mohammad vs Mohammad Baksh(2), Sir Benod Mitter (1) [1927] L.R. 54 I.A. 178.
(2) [1929] L.R. 57 I.A 86:59M.L.J. 53.
(3) [1984] L.R. 61 I.A. 163: (4) [1949] L.R. 76 I.A. 271: 718 exhaustively reviewed the authorities on the questions and stated the law in the following terms: "No doubt questions of law and fact are often difficult to disentangle, but the following propositions are clearly established: (1) There is no jurisdiction to entertain a second appeal on the ground of erroneous finding of facts, however gross the error may seem to be.
(See Musumat Durga Choudrain vs Jawahir Singh Choudhri(1)).
(2) The proper legal effect of a proved fact is essentially a question of law, but the question whether a fact has been proved when evidence for and against has been properly admitted is necessarily a pure question of fact.
(Nafar vs Shukur(2)).
(3) Where the question to be decided is one of fact, it does not involve an issue of.
law merely because documents which were not instruments of title or otherwise the direct foundation of rights but were really historical matters, have to be construed for the purpose of deciding the question.
(See Midnapur Zamindary Co. vs Uma Charan Mandal(3)).
(4) A second appeal would not lie because some portion of the evidence might be contained in a document or documents and the first appellate court had made a mistake as to its meaning.
(See Nowbutt Singh vs Chutter Dharee Singh(4)).
Great reliance was placed by the appellants counsel on Dhanna Mal vs Moti Sagar(5) but there, the tenancy was admitted and the question was whether it was permanent or not, and the solution of it depended upon what was the legal inference to be drawn from proved facts, or in other words, the question was what was the legal effect.
of proved facts".
In Secretary of State for India in Council vs Rameswaram Devasthanam(6) where a finding of fact reached by the lower appellate court on a consideration of the documentary evidence was reversed in second appeal, Sir John Wallis in holding that the High Court had, in interfering with the finding of (1) [1889 90] 17 I.A. 122.
(2) [1917 18) 45 I.A. 183.
(3) P.C.; (4) 19 W.R. 222.
(5) [1927] L.R. 54 I.A. 178.
(6) [1934] L.R. 61 I.A. 163.
719 fact, acted in excess of its powers under section 100 observed "The question is mainly one of fact, and it is well settled that under section 100 of the Code of Civil Procedure the High Court has no jurisdiction to reverse the findings of fact arrived at by the lower appellate court however erroneous, unless they are vitiated by some error of law.
Subsequently to the date of the judgments under appeal the Board has had occasion to emphasis the fact that this rule is, equally applicable to cases such as this in which the findings of the lower appellate court are based on inferences drawn from the documents exhibited in evidence".
If an inference from documents exhibited in evidence is a question of fact, an inference from facts found on the evidence must equally be so.
There is one more decision of the Privy Council bearing on this question.
In Lakshmidhar Misra vs Rangalal(1), the question was whether the finding of the Subordinate Judge in appeal that there had been a dedication of certain lands as cremation ground could be reversed in second appeal.
In ' holding that the finding was open to review by the High Court, Lord Radcliffe observed: "Issue No. 5, (whether the land was a cremation ground) is essentially a mixed question of law and fact.
There are findings of fact by the Subordinate Judge which must indeed be accepted as binding in any consideration of this matter on further appeal: but his actual conclusion that there had been a dedication or lost grant is more properly regarded as a proposition of law derived from those facts than as a finding of fact itself".
These observations lend no support to the broad contention of the appellant that inferences from facts are of necessity and always questions of law.
We have discussed the authorities at great length, as some of the observations contained therein appear, at first sight, to render plausible the contention of the appellant, and it seems desirable that the true (1) [1949] L.R. 76 I.A. 271, 720 meaning of those observations Should be clarified, lest error and misconception should embarrass and fog the administration of law.
The position that emerges on the authorities may thus be summed up: (1)When the point for determination is a pure question of law such as construction of a statute or document of title, the decision of the Tribunal is open to reference to the court under section 66(1).
(2)When the point for determination is a mixed question of law and fact; while the finding of the Tribunal on the facts found is final its decision as to the legal effect of those finding is a question of law which can be reviewed by the court.
(3) A finding on a question of fact is open to attack, under section 66(1) as erroneous in law when there is no evidence to support it or if it is perverse.
(4) When the finding is one of fact, the fact that it is itself in inference from other basic facts will not alter its character as one of fact.
Applying these principles, admittedly there is no question here of construction of any statutory provision or document of title.
The issues which arise for determination whether the sales entered in the books of the appellant in the names of the intermediaries were genuine and if not, to whom the goods were sold and for what price are all questions of fact.
Their determination does not involve the application of legal principles to facts established in the evidence.
The findings of the Tribunal are amply supported by evidence and are eminently reasonable.
It should, therefore, follow that there is no question which could be referred to the court under section 66(1).
it was argued for the appellant that what the Tribunal had found was that the intermediaries, firms and companies were benamidars for the appellant, that a question of benami was one of mixed law and fact, and that accordingly a finding thereon was open to review under section 66(1).
Whether that is a correct reading of what the Tribunal bad found will presently be considered.
Assuming that such is the finding, what is the ground for holding that a finding of benami is one of mixed law and fact? The only basis 721 for such a contention is that the finding that a transaction is benami is a matter of inference from various primary basic facts such as who paid the consideration, who is in enjoyment of the properties and the like.
But that is not sufficient to make the question one of mixed law and fact unless, as already stated, there are legal principles to be applied to the basic findings before the ultimate conclusion is drawn.
But no such principles arise for application to the determination of the question of.
benami, which is purely one of fact, and none has been suggested by the ap pellant.
In Gangadara Ayyar vs Subramania Sastrigal(1), the Federal Court had to consider whether concurrent findings of benami by the courts below could be reviewed by it, and it was held that it could not be clone as the practice of the court was not to interfere with concurrent findings of fact unless there were exceptional grounds therefor and that there were none such in that case.
It should be noted that the finding of benami in that case was a matter of inference from primary facts found which are set out at page 573.
But it was nevertheless held to be a question of fact.
In Misrilal vs Surji(2), it was held by the Privy Council that a finding of benami was one of fact not open to attack in second appeal.
This contention of the appellant must accordingly be rejected.
It was next contended that the finding of the Tribunal that the intermediaries, firms and companies were benamidars.
for the appellant was bad for the following reasons: (1)It had been reached without due consideration of several matters relevant for such a determination.
(2)The finding of benami in so far as it related to the companies was bad for not considering the tests laid down in Smith, Stone and Knight vs Birmingham Corporation(3) as material for a decision on the point.
(1) [1949] 1 M.L.J. 568: A.I.R. 1949 F.C. 88 (2) A.I.R. 1950 P.C. 28: (3) 722 (3) On the facts found,, the proper conclusion to come to was that the intermediaries were benamidars not for the appellant but for Mr. Thyagarajan Chettiar of the Managing Agents firm.
These contentions will now be considered.
As regards the first contention, the argument on behalf of the appellant was this: An important test for determining whether a transaction is benami is to discover the source of consideration for the transfer.
When the question is whether firms and companies are benamidars for another person, what has to be found is whether it was the latter who found the capital of those concerns.
The firms and companies had according to their books their own capital, and there is no finding that the appellant subscribed it.
Another important test of benami is to find who has been in enjoyment of the benefits of the transaction.
It has not been shown that the profits of the intermediaries had been utilised by the appellant.
Therefore, the finding that the intermediaries were benamidars of the appellant could not stand.
Now, the assumption underlying this argument is that the Tribunal had found in its order that the intermediaries were benamidars for the appellant, but there is no basis for this in the order.
In this connection, it is necessary to note that the word 'benami ' is used to denote two classes of transactions which differ from each other in their legal character and incidents.
In one sense, it signifies a transaction which is real, as for example when A sells properties to B but the sale deed mentions X as the purchaser.
Here the sale itself is genuine, but the real purchaser is B, X being his benamidar.
This is the class of transactions which is usually termed as benami.
But the word 'benami ' is also occasionally used, perhaps not quite accurately, to refer to a sham transaction, as for example, when A purports to sell his property to B without intending that his title should cease or pass to B.
The fundamental difference between these, two classes of transactions is that whereas in the former there is an operative transfer resulting in the vesting of title in the transferee, in the latter there is none 723 such, the transferor continuing to retain the title notwithstanding the execution of the transfer deed.
It is only in the former class of cases that it would be necessary, when a dispute arises as to whether the person named in the deed is the real transferee or B, to enquire into the question as to who paid the consideration for the transfer, X or B. But in the latter class of cases, when the question is whether the transfer is genuine or sham, the point for decision would be, not who paid the consideration but whether any consideration was paid.
Therefore, there will be force in the contention of the appellant that a finding as to who furnished the capital for the intermediaries was requisite before they could be held to be benamidars, if the Tribunal had held them to be benamidars in the former sense but not in the latter.
We must.
, therefore, examine what it is that the Tribunal has actually found.
Now, the Tribunal has not held that any of the transactions with which the assessment proceedings are concerned are benami.
Indeed, the word 'benami ' does not find a place anywhere in its order.
It is only in the question which the appellant framed for reference to the court in its application under section 661) that it has chosen for the first time to introduce the word 'benamidar '.
That apart, looking at the substance of the finding, the point that arose for determination before the taxing authorities was what profit the appellant had made on certain sales standing in its books in the names of the intermediaries.
If the sales were true, the amounts shown in the books as price received therefor would be the basis for working out the profits, and that was the stand of the appellant; but the authorities held that those sales were sham and the entries relating to the payment of price therefor fictitious.
Then, they found that the concerned goods were sold by the appellant directly to its own constituents, that the price paid by them was actually received by it, and that should be the basis for calculating its profits.
Thus, the point which was actually in issue in the proceedings was a question of benami in the second sense and not in the first, and to decide that, the Tribunal bad only to 724 find whether any price was paid by the intermediaries for the sales and not who paid the price for them.
It is scarcely necessary to add that no question arises as to whether the intermediaries are benamidars for the ultimate purchasers, because the claim of the former is that they had sold the goods to the latter under fresh contracts at different prices.
Nor could there be a question of benami in the first sense, as that could arise only between a party to a deed and another who is economic not a party to it but claims to be beneficially entitled to the properties conveyed by the deed.
Therefore, on the findings of the Tribunal, the question whether the intermediaries were benamidars for the appellant could not arise, and the further question as to who found the capital for the intermediaries is altogether irrelevant.
Likewise, on the finding that the yarn was really sold by the appellant not to the intermediaries but to its own constituents and that they paid the price therefor to the appellant, the question who had the benefit of the transaction could not arise either.
(2)It is next contended that some of the intermediaries were private limited companies registered in accordance with the provisions of the Companies Act and were in law distinct legal entities as held in Solomon vs Solomon & Company(1), and that they could not be held to be benamidars for the appellant without deciding the matters mentioned by Atkinson J. in Smith, Stone and Knight vs Birmingham Corporation (2) .
The learned Judge observed at page 121: "It seems therefore to be a question of fact in each case, and those cases indicate that the question is whether the subsidiary was carrying on the business as the company 's business or as its own.
I have looked at a number of cases they are all revenue cases to see what the courts regarded as of importance for determining that question.
There is San Paulo Brazilian Rly.
Carter(3), Apthorpe vs Peter Schoenhofen Brewery Co. Ltd. (4), Frank Jones Brew (1) ; (2) (3) [1896] A.G. 31: (4) 725 ing Co. vs Apthorpe(1), St. Louis Breweries vs Apthorpe(2), and I find six points which were deemed relevant for the determination of the question: who was really carrying on the business? In all the cases, the question was whether the company, an English company here, could be taxed in respect of all the profits made by some other company, a subsidiary company, being carried on elsewhere.
The first point was: Were the profits treated as the profits of the Company? wben I say 'the company ' I mean the parent company secondly, were the persons conducting the business appointed by the parent company? Thirdly, was the company the head and the brain of the trading venture? Fourthly, did the company govern the adventure, decide what should be done and what capital should be embarked on the venture? Fifthly, did the company make the profits by its skill and direction? Sixthly, was the company in effectual and constant control?" The contention of the appellant is that before the intermediaries could be held to be benamidars for the appellant, findings ought to have been recorded on the six points mentioned in the judgment of Atkinson, J.
This contention proceeds on a misapprehension as to the true scope of the above observations and of the decisions referred to therein.
In those cases, the question was whether the profits earned by a subsidiary company X could be held to be profits earned by the parent company A and taxed in the hands of company A.
It was held that the fact that X was a legal entity did not stand in the way of its profits being treated as profits of A, if, as observed by Lord Sterndale in Inland Revenue Commissioners vs Samson(3), X was doing the business of A and not its own, and various tests were laid down for ascertaining whether it was A who was running the business of X.
But here, no such question arises.
The true scope of the assessment proceedings is to discover what profits were really made on certain sales effected by the appellant, and the intermediaries came into (1) (2) (3) ; 726 the picture only as the persons in whose names the sales were made.
The question whether apart from those sales the intermediaries were genuine commercial bodies having existence independent of the appellant did not arise for determination, as a finding that they were such bodies would have had no effect on the chargeability of the appellant to tax on the profits made by it on the sales in question.
The question of the true status of the intermediaries would have assumed practical importance if they had done business other than the sales in question and had made profits thereon, and those profits were sought to be taxed as profits made by the appellant.
It would then be a legitimate contention for the appellant to advance that could not be done unless the intermediaries were found to have been really benamidars for it.
In that case, it would have been important to consider who found the capital for the concerns and who was running them.
But here, the tax is levied only on the profits ostensibly earned by the intermediaries on the sales which stand in the books of the appellant in their names.
If those sales are sham, then the order of assessment must stand even if the intermediaries were real concerns, which had found their own capital and earned their own profits in other transactions.
If an individual A carrying on his own business lends his name to the business transaction of B. the latter cannot escape the obligation to pay the tax on these transactions on the ground that A had also his own genuine business.
Likewise if companies doing their own business lend their names to business transactions of other persons, those other persons cannot be heard to say that they are not taxable on the profits of these transactions for the reason that the companies were also carrying on their own business.
Therefore, on the finding that the sales were sham, no question arises as to the constitution or status of the intermediaries.
It is true that the Tribunal has directed that all the profits earned by the intermediaries should be added to the profits of the appellant but that is because it has found that the intermediaries 727 did no business of her than the transactions of the appellant.
And this finding clearly reveals how hollow and unsubstantial the contentions of the appellant are as to the sources of capital for the intermediaries and the application of the tests laid down in Smith, Stone and Knight vs Birmingham Corporation(1).
It is a most unreal question to raise of firms and companies whose only business consists of sham transactions as to who found the capital for them or who was running them.
(3) It is next contended that though the facts proved might justify a finding that the intermediaries were benamidars, they did not necessarily lead to the conclusion that they were benamidars for the appellant.
It is argued that on the findings of the Tribunal that it was Mr. Thyagaraja Chettiar, the Managing Agent of the appellant, that had setup the intermediaries, that it was his relations and men who had been put up as partners and shareholders of these concerns, and that it was he that generally had the control of the business, the proper inference to draw was that the intermediaries were benamidars for Mr. Tbyagaraja Chettiar, and that in consequence their profits were liable to be added to his and not to those of the appellant.
This argument again proceeds on the assumption that the profits of the intermediaries have been taxed in the hands of the appellant on the ground that they are its benamidars.
But, as already stated, that is not the true position.
What are sought to be taxed in these proceedings are the profits made on certain sales and not the profits made by the intermediaries as distinct entities chargeable to tax under section 3 of the Act, and the only relevant points for decision are, what profits were made on those sales and by whom.
On the finding that the appellant sold the goods direct to the ultimate purchasers and recovered the price therefor, it is only the appellant that could be taxed for the profits made thereon and not the Managing Agent.
It is of no consequence that in form the order is that the profits of the intermediaries should be added to those of the (1) [1939] 4 A.E.R.116.
728 appellant, because, as pointed out in discussing the previous contention of the appellant of which the present is but a repetition in another form, the intermediaries did no other business than the sales concerned in this assessment, so that the profits of the business mean the same thing as profits made on the concerned sales.
There is another aspect of the matter, which calls for notice.
If the contention of the appellant that the intermediaries were benamidars for Mr. Thyagaraja Chettiar is accepted, it means that he had, by availing himself of his position as Managing Agent, unjustly enriched himself at the expense of the shareholders to the tune of over Rs. 25 lakhs.
Now, Mr. Thyagaraja Chettiar is the dominant member of the firm of Managing Agents.
It is this firm that has been in management of the affairs of the company at all times and has been representing it in the assessment proceedings at all stages, and it is through this firm that the appellant speaks in the present appeals.
The position then is that Mr. Thyagaraja Chettiar as Managing Agent of the appellant charges himself in his individual capacity with conduct which is grossly fraudulent and infamous, so that the company might escape its liability to tax.
This, to our minds, is a most surprising position to take.
But we are not concerned here with the ethics of it and must consider it on its merits so long as the law does not bar it.
But what are its merits The position which the appellant took up with reference to this matter at the several stages of the assessment has been neither uniform nor even consistent.
Thus, before the Appellate Assistant Commissioner its argument was that the Managing Agent had been the protector of the interests of the ' company at all times, that he had "Stood by it in its lean years" and should "not therefore be presumed to have acted against the interests of the company" and that therefore the transactions in the names of the intermediaries should be accepted as genuine.
Before.
the Tribunal, the contention was that even if the intermediaries were bogus concerns "it might be that some other individual got the bene 730 fit and not the company".
Thus, the contention now advanced was not thought of in the earlier stages and was still nebulous and in the making, when the matter was before the Tribunal, and it is only in the, argument that it has assumed a definite and concrete shape.
Dealing with the contention as advanced before it,.
the Tribunal referred to several facts such as that the sales in favour of the intermediaries were for unusually large quantities and for prices far below the market rate and even the cost of production, that the appellant was a public company with a Board of Directors in charge of its business, and that they must have known all about these transactions.
Is it likely that the Directors would have accepted these sales involving such huge loss to the company and carried on regularly from month to month and year to year during the whole of this period as proper and genuine, unless they considered that it was the company and not Mr. Thyagaraia Chettiar who was to have the benefit of them? it was argued by the learned Solicitor General for the respondent that if on the facts two inferences were possible and the Tribunal chose to draw one and not the other, it was not a matter in which the court could interfere, if the inference is one of fact.
That is a proposition of law well settled, and has not been disputed.
Now, on the facts, two inferences are possible.
One is that the object of the Managing Agent was to defraud the shareholders by purchasing goods himself at a low valuation for his own benefit and that the intermediaries were set up by him for that purpose.
The other is that they were set up for the purpose of concealing portions of the profits earned by the company so as to reduce the tax to which it was liable to be assessed.
The former involves cheating the shareholders; the latter, evad ing the tax due to the State.
Is it an unreasonable inference for the Tribunal to draw that the motive by which the Managing Agent was actuated was the latter and not the former? Is it not more legitimate to presume that the Managing Agent wanted to benefit the shareholders by reducing the 730 tax rather than he wanted to defraud them by himself purchasing the goods for a low price in the names of the intermediaries? If the Tribunal came to the former conclusion and it is one which could reasonably be come to on the materials, it is not one which the court can review, being one of fact.
This ground.
of attack also must be rejected.
In the result, all the contentions of the appellant based on the assumption that the intermediaries had been held to be benamidars for the appellant must be overruled on the ground that on the findings of the Tribunal they do not really arise.
Lastly, it was contended that the profits earned by the intermediaries bad not been brought into the books of the company_ as its income, had not been included in its balance sheet and had not been distributed as dividends or added to its reserves, and, not having been treated as its income or profits, could not be taxed.
The decisions in St. Lucia Usines and Estates Co. vs St. Lucia (Colonial Treasurer) (1), Commissioner of Taxes vs Melbourne Trust(2) and Commissioner of Income tax, Bihar and Orissa vs Maha rajadhiraja of Darbhanga(3) were quoted in support of this contention.
This question is, however, no longer res integral and is covered by the decision of this Court in Commissioner of Income tax vs K. B. M. T. T. Thyagaraja Chetty(1).
There, the assessee which was no other than the firm of Messrs K.R.M.T.T. Thyagaraja Chettiar and Co., the Managing Agents of the present appellant, failed to bring into its profit and loss account a certain amount which it had earned as commission, and the point for decision was whether that amount was liable to tax.
The contention of the assessees was that it was not liable as it had not been treated as profits by the assessee and the decisions in St. Lucia Usines and Estates Co. vs St. Lucia (Colonial Treasurer)(1), Commissioner of Taxes vs Melbourne Trust(2) and Commissioner of Income tax, Bihar and Orissa vs Maharajadhiraja of Darbhanga(3) were relied on in support of this position.
But this Court disagreed with this contention, and (1) [1924] A.G. 508.
(2) (3) 60 I.A. 146.
(4) 731 held that the liability to pay tax on the income arose when it had arisen or accrued and that how the assessee dealt with it subsequently did not affect that liability, and distinguished the decisions in St. Lucia Usines and Estates Co. vs St. Lucia (Colonial Treasurer) (1) and Commissioner of Taxes vs Melbourne Trust(2) on the ground that they were pronouncements on the particular statutes there under con sideration and were not authorities on the question of assessment of profits and gains under the Indian Income tax Act.
Applying this decision, the appellant having been found to have sold its goods to the ultimate purchasers and received the prices, there can be no question but that the profits had accrued to it both in the business and in the legal sense and that liability to tax had arisen.
If an individual were to sell goods and receive the price therefor, that would be income accrued or arisen liable to tax in his hands even though he should have failed to enter it in his accounts.
A party cannot avoid tax by adopting the simple expedient of not disclosing its receipt in his books.
That will be a case of income accrued or arisen but concealed and not of income not accrued or arisen.
This is conceded by the appellant.
But it is argued that different considerations arise in the case of companies registered under the Indian Companies Act, because there are provisions in the Act as to how the profits are to be disposed of, such as distribution of dividends or adding to the reserve and until that was done, there was no accrual of income or of profits under the statute.
This is to confuse accrual of income with the disposal of it.
Income which has accrued to an assessee might remain undisposed of by him, but the liability to tax attaches to it under the provisions of the Indian Income tax Act as soon as it accrues.
It is no concern of the revenue how and when profits are disposed of by the assessees, and for this purpose it makes no difference whether the assessee is an individual or a company, both of them being equally liable to tax 'on income and profits when they have arisen or accrued.
The (1) (1924] A.C. 508.
95 (2) 732 provisions of the Companies Act as to the disposal of profits are designed to protect the interests of the shareholders and have no effect on the right which the State has under the provisions of the Act to impose a tax on income when it arises or accrues.
It should also be mentioned that though the decision in Commissioner of Income tax, Madras vs K. R. M. T. T. Thyagaraja Chetty(1) relates to a firm and not a company, the decisions in St. Lucia Usines and Estates Co. vs St. Lucia (Colonial Treasurer) (2) an(? Commissioner of Taxes vs Melbourne Trust(3) which were held to be inapplicable to the imposition of a charge under the Indian Income tax Act related to companies, and the argument and the decision pro ceeded on the footing that principles applicable were the same both to firms and companies.
The decision in Commissioner of Income tax, Madras vs K. R. M. T. T. Thyagaraja Chetty(1) must accordingly be held to conclude this question against the appellant.
It must be said of this contention that it was raised before the Tribunal and negatived.
Being a question of law, the appellant bad a right to have it referred to the court under section 66(1).
But the question as framed by the appellant in its application under section 66(1) did not specifically raise this point; nor does it appear to have been argued in the High Court.
As the matter is now concluded by authority, it will be an idle formality to direct the Tribunal to refer the question for the decision of the court.
The powers of this Court in appeal under article 136 are not intended to be exercised for such a purpose.
That disposes of the main and substantial questions that have been agitated in these proceedings.
There is one other matter in respect of which the appellant sought reference to the court in its application under section 66(1).
The facts relating to this matter are that during the periods of assessment with which the appeals are concerned, the appellant opened branches in the States of Travancore, Cochin, Pudukkottah and Mysore, and sold yarn to its consti (1) [1964] S.C.R. 258: (2) , (3) 733 tuents in those States through these branches.
The point in dispute is whether the profits made by the appellant on those sales are chargeable to tax.
The contention of the appellant before the Tribunal was that the matter was governed by section 14(2) (c), and that the profits could be taxed only if they were remitted to British India.
That was not disputed by the Department, but they contended that as the appellant sold in the States goods manufactured by it in British India, the governing provisions were sections 42(1) and 42(3), and that under these provisions, the appellant was liable to be taxed on such portions of the profits as were apportionable to the manufacture of the goods in British India.
That was accepted by the Tribunal, and the profits were apportioned in the ratio of 85:15.
In its application under section 66(1), the appellant raised the contention that sections 42 (1) and 42 (3) applied 'only to nonresidents, and that it was only section 14(2) (c) that would apply to residents and applied to have that question referred to the decision of the court.
But the Tribunal held that the decision of this Court in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai and Co.(1) had settled that sections 42(1) and 42(3) applied both to residents as well as nonresidents and consequently declined to refer the question ' The correctness of this decision does not appear to have been contested before the High Court, the only point dealt with in the judgment of the learned Judges being as to the correctness of the ratio in which the apportionment was made.
Even in this Court, it was only this question that was pressed on the strength of the decision in Commissioner of Income tax and Excess Profits Pax vs section Sen(2), Section 14 was mentioned in the course of the argument, but no contention was advanced that sections 42(1) and 42(3) ap plied only to non residents, and the decision in Com Missione; of Income tax vs Ahmedbhai Umarbhai and Co.(1) was not even so much as referred to in the (1) ; (2) 734 course of the argument, and the appellant did not even ask for this question being referred.
That apart,in view of the decision in Commissioner of Income tax vs Ahmedbhai Umarbhai and Co.(1), no purpose would be served by directing a reference of this question,and the Tribunal was right in observing that "it is not even of academic interest to refer the said question to the High Court".
On the question whether the fixation of ratio was correct, we are of opinion that it is a pure question of fact, and is not open to reference under section 66(1).
In the result, the appeals fail, and are dismissed with costs.
| A finding of fact, even when it is an inference from other facts found on evidence, is not a question of law within the meaning of section 66(1) of the Indian Income Tax Act that can be referred to the High Court for its decision.
Such an inference can be a question of law only when the point for determination is a mixed question of law and fact.
On the principles established by authorities, only such questions as relate to one or other of the following matters can be questions of law under the section: (1) the construction of a statute or a document of title; (2) the legal effect of the facts found where the point for determination is a mixed question of law and fact; (3) a finding of fact unsupported by evidence or unreasonable and perverse in nature.
Although a finding of fact which is not supported by any evidence or is unreasonable and perverse may be challenged as an error of law, where there is evidence to consider the finding of the Tribunal does not cease to be final simply because the Court may be inclined to take a view different from that of the Tribunal.
Great Western Railway Co. vs Bater, ([1922] , followed.
The soundness of a conclusion based on a number of facts found on evidence must be judged by the cumulative effect of all the facts and it is altogether a wrong approach to consider them individually in an isolated manner in order to explain them and show that inferences other than those drawn by the Tribunal could be drawn from them.
90 392 Edwards (Inspector of Taxes) vs Bairstow, ([1955] 28 I.T.R. 579), referred to.
Misappreciation of evidence does not amount to want of evi dence and unless the evidence can be shown to be irrelevant or inadmissible, the conclusion of the Tribunal cannot be challenged on the ground that it is based on no legal evidence.
The test as to whether a question is one of fact or one of mixed law and fact is this that while in determining a question of fact no application of any principle of law is required in finding either the basic facts or arriving at the ultimate conclusion, in a mixed question of law and fact the ultimate conclusion has to be drawn by applying the relevant principles of law to the basic findings.
Herbert vs Samuel Fox and Co. Ltd., ([1916] 1 A.C. 405) and The Queen vs Special Commissioners of Income tax ([1894] , followed.
The view expressed in a number of English decisions that an inference from facts is a question of law has reference really to questions of mixed law and fact.
Edwards (Inspector of Taxes) vs Bairstow, ([1955] 28 I.T.R. 679), Bam ford v Osborne, ([1942] A.C. 14), Thomas Fattorini (Lancashire) Ltd. vs Commissioners of Inland Bevenue, ([1942] A.C. 643), and Cameron vs Prendergast, ([1940] A.C. 549), referred to and explained.
The Gramaphone and Typewriter Company Ltd. vs Stanley ([1908] 2 K.B. 89), held inapplicable.
The American Thread Company vs Joyce, ([1911] and The American Thread Company vs Joyce, ([1913] , relied on.
Nor do the observations made by the Privy Council in a number of cases lend any support to the broad contention that inferences from facts are always and necessarily questions of law.
Ram Gopal vs Shamskhaton, ([1892] L.R. 19 I.A. 228), Nafar Chandra Pal vs Shukur ([1918] L.R. 45 I.A. 183), Dhanna Mal vs Moti Sagar, ([1927] L.R. 54 I.A. 178), Wali Mohammad vs Mohammad Baksh, (E 1929] L.R. 57 I.A. 86), Secretary of State for India in Council vs Bameswaram Devasthanam, ([1934] L.R. 61 I.A. 163) and Lakshmidhar Misra vs Bangalal, ([1949] L.R. 76 I.A. 271), referred to and explained.
Consequently, in a case where, as in the present, the Appellate Tribunal, on the basis of certain findings of fact, amply supported by the evidence and eminently reasonable, came to the conclusion that certain sales entered in the books of the assessee Company in the names of certain intermediaries, firms and Companies, which were brought into existence by the assessee solely for the purpose of concealing its own profits, and appeared to have done no other business except the sales in question, were fictitious and the profits ostensibly earned by those firms and Companies were, in fact, 693 earned by the assesses which had itself sold the goods to the real purchasers and received the prices, and should be added to the amounts shown as profits in its accounts, no question of law arose for reference under section 66(1) of the Act.
The question of benami is purely a question of fact and not a mixed question of law and fact as it does not involve the application of any legal principle for its determination.
Gangadhara Ayyar vs Subramania Sastrigal, (A.I.R. 1949 F.C. 88) and Misrilal vs Surji, (A.I.R. , referred to.
The word 'benami ' is used to denote two classes of transactions which differ from each other in their legal character and incidents.
In one, the usual class, the sale is genuine and title is transferred but the real transferee is not the ostensible transferee but another and in the other, where the term is inaccurately applied, the sale to the benamidar is fictitious and the title of the transferor is not intended to pass.
The fundamental difference between these two classes is that while in the former title vests in the transferee, in the latter it remains with the transferor, and when a dispute arises the question as to who paid the consideration becomes relevant only with respect to the former class while in the latter the only question is whether any consideration was paid at all.
The point actually in issue in the instant case, therefore, was a benami in the second sense and what the Tribunal had to decide was whether any price had at all been paid by the intermediaries for the goods ostensibly sold to them by the assessee.
It was not necessary for it to decide whether apart from the sales the intermediaries had an independent existence of their own, for such a decision could not in any way affect the liability of the assessee to pay the tax.
Smith, Stone and Knight vs Birmingham corporation, ([1939] 4 All E.R. 116), distinguished and held inapplicable.
Under the Indian Income tax Act liability to pay the tax arises as soon as the income accrues, whether the assessee be an individual or a registered Company, and the manner in which such a Company chooses to deal with the profits cannot in any way affect its liability.
The provisions of the Indian Companies Act, designed to protect the interests of the share holders, cannot in any way affect the right of the state to levy the tax.
Although the point involved was a question of law appropriate for reference under section 66(1), since the assesses had failed to raise it in his application under that section, this Court would not direct a fresh reference in exercise of its powers under article 136 of the Constitution as the point was no longer in doubt in view of the decision of this Court.
Commissioner of Income tax, Madras vs K.B.M.T.T. Thiagaraja Chetty, ([1954] S.C.R. 258), referred to and followed.
The Tribunal was entirely right in refusing to refer the question as to whether sections 42(1) and 42(3) of the Indian Income tax Act 694 applied only to non residents as was urged on behalf of the assessee.
These sections apply both to residents and non residents.
Commissioner of Income tax vs Ahmedbhai Umarbhai and Co., ([1950] S.C.R. 335), referred to and followed.
The question of apportionment of the profits between the place of manufacture and the place of sale and correctness of the ratio fixed by the Tribunal is a pure question of fact and cannot be referred to Court.
under section 66(1) of the Act.
|
Summarize this legal judgement text concisely | 100 and 101 of 1956.
Petitions under Article 32 of the Constitution for writs in the nature of Habeas Corpus.
N. C. Chatterjee, Sadhan Chandra Gupta and Janardhan Sharma, for the petitioners.
C. K. Daphtary, Solicitor General for India, Porus A. Mehta and R. H. Dhebar, for the respondents.
September 17.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
These are petitions under article 32 of the Constitution for the issue of a writ in the nature of habeas corpus.
On 26th January 1956 the District Magistrate, Than;, passed orders under section 3(2) of the IV of 1950 (hereinafter referred to as the Act) for the detention of the petitioners, and in execution of the orders, they were arrested on 27th January 1956.
The next day, the District Magistrate sent his report to the State Government which on 3rd February 1956 approved of the same.
Meantime, on 30th January 1956 the District Magistrate formulated the grounds on which the orders of detention were made, and the same were communicated to the petitioners on 31st January 1956.
A copy of these grounds was sent to the State Government on 6th February 1956.
The petitioners challenge the validity of the detention on two grounds.
They contend firstly that the grounds for the order of detention which were furnished to them under section 7 of the Act are vague, 646 and secondly that the requirements of section 3 (3) of the Act had not been complied with, in that those grounds had been sent to the State Government by the District Magistrate, not along with, his report on 28th January 1956, but on 6th February 1956, after the State Government had approved of the order.
There is no substance whatsoever in the first contention.
The communication sent to the petitioners runs as follows: "During the monsoon season in the year 1955, you held secret meeting of Adivasis in Umbergaon, Dhanu, Palghar and Jawhar Talukas of Thana Distric 't at which you incited and instigated them to have recourse to intimidation, violence and arson in order to prevent the labourers from outside villages hired by landlords from working for landlords.
As a direct result of your incitement and instigation, there were several cases of intimidation, violence and arson in which the Adivasis from these Talukas indulged.
Some of these cases are described below. . " Then follows a detailed statement of the cases.
It is argued for the petitioners that no particulars were given as to when and where the secret meetings were held in which they are alleged to have participated, and that the bald statement that they took place during the monsoon season was too wide and vague to be capable of being refuted.
But then, the particulars Which follow give the dates on which the several incidents took place, and it is obvious that the meetings must have been held near about those dates.
The communication further states that it is not in the public interests to disclose further facts.
Reading the communication as a whole, we are of opinion that it is sufficiently definite to apprise the petitioners of what they were charged with and to enable them to give their explanation therefor.
That was the view taken by Chagla, C. J. in the applications for habeas corpus, which the petitioners moved in the High Court of Bombay under article 226 of the Constitution, and we are in agreement with it.
The complaint that the grounds are vague must therefore fail.
As regards the second contention, it will be usefu 647 to set out the relevant sections of the Act bearing on the question: Section 3(1) "The Central Government or the State Government may (a)if satisfied with respect to any person that with a view to preventing him from acting in any manner prejudicial to (i)the defence of India, the relations of India with foreign powers, or the security of India, or (ii)the security of the State or the maintenance of public order, or (iii)the maintenance of supplies and services essential to the community; or (b)if satisfied with respect to any person who is a foreigner within the meaning of the (XXXI of 1946), that with a view to regulating his continued presence in India or with a view to making arrangements for his expulsion from India, it is necessary so to do, make an order directing that such person be detained.
(2) Any of the following officers, namely, (a) District Magistrates, (b) Additional District Magistrates specially empowered in this behalf by the State Government, (c) the Commissioner of Police for Bombay, Calcutta, Madras or Hyderabad, (d) Collector in the State of Hyderabad may if satisfied as provided in sub clauses (ii) and (iii) of clause (a) of sub section (1) exercise powers conferred by the said sub section.
(3) When any order is made under this section by an officer mentioned in sub section (2) he shall forthwith report the fact to the State Government to which he is subordinate together with the grounds on which the order has been made and such other particulars as in his opinion have a bearing on the matter, and no such order made after the commencement of the Preventive Detention (Second Amendment) Act, 1952, shall remain in force for more than twelve days after the making thereof unless in the meantime it has been approved by the State Government.
648 (4) Where any order is made or approved by the State Government under this section, the State Government shall, as soon as may be, report the fact to the Central Government together with the grounds on which the order has been made and such other particulars as in the opinion of the State Government have bearing on the necessity for the order".
Section 7 (1) "Where 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 appropriate Government.
(2) Nothing in sub section (1) shall require the authority to disclose facts which it considers to be against the public interest to disclose".
On these sections, the argument of Mr. Chatterjee for the petitioners is that section 3 (3) requires that when an order of detention is made by one of the authorities mentioned in section 3(2) in this case it was so made that authority should forthwith report the fact to the State Government together with the grounds on which the order was made; that this provision is clearly intended to safeguard the rights of the detenu, as it is on a consideration of these grounds that the Government has to decide whether it will approve of the order or not;, that when therefore the grounds had not been made available to the State Government before they had approved of the order, as happened in the present case, there was a clear violation of the procedure prescribed by the statute, and that the detention became illegal.
Now, it is clear from the affidavit filed on behalf of the respondent that when the District Magistrate sent a report under section 3(3) on 28th January 1956, he did send a report not merely of the fact of the making of the order of detention, but also of the materials on which he had made the order.
The contention of the petitioner is that the grounds which 649 were formulated on 30th January 1956 and communicated to them on 31st January 1956 should also have been sent along with the report.
The question is whether what the District Magistrate did was sufficient compliance with the requirements of section 3 (3), and that will depend upon the interpretation to be put upon the words "grounds on which the order has been made" occurring in that section.
Construing these words in their natural and ordinary sense they would include any information or material on which the order was based.
The Oxford Concise Dictionary gives the following meanings to the word "ground": 'Base, foundation, motive, valid reason '.
On this definition, the materials on which the District Magistrate considered that an order of detention should be made could properly be described as grounds therefor.
But it is contended by Mr. Chatterjee that the expression "grounds on which the order has been made" occurring in section 3(3) is, word for word, the same as in section 7, that the same expression occurring in the same statute must receive the same construction, that what section 3 requires is that on the making of an order for detention, the authority is to formulate the grounds for that order, and send the same to the State Government under section 3(3) and to the detenu under section 7, and that therefore it was not sufficient merely to send to the State Government a report of the materials on which the order was made.
Reliance was placed on the following passage in Maxwell 's Inter predation of Statutes, 10th Edition, page 522: "it is, at all events, reasonable to presume that the same meaning is implied by the use of the same expression in every part of an Act".
The rule of construction contended for by the petitioners is well settled, but that is only one element in deciding what the true import of the enactment.
is) to ascertain which it is necessary to have regard to the purpose behind the particular provision and its setting in the scheme of the statute.
"The presumption", says Craies, "that the same words are used in the same meaning is however very slight, and 650 it is proper 'if sufficient reason can be assigned, to construe a word in one part of an Act in a different sense from that which it bears in another part of an Act" '.
(Statute Law, 5th Edition, page 159).
And Maxwell, on whose statement of the law the petitioners rely, observes further on: "But the presumption is not of much weight.
The same word.
may be used in different senses in the same statute, and even in the same section".
(Interpretation of Statutes, page 322).
Examining the two provisions in their context, it will be seen that section 3(1) confers on the Central Government and the State Government the power to pass an order of detention, when the grounds mentioned in that sub clause exist.
When an order is made under this provision, the right of the detenu under section 7 is to be informed of the grounds of detention, as soon as may be, and that is to enable him to make a representation against that order, which is a fundamental right guaranteed under article 22(5).
Coming next to section 3(2), it provides for the power which is conferred on the State Government under section 3(1) being exercised by certain authorities with reference to the matters specified therein.
This being a delegation of the power conferred on the State Government under section 3(1), with a view to ensure that the delegate acts within his authority and fairly and properly and that the State exercises due and effective control and supervision over him, section 3(3) enacts a special procedure to be observed when action is taken under section 3(2).
The authority making the order under section 3(2) is accordingly required to report the fact of the order forthwith to the State along with the grounds therefor, and if the State does not approve of the order within twelve days, it is automatically to lapse.
These provisions are intended to regulate the course of business between the State Government and, the authorities subordinate to it exercising its power under statutory delegation and their scope is altogether different from that of section 7 which deals with the right of the detenue as against the State 651 Government and ' its subordinate authorities.
Section 3(3) requires the authority to communicate the, grounds of its order to the State Government, so that the latter might satisfy itself whether detention should be approved.
Section 7 requires the statement of grounds to be sent to the detenu, so that he might, make a representation against the order.
The purpose of 'the two sections is so different that it cannot, be presumed that the expression "the grounds on which the order has been made" is used in section ' 3(3) in the same sense 'Which it bears in section 7.
That the legislature could not have contemplated that the grounds mentioned in section 3(3) should be, identical with those referred to in section 7 could also be seen from the fact that whereas under section 7(2) it is open to the authority not to disclose to the detenu facts if it considers that it would be against public interests so to do, it is these facts that will figure prominently in a report by the subordinate authority to the State Government under section 3(3),and form the basis for approval.
If the grounds which are furnished under section 3(3) could contain matters which need not be communicated to the detenu under section 7, the expression "grounds on which the order has been made" cannot bear the same meaning in both the sections.
There is also another reason in support of this conclusion.
When the authority mentioned in section 3(2) decides, on a consideration of the materials placed before it, to act under that section and orders detention, it is required by section 3(3) to, report that fact with the grounds therefore to the State Government forthwith.
But under section 7, the duty of the authority is to communicate the grounds to the detenu, as soon as may be.
Now, it has been held that as the object of this provision is to give the detenu an opportunity to make a representation against the order, the grounds must be sufficiently definite and detailed to enable him to do so.
It is obvious that the communication that has to be served on the detenu under section 7 of the Act is a formal document setting out the grounds for the order and the 652 Particulars in support thereof, subject, of course, to section 7(2); whereas the report to the State under section 3(3) is a less formal document in the nature of a confidential inter departmental communication, which is to contain the particulars on which the order was made.
It could not have been intended that the contents of the two communications which are so Dissimilar in their scope and intendment should be identical.
Mr. N. C. Chatterjee also cited certain observations of Kania C.J. in State of Bombay vs Atma Ram Sridhar Vaidya(1) as supporting his contention that the grounds which are furnished to the detenu must have been before the State Government before it approves of the order.
Said the learned Chief Justice: "It is obvious that the grounds for making the order as mentioned above, are the grounds on which the detaining authority was satisfied that it was necessary to make the order.
These grounds therefore must be in existence when the order is made".
But the grounds referred to in the above passages are the reasons for making the order, not the formal expressions in which they are.
embodied, and that will be clear from the following observation further on: "By their very nature the grounds are conclusions of facts and not a complete detailed recital of all the facts".
Our conclusion is that the failure on the part of the District Magistrate of Thana to send along with his report under section 3(3), the very grounds which he subsequently communicated to the detenu under section 7 is not a breach of the requirements of that sub section, and that it was sufficiently complied with when he reported the materials on which he made the order.
The second contention of the petitioners also fails, and these applications must therefore be dismissed.
(1) ; , 178.
| Sub section (3) of section 3 of the , provides that when an order of detention is made under subsection (2) by an officer mentioned therein, he shall forthwith report the fact to the State Government together with the grounds on which the order has been made . and no such order. shall remain in force for more then twelve days after the making thereof unless in the meantime it has been approved by the State Government.
Under section 7(1) "when a person is detained in pursuance of a detention order, the authority making the order shall . 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 appropriate Government".
The petitioners were arrested on 27th January 1956 in pursu anoe of the orders of detention passed under section 3(2) of the , by the District Magistrate who sent his report the next day to the State Government which approved of the same on 3rd February 1956.
Meantime, the grounds on which the orders of detention were made were formulated by the District Magistrate who furnished the same to the petitioners on 31st January 1966 under section 7 of the Act.
A copy of these grounds was sent to the State Government on 6th February 1956.
The petitioners challenged the validity of the detention and contended, inter alia, that as the expression "grounds on which the order has been made" occurring in section 3(3) is word for word, the same as in section 7 of the Act, it must have the same meaning and as the copy of the grounds referred to in section 7 had not been sent along with the report under section 3(3) to the State Government before it had approved of the orders of detention there was a violation of the procedure prescribed by the statute and consequently the detention became illegal.
It was found that the report sent by the District Magistrate set out not merely the fact of the making of the order of detention but also the materials on which he had made the order.
Held, that the failure on the part of the District Magistrate to 645 send along with his report under section 3(3) the very grounds which he subsequently furnished the detenu under section 7, is not a breach of the requirements of that sub section and that it was sufficiently complied with when he reported the materials on which he made the order.
The scope and intendment of the expression " the grounds on which the order has been made" in sections 3(3) and 7 of the Act are quite different and it is not essential that the grounds which are furnished to the detenu must have been before the State Government before it approves of the order.
|
Summarize this legal judgement text concisely | Appeals Nos. 325 of 1955 and 174 of 1956.
Appeal by special leave from the decision and order dated the 29th April 1955 of the Labour Appellate Tribunal of India at Calcutta in Appeal No. Calcutta 110 of 1953 arising out of the award dated 24th June, 1953, of the Industrial Tribunal, Calcutta.
M. C. Setalvad, Attorney General for India, B. Sen, section N. Mukherji and B. N. Ghosh for M/s. Burn & Co. N. C. Chatterji, A. K. Dutt and B. P. Maheshwari for the workmen.
783 1956.
October 11.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
.Disputes having arisen between Messrs Burn and Company, Calcutta, hereinafter called the Company, and a section of their employees in Howrah Iron Works, hereinafter referred to as the Union, the Government of West Bengal issued a notification on 16 12 1952 referring the same to the First Industrial Tribunal for adjudication.
Though there were as many as 13 items comprised in the reference, we are concerned in these appeals only with four of them, viz., (1) revision of pay of clerical and sub staff, (2) grades of sarkars and checkers, (3) bonus and (4) reinstatement of four employees, section N. Chatterjee, Ashimananda Banerjee, Panchanan Rana and Joydeb Banerjee and/or payment of compensation to them.
By his award dated 24 6 1953, Shri Banerji, the Industrial Tribunal, held (1) that there were no grounds for revising the scale of pay of the clerical and sub staff; (2) that the pay of checkers should be increased and that they should be paid according to the scale as set out in his award; (3) that the profits of the Company did not warrant the grant of any bonus in addition to what had been paid by the Company; and (4) that of the four employees, Shambunath Chatterjee should be re employed as a checker on his old pay, that Ashimananda Banerjee and Panchanan Rana should be "re employed in posts equivalent to their own posts as new incumbents" and that Joydeb Banerjee was not entitled either to reinstatement or compensation.
Against this award, the Union preferred an appeal to the Labour Appellate Tribunal.
By its decision dated 29 4 1955 the Appellate Tribunal substantially modified the award of Shri Banerji in favour of the Union it held (1) that the minimum pay of the clerical and sub staff should be raised, and that corresponding changes should be made in the ceiling level, in the increments and in the scales of pay of other grades of the staff; (2) that the scale of pay of the sarkars and checkers should be increased and incre 784 ments given as laid down in the award; (3) that the employees should be paid a month 's bonus in addition to what had been given to them; and (4) that of the employees, Shambunath Chatterjee, Ashimananda Banerjee and Panchanan Rana should not merely be re employed but reinstated with continuity of service, and that further Shambunath Chatterjee was entitled to compensation at the rate of six months ' basic wages with dearness allowance.
As for Joydeb Banerjee, the Appellate Tribunal held that though his reinstatement was not desirable, he was entitled to one year 's basic wages with dearness allowance as compensation.
Against this decision, the Company has preferred Civil Appeal No. 325 of 1955 by special leave, and the Union has likewise preferred Civil Appeal No. 174 of 1956, the leave being limited in the latter to the four points raised by the Company in its appeal.
(1) The first question relates to the increase in the minimum wages of the clerical and sub staff.
For a correct understanding of the true position, it is necessary to refer to the facts which form the background of the present dispute.
In 1946, the Bengal chamber of Commerce took up the question of fixing, suitably to the changed conditions brought about by World War II, wages and other terms of service of the employees in industrial concerns, and framed a scheme classifying them under different categories, and fixing scales of pay and dearness allowance for the several categories, and that was brought into force in the Company on 1 10 1946.
Under this scheme, the scale of pay for the lower categories of employees, with whom we are concerned in these appeals, was as follows: Class of employees Basic monthly pay range Junior clerks Rs. 60 2 90 Tracers 60 2 80 Clerks 60 4 124 (E. B. at 105) Typists 60 4 90 Steno typists Comptometer 80 4 124 (E. B. at 105) Operators 785 Juniors (Drg.
and Estg.)60 4 88 2 100 Junior Draftsmen 92 4 124 2 134 Junior Estimatorsr Disputes then arose between Engineering Firms in the State of West Bengal and their employees as regards fixation of grades, wages and dearness allowance, and by a notification dated 31 10 1947 the Government referred them to the adjudication of the First Engineering Tribunal.
The appellant Company and its workmen were parties to the proceedings but not the present Union, which was composed of the clerical and sub staff.
On 30 6 1948 the Tribunal passed an award, the terms whereof were, in general, less favourable to the employees than those fixed by the Bengal Chamber of Commerce and adopted by the Company on 1 10 1946.
While the proceedings were, pending before the Engineering Tribunal, disputes arose between various Mercantile Firms in Calcutta and their employees as regards wages, dearness allowance and other terms of service, and by notification dated 17 1 1948 the Government of West Bengal referred them to the adjudication of another Tribunal, called the Mercantile Tribunal.
This Tribunal pronounced its award on 26 8 1949, and the scale of pay provided therein for the lower categories of employees was as follows: Grade D Rs. 70 3 130 Grade C Rs. 70 4 134 The Union was party No. 192 in those proceedings, but for technical reasons, the Tribunal declined to adjudicate on their disputes.
The result was that this award was no more binding on the parties than the one passed by the Engineering Tribunal.
But the scale fixed in the award of the Mercantile Tribunal was decidedly more favourable to the employees than either the scale recommended by the Bengal Chamber of Commerce and adopted by the Company on 1 10 1946 or that fixed in the award of the Engineering Tribunal, and it is therefore not surprising that it should have inspired the Union to present a demand 786 for wages and dearness allowance on the scales provided therein.
The Company having declined to accept it, there arose an industrial dispute, and by a notification dated 18 1 1950, the Government of West Bengal referred the same for adjudication to one Shri Palit, District Judge.
Before him, the Company contended that as the members of the Union were employees in an Engineering concern, the scale of pay applicable to ' them was that laid down in the award of the Engineering Tribunal, and that as the scale actually in force was more favourable to them than that scale, there was no ground for revision.
The Union, on the other hand, contended that not having been a party to the proceedings before the Engineering Tribunal, it was not bound by the award therein, and that as its members were clerical staff and not workers, the scales fixed in the award of the Mercantile Tribunal were more appropriate to them.
By his award dated 12 6 1950 shri Palit held that the nature of the work and the qualifications of the clerical staff were not the same in all business establishments, that the clerks in mercantile concerns were better qualified and had to do more onerous work than the members of the Union, that the latter could not be put in the same position as the former, and that the scale of pay fixed in the scheme of the Bengal Chamber of Commerce which was adopted by the Company was fair and required no revision.
He, however, made some slight changes in the incremental scales and the maximum limits of the grades.
The scheme as settled in his award with reference to the categories involved in this appeal was as follows: Grade Class of employees Pay according to the award of Shri Palit "D" Junior Clerks 60 3 96 Tracers 60 3 90 Clerks 60 4 140 (E.B. at 100) Typists 60 4 100 Stenotypists and Comptometer Operators 80 4 124 (E.B. at 120) 787 "C" Junior (Drawing and Estimating) 60 4 120 Junior Draftsmen _ Junior Estimators 92 4 140.
The Union preferred an appeal against this award, but that was dismissed as barred by limitation.
Under section 19(3) of the Industrial Disputes Act XIV of 1947, an award is to be in operation for a period of one year, and under section 19(6), it is to continue to be binding on the parties even thereafter, until terminated by either party by giving two months ' notice.
Acting on this provision, the Union issued a notice to the Company on 12 7 1951 being exactly one year from the date of publication of Shri Palit 's award dated 12 6 1950, declaring its intention not to be bound by it.
This was followed in November by presentation of demands including ' one for raising the scale of pay to the level adopted in the award of the Mercantile Tribunal, and the result was an industrial dispute, which is the subject matter of the present reference.
Shri Banerji, who heard the ,reference, held that the question as to the scale of pay had been directly adjudicated upon by Shri Palit, that, on principle, the decision of a Tribunal on a matter referred to it should not be disturbed, unless there had been a change of circumstances since the date of the award, and as none such existed,, the wage structure as fixed by him should stand.
The Appellate Tribunal disagreed with this conclusion.
It held that the award of Shri Palit, which Shri Banerji accepted, was bad for the reason that it had failed to examine "the question as to whether the minimum salary fixed by the Managing Agents was adequate to cover the cost of a balanced diet and provide frugal comforts which a workman of the clerical staff must have to maintain the efficiency of his work".
It then referred to the opinion of Dr. Akroyd that an intake of 2,600 calories of food was necessary for efficiency of work, quoted some decisions of the Labour Tribunal in which the minimum pay of the clerical staff had been fixed at Rs. 70 and even more, and decided that the minimum pay should be fixed at Rs. 65 per 788 mensem for the clerical and sub staff of the Company.
Having raised the floor level of the wage structure as aforesaid, it correspondingly raised the ceiling level and the scales of increment, and further with a view to maintain the differential scales as between the different categories, it raised the minimum pay in scales where it stood at Rs. 65 and more, with "consequential change in their incremental scales and the maximum grades".
It is argued for the appellant Company that the Appellate Tribunal was in error in brushing aside the award of Shri Palit and in deciding the matter afresh, as if it arose for the first time for determination, that when once a dispute is referred to a Tribunal and that results in an adjudication, that must be taken as binding on the parties thereto, unless there was a change of circumstances, and as none such had been alleged or proved, the award of shri Palit should, have been accepted, as indeed it was by Shri Banerji, and the decisions in The Army & Navy Stores Ltd., Bombay vs Their Workmen(1) and Ford Motor Co. of India, Ltd. vs Their Workmen(1) were cited in support of this contention.
In the instant case, the Labour Appellate Tribunal dismissed this argument with the observation that was "a rule of prudence and not of law".
If the Tribunal meant by this observation that the statute does not enact that an award 'should not be re opened except on the ground of change of circumstances, that would be quite correct.
But that is not decisive of the question ', because there is no provision in the statute prescribing when and under what circumstances an award could be re opened.
Section 19(4) authorises the Government to move the Tribunal for shortening the period during which the award would operate, if "there has been a material change in the circumstances on which it was based".
But this has reference to the period of one year fixed under section 19(3) and if that indicates anything, it is that would be the proper ground on which the award could be reopened under section 19(6), and that is what the learned Attorney General (1) (2) 789 contends.
But we propose to consider the question on the footing that there is nothing in the statute to indicate the grounds on which an award could be reopened.
What then is the position? Are we to hold that an award given on a matter in controversy between the parties after full hearing ceases to have any force if either of them repudiates it under section 19(6), and that the Tribunal has no option, when the matter is again referred to it for adjudication, but to proceed to try it de novo, traverse the entire ground once again, and come to a fresh decision.
That would be contrary to the well recognised principle that a decision once rendered by a competent authority on a matter in issue between the parties after a full enquiry should not be permitted to be re agitated.
It is on this principle that the rule of res judicata enacted in section II of the Civil Procedure Code is based.
That section is, no doubt, in terms inapplicable to the present matter, but the principle underlying it, expressed in the maxim "interest rei publicae ut sit finis litium", is founded on sound public policy and is of universal application.
(Vide Broom 's Legal Maxims, Tenth Edition, page.
"The rule of res judicata is dictated" observed Sir Lawrence Jenkins, C.J. in Sheoparsan Singh vs Ramnandan Prasad Singh(1)."by a wisdom which is for all time".
And there are good reasons why this principle should be applicable to decisions of Industrial Tribunals also.
Legislation regulating the relation between Capital and Labour has two objects in view.
It seeks to ensure to the workmen who have not the capacity to treat with capital on equal terms, fair returns for their labour.
It also seeks to prevent disputes between employer and employees, so that production might not be adversely affected and the larger interests of the society might not suffer.
Now, if we are to hold that an adjudication loses its force when it is repudiated under section 19(6) and that the whole controversy is at large, then the result would be that far from reconciling themselves to the award and settling down to work it, either party will treat it as a (1) [1916] L.R. 43 I.A. 91; Cal.
103 103 790 mere stage in the prosecution of a prolonged struggle, and far from bringing industrial peace, the awards would turn out to be but truces giving the parties breathing time before resuming hostile action with renewed vigour.
On the other hand, if we are to regard them as intended to have long term operation and at the same time hold that they are liable to be modified by change in the circumstances on which they were based, both the purposes of the legislature would be served.
That is the view taken by the Tribunals themselves in The Army & Navy Stores Ltd., Bombay vs Their Workmen(1) and Ford Motor Co. of India Ltd. vs Their Workmen(2), and we are of opinion that they lay down the correct principle, and that there were no grounds for the Appellate Tribunal for not following them.
We should add that the Appellate Tribunal was also in error in thinking that Shri Palit had failed to advert to the principle on which basic wages should be fixed, and that he had not referred to the doctrine of Dr. Akroyd about the need for a balanced diet of 2,600 calories.
It is true that Shri Palit does not in terms refer to these matters in his award.
But they were all discussed in the awards of both the Engineering Tribunal and the Mercantile Tribunal.
The dispute between the parties was whether the one award or the other should be taken as the basis for fixation of the scale of pay, and Shri Palit decided that it was the Engineering Tribunal 's award and not the other that was more appropriate to the class of employees, of which the Union was composed.
In basing his award on the award of the Engineering Tribunal, Shri Palit must be taken to have considered all the factors relied on by the Tribunal for fixing the scales and the criticism that the award does not refer to them once again is one of form rather than of substance.
We must, therefore, hold that the decision of the Appellate Tribunal cannot be maintained even on its own ground.
The position then is this: The question of scales of pay was decided by Shri Palit in his award dated (1) (2) 791 12 6 1950, and the Union was a party to it.
It is not alleged that there has been any change in circumstances between that date and 16 12 1952 when the present reference was made to Shri Banerji.
On the principles stated above, therefore, the award of Shri Palit should not be disturbed.
This conclusion would have entailed the reversal of the order of the Appellate Tribunal and the restoration of the award of Shri Banerji.
We are of opinion, however, that the scale fixed by the Appellate Tribunal In its order dated 29 4 1955 should not be interfered with, in so far as it fixes the minimum pay of the clerical and sub staff at Rs. 65 per mensem.
It is common ground that dearness allowance is payable under the rules of the Company, only when the cost of living index exceeds point 180.
The basic wages should therefore be fixed with 180 point as cost of living index.
When we turn to the award of the Engineering Tribunal, we find that it fixed the basic wages after taking the cost of living index as 160 points.
Before Shri Palit, the Company contended that the scale fixed in the award of the Engineering Tribunal should form the basis of fixation of the pay scale of the Union, and though the Tribunal held that the award was not as such binding on the Union, it agreed with the Company that it was the scale fixed therein and not that fixed in the award of the Mercantile Tribunal that was more appropriate to the clerical staff of an Engineering concern, and adopted the scale fixed by the Company on 31 10 1946 as being "slightly in advance of the terms contained in the Engineering Tribunal 's award".
It is clear from a reading of the award of Shri Palit that he was not conscious that the basic wages had been fixed by the Engineering Tribunal with point 160 as the cost of living index, and his observation that the scale adopted by the Company was an advance on that fixed by the Engineering Tribunal is consistent only with an assumption by him that the basic wages bad been fixed both by the Company and the Engineering Tribunal with point 180 as the cost of living index.
Now, if we are to accept the scale fixed in the award 792 of Shri Palit as did Shri Banerji, the position would.
be that while for purposes of basic wages the cost of living index point would be 160, for purposes of dearness allowance it would be 180, and that would work great injustice on the workers.
It is the realisation of this fact that must have led Mr. Bose, counsel for the Company ' to raise at a late stage of the hearing of the appeal the contention that the 'cost of living index of the Bengal Chamber of Commerce which was adopted by the Company was different from that of the Government.
But this contention went against the admission made by Mr. Sen on behalf of the Company at an earlier stage, and was rightly rejected by the Appellate Tribunal and that was abandoned before us.
There is thus, on the face of the record, an error of a fundamental character.
It is argued for the appellant that this point is not open to consideration at this stage, as it had not been raised by the Union at any time before, and that, in any event, the matter should be remanded for further enquiry.
But the question is whether in view of what appears on the face of the record this is a fit case for our interference in special appeal.
The minimum pay fixed by the Appellate Tribunal would be quite proper if the cost of living index is taken, for the purpose of fixing the basic wages, at point 180 instead of 160, and there is no reason why we should not accept it.
Nor do we think that a remand is called for in the interests of justice, as, in the face of the undisputed facts, it can only result in the proceedings dragging on and the relationship between the parties deteriorating.
Under the circumstances, we do not propose to disturb the minimum pay of Rs. 65 per mensem fixed by the Appellate Tribunal.
But we see no justification for raising either the ceiling levels or the starting pay of other categories of employees whose initial pay was Rs. 65 per mensem or more.
We accordingly set aside the scale of pay as fixed by the Appellate Tribunal and restore that of Shri Banerji subject to the following modifications: Grade D Junior clerks Rs. 65 3 98 Tracers 65 3 92 793 Grade C Clerks 65 4 141 (E.B. 'at 105) Typists 65 4 101 Junior (Drawing and Estimating) 65 4 121 (2) The second question relates to the grading of sarkars and checkers.
The claim put forward on their behalf is that they should be raised to the category of clerks.
This was rejected by Shri Palit in his award dated 12 6 1950 and again by Shri Banerji in those proceedings.
The Appellate Tribunal before whom this claim was repeated, while observing that the work of sarkars and checkers was "not of the same nature as that of the members of the clerical staff", held, nevertheless, that the scales of pay fixed in the award of the Engineering Tribunal for clerks should be applied to them, and that therefore non matriculate sarkars and checkers should be put on Rs. 55 2 1/2 80 scale and matriculate sarkars and checkers on Rs. 60 2 1/2 90 scale.
We are unable to uphold this order.
When once the Appellate Tribunal reached the conclusion that the sarkars and checkers could not be put in the same category as clerks, the question then is simply whether any grounds had been made out for interfering with the fixation of pay scales by Shri Banerji.
So far as the sarkars are concerned, the scale had been fixed by Shri Palit, and Shri Banerji adopted it.
As no change ' in the circumstances was alleged in support of a revision thereof, there was no ground for interfering with it.
As for checkers, they are hourly rated workers, and Shri Banerji had revised their pay scale.
Apart from stating that "the ends of justice" required it, the Appellate Tribunal gave no reason for modifying his award.
We are of opinion that the order of the Appellate Tribunal should be set aside both in respect of sarkars and checkers and the award of Shri Banerji restored.
(3) On the question of bonus, the facts are that the Company had an elaborate scheme for granting bonus and the employees had been paid in accordance therewith.
But the Union claimed that having regard to the profits made by the Company, the employees 794 should be paid three months ' basic wages as bonus for the years 1950 and 1951.
It is not in dispute that the profits of the Company available for distribution for the year 1950 were Rs. 3.81 lakhs and for the year 1951, even less.
The monthly salary of the clerks, sub staff, sarkars and checkers was Rs. 89,500 and the monthly wages of the workers were Rs. 1,75,000, making a total of Rs. 2,64,500.
This is only for one factory, the Howrah Iron Works.
The Company owns nine other units at different places, and there is no evidence as to the monthly salary payable to the employees and workmen in those units.
Now, the surplus of Rs. 3.81 lakhs in the hands of the Company represents the total profits made by it in all its units, and there cannot be much of a doubt that this amount would be wholly insufficient to pay one month 's basic wages as bonus to the employees of the Company in ,all its, ten units.
Shri Banerji accordingly held to at the profits of the, Company did not justify the grant of any bonus beyond what the Company had granted, and simplifying the complicated scheme of bonus which the Company had evolved, he directed that bonus should be paid, including what had been paid by it, at one month 's basic pay.
The Appellate Tribunal when dealing with this question agreed that "if all categories of workmen be paid bonus, there is no scope for the payment of any additional bonus".
But it held that as the other categories of workmen had not made any claim for bonus and as the amount payable to the members of the Union was only Rs. 89,000, the surplus was sufficient to justify the award to them only of another month 's basic wages as bonus.
Whether we consider the question on principles of law or of equity, this conclusion is clearly unsound.
In law, a claim for bonus will be admissible only if the business had resulted during the year in sufficient profits.
And as the reasons for the grant of bonus is that workers should share in the prosperity to which they have contributed, all of them would have the right to participate in it.
Therefore, profits can be said to be sufficient to declare a bonus only if they 795 are sufficient to make a payment to all of them.
If the profits are not sufficient for that purpose, then the very, condition on which bonus could be declared would be absent, and no question of granting any bonus could arise.
As it is common ground that the profits of the Company are not sufficient to justify the award of bonus if it is to be paid to all the workers of the Company in all its units, it follows that there is in law no ground for the grant of bonus.
Nor can such a claim be sustained in equity.
The entire profits of the Company are the result of the labour of all the workmen and employees in all its units.
To grant a bonus to a section of them on the basis of the total profits of the Company will be to give them a share in profits to which they have not contributed.
We are wholly unable to appreciate the observation of the Appellate Tribunal that to refuse additional bonus to the Union employees would be to penalise them " not for their own fault but for the laches of the coworkers, who abandoned their claim".
The Tribunal forgets that, on its own finding, if all the workmen made a claim, no bonus could have been declared.
It is not a question of their abandoning their claim but of their realising that they have none.
If the order of the Appellate Tribunal is to be given effect to, some of the employees of the Company would get a bonus, while others not, and as observed in Karam Chand Thappar & Bros. ' Workmen vs The Company(1), that must lead to disaffection among the workers and to further industrial disputes.
The order of the Appellate Tribunal awarding an additional one months basic wages as bonus is neither legal nor just and must be set aside and the award of Shri Banerji as regards bonus restored.
(4) It remains to deal with the question of the re instatement and/or compensation of four employees, section N. Chatterjee, Ashimananda Banerjee, Panchanan Rana and Joydeb Banerjee.
It has been already stated that the order of Shri Banerji with reference to them was modified by the Appellate Tribunal by awarding compensation at the rate of six months ' basic wages (1) ,160.
796 to section N. Chatterjee and one year 's basic wages with dearness allowance to Joydeb Banerjee and by providing that section N. Chatterjee, Ashimananda Banerjee and Panchanan Rana should not merely be re employed but reinstated with continuity of service.
It is argued for the appellant that under section 7 of the Industrial Disputes (Appellate Tribunal) Act XLVIII of 1950, the order of the Tribunal refusing reinstatement was not open to appeal, as it is not one of the matters set out in section 7(1)(b), and that, in consequence, the order of the Appellate Tribunal in so far as it modified the order of the Tribunal as regards the four employees aforesaid, was without jurisdiction, and the decision in Ranganathan vs Madras Electric Tramways(1) and Sudershan Steel Rolling Mills vs Their Workmen(2) were relied on in support of this contention.
It must be mentioned that retrenchment is one of the matters enumerated in section 7 (1) (b), in respect of which an appeal would lie.
But if the order is one of dismissal, it cannot be said to be one of retrenchment as that word is ordinarily understood, and will not be appealable under section7(1)(b).
In 1953 the legislature enacted the Industrial Disputes (Amendment) Act XLIII of 1953 wherein "retrenchment" was for the first time defined so as to include, subject to certain exceptions, the termination by the employer of the service of workmen for any reason whatsoever.
(Vide section 2(oo)).
Under this definition, an appeal would be competent under section 7 (1) (b) (vii) in the case of termination of service, subject to the exceptions specified therein.
But this Act came into force on the 24th December 1953, and as there is nothing in it giving retrospective operation to this definition, the rights of the parties to the present appeal would remain unaffected by it.
Act XLIII of 1953 replaced Ordinance No. V of 1953, wherein also retrenchment was defined as including, subject to exceptions all termination of service; but that also came into force only on the 24th October 1953, whereas the present appeal was filed on 19 8 1953.
On that date, the order of the Tribunal refusing (1) A.I.R. 1952 Mad. 669.
(2) 797 reinstatement was not open to appeal, and the order of the Appellate Tribunal modifying it would therefore be without jurisdiction and void.
But it is argued for the respondent that an award of the Tribunal refusing reinstatement would be appealable under section 7 (1) (a ') if it involved a substantial question of law, and that as the contention of the employees was that the orders dismissing them were bad as having been passed in contravention of ,the rules of natural justice, that was a question of law on which an appeal was competent.
It was further contended that when a question arises whether a Tribunal has jurisdiction over the subject matter, it must be competent to decide whether the preliminary conditions exist, on which its jurisdiction depends, and its decision on that question is not liable to be attacked in civil courts, and that accordingly the assumption of jurisdiction by the Appellate Tribunal on the footing that there was a substantial question of law was not liable to be questioned by the civil court, and the decisions in Pankaj Kumar Ganguli vs Bank of India(3) and Upper Ganges Electric Employees Union vs Upper Ganges Valley Electricity Supply Co. Ltd. and another(4) were relied on in support of this contention.
We agree that an order refusing reinstatement would be open to appeal under section 7(1)(a) if it involved a substantial question of law.
Whether a decision of the Appellate Tribunal that an appeal to it from an award was competent under section 7 (1) (a) on the ground that it involved a substantial question of law is final and not open to question in a civil court is a point on which we do not desire to express an opinion, as in the present case, the correctness of that ,decision is challenged not collaterally or in independent proceedings, such as an application under article 226 of the Constitution as in the two cases relied on for the respondent, but by way of appeal under article 136, and it is open to us to consider as a Court of Appeal whether, in fact, the order of the Tribunal was vitiated by an error of law, and whether the (1) 104 (2) A.I.R. 1956 All. 491, 104 798 order of the Appellate Tribunal modifying it is sound.
We must now consider the case of the four employees from this standpoint: (1) section N. Chatterjee had an eye defect, and acting on the advice of its medical officer, the Company discharged him on that ground.
The Tribunal has found him to be fit, and directed his re employment.
He now claims compensation on the ground that he had produced a certificate of fitness from a competent medical officer but that the Company discharged him without making any enquiry thereon.
The Appellate Tribunal found that the company bad acted bonafide, but that as the order of dismissal was made without due enquiry it was bad, and accordingly awarded compensation at the rate of six months ' basic wages.
We are unable to hold that on the facts found the Appellate Tribunal had acted without jurisdiction in interfering with the award or that its order is unjust.
No case has been made out for our interference with it under article 136 (2) Ashimananda Banerjee was arrested by the Government under the West Bengal Security Act and detained in jail from 25 1 1949 to 5 4 1951.
The Company terminated his services on 22 4 1949.
The Tribunal made an order that he should be re employed, and that is not now in question.
But he fur ther claims that he is entitled to be reinstated.
The Appellate Tribunal has accepted that claim on the ground that he had been discharged without the Company framing a charge or holding an enquiry, and that the rules of natural justice had been violated.
We are unable to agree with this decision.
The ground of discharge is the continued absence of the employee, and his inability to do work, and it is difficult to see what purpose would be served by a formal charge being delivered to him and what conceivable answer he could give thereto.
The order of the Appellate Tribunal is manifestly erroneous and must be set aside.
(3) The facts relating to Panchanan Rana are similar to those of Ashimananda Banerjee, and for the reasons already given, the order of the Appellate 799 Tribunal in his favour should be set aside.
(4) The question as regards Joydeb Banerjee is whether he is entitled to compensation on the ground that he had been wrongly discharged.
The facts are that on 16 11 1950 a number of employees participated in an assault on the Works Manager, Mr. Davison, and the Company dismissed fourteen of them on that ground, and Joydeb Banerjee was one of them.
The Appellate Tribunal has held that as no charge was, framed against him or an enquiry held, his dismissal was in contravention of the rules of natural justice.
It has accordingly ordered that he should be given one year 's basic wages with dearness allowance as compensation.
It is true that no charge sheet was formally drawn up against him, but that would not vitiate the order of dismissal if he knew what the charge against him was and had an opportunity of giving his explanation.
It appears from the order of the Tribunal that subsequent to the order of dismissal by the Company, there were conciliation proceedings and an enquiry by the Labour Minister, as a result of which he recommended the reinstatement of seven out of the fourteen who had been dismissed, leaving the order in operation as regards the other seven, of whom Joydeb Banerjee was one.
In the face of these facts, it is idle for him to contend that he had been dismissed without hearing or enquiry.
The order of the Appellate Tribunal awarding compensation to him should be set aside.
In the result, Civil Appeal No. 325 of 1955 is allowed, the order of the Appellate Tribunal set aside and that of Shri Banerji restored, except that (1) the minimum pay of the clerical staff will be Rs. 65 per mensem with modifications as to the ceiling level and increments as set out supra and (2) that section N. Chatterjee will be reinstated with compensation as provided in the order of the Appellate Tribunal.
The Union will pay half the costs of the appellant throughout.
Civil Appeal No. 174 of 1956 is dis missed, but there will be no order as to costs.
| An award of an Industrial Tribunal is intended to have a long term of operation, and can be reopened under section 19(6) of the Industrial Disputes Act XIV of 1947 only when there has been a material change in the circumstances on which it was based.
To hold otherwise would be to defeat the two basic objects which all industrial legislations have in view, namely, to ensure to the workmen, a fair return for their labour and to prevent disputes between the employers and employees, so that production might not be affected and the interests of the society might not suffer.
That although the rule of res judicata as enacted by section 11 of the Code of Civil Procedure does not in terms apply to such an award, its underlying principle which is founded on sound public policy and is of universal application must apply.
The Army & Navy Stores Ltd., Bombay vs Their Workmen, ([1951] and Ford Motor Co. of India Ltd. vs Their Workmen, ([1951] , approved and applied.
Sheoparson Singh vs Bamnandan Prasad Singh, ([1916] L.R. 43 I.A. 91), referred to.
Consequently, where, as in the instant case, the Union of the employees of a certain section of the appellant Company served a notice on the Company under section 19(6) of the Act terminating a previous award which had applied to its members the scales of pay and dearness allowance fixed by the Bengal Chamber of Commerce with slight modifications, and demanded that the more favourable Scale of pay adopted by the Mercantile Tribunal in its award might be applied to them, and the Tribunal appointed to adjudicate the dispute, held that, there having been no change in the circumstances in which the previous award had been made, the same was binding between the parties and could not be modified, but the Appel 102 782 late Tribunal in appeal held otherwise and brushed aside the previous award, held that the order of the Appellate Tribunal was erroneous in law and as such liable to be set aside.
Hold further, that the reason for the grant of a bonus being that the workers should be allowed to share in the prosperity to which they have contributed, unless the profits for a particular year were adequate for a payment of bonus to all the workers of the Company in all its sections, no claim for it could at all arise either in law or equity.
Karam Chand Thappar & Bros. ' Workmen vs The Company ([1953] L.A.C. 152), referred to.
That an order passed by the Tribunal refusing reinstatement would be appealable under section 7(1)(a) of the Industrial Disputes (Appellate Tribunal) Act of 1960 if it involved a substantial question of law and it was not necessary to decide in the present case whether the decision of the Appellate Tribunal that an appeal lay to it under that section was final and not open to question in a civil court, as the correctness of that decision was challenged not collaterally or in an independent proceeding but in an appeal under article 136 of the Constitution and it was open to the Supreme Court in such an appeal to consider the legality or otherwise of the orders passed either by the Tribunal or by the Appellate Tribunal in appeal.
Pankaj Kumar Ganguli vs The Bank of India, ([1966] 60 C.W.N. 602) and Upper Ganges Valley Electric Employees Union vs Upper Ganges Valley Electricity Supply Co. Ltd. and another, (A.I.R. 1956 All. 491), distinguished.
That the omission to draw up a formal charge sheet against a workman could not vitiate an order of dismissal if he was aware of the charge framed against him and had an opportunity of offering his explanation.
|
Summarize this legal judgement text concisely | Appeal No. 247 of 1953.
Appeal by special leave from the judgment and decree dated August 22, 1952 of the Bombay High Court in Appeal No. 66 of 1952 arising out of the decree dated March 7, 1952 of Bombay High Court in its Ordinary Original Civil Jurisdiction in Suit No. 1177 of 1951.
M. C. Setalvad, Attorney General for India, Purshottam Tricumdas, T. Godiwala, J. B. Dadachanji, Rameshwar Nath and section N. Andley, for the appellant.
C. K. Daphtary, Solicitor General of India and Sardar Bahadur, for the respondent.
October 19.
The Judgment of the Court was delivered by SINHA J.
This is an appeal by special leave against the judgment and decree of the High Court of Judicature at Bombay dated August 22,1952, reversing those of a single Judge of that Court on the Original Side, dated March 7,1952, by which he had granted a decree for dissolution of marriage between the appellant and the respondent.
840 The facts and circumstances of this case may be stated as follows: The appellant, who was the plaintiff, and the respondent were married at Patan on April 20, 1942, according to Hindu rites of the Jain Community.
The families of both the parties belong to Patan, which is a town in Gujarat, about a night 's rail journey from Bombay.
They lived in Bombay in a two room flat which was in occupation of the appellant 's family consisting of his parents and his two sisters, who occupied the larger room called the hall, and the plaintiff and the defendant who occupied the smaller room called the kitchen.
The appellant 's mother who is a patient of asthma lived mostly at Patan.
There is an issue of the marriage, a son named Kirit, born on September 10, 1945.
The defendant 's parents lived mostly at Jaigaon in the East Khandesh district in Bombay.
The parties appear to have lived happily in Bombay until a third party named Mahendra, a friend of the family came upon the scene and began to live with the family in their Bombay flat some time in 1946, after his discharge from the army.
On January 8, 1947, the appellant left for England on business.
It was the plaintiff 's case that during his absence from Bombay the defendant became intimate with the said Mahendra and when she went to Patan after the plaintiff 's departure for England she carried on "amorous correspondence" with Mahendra who continued to stay with the plaintiff 's family in Bombay.
One of the letters written by the defendant to Mahendra while staying at the plaintiff 's flat in Bombay, is exhibit E as officially translated in English, the original being in Gujerati except a few words written in faulty English.
This letter is dated April,1947, written from the plaintiff 's house at Patan, where the defendant bad been staying with her mother in law.
This letter had been annexed to the plaint with the official translation.
It was denied by the defendant in her written statement.
But at the trial her counsel admitted it to have been written by her to Mahendra.
As this letter started all the trouble between the parties to this litigation, it will have to be set out in extenso hereinafter.
Continuing 841 the plaintiff 's narrative of the events as alleged in the plaint and in his evidence, the plaintiff returned to Bombay from abroadon May 2O, 1947.
To receive him back from his foreign journey the whole family ' including the defendant was there in Bombay.
According to the plaintiff, he found that on the first night after his return his bed had been made in the hall occupied by his father and that night he slept away from his wife.
As this incident is said to have some significance in the narrative of events leading up to the separation between the husband and the wife and about the reason for which the parties differ, it will have to be examined in detail later.
Next morning, that is to say, on May 21, 1947, the plaintiff 's father handed over the letter aforesaid to the plaintiff, who recognised it as being in the familiar handwriting of his wife.
He decided to tackle his wife with reference to the letter.
He handed it to a photographer to have photo copies made of the same.
That very day in the evening he asked his wife as to why she had addressed the letter to Mahendra.
She at first denied having written any letter and asked to see the letter upon which the plaintiff informed her that it was with the photographer with a view to photo copies being made.
After receiving the letter and the photo copies from the photographer on May 23, the plaintiff showed the defendant the photo copy of the letter in controversy between them at that stage and then the defendant is alleged to have admitted having written the letter to Mahendra and to have further told the plaintiff that Mahendra was a better man than him and that Mahendra loved her and she loved him.
The next important event in the narrative is what happened on May 24, 1947.
On the morning of that day, while the plaintiff was getting ready to go to his business office his wife is alleged to have told him that she had packed her luggage and was ready to go to Jalgaon on the ostensible ground that there was a marriage in her father 's family.
The plaintiff told her that if she had made up her mind to go, he would send the car to take her to the station and offered to pay her Rs. 100 for her expenses.
But she 884 refused the offer.
She left Bombay apparently in the plaintiff 's absence for Jalgaon by the afternoon train.
when the plaintiff came back home from his office, he "discovered that she had taken away everything with her and had left nothing behind".
It may be added here that the plaintiff 's mother had left for Patan with his son some days previously.
Plaintiff 's case further is that the defendant never came back to Bombay to live with him, nor did she write any letters from Jalgaon, where she stayed most of the time.
It appears further that the plaintiff took a very hasty, 'if not also a foolish, step of having a letter addressed to the defendant by his solicitor on July 15, 1947, charging her with intimacy between herself and Mahendra and asking her to send back the little boy.
,The parties violently differ on the intent and effect of this letter which will have to be set out in extenso at the appropriate place.
No answer to this letter was received by the plaintiff.
In November, 1947, the plaintiff 's mother came from Patan to Bombay and informed the plaintiff that the defendant might be expected in Bombay a few days later.
Thereupon the plaintiff sent a telegram to his father in law at Patan.
The telegram is worded as follows: "Must not send Prabha.
Letter posted.
Wishing happy new year".
The telegram stated that a letter bad been posted.
The defendant denied that any such letter bad been received by her or by her father.
Hence the original, if any, is not on the record.
But the plaintiff produced what he alleged to be a carbon copy of that letter which purports to have been written on November 13, 1947, the date on which the telegram was despatched.
An English translation of that letter is exhibit C and is to the following effect: Bombay 13 11 47 To Rajmanya Rajeshri Seth Popatlal & others.
There is no letter from you recently.
You must have received the telegram sent by me today.
Further, this is to inform you that I have received information from my Mami (mother) that 843 Prabha is going to come to Bombay in 3 or 4 days.
I am surprised to hear this news; Ever since she has gone to Jalgaon, there has been not a single letter from her to this day.
Not only that, but, although you know everything, neither you nor any one on your behalf has come to see me in this connection.
What has made Prabha thus inclined to come all of a sudden! After her behaviour while going to Jalgaon for: the marriage, (and after), her letter to Mahendra and her words. 'He is better than you Has feeling for ' me and I love him ' and all this, I was afraid that she would not set up a house with me.
Hence when my mother gave me the news of her return, I was surprised.
I have not the slightest objection to the return of Prabha, but if she gives such shameless replies to me and shows such improper behaviour, I shall not be able to tolerate the same.
If she now really realises her mistake and if she is really repenting and wants sincerely to come, please make her write a reply to this letter.
On getting a letter from her, I shall personally come to Patan to fetch her.
Kirit is young.
For his sake also, it is necessary to persuade Prabha.
Further, I have to state that I have so far kept peace.
I have made efforts to call back Prabha.
Please understand this to her my final effort.
If even now Prabha does not give up her obstinacy, I am not responsible and (then) do not blame me.
Well, that is all for the present.
Kirit must be bale and hearty.
My new year 's greetings to you all.
Please do assign to me such work as I can manage.
Written by Bipinchandra" The plaintiff stated that be received no answer either to the telegram or to the letter.
Two days later, on, November 15, the plaintiff 's father addressed a letter to the defendant 's father, which is exhibit D.
This letter makes reference.
to the defendant 's mother having, talked to the plaintiffs mother about sending the defendant I to Bombay and to the fact that the plaintiff bad sent a telegram on November 13, and ends with the expression of opinion by the plaintiff 's father 844 that it was "absolutely necessary" that the plaintiff 's consent should be obtained before sending the defendant to Bombay.
This letter also remained unanswered.
According to the plaintiff, nothing happened until May, 1948, when he went to Patan and there met the defendant and told her "that if she repented for her relations with Mahendra in the interests of the child as well as our own interests she could come back and live with me".
To that the defendant is said to have replied that in November, 1947, as a result of pressure from her father and the community, she had been thinking of coming to live with the plaintiff) but that she had then decided not to do so.
The defendant has given quite a different version of this interview.
The second interview between the plaintiff and the defendant again took place at Patan some time later in 1948 when the plaintiff went there to see her on coming to know that she had been suffering from typhoid,.
At that time also she evinced no desire to come back to the plaintiff.
The third and the last interview between the plaintiff and the defendant took place at Jalgaon in April May, 1949.
At that interview also the defendant turned down the plaintiff 's request that at least in the interests of the child she should come back to him.
According to the plaintiff, since May 24, 1947, when the defendant left his home in Bombay of her own accord, she bad not come back to her marital home.
The suit was commenced by the plaintiff by filing the plaint dated July 4, 1951, substantially on the ground that the defendant bad been in desertion ever since May 24, 1947, without reasonable cause and without his consent and against his will for a period of over four years.
He therefore prayed for a decree for a dissolution of his marriage with the defendant and for the custody of the minor child.
The suit was contested by the defendant by a written statement filed on February 4, 1952, substantially on the ground that it was the plaintiff who by his treatment of her after his return from England had made her life unbearable and compelled her to leave her marital home against her wishes on or about May 845 24, 1.947.
She denied any intimacy between herself and Mahendra or that she was confronted by the plaintiff with a photostat copy of the letter.
, exhibit E, or that she had confessed any such intimacy to the plaintiff.
She admitted having received the Attorney 's letter, exhibit A, and also that she did not reply to that letter.
She adduced her father 's advice as the reason for not sending any answer to that letter.
She added that her paternal uncle Bhogilal (since deceased) and his son Babubhai saw the plaintiff in Bombay at the instance of the defendant and her father and that the plaintiff turned down their request for taking her back.
She also made reference to the negotiations between the defendant 's mother and the plaintiff 's mother to take the defendant back to Bombay and that the defendant could not go to Bombay as a result of the telegram of November 13, 1947, and the plaintiff 's father 's letter of November 15, 1947, aforesaid.
She also stated that the defendant and her son, Kirit, both lived with,the plaintiff 's family at Patan for over four months and off and on on several occasions.
The defendant 's definite case is that she had always been ready and willing to go back to the plaintiff and that it was the plaintiff who all along had been wailfully refusing to keep her and to cohabit with her.
On those allegations she resisted the plaintiff 's claim for a decree for a dissolution of the marriage.
On those pleadings a single issue was joined between the parties, namely, "Whether the defendant deserted the plaintiff for a continuous period of over four years prior to the filing of the suit".
At the trial held by Tendolkar, J. of the Bombay High Court on the Original Side, the plaintiff examined only himself in support of his case.
The defendant examined herself, her father, Popatlal, and her cousin, Bhogilal, in support of her case that she had been all along ready and willing to go back to her marital home and that in spite of repeated efforts on her part through her relations the plaintiff had been persistently refusing to take her back.
110 846 The learned trial Judge answered the only issue in the case in the affirmative and granted a decree for divorce in favour of the plaintiff, but made DO order as to the costs of the suit.
He held that the letter, exhibit E "reads like a love letter written by a girl to her paramour.
The reference to both of them having been anxious about something and there being now no need to be anxious any more can only be to a possible fear that she might miss her monthly periods and her having got her monthly period thereafter, because, if it were not so and the reference was to anything innocent, there was nothing that she should have repented later on in her mind as she says she did, nor should there have been occasion for saying 'after all love is such an affair '.
" With reference to that letter he further held that it was capable of the interpretation that she had misbehaved with Mahendra and that she was conscious of her guilt.
With reference to the incident of May 24, the learned Judge observed that having regard to the demeanour of the plaintiff and of the defendant in the witness box, he was inclined to prefer the husband 's testimony to that of the wife in all matters in which there was a conflict.
He held therefore that there was desertion with the necessary animus deserendi and that the defendant had failed to prove that she entertained a bonafide intention to come back to the marital home, that is to say, there was no animus revertendi.
With reference to the contention that the solicitor 's letter of July 15,1947, had terminated the desertion, if any, he held that it was not well founded inasmuch as the defendant had at no time a genuine desire to return to her husband.
He made no reference to the prayer in the plaint that the custody of the child should be given to the father, perhaps because that prayer was not pressed.
The defendant preferred an appeal under the Letters Patent which was heard by a. Division Bench consisting of Chagla C.J. and Bhagwati J.
The Appellate Bench, allowed the appeal, set aside the decision of the trial Judge and dismissed the suit with costs.
It held that the defendant was not guilty of 847 desertion, that the letter of July 15, 1947, clearly established that it was the 'plaintiff who had deserted the defendant.
Alternatively, the Appellate Court held that even assuming that the defendant was in desertion as a result of what had happened on May 24, and subsequently, the letter aforesaid bad the effect of putting an end to that desertion.
In its judgment the letter, exhibit E, did not justify the plaintiff having any reasonable suspicions about his wife 's guilt and that the oral evidence of the defendant and her relations proved the wife 's anxiety to return back to her husband and of the obduracy of the husband in refusing to take the wife back.
The plaintiff made an application to the High Court for leave to appeal to this Court.
The leave asked for was refused by another Division Bench consisting of the Chief Justice and Dixit J.
Thereafter the plaintiff moved this Court and obtained special leave to appeal from the judgment of the Appellate Bench of the High Court.
In this appeal the learned Attorney General appearing on behalf of the appellant and the learned Solicitor General appearing on behalf of the respondent have placed all relevant considerations of fact and law before us, and we are beholden to them for the great assistance they rendered to us in deciding this difficult case.
The difficulty is enhanced by the fact that the two courts below have taken diametrically opposite views of the facts of the case which depend mostly upon oral testimony of the plaintiff husband and the defendant wife and not corroborated in many respects on either side.
It is a case of the husband 's testimony alone on his side and the wife 's testimony aided by that of her father and her cousin.
As already indicated, the learned trial Judge was strongly in favour of preferring the husband 's testimony to that of the wife whenever there was any conflict.
But he made no reference to the testimony of the defendant 's father and cousin which, if believed, would give an entirely different colour to the case.
Before we deal with the points in controversy, it is convenient here to make certain general of observations 848 on the history of the law on the subject and the well established general principles on which such cases are determined.
The suit giving rise to this appeal is based on section 3(1) (d) of the Bombay Hindu Divorce Act ', XXII of 1947, (which hereinafter will be referred to as "The Act") which came into force on May 12, 1947, the date the Governor 's assent was published in the Bombay Government Gazette.
This Act, so far as the Bombay Province, as it then was, was concerned, was the first step in revolutionizing the law of matrimonial relationship, and, as the Preamble shows, was meant "to provide for a right of divorce among all communities of Hindus in certain circumstances".
Before the enactment, dissolution of a Hindu marriage particularly amongst what were called the regenerate classes was unknown to general Hindu law and was wholly inconsistent with the basic conception of a Hindu marriage as a sacrament, that is to say, a holy alliance for the performance of religious duties.
According to the Shastras, marriage amongst the Hindus was the last of the ten sacraments enjoined by the Hindu religion for purification.
Hence according to strict Hindu law as given by the Samhitas and as developed by the commentators, a Hindu marriage could not be dissolved on any ground whatsoever, even on account of degradation in the hierarchy of castes or apostacy.
But custom ', particularly amongst the tribal and what used to be called the lower castes recognised divorce on rather easy terms.
Such customs of divorce on easy terms have been in some instances held by the courts to be against public policy.
The Act in section 3 sets out the grounds of divorce.
It is noticeable that the Act does not recognise adultery simpliciter as one of the grounds of divorce, though cl.
(f) renders the fact that a husband "has any other woman as a concubine" and that a wife "is a concubine of any other man or leads the life of a prostitute" a ground of divorce.
In the present case we are immediately concerned with the provisions of section 3(1)(d), which are in these terms: 3.
(1) A husband or wife may sue for divorce on 849 any of the following grounds, namely: . . . . . . . . (d) that the defendant has deserted the plaintiff for a continuous period of four years".
"Desertion" has been defined in section 2(b) in these terms: 'Desert ' means to desert without reasonable cause and without the consent or against the will of the spouse".
It will be seen that the definition is tautological and not very helpful and leads us to the Common Law of England where in spite of repeated legislation on the subject of matrimonial law, no attempt has been made to define "desertion".
Hence a large body of case law has developed round the legal significance of "desertion".
"Marriage" under the Act means "a marriage between Hindus whether contracted before or after the coming into operation of this Act".
"Husband" means a Hindu husband and "wife" means a Hindu wife.
In England until 1858 the only remedy for desertion was a suit for restitution of conjugal rights.
But by the Matrimonial Causes Act of 1857, desertion without cause for two years and upwards was made a ground for a suit for judicial separation.
It was not till 1937 that by the Matrimonial Causes Act, 1937, desertion without cause for a period of three years immediately preceding the institution of proceedings was made a ground for divorce.
The law has now been consolidated in the Matrimonial Causes Act, 1950 (14 Geo.
VI, c. 25 ).
It would thus appear that desertion as affording a cause of action for a suit for dissolution of marriage is a recent growth even in England.
What is desertion? "Rayden on Divorce" which is a standard Work on the subject at p. 128 (6th Edn.) has summarised the case law on the subject in these terms: "Desertion is the separation of one spouse from the other, with an intention on the part of the deserting spouse of bringing cohabitation permanently to on end without reasonable cause and without the 850 consent of the other spouse; but the physical act of departure by one spouse does not necessarily make that spouse the deserting party".
The legal position has been admirably summarised in paras.
453 and 454 at pp.
241 to 243 of Halsbury 's Laws of England (3rd Edn.) Vol. 12, in the following words: "In its essence desertion means the intentional permanent forsaking and abandonment of one spouse by the other without that other 's consent, and without reasonable cause.
It is a total repudiation of the obligations of marriage.
In view of the large variety of circumstances and of modes of life involved, the Court has discouraged attempts at defining desertion, there being no general principle applicable to all cases.
Desertion is not the withdrawal from a place but from a state of things, for what the law seeks to enforce is the recognition and discharge of the common obligations of the married state; the state of things may usually be termed, for short, 'the home '.
There can be desertion without previous cohabitation by the parties, or without the marriage having been consummated.
The person who actually withdraws from cohabitation is not necessarily the deserting party.
, The fact that a husband makes an allowance to a wife whom he has abandoned is no answer to a charge of desertion.
The offence of desertion is a course of conduct which exists independently of its duration, but as a ground for divorce it must exist for a period of at least three years immediately preceding the presentation of the petition or, where the offence appears as a cross charge, of the answer.
Desertion as a ground of divorce differs from the statutory grounds of adultery and cruelty in that the offence founding the cause of action of desertion is not complete, but is inchoate, until the suit is constituted.
Desertion is a continuing offence".
Thus the quality of permanence is one of the essential elements which differentiates desertion from 851 wilful separation.
If a spouse abandon the other spouse in a state of temporary passion, for example, anger or disgust, without intending permanently to cease cohabitation, it will not amount to desertion. ' For the offence of desertion, so far as the deserting spouse is concerned, two essential conditions must be there., namely, (1) the factum of separation, and (2) the intention to bring cohabitation permanently to an end (animus deserendi ).
Similarly two elements are essential so far as the deserted spouse is con cerned: (1) the absence of consent, and (2) absence of conduct giving reasonable cause to the spouse leaving the matrimonial home to form the necessary intention aforesaid.
The petitioner for divorce bears the burden of proving those elements in the two spouses respectively.
Here a difference between the English law and the law as enacted by the Bombay Legislature may be pointed out.
Whereas under the English law those essential conditions must continue throughout the course of the three years immediately preceding the institution of the suit for divorce; under the Act, the period is four years without specifying that it should immediately precede the commencement of proceedings for divorce.
Whether the omission of the last clause has any practical result need not detain us, as it does not call for decision in the present case.
Desertion is a matter of inference to be drawn from the facts and circumstances of each case.
The inference may be drawn from certain facts which may not in another case be capable of leading to the same inference; that is to say, the facts have to be viewed as to the purpose which is revealed by those acts or by conduct and expression of intention, both anterior and subsequent to the actual acts of separation.
If, in fact, there has been a separation, the essential question always is whether that act could be attributable to an animus deserendi.
The offence of desertion commences when the fact of separation and the animus deserendi co exist.
But it is not necessary that they should commence at the same time.
The de facto separation may have commenced without the necessary animus or it may be that the separation 852 and the animus deserendi coincide in point of time; for example, when the separating spouse abandons the marital home with the intention, express or implied, of bringing cohabitation permanently to a close.
The law in England has prescribed a three year period and the Bombay Act prescribes a period of four years as a continuous period during which the two elements must subsist.
Hence, if a deserting spouse takes advantage of the locus poenitentiae thus provided by law and decides to come back to the deserted spouse by a bonafide offer of resuming the matrimonial some with all the implications of marital life, before the statutory period is out or even after the lapse of that period, unless proceedings for divorce have been commenced,, desertion comes to an end and if the deserted spouse unreasonably refuses the offer, the latter may be in desertion and not the former.
Hence it is necessary that during all the period that there has been a desertion the deserted spouse must affirm the marriage and be ready and willing to resume married life on such conditions as may be reasonable.
It is also well settled that in proceedings for divorce ' the plaintiff must prove the offence of desertion, like any other matrimonial offence, beyond all reasonable doubt.
Hence, though corroboration is not required as an absolute rule of law, the courts insist upon corroborative evidence, unless its absence is accounted for to the satisfaction of the court.
In this connection the following observations of Lord Goddard, C.J. in the case of Lawson vs Lawson(1) may be referred to: "These cases are not cases in which corroboration is required as a matter of law.
It is required as a matter of precaution. . .
With these preliminary observations we now proceed to examine the evidence led on behalf of the parties to find out whether desertion has been proved in this case and, if so, whether there was a bona fide offer by the wife to return to her matrimonial home with a view to discharging marital duties and, if so, whether (1) , 342. 853 there was an unreasonable refusal on the part of the husband to take her back.
In this connection the plaintiff in the witness box deposed to the incident of the night of May 20, 1947.
He stated that at night he found that his bed had been made in the hall in which his father used to sleep, and on being questioned by him, the defendant told him that it was so done with a view to giving him the opportunity after a long absence in England to talk to his father.
The plaintiff expressed his wish to the defendant that they should sleep in the same room as they used to before his departure for England, to which the wife replied that as the bed had already been made, "it would look indecent if they were removed".
The plaintiff therefore slept in the hall that night.
This incident was relied upon by the plaintiff with a view to showing that the wife had already made up her mind to stop cohabitation.
This incident has not been admitted by the defendant in her cross examination.
On the other hand she would make it out that it was at the instance of the plaintiff that the bed had been made in the hall occu pied by his father and that it was the plaintiff and not she who was responsible for their sleeping apart that night.
As the learned trial Judge has preferred the plaintiff 's testimony to that of the defendant on all matters on which there was simply oath against oath, we would not go behind that finding.
This incident by itself is capable of an innocent explanation and therefore has to be viewed along with the other incidents deposed to by the plaintiff in order to prove his case of desertion by the defendant.
There was no reason why the husband should have thought of sleeping apart from the wife because there was no suggestion in the record that the husband was aware till then of the alleged relationship between the defendant and Mahendra.
But the wife may have been apprehensive that the plaintiff had known of her relations with Mahendra.
That apprehension may have induced her to keep out of the plaintiff 's way.
The most important event which led to the ulti 854 mate rupture between the parties took place on May 21, 1947, when in the morning the plaintiff 's father placed Mahendra 's letter aforesaid in the plaintiff 's hands.
The letter which has rightly been pointed out in the courts below as the root case of the trouble is in its relevant parts in these terms: "Mahendrababu, Your letter has been received.
I have read the same and have noted the contents.
In the same way, I hope, you will take the trouble of writing me a letter now and then.
I am writing, this letter with fear in my mind, because if this reaches anybody 's hands, that cannot be said to be decent.
What the mind feels has got to be constrained in the mind only.
On the pretext of lulling (my) son to sleep, I have been sitting here in this attic, writing this letter to you.
All others are chitchatting below.
I am thinking now and then that I shall write this and shall write that.
Just now my brain cannot go in any way.
I do not feel like writing on the main point.
The matters on which we were to remain anxious and you particularly were anxious, well we need not now be.
I very much repented later on in my mind.
But after all love is such an affair.
(Love begets love).
. . . . . . . "While yet busy doing services to my mother in law, the clock strikes twelve.
At this time, I think of you and you only, and your portrait shoots up before my eyes.
I am reminded of you every time.
You write of coming, but just now there is nothing like a necessity, why unnecessarily waste money? And again nobody gets salvation at my bands and really nobody will.
You know the natures of all.
Many a time I get tired and keep on being uneasy in my mind, and in the end I weep and pray God and say, 0 Lord, kindly take me away soon: I am not obsessed by any kind of anxiety and so relieve me from this mundane existence.
I do not know how many times I must be thinking of you every day. . . " This letter is not signed by the defendant and in place of the signature the word "namaste" finds 855 place.
The contents of the letter were put to the defendant in cross examination.
At that time it was no more a contested document, the defendant 's counsel having admitted it during the cross examination" of the plaintiff.
She stated that she had feelings for Mahendra as a brother and not as a lover ' When the mysterious parts of the letter beginning with the words "The matters on which" and ending with the words "such an affair" were put to her, she could not give any explanation as to what she meant.
She denied the suggestion made on behalf of the plaintiff in these words: "It is not true that the reference here is to our having had sexual intercourse and being afraid that I might remain pregnant".
The sentence "I very much repented later on in my mind" was also put to her specifically and her answer was "I do not know what I repented for.
I wrote some thing foolishly".
Pressed further about the meaning of the next sentence after that, her answer was "I cannot now understand how I came to write such a letter.
I admit that this reads like a letter written by a girl to her lover.
Besides the fact that my brain was not working properly I bad no explanation to give as to how I wrote such a letter".
She also admitted that she took good care to see that the.
other members of the family, meaning the mother in law and the sisters in law, did not see her writing that letter and that she wanted that the letter should remain a secret to them.
Being further pressed to explain the sentence "We need not be anxious now", her answer was " I did not intend to convey that I had got my monthly period about which we were anxious.
I cannot say what the normal natural meaning of this letter would be".
She bad admitted having received at least one letter from Mahendra.
Though it would appear from the trend of her cross examination that she received more letters than one, she stated that she did not preserve any of his letters.
She has further admitted in cross examination "I have not signed this letter.
It must have remained to be signed by mistake.
I admit that under the 856 letter where the signature should be I have put the word 'Namaste ' only.
It is not true that I did not sign this letter because I was afraid, that if it got into the hands of any one, it might compromise me and Mahendra.
Mahendra would have known from my handwriting that this was my letter.
I had previously written one letter to him.
That letter also I had not signed.
I had only said 'Namaste" '.
The tenor of the letter and the defendant 's explanation or want of explanation in the witness box of those portions of the letter which very much need explanation would leave no manner of doubt in any person who read that letter that there was something between her and Mahendra which she was interested to keep a secret from everybody.
Even when given the opportunity to explain, if she could, those portions of the letter, she was not able to put any innocent meaning to her words except saying in a bland way that it was a letter from a sister to a brother.
The trial court rightly discredited her testimony relating to her answers with respect to the contents of the letter.
The letter shows a correspondence between her and Mahendra which was clearly unworthy of a faithful wife and her pose of innocence by characterising it as between a sister and a brother is manifestly disingenuous.
Her explanation, if any, is wholly unacceptable.
The plaintiff naturally got suspicious of his wife and naturally taxed her with reference to the contents of the letter.
That she had a guilty mind in respect of the letter is shown by the fact that she at first denied having written any such letter to Mahendra, a denial in which she persisted even in her answer to the plaint.
The plaintiff 's evidence that he showed her a photostatic copy of that letter on May 23, 1947, and that she then admitted having written that letter and that she bad tender feelings for Mahendra can easily be believed.
The learned trial Judge was therefore justified in coming to the conclusion that the letter betrayed on the part of the writer "a consciousness of guilt".
But it is questionable how far the learned Judge was justified in observing further that ' the contents of the 857 letter "are only capable of the interpretation that she had misbehaved with Mahendra during the absence of the plaintiff".
If he meant by the word "misbehaved" that the defendant had sexual intercourse with Mahendra, he may be said to have jumped to the conclusion which did not necessarily follow as the only conclusion from them.
The very fact that a married girl was writing amorous letters to a man other than her husband was reprehensible and easily capable of furnishing good grounds to the husband for suspecting the wife 's fidelity.
So far there can be no difficulty in assuming that the husband was fully justified in losing temper with his wife and in insisting upon her repentance and assurance of good conduct in future.
But we are not prepared to say that the contents of the letter are capable of only that interpretation and no other.
On the other hand, the learned Judges of the Appeal Court were inclined to view this letter as an evidence merely of what is sometimes characterised as "platonic love" between two persons who by reasons of bond of matrimony are compelled to restrain themselves and not to go further than merely showing love and devotion for each other.
We are not prepared to take such a lenient, almost indulgent, view of the wife 's conduct as betrayed in the letter in question.
We cannot but sympathise with the husband in taking a very serious view of the lapse on the wife 's part.
The learned Judges of the Appeal Court have castigated the counsel for the plaintiff for putting those questions to the defendant in cross examination.
They observe in their judgment (speaking through the Chief Justice) that there was no justification for the counsel for the plaintiff to put to the defendant those questions in cross examination suggesting that she had intercourse with Mahendra as a result of which they were apprehending future trouble in the shape of pregnancy and illegitimate child birth.
It is true that it was not in terms the plaintiff 's case that there had been an adulterous intercourse between the defendant and Mahendra.
That need not have been so, because the Act does not recognise adultery as one of the grounds 858 for divorce.
But we do not agree with the appellate Court that those questions to the defendant in cross examination were not justified.
The plaintiff proposed to prove that the discovery of the incriminating letter containing those mysterious sentences was the occasion for the defendant to make up her mind to desert,the plaintiff.
We do not therefore agree with the observations of the appellate Court in all that they have said in respect of the letter in question.
There can be no doubt that the letter in question made the plaintiff strongly suspicious of his wife 's conduct (to put it rather mildly), and naturally he taxed his wife to know from her as to what she bad to say about her relations with Mahendra.
She is said to have confessed to him that Mahendra was a better man than the plaintiff and that he loved her and she loved him.
When matters had come to such a head, the natural reaction of the parties would be that the husband would get not only depressed, as the plaintiff admitted in the witness box, but would in the first blush think of getting rid of such an unloving, if not a faithless, wife.
The natural reaction of the defendant would be not to face the husband in that frame of mind.
She would naturally wish to be out of the sight of her husband at least for some time, to gain time for trying, if she was so minded, to reestablish herself in her husband 's estimation and affection, if not love.
The event of the afternoon of May 24, 1947, must therefore be viewed in that light.
There was going to be performed the marriage of the defendant 's cousin at her father 's place of business in Jalgaon, though it was about five to six weeks from then.
The plaintiff would make it out in his evidence that she left rather in a recalcitrant mood in the afternoon during his absence in office with all her belongings and that she had refused his offer of being sent in his car to station and Rs. 100 for ' expenses.
This conduct on the part of the wife can easily be explained as that of a person who had found that her love letter had been discovered by the husband.
She would naturally try to flee away from the husband for the time being at least because she had not the 859 moral courage to face him.
The question is whether her leaving her marital home on the afternoon of May 24, 1947, is only consistent with her having deserted, her husband, in the sense that she had deliberately ' decided permanently to forsake all relationship with her husband with the intention of not returning to consortium, without the consent of the husband and against his wishes.
That is the plaintiff 's case.
May that conduct be not consistent with the defendant 's case that she had not any such intention, i.e., being in desertion? The following observations of Pollock, M. R. in Thomas vs Thomas(1) may usefully be quoted in this connection: "Desertion is not a single act complete in itself and revocable by a single act of repentance.
The act of departure from the other spouse draws its significance from the purpose with which it is done, as revealed by conduct or other expressions of intention: see Charter vs Charter(2).
A mere temporary parting is equivocal, unless and until its purpose and object is made plain.
I agree with the observations of Day J. in Wilkinson vs Wilkinson(3) that desertion is not a specific act, but a course of conduct.
As Corell Barnes J. said in Sickert vs Sickert(4): 'The party who intends bringing the cohabitation to an end, and whose conduct in reality causes its termination, commits the act of desertion '.
That conduct is not necessarily wiped out by a letter of invitation to the wife to return".
The defendant 's further case that she bad been turned out of the house by the husband under duress cannot be accepted because it is not corroborated either by circumstances or by direct testimony.
Neither her father nor her cousin say a word about her speaking to them on her arrival at Jalgaon that she had been turned out of her husband 's home.
If her case that she bad been forcibly turned out of her marital home by the husband had been made out, certainly the husband would have been guilty of "constructive desertion", because the test is riot who (1) (3) (2) (4) , 282, 860 left the matrimonial home first.
(See Lang vs Lang(1)).
If one spouse by his words and conduct compel the other spouse to leave the marital home.
the former would be guilty of desertion, though it is the latter who has physically separated from the other and has been made to leave the marital home.
It should be noted that the wife did not cross petition for divorce or for any other relief.
Hence it is no more necessary for us to go into that question.
It is enough to point out that we are not prepared to rely upon the uncorroborated testimony 'of the defendant Chat she had been compelled to leave her marital home by the threats of the plaintiff.
The happenings of May 24, 1947, as pointed out above, are consistent with the plaintiff 's case of desertion by the wife.
But they are also consistent not with the defendant 's case as actually Pleaded in her written statement, but with the fact; and circumstances disclosed in the evidence, namely, that the defendant having been discovered in her clandestine amorous correspondence with her supposed paramour Mahendra, she could not face her husband or her husband 's people living in the same flat in Bombay and therefore shamefacedly withdrew herself and went to her parent 's place of business in Jalgaon on the pretext of the marriage of her cousin which was yet far off.
That she was not expected at Jalgaon on that day in connection with the marriage is proved by her own admission in the witness box that "when I went to Jalgaon everyone was surprised".
As pointed out above, the burden is on the plaintiff to prove desertion without cause for the statutory period of four years, that is.
to say, that the deserting spouse must be in desertion throughout the whole period.
In this connection the following observations of Lord Macmillan in his speech in the House of Lords in the case of Pratt vs Pratt(2 ) are apposite: "In my opinion what is required of a petitioner for divorce on the ground of desertion is proof that throughout the whole course of the three years the respondent has without cause been in desertion.
The (1) 417.
(2) , 420. 861, deserting spouse must be shown to have persisted in the intention to desert throughout the whole period.
In fulfilling its duty of determining whether on the evidence a case of desertion without cause has been proved the court ought not, in my opinion, to leave out of account the attitude of mind of the petitioner.
If on the facts it appears that a petitioning husband has made it plain to his deserting wife that he will not receive her back, or if he has repelled all the advances which she may have made towards a resumption of married life, he cannot complain that she has persisted without cause in her desertion".
It is true that the defendant did not plead that she had left her husband 's home in Bombay in the circumstances indicated above.
She, on the other hand, pleaded constructive desertion by the husband.
That case, as already observed, she has failed to substantiate by reliable evidence.
But the fact that the defendant has so failed does not necessarily lead to the conclusion that the plaintiff has succeeded in proving his case.
The plaintiff must satisfy the court that the defendant had been in desertion for the continuous period of four years as required by the Act.
If we come to the conclusion that the happenings of May 24, 1947, are consistent with both the conflicting theories, it is plain that the plaintiff has not succeeded in bringing the offence of desertion home to the defendant beyond all reasonable doubt.
We must therefore examine what other evidence there is in support of the plaintiff 's case and in corroboration of his evidence in court.
The next event of importance in this narrative is the plaintiff 's solicitor 's letter of July 15, 1947, addressed to the defendant, care of her father at Jalgaon.
The defendant 's cousin 's marriage was performed towards the end of June and she could have come back to her husband 's place, soon thereafter ' Her evidence is that after the marriage had been performed she was making preparations to go back to Bombay but her father detained her and asked her to await a letter from the plaintiff.
The defendant instead of getting an invitation from the plaintiff to 862 come back to the marital home received the solicitor 's letter aforesaid, which, to say the least, was not calculated to bring the parties nearer.
The letter is in these terms: "Madam, Under instructions from our client Bipin Chandra J. Shah we have to address you as under: That you were married to our client in or about April 1942 at Patan.
Since the marriage you and our client lived together mostly in Bombay and son by name Kirit was born on or about the 10th day of September 1944.
Our client.
states that he left for Europe in January last and returned by the end of May last.
After our client 's return, our client learnt that during our client 's absence from India you developed intimacy with one Mahendra and you failed to give any satisfactory reply when questioned about the same and left for your parents under the pretext of attending to the marriage ceremony of your cousin.
You have also taken the minor with you and since then you are residing with your father to evade any satisfactory explanation.
Our client states that under the events that have happened, our client has become entitled to obtain a divorce and our client does not desire to keep you any longer under his care and protection.
Our client desires the minor to be kept by him and we are instructed to request you to send back the minor to our client or if necessary our client will send his agent to bring the minor to him.
Our client further states that in any event it will be in the interest of the minor that he should stay with our client.
Our client has made this inquiry about the minor to avoid any unpleasantness when our client 's agent comes to receive the minor".
The letter is remarkable in some respects,apart from antedating the birth of the son Kirit by a year.
The letter does not in terms allege that the defendant was in desertion, apart from mentioning the fact that she had left against the plaintiff 's wishes or that she had done so with the intention of permanently abandon 863 ing her marital duties.
On the other hand, it alleges that "You are residing with your father to avoid any satisfactory explanation".
The most important part of the letter is to the effect that the plaintiff had "become entitled to obtain a divorce" and that he "does not desire to keep you any longer under his care and protection".
Thus if the solicitor 's letter is any indication of the working of the mind of the plaintiff, it makes it clear that at that time the plaintiff did not believe that the defendant had been in desertion and that the plaintiff had positively come to the determination that he was no longer prepared to affirm the marriage relationship.
As already indicated, one of the essential conditions for success in a suit for divorce grounded upon desertion is that the deserted spouse should have been willing to fulfill his or her part of the marital duties.
The statement of the law in para 457 at p. 244 of Halsbury 's Laws of England (3rd Edn.
Vol 12) may be usefully quoted: "The burden is on the petitioner to show that desertion without cause subsisted, throughout the statutory period.
The deserting spouse must be shown to have persisted in the intention to desert throughout the whole of the three year period.
It has been said that a petitioner should be able honestly to say that he or she was all along willing to fulfill the duties of the marriage, and that the desertion was against his or her will, and continued throughout the statutory period without his or her consent; but in practice it is accepted that once desertion has been started by the fault of the deserting spouse, it is no longer necessary for the deserted spouse to show that during the three years preceding the petition be or she actually wanted the other spouse to come back, for the intention to desert is presumed to continue.
That presumption may, however, be rebutted".
Applying those observations to the facts of the present case, can the plaintiff honestly say that be was all along willing to fulfill the duties of the marriage and that the defendant 's desertion, if any, continued throughout the statutory period without his consent.
The letter, exhibit A) is an emphatic No.
In the first 864 place, even the plaintiff in that letter did not allege any desertion and, secondly, he was not prepared to receive her back to the matrimonial home.
Realising his difficulty when cross examined as to the contents of that letter, he wished the court to believe that at the time the letter was written in his presence he was "in a confused state of mind" and did not remember exactly whether he noticed the sentence that he did not desire to keep his wife any longer.
Pressed fur ther in cross examination, he was very emphatic in his answer and stated: "It is not true that by the date of this letter I had made up my mind not to take her back.
It was my hope that the letter might induce her parents to find out what had happened, and they would persuade her to come back.
I am still in the confused state of mind that despite my repeated attempts my wife puts me off".
In our opinion, the contents of the letter could not thus be explained away by the plaintiff in the witness box.
On the other hand, it shows that about seven weeks after the wife 's departure for her father 's place the plaintiff had at least for the time being convinced himself that the defendant was no more a suitable person to live with.
That, as found by us, be was justified in this attitude by the reprehensible conduct of his wife during his absence is beside the point.
This letter has an importance of its own only in so far as it does not corroborate the plaintiff 's version that the defendant was in desertion and that the plaintiff was all along anxious to induce her to come back to him.
This letter is more consistent with the supposition that the husband was very angry with her on account of her conduct as betrayed by the letter, exhibit E and that the wife left her husband 's place in shame not having the courage to face him after that discovery.
But that will not render her in the eye of the law a deserter, as observed by Pollock, M. R. in Bowron vs Bowron(1) partly quoting from Lord Gorell as follows: "In most cases of desertion the guilty party (1) , 192. 865 actually leaves the other, but it is not always or necessarily the guilty party who leaves the matrimonial home.
In my opinion, the party who intends bringing the cohabitation to an end, and whose conduct in reality causes its termination, commits the act of desertion: See also Graves vs Graves(1); Pulford vs Pulford(2); Jackson vs Jackson(2); where Sir Henry Duke P. explains the same doctrine.
You must look at the conduct of the spouses and ascertain their real intention".
It is true that once it is found that one of the spouses has been in desertion, the presumption is that the desertion has continued and that it is not necessary for the deserted spouse actually to take steps to bring the deserting spouse back to the matrimonial home.
So far we do not.find any convincing evidence in proof of the alleged desertion by the wife and naturally therefore the presumption of continued desertion cannot arise.
But it is not necessary that at the time the wife left her husband 's home, she should have at the same time the animus deserendi.
Let us therefore examine the question whether the defendant in this case, even if she had no such intention at the time she left Bombay, subsequently decided to put an end to the matrimonial tie.
This is in consonance with the latest pronouncement of the Judicial Committee of the Privy Council in the case of Lang vs Lang(1) in an appeal from the decision of the High Court of Australia, to the following effect: "Both in England and in Australia, to establish desertion two things must be proved: first, certain outward and visible conduct the 'factum ' of desertion; secondly, the 'animus deserendi ' the intention underlying this conduct to bring the matrimonial union to an end.
In ordinary desertion the factum is simple: it is the act of the absconding party in leaving the matrimonial home.
The contest in such a case will be almost entirely as to the 'animus '.
Was the intention (1) 3 Sw. & Tr.
(3) (2) (4) [1955] A.G. 402, 417.
866 of the party leaving the home to break it up for good, or something short of, or different from that?" In this connection the episode of November, 1947, when the plaintiff 's mother came from Patan to Bombay is relevant.
It appears to be common ground now that the defendant had agreed to come back to Bombay along with the plaintiff 's mother or after a few days.
But on this information being given to the plaintiff he countermanded any such steps on the wife 's part by sending the telegram, exhibit B,aforesaid and the plaintiff 's father 's letter dated November 15, 1947.
'We are keeping out of consideration for the present the letter, exhibit C, dated November 13, 1947, which is not admitted to have been received either by the defendant or her father.
The telegram is in peremptory terms: "Must not send Prabha".
The letter of November 15, 1947, by the plaintiff 's father to the defendant 's father is equally peremptory.
It says "It is absolutely necessary that you should obtain the consent of Chi.
Bipinchandra before sending Chi.
Prabhavati".
The telegram and the letter which is a supplement to the telegram, as found by the courts below, completely negative the plaintiff 's statement in court that he was all along ready and willing to receive the defendant back to his home.
The letter of November 13, 1947, exhibit C, which the plaintiff claims to have written to his father in law in explanation of the telegram and is a prelude to it is altogether out of tune with the tenor of the letter and the telegram referred to above.
The receipt of this letter has been denied by the defendant and her father.
In court this letter has been described as a fake in the sense that it was an afterthought and was written with a. view to the legal position and particularly with a view to getting rid of the effect of the solicitor 's letter of July 15, which the plaintiff found it hard to explain away in the witness box.
Neither the trial court, which was entirely in favour of the plaintiff and which had accepted the letter as genuine, nor the appellate Court, which was entirely in favour of the defendant has placed implicit faith in the bona fides of this letter.
The lower appellate Court 867 is rather ironical about it, observing "This letter as it were stands in isolated glory.
There is no other letter.
There is no other conduct of the plaintiff which is consistent with this letter".
Without going into the controversy as to the genuineness or bona fldes of this letter, it can be said that the plaintiff 's attitude, as disclosed therein, was that he was prepared to take her back into the matrimonial home provided she wrote a letter to him expressing real repentance and confession of mistake.
This attitude of the plaintiff cannot be said to be unreasonable in the circumstances of the case.
He was more sinned against than sinning at the beginning of the controversy between the husband and the wife.
This brings us to a consideration of the three attempts alleged by the plaintiff to have been made by him to induce his wife to return to the matrimonial home when he made two journeys to Patan in 1948 and the third journey in April May, 1949, to Jalgaon.
These three visits are not denied by the defendant.
The only difference between the parties is as to the purpose of the visit and the substance of the talk between them.
That the plaintiff 's attachment for the defendant had not completely dried up is proved by the fact that when he came to know that she had been suffering from typhoid he went to Patan to see her.
On this occasion which was the second visit the plaintiff does not say that he proposed to her to come back and that she refused to do so.
He only says that she did not express any desire to come back.
That may be explained as being due to diffidence on her part.
But in respect of the first and the third visits the plaintiff states that on both those occasions he wanted her to come back but she refused.
On the other hand, the defendant 's version is that the purpose of his visit was only to take away the child and not to take her back to his home.
It is also the plaintiff 's complaint that the defendant never wrote any letter to him offering to come back.
The wife 's answer is that she did write a few letters before the solicitor 's letter was received by the father and that thereafter under her father 's advice she did not write 868 any more to the plaintiff.
In this connection it becomes necessary to examine the evidence of her cousin Babulal and her father Popatlal.
Her cousin, Babulal, who was a member of her father 's joint family, deposes that on receipt of the letter, exhibit A, a fortnight later he and his father, since deceased, came to Bombay and saw the plaintiff.
They expostulated with him and pleaded the defendant 's cause and asked the plaintiff to forgive and forget and to take her back.
The plaintiff 's answer was that he did not wish to keep his wife.
The defendant 's father 's evidence is to the effect that after receipt of the letter, exhibit A, he came to Bombay and saw the plaintiff 's father at his residence and protested to him that "a false notice had been given to us".
The plaintiff 's father is said to have replied that they "would settle the matters amicably" He also deposes as to his brother and his brother 's son having gone to the plaintiff.
He further states that he with his wife and the defendant went to Patan and saw the plaintiff 's mother and in consultation with her made arrangements to send her back to 'Bombay.
But before that could be done the telegram, exhibit B, and the letter, exhibit D, were received and consequently he gave up the idea of sending the defendant to Bombay without straightening matters.
Both these witnesses on behalf of the defendant further deposed to the defendant having done several times and stayed with the plaintiff 's family, particularly his mother at Patan along with the boy.
The evidence of these two witnesses on behalf of the defendant is ample corroboration of the defendant 's ,case and the evidence in court that she has all along been ready and willing to go back to the matrimonial home.
The learned trial Judge has not noticed this evidence and we have not the advantage of his comment on this corroborative evidence.
This body of evidence is in consonance with the natural course of events.
The plaintiff himself stated in the witness box that he had sent the solicitor 's ' letter by way of a shock treatment to the defendant 's family so that they might persuade his wife to come back to his matrimonial home.
The subsequent 869 telegram and letters (assuming that both the letters of the 13th and 15th November had been posted in the usual course and received by the addressees) would give a shock to the family.
Naturally thereafter the members of the family would be up and doing to see that a reconciliation is brought about between the husband and the wife.
Hence the visits of the defendant 's uncle and the father would be a natural conduct after they had been apprised of the rupture between them.
We therefore do not see any sufficient reasons for brushing aside all that oral evidence which has been believed by the Lower Appellate Court and had not in terms been disbelieved by the trial court.
This part of the case on behalf of the defendant and her evidence is corroborated by the evidence of the defendant 's relatives aforesaid.
It cannot be seriously argued that evidence should be disbelieved, because the witnesses happened to be the defendant 's relatives.
They were naturally the parties most interested in bringing about a reconciliation They were anxious not only for the welfare of the defendant but were also interested in the good name of the family and the community as is only natural in families like these which have not been so urbanised as to completely ignore the feelings of the community.
They would therefore be the persons most anxious in the interests of all the parties concerned to make efforts to bring the husband and the wife together and to put an end to a controversy which they con sidered to be derogatory to the good name and, prestige of the families concerned.
The plaintiff 's evidence, on the other hand, on this part of the case is uncorroborated.
Indeed his evidence stands uncorroborated in many parts of his case and the letters already discussed run counter to the tenor of his evidence in court.
We therefore feel inclined to accept the defendant 's case that after her leaving her husband 's home and after the performance of her cousin 's marriage she was ready and willing to go back to her husband.
It, follows from what we have said so far that the wife was not in desertion though she left her husband 's home without any fault on the part of the 870 plaintiff which could justify her action in leaving him, and that after the lapse of a few months ' stay at her father 's place she was willing to go back to her matrimonial home.
This conclusion is further supported by the fact that between 1948 and 1951 the defendant stayed with her mother in law at Patan whenever she was there, sometimes for months, at other times for weeks.
This conduct is wholly inconsistent with the plaintiff 's case that the defendant was in desertion during the four years that she was out of her matrimonial home.
It is more consistent with the defen dant 's attempts to.
get herself re established in her husband 's home after the rupture in May 1947 as aforesaid.
It is also in evidence that at the suggestion of her mother in law the defendant sent her three year old son to Bombay so that be might induce his ' ,father to send for the mother, The boy stayed in Bombay for about twenty days and then was brought.
back to Patan by his father as he (the boy) was unwilling to stay there without the mother.
, This was in August_September 1948 when the defendant deposes to having questioned her husband why she bad not been called back and the husband 's answer was evasive.
Whether or not this statement of the defendant is true, there can be no doubt that the defendant would not have allowed her little boy of about three years of age to be sent alone to Bombay except in the hope that he might be instrumental in bringing about a reconciliation between the father and the mother.
The defendant has deposed to the several efforts made by her mother in law and her father in law to intercede on her behalf with the plaintiff but without any result.
There is no explanation why the plaintiff could not examine his father and mother in corroboration of his case of continuous desertion for the statutory period by the defendant.
Their evidence would have been as valuable, if not more, as that of the defendant 's father and cousin as discussed above.
Thus it is not a case where evidence was not available in corroboration of the plaintiff 's case.
As the plaintiff 's evidence on many important aspects of the case 871 has remained uncorroborated by evidence which could be available to him, we must hold that the evidence given by the plaintiff falls short of proving his case of desertion by his wife.
Though we do not find that the essential ingredients of desertion have been proved by the plaintiff, there cannot be the least doubt that it was the defendant who had by her objectionable conduct brought about a rupture in the matrimonial home and caused the plaintiff to become so cold to her after she left him.
In view of our finding that the plaintiff has failed to prove his case of desertion by the defendant, it is not necessary to go into the question of animus revertendi on which considerable argument with reference to case law was addressed to us on both sides.
For the aforesaid reasons we agree with the Appellate Bench of the High Court in the conclusion at which they had arrived, though not exactly for the same reasons.
The appeal is accordingly dismissed.
But as the trouble started on account of the defendant 's con duct, though she is successful in this Court, we direct that each party must bear its own costs throughout.
Appeal dismissed.
| The parties were married in 1942 and there was a child of the marriage.
In 1947 the appellant left for England on business and on his return to India discovered that this wife (respondent) bad been having amorous correspondence with one M, and taxed her with having developed intimacy with him.
She was unable to give any answer and went to her father 's place on May 24, 1947, on the pretext of the marriage of her cousin which was to take place in June.
On July 15, 1947, the appellant sent a notice to the respondent through his solicitor in which after mentioning the fact that she had, left against his wishes stated that he did not desire to keep her any ' longer under his care and protection, and desired her to send the minor son to him.
On July 4, 1951, the appellant instituted the suit for divorce under section 3(1)(d) of the Bombay Hindu Divorce Act, 1947, on the ground that the respondent had been in desertion ever since May 24, 1947, without reasonable cause and without his consent and against his will for a period of over four years.
The respondent 's case that it was the appellant who by his treatment of her after his return from England had made her life unbearable and compelled her to leave her marital home against her wishes, 'was not proved but there was evidence that after the solicitor 's notice dated July 15, 1947, was received by the respondent, attempts were made by her father and his relations to bring about reconciliation between the parties but they failed owing to the attitude of the appellant.
The question was whether the respondent had been in desertion, entitling the appellant to have a decree for divorce.
Held that, on the facts, though the initial fault lay with the respondent, her leaving her marital home was not actuated by any animus to desert her husband but as the result of her sense of guilt, and as subsequently she was willing to come back but could not do, so owing to the attitude of the appellant, there was no proof that she deserted him, much less that she bad harbored that animus for the statutory period, and the appellant 's case must fail.
The essential conditions for the offence of desertion, so far as the deserting spouse is concerned, are (i) the factum of separation and (ii) the intention to bring cohabitation permanently to an end 839 (animus deserendi); and as regards the deserted spouse the elements are (i) the absence of consent and (ii) absence of conduct giving reasonable cause to the spouse leaving the matrimonial home to form the necessary intention aforesaid.
Desertion is a matter of inference to be drawn from the facts and circumstances of each case and those facts have to be viewed as to the purpose which is revealed by those facts or by conduct and expression of intention, both anterior and subsequent to the actual act of separation.
In a suit for divorce on the ground of desertion the burden is on the plaintiff to prove that the deserting spouse has been in desertion throughout the statutory period of four years.
Thomas vs Thomas ([1924] P. 194), Bowron vs Bowron ([1925] P. 187), Pratt vs Pratt ([1939] A.C. 417) and Lang vs Lang ([1965] A.C. 402), referred to.
Quaere, whether the statutory period of four years specified in section 3(1)(d) should immediately precede the institution of the suit for divorce.
|
Summarize this legal judgement text concisely | Appeal No. 247 of 1954.
Appeal from the judgment and decree dated July 21, 19 53 of the Labour Appellate Tribunal of India, Third Bench, Lucknow in Appeal.
No. Calcutta 44 of 1952.
G. G. Mathur, for the appellant.
H. J. Umrigar, amicus curiae for the respondent, 874 1956.
October 23.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
The appellant is a limited Company, which had been carrying on business in crushing sugarcane at a place called Pipraich in Gorakhpur District from the year 1932.
In 1946 it decided to expand its business, and with that object, sold its old machinery which had a crushing capacity of 160 tons per day, and purchased a new one with 650 tons capacity.
The new plant was installed in 1947, and it actually started working in 1948 49.
During this period, the sugar industry was passing through a crisis owing to shortage of sugarcane, and in consequence, the Government assumed control of its production and supply.
The quota which was allotted to the appellant 's Mill proved too small to its being worked profitably, with the result that in 1948 49 and 1949 50 the Company sustained losses which according to the appellant came to Rs. 2,67 042 7 4.
After several unsuccessful attempts at setting a larger supply, the management wrote to the Government on May 11, 1950, either to increase their quota or to permit them to sell the Mills.
In October, 1950, the Government granted permission for the sale of the plant and machinery, and pursuant thereto, the management sold them to a Madras party.
As the crushing season was then on, the appellant obtained from the purchaser a lease of the Mills for the current season agreeing to deliver possession thereof on the termination of the lease.
It should be mentioned that the appellant was also carrying on negotiations with the purchaser, for itself dismantling the machinery and erecting it at Madras for a lump consideration, expecting to perform the contract through its own workmen.
When the workmen became aware of the agreement of sale, their reaction to it was thoroughly hostile, and acting through their union, the respondent herein, they decided to prevent the transaction going through, as otherwise they would be thrown out of employment.
With that object, they moved the 875 Government to cancel the permission granted to the appellant for the sale of the Mills, and they also passed a resolution on December 26, 1950, to go on strike from January 12, 1951, and communicated the same to the appellant.
This led to correspondence between the parties, and as that is the foundation of the claim for compensation put forward by the respondent and awarded by the Tribunal, it becomes necessary to set it out with sufficient fulness.
On January 3, 1951, the Managing Director offered through the Manager of the Mills, to allot 25 per cent.
of the profit on the sale transaction with the Madras party on certain terms and subject to the condition "that the notice of strike should be withdrawn at once and today, so that arrangement of work could be made".
To this, the reply of the Union on January 5, 1951, was as follows: "With reference to the assurance given by the Managing Director, communicated by your goodself to us under your No. 975 dated 4th January 1951, asking us to withdraw the notice of strike, we regret to inform you that our fight is with the Government, which is not solved with this only.
Our members are bent upon keeping the Sugar mills here at any cost, either by strike, satyagrah, etc., or through any other means guided by our federation, otherwise there is no assurance of employment of thousands of creatures".
Then the letter proceeded to take exception to some of the terms, and finally wound up by stating that the workmen were waiting for their President Kashinath Pandey to advise them in the matter.
Replying to the objections raised by the respondent to some of the terms, the management wrote on January 8,1951, that they were ready to reconsider them, but insisted on the withdrawal of notice of strike as "the chief point".
On January 9,1951, Kashinath Pandey came to Pipraich, and discussed the matter with the management, and following upon it, the General Manager wrote to the respondent on January 10, 1951, that "in case the strike notice was withdrawn at once he would accede to the following points raised by the Union", and then the points were set down.
The 876 letter concluded by stating that the amount of compensation "will not be less than a lac".
The respondent replied to this on the same day that the workers were waiting for the "final order" of Kashinath Pandey in the matter, and assured the management that "in the meantime the strike was not coming off from the 12th".
After this, the appellant did not hear from the respondent, the strike also did not take place, and the crushing went on till the end of January, 1951, when the season came to an end.
One of the points that arises for our determination in this appeal is whether on this correspondence there was a concluded.
and binding agreement that the appellant should pay 25 per cent.
of the profits on the sale transaction to the workmen.
To continue the narration, the lease having expired with the crushing season, the purchaser came over to Pipraich to take delivery of the Mills and to arrange for the machinery being dismantled and removed to Madras for being erected there.
The appellant who, as already stated, was negotiating to get the dismantling done for a lump consideration found that its workmen were as hostile to it as ever, and refused to help in the work.
To adopt the language of the respondent in its written statement "they declined out of sentiment to dig their own graves".
After fruitless attempts at getting them to co 'operate in dismantling the machinery, the management put up the following notice on February 28, 1951: "The workers of Pipraich.
Sagar Mills Ltd. should know that we have sold our Mill to Madras party under the permission of the Government.
The party has arrived for dismantling.
Under the terms of agreement, we are bound to help them in this work.
So the workers should know that we can do this favour that we can take contract of dismantling here and erection in Madras and keep the workers engaged and request the purchasers for providing them in their concern.
Hence it is notified that workers who are not ready to co operate they should consider themselves to be discharged from 1st March 1951.
Fifteen days ' notice is served on the workers.
Those who 877 create obstructions will be deprived of benefit,, promised to them".
But the Union could not reconcile itself to the prospect of the Mills being shifted, and on March 4, 1951 Kashinath Pandey wrote a letter to the Government threatening to go on hunger strike, if the Mills were to be shifted from Pipraich.
The workmen were thus in no mood to accept the terms contained in the notice dated February 28, 1951, and so, the management had to issue further notice on March 14, 1951 in the following terms: "Whereas the workers have already been notified that we have sold our entire plant to a Madras party who have arrived to take charge of the Machines and whereas we have to hand over the plant from 15 3 1951 to the purchasers and thus there will be no work for our workers and whereas the Mazdoor Union, has already refused our suggestion to engage the workers in the work of dismantling and erection at Madras.
Now in pursuance of our notice dated 28 2 1951, it is notified that the following workers have been discharged from the services since 1 3 1951 subject of course to the payment of 15 days wages.
The workers are hereby asked to take their wages of 15 days on the 15th and 16th instant".
It appears from a notice dated March 16, 1951, sent by the appellant to the respondent, that after the notice dated March 14, 1951, was issued, Kashinath Pandey had a discussion with the management, as a result of which the date of termination of service of, the workers was extended from the 15th to 21st March pending the decision of the Government on the "future programme of the Pipraich factory", the workmen agreeing on their part to "take up the dismantling of the Mill after the said date".
But the Government declined by its letter dated March 21, 1951, to interfere with the sale of the machinery, and in accordance with the understanding reached above, the workers should have co operated with the appellant in dismantling the machinery from March 21.
But they declined to do so, and thereupon, acting in accordance with its notices dated February 28, 1951, 114 878 and March 14, 1951, the management duly discharged them.
In view of the inability of the appellant to take up the contract, the purchaser entered into direct negotiations with the workmen, and on 1 4 1951 concluded an agreement with them for dismantling the machinery.
The net result was that the appellant lost a contract on which, as admitted by the respondent, it would have earned a profit of at least Rs. 2 lakhs.
The workers.
, having taken the benefit of a direct contract with the purchaser for dismantling the machinery, next turned their attention to the appellant, and on the basis of the letters dated January 3, 1951, and January 10, 1951, sent a notice to it on April 19, 1951, asking for distribution among the workers of the "25 per cent labour share of the profits on sale of machinery".
By its letter dated June 19, 1951, the appellant repudiated.
the claim, and stated: "Then we also refer you to our notice dated 27 2 1951 in which we appealed to the labour to cooperate.
with us so that we might take the contract of dismantling here at Pipraich and erection at Etikoppaka and said definitely that those who do not co operate should consider themselves discharged.
This would have given us a good saving to meet the demand of the labour, but as you in spite of our appeal and notice refused to co operate, we had to suffer a heavy loss, for which you are directly responsible".
Thereafter, the respondent moved the Government to take action in the matter, and the result was that on November 16,1951, the U. P. Government issued a notification under section 3 of the U. P. Industrial Disputes Act XXVIII of 1947, hereinafter referred to as the Act, referring the following dispute to the adjudication of the Industrial Tribunal: "Whether the services of workmen, if so how many, were terminated by the concern known as Pipraich Sugar Mills Ltd., Pipraich, District Gorakhpur, without settlement of their due claims and improperly; and if so, to what relief are the workmen concerned entitled?" By its award dated February 28,1952, the Indus 879 trial Tribunal held firstly that the closure of the business and the sale of the machinery by the appellant was bona fide, as it had been continuously incurring losses and the supply position of sugarcane held out no immediate prospects of improvement, that the conduct of the workmen had been throughout unfair and such as to disentitle them to compensation but that the promise contained in the letters dated January 3 and 10, 1951, to pay 25 per cent.
of the profits realised by the sale of the Mills, was binding on the management.
It further held, repelling the contention of the appellant, that the notification dated November 16, 1951, was competent, notwithstanding that at that date the business had been closed.
The Tribunal then proceeded to ascertain the profits made by the appellant on its sale of the Mills, and held that a sum of Rs. 45,000 representing the 25 per cent.
of the net profits was payable to the workmen.
The management appealed against this decision but the same was confirmed by the Labour Appellate Tribunal by its order dated July 21, 1953.
The matter now comes before us.
in appeal under article 136.
As the appeal raised questions of importance, and as the respondent was unrepresented we requested Mr. Umrigar to assist us, and we are indebted to him for his learned and comprehensive argument.
Two contentions have been urged in support of the appeal: (1) The notification dated November 16, 1951, referring the dispute to the adjudication of the Industrial Tribunal is ultra vires, and the reference and the award therein are in consequence void; and (2) there was no concluded or binding agreement by the appellant to pay the workmen any share of profits in the sale transaction and the award is therefore bad on the merits.
Taking the first contention, the provision of law under which the impugned notification dated November 16, 1951, was issued by the State is section 3 of the Act, which runs as follows: "If in the opinion of the State Government, it is necessary or expedient so to do for securing the public safety or convenience, or the maintenance of 880 public order or supplies and services essential to the, life of the community, or for maintaining employment, it may, by general or special order, make provision (d) for referring any industrial disputes for conciliation or adjudication in the manner provided in the order".
An "industrial dispute", as defined in section 2(k) of the Industrial Disputes Act XIV of 1947 and by force of section 2, that definition applies to the Act"means any dispute or difference between employers and employees, 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".
Now, the contention of the appellant is that it is a condition precedent to the exercise by the State of its power under section 3 of the Act that there should be an industrial dispute, that there could be no industrial dispute according to this definition, unless there is a relationship of employer and employee; that in the present case, as the appellant sold its Mills, closed its business and discharged the workmen on March 21, 1951, paying to them in full whatever was due in accordance with the standing orders.
there was thereafter no question of any relationship of employer and employees between them that accordingly there was no industrial dispute at the date of the notification on November 16, 1951, and that it was therefore incompetent.
Reliance was placed in support of this position on the observation in Indian Metal and Metallurgical Corporation vs Industrial Tribunal, Madras(1) that the definition of an "industrial dispute" presupposes the continued existence of the industry, and on the decision in K. N. Padmanabha Ayyar vs The State of Madras(2) that there could be no industrial dispute with regard to a business, which was not in existence.
It cannot be doubted that the entire scheme of the Act assumes that there is in existence an industry, (1) A.I.R. 1953 Mad. 98, 102.
(2) 881 and then proceeds on to provide for various steps being taken, when a dispute arises in that industry.
Thus, the provisions of the Act relating to lock out, strike, lay off, retrenchment, conciliation and adjudication proceedings, the period during which the awards are to be in force have meaning only if they refer to an industry which is running and not one which is closed.
In Messrs Burn and Co., Ltd., Calcutta vs Their Workmen(1), this Court observed that the object of all labour legislation was firstly to ensure fair terms to the workmen, and secondly to prevent disputes between employers and employees, so that production might not be adversely affected and the larger interests of the public, might not suffer.
Both these objects again can have their fulfillment only in an existing and not a dead industry.
The view therefore expressed in Indian Metal and Metallurgical Corporation vs Industrial Tribunal, Madras (supra) and K. N. Padmanabha Ayyar vs The State of Madras (supra) that the industrial dispute to which the provisions of the Act apply is only one which arises out of an existing industry is clearly correct.
Therefore, where the business has been closed and it is either admitted or found that the closure is real and bona fide, any dispute arising with reference thereto would, as held in K. N. Padmanabha Ayyar vs The State of Madras (supra), fall outside the purview of the Industrial Disputes Act.
And that will a fortiori be so, if a dispute arises if one such can be conceived after the closure of the business between the quondam employer and em ployees.
In the light of the principles stated above, we must examine the nature of the dispute which is the subject matter of the reference under the impugned notification.
The claim of the workmen is that the promise made by the management in its letters dated January 3, 1951, and January 10, 1951, is a binding agreement and that they are entitled to be paid in accordance therewith.
Now, if this contention is well founded, the dispute relates to a claim which arose (1) Civil Appeal No. 325 of 1955, decided on October 11, 1956.
882 while the industry was in existence and between persons who stood in the relationship of employer and employees, and that would clearly be an industrial dispute as defined in the Act.
But it is argued for the appellant that even so, the 'notification dated November 16, 1951, would be incompetent as the industry had been closed before that date, and there was therefore no relationship of employer and employee at that point of time.
In other words, the power of the State to make a reference under section 3 will depend, according to the appellant, not only on the dispute having arisen in an existing industry but further, on the continued existence of that industry on the date of the notification.
We do not find anything in the language of section 3 of the Act to warrant the imposition of this additional limitation on the power of the State to make a reference.
That section only requires, apart from other conditions, with which we are not concerned, that there should be an industrial dispute before there can be a ref erence, and we have held that it would be an industrial dispute if it arises out of an existing industry.
If that condition is satisfied, the competence of the State for taking action under that section is complete, and the fact that the industry has since been closed can have no effect on it.
Any other construction would, in our opinion, result in serious anomalies and grave injustice.
If a workman improperly dismissed raises an industrial dispute, and before action is taken by the Government the industry is closed, what happens to the right which the Act gives him for appropriate relief, if the Act vanishes into thin air as soon as the industry is closed? If the contention of the appellant is correct, what is there to prevent an employer who intends, for good and commercial reason, to close his business from indulging on a large scale in unfair labour practices, in victimisation and in wrongful dismissals, and escaping the consequences thereof by closing down the industry? We think that on a true construction of section 3, the power of the State to make a reference under that section must be determined with reference not to the date,on which 883 it is made but to the date on which the right which is the subject matter of the dispute arises, and that the machinery provided under the Act would be available for working out the rights which bad accrued prior to the dissolution of the business.
It was next argued that even on this view, the notification dated November 16, 1951, was incompetent inasmuch as the management had offered by its letter dated January 3, 1951, to pay the workmen 25 per cent.
of the profits on the sale transaction only on April 30, 1951, and the right to the amount thus accrued to the workmen only after the closure of the business on March 21, 1951.
But this argument proceeds on a misapprehension of the correct position on the facts.
The true scope of the promise contained in the letter dated January 3, 1951, is that the workmen acquired thereunder a right in praesenti to 25 per cent.
of the profits, but that the amount became payable only on April 30, 1951, the reason obviously being that it could be precisely determined only after the transaction was completed.
In this view, as the claim for share of profits arose on January 3, 1951, and January 10, 1951, when the industry was working, the reference dated November 16, 1951, would be valid, notwithstanding that the business was closed on March 21, 1951.
That brings us on to a consideration of the second question, as to whether there was a concluded agreement binding the appellant to pay 25 per cent.
of the profits in.
the sale transaction to the workmen.
The Tribunal has answered it in the affirmative, and its finding was accepted by the Appellate Tribunal as, being one of fact, it had to be, under section 7 of the Industrial Dispute (Appellate Tribunal) Act No. XLVIII of 1950.
It is argued by Mr. Umrigar that following the usual practice of this Court in special appeals not to disturb findings of fact by Tribunals unless there were exceptional grounds therefore we should not interfere with the finding of the Industrial Tribunal that there was a concluded and enforceable agreement.
But our difficulty is that the Tribunal has spoken in two voices, and has given inconsistent 884 and conflicting findings, and it has consequently become necessary for us to determine which of its findings should be accepted as supported by materials.
We start with the letter dated January 3, 1951, wherein the management made an offer to pay 25 per cent.
of the profits of the sale transaction to the workmen.
It was expressly subject to the condition that the strike should be called off "at once and today".
That was not done.
On the other hand, the respondent made certain counter proposals in its letter dated January 5, 1951, and the management replied on January 8, 1951, that it would reconsider its terms provided the strike notice was withdrawn.
Thus, the offer contained in the letter dated January 3, 1951, was not accepted and lapsed.
Then on January 10, 1951, the management renewed its offer subject again to the condition that the strike notice was withdrawn at once.
The respondent passed no resolution withdrawing the notice, and in its reply dated January 10, 1951, it made it clear that it was waiting for Kashinath Pandey for it to come to a final decision '.
There was no further communication from the Union.
We do not see bow on this correspondence it could be held that there was a concluded agreement between the parties, and that is the view which the Tribunal itself took of it when it observed that "no final agreement could be arrived at. . and consequently the management served a notice on 28th February 1951".
But then, it went on to observe that, in fact, the workmen did not go on strike on January 12, 1951, and continued in service till they were served with notice of discharge on February 28, 1951, that that was consideration for the promise made by the agreement, which must therefore be taken to have become a term of service, and that in consequence "the promise of the management as contained in the letters of 3rd and 10th January 1951, is a binding agreement under which the workmen are entitled to compensation for termination of their services on the closure of the Mills".
This argument rests on a confusion of thought.
The question whether there was consideration.
for the promise made by the 885 management in its letters dated January 3, and January 10, 1951 arises only if the offer contained in the letters had been accepted by the respondent, so as to ripen into an agreement.
And if there was no concluded agreement between the parties, as the Tribunal itself had held, then the further question as to whether it was supported by consideration would not arise, nor would there be any question of its becoming one of the terms of the service.
It was argued that though a formal resolution withdrawing the strike was not passed, in fact there was no strike, and that must be taken to be acceptance of the offer by conduct.
That would not be acceptance as required by the 'appellant, and that alone would be sufficient to reject the contention of the respondent.
But this contention must fail even on the merits.
In its letter dated January 10, 1951, the respondent, while stating that the strike was not taking place on the 12th, made it clear that this was pending the final decision of the Union.
That clearly is not an acceptance of the offer.
The matter does not rest there.
, The object of the strike was, it should be remembered, not anything directly connected with the terms of employment but something collateral to it.
It was to prevent the Mills from being removed from Pipraich to Madras.
When the management offered to part with 25 per cent.
of the profits of the sale transaction, its object was clearly to disarm the opposition of the workmen and to get the machinery dismantled and delivered to the purchaser peacefully.
Did the workmen ever agree to it? As late as March 5, 1951, Kashinath Pandey wrote to the Government that if the Mills were to be shifted from Pipraich, he would go on hunger strike.
Even after the Government had informed him that the sale could not be interfered with, the workmen did not co operate with the management in the dismantling of the machinery with the result that the appellant had to give up the contract with reference thereto and to lose Rs. 2 lakhs profits.
To crown all, the workmen having successfully prevented the appellant from getting the contract for dismantling, themselves 886 entered into it directly with the purchaser and undoubtedly intercepted a part, if not the whole, of the profits which the appellant would have earned.
It is impossible to hold on these facts that there was a concluded agreement between the parties binding the appellant to give the workmen a share of the profits of the sale transaction.
It was next contended by Mr. Umrigar that even if there was no concluded agreement by the management to pay the workmen a share of profits on the sale transaction, it would have been open to the Tribunal to have awarded compensation for the termination of their services, treating it as retrench ment, and that the 'award of compensation of Rs. 45,000 which was what the management itself had suggested, might be sustained on that footing.
This contention assumes that the termination of the services of workmen, on the closure of a business, is retrenchment.
But retrenchment connotes in its ordinary acceptation that the business itself is being continued but that a portion of the staff or the labour force is discharged as surplusage and the termination of services of all the workmen as a result of the closure of the business cannot therefore be properly described as retrenchment.
It is 'however contended by Mr. Umrigar that the definition of retrenchment in section 2(oo) of the Industrial Disputes Act XIV of 1947 is wide enough to include discharge consequent on the, closure of business, and that under section 25 F, compensation could be awarded therefore Our attention has been invited on behalf of the appellant to the decision in J. K. Hosiery Factory vs Labour Appellate Tribunal(1), where it was held that retrenchment as defined in section 2(oo) does not comprehend discharge on the closure of business, but Mr. Umrigar contends that it is erroneous.
We do not consider it necessary to decide this question, as the definition of "retrenchment" in section 2(oo) of Act XIV 1947 and section 25 F therein were inserted by the Industrial Disputes (Amendment) Act No. XLIII of 1953, and we have held in Messrs Burn and Co., Ltd., Calcutta vs (1) A I.R. 1956 All. 498.
887 Their Workmen (supra) that this Act has no retrospective operation.
The rights of the parties to the present appeal must therefore be decided in accordance with the law as it stood on March 21, 1951, when the workmen were discharged.
It was next contended, on the strength of the decisions in Employees of Messrs India Reconstruction Corporation Limited, Calcutta vs Messrs India Reconstruction Corporation Limited, Calcutta(1) and Messrs Benett Coleman & Company Ltd vs Their Employees(2) that even prior to the enactment of Act XLIII of 1953, the Tribunals had acted on the view that retrenchment included discharge on closure of business, and had awarded compensation on that footing and that the award of the Tribunal in the present case could be supported in that view and should not be disturbed.
In Employees of Messrs India Reconstruction Corporation Limited, Calcutta vs Messrs India Reconstruction Corporation Limited, Calcutta (supra), the Tribunal observed at P. 576 as follows: "Ordinarily retrenchment means discharge from service of only the surplus part of the labour force but in the case of closure the whole labour force is dispensed with.
In substance the difference between closure and normal retrenchment is one of degree only.
As in the case of retrenchment so in the case of closure the workmen are not responsible for closing their jobs.
In both the cases, what is called compensation by way of retrenchment relief should be admissible".
We are unable to agree with these observations.
Though there is discharge of workmen both when there is retrenchment and closure of business, the compensation is to be awarded under the law, not for discharge as such but for discharge on retrenchment, and if, as is conceded, retrenchment means in ordinary parlance, discharge of the surplus, it cannot include discharge on ' closure of business.
Moreover, there was no question of closing of business in Employees of Messrs India Reconstruction Corporation Limited, Calcutta vs Messrs India Reconstruction Corporation (1) (1953] L.A.C. 563.
(2) 888 Limited, Calcutta (supra), as what happened there was that one of the units of the company, that at Calcutta, was closed and that would be a case of retrenchment, and the observations quoted above were purely obiter.
They were, however, quoted and followed without discussion by the Appellate Tribunal in Messrs Benett Coleman & Company Ltd. vs Their Employees (supra), which further remarked at p. 27: "Thus whether the closure was justified or not, the workmen who have lost their jobs would in any event get compensation.
If it was not bona fide or not justified, it may be that the measure of compensation would be larger than if it was otherwise".
For the reasons given above, we cannot assent to these observations.
It, should be mentioned that in Messrs Benett Coleman and Company Ltd. vs Their Employee (supra), there was no closure of business, but winding up of the Calcutta unit by a newspaper publishing company which had its headquarters at Bombay.
We must accordingly overrule this contention also.
We should add that the Tribunal was of the opinion that, apart from agreement, the workmen should not, in view of their conduct, be awarded compensation, and we entirely agree with it.
And as we have found against the agreement, we must allow this appeal, and set aside the award of compensation to the workmen made by the Tribunal.
In the circumstances, the parties will bear their own costs throughout.
Appeal allowed.
| The appellant company could not work its Mills to full capa city owing to short supply of sugar cane and got the permission of the Government to sell its machinery but continued crushing cane under a lease from the purchaser.
The workmen 's Union in order to frustrate the transaction resolved to go on strike and communicated its resolution to the company.
There wag correspondence between the parties in course of which the company offered to pay to the workmen 25 per cent.
of the profits of the sale on condition that the strike notice must immediately be withdrawn.
The workmen did not fulfill the condition and made certain counter proposals.
The company insisted that the condition must first be fulfilled before the counter proposals could be considered and renewed its offer.
Although the workmen did not actually go on strike, they did not withdraw the strike notice, and did not co operate with the management in the dismantling and delivery of the machinery to the pur chaser, with the result that the company lost heavily.
On the expiry of the lease and closure of the industry, the services of the workmen were duty terminated by the company on March 21, 1951.
The workmen thereafter, claimed the share of profits on the basis of the offer made by the company in the correspondence and the dispute was referred to the Industrial Tribunal for adjudication by the U.P. Government by a notification under section 3 of the U.P. Industrial Disputes Act of 1947.
The Tribunal held that the company was bound by the offer it had made and awarded a sum of Rs. 45,000 to the workmen as representing their share of the profits.
On appeal the award of the Industrial Tribunal was affirmed by the Labour Appellate Tribunal.
It was contended on behalf of the appellant company that the notification was ultra vires, and the reference and the award void in consequence and that there having been no concluded agreement between the parties, it was not bound to pay.
Held, that the definition of an industrial dispute contained in section 2(k) of the Industrial Disputes Act XIV of 1947 and adopted by the U.P. Industrial Disputes Act XXVIII of 1947 contemplated the 873 existence of an industry and a subsisting relationship of employer and employee between the parties and, therefore, there could be no industrial dispute within the meaning of those Acts where the industry had been closed, and the closure was real and bona fide, if the dispute arose on such closure, or thereafter, if that could be conceived.
Section 3 of the U.P. Industrial Disputes Act of 1947 only required that there must be an industrial dispute before the Government could make a reference under that section arid, consequently, in the instant ease where the claim in dispute had arisen, if at all, prior to the closing of the industry, the Government was fully competent to issue the notification.
Indian Metal and Metallurgical Corporation vs Industrial Tribunal, Madras (A.I.R. and E. N. Padmanabha Ayyar vs The State of Madras ([1954] , approved.
Messrs Burn and Co. Ltd., Calcutta vs Their Workmen, (Civil Appeal No. 325 of 1955, decided on October 11, 1956), referred to.
In the instant case, however, as the findings of the Tribunal were inconsistent and conflicting, the court examined the correspondence and held that it did not establish that there was a concluded agreement between the parties whereby the workmen could be entitled to any share of the profits and, consequently, the award made by the Labour Appellate Tribunal must be sot aside.
Nor was the award sustainable as one for compensation for termination of the services of workmen on closure of the industry as such discharge was different from discharge on retrenchment, which implied the continuance of the industry and discharge only of the surplusage, and the workmen were not entitled either under the law as it stood on the day of their discharge or even on merits to any compensation.
Employees of Messrs India Reconstruction Corporation Limited, Calcutta vs Messrs India Reconstruction Corporation Limited, Calcutta ([1953] L.A.C. 563) and Messrs Benett Coleman & Company Ltd. vs Their Employees, ([1954] L.A.C. 24), distinguished and disapproved.
|
Summarize this legal judgement text concisely | Appeal No. 323 of 1955.
Appeal from the judgment and order dated July 2, 1953 of the Bombay High Court in Special Civil Application No. 159 of 1953.
R. J. Kolah and A. C. Dave, for the appellant.
H. R. Gokhale, K. R. Chaudhury and M. R. Rangaswamy, for respondent No. 2. 1956.
October 31.
The Judgment of the Court was delivered by GOVINDA MENON J.
On July 20, 1954, the High Court of Judicature at Bombay granted a certificate of fitness under article 133(1) (c) of the Constitution 940 that the judgment of that court dated July 2, 1953, passed in Special Civil Application No. 159 of 1953, was a fit one for appeal to the Supreme Court as it involved a substantial question of law, and it is in pursuance of such certification that the above appeal is now before this court.
A brief resume of the facts and circumstances, which led to the application for a writ of certiorari in the High Court, becomes necessary for a correct appreciation of the question of law involved and may, therefore, be shortly stated.
The appellant which may hereafter, for the purpose of convenience, be called "The Mill", is a limited company owning and possessing a Cotton Textile Spinning and Weaving Mill situated in Poona, employing a large number of workmen who have a union of theirs.
The first respondent is a workman employed by the Mill and the second respondent is the Poona Girni Kamagar Union of which the first respondent is a member.
Respondents 3 to 5 were formally added as parties in the first in stance, but their names were struck off as unnecessary at the time of the hearing.
The appellant was running 580 looms, for working which one weaver had been allotted at the rate of two looms; and when things were in that state on August 29, 1951, the Management issued a notice to the effect that from September 1, 1951, it was desired to carry on an experiment of four looms to a weaver for a period of 2 months, on 16 looms.
If at the end of that period or before the expiry of the same it was found that the working was successful, the Management would introduce the scheme after giving the notice of change required under the Act.
The object of this notice was ostensibly to introduce rationalization or rather efficiency system of work, if and when the suggested experiment proved successful.
As a result of this notice on September 4, 1951, the Secretary of the Union wrote to the Manager of the appellant Mill intimating that under the Bombay Industrial Relations Act the Management could not legally introduce any change in the existing system ,of working without first giving notice of the change 941 in the prescribed form to the representatives of the Union and workers and without going through the other procedure prescribed by the Act; and the Management were further informed that if they insisted in carrying on the change illegally, the workmen would be free to move the proper courts.
The notice also stated that the introduction of the new system would affect the workers ' wages and cause great hardship; and that if anything untoward happened, the blame would be wholly on the management, as it would be impossible for the Union to control the workers in the matter.
Four workers volunteered to work the experiment and started working accordingly on the 16 looms on September 6, 1951, whereupon the other workmen raised an objection and the four loyal workmen were prevented from continuing with the experimental work.
But the Management did not withdraw the notice and none except the 4, was required by the Management to take part in the experiment.
The second shift among the workmen also refused to work with the result that there was a complete strike in the Mills between the 6th and the 26th of September, 1951.
On September 10, 1951 the appellant filed an application under sections 78 and 97 of the Bombay Industrial Relations Act, 1946 (Bom.
XI of 1947), praying that the strike resorted to by the weavers working on both the shifts commencing on September 6, 1951, and continuing till the presentation of the application be declared illegal being in contravention of the provisions of the said Act.
On September 16, 1951 the Vice President of the Mill Mazdoor Sabha filed a written statement in answer to the above com plaint stating that the workers did not strike work in contravention of the Bombay Industrial Relations Act and that the weavers never refused to do their proper and usual work but refused only to do the illegal work insisted on them by the employers; in other words, they were agreeable to have two looms per weaver and not to work the attempted experiment.
Within three days of the filing of the above written 942 statement, two of the workers filed an application under sections 78 and 98 of the Bombay Industrial Relations Act before the same Labour Court against the Management praying for a declaration that the action of the Management had resulted in an illegal lockout in contravention of the Act, and, therefore, the Management should be ordered to withdraw the said illegal change.
The appellant filed a written statement countering the allegations contained in the application for the declaration of an illegal lockout and 'stated that their action was not in contravention of the Bombay Industrial Relations Act, as it did not constitute an illegal change.
The Labour Court at Bombay heard both the applications together and by a combined order dated September 26, 1951, held that since the Management had not compelled any one to accept any work, their action could not be considered an illegal lockout.
At the same time, it held that the workers did not create a situation amounting to an illegal strike.
The result of these findings was the negation of the grant of the prayers contained in the respective applications, but in addition, the court declared that the action of the Management was an illegal change and, therefore, the notice whereby the experiment was attempted to be tried, should be withdrawn.
The workers were content with the outcome of their application but the Management having been aggrieved by the declaration that their action amounted to an 'illegal change ' filed an appeal before the Labour Appellate Tribunal at Bombay (Appeal No. 293 of 1951) upon which the learned Judges of the Labour Appellate Tribunal took the view that the strike by the workmen was illegal.
They also concluded that there was no lockout on the part of the Management.
That being the case, the order of the Labour Court declaring that there was an illegal change was set aside with the declaration that the strike in question was illegal with the necessary consequences.
I In order to get the said order of the Labour Appellate Tribunal quashed, an application for a writ 943 of certiorari under articles 226 and 227 of the Constitution was filed by the two of the workers before the High Court of Bombay where Chagla C.J. and Dixit J., took the view that since the decision of the Appellate Tribunal was erroneous, the same should be quashed, with the result that the decision of the Labour Court was upheld.
It is this judgment that is under appeal before us as a result of the certificate granted by the High Court of Bombay.
A reading of the relevant portions of the statute is necessary to find out whether the order appealed against is justified or not.
The Bombay Industrial Relations Act, 1946 was enacted to regulate the relations of employer and employees, to make provisions for the settlement of industrial disputes and to provide for certain other purposes.
This statute repealed the Bombay Trade 'Disputes Conciliation Act, 1934 and the Bombay Industrial Disputes Act, 1938.
Section 3(8) defines "change" as meaning an alteration in an industrial matter and sub section
(15) contains a definition of 'illegal change ' as meaning an illegal change within the meaning of sub sections
(4) & (5) of section 46 which are in the following terms: "(1) . . . . . . . (2) . . . . . . . . (3) . . . . . . . . (4)Any change made in contravention of the provisions of sub sections (1), (2) and (3) shall be illegal.
(5)Failure to carry out the terms of any settlement, award (registered agreement or effective order or decision of a Wage Board), (a Labour Court or the Industrial Court affecting, industrial matters) shall be deemed to be an illegal change".
Section 42 which speaks of change may also be quoted so far as it is relevant for our purpose: "(I) Any employer intending to effect any change in respect of an industrial matter specified in Schedule II shall give notice of such intention in the prescribed form to the representative of employees.
He shall send a copy of such notice to the Chief Conciliator, the Conciliator for the industry concerned for the 944 local area, the Registrar, the Labour Officer and such other person as may be prescribed: He shall also affix a copy of such notice at a conspicuous place on the premises where the employees affected by the change are employed for work and at such other place as way be directed by the Chief Conciliator in any particular case.
"Industrial matter ' has also been defined in the Act in section 3(18) in the following words: "Industrial matter ' means any matter relating to employment, work, wages, hours of work, privileges, rights or duties of employers or employees, or the mode, terms and conditions of employment, and includes: (a)all matters pertaining to the relationship between employers and employees, or to the dismissal or non employment of any person; ( b) all matters pertaining to the demarcation of functions of any employees or classes of employees; (c) all matters pertaining to any right or claim under or in respect of or concerning a registered agreement or a submission, settlement or award made under this Act; (d)all questions of what is fair and right in relation to any industrial matter having regard to the interest of the person immediately concerned and of the community as a whole;".
Schedule II, para 4 mentions "rationalization or other efficiency system of work" and therefore when any such rationalization is introduced, it is obligatory upon the employer to give notice of such an intention in the prescribed form to the representatives of the employees.
We may also refer to section 3(35 A) defining 'stoppage ' in the following terms: " Stoppage ' means a total or partial cessation of work by the employee in an industry acting in combination or a concerted refusal or a refusal under a common understanding of employees to, continue to work or to accept work, whether such cessation or refusal is or is not in consequence of an industrial dispute;".
945 Sub section (36) defines 'strike ' as follows: " 'Strike ' means a total or partial cessation of work by the employees in an industry acting in combination or a concerted refusal or a refusal under a common understanding of employees to continue to work or to accept work, where such cessation or refusal is in consequence of an industrial dispute".
Chapter XIV of the statute concerns itself with illegal strikes and lockouts of which section 97 deals with illegal strikes, whereas section 98 deals with an illegal lockout.
According to section 97(1)(c), a strike shall be illegal if it is commenced or continued only for the reason that the employer has not carried out the provisions of any standing order or made "an illegal change".
In considering whether the strike in question was illegal.
the learned Judges of the High Court have expressed the opinion that there is a common law right for an employee to stop work and that it is only by statutory prohibition that certain strikes have been made illegal in the interest of labour relations.
In the present case since there had been no 'illegal change" effected by the employer, the High Court took the view that on the very finding of the Appellate Tribunal that the change was a legal change, the strike in question did not come within the ambit of section 97.
Learned counsel for the appellant has pressed two arguments before us with regard to the construction of section 97 (1) (e) of the Bombay Industrial Relations Act., 1946.
His first argument is that the High Court was in error when it held that there was any such right as a common law right of an employee to go on strike and section 97 constituted an inroad on that right.
Learned counsel has submitted that under section 97 (f) (c) a strike shall be illegal if it is commenced or continued only for the reason that the employer has not carried out the provisions of any standing order or has made an illegal change; if a strike is illegal when it is com menced or continued only for the reason that the employer has made an illegal change, a fortiori it must be illegal when it is commenced or continued for a legal change.
The contention of learned counsel is 128 946 that by necessary implication cl.
(c) condemns a strike which is commenced or continued for a change which is not illegal.
The second argument of learned counsel is that the true scope and effect of cl.
(c) is this: the word 'only ' occurring in the clause goes with the word 'reason ' and if the strike is commenced or continued for the only reason that the employer has made an illegal change, it shall be illegal.
The test is not whether there was a legal or illegal change in fact but what was the reason for which the employees went on strike, and if the employees.
commenced or continued a strike only for the reason that the employer had made an illegal change, the strike would be illegal within the express terms of the clause.
In our opinion it is unnecessary to decide in this case whether the first argument of learned counsel for the appellant is correct or not; because we are I clearly of the opinion that the second argument with regard to the construction of section 97 (1) (c) is correct and should prevail.
In this case the workmen themselves came to court with the plea that the action of the employer amounted to an illegal change.
In their application to the Labour Court, they said: "That for the above mentioned reasons it is prayed that this Honourable Court be pleased to declare the said lockout by the opponent Mills as illegal being in con travention of the Bombay Industrial Relations Act, and the opponent be ordered to withdraw the said illegal change".
It is obvious, therefore, that the workmen in this case struck work only for the reason that the change or experiment made by the appellant employer was an illegal change.
The action of the workmen, therefore, came within the express terms of section 97 (1) (c) of the Act.
The learned Chief Justice did not consider this aspect of the case, and reached a conclusion with regard to the legality of the strike on a reasoning which did not give full effect to the words used in s.97(1)(c).
In our view,the true test was to find out the reason for which the strike was commenced or continued, and it was unnecessary to consider or decide whether there was a common law right of the workmen to go on strike or whether the work 947 men had the right to go on strike as a means of collective bargaining against a change which they did not like.
Mr. Gokhale appearing for the workmen has taken us through the different provisions of the Bombay Industrial Relations Act, 1946, and has contended that the workmen have the right to go on strike as a means of collective bargaining against any measure adopted by the employer which the workmen may consider to be detrimental to their interests, provided the strike does not come within the prohibited ambit of section 97.
Even assuming that Mr. Gokhale is right in his contention, it is clear to us that if the workmen commence or continue a strike for the only reason that the employer has made an illegal change, they come within the express terms of section 97 (1) (c).
It is immaterial whether the change is subsequently found by the Labour Court to be a legal change.
It is worthy of note that there is a separate provision for imposing a penalty on an employer who makes an illegal change.
The relevant consideration, however, with regard to section 97 (1) (c) is the reason for which the strike is commenced or continued.
That reason in this particular case is clear enough.
The workmen themselves said that they commenced and continued the strike because the employer had made an illegal change.
That being the position, the strike was illegal within the express terms of section 97(1)(c) of the Act.
We are, therefore, of the opinion that, on a proper interpretation of section 97(1) (c) of the Act, the strike which was commenced and continued from September 6, to September 26, 1951, was clearly illegal.
The appeal is, accordingly, allowed and the order of the High Court dated July 2, 1953, is set aside.
The result, therefore, is that the order of the Labour Appellate Court dated September 4, 1952, stands, with the declaration that the strike in question was illegal with its usual consequences.
In this case, the appellant had agreed, while asking for a certificate from the Bombay High Court for leave to appeal to the Supreme Court, to pay the taxed costs of the respondents in one set.
Learned 948 counsel for the appellant himself has drawn our attention to the agreement.
In view of that it is not necessary for us to decide in this case whether it was open to the Bombay High Court to pass any order about costs in this Court while granting a certificate of fitness under article 133(1) (c) of the Constitution, and we direct that the appellant should pay to the respondents the costs of this appeal in one set and bear its own costs thereof.
Appeal allowed.
| By section 97(1)(c) of the Bombay Industrial Relations Act, 1946: "A strike shall be illegal if it is commenced or continued only for the reason that the employer has not carried out the provisions of any standing order or has made an illegal change".
The management of the appellant Mill desiring to make a change in the existing system of working started making an experiment by asking a few workmen who had volunteered to work at the rate of four looms to a weaver for a period of two months.
The other workers objected that this was an illegal change on the ground that the management could not legally introduce any change without first going through the procedure prescribed by the Act, and went on strike.
The question was whether the strike was illegal.
Held, that as the workmen had gone on strike only for the reason that the change or experiment made by the appellant was an illegal change, their action came within the express terms of B. 97(1)(c) of the Act and the strike was illegal.
|
Summarize this legal judgement text concisely | Appeal No 320 of 1955.
Appeal by special leave from the judgment and order dated October 19, 1954 of the Labour Appellate Tribunal of India at Bombay in Appeal No. 76 of 1954.
H. J. Umrigar, E. J. Muharir and Rameshwar Nath, for the appellant.
section W. Dhabe and R. A. Govind, for the respondent.
November 6.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
The Central Provinces Transport Services Ltd., Nagpur, was, at the material dates, a public limited company, and the respondent was employed as a mechanic therein.
In June 1950, goods belonging to the Company were stolen, 958 and suspicion fell on the respondent.
There was an enquiry into the matter, and that resulted in his dismissal on June 28, 1950, on the ground of gross negligence and misconduct.
He was then prosecuted on a charge of theft, but that ended in his acquittal on March 3, 1952.
Thereafter, be applied to the Company to be reinstated, and failing to get redress, filed on October 1, 1952, an application before the Labour Commissioner under section 16(2) of the Central Provinces and Berar Industrial Disputes Settlement Act XXIII of 1947, hereinafter referred to as the Act, for reinstatement and compensation.
The Company resisted the claim on the ground, inter alia, that as the applicant had been dismissed on June 28, 1950, he was not an employee on the date of the applica tion, that accordingly there was no "industrial dispute touching the dismissal of an employee" as required by section 16, sub sections
(1) and (2) of the Act, and that, in consequence, the proceedings under that section were incompetent.
The Assistant Labour Commissioner, before whom the matter came up for hearing, agreed with this contention, and dismissed the application.
The respondent preferred a revision against this order to the Provincial Industrial Court ,under a. 16(5) of the Act, and by its order dated February 5, 1954, that Court held that a dismissed employee was an employee as defined in section 2(10) of the Act, that a dispute by such an employee was an industrial dispute within section 2(12) of the Act,.
and that the application under section 16(2) of the Act was therefore maintainable.
In the result, the order of dismissal was set aside and the matter remanded for enquiry on the merits.
Against that order, the Company appealed to the Labour Appellate Tribunal, which by its order dated October 19, 1954, affirmed the decision of the Provincial Industrial Court, and dismissed the appeal.
The Company has preferred the present appeal against this order under article 136.
Pending the appeal to this Court, the Company went into liquidation and has been taken over by the State of Madhya Pradesh, and is now being run under the name of Central Provinces Transport Services (under 959 Government ownership), Nagpur.
On the application of the respondent, the record has been suitably amended.
The point for decision in this appeal is whether an application for reinstatement and compensation by a dismissed employee is maintainable under section 16 of the Act.
That section, so far as is material to the Present question, runs as follows: "(1) Where the State Government by notification so directs, the Labour Commissioner shall have power to decide an industrial dispute touching the dismissal, discharge, removal or suspension of an employee working in any industry in general or in any local area as may be specified in the notification. "(2) Any employee, working in an industry to which the notification under sub section (1) applied may within six months from the date of such dismissal, discharge, removal or suspension, apply to the Labour Commissioner for reinstatement and payment of compensation for loss of wages".
The argument of Mr. Umrigar for the Appellant is that it is a condition prerequisite to the entertainment of an application for reinstatement under this section that there should be an industrial dispute touching the dismissal of an employee, that there was none such in this case, because the respondent was not an employee on the date of the application, having been dismissed long prior thereto and further because his dispute was an individual and not an industrial dispute.
It will be convenient at this stage to refer to the relevant provisions of the Act, as they stood on the material dates.
Section 2(10) defines an employee as follows: "employee" means any person employed by an employer to do any skilled or unskilled manual or clerical work for contract or hire or reward in any industry and includes an employee discharged on account of any dispute relating to a change in respect of which a notice is given under section 31 or 32 whether before or after the discharge".
Section 2(12) defines "industrial dispute" as meaning 960 "any dispute or difference connected with an industrial matter arising between employer and employee or between employers or employees".
Under section 2(13), "industrial matter" means "any matter relating to work, pay, wages, reward, hours, privileges, rights or duties of employers or employees, or the mode, terms and conditions of employment or refusal to employ and includes questions pertaining to (a) the relationship between employer and employee, or to the dismissal or non employment of any person. ') It is not disputed that a question of reinstatement is an industrial matter as defined in section 2(13) of the Act.
The controversy relates to the question whether it is an industrial dispute as defined in section 2(12) of the Act ' The contention of the appellant is that it does not fall within that definition., because the further condition prescribed by section 2(12) that it must be between an employer and employee is not satisfied.
It was argued by Mr. Umrigar that when the respondent was dismissed on June 28, 1950, his employment came to an end, and that he could not thereafter be termed an employee, as that word is ordinarily understood, that it could not have been the intention of the legislature to include in the definition of an employee even those who had ceased to be in service.
, as otherwise there was no need for the further provision in section 2(10) that discharged employees would in certain cases be employees; and that, in any event, the inclusive portion of the definition would, on the principle Expressio unius est exclusive alterius, operate to exclude all exemployees, other than those mentioned therein.
The question whether a dismissed employee is an employee as defined in section 2(10) of the Act must be held to be practically concluded by the decision of the Federal Court in Western India Automobile Association vs Industrial Tribunal, Bombay(1).
There, the point for determination was whether a claim for reinstatement by a dismissed workman was an industrial dispute as defined in section 2(k) of the XIV of 1947.
It was held that the definition in section 2(k) including as it did, all disputes or (1) 961 differences in connection with employment or non employment of a person was sufficiently wide to include a claim for reinstatement by a dismissed workman.
Counsel for the appellant sought to distinguish that decision on the ground firstly, that it was given on a. statute different from what we are concerned with in this appeal, and secondly, that the reference there, included other items of dispute, which un doubtedly fell within the Act, and the question of reinstatement took its complexion from those items.
We do not see any force in.
either of these contentions.
Section 2(12) and section 2(13) of the Act are substantially in pari materia with section 2(k) of Act XIV of 1947, and the ratio of the decision in Western India Automobile Association vs Industrial Tribunal, Bombay (supra) will be as much applicable to the one enactment as to the other.
, Nor does it make any difference that there were comprised in the reference other items which fell within the definition under section 2(k), because if the Government had no jurisdiction under the Act to refer the question of reinstatement of dismissed employee for adjudication, ' then the to that extent, be treated as a nullity,reference must, and it would be immaterial that it was intravires as regards the other items of dispute.
We are also unable to accede to the contention of the appellant that the inclusive clause in section 2(10) of the Act, is an indication that the legislature did not intend to include within that definition those who had ceased to be in service.
In our opinion, that clause Was inserted ex abuNdanti cautela to repel a possible contention that employees discharged under sections 31 and 32 of the Act would not fall within section 2 (10), and cannot be read as importing an intention generally to exclude dismissed employees from that definition.
On the other hand, section 16 of the Act expressly provides for relief being granted to dismissed em ployees by way of 'reinstatement and compensation, and that provision must become useless and inoperative, if we are to adopt the construction which the appellant seeks to put on the definition of employee in section 2(10).
We must accordingly bold agreeing with 125 962 the decision in Western India Automobile Association V. Industrial Tribunal, Bombay (supra) that the definition of "employee" in the Act would include one who has been dismissed and the respondent cannot be denied relief only by reason of the fact that he was iiot in employment on the date of the application.
It was next contended that even assuming that the respondent was an "employee" as defined in section 2 (10) of the Act, his dimissal could not be held to be an industrial dispute as defined in section 2(12), because that term properly meant that the dispute was one between employer on the one hand and the industry represented by its workmen as a class on the other, and that a dispute between the employer and a single employee would be an individual dispute and would therefore be outside the purview of a. 2(12).
It was argued in support of this contention that the object of all tabour legislation was not so much to deal with individual rights of workmen, for the enforcement of which there was an appropriate forum in the ordinary courts of the land as to regulate the relation between capital and labour, treating them as distinct entities, so that public peace and order might not be disturbed and production might not suffer, and for that end, to recognise the right of labour to speak and act as a body for the protection of its common interests and to provide a machinery for speedy settlement of disputes which that body might raise; and that it could not have been the intention of the legislature, where the above considerations did not operate, to interfere with the normal relations between employer and employee under the law and to provide an additional forum to the employee to vindicate his rights.
Reliance was placed in support of this contention on decisions of the Madras, Calcutta and Patna High Courts and of Industrial Tribunals.
The question whether a dispute by an individual workman would be an industrial dispute as defined i section 2(k) of the Act XIV of 1947, has evoked considerable conflict of opinion both in the High Courts and in Industrial Tribunals, and three different views have been expressed thereon: (I) A dispute which concerns 963 only the rights of individual workers, cannot be held to be an industrial dispute.
That was the opinion expressed in Kandan Textiles vs Industrial Tribunal(1).
There, Rajamannar C. J. observed that though the language of the definition in section 2(k) was wide enough to include such a dispute, the provisions of section 18 suggested that something more than an individual dispute between a worker and the employer was meant by an industrial dispute.
The other learned Judge, Mack J., was more emphatic in his opinion, and observed that the Act was "never intended to provide a machinery for redress by a dismissed workman".
It became, however, unnecessary to decide the point, as the court came to the conclusion that the reference it self was bad for the reason that there was no material on which the Government could be satisfied that there was a dispute.
The views expressed in Kandan Textiles vs Industrial Tribunal (supra) were approved in Manager, United Commercial Bank Ltd. V. Commissioner of Labour(2); but here again, the observations were obiter, as the point for decision was whether a right of appeal conferred by section 41 of the Madras Shops and Establishments Act XXXVI of 1947 was taken away by implication by Act XIV of 1947.
The question, however, arose directly for decision in J. Chowdhury vs M. C. Banerjee(3), in which the order of the Government referring the dispute of a dismissed employee to the adjudication of a Tribunal was attacked as incompetent, and it was held by Mitter J., following the observations in Kandan Textiles V. Industrial Tribunal (supra) that the dispute in question was not an industrial dispute, and that the reference was, in consequence, bad.
(11)A dispute between an employer and a single employee can be an industrial dispute as defined in section 2(k).
That was the decision in Newspapers Ltd., Allahabad vs State Industrial Tribunal, U.P. (i).
In that case a reference of a dispute by a dismissed employee and the award of the Tribunal passed on that refer (1) A.I.R. (2) A.I.R. 1951 Mad. 141.
(8) (4) A.I.R. 1954 All.
516, 964 ence were attacked as bad on the ground that the dispute in question was not an industrial dispute within section 2(k) of Act XIV of 1947, and it was held by Bhargava J., that an industrial dispute could come into existence even if the parties thereto were only the employer and a single employee and that the reference and the award were, in consequence, valid.
A similar decision was given by a Full Bench of the Labour Appellate Tribunal in Swadeshi Cotton Mills Company Ltd. vs Their Workmen(1).
(III) A dispute between an employer and a single employee cannot per se be an industrial dispute, but it may become one if it is taken up by the Union or a number of workmen.
That was held by Bose J., in Bilash Chandra Mitra vs Balmer Lawrie & Co.(2), by Ramaswami and Sarjoo Prosad JJ., in New India Assurance Co. vs Central Government Industrial Tribunal(3) and by Balakrishna Ayyar J., in Lakshmi, Talkies, Madras vs Munuswami and others(4) and by the Industrial Tribunals in Gordon Woodroffe & Co. (Madras).
Ltd. vs Appa Rao(5) and Lynus & Co. vs Hemanta Kumar Samanta(6).
The preponderance of judicial opinion is clearly in favour of the last of the three views stated above, and there is considerable reason behind it.
Notwithstanding that the language of section 2(k) is wide enough to cover a dispute between an employer and a single employee, the scheme of the does appear to contemplate that the machinery provided therein should be set in motion, to settle only disputes which involve the rights of workmen as a class and that a dispute touching the individual rights of a workman was not intended to be the subject of an adjudication under the Act, when the same bad not been taken up by the Union or a number of workmen.
If that were the correct position, the respondent was not entitled to apply under section 16(2) of the Act as the workmen in the industry had not adopted his dispute as their own and chosen to treat it as (1) (3) A.I.R. 1953 Patna 321.
(5) (2) A.I.R. 1953 Cal. 613.
(4) (6) 965 their ' casus belli with the Company.
But then, we are directly concerned in this appeal not with the XIV of 1947 but with the Central Provinces and Berar Industrial Disputes Settlement Act XXIII of 1947, and in the view which we take of the rights of the respondent under that statute, there is no Deed to express a final opinion on the question whether a dispute simpliciter between an employer and a workman would be an industrial dispute within 9. 2(k) of Act XIV of 1947.
Now, the Central Provinces and Berar Industrial Disputes Settlement Act XXIII of 1947 with which we are concerned, is not in pari materia with Act XIV of 1947.
It no doubt covers the ground occupied by that Act, and contains provisions relating to arbitration, adjudication, awards, strikes and lock outs.
But it contains more.
It enacts in Ch.
IV provisions which are intended to regulate the contract of employment between employer and workmen, a subject which is covered by a distinct piece of Central legislation, Industrial Employment (Standing Orders) Act XX of 1946.
The object of that Act was, as appears from the preamble thereto, "to require employers in industrial establishments formally to define conditions of employment under them", whereas the object of the XIV of 1947 is, as set out in its preamble, "to make provision for the investigation and settlement of industrial disputes and for certain other purposes".
Thus, even though the two enactments are pieces of what is termed labour legislation, their objects and their vision are different.
While Act XIV of 1947 may be said to be primarily concerned with disputes of labour as a class Act XX of 1946 is directed to getting the rights of an employee under a contract defined.
Now, as the Central Provinces and Berar Industrial Disputes Settlement Act XXIII of 1947 covers the ground occupied by both Act XX of 1946 and Act XIV of 1947, it would be proper to interpret the expression "industrial dispute" therein in a sense wider than what it bears in Act XIV of 1947, so as to cover not only disputes of workmen as a class but also their individual disputes.
966 And this view receives considerable support from other provisions of the Act.
Section Al enacts that an ap plication under that section can be made either by an employer or employee concerned or by a representative of the employees concerned.
Section 2(24) defines "representative of employees" as meaning a union or where there is no union, persons elected by the employees not exceeding five.
Thus, there is a clear recognition of the rights of an individual employee as distinguished from a class of employees, to move for redress.
It is argued by Mr. Umrigar that this re cognition is only for the purpose of section 41 and that no inference can be drawn therefrom that the employee has a similar right to apply under section 16(2).
But the importance of section 41 consists in this that it indicates that the Act has in contemplation the enforcement of individual rights of workmen also.
Then we have section 53, which runs as follows: "Save with the permission of the authority holding any proceeding under this Act, no employee shall be allowed to appear in such proceeding except through the representative of employees: Provided that where only a single employee is concerned he may appear personally".
, This section again recognises the rights of employees to agitate their individual rights under the provisions of the Act.
Section 16 is intended, in our opinion, to enable an employee to enforce his individual rights when there is an order of dismissal, discharge, removal or suspension, and in the context, "industrial dispute" must be interpreted as including the claim of an employee who has been dismissed, for reinstatement and compensation.
The view taken by the Industrial Court and the Labour Appellate Tribunal as to the meaning of "industrial dispute" in the Central Provinces and Berar Industrial Disputes Settlement Apt XXIII of 1947" is therefore correct, and this appeal must be dismissed with costs.
Appeal dismissed.
APPENDIX Reference to the memory of late Dr. Bijan Kumar Mukherjea, Ex Chief Justice of India, by the Judges and members of the Bar of the Supreme Court of India assembled at a meeting on February 23, 1956.
section R. DAS, C.J. Mr.
Attorney General we have met here today under the shadow of death to mourn the passing away of one who only the other day was our Chief Justice and beloved leader.
He had been ailing for some time but we did not anticipate that his end was so near.
Therefore, when the melancholy news came suddenly over the wires, my colleagues and I felt a severe shook as all of you must also have done.
We have assembled here today to pay our respectful homage to the memory of our departed leader.
Bijan Kumar Mukherjea was born on August 15 ' 1891.
His father late R. D. Mukherjea was a Sanskrit ' scholar.
He was a Vakil of the Calcutta High Court but used to practice at Hooghly.
Mukherjea had his early education at Hooghly and thereafter at Calcutta.
He obtained his Master 's Degree in History.
In B.L. and M.L. examinations he topped the list of successful candidates and secured University gold medals.
He was Ananth Deb Research Prizeman.
Bijan Kumar Mukherjea was enrolled as a Vakil o the Calcutta High Court on the Appellate Side on January 9, 1914.
Shortly thereafter Sir Ashutosh Mookerjee, who had an eye for discovering talents, offered him a lectureship in the University Law College.
This was a great help to the struggling junior and indeed, changed the whole course of his life and career, for the stipend, meager as it was, enabled him to struggle at the Bar of the Calcutta High Court instead of moving to Patna where a new High Court had recently been set up.
His rise at the Bar was not meteoric but was a steady one.
He passed through the hard trial but momentary disappointments or set backs did not dim his enthusiasm or dishearten him.
While practising at the Bar, he 126 968 secured his Doctorate in Law.
His academic distinctions and studious habit stood him in good stead.
His scholarly erudition, good grounding in legal principles and deep insight into human nature soon brought him to the forefront of the profession.
To his legal learning and forensic skill was added a graceful style of advocacy ,Which was entirely his own.
His merit was soon recognised and in or about 1934 he was appointed the junior Government Pleader and within two years the senior Government Pleader.
True to tradition he was elevated to the High Court Bench in 1936 Distinguished as an Advocate he became greater as a Judge.
His sweet temper and amiable disposition endeared him to his colleagues as well as to the members of the Bar and particularly to the junior members.
I am happy to bear testimony to his kindness, courtesy and consideration for his colleagues for I had the privilege of sitting with him on the Bench of the Calcutta High Court.
In 1947 he served on the Boundary Commission.
In 1948 Bijan Kumar Mukherjea along with Shri Mehr Chand Mahajan, who happily is with us, was called upon to serve as a Judge of the Federal Court.
He readily responded to the call of duty and came all the way to New Delhi leaving at Calcutta his only son to whom he had been both a father and a mother.
In the midst of his work on the Bench, he could find time to prepare and deliver his Tagore Law Lectures on the Hindu Law of Endowments.
On the retirement of Shri Mahajan on December 23, 1954, Mukherjen, became the the fourth Chief Justice of this Court.
He brought with him here his profound legal scholarship, a clear thinking and rational mind and a burning sense of justice.
The Law Reports will bear testimony to his sound erudition, and his masterly grasp of the fundamental principles which lie at the root of our legal system.
His judgments had a freshness and a compactness and were not mere collections of precedents.
He delved deep into the foundations of the law and analysed the underlying principles with clarity and precision.
By his judgments he made 969 priceless contributions to our legal literature.
As a Judge he shed lustre on the High Court at Calcutta as well as on this Court.
His energy was not confined to law only.
He was closely associated with the Scout movement in Bengal.
He was a profound Sanskrit scholar and earned the degree of Saraswati.
Perhaps he imbibed his Sanskrit scholarship from his revered father.
He became President of the Bengal Sanskrit Association.
He was also a Fellow of the Calcutta University.
He was also a good student of philosophy.
He had sensitive and fine literary tastes and he could recite from memory long passages from Tagore 's works as well as from the works of Sanskrit and English poets.
He was an essentially religious main with a scrupulously chaste character.
He was pure in thought, word and deed.
Mukherjea was loved and respected because of his deep human sympathy, piety and the nobility of his character.
He drew people towards him and radiated a serenity on all who came into contact with him.
I have heard more than one person say that on returning home after a visit to Mukherjea he felt that he had returned as a better man.
He was ailing and undergoing suffering and pain and death must have brought relief and deliverance to him.
But by his premature retirement and death our Court and country have lost an illustrious Chief Justice, an erudite scholar, a sound jurist and above all, a great gentleman and we, who had the privilege of working with him and sharing our joys and sorrows with him, have lost a brilliant colleague, a respected leader and a lovable friend.
We mourn his death as a personal loss and we pay our respectful homage and sincere tribute of appreciation and affection to the memory of the great departed soul.
May his soul rest in eternal peace.
We also offer our sincere sympathies to his son who is an Advocate of this Court.
M. C. Setalvad, Attorney General of India.
My Lords, The Bar respectfully associates itself with all that has fallen from my Lord the Chief Justice.
970 His ill health followed by his painful illness which led to his premature retirement made us all feel that he would not be with us for long.
Yet when the news of the end came, so endearing was his personality and so great his kindness to everyone who came it contact with him, that all of us were deeply touched.
Rarely has one the privilege of appearing before a Judge with such a deep knowledge of fundamental principles in all branches of the law and an unfailing and quick grasp of legal issues.
Whether it was a question relating to Hindu Religious Endowments, a subject in which he had made extensive research, or a constitutional question or a question of the law of contract his piercing intellect and analytical mind immediately perceived the points that arose, the Counsel had to be prepared to deal with a series of searching questions on all the legal aspects which arose.
His erudition in law is writ large in the numerous judgments delivered by him scattered over the reports of this Court during the last six years.
His masterly exposition of the doctrine of equality before the law in Cheranjitlal 's case and his analysis of the law of frustration of contract with a view to show that in India it had its roots not in the theory of a term implied by the parties but in a positive statutory provision, are landmarks in the development of our law of the Constitution and our law of contract.
Truly did Justice Douglas of the United States speak in his recently delivered Tagore ' Law Lectures of the march of.
legal doctrine from Marshall to Mukherjea.
Nor were his interests confined to the sphere of law.
He was a keen student of philosophy and literature, had a profound knowledge of Sanskrit and was deeply interested in all literary and cultural problems.
He had a prodigious memory and even a few minutes with him gave one glimpses of many an interesting event in the history and politics of Bengal.
Great as a Judge and a learned scholar, he was, I think, even greater as a man.
Simple and unassuming, gentle and kind, frank and outspoken, he won the affection of all who.
came to know him.
A few months 971 ago, a member of the Bar was brought before a Bench over which he presided to answer a charge of misconduct which he admitted.
Considering the question of punishment, the late Chief Justice asked Counsel assisting the Court whether it would be just to punish the Advocate with a year 's suspension when he had a family dependent on his professional earnings.
That was a question truly characteristic of him and showed his kindly heart.
We at the Bar voice our deep grief at the sad demise of a great and distinguished Chief Justice and extend our warm sympathies to his bereaved family.
| In June, 1950, goods belonging to the appellant company were stolen and as the result of an enquiry the respondent was dismissed on the ground of gross negligence and misconduct.
He was prosecuted on a charge of theft but was acquitted in March, 1952, and thereupon he made an application before the Labour Commissioner 957 for reinstatement and compensation under section 16(2) of the Central Provinces and Barar Industrial Disputes Settlement Act, 1947.
It was contended for the appellant that the application was not main tainable because (1) the respondent was not an employee on the date of the application, having been dismissed long prior thereto and (2) his dispute was an individual and not an industrial dispute Held, (1) that the definition of "employee" in section 2(10) of the Act includes one who has been dismissed and has ceased to be in service, and that the inclusive clause therein was inserted ex abundanti cautela to repel a possible contention that employees discharged under sections 31 and 32 of the Act would not fall with Ins. 2(10) and cannot be read as importing an intention generally to exclude dismissed employees from that definition.
Western India Automobile Association vs Industrial Tribunal Bombay ([1949] F.C.R. 321), relied on.
(2) that a dispute between an employer and an employee who has been dismissed and who makes a claim for reinstatement and compensation, would be an industrial dispute within the meaning of section 2(12) of the Act, and section 16 enables the employee to enforce his individual rights against an order of dismissal, discharge, removal or suspension.
Quaere, whether a dispute simpliciter between an employer and a workman would be an industrial dispute within section 2(k) of the (XIV of 1947).
|
Summarize this legal judgement text concisely | Appeals Nos.
32 to 34 of 1955.
Appeal by special leave from the judgment and order dated September 5, 1952, of the Calcutta High Court in Civil Revision cases Nos.
3257, 3258 and 3259 of 1951 arising out of the order dated September 7, 1951, of the Court of Small Causes at Calcutta, 4th Bench, in Rent Appeal Nos. 115, 743 and 744 of 1951.
C. K. Daphtary, Solicitor General of India, D. N. Mookerji and Sukumar Ghose, for the appellant.
S.C. Janah and S.N. Mookerji, for the respondent.
November 9.
The Judgment of the Court was delivered by SINHA J.
Thesubstantial question for determination in these three analogous appeals by special leave 22 is whether the provisions of section 9 of the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 (which hereinafter will be referred to as "the Act") apply to the three promises which formed the subject matter of three separate proceedings in the courts below; and, if so, which clause thereof.
The common landlord is the appellant in each case the respondent in each case being the tenant of the particular tenement.
In order to appreciate the points of law at issue between the parties, it is necessary to state the relevant facts shorn of all details relating to the basic rent and the standard rent fixed at different stages of the proceedings.
Those details are not necessary for the determination of these appeals.
The undisputed facts are that the appellant is seized and possessed of several municipal holdings collectively known as the Karnani Mansions, 25 A, Park Street, together with adjoining premises situated at the junction of Park Street and Free School Street in the city of Calcutta.
There are about 210 flats of different types and shop rooms in the said Karnani Mansions let out separately to tenants.
The tenant in each of the three cases leading up to the appeals in this Court had been inducted by the predecessor in title of the appellant.
In each case the tenancy consisted of a single room, a bath and a covered verandah.
The tenant has also the use of a number of fans, plug points, towel racks, besides a basin, a commode and a glass shelf.
The landlord also supplies without any additional charge electrical energy for consumption by the tenant for the use of lamps, fans, radio, ovens for cooking, for ironing, laundering and refrigerators.
The landlord is also responsible for repairs of the electric installations and sanitary fittings, as also for supplying service of night guards, sweepers, liftmen etc.
The tenant in each case applied before the Rent Controller of Calcutta under section 9 read with Schedule A of the Act for fixation of standard rent in respect of the flat occupied by the applicant.
The landlord resisted the application on the ground, inter alia, that the Rent Controller was not authorised by the Act to deal with the tenancies in question because 23 the premises were outside the scope of the Act; that there had been a great increase in the cost of maintenance, as also of repairs and replacements of electric and other installations, that there had been a considerable enhancement of the charge for electricity supplied by the Calcutta Electric Supply Corporation Ltd. and of Government duty on the same; that if the court held that these premises were governed by the ' provisions of the Act, the landlord was entitled to proportionate increase in respect of those charges; that the fact that the Act does not make specific provision for increasing the rent with reference to the charges aforesaid would also point to the conclusion that the Act was not intended to the applied to the tenancies in question.
The Rent Controller after having inspections made of the premises in question fixed a standard rent in accordance with the rules laid down in Schedule A to the Act.
The rent thus standardized was to take effect from September 1, 1950.
The appellant preferred an appeal to the Chief Judge of the Small Cause Court, Calcutta, against the aforesaid order of the Rent Controller.
The Appellate Authority allowed the landlord 's appeal in part by setting the standard rent at a higher figure than that arrived at by the Rent Controller by applying the provisions of cl.
(g) of section 9.
The Appellate Authority aforesaid negatived the landlord 's contention that the premises in question providing the special services and amenities aforesaid were outside the ambit of the Act.
It gave the landlord relief in respect of the higher charges for electric consumption and Government duty aforesaid.
The standard rent thus fixed by the appellate authority was in excess of the original rent agreed between the parties.
The tenant in each case moved the High Court of Calcutta in its revisional jurisdiction.
The learned single Judge of the High Court, who heard the revisional applications allowed them in part, giving effect virtually, though not entirely, to the decision of the Rent Controller and holding that cl.
(g) of section 9 of the Act was not attracted to the facts and circumstances of the cases before the court.
He relied upon a Division Bench ruling of the same Court in the case of Residence 24 Ltd. vs Surendra Mohan(1), which, it is agreed at the Bar, is on all fours with the facts and circumstances of the present case.
After the rejection by the High Court of of the appellant 's petition for a certificate under article 133 of the Constitution, the appellant obtained from this Court special leave to appeal on common questions of law.
Hence the appeals in each of these three cases have been heard together.
In these appeals the learned Solicitor General appearing on behalf of the appellant raised substantially two points for determination, namely, (1) that the Act does not apply to the premises in question in view of the specify incidents of the tenancy as disclosed in the terms of the lease in the standard form as exhibited in Civil Appeal No. 42 of 1955 (Exhibit J) between the appellant and Miss M. Augustin, and as found by the courts of fact below; and (2) alternatively, that if the Court were to come to the conclusion that the premises in question were within the ambit of the Act, clause (g) of section 9 should be applied to the tenancies in question as determined by the appellate authority aforesaid.
Adverting to the first point raised on behalf of the appellant, we have to notice an argument which was raised for the first time before 'us, namely, that the definition of " premises " in section 2 (8) would not in terms apply to the tenements in question and that if any provisions of the Act could be attracted totes cases, cl.
(3) of section 2 defining " hotel or lodging house " could more appropriately be applied to the tenancies in question.
As this point in this form has not been raised in the courts below or even in the statement of the case in this Court, we refuse to go into that question, even assuming that the controversy thus raised does not require any fresh findings of fact.
These cases have not been fought on that ground and, in our opinion, it is too late to raise for the first time a controversy in that form.
We have therefore to examine the question whether the definition of " Premises " as contained in section 2 (8) of the Act is not comprehensive enough to be (1) A.1.R. 1951 Cal 126 25 applicable to these cases.
The definition is in these terms: " premises ' means any building or part of a building or any hut or part of a hut let separately and includes (a)the gardens, grounds and out houses (if any) appertaining to such building or part of a building or hut or part of a hut, (b)any furniture supplied or any fittings affixed by the landlord for use of the tenant in such building or part of a building or hut or part of a hut, but does not include a room or part of a room or other accommodation in a hotel or lodging house or a stall in a municipal market as defined in clause (44) of section 3 of the Calcutta Municipal Act, 1923, or in any other market maintained by or belonging to a local authority or a stall let at variable rents at different seasons of the year for the retail sale of goods in any other market as defined in clause (39) of section 3 of the Calcutta Municipal Act, 1923, or clause (30) of section 3 of the Bengal Municipal Act, 1932 ".
It has been contended for the appellant that premises " thus defined do not include tenements with the special facilities and conveniences agreed by the landlord to be supplied to the tenants.
In this connection reference was made to the definition of " premises " as contained in the previous legislation like the Calcutta Rent Act (Bengal Act III), 1920, the Calcutta House Rent Control Order, 1943, the Calcutta Rent Ordinance (No. V), 1946 and the West Bengal Premises Rent Control (Temporary Provisions) Act, XXXVIII of 1948, which has been replaced by the Act.
It will serve no useful purpose to go into the ramifications of the definitions in the different pieces of legislation which deal with the same subject matter.
We have to construe the Act as it stood.
The Act has now been replaced by the West Bengal Premises Tenancy Act (Act XII), 1956.
But it is agreed at the Bar that we are concerned with the Act as it stood before it was replaced by the Act of 1956.
The definition of " premises " set out above is in very wide terms 4 26 and includes not only gardens, grounds and outhouse, if any, appertaining to a building or part of a building, but also furniture supplied by the landlord for the tenants ' use and any fittings affixed to the building, thus indicating that the legislature was providing for all kinds of letting.
The definition of " premises " and "hotel or lodging house" between them almost exhaust the whole field covered by the relationship of landlord and tenant, subject to the exceptions noted in the definition of "premises.
" It is admitted at the Bar that the tenancies in question are regulated by the terms and conditions appearing in Exhibit J, the most important of which is clause (1) in the following terms: " That the tenant shall occupy the said flat paying therefor unto the Bank a monthly rent of Rs. 100 including hire of 2 A.C. fans and extra Government duty on electric current without any reduction or abatement to be paid at the Bank on or before the 7th of succeeding month for which the rent is due and that the said rent is inclusive of charges for current for fans, lights, radio and electric stove not exceeding 600 Watts for heating meals and making tea only, use of lift, hot and cold water, the owner and occupier 's shares of Municipal Taxes.
" It is clear from the terms of the clause quoted above that the landlord was to place at the disposal of the tenants not only electric installation including fans but also electric current to be consumed in the use of those installations etc., besides radio and electric stove.
it was argued that the tenancy comprised not only buildings and structures and permanent fixtures but also.
the supply of electric power without any fresh charge for the same.
It was also pointed out that section 9 dealing with fixation of standard rent did not in terms contemplate the enhancement or reduction of rent according as the rates for electric current and Government duty thereon were enhanced or reduced.
it is true that none of the cls.
(a) to (f) of section 9 has any reference to these considerations Clause (b) makes a specific reference only to increase in municipal taxes, 27 rates or cesses.
But then there is the residuary cl.
(g) and the question whether that clause applies to the present cases will have to be discussed separately when the second point in controversy will be taken up for consideration.
It is enough to point out at this stage that the legislature was conscious that contingencies may arise which would not be covered by any of the specific cls;.
(a) to (f) of section 9 which is the operative section in the Act relating to fixation of standard rent.
Under this head the question reduces itself to.
this: whether, if by a stipulation between the landlord and the tenant the ' landlord agrees to provide for additional amenities like electric power for consumption and such other facilities, the case is taken out of the operation of the Act.
The Act is intended " to make better provision for the control of rents of premises.
" It has defined "premises" in very wide terms, as pointed out above.
Hence it is difficult, if not impossible, to accept the contention that the legislature intended the provisions of the Act to have a limited application depending upon the terms which an astute landlord may be able to impose upon his tenants.
In order fully to give effect to the provisions of the statute, the court has to give them the widest application possible within the terms of the statute.
Having those considerations in view, we do not think that the ,supply of the amenities aforesaid would make any difference to the application of the Act to the premises in question.
In this connection reference may be made to the decision of the Court of Apeal in the case of Property Holding Co .
Ltd. vs
Clark (1) and ' the case of Alliance Property Co. Ltd. V. Shaffer (2) which followed the earlier decision to the effect that if the stipulations between landlord and tenant include payment of rent for not only what may properly be characterized as premises within the ordinary acceptation of the term but also payment in respect of lighting cooking equipment, the furnishing and cleaning of hall and staircase and certain other similar amenities, the sum total of the payments in respect of the building or part of the building and other services and amenities constitute (2)[1948] 2 K. B. (1) 28 rent.
In the earlier case of Property Holding Co. Ltd. vs Clark (supra) the facts, shortly stated, were that the agreement between the landlord and the tenant in writing provided for the payment of pound 110 a year as rent and an additional payment of pound 30 a year in respect of the additional amenities and conveniences like lighting and cooking equipments, furnishing and cleaning of hall and staircase etc.
In an action for rent by the landlord at the rate of pound 140 a year the tenant contended that the rent proper was only pound 110 and not the total sum of pound 140 a year payable on all counts, as aforesaid.
The Court of Appeal allowed the landlord 's appeal and held that the standard rent was pound 140 and not only pound 110.
In the course of his judgment Asquith L.J. adopted the language of Younger L. J. in the case of Wilkes vs Goodwin (1) to the following effect: "The first of these (considerations) is that the word Arent ' in this exception surely means not rent in the strict sense but the total payment under the instrument of letting.
The exception assumes that 'rent ' so called may include, for example, 'board ', payment of which is not rent.
I am here paraphrasing the statement of Shearman J. in Nye vs Davis (2)with which I agree.
" Their Lordships of the Court of Appeal repelled the contention that the additional payment was not part of rent and held that the payment in respect of the additional amenities aforesaid was also part of rent within the meaning of the English Act which corresponds to the Bengal Act.
Those English decisions are authorities for the proposition that "rent" included not only what is ordinarily described as rent in an agreement between a landlord and a tenant but also payment in respect of special amenities provided by the landlord under the agreement between him and his tenant.
The term "rent" has not been defined in the Act.
Hence it must be taken to have been used in its ordinary dictionary meaning.
If, as already indicated, the term it, rent " is comprehensive enough to include all payment;.agreed by the tenant to be paid to his landlord for the use and occupation not only of the building and (1) (2) 29 its appurtenances but also of furnishings, electric in stallations and other amenities agreed between the parties to be provided by and at the cost of the land lord, the conclusion is irresistible that all that is included in the term "rent" is within the purview of the Act and the Rent Controller and other authorities had the power to control the same.
In view of these considerations we overrule the first contention raised on behalf of the appellant.
But the second contention raised on behalf of the appellant, in our opinion, is well founded.
"Standard rent" has been defined in el.
(10) of section 2 as follows:standard rent ' in relation to any premises means (a)the standard rent determined in accordance.
with the provisions of Schedule A; (b)where the rent has been fixed under section 9, the rent so fixed; or at which it would have been fixed if application were made under the said section;. . .
This is a definition by in corpation of the provisions of Schedule A and of section 9.
it is common ground that no standard rent had so far been determined in respect of the premises in question before the present proceedings were commenced at the instance of the respective tenants.
Schedule A to the Act in clause (1) defines "basic rent" and then cl.
(2) lays down the formulae for determination of standard rent once the basic rent has been arrived at.
The tenant in each case in the present appeals invoked the provisions of section 9 read with Schedule A of the Act for fixing the standard rent for their respective premises.
The question arises which clause or clauses apply to the terms of the tenancy as indicated above.
Clause (a) cannot apply because it cannot be said that "There is no cause for the alteration of the rate of standard rent as determined according to the schedule for any of the reasons mentioned in the following clauses, in accordance with the provisions of Schedule A." It has not been denied that electric charges and the Government duty thereon have been enhanced and that the municipal taxes also have been increased.
Clause (b) also in terms cannot apply because 30 it does not by itself entirely cover the cases in hand.
There has been increase not only.
in municipal taxes but also in electric charges, Government duty on electric consumption and in the cost of the other services and amenities specially provided for by the agreement between the parties.
Clause (c) is out of the way of the parties because there is no question of addition, alteration or improvement in the premises.
Clause(d) is similarly inapplicable because it is nobody 's case that any furniture not already provided by the landlord has been supplied to any of the premise,% for the use of the tenant.
Clause (e) also has not been claimed by either party to be applicable because the special circumstances contemplated therein are not found in these cases.
Clause (f) is clearly inapplicable because the premises had been constructed admittedly much earlier than December 31, 1949.
The only remaining clause is el.
(g) which is in these terms: " Where no provisions of this Act for fixing standard rent apply to any 'Premises, by determining the standard rent at a rate " which is fair and reasonable.
" It will appear from the terms of the contract between the landlord and the tenant in each case, particularly from clause (1) of the agreement quoted hereinbefore that the land lord has not only agreed to supply electric and other installations but also electric power and other services for which no separate payment has been stipulated It has not been denied as a matter of fact, coun ' Sol for the tenats respondents clearly admitted that the rent fixed 'in each case included payment for those additional amenities and services though the amounts in respect of them have been separately shown in the agreement.
The rent fixed was a consolidated sum for all those amenities and services, as is clearly stated in para.1 of the agreement set out above ' But even after making that concession the learned counsel for the respondents strongly relied upon the decision of a Division Bench of the Calcutta High Court given on Letters Patent Appeal from a judgment of a single Judge of that Court, in Residence, Ltd. vs Surendra It has been laid down in that case that the (1) A.I.R. 1951 Cal.
31 Act is applicable to a tenancy the terms of which included such additional conveniences and facilities as have been provided by the landlord in these cases.
We have already indicated that we agree with that conclusion.
But the case also lays down the proposition that what is paid.
as rent for the flat does not include any payment for the additional facilities and conveniences provided by the landlord for the use of the tenant.
In this connection the High Court made the following observations: " In my judgment when a flat is let, with the landlord agreeing to provide certain free services, what is let is the flat and what is paid is paid for the flat with the landlord providing certain amenities or performing certain obligation.
What is paid is rent for the flat and no part of.
it can be truly regarded as payment for the services.
" With all due deference to the views the views thus expressed by that very experienced and learned Judge, we cannot agree that those observations correctly represent the true legal position.
As a matter of fact, the learned Judge has referred to with approval the judgments of the Appeal Court and of the King 's Bench Division in the cases mentioned above to show that the term "rent" is comprehensive enough to include not only rent in the narrower sense of the term as ordinarily understood but also payment in respect of the additional conveniences and amenities.
The learned Judge goes on to make the following observations: " If he has undertaken obligations by the tenancy agreement the monthly payment or the yearly payment as the case may be would be suitably adjusted.
That, however, would not make the monthly or yearly payment any the less rent.
" The two parts of the observations quoted above cannot be reconciled unless it can be said that the learned Judge is using the word "rent" not in the same sense but in its different connotations according to the context.
If the learned Judge used the word "rent" in its comprehensive sense in which the Act must.
be construed as having used that term, this part of the 32 judgment cannot be said to be against the appellant 's contention that the standard rent must be fixed with reference to all the constituents which made up the lump sum as fixed in each case as rent.
This position emerges not only from a consideration of the legal position in contemplation of the Act, but also from the terms of the agreement between the parties, as indicated above.
The provisions of el.
(g) of a. 9 of the Act empower the Rent Controller and the other authorities under the Act to determine the standard rent after taking into consideration all the constituents which make up the total sum shown in the agreement as monthly rent.
Those authorities are authorised to determine rent which is fair and reasonable.
In thus arriving at a fair and reasonable rent they are not precluded from having recourse to such of the provisions of the Act as may be found applicable either in their entirety or in so far as they can be made applicable.
The Rent Controller gave the landlord credit only for the amount by which the municipal taxes had been increased and no more, by applying the provisions of cl.
(b) of section 9.
The Appellate Authority on the other hand, applied the provisions of el.
(g) of section 9 by determining the fair and reasonable rent after taking into consideration the fact that electric charges as also Government duty on the consumption of electric power had been increased.
So had the cost of providing for the other amenities and services.
In view of our conclusion that the residuary el.
(g) applies to the terms of the tenancy in these cases, it follows that the decision of the Appellate Authority was more in consonance with the provisions of cl.
(g) than that of the Rent Controller or of the High Court.
As the figures arrived at by the Appellate Authority have not been challenged before us, we would direct, that the orders passed by it should be restored and those of the High Court and of the Rent Controller set aside.
The appeal is accordingly allowed in part as indicated above.
But in view of the directions of this Court at the time of granting the special leave, even though the appellant is successful in this Court, he 33 must pay the costs of the respondents, one set of hearing fee to be equally divided amongst the three respondents.
Appeal allowed in part.
| The appellant was the common landlord of the three premises in respect of which three analogous proceedings were started by the respective tenants for standardisation of rent under section 9 read with Sch.
A of the West Bengal Premises Rent Control (Temporary Provisions) Act of 1950.
Under the terms of the lease, which provided for a consolidated monthly rent, the landlord was to provide, besides electric installations, electric current for consumption and other special amenities.
His defence was that the special incidents of the tenancies took the tenancies out of the scope of the Act and if not, alternatively, cl.
(g) of section 9 of the Act should apply and the rent increased proportionately to the increase in the charges for electric current and enhanced Government duty payable thereon.
The Rent Controller rejected the contentions and fixed the standard rent in accordance with the rules laid down in Sch.
A of the Act.
The Chief Judge of the Small Causes Court, on appeal by the landlord, applied cl.
(g) of section 9 of the Act, gave relief in respect of the higher charges for electricity and Government duty and fixed the standard rent at a higher figure.
The tenants moved the High Court in revision and it held that cl.
(g) of section 9 did not apply and virtually, though not entirely, affirmed the decision of the Rent Controller.
The landlord appealed by special leave on the questions of law involved.
Held, that the Act applied to the premises and the standard rent must be determined, under the provisions of cl.
(g) of section 9 of the Act and the decision of the Chief judge restored.
21 The term 'Premises ' as defined in section 2(8) of_ the Act was wide enough to cover the tenancies with their special incidents and the consolidated monthly rent for the amenities provided by the landlord came within the comprehensive sense in which the word rent was used by the Act and was as such liable to be controlled under it.
The observation to the contrary made in respect of such rent in the case of Residence Ltd. vs Surendra Mokan did not correctly represent the legal position.
Property Holding Co., Ltd. vs Clark, (1948) I K. B. 63o, and Alliance Property Co. Ltd. vs Shaffer, , referred to.
Residence Ltd. vs Surendra Mohan, A.I.R. 1951 Cal.
126, considered.
The purpose which the legislature had in view in enacting the Act and the wide terms in which it defined the term 'premises ' leave no manner of doubt that its operative provisions were intended to have a wide application and the mere putting in of a term in the lease, not in terms provided for by any of the clauses of section 9, could not take the tenancy out of the scope of the Act and it would be the duty of the Court, in order that the provisions of the Act might have full effect, to give as wide an application to them as was permissible under the Act.
Where, as in the instant case, the lease provided for a consolidated monthly rent, the Rent Controller and other authorities under the Act were empowered by the provisions of cl.
(g) of section 9 to determine the standard rent on a consideration of all the payments that constitued the agreed rent and they did not prohibit a recourse to such other provisions of the Act as could be applied, either in part or as a whole, in arriving at a fair and reasonable rent.
|
Summarize this legal judgement text concisely | Appeals Nos. 244 and 245 of 1954.
Appeals from the judgment and order dated August 19, 1952, of the Labour Appellate Tribunal of India (Calcutta) at Allahabad in Miscellaneous Cases Nos, C 91 and 93 of 1952.
919 N. C. Chatterji, H. J. Umrigar, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellant in both appeals.
Purshottam Tricumdas, R. Ganapathy Iyer and B. P. Maheshwari, for respondents in both appeals.
M. C. Setalvad, Attorney General for India, Porus A. Mehta and R. H. Dhebar, for the Intervener.
October 24.
The Judgment of the Court was delivered by BHAGWATI J.
These two appeals :by special leave arise out of an order of the Labour Appellate Tribunal of India, Lucknow Bench, by which it dismissed the application of the appellant under section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950, hereinafter referred to as the Act for permission to dismiss the respondents from its employ and allowed the application of the respondents under section 23 of the Act for reinstatement.
The respondents are 76 employees of the appellant, a limited company of Sugar Mills, situated in village Chitauni in the district of Deoria and were working in the engineering department of the mills in the mill house, boiling house and the workshop sections.
There were disputes between the appellant and its workmen and, on the date in question, i.e., May 27, 1952, there was pending before the Labour Appellate Tribunal an appeal which was registered as Cal 101/51.
It appears that one Motilal Singh, an employee of the appellant, had been dismissed by it sometime prior thereto and he had been inciting the workmen to make common cause with him, and, at a meeting held the previous night, some sort of action had been decided upon.
When the workmen of the appellant entered the mills on the morning of May 27, 1952, these 76 workmen, though they entered their respective sections of the engineering department, did not commence any work from 7 a.m. as they should have done.
The sectional engineers in charge asked these workmen as to why they did not commence their work and became a ware of their intention to resort 920 to a tools down strike.
They reported the fact to the Chief Engineer who sent a slip to the General Manager informing him that the workers had gone on a tools down strike.
The General.
Manager thereupon personally went to the workshop, mill house and the boiling house and asked these workmen not to resort to such strike but the latter did not pay any heed to his advice.
The General Manager then asked the Chief Engineer to persuade these workmen to commence the work, give them time for about 2 hours till 10 30 a.m. and report to him if, in spite of his persuasions, they did not commence work.
The persuasions of the Chief Engineer and also of the section engineers proved of no avail and the 76 workmen persisted in their attitude with the result that the section engineers made their reports to the General Manager through the Chief Engineer giving the names of the workmen belonging to their respective sections who had resorted to the tools down strike with effect from 7 a.m. that day.
These reports were endorsed by the Chief Engineer and passed on to the General Manager who,in his turn, passed an order at about 10 30 a.m. suspending these 76 workmen till further orders.
The order for suspension was communicated to these workmen through their sectional heads and was also pasted on the notice board of the mills.
There was a recess between 11 a.m. and 1 p.m. and when the gates were opened at 1 p.m. these 76 workmen, in spite of the warnings of the gatekeepers and Jemadar to the contrary, rushed into the mills, entered their respective sections and adopted a threatening attitude.
The sectional engineers made reports to the General Manager in regard to this occurrence and these reports also were endorsed by the Chief Engineer and passed on by him to the General Manager.
The situation which was created by these workmen by forcibly entering their respective sections and continuing there threatening violence was explosive and the management had to call in the police in order to avert violence and damage to the property.
The police came in at 5 p.m. and order appears to have been restored.
There was no untoward incident that day 921 but the management appears to have viewed the situation with, seriousness and approached the Regional Conciliation Officer the next day in order to ask for advice in regard to the dismissal of these workmen.
The Regional Conciliation Officer, however, pointed out to the General Manager that, in view of the pendency of the appeal before the Labour Appel, late Tribunal, he had no jurisdiction to entertain any application for such permission and referred the General Manager to the Labour Appellate Tribunal.
The workmen, on the other hand, got a letter dated May 28, 1952, addressed to the General Manager by the General Secretary of the Chini Mill Mazdoor Sangh to the effect that they had gone to the gates of 'the mills as usual at 7 a.m. that day to attend to their work but they were not allowed to enter the mill pre mises.
They charged the management with the intention to victimise them on the charge of a tools down strike and stated that they had neither struck nor intended to strike but had been prevented from attending to their work and had therefore been advised to go back to their quarters with a view to maintain peace.
The last paragraph of that letter was very significant.
The General Manager was told that if he did not mend his illegal mistakes and did not take the workmen back on duty he would be responsible for any breach of peace.
After receipt of that letter it was evident that the workmen would resort to violent measures in order to attend to their work and a breach of peace was apprehended.
The management evidently continued the police precautions and, after having waited for some time, the General Manager furnished to these 76 workmen on June 2, 1952, a charge sheet wherein he charged them with having committed misconduct within the meaning of cl.
L. I (a) and (b) and wailful insubordination within the meaning of el.
L. I (a), (b) and (w) of the Standing Orders.
He called upon them to show cause within 24 hours of the receipt of the charge sheet why disciplinary action should not be taken against them and gave them intimation that an open enquiry in connection with the said charges 120 922 would be held by him at 8 a.m. on June 6, 1952.
He also intimated that if all the workmen arranged to present themselves earlier than June 6, 1952, he would take up the said enquiry earlier provided, however, an intimation was received to that effect from them or from their Union.
The workmen were to remain suspended till the enquiry was finished.
The workmen addressed uniform letters to the General Manager denying that there was any tools down strike on May 27, 1952, and alleging that the sectional heads and the Chief Engineer bad conspired together "under some mysterious preconceived plans" and stated that no useful purpose would be served by holding an enquiry on the 1 1 th day of their suspension.
They pointed out that such indefinite period of suspension during the pendency of the appeal before the Labour Appellate Tribunal and Reconciliation Board was illegal and unjustified and was in utter disregard of the Standing Orders.
By their further letter dated June 5, 1952, similarly addressed to the General Manager, they voiced their apprehension that they would not get any justice from an enquiry held by the management itself and asked for investigation by an impartial tribunal.
The management, however, held the enquiry as intimated at 8 a.m. on June 6, 1952.
The workmen non co operated and did not present themselves at the enquiry.
The General Manager immediately addressed a letter to these workmen putting on record that in spite of the orders conveyed by him earlier the workmen had disobeyed the.
same and had not appeared at the appointed time and place for the enquiry into the tools down strike.
He pointed out that by not appearing in this manner they had made themselves liable to dismissal for insubordination, and intimated that the management was applying to the proper authorities for permission to dismiss them pending receipt of which the workmen would remain under suspension.
This letter was received by the workmen at 9 a.m. that day and they replied through the General Secretary of the Chini Mill Mazdoor Sangh repeating that a demand had been made for an 923 investigation by an impartial tribunal and in so far as no impartial tribunal had been appointed they were not agreeable to present themselves and submit their defence at the enquiry which was conducted by the management itself.
The appellant thereafter made the necessary application under section 22 of the Act before the Labour Appellate Tribunal of India, Lucknow Bench, for permission to dismiss these 76 workmen.
In the affidavit which was filed in support of that application, all the facts herein before mentioned were set out in extenso and it was pointed out that the management, after giving full consideration to the explanations and offering every possible opportunity to these workmen to explain their conduct coupled with the unreasonable attitude adopted by them, had adjudged them guilty of misconduct under cl.
L. I (a), (b) and (w) of the Standing Orders and considered that any further employment of these workmen would be extremely detrimental to discipline and dangerous in the interests of the industry.
The workmen, in their turn, filed on June 9, 1952, an application under section 23 of the Act for requisite action to be taken against the appellant for having contravened section 22(b) of the Act by inflicting on them the punishment in the shape of harassment by resorting to an illegal lookout for an indefinite period with effect from May 27, 1952, without obtaining the prior permission of the , Labour Appellate Tribunal and "thereby acting contrary to law and resorting to mala fide actions in direct violation of the provisions of the Standing Orders in continuation of the management 's anti trade (Union) activities".
Counter affidavits were made by the workmen as also the management in reply to both the above applications.
The Labour Appellate Tribunal held that the appellant did not act in strict compliance with cl.
L. 12 of the Standing Orders and was, therefore, not entitled to ask for permission to dismiss the 76 workmen.
It accordingly dismissed the appellant 's application under section 22 of the Act.
In regard to the application of the workmen under section 23 of the Act, it held 924 that the wholesale suspension of the 76 workmen and their prevention from resuming work at I p.m. after the lunch hour amounted to a lockout and that this conduct of the appellant amounted to punishment of the workers whether by dismissal or otherwise and was, therefore, in contravention of section 22(b) of the Act.
It accordingly ordered the reinstatement of the workmen if they presented themselves at the office of the General Manager during office hours on any day within 15 days of the order and also ordered payment of half the salary and allowances for the period of non payment, viz., from the date of their suspension up to the date on which they were taken back in service.
Shri N. C. Chatterjee for the appellant before us has strenuously urged that the workmen had resorted to the tools down strike which was an illegal strike and that the appellant was well within its rights in suspending the pending enquiry and also pending the application for permission to dismiss them made before the Labour Appellate Tribunal.
Even if it be held that the appellant had declared a lockout, such a lockout was in consequence of the illegal strike resorted to by the workmen and could not be deemed to be illegal.
He further urged that the management had held an enquiry into the illegal strike which had been resorted to by the workmen and found that the workmen were guilty of misconduct and insubordination within the meaning of cl.
L. I (a), (b) and (w) of the Standing Orders and the appellant rightly came to the conclusion that any further employment of these workmen would be extremely detrimental to discipline and dangerous in the interests of the indus try.
He also contended that the delay in holding the enquiry was not unreasonable and the suspension of the workmen pending enquiry for more than four days was due to sufficient reason, the atmosphere created by the non cooperation of the workers being so tense as not being appropriate for the holding of an enquiry within those four days, that there was no breach of cl.
L. 12 of the Standing Orders and that the Labour Appellate Tribunal was in error when it 925 refused to grant the application under section 22 of the Act.
Civil Appeal No. 245 of 1954 which is directed against the order of the Labour Appellate Tribunal under section 23 of the Act may be disposed of at once.
The Labour Appellate Tribunal was of opinion that the conduct of the appellant in preventing the workmen from continuing work after I p.m. on May 27, 1952, came within the definition of a lockout and the workmen being employed in a public utility concern such lockout would be illegal without a proper notice.
It was further of opinion that this conduct amounted to punishment of a worker whether by dismissal or otherwise and was, therefore, in contravention of section 22(b) of the Act.
This conclusion of the Labour Appellate Tribunal was, in our opinion, based on a misapprehension of the whole position.
The position had been summed up by the Labour Appellate Tribunal in the following words: "As a matter of fact the management never thought of a lockout.
Their idea was to suspend the suspected persons pending enquiry for which they gave a notice".
If this was the correct position, the conclusion reached by the Labour Appellate Tribunal that the conduct of the management came within the definition of a lockout was absolutely unjustifiable.
The Labour Appellate Tribunal recorded its inability to come to a definite finding as to what was the position which obtained on May 27, 1952.
It observed "We have got a number of affidavits in support of the parties ' case and there is oath against oath.
We do not find ourselves in a position to hold definitely as to what was the exact situation.
But it does appear to us that a mountain has been made of a mole hill and conclusions have been arrived at without going deep into the matter".
Even if the parties had made a mountain of a mole hill and had reached conclusions without going deep into the matter, it was certainly the business of the Labour Appellate Tribunal itself to record a finding of fact in regard to the situation as it obtained on 926 that day.
This unfortunately the Labour Appellate Tribunal did not do and it came to record its conclusion, that the conduct of the management came within the definition of a lockout without realizing that such conclusion was inconsistent with what it ' had stated a little earlier that the management as a matter of fact never thought of a lockout.
We have been taken through the whole evidence by the learned counsel for the appellant and there is clear documentary evidence to show that the 76 workmen resorted to a tools down strike from 7 a.m. on May 27, 1952.
The reports which were made by the section engineers and sent to the General Manager through the Chief Engineer were clear and categoric in regard to such tools down strike having been resorted to by the workmen in question and the list of the 76 workmen which was prepared by the General Manager ordering their suspension was based on those reports.
The further reports which were made by the section engineers again sent by them to the General Manager through the Chief Engineer in the afternoon of May 27, 1952, also were clear and categoric in regard to the said workmen having been asked not to enter the workshop, the boiling house and the mill house at 1 p.m. but their having entered the same threatening violence.
A faint attempt was made to charge the section engineers and the Chief Engineer with having conspired "under some mysterious preconceived plans" but the same rested merely on a bare allegation and was not substantiated by any tangible evidence.
Even though there was some conflict of evidence in regard to the time when the notice of suspension was given by the General Manager to these workmen and when the notice in that behalf was pasted on the notice board of the appellant, it is abundantly clear on the documentary evidence above referred to that the 76 workmen resorted to a tools down strike from 7 a.m. on the morning of May 27, 1952, that they were suspended till further orders immediately after the receipt by the General Manager of the first series of reports from the section engineers, that they were prevented from entering the premises 927 at I p.m. but entered the same threatening violence.
If this is the true position it follows that there was no lockout declared by the appellant, much less an illegal lockout.
The workmen bad resorted to an illegal strike and the General Manager rightly ordered that the workmen indulging in such strike should be suspended pending further orders which obviously meant pending enquiry into their conduct and the obtaining of the permission to.
dismiss them as a result of such enquiry if the management thought fit.
If there was thus no illegal lockout at all, the conclusion reached by the Labour Appellate Tribunal in that behalf was absolutely unjustified.
Even if there had been a lockout as concluded by the Labour Appellate Tribunal the same was in consequence of the illegal strike which had been resorted to by these workmen and could not by virtue of section 24(3) of the , be deemed to be illegal.
There is, however, a more fundamental objection that, even if the appellant be held responsible for having declared an illegal lockout, the lockout would not come within the ban of section 22 of the Act.
The Labour Appellate Tribunal had before it an earlier decision of its own in Jute Workers Federation, Calcutta vs Clive Jute Mills(1), in which the same question had beed considered with reference to section 33 of the .
In that case, a lockout had been declared which involved 4,000 workers of the company and a preliminary contention was urged that there was no contravention of the provisions of section 33 of the .
The Labour Appellate Tribunal considered the question whether the lockout had (1) in fact altered the conditions of service of the workmen to their prejudice, or (2) had the effect of discharge, or (3) amounted to punishment of the workmen.
It came to the conclusion that a lockout had not the effect of a discharge, for a lockout does not automatically terminate the services of the workmen.
It did not also amount to punishment, for punishment presup (1) [1951] II L.L.J. 344.
928 poses an offence or misconduct.
A lockout is generally adopted as a security measure and may in certain cases be used as a weapon corresponding to what the employees have in the shape of a strike and that, therefore, a. 33(b) would not be contravened by the company by.
declaring a lockout.
The Labour Appellate Tribunal then considered whether a lockout would attract the operation of section 33(a).
It was of opinion that no automatic termination of the services of the employees was brought about by a lockout and the question was whether any of the conditions of service was altered thereby to their prejudice.
The contention of the Union was that the conditions of service were altered to the prejudice of the workmen because those employees did, not in fact get their pay during the period of the lockout with the possibility of losing it.
This contention was negatived and the Labour Appellate Tribunal was of opinion that the conditions of their service would be altered by the lockout if the employees lost their right to receive their pay during the period of lockout in 'all circumstances but the question whether they would be entitled to get their pay during that period could not be postulated with certainty for that would depend on a variety of considerations.
In the opinion of the Labour Appellate Tribunal to bring a case within section 33(a), the questioned act of the employer must directly and in fact alter the conditions of service to the prejudice of the workmen concerned, that is to say, the moment the lockout was declared.
The possibility that they may or may not get their pay meant that the lockout may or may not alter the conditions of their service to their prejudice.
Section 33(a) would not, therefore, be attracted by the mere fact of a lockout.
The Labour Appellate Tribunal thus came to the conclusion that neither section 33(a) nor section 33(b) would be contravened by the company in de claring the lockout.
This decision of the Labour.
Appellate Tribunal was followed in Colliery Mazdoor Congress, Asansol, vs New Beerbhoom Coal Co. Ltd.(1) and the Labour (1) 11952] L A.C. 219.
929 Appellate Tribunal there held that a lockout did not come within the ambit of section 33 and, therefore, no permission under that section was required for declaring a lockout.
We agree with the reasoning adopted in the above cases and are of opinion that a lockout is neither an alteration to the prejudice of the workmen of the conditions of service applicable to them within the meaning of cl.
(a) nor a discharge or punishment whether by dismissal or otherwise of the workmen within the meaning of cl.
(b) of section 33 of the , or section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950, and that, therefore, no permission of the Conciliation Officer, Board or Tribunal as the case may be is necessary to be obtained before a lockout can be declared.
If the lockout is legal, no question can at all arise.
If, on the other hand,, the lockout is illegal, a remedy is provided in section 26 of the .
The employees affected by a lock out would in any event be entitled to refer the industrial dispute arising between themselves and the employer for adjudication by adopting the proper procedure in regard thereto.
The Labour Appellate Tribunal was, therefore, clearly in error when it came to the conclusion that the conduct of the appellant came within the definition of a lockout and that it amounted to punishment of the workmen whether by dismissal or otherwise and was, therefore, in contravention of s, 22(b) of the Act.
The application of the respondents under section 23 of the Act was accordingly liable to be dismissed and should have been dismissed by the Labour Appellate Tribunal.
Civil Appeal No. 245 of 1954 will, therefore, be allowed and the order of the Labour Appellate Tribunal reinstating the respondents in the service of the appellant will be set aside.
Coming now to Civil Appeal No. 244 of 1954, the first question to determine is whether the respondents had resorted to an illegal strike.
We have already pointed out the circumstances under which the 76 workmen resorted to the tools down strike from 7 a.m. on May 27, 1952, and recorded the finding 121 930 that they not only resorted to such strike but persisted in their attitude in spite of the persuasions of the Chief Engineer and the General Manager of the appellant.
The appellant having been declared a public utility concern, the workmen were not entitled to resort to such strike without giving to the appellant notice of the strike in terms of section 22(1) of the , and the tools down strike which was resorted to by them was, therefore, an illegal strike.
The fact that the strike was of a short duration viz., from 7 a.m. till 10 30 a.m. would not exculpate the respondents from the consequence" of having resorted to such illegal strike, the avowed intention of the strikers being not to resume work until their pre concerted plan conceived at, the meeting held on the previous night was carried out.
The strike resorted to by the workmen was of an indefinite duration.
and the management, having failed in its attempts to persuade the workmen to resume their work was well within its rights to suspend these workmen pending further orders.
(Vide Buckingham and Carnatic Co. Ltd. vs Workers of the Buckingham ' and Carnatic Co. Ltd.(1)).
The Labour Appellate Tribunal did not decide this issue at all but only considered the alleged non compliance by the appellant of cl.
L. 12 of the Standing Orders as determinative of the whole enquiry before it observing that "although the delay (in holding the enquiry) was not unreasonable, there was no doubt that the management did violate the letter of the rule".
It further observed that there was no sufficient reason indicated for extending the period of suspension beyond the period of four days provided in cl.
L. 12 of the Standing Orders, the tension created by the non co operation of the workers not having been considered sufficient to preclude the management from collecting materials for conducting the enquiry within the said period of 4 days, This reasoning of the Labour Appellate Tribunal was unsound.
Having once come to the conclusion that the delay was not unreasonable, there was no justification for the further (1) ; 931 conclusion reached by the Labour Appellate Tribunal that the tension created by the non co operation of the workers was not a sufficient reason for extending the period of such suspension.
The workmen had forcibly entered the premises of the mills in spite of the warnings of the watchmen and the Jemadar and had also entered the workshop, the boiling house and the mill house and continued to stay there threatening violence.
In their letter dated June 3, 1952, they had also threatened the General Manager that if he did not mend his illegal mistakes and did not take the workmen back on duty be would be responsible for any breach of peace.
This was enough evidence of their mentality and the management naturally enough apprehended breach of peace at the hands of these workmen.
If this was the tense atmosphere created by the non co operation of the workmen, the management was perfectly justified in postponing the enquiry by a few days and continuing the workmen under sus pension.
The delay which was thus caused in furnishing the charge sheets and giving notice of the enquiry to these workmen on June 2, 1952, was, therefore, sufficiently explained and if there was any one responsible for this.
delay it was the workmen and not the management.
It did not then lie in the mouth of the workmen to protest against this delay in the enquiry and trot out their suspension for a period exceeding four day 's as an excuse for abstaining from the enquiry.
As a matter of fact, the management intimated to the workmen that in spite of June 6, 1952, having been fixed as the date for the open enquiry, the management would be prepared to take up the enquiry earlier provided an intimation was received either from the workmen or from their Union to that effect.
Instead of responding to this gesture of the appellant the workmen persisted in asking for an independent enquiry and non co operated with the management in the enquiry which was ultimately held by it as notified at 8 a.m. on June 6, 1952.
We are of opinion that under the circumstances the appellant was not guilty of having contravened el.
L. 12 of the Standing Orders and the Labour Appellate 932 Tribunal was in error when it came to the contrary conclusion and dismissed the application of the appellant under section 22 merely on that ground without making any further enquiry into the circumstances of the case.
It appears that the Labour Appellate Tribunal was driven to take this step because it found itself unable to hold definitely as to what was the exact situation on May 27, 1952.
We shall only observe that if the Labour Appellate Tribunal had really ap plied its mind to the question it would have come to the conclusion that the respondents in fact did resort to the illegal strike from 7 a.m. on May 27, 1952, and that there was no contravention of cl.
L. 12 of the Standing Orders by the appellant.
The next question that falls to be determined is whether the enquiry which was held by the management on June 6, 1952, was a fair enquiry and whether the General Manager observed the principles of natural justice in the conduct of that enquiry Due notice of the enquiry was given to the respondents by the letter of the management addressed to them on June 2, 1952, and if the respondents did not avail themselves of the opportunity of presenting themselves and defending their action at the enquiry they had only themselves to blame for it.
It was within the province of the management to hold such an enquiry after giving due notice thereof to the respondents and to come to its own conclusion as a result of such enquiry whether the respondents were guilty of the charges which had been leveled against them.
If full and free opportunity was given to the respondents to present themselves at the enquiry and defend themselves it could not be said that the enquiry was anything but fair.
No principles of natural justice were violated and the management was at liberty to come to its own conclusions in regard to the culpability of the respondents and also to determine what punishment should be meted out to the respondents for the misconduct and insubordination proved against them.
If the ban which is imposed by section 22 of the Act had not been in existence, the management would have been entitled to impose the punishment on the 933 respondents and dismiss them without anything more, if it honestly came to the conclusion that dismissal of these workmen was the only punishment which should be meted out to them in all the circumstances of the case.
The respondents would no doubt then have been entitled to refer the industrial dispute which arose out of their dismissal for adjudication by adopting the proper procedure set out in the , and the Industrial Tribunal appointed by the Government for the adjudication of such dispute would have been in a position to thrash out all the circumstances and award to them the appropriate relief This course was, however, not open to the appellant by reason of the pendency of the appeal before the Labour Appellate Tribunal and the only thing which the appellant could do, therefore, was, after coming to its own conclusion as a result of such enquiry, to apply to the Labour Appellate Tribunal under s.22 of the Act for permission to dismiss the respondents and this the appellant did on June 8, 1952.
It was not open to the respondents then, having regard to the attitude which they had adopted throughout in relation to the said enquiry, to urge that the enquiry was not fair or impartial or that the principles of natural justice had been violated by the General Manager of the appellant in the conduct of the enquiry.
It was, however, urged on behalf of the respondents that the suspension for an indefinite period beyond the period of four days provided in cl.
L. 12 of the Standing Orders was a punitive measure and the appellant was not justified in imposing that punishment on them without the permission of the Labour Appellate Tribunal.
It was contended that such suspension involved loss of pay by the respondents and being of an indefinite duration inflicted such harassment on them that it could not be deemed to be anything except a punishment.
We do not accept this contention.
It has been rightly held by the Labour Appellate Tribunal that suspension without pay pending enquiry as also pending permission of the Tribunal under the relevant section could not 934 be considered a punishment as such suspension without payment would only be an interim measure and would last till the application for permission to punish the workman was made and the Tribunal bad passed orders thereupon.
If the permission was accorded the workman would not be paid during the period of suspension but if the permission was refused he would have to be paid for the whole period of suspension.
There is nothing like a contingent punishment of a workman and therefore such suspension could not be deemed to be a punishment of the workman at all.
Such suspension would of necessity be of an indefinite duration because to get a written permission of the Tribunal would mean delay and no Tribunal would likely issue any order without notice and without hearing all the parties concerned.
Orders for suspension were meant only as security measures or precau tionary ones taken in the interest of the industry itself or its employees in general.
These measures were sometimes called for immediately after an incident and any delay, however small, might defeat the purpose for which such measures were intended.
It would therefore be necessary to adopt these measures immediately and to suspend the workman pending the enquiry as also the permission to be obtained from the appropriate Tribunal for dismissing him if as a result of the enquiry the, management thought fit to inflict such punishment upon him.
The suspension.
, however, would not be a punishment by itself.
The ordinary dictionary meaning of the word "Punish" is "to cause the offender to suffer for the offence" or "to inflict penalty on the offender" or "to inflict penalty for the offence" (Concise Oxford Dictionary, 4th Ed.).
Punishment can be otherwise defined (Vide Law Lexicon by P.R. Aiyar, 1943 Ed.) as penalty for the transgression.
of law, and the word cc punish" denotes or signifies some offence committed by the person who is punished.
Any action of the employer to the detriment of the workman 's interest would not be punishment so long as no offence was found to have been committed by the workman.
The suspension under such circumstances, therefore, could 935 not be a punishment even though it may be of an indefinite duration and would not attract the operation of section 22 of the Act.
It could not be contended, therefore, that suspension without pay even for an indefinite period pending enquiry or pending the permission of the appropriate Tribunal to dismiss the workman would be a punishment which would require permission under section 22 of the Act before the same could be meted out to the workman.
(Vide Champdany Jute Mills And Certain Workmen(1); Joint Steamer Companies And Their Workmen(2); Assam Oil Co. Ltd. vs Appalswami(3); Standard Vacuum Oil Co. vs Gunaseelan, M. O.(4)).
The scope of the enquiry before the Labour Appellate Tribunal under section 22 of the Act has been the subject matter of decisions by this Court in Atherton West & Co. Ltd. vs Suti Mill Mazdoor Union and Others(5) and The Automobile Products of India Ltd. vs Rukmaji Bala & Others(6).
The Tribunal before whom an application is made under that section has not to adjudicate upon any industrial dispute arising between the employer and the workman but has only got to consider whether the ban which is imposed on the employer in the matter of altering the conditions of employment 'to the prejudice of the workman or his discharge or punishment whether by dismissal or otherwise during tile pendency of the proceedings therein referred to should be lifted.
A prima facie case has to be made out by the employer for the lifting of such ban and the only jurisdiction which the Tribunal has is either to give such permission or to refuse it provided the employer is not acting mala fide or is not resorting to any unfair practice or victimization.
It cannot impose any conditions on the employer before such permission is granted nor can it substitute another prayer for the one which the employer has set out in his application.
If the permission is granted, the ban would be lifted and the employer would be at liberty, if he so chooses thereafter, to deal out the (1) [1952] I L.L.J. 554.
(2) [1954] II L.L.J. 328. ; (4) [1951] II L.L J. 221.
(5) [1954] II L.L.J. 656.
(6) , 936 punishment to the workman.
On such action being taken by the employer the workman would be entitled to raise an industrial dispute which would have to be referred to the appropriate Tribunal for adjudication by the Government on proper steps being taken in that behalf.
When such industrial dispute comes to be adjudicated upon by the appropriate Tribunal, the workman would be entitled to have all the circumstances of the case scrutinized by the Tribu nal and would be entitled to get the appropriate relief at.
the hands of the Tribunal.
If, on the other hand, such permission is refused, the parties would be relegated to the status quo and the employer would not be able to deal out the punishment which he intends to do to the workman.
Even then an industrial dispute might arise between the employer and the workman if the workman was not paid his due wages and other benefits.
Such industrial dispute also would have to be referred to the appropriate Tribunal by the Government and the Tribunal would award to the workman the appropriate relief having regard to all the circumstances of the case.
The Tribunal before whom such an 'application for permission is made under section 22 of the Act would not be entitled to sit in judgment on the action of the employer if once it came to the conclusion that a prima facie case had been made out for dealing out the punishment to the workman.
It would not be concerned with the measure of the punishment nor with the harshness or otherwise of the action proposed to be taken by the employer except perhaps to the extent that it might bear on the question whether the action of the management was bona fide or was actuated by the motive of victimization.
If on the materials before it the Tribunal came to the conclusion that a fair enquiry was held by the management in the circumstances of the case and it bad bona fide come to the conclusion that the workman was guilty of misconduct with which he had been charged a prima facie case would be made out by the employer and the Tribunal would under these circumstances be bound to give the requisite permission to the employer to deal 937 out the punishment to the workman.
If the punishment was harsh or excessive or was not such as should be dealt out by the employer having regard to all the circumstances of the case the dealing out of such punishment by the employer to the workman after such permission was granted would be the subject matter of an industrial dispute to be raised by the workman and to be dealt with as aforesaid.
The Tribunal, however, would have no jurisdiction to go into that question and the only function of the Tribunal under section 22 of the Act would be to either grant the permission or to refuse it.
(Vide Champdani Jute Mills And Shri Alijan(1); R.B section Lachmandas Mohan Lal & Sons Ltd. And Chini Mill Karmachari Union(2) Assam Oil Companies ' case(3)).
In the circumstances of the present case, once the appellant succeeded in establishing that the workmen had resorted to an illegal strike from 7 a.m. on May 27, 1952, that a fair enquiry into the alleged misconduct and insubordination of the workmen had been held by the management without violating any principles of natural justice, that the management had as a result of such enquiry found that the workmen had been guilty of misconduct and insubordination with which they had been charged and that the management had come to the bona fide conclusion that continuing the workmen in its employ was detrimental to discipline and dangerous in the interests of the appellant, the Labour Appellate Tribunal ought to have held that a prima facie case for the dismissal of the workmen had been made out by the appellant and ought to have granted the appellant the permission to dismiss the workmen.
We are, therefore, of opinion that the Labour Appellate Tribunal was clearly in error in rejecting the application of the appellant under section 22 of the Act and refusing it the permission to discharge the respondents from its employ.
Civil Appeal go.
244 of 1954 will, therefore, be allowed and the order of (1) [1952] II L.L.J. 629.
(2) [1952] II L.L.J. 787, (8) 122 938 the Labour Appellate Tribunal dismissing the application under section 22 of the Act will be set aside.
The appellant will be granted permission under section 22 of the Act to discharge the respondents from its employ.
Under the orders of the Court, one half of their salary has been already paid by the appellant to the respondents from May 27, 1952, onwards.
As a result of this decision, the appellant would be entitled to recover the same back from them.
Shri N. C. Chatterjee appearing on behalf of the appellant has, however, stated that the appellant would forego the recovery of that amount and would also keep the respondents on the reserve list to be employed in the mills as and when there were vacancies in their permanent cadre.
We hope that the respondents will take this offer in the true spirit with, which it has been made on behalf of the appellant and behave better in the future.
Shri N. C. Chatterjee has also left the question of costs of both these appeals to us and we do order that, in all the circumstances of the case, it would be proper that each party do bear and pay its own costs of both these appeals.
Appeals allowed.
| Seventy six workers of the appellant company resorted to a tools down strike in sympathy with a dismissed co worker.
Repeated attempts to persuade them to resume work having failed the General Manager suspended them until further orders.
After midday recess the Management sought to prevent the workers from entering the mills but they violently entered the mills and the Police had to be called in by the company to keep the peace.
Charges of misconduct and insubordination were thereafter framed against the workers and they were called upon to show cause in an open enquiry to be held by the General Manager why disciplinary action should not be taken against them and the order of suspension was extended pending the enquiry.
The workers took up an attitude of total non cooperation and the atmosphere was tense with the result that the enquiry could not be held within 4 days.
The Management decided to dismiss the workers as a result of the enquiry but as an appeal was then pending before the Labour Appellate Tribunal, the company applied to it under section 22 of the Industrial Disputes (Appellate Tribunal) Act of 1950 for permission to do so and extended the period of suspension pending receipt of such permission.
The workmen in their turn filed an application under a. 23 of the Act to the Appellate Tribunal for requisite action to be taken against the company for having contravened section 22(b) of the Act by resorting to an illegal lock out and thereby punishing them without its prior permission.
The Appellate Tribunal held that the company had not held the enquiry within the time specified by el.
L 12 of the Standing Orders and on that ground dismissed its application.
It allowed the application of the workers holding that the wholesale suspension of the workers and preventing them from continuing work.
after the mid day recess amounted to a lock out 917 and punishment by the company and contravened section 22(b) of the Act and directed their reinstatement.
The company appealed.
It was contended on behalf of the company that there had been neither a breach of el.
L 12 of the Standing Orders nor a contravention of section 22(b) of the Act.
Hold, that the contentions were correct and the appeals must succeed.
The conduct of the company did not come within the definition of a lock out and even if there was any lock out it was in consequence of the illegal strike resorted to by the workmen and as such could not be deemed to be illegal by virtue of section 24(3) of the Industrial Disputes.
Act, 1947.
Moreover, even assuming that the company declared an illegal lock out it was not necessary for it to obtain the permission of the Appellate Tribunal under section 22 of the Act before it could do so.
A lock out was neither an alteration of the conditions of service within the meaning of el.
(a) nor a discharge or punishment by dismissal or otherwise within the meaning of el.
(b) of section 33 of the Industrial Disputes Act, 1947 or under section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950 and no permission was, therefore, required for its declaration.
If the lock out was illegal the workmen had their remedy under section 26 of the Industrial Disputes Act and in any event they had the right to have the dispute referred for adjudication.
Jute Workers Federation, Calcutta vs Clive Jute Mills ([1951] and Colliery Mazdoor Congress, Asansol vs New Beerbhoom Coal Co. Ltd. ([1952] L.A.C. 219), approved.
The Company having been declared a public utility concern, the workers had no right to go on strike without giving a notice in terms of section 22(1) of the and the tools down strike resorted to by them was illegal and the company was within its rights in suspending them.
Buckingham and Carnatic Co. Ltd. vs Workers of the Buckingham and Carnatic Co. Ltd., ([1953] S.C.R. 219), referred to.
Mere failure to hold an enquiry within the period of four days prescribed by el.
L 12 of the Standing Orders could not determine the matter before the Appellate Tribunal and where, as in the instant case, the delay was due to the conduct of the workers it was sufficiently explained.
Where full and free opportunity was given to the workers to be present and defend themselves in a duly notified enquiry and they failed to do so, the Management was quite within its right to come to its own conclusion as to their guilt and the punishment to be meted out to them and it was not open to the workmen thereafter to urge that such enquiry was not fair or impartial or violated the principles of natural justice.
918 There could be no punishment so long as there was no offence and any action of the employer to the detriment of the workers ' interest would not amount to punishment.
The law did not contemplate anything like a contingent punishment of a worker and, consequently, where there was an interim order of suspension pending an enquiry or the grant of permission by the Appellate Tribunal, the question of pay for the period of such suspension depending on whether or not the permission would be granted, such suspension would not amount to punishment even where it was of an indefinite duration so as to attract the operation of section 22 of the In dustrial Disputes (Appellate Tribunal) Act, 1950.
Champdany Jute Mills and Certain Workmen, ([1952) 1 L.L.J. 554), Joint Steamer Companies and Their Workmen, ([1954] II L.L.J. 221), Assam Oil Co. Ltd. vs Appalswami, ([1954] , Standard Vacuum Oil Co. vs Gunaseelan, M. G. ([1954] II L.L.J. 656), relied on.
Under that section the only thing that the Appellate Tribunal had to consider was whether a prima facie case had been made out by the employer for lifting the ban imposed by the section and if, on the materials before it, it was satisfied that there bad been a fair enquiry in the circumstances of the case and the Management had bona fide come to the conclusion that the worker was guilty of misconduct with which he had been charged and it would be detrimental to discipline and dangerous in the interests of the company to continue him in its employ, a prima facie case was made out and the Tribunal would be bound to permit the employer to punish the workman.
It would be no part of its duty to judge whether the punishment was harsh or excessive, except so far it might bear on the bona fides of the Management, and could only grant the permission as sought for or refuse it and the question of the propriety of the punishment could be decided only by the appropriate Tribunal appointed by the Government for adjudicating the industrial dispute which would ensue upon the action of the management.
Atherton West & Co. Ltd. vs Suti Mills Mazdoor Union and Others, ([1953] S.C.R. 780), The Automobile Products of India Ltd. vs Bukmaji Bala & Others, ([1955] 1 S.C.R. 1241) Champdany Jute Mills and Shri Alijan, ([1952] II L.L.J. 629), R.B.S. Lachmandas Mohan Lal & Sons Ltd. and Chini Hill Karmachari Union, ([1952] II L.L.J. 787) and Assam Oil Companies ' Case, ([1954] L.A.C. 78), referred to.
|
Summarize this legal judgement text concisely | Appeal No. 32 of 1955.
Appeal from the judgment and decree dated May 5, 1954, of the High Court of Punjab at Chandigarh in Regular First Appeal No. 115 of 1953 arising out of the decree dated June 6, 1953, of the Court of the Subordinate Judge, 1st Class, Delhi, in suit No. 26 of 1953.
Dewan Chaman Lal and Ratan Lal Chawla, for the appellant.
M. C. Setalvad Attorney General for India, Porus A. Mehta and R. H. Dhebar, for the respondent.
November 6.
The Judgment of the Court was delivered by SINHA J.
The main question for determination in this appeal from the concurrent decisions of the courts below is whether the Delhi and Ajmer Rent Control Act, XXXVIII of 1952 (which hereinafter will be referred to as the Control Act) is applicable to the premises in question.
The courts below have come to the conclusion that in view of the provisions section 3(a) of the Control Act the market called the New Fruit and Vegetable Market, Subzimandi, under the adminis tration the respondent, the Delhi Improvement Trust, (which hereinafter will be referred to as the Trust) is Government property to which the provisions of the Act are not attracted.
This appeal has been brought to this Court on a certificate granted by the High Court of Judicature of the State of Punjab that the case involved a substantial question of law as to the legal status of the respondent vis a vis the Government.
The sequence of events leading up to the institution of the suit by the appellant " The Fruit and Vegetable Merchants Union, Su bzimandi " a registered body under the Indian Trade Unions Act, giving rise to this appeal may shortly be stated as follows: By an agreement dated, March 31, 1937, (Exhibit D 5) between the Secretary of State for India in Council and the Delhi Improvement Trust, which will have to be set out in detail hereinafter and the construction of 3 which is the main point in controversy between the parties, a certain area of the land admittedly belonging to Government was placed at the disposal of the Trust for the " orderly expansion of Delhi under the supervision of a single authority.
" The said property was compendiously called " the Nazul Estate.
" By a letter dated May 1/2, 1939 (not exhibited but filed in the High Court at the appellate stage) the Chairman of the Trust forwarded a copy of the resolution No. 551 dated April 24,1939, (Exhibit D 15) to the Chief Commissioner of Delhi.
The resolution sets out the scheme for the construction of the new Subzimandi Fruit Market on a gross area of 10.87 acres including certain lands which till then did not vest in the Trust.
The Chairman asked for administrative sanction of the Government of India to place the additional area at the disposal of the Trust on the same terms as those applicable to the Nazul Estate aforesaid held under the agreement, exhibit D 5.
The resolution aforesaid sets out the object and history of the scheme.
It contains the categorical statement that " Government is the owner of all the land included in the scheme.
The position according to the revenue records is given in the statement on the next page.
" The scheme then sets out in great detail the several structures to be constructed and the, profit and loss figures.
Under the heading " Computation of revenue surplus " occur the following significant statements very much relied upon by the appellant: "The revenue surplus of Rs. 4,530/ is made up as follows; and is based on the recommendation that the Trust shall own and maintain the market.
Under the heading " Future Jurisdiction " the following significant passage occurs: At this stage, if the suggestion is accepted that the, Trust should own and run the market at least until it is firmly established, and in view of the fact that Government are the sole owners of the land, no difficulty is anticipated due to divided territorial jurisdiction of the two local authorities and no change is proposed.
4 The letter enclosing the resolution of the Trust as aforesaid contains a summary of the scheme, a portion of which is as follows: " An estimated capital expenditure of Rs. 4.73 lakhs is involved.
On this capital expenditure there will be a capital deficit of Rs. 4.20 lakhs and a recurring revenue surplus of Rs. 4,530.
This financial result assumes ownership and management of the market by the Trust, and takes into account all charges on maintenance and day to day management which would otherwise fall to a local body.
The scheme involves no acquisition of land, but assumes transfer free of charge of an area of 10.87 acres of Government land, all of which except for 1,510 square yards, falls within the limits of the Civil Lines Notified Area Committee." (Underlined by us).
In answer to this communication from the Trust, the Chief Commissioner sent the letter (exhibit D 8) dated May 13, 1939, sanctioning under section 22 A of the Trust Law the scheme of the " New Fruit and Vegetable Market " as proposed in the resolution aforesaid at a cost not exceeding Rs. 4,73,186.
The sanction is in terms made subject to the remarks (1) that "the whole of the land required for the construction of the new market is the property of the Government ", and (2) that "the trust will administer the new market on its completion.
" It will thus appear that it was clearly understood that the land on which the market was to be constructed would continue to be the property of the Government in modification of the proposal made by the Trust as aforesaid, the Trust only being vested with the power to administer the new market.
On receipt of the letter aforesaid of the Chief Com missioner, the Chairman of the Trust requested the former to obtain the orders of the Government of India to place the additional land required for the market at the disposal of the Trust under section 54 A of the United Provinces Town Improvement Act, VIII of 1919, (which will hereinafter be referred to as the Improvement Act) as extended to the Province of Delhi, "on the same terms applicable to other Nazul Estate held under the agreement between the Trust and the Government of India" (exhibit D 7).
By his letter dated 5 August 10, 1939, (exhibit D 6) the Chief Commissioner forwarded the orders dated June 21, 1939, of the Government of India agreeing to the proposal aforesaid of the, Trust placing the additional area at the disposal of the Trust on the original terms aforesaid.
This is the genesis of the New Fruit and Vegetable Market, Subzimandi, which hereinafter will be referred to as the Market, for a period of six years with effect from May 25, 1942, at an annual rent of Rs. 35,000 rising every year by Rs. 2,000 to Rs. 45,000 in respect of the sixth year of the lease.
In anticipation of the termi nation of the lease period aforesaid the Trust advertised the auction of the market for a fresh settlement.
That occasioned the suit for an injunction by the plaintiff against the Trust in the Court of the Senior Subordinate Judge of Delhi, instituted on March 18, 1948.
The Court granted the plaintiff an interim injunction restraining the defendant from putting the market to auction.
The said ex parte order of injunction was contested by the Trust with the result that the trial Court dissolved that injunction.
The plaintiff carried an appeal to the High Court of Punjab at Simla.
During the pendency of the appeal a settlement was arrived at between the parties and the plaintiff 's offer of Rs. 1,50,000 as annual rent of the market on the expiry of the lease was accepted by the Trust.
This settlement is evidenced by the resolution of the Trust dated February 24, 1949 (exhibit D 13).
In pursuance of that settlement a fresh lease was executed.
By the indenture(Ex.
D 4)dated April 22, 1949, the plaintiff was granted a fresh lease for the period May 25, 1948, to March 31, 1950, at an annual rent of Rs. 1,50,000.
One of the terms of the ' lease, which is a registered document, was " That the lessee shall on expiry of the lease or on its determination by the lessor, vacate the premises and deliver its peaceful possession to the lessor.
If the lessee fails to do so, he shall be liable to pay double the rent as liquidated damages for the unauthorised period of occupation till such time as he vacates it or he is ejected by process of law.
" Paragraph 22 of the indenture aforesaid contains the following important aidmission: 6 that both the lessor and lessee agree that the premises in dispute are owned by the Government and the provisions of the Delhi Ajmer Merwara Rent.
Control Act (1947) do not apply to the same.
" The effect of this admission is also one of the controversies between the parties and shall have to be adverted to later.
It appears that during the pendency of the second lease aforesaid, negotiations had started between the parties for extension of the period of the lease.
The plaintiff made an offer of a fresh lease for a further period of five years at an annual rent of rupees two lakhs.
But the Trust by its resolution dated May 25, 1950, (exhibit D 12) aoreed only to extend the period by two years " on the existing conditions, subject to enhancement of rent to Rs. 2 lakhs per year.
" The plaintiff 's case in the plaint is that these onerous terms successively enhancing the rent to Rs. 2 lakhs per year were agreed to by it as it had no other alternative in view of the plaintiff 's need.
The plaintiff has been paying the enhanced rent of Rs. 2 lakhs per year in view of the resolution aforesaid of the Trust but has all the same started proceedings under section 8.
of the Control Act, for fixation of standard rent in respect of the market.
The Trust got an advertisement inserted in the Hindustan Times, New Delhi, dated March 5, 1953, inviting tenders for the lease of the market for a period of three years from April 1, 1953.
The plaintiff 's case in the plaint is that the tenancy in favour of the plaintiff still subsisted and had not been terminated in accordance with law.
That was the cause of action for the plaintiff to institute the present suit on March 9, 1953.
The plaintiff 's prayer in the plaint is that a decree for a permanent injunction may be passed in favour of the plaintiff restraining the defendant from evicting the plaintiff from the market.
The suit was contested by the Trust on the allegations that the market had been constructed on Nazul land under the authority of the Delhi State Government with Government funds, that the market was Government property and was only being managed by the defendant on behalf of the Government, that the 7 Control Act by virtue of section 3 (a) thereof was not applicable to the premises in question and that therefore the plaintiff was liable to be ejected as the term of its lease had expired.
Reliance was also placed on behalf of the defendant on the provisions of the Government Premises (Eviction) Act, XXVII of 1950, read with the Requisitioning and Acquisition of Immovable Property Act, XXX of 1952.
On those pleadings a number of issues were joined between the parties of which the most important is issue No. 1 " Whether the property in dispute belongs to the Government within the meaning of section 3 (a) of the Rent Control Act, 1952 ?" Both the courts below have answered that issue in the affirmative, that is to say, in favour of the defendant.
The plaintiff prayed for and obtained the necessary certificate from the High Court that the case involved substantial questions of law as to the interpretation of the relevant statute and the agreement (exhibit D 5) between the Government of India and the Delhi Improvement Trust.
Hence this appeal.
It has been contended on behalf of the appellant that on a true construction of the provisions, particularly section 54A of the Improvement Act as applied to the Province of Delhi and the agreement (exhibit D 5) between the Government of India and the Trust, as also of the correspondence that passed between the Chief Commissioner of Delhi and the Trust, the land on which the market was constructed and the structure itself belonged to the Trust and that therefore the provisions of the Control Act were applicable to the tenancy created by the Trust in favour of the plaintiff; and that being so, the plaintiff could not be ejected by the defendant on the expiry of the term or the extended term of the lease.
On the other hand, it has been argued on behalf of the defendant respondent that the Trust is the statutory agent of the Government and has to function in accordance with the provisions of the statute aforesaid, namely, the Improvement Act.
The agency was created under the provisions of section 54A (1) 8 of the Improvement Act, the terms of the agreement being incorporated in the indenture, exhibit D 5, dated ;March 31 1937.
The argument further is that in accordance with the scheme as embodied in the agreement the Government was to hand over to its agent, the Trust, Government property which vests in possession of the agent who has to manage and develop the property with funds made available to it by Government.
Proper accounts have to be kept by the Trust of the monies thus advanced by Government in a separate account.
The Trust has also to pay a certain fixed sum by way of revenue on the property placed at its disposal.
The income from the property in the hands of the Trust has to be applied to payment of interest on money advanced by Government at a specified rate, as also to expenses for the management and improvement of the property and any surplus left over out of the income of the property in the hands of the Trust after meeting all the outgoing has to be placed at the disposal of Government to be spent according to its directions.
Thus the case of the respondent is that no legal title was created in favour of the Trust and the land, as also the structures constructed by the Trust with the monies thus advanced by Government are the property of the Government.
The Trust as the statutory agent has only to manage and develop the property in accordance with schemes sanctioned by Government.
Consequently, it was argued that the market in question belongs to Government and is not governed by the Control Act.
The question as to in whom the title to the market in question vests may be discussed in two parts, (1) title to the land on which the market is situate, and (2) title to the buildings admittedly constructed by the Trust.
Adverting first to the question of title in respect of the land, it is common ground that before it was placed at the disposal of the Trust it was Government property.
The question, therefore, naturally arises whether either by the provisions of section 54A relied upon by both the parties in this connection, or by virtue of the terms of the indenture aforesaid or by the combined operation of the two, title to the land has become vested in 9 the Trust.
The appellant contends it is so vested.
The respondent contests this proposition and contends that there are no words in the statute or in the agreement which either separately or together can be said to have transferred the pre existing title of the Government to the Trust.
It is pointed out on behalf of the respondent that section 54A only authorises Government to place the land in question " at the disposal of the Trust" which has to hold it in accordance with the terms agreed upon between them, as evidenced by the indenture exhibit D 5.
Let us examine those terms.
The agreement provides, inter alia, that with a view to the orderly expansion of Delhi under the supervision of a single authority the Government agreed to place at its disposal " the Nazul Estate " (described in Schedule 1), with effect from April 1, 1937.
One of the conditions stipulated was that the "Trust shall hold and manage the said Nazul Estate on behalf of the Government.
" These words cannot be construed as transferring title to the Nazul Estate from Government to the Trust.
They amount to constituting the Trust as an agent of the Government to hold possession of the property and to manage the same for the purpose for which the Trust had been created.
The Trust is enjoined to use its best endeavours for the improvement and development of the said Nazul Estate in accordance with the provisions of the Improvement Act, " provided that no expenditure shall be incurred upon the purchase of land to be added to the said Nazul Estate unless the proposal to make the purchase has been specifically included in an Improvement Scheme sanctioned under section 42 of the said Act.
" Particular reliance was placed on behalf of the appel lant on the following terms in the indenture to show that the title to the Nazul Estate vested in the Trust: " The Trust may sell or lease any land included in the said Nazul Estate in pursuance of the provisions of an Improvement Scheme sanctioned under section 42 of the said Act.
2 10 The Trust may, otherwise than in pursuance of an Improvement Scheme sanctioned under section 42 of the said Act, sell any land included in the said Nazul Estate." In order to appreciate the true legal position it is necessary here to examine some of the provisions of the Improvement Act bearing on this aspect of the case.
Section 22 A occurring in Chap 111 A vests the Trust with the power to undertake any works and incur any expenditure for the improvement or development of the area to which the Act may have been extended.
Section 23 in Chap.
IV sets out in detail what is meant by "An improvement Scheme.
" It lays down that the acquisition by purchase, exchange or otherwise of any property necessary for or affected by the execution of the scheme, the construction or reconstruction of buildings.
the sale, letting or exchange of any property comprised in the scheme and doing of all incidental acts necessary for the execution of the scheme may be undertaken by the Trust.
Section 24 sets out the different types of improvement schemes including a general improvement scheme, a re building scheme, a re housing scheme, a development scheme etc., and the sections following section 24 lay down in detail the scope of the different types of improvement schemes enumerated in section 24.
Section 42 requires the Chief Commissioner to announce an improvement scheme sanctioned by him by notification and thereupon the Trust embarks upon the execution of the scheme.
Then comes Chap.
V dealing with the powers and duties of the Trust when a scheme has been sanctioned.
In this chapter occur sections 45 to 48 which provide for the vesting of certain properties in the Trust.
Section 45 lays down the conditions and the procedure according to which any building, street, square or other land vested in the Municipality or Notified Area Committee may become vested in a Trust.
Similarly, section 46 deals with the vesting in the Trust of properties like a street or a square as are not vested in a Municipality or Notified Area Committee.
These sections, as also sections 47 and 48 make provision for compensation and for empowering the Trust to deal with such property 11 vested in it.
The vesting of such property is only for the purpose of executing any improvement scheme which it has undertaken and riot with a view to clothing it with complete title.
As will presently appear, the term "vesting" has a variety of meaning which has to be gathered from the context in which it has been used.
It may mean full ownership, or only possession for a particular purpose, or clothing the authority with power to deal with the property as the agent of another person or authority.
Coming back to the terms of the indenture with reference to the power of the Trust to sell or lease any land included in the Nazul Estate, certain conditions are laid down for the exercise of the aforesaid power to transfer.
The Trust is empowered to sell any land included in the Nazul Estate on its own authority only in cases where the sale is for full market value and which does not exceed Rs. 25,000/ .
In other cases the transaction has to be sanctioned either by the Chief Commissioner or by Government and in every case the forms of conveyances and leases by the Trust have to be approved by Government.
It would thus appear that the power to transfer by way of sale, lease or otherwise, vested in the Trust is not an unlimited or an unqualified power but a power circumscribed by such conditions as the Government or the Chief Commissioner, as the case may be, thought fit to impose.
The imposition of those conditions is not consistent with the title to the property vesting absolutely in the Trust.
On the other hand, the imposition of those conditions is more consistent with the proposition contended for by the learned Attorney General on behalf of the res pondent that the Trust was only constituted a statutory agent on behalf of the Government in accordance with the provisions of the Improvement Act and the terms of the indenture, exhibit D 5.
It is noteworthy that there are no provisions either in the Improvement Act or in the indenture, exhibit D 5, to the effect that the title to the Nazul Estate vested in the Trust.
It must, therefore, be held that no grounds have been made out for holding that title to the land on which the market stands was conveyed by Government to the Trust.
12 We turn now to the question whether apart from title to the land, title to the building standing upon the land is vested in the Trust.
In order to examine the contentions raised on behalf of the appellant it is necessary to set out the remaining portion of the terms of the indenture aforesaid.
The Trust was to assume full liability for all expenditure to be incurred upon works of improvement and to arrange for the completion of those works to the satisfaction of Government.
The Trust is also enjoined to maintain in accordance with the statutory rules separate accounts of all revenue realised from, and all expenditure incurred upon, the said Nazul Estate and to pay to Government the sum of Rs. 2 lakhs being the equivalent of the net annual revenue in respect thereof subject to certain conditions, not material to this case.
Then follows the.
most important clause in these terms: Any surplus funds in the Nazul Development Account remaining at the end of each financial year when the said sum has been paid shall be put at the disposal of Government and shall be applied until further orders of Government to the further improvement and development of the said Nazul Estate and/or to the repayment of loans made to the Trust as Government may direct.
" Government on its part undertook to finance either in part or in whole such schemes as may be agreed between the parties and also to advance loans at interest equal to Government rates for the time being for loans to Local Authorities.
It was in pursuance of the terms aforesaid that the scheme of the building of the market in question was put through at an estimate.
cost of a little less than five lakhs of rupees.
It is clear upon the terms of the agreement shortly set out above that the market was constructed by the Trust on Government land with Government funds advanced by way of loan at interest.
On those facts what is the legal position of the Trust vis a vis the Government in respect of the ownership of the property ? It is important, therefore, to determine the true nature of the initial relationship between the Government and the Trust.
The learned counsel for 13 the appellant conceded that relationship could not be described in terms of ordinary legal import, that is to say, in, terms of mortgagor and mortgagee, or lessor and lessee, or licensor and licensee.
He contended that it was a peculiar relationship which could not be defined in exact legal phraseology, but all the same, that the Trust was the owner of the market, especially in view of the fact that, as admitted by the defendants counsel at the trial, the Trust had repaid the entire amount of five lakhs odd advanced by Government for the construction of the market.
This result, it was further contended, follows from the terms of section 54A of the Improvement Act.
The Attorney General appearing on behalf of the respondent also strongly relied upon the terms of that section for his contention that the relationship between the Trust and the Government was that of agent and principal.
It is therefore necessary to examine closely the provisions of that section which is in these terms: " (1) The Government may, upon such terms as may be agreed upon between the Government and the Trust, place at the disposal of the Trust any properties, or any funds or dues, of the Government and thereupon the Trust shall hold or realise such properties, funds and dues in accordance with such terms.
(2) If any immovable property, held by the Trust under sub section (1) is required by the Government for administrative purposes, the Trust shall transfer the same to the Chief Commissioner upon payment of all costs incurred by the Trust in acquiring, reclaiming or developing the same, together with interest thereon at such rate as may be fixed by the Chief Commissioner calculated from the day on which this Act comes into force or from the date on which such costs were incurred, whichever is the later.
The transfer of any such immovable property shall be notified in the gazette and such property shall thereupon vest in the Chief Commissioner from the date of the notification.
" The section quoted above finds place in Chap.
VA, headed " Government Property Held by Trust.
" It is 14 manifest upon a reading of the entire section that there are no express words of conveyance whereby title is transferred by Government to the Trust either absolutely or upon certain conditions.
As applied to the present case, sub section
(1) only provides that the Government would place the property in question at the disposal of the Trust which shall hold the same in accordance with the terms as may be agreed between them, that is to say, in accordance with the terms of the agreement aforesaid, (exhibit D 5).
Placing the property " at the disposal of the Trust " does not signify that Government had divested itself of its title to the property and transferred the same to the Trust.
Clause 12 of the agreement (exhibit D 5) to the effect that "Government may at any time on giving six months ' notice terminate this agreement " clearly indicates that the Government had created this agency not on a permanent basis.
but as a convenient mode of having its schemes of improvement implemented by a single agency with wide powers of management and expenditure of funds placed at its disposal, either by way of income from the property or by way of advance from Government funds.
Sub section
therefore, does not in express terms or by necessary implication confer any title on the Trust in respect of the market.
The Trust only holds the market and realizes the income therefrom which is disbursed in accordance with the terms of the agreement and the rules framed by the Chief Commissioner in exercise of the powers conferred on him by cl.
(e) of sub section
(1) of section 72.
Our attention was called to some of those statutory rules, particularly rules, 21, 36, 38 and 156 read along with the forms and the Appendix.
It is not necessary to discuss those rules in detail because on a consideration of those rules we are satisfied that they are more consistent with the Trust being a statutory agent of the Government, which has to maintain separate accounts in.
respect of nazul property.
Any reappropriation from nazul to non nazul or vice versa could not be made by the Trust without the prior sanction of the Chief Commissioner.
The method of keeping accounts in respect of the nazul estate would show that the Trust had to function as 15 the statutory agent of the Government in the matter of the administration of the Trust funds with particular reference to the nazul estate with which we are immediately concerned.
But it has been argued on behalf of the appellant that sub section (2) of section 54A quoted above postulates that the Trust is the owner of the property ' otherwise the sub section would not speak of the Trust having to transfer immovable property held by it to the Chief Commissioner in certain contingen cies, upon payment of all costs incurred by the ' Trust in acquiring, reclaiming or developing that property together with interest calculated in the way set out in that sub section.
It should be noted in this connection that what the Government was required to pay was not the market value of the property but only the cost incurred by the Trust.
That provision apparently was made for the purpose of accounting between the different branches of the Trust activities.
If title really vested in the Trust, it would be entitled to receive from Government the price of the property and not merely required to be reimbursed in respect of the actual expenditure on the scheme.
Particular reliance was placed upon the words " and such property shall thereupon vest in the Chief Commissioner.
" It was argued that unless the property previously vested in the Trust it could not upon the transfer contemplated by sub section
(2) vest in the Chief Commissioner.
This argument assumes that the word " vest " necessarily signifies that title to the property resides in the Trust.
But the word "vest" has several meanings with reference to the context in which it is used.
In this connection reference may be made to the following observations of Lord Cranworth in Richardson vs Robertson (1) : " .
The word 'vest ' is a word, at least of ambiguous import.
Prima facie 'vesting ' in possession is the more natural meaning.
The, expressions 'investiture ' 'clothing ' and whatever else be the explanation as to the origin of the word, point prima facie rather to the enjoyment than to the obtaining of a right.
But (1) , at P. 78.
16 I am willing to accede to the argument that was pressed at the bar, that by long usage ' vesting ' ordinarily means the having obtained an absolute and indefeasible right, as contra distinguished from the not having so obtained it.
But it cannot be disputed that the word ' vesting ' may mean, and often does mean, that which is its primary etymological signification, namely, vesting in possession.
" Similarly with reference to the provisions of a local Act (5 Geo. 4, c. Ixiv), it was held that the word "vest" did not convey a freehold title but only a right in the nature of an easement.
The following words of Willes, J. in Hinde vs Charlton(1) are relevant: words, which in terms vested the freehold in persons appointed to perform some public duties, such as canal companies and boards of health, have been held satisfied by giving to such persons the control over the soil which was necessary to the carrying out the objects of the Act without giving them the freehold ' " In the case of Coverdale vs Charlton (2), the Court of Appeal on a consideration of the provisions of the Public Health Act, 1875 (38 and 39 Vict. c. 55) with particular reference to section 149, has made the following observations at p. 116: What then is the meaning of the word 'vest ' in this section ? The legislature might have used the expression transferred ' or 'conveyed ', but they have used the word 'vest '.
The meaning I should like to put upon it is, that the street vests in the local board qua street; not that any soil or any right to the soil or surface vests, but that it vests qua street." Referring to the provisions of section 134 of the Lunacy Act, 1890 (53 & 54 Vict. c. 5) in the case of In re Brown (a lunatic)(3) it has been laid down by Lindley, L. J., that the word "vested" in that section included the right to obtain and deal with; without being actual owner of the lunatic 's personal estate.
(1) (1866 67) C.P. Cases 104 at 116.
(2) (3) 17 In the case of Finchley Electric Light Company vs Finchley Urban District Council(1), adverting to the provisions of section 149 of the Public Health Act, 1875, (supra) Romer, L.J., has made the following observations at pp.
443 and 444: "Now, that section has received by this time an authoritative interpretation by a long series of cases.
It was not by that section intended to vest in the urban authority what I may call the full rights in fee over the street, as if that street was owned by an ordinary owner in fee having the fullest rights both as to the soil below and as to the air above.
It is settled that the section in question was only intended to vest in the urban authority so much of the actual soil of the street as might be necessary for the control, protection, and maintenance of the street as a highway for public use.
For that proposition it is sufficient to refer to what was said by Lord Halsbury, L. C., and by Lord Herschell in Tunbridge Wells Corporation vs Baird(2) I. .
That section has nothing 'to do with title; it is not considering a question of title.
No matter what the title is of the person who owns the street, the section is only considering how much of the street shall vest in the urban authority. .
That the word "vest" is a word of variable import is shown by provisions of Indian statutes also.
For example, section 56 of the Provincial Insolvency Act (V of 1920) empowers the court at the time of the making of the order of adjudication or thereafter to appoint a receiver for the property of the insolvent and further provides that " such property shall thereupon vest in the receiver.
" The property vests in the receiver for the purpose of administering the estate of the insolvent for the payment of his debts after realising his assets.
The property of the insolvent vests in the receiver not for all purposes but only for the purpose of the Insolvency Act and the receiver has no interest of his own in the property.
On the other hand, sections 16 and 17 of the Land Acquisition Act.
(Act I of 1894), provide that the property so acquired, upon the happening of (1)[1903] 1 Ch.
437. 3 (2) 18 certain events, shall " vest absolutely in the Government free from all encumbrances '.
In the cases contemplated by sections 16 and 17 the property acquired becomes.
the property of Government without any conditions or limitations either as to title or possession.
The legislature has made it clear that the vesting of the property is not for any limited purpose or limited duration.
It would thus appear that the word "vest" has not got a fixed connotation, meaning in all cases that the property is owned by the person or the autho rity in whom it vests.
It may vest in title, or it may vest in possession, or it may vest in a limited sense, as indicated in the context in which it may have been used in a particular piece of legislation.
The provisions of the Improvement Act, particularly sections 45 to 49 and 54 and 54A when they speak of a certain building or street or square or other land vesting in a municipality or other local body or in a trust, do not necessarily mean that ownership has passed to any of them.
The question of the ownership of the structure built upon Government land by the Trust may be looked at from another point of view.
We have already held that the Trust was in the position of a statutory agent of Government and had erected the structure with money belonging to Government but advanced at interest to the Trust.
In such a situation the structure also would be the property of Government, though for the time being it may be at the disposal of the Trust for the purpose of managing it efficiently as a statutory body.
Simply because the Trust erected the structure in question and later on paid up the amount advanced by Government for the purpose would not necessarily lead to the,legal inference that the structure was the property of the Trust.
In this connection reference may be made to the decision of this Court in Bhatia Co operative Housing Society Ltd. vs D. C. Patel(1).
The case is not on all fours with the facts of the present case.
But the following observations of Das J. (as he then was) at p. 195 of the report are pertinent: " It is true that the lessee erected the building at his own cost but he did so for the lessor and on the (1) ; 19 lessor 's land on agreed terms.
The fact that the lessee incurred expenses in putting up the building is precisely the consideration for the lessor granting him a lease, for 999 years not only of the building but of the land as well at what may, for all we know, be a cheap rent which the lessor may not have otherwise agreed to do.
By the agreement the building became the property of the lessor and the lessor demised the land and the building which, in the circumstances, in law and in fact belonged to the lessor.
The law.
of fixtures under section 108 of the Transfer of Property Act may be different from the English law, but section 108 is subject to any agreement that the parties may choose to make.
Here, by the agreement the building became part of the land and the property of the lessor and the lessee took a lease on that footing.
" In our opinion, therefore, it cannot be said that either under the provisions of the Improvement Act or in accordance with the terms of the agreement (exhibit D 5) or the two taken together, the market became the property of the Trust.
We have already noticed the relevant portions of the correspondence that passed between Government and the Trust to show that though at the initial stages the Trust proposed that the ownership of the market should vest in the Trust, the final terms agreed between the parties in accordance with the provisions of section 54A left the ownership with Government.
We have come to this conclusion without reference to the admission of the plaintiff contained in para.
22 of the indenture (exhibit D 4) quoted above.
It is therefore not necessary for us to consider the question raised by the learned Attorney General that the plaintiff was bound by that admission or whether that admission is vitiated by any pressure of circumstances or duress as pleaded by the plaintiff.
Certainly that admission is a piece of evidence which could be considered on its merits even apart from the question of estopped which had not been specifically pleaded or formed the subject matter of a separate issue.
In view of our finding that the market, as also the land on which it stands, is the property of Government, the conclusion follows that the operative provisions of 20 the Control Act do not apply to the premises in question.
That being so, it must be held that there is no merit in this appeal.
It is accordingly dismissed with costs.
Appeal dismissed.
| Under an agreement the Government placed certain lands belonging to it at the disposal of the Improvement Trust for the construction of a market.
The Trust constructed the market with funds advanced by the Government by way of loan at interest.
Under the agreement the Trust had to pay a certain fixed sum by way of revenue on the property; the income from the market had to be applied to the payment of interest on the money advanced by Government, and to the payment of expenses for the management of the market and the surplus had to be placed at the disposal of, Government to be spent according to its directions.
The lessee of the market from the Trust filed a suit for a declaration that it was protected from ejectment by the provisions of the Delhi and Ajmer Rent Control Act.
It was contended by the lessee that the market was the property of the Trust to which the Act applied.
It was further contended by the lessee relying upon the language of section 54A(2) of the U. P. Town Improvement Act, that the market vested in the Trust for otherwise it could not upon transfer by the Trust vest in the Chief Commissioner as provided by this section.
Held, that upon a proper construction of the terms of the agreement between the Trust and the Government, the Trust was in the position of a statutory agent of the Government and that the market was Government premises to which the provisions of the Delhi and Ajmer Rent Control Act were not applicable by virtue Of section 3(a).thereof, and consequently the lessee was liable to ejectment upon termination.
of the period of the lease.
The word 'vest ' has not got a fixed connotation, meaning in all cases that the property is owned by the person or authority in whom it vests.
It may vest in title, or it may vest in possession or it may vest in a limited sense.
|
Summarize this legal judgement text concisely | 172 of 1956.
Under Article 32 of the Constitution for a writ in the nature of Habeas Corpus.
section N.
Andely, amicus curiae, for the petitioner.
Porus A. Mehta, T. M. Sen and R. H. Dhebar, for the respondent.
November 1.
The Judgment of the Court was delivered by JAGANNADHADAS J.
This is an application under article 32 of the Constitution for the issue of a writ in the nature of habeas corpus against the State of, Jammu and Kashmir by the petitioner who was under detention by virtue of an order dated the 5th September, 1956, issued by the Government of the State of Jammu and Kashmir under sub section (2) of sec tion 3 taken with sub section (1) of section 12 of Jammu and Kashmir Preventive Detention Act, 2011 (hereinafter referred to as the Act).
The petitioner was first placed under detention by virtue of an order passed by the District Magistrate, Jammu, under subsection (2) of section 3 of the Act on the 1st May, 1956, and that order was confirmed and continued on the 5th September, 1956, under sub section (1) of section 12 of the Act by the Government after taking the opinion of the Advisory Board.
The two orders of detention, one of the District Magistrate dated the 1st May, 1956, and the other of the Government dated the 5th September, 1956, recited that the petitioner is directed to be detained because it was, necessary to make such an order "with a view to preventing him 950 from acting in a manner prejudicial to the maintenance of supplies and services essential to the community".
The grounds of detention as communicated to the petitioner on the 31st May, 1956, by the District Magistrate, Jammu, are as follows: "1.
That you carried on smuggling of essential goods to Pakistan through the Ferozpur and Amritsar border, but since the tightening of said borders you have recently shifted your smuggling activities to Ranbirsinghpura Pakistan borders in the State of Jammu and Kashmir and are carrying on illicit smuggling of essential goods such as cloth, zari and mercury to Pakistan through this border (thus affecting the economic condition of the public in Kashmir State adversely).
That for the said purpose of smuggling of goods to Pakistan you went to village Darsoopura on 7th April, 1956, and contacted Ghulam Ahmed son of Suraj bin resident of Darsoopura Tehsil Ranbirsinghpura and one Ram Lal son of Frangi resident of Miran Sahib Tehsil Ranbirsinghpura and others who I similarly are addicted to carrying on such a smuggling business and with their aid made arrangements for export of Shaffon cloth worth Rs. 2,500 to Pakistan through Ranbirsinghpura Pakistan border.
That on 11 4 1956, you booked 3 bales of silk cloth through Messrs Jaigopal Rajkumar Shegal of Amritsar to Jammu Tawi and got these bales on address of yourself, and on the same day you got one package of Tila booked through section Kanti Lal Zarianwalla of Amritsar and got this package also addressed "To self" for Jammu Tawi.
That after booking these packages as aforesaid you came over to Jammu and waited for their arrival and contacted Ghulam Ahmed and Ram Lal the above mentioned persons.
That on the 15th April, 1956, you tried to get the transport receipt from the Punjab National.
Bank but did not succeed in doing so as it was a public holiday.
Meanwhile your activities leaked out and the goods 951 were seized by the Central Customs and Excise Department of India.
2.There are other facts also but those cannot be given as I consider their disclosure would be against the public interest.
That by resorting to the above activities you have been and are acting in a manner prejudicial to the maintenance of the supplies and services essential to the community".
It will be seen from the above grounds that the reason for the detention is the alleged "illicit smuggling of essential goods such as cloth, zari and mercury to Pakistan through the border, thereby affecting the economic condition of the public, in Kashmir State adversely".
From the particulars set out in paragraph 2 of the grounds, it appears that the cloth referred to in paragraph I is Shaffon cloth.
The High Court of Jammu and Kashmir, to whom a similar application was filed by this petitioner along with a number of others similarly detained for illicit smuggling of goods, has in its judgment dated the 21st June, 1956" held that Shaffon cloth is not within the category of an essential commodity as defined in the Essential Supplies (Temporary Powers) Ordinance of Jammu and Kashmir.
There is no indication in the High Court judgment whether zari is or is not an essential commodity in the same sense.
But in answer to a query from this Court, Shri Porus Mehta who appeared before us on behalf of the State of Jammu and Kashmir has stated, on instructions, that zari which is obviously a luxury article is not one of the commodities declared essential under the above Ordinance.
The High Court, when it dealt with the batch of applications, of which the application of the petitioner before us was one, set aside the detention of number of others on the ground that the smuggling attributed to the individuals concerned in those cases was not of essential goods.
So far as this petitioner is concerned the High Court held as follows: "The case of Dwarika Das Bhatia stands on s 952 different footing altogether.
The allegation against him is that he smuggled into Pakistan some goods such as cloth and zari along with a certain quantity of mercury.
Mercury is a non ferrous metal and according to the definition of an essential commodity given in the Essential Supplies (Temporary Powers) Ordinance, mercury is an essential commodity.
This being so, Dwarika Das Bhatia 's detention cannot be challenged".
The point raised before us is that since the detention is based on the assumption that Shaffon cloth and zari as well as mercury are all essential goods and since two out of the three categories of the goods with reference to the smuggling of which the detention has been directed, are found not to be essential goods, the entire order is illegal, although one of the items, viz., mercury is an essential commodity.
In support of this contention, the cases of this Court in Dr. Ram Krishan Bhardwaj vs The,, State of Delhi(1), and Shibban Lal Saksena vs The State of U. P. (2) are relied upon.
Learned counsel for the State of Jammu and Kashmir contends that the principle of these decisions has no application to the present case, and attempts to distinguish the same.
In order to understand the principle underlying these two cases, it is necessary to examine them in some detail.
In Dr. Ram Krishan Bhardwaj 's case (supra) the two points that were raised were (1) whether an order of detention is invalid if the grounds supplied in support thereof are vague, and (2) whether the vagueness of one or some of the various grounds vitiates the entire order.
The argument advanced in that case was based on the view adopted by this Court in the decision in Atma Ram Sridhar Vaidya 's case(3), viz., that the obligation cast on the detaining authority to supply grounds is for the purpose of enabling a detenue to make a fair representation to the authority concerned and to the Advisory Board, against the order of detention.
The argument was that in a (1) ; (2) ; (3)[1951] S C.R. 167.
953 case where one or more of the grounds are vague, the petitioner is handicapped in making an adequate representation as regards that ground and his representation even if effective in respect of the other grounds, may fail to carry conviction as regards the ground which is vague and that this might result in the detention being confirmed.
The Court stated that that argument was not without force and held as follows: "The question however is not whether the petitioner will in fact be prejudicially affected in the matter of securing his release by his representation, but whether his constitutional safeguard has been infringed.
Preventive detention is a serious invasion of personal liberty and such meager safeguards as the Constitution has provided against the improper exercise of the power must be jealously watched and enforced by the Court. .
We are Of opinion that this constitutional requirement must be satisfied with respect to each of the grounds communicated to the person detained, subject of course to a claim of the privilege under clause (6) of article 22.
That not having been done in regard to the ground mentioned. . the petitioner 's detention cannot be held to be in accordance with the procedure established by law within the meaning of article 21".
Shibban Lal Saksena vs The State of U. P. (supra) is a case where the question arose in a different form.
The grounds of detention communicated to the detenue were of two fold character, i.e., fell under two different categories, viz., (1) prejudicial to maintenance of supplies essential to community, and (2) injurious to maintenance of public order.
When the matter was referred to the Advisory Board, it held that the first of the above grounds was not made out as a fact but upheld the order on the second ground.
The question before the court was whether this confirmation of the original order of detention, when one of the two grounds was found to be non existent by the Advisory Board, could be maintained.
Their Lordships dealt with the matter as follows: 124 954 "It has been repeatedly held by this court that the power to issue a detention order under section 3 of the Preventive Detention Act depends entirely upon the satisfaction of the appropriate authority specified in that section.
The sufficiency Of the grounds upon which such satisfaction purports to be based, provided they have a rational probative value and are not extraneous to the scope or purpose of the legislative provision cannot be challenged in a court of law, except on the ground of mala fides.
A Court of law is not even competent to enquire into the truth or otherwise of the facts which are mentioned as grounds of detention in the communication to the detenue under section 7 of the Act." Posing the situation which arises in such cases where one of the grounds is found to be irrelevant or un.substantiated, the Court stated as follows: "The question is, whether in such circumstances the original order made under section 3(1) (a) of the Act can be allowed to stand.
The answer, in our opinion, can only be in the negative.
The detaining authority gave here two grounds for detaining the petitioner.
We can neither decide whether these grounds are good or bad nor can we attempt to assess in what manner and to what extent each of these grounds operated on the mind of the appropriate authority and contributed to the creation of the satisfaction on the basis of which the detention order was made.
To say that the other ground, which still remains, is quite sufficient to sustain the order, would be to substitute an objective judicial test for the subjective decision of the executive authority which is against the legislative policy underlying the statute.
In such cases, we think, the position would be the same as if one of these two grounds was irrelevant for the purpose of the Act or was wholly illusory and this would vitiate the detention order as a whole.
This principle, which was recognised by the Federal Court in the case of Keshav Talpade vs The King Emperor(1), seems to us to be quite sound and applicable to the facts of this case".
(1) 955 In Keshav Talpade 's case(1) the learned Judges stated as follows: "If a detaining authority gives four reasons for detaining a man, without distinguishing between them, and any two or three of the reasons are held to be bad, it can never be certain to what extent the bad reasons operated on the mind of the authority or whether the detention order would have been made at all if only one or two good reasons bad been before them".
The principle underlying all these decisions is this power is vested in a statutory authority to deprive the liberty of a subject on its subjective satisfaction with reference to specified matters, if that satisfaction is stated to be based on a Dumber of grounds or for a variety of reasons all taken together, and if some out of them are found to be non existent or irrelevant, the very exercise of that power is bad.
That is so, because the matter being one for subjec tive satisfaction, it must be properly based.
on all the reasons on which it purports to be based.
If some ,out of them are found to be non existent or irrelevant, the Court cannot predicate what the subjective satisfaction of the said authority would have been on the exclusion of those grounds or reasons.
To uphold the validity of such an order in spite of the invalidity of some of the reasons or grounds would be to substitute the objective standards of the Court for the subjective satisfaction of the statutory authority.
In applying these principles, however, the Court must be satisfied that the vague or irrelevant grounds are such as , if excluded, might reasonably have affected the subjective satisfaction of the appropriate authority.
It is not merely because some ground or reason of a comparatively unessential nature is defective that such an order based on subjective satisfaction can be held to be invalid.
The Court while anxious to safeguard the personal liberty of the individual will not lightly interfere with such orders.
It is in the light of these principles that the validity of the impugned order has to be judged.
(1) 956 In this case, the order of detention is based on the ground that the petitioner was engaged in unlawful smuggling activities relating to three commodities, cloth, zari and mercury of which two are found not to be essential articles.
No material is placed before us enabling us to say that the smuggling attributed to the petitioner was substantially only of mercury and that the smuggling as regards the other two commodities was of an inconsequential nature.
On the other hand the fact that the particulars furnished to the detenue on the 31st May, 1956, relate only to cloth and zari (we understand that tila referred to in paragraph 3 is zari) indicates that probably the smuggling of these two items was not of an inconsequential nature.
We are, therefore, clearly of the opinion that the order of detention in this case is bad and must be quashed.
We have accordingly quashed the order and directed the release forthwith of the detenue on the conclusion of the hearing on the 29th October, 1956.
Petition allowed.
| The petitioner was detained by virtue of an order of detention passed by the District Magistrate, Jammu, under section 3(2) of the Jammu and Kashmir Preventive Detention Act, 2011 and that order was confirmed and continued by an order passed by the Government of the State of Jammu and Kashmir under section 12(1) of the Act after taking the opinion of the Advisory Board.
The order recited that it was necessary to detain the petitioner with a view to preventing him from acting in a manner prejudicial to the maintenance of supplies and services essential to the community and was based on the ground of alleged illicit smuggling by the petitioner of essential goods such as shaff on cloth, zari and mercury to Pakistan.
It was found that shaffon cloth and zari were not essential goods.
It was not established that the smuggling attributed to the petitioner was substantially only of.
mercury or that the smuggling as regards shaffon cloth and zari was of an inconsequential nature.
Held, that the order was bad and must be quashed.
The sub jective satisfaction of the detaining authority must be properly based on all the reasons on which it purports to be based.
If some out of those reasons are found to be non existent or irrelevant, the Court cannot predicate what the subjective satisfaction of the authority would have been on the exclusion of those reasons.
To 949 uphold the order on the remaining reasons would be to substitute the objective standards of the Court for the subjective satisfaction of the authority.
The Court must, however, be satisfied that the vague or irrelevant grounds are such as, if excluded, might reasonably have affected the subjective satisfaction of the authority.
Keshav Talpade vs The King Emperor ([1943] F.C.R. 88), Atma Ram Sridhar Vaidya 's case ([1951] S.C.R. 167), Dr. Ram Krishan Bhardwaj vs The State of Delhi ([1953] S.C.R. 708) and Shibban Lal Saksena vs The State of U.P. ([1954] S.C.R. 418), relied on.
|
Summarize this legal judgement text concisely | Appeals Nos.
196 to 201 of 1953.
Appeals from the judgment and decrees of the Punjab High Court dated December 30, 1949, in Civil Regular Appeals Nos.
1567, 1568, 1569, 1570, 1573 an& 1574 of 1942 arising out of the decrees dated July 31, 1942, of the Court of the District Judge, Hoshiarpur in Appeals Nos.
104/35 of 1941 42,101/32 of 1941, 103/34 of 1941/42) 15/73 of 1941, 102/33 of 1941/42 and 120 of 1941 arising 'out of the decrees dated July 24, 1941, of the Court of Subordinate Judge, 4th Class, Kangra in Suits Nos.
544, 548, 545, 547, 546 and 549 of 1940.
Bang Beharilal and K. R. Chaudhury, for the appellant.
891 Ganpat Rai, for the respondent.
S.M. Sikri, Advocate General for Punjab, Jindra Lal and R. H. Dhebar, for the Intervener (State of Punjab).
October 23.
The Judgment of the Court was delivered by section K. DAS J.
These are six appeals by the plaintiff Raja Rajinder Chand, the superior landlord (alamalik) of Nadaun Jagir in the district of Kangra.
He brought six suits in the Court of the Subordinate Judge of Kangra for a declaration that he was the owner of all pine (chil pinus longifolia) trees standing on the lands of the defendants within the said Jagir and for a permanent injunction restraining the latter from interfering with his rights of ownership and extraction of resin from the said trees.
He also claimed specified sums as damages for the loss caused to him from the tapping of pine trees by different defendants from March 24, 1940, up to the date when the suits were brought.
The defendants, who are the adnamaliks (inferior landlords), pleaded that they were the owners in possession of the lands on which the trees stood, that the trees were their property, and that the plaintiff had no right to the trees nor had he ever exercised any right of possession over them.
Three questions arose for decision on the pleadings of the parties.
The first question was whether all pine trees standing on the lands in suit were the property of the plaintiff, i.e., the present appellant.
The second question was one of limitation, and the third question related to the quantum of damages claimed by the appellant.
The learned Subordinate Judge, who dealt with the suits in the first instance, held that the present appellant had failed to prove his ownership of the trees.
He further held that the suits were barred by time.
On the question of damages, he held that if the appellant 's claim to ownership of the trees were established, some of the defendants in four of the suits would be liable for small amounts of damages.
In view, how 892 ever, of his findings on the questions of ownership and limitation, lie dismissed the suits.
Raja Rajinder Chand then preferred appeals from the judgment and decrees of the learned Subordinate Judge, and the appeals were heard by the learned District Judge of Hoshiarpur.
The latter reversed the finding of the ,learned Subordinate Judge on the question of ownership and held that the present appellant had established his right to the trees in question.
He also reversed the finding of the learned Subordinate Judge on the question of limitation, but accepted his finding as to damages.
Accordingly, he allowed the appeals, set aside the judgment and decrees of the learned Subordinate Judge, and gave the appellant the declaration and order of injunction he had asked for, as also damages in four of the suits as assessed by the learned Subordinate Judge.
The defendants then preferred second appeals to the Punjab High Court.
On the main question as to whether the present appellant had been able to establish his right to the trees, the learned Judges of the High Court differed from the learned District Judge and, agreeing with the learned Subordinate Judge, held that the present appellant bad not been able to establish his right to the trees.
On the question of limitation, however, they agreed with the learned District Judge.
In view of their finding that the appellant bad failed to establish his right to the trees, the appeals were allowed and the suits brought by the appellant were dismissed.
The High Court gave a certificate that the cases fulfilled the requirements of sections 109(c) and 110 of the Code of Civil Procedure.
These six appeals have come to this Court on that certificate.
We have heard these appeals together, as the questions which arise are the same.
The present judgment will govern all the six appeals.
The short but important question which arises in these appeals is whether the present appellant has been able to establish his right to all pine (chil) trees standing on the suit lands of the defendants.
The question is of some importance, as it affects the rights of ala and adna maliks in Nadaun Jagir.
The res 893 pondents have not contested before us the correctness of the finding of two of the Courts below that the suits were not barred by time; therefore, the question of limitation is no longer a live question and need not be further referred to in this judgment.
Though the main question which arises in these six appeals is a short one, a satisfactory answer thereto requires an examination of the history of the creation of Nadaun Jagir, of the land revenue and revisional settlements made of the said Jagir from time to time, and of the various entries made in the record of rights prepared in the course of those settlements.
Before we advert to that history, it is necessary to indicate here the nature of the claim made by the present appellant.
The plaints of the six suits were very brief and did not give sufficient particulars of the claim made by the appellant.
We may take the plaint in Suit No. 544 of 1940 by way of an example; in para 1 it was stated that the land in question in that suit was in tappa Badhog and the appellant was the superior landlord thereof; then came para 2 which.
said "The land is situate in Nadaun Jagir.
All the pine trees standing on the aforesaid land belong to the plaintiff.
He alone enjoys benefit of those trees.
This has always been the practice throughout".
In a later statement of replication.
dated October 26, 1940, the plaintiff appellant gave some more particulars of his claim.
The learned Subordinate Judge, who tried the suits in the first instance, observed that the present appellant based his claim to ownership of the trees on three main grounds: first, on the ground that the land itself on which the trees stood belonged formerly to the ancestors of the present appellant (namely, the independent rulers of Kangra) and they gave the land to the ancestors of the adna maliks but retained their right of ownership in all pine trees; secondly, after the conquest of Kangra by the British, the rights of ownership in the pine trees belonged to the British Government and the rights were assigned to Raja Jodhbir Chand, the first grantee of Nadaun Jagir; and thirdly, the right of the appellant in the 894 trees had been "vouchsafed" by the entries made in the Wajib ul arz and recognised in several judicial decisions.
The Courts below considered the claim of the appellant on the aforesaid three grounds, and we propose to consider these grounds in the order in which we have stated them.
It is now necessary to advert to the history of the creation of Nadaun Jagir so far as it is relevant for considering the claim of the appellant on the first two grounds.
Admittedly, the suit lands lie in Badhog and Jasai tappas comprised within the Jagir of Nadaun in the district of Kangra.
The last independent ruler of Kangra was Raja Sansar Chand who died in the year 1824.
Raja Sansar Chand was a Katoch Rajput and had children from two women; one of them, who was a Katoch lady, was his properly married wife and Raja Sansar Chand bad a son by her, named Raja Anirudh Chand.
The other woman was of the Gaddi tribe and by her Raja Sansar Chand had a son, named Raja Jodhbir Chand.
The great antiquity of the Katoch royal line is undoubted, and the history of the Kangra State from the earliest times right up to its conquest by the Sikhs under Maharaja Ranjit Singh has been traced in the Kangra District Gazetteer (1924 25) at pp.
52 to 76.
We are not concerned with that history prior to the time of Raja Sansar Chand.
The Gazetteer states (p. 75) that Raja Sansar Chand was for 20 years the "lord paramount of the hills and even a formidable rival to Ranjit Singh himself; but his aggressive nature led him on in his bold designs and be fell at last a victim to his own violence".
With him the glory of the Katoch line passed away and what remained to his son Anirudh Chand was little more than a name.
Anirudh Chand was summoned several times to the Sikh camp and on the third occasion of his visit to that camp, be was met by a very unacceptable dein and Raja Sansar Chand had left two daughters, and Raja Dhian Singh of Jamun, one of the principal officers of Maharaja Ranjit Singh, asked one of the daughters to be given in marriage to his son, Hira Singh.
Anirudh Chand was afraid to refuse, though 895 in reality he regarded the alliance as an insult to his family honour; because by immemorial custom a Katoch Raja 's daughter may not marry any one of lower rank than her father, i.e., a Raja or an heirapparent.
Anirudh Chand was a Raja in his own right and the descendant of a long line of kings, while Dhian Singh was a Raja only by favour of his master.
Anirudh Chand prevaricated for some time; but he was determined to sacrifice everything rather than compromise the honour of his ancient line.
He secretly sent away his family and property across the Sutlej and on hearing that Maharaja Ranjit Singh had started from Lahore for Nadaun, he fled into British territory.
Maharaja Ranjit Singh came to Nadaun, and Jodhbir Chand gave his two sisters to the Maharaja.
Jodhbir Chand was then created a Raja, with Nadaun and the surrounding country as his Jagir.
Mian Fateh Chand, younger brother of Raja Sansar Chand, offered his granddaughter to Raja Hira Singh.
He was also rewarded with the gift of a Jagir known as the Rajgiri Jagir and received the rest of the State on lease on favourable terms.
His son, however, failed to pay the amount agreed upon.
The State was then annexed to the Sikh kingdom, and only the Rajgiri Jagir was reserved for the royal family.
Thus by 1827 28 Kangra had ceased to be an independent principality and was to all intents and purposes annexed to the Sikh kingdom, the son of Mian Fateh Chand and Raja Jodhbir Chand occupying merely the position of Jagirdars tinder the Sikhs, The present appellant, Raja Rajinder Chand, is a direct lineal descendant of Raja Jodhbir Chand, being fourth in the line of descent.
Then followed the Sikh wars and the establishment of British rule in Kangra.
The first Sikh war ended in March 1846, in the occupation of Lahore and the cession to the British Government of the Jullunder Doaba and the hills between the Sutlej and the Ravi.
In 1848, the second Sikh war began and Raja Parmudh Chand, one of the sons of Raja Anirudh Chand, raised the standard of rebellion in Kangra.
The rebellion however failed.
Meanwhile, Jodhbir Chand 896 remained conspicuous for his fidelity to the British Government; both in the Sikh war and in the Katoch insurrection he did good service to the British.
He obtained a Sanad from the British Government in 1846.
A copy of that Sanad was not available, but a copy of a Sanad granted on October 11, 1848, which renewed and clarified the earlier Sanad, was produced and exhibited on behalf of the present appellant.
We shall have occasion to refer to this Sanad in detail at a later stage.
Having thus indicated in brief the earlier history with regard to the creation of Nadaun Jagir in favour of Raja Jodhbir Chand, we now proceed to consider the first two grounds of the claim of the appellant.
The learned Judges of the High Court held, in agreement with the learned Subordinate Judge, that the present appellant could not claim the sovereign rights of Raja Sansar Chand who was an independent ruler of Kangra.
For this finding they gave two reasons; firstly, Raja Jodhbir Chand was an illegitimate son of Raja Sansar Chand and could not succeed to the rights of the Raja; secondly, whatever rights Raja Sansar Chand had as an independent ruler of Kangra came to an end (so far as his descendants were concerned) with the annexation of his territory by the Sikhs, and Raja Jodhbir Chand merely got an assignment of land revenue to the tune of Rs. 30,000 by the grant.
of Nadaun Jagir by Maharaja Ranjit Singh.
We accept these as good and convincing reasons for discountenancing the claim of the appellant that the sovereign rights of the independent rulers of Kangra in respect of all royal trees (including pine trees) within Nadaun Jagir had come down to him.
For the purposes of these cases we may accept the position, in support of which there is some historical material, that Raja Sansar Chand had a right to all royal trees including pine trees within his territory; but it is clear to us that neither Raja Jodhbir Chand nor the present appellant succeeded to the rights of the independent rulers of Kangra.
Raja Jodhbir Chand was a grantee under a grant first made by Maharaja Ranjit Singh and then by the British Gov 897 ernment.
The precise terms of the grant made by Maharaja Ranjit Singh are not known.
The terms of the grant made by the Governor General on October 11, 1848, are to be found in the Sanad of that date.
Therefore,, the position of the appellant cannot be any higher in law than that of Raja Jodhbir Chand and the claim of the appellant that he bad succeeded, to the rights of the independent rulers of Kangra is clearly unfounded.
Dealing with this part of the appellant 's claim, the learned District Judge, who found in favour of the appellant, relied on certain observations quoted at p. 365, and again at p. 378, of the Kangra District Gazetteer (1924 25), observations on which learned counsel for the appellant has also relied.
The observations are taken from Mr. Lyall 's Settlement Report.
Mr. Lyall said: "Under the Rajas (meaning the old Katoch rulers) the theory of property in land was that each Raja was the landlord of the whole of his raj or principality, not merely in the degree in which everywhere in India the State is, in one sense, the landlord, but in a clearer and stronger degree. . . . . . . . . . . .
Each principality was a single estate, divided for management into a certain number of circuits. . . . . . . . . . .
The waste lands, great or small, were the Raja 's waste, the arable lands were made up of the separate holdings of his tenants.
The rent due from the holder of each field was payable direct to the Raja, unless he remitted it as an act of favour to the holder, or assigned it in Jagir to a third party in lieu of pay, or as a subsistence allowance. . . . . . . . . . .
Every several interest in land, whether 'the right to cultivate certain fields, to graze exclusively certain plots of waste, work a water mill, set a net to catch game or hawks on a mountain, or put a fish weir in a stream, was held direct of the Raja as a separate holding or tenancy.
The incumbent or tenant at the 117 898 most called his interest a 'warisi ' or inheritance not 'maliki ' or lordship".
Mr. Lyall further observed that "all rights were supposed to come from the Raja; several rights, such as holdings of land, etc., from his grant; others, such as rights of common, from his sufferance".
At p. 377 of the Gazetteer a summary is given of the conditions of land tenure under the rule of the Katoch Rajas.
It is stated that there were two rights in the soil recognised under the Raja 's rule the paramount right of property which was vested in the Raja and the right of cultivation derived by grant from the Raja, which was vested in the cultivators.
The first right extended to the whole of the principality; the second primarily extended only to the plot specified in the grant, but carried with it further rights of common in adjacent waste.
It is then observed that this system of land tenure came down practically unchanged until the introduction of British rule, and though the period of Sikh dominion intervened, the Sikhs did not appear to have altered the system.
The learned District Judge relied on the aforesaid observations for his finding that the appellant had the ownership of all royal trees in accordance with the system of land tenure which prevailed during the time of the old Rajas.
In our view, the learned District Judge was in error with regard to this part of the claim of the appellant.
Mr. Lyall began his settlement work in 1865 and his report was dated July 30, 1872.
He continued and revised the earlier settlement work of Mr. Barnes.
It is worthy of note that neither Mr. Barnes nor Mr. Lyall undertook any actual settlement operations in Nadaun, though Mr. Lyall gathered very valuable historical data regarding the conditions of land tenure which prevailed in the district of Kangra under the old Katoch Rajas.
It is one thing to say that the system of land tenure prevailing under the old Katoch rulers continued in spite of the Sikh interregnums, but it is quite a different thing to say that Raja Jodhbir Chand, the grantee of a Jagir, succeeded to the rights of the in dependent Katoch rulers.
The rights of the last independent Katoch ruler, under the system of land 899 tenure which prevailed at the time, passed first to the Sikhs who became the rulers of Kangra and then to the British after the Sikh wars.
The learned District Judge failed to appreciate the distinction between the sovereign rights of an independent ruler and the rights of a grantee under a grant made by the sovereign ruler.
It is pertinent to quote here the following observations of Lord Dunedin in Vajesingji Joravarsingji vs Secretary of State for India(1): "When a territory is acquired by a sovereign State for the first time that is an act of State.
It matters not how the acquisition has been brought about.
It may be by conquest, it may be by cession following on treaty, it may be by occupation of territory hitherto unoccupied by a 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.
Such rights as he had under the rule of predecessors avail him nothing".
Mr. Douie in his Punjab Settlement Manual (1899) said (P. 69): "The Sikhs drove the hill Rajas of Kangra into exile or degraded them into mere Jagirdars, and the British Government when it took over the country did not restore them to their old position".
The question as to whether the sovereign ruler having a right in all royal trees made a grant of that right to Raja Jodhbir Chand or surrendered that right in favour of Raja Jodhbir Chand or any of his successors in interest is a different question which will depend on the terms of the grant or on other evidence showing that the right had been surrendered in favour of the appellant or his predecessors in interest.
That is a question which we shall presently discuss.
The learned District Judge was however wrong in thinking that, according to the system of land tenure which prevailed under the old Rajas or, under the Sikhs, Raja Jodhbir Chand got any right to all pine trees within Nadaun Jagir.
(1) [1924] L.R. 51.
I.A. 357, 360.
900 That brings us to the second ground and to a consideration of the terms of the Sanad dated October 11, 1848, on which also the appellant based his claim.
The Sanad was in these terms: "Fresh Sanad re: Settlement upon Raja Jodhbir Chand Katoch of the villages named hereinafter, situate in Taalluqa Nadaun, possessed by him.
Whereas the mountainous country together with the Doaba tract had come under the occupation of the British Company in pursuance of the treaty which took place between the British Government and the Sirkar of Lahore on March 9, 1846: The Jagir of Choru, Bara, etc., situate in the Ilaqa of Nadaun the name of each Tappa whereof together with the number of its villages and its Jama is given herein below and the total Jama whereof was Rs. 26,270/10/3 per annum approximately, i.e., as much of the Ilaqa of Nadaun as was in the possession of the said Raja at the time of the commencement of tumult of battle whether less or more than the present one, has been granted in perpetuity, generation after generation, to Raja Jodhbir Chand and his male legitimate, descendants who are not from the womb of a slave girl under the orders of the Most Generous Gracious, Exalted and Excellent Nawab Sir Henry Hardinge G.C.B. Governor General, ruler of the territory of India, communicated in writing in English bearing the signature of Mr. 'Edward, Deputy Chief Secretary to His Excellency, in reply to the Commissioner 's report No. 147, dated July 24, 1847, and also as contemplated in the previous order of the Nawab Governor General, dated August 7, 1846, subject to the following conditions: 1.
In no way shall criminal jurisdiction in respect of the said Ilaqa vest in the Raja Sahib.
The entire administration and power of hearing every sort of complaint between the Riaya (subjects) and the said Raja shall remain in the hands of the British Government 's officers.
The Raja Sahib shall not be at liberty to receive on any pretext Mahsul for any commodity from any I Mahajan and trader or from the Riaya 901 (subjects) by way of Zakat (octroi), or anything on account of excise and intoxicants.
He shall receive only revenue from the Riaya living in the villages of his Jagir according to the British Government 's rules of practice.
In case of contravention of the said rules of practice cash shall be fixed by the Government for the said Raja Sahib or his descendants.
After the death of the said Raja Sahib this Jagir shall be divided among his real sons according to the practice followed by Hindus.
It shall not devolve on his descendants from a slave girl.
It shall be essential for the Raja Sahib to construct at his own expense public roads, eleven cubits in width, in his Ilaqa.
It is proper for the Raja Sahib to be always ready to serve the Government wholeheartedly and to bear good moral character.
Hence it is obligatory on the said Raja Sahib not to set his foot on the borders of others beyond his own.
He should treat this Sanad as a Sanad absolute.
Previously on September 22, 1846, a Sanad was issued ' by the Exalted Henry Montgomery Colonel Lawrence from Simla without thorough enquiry and without the name of each village being entered therein.
In that Sanad the entire Jama is shown to be Rs. 32,000 approximately.
According to the statements of officials of the Raja Sahib the said Jama includes amounts on account of excise, Bhum Chari (cattle grazing) etc.
That was found to be wrong.
Now the present Sanad with the name of each Tappa and the number of villages and Jama thereof being entered in it is issued by this Court subject to the above mentioned conditions after an enquiry having been made and a report having been submitted to the Nawab Governor General".
Appended to the Sanad was a list of tappas and villages comprised within the Jagir of Nadaun.
The list also mentioned in the third column the amount of Jama for each tappa.
The question now is whether the aforesaid Sanad was a grant primarily of land revenue; or it made a grant of other royal rights including the right to all 902 pine trees which is the particular right under consideration in the six suits brought by the appellant.
It is, we think, well settled that the ordinary rule applicable to grants made by a subject does not apply to grants made by the sovereign authority; and grants made by the Sovereign are to be construed most favourably for the Sovereign.
This general rule, however, is capable of important relaxations in favour of the subject.
It is necessary to refer here to such only of those relaxations as have a bearing on the con struction of the document before us; thus, if the intention is obvious, a fair and liberal interpretation must be given to the grant to enable it to take effect; and the operative part, if plainly expressed, may take effect notwithstanding qualifications in the recitals.
In cases where the grant is for valuable consideration, it is construed in favour of the grantee, for the honour of the Sovereign; and where two constructions are possible, one valid and the other void that which is valid ought to be preferred, for the honour of the Sovereign ought to be more regarded than the Sovereign 's profit (see para 670 at p. 315 of Halsbury 's Laws of England, Vol.
VII, section 12, Simonds Ed.).
It is worthy of note that so far as the lands in possession of tenants or subjects were concerned, the Sanad did not grant any right other than the right to receive revenue; condition No., 2 of the Sanad made it quite clear that the grantee would receive only revenue from the subjects living in the villages of his Jagir according to the British Government 's rules of practice, and that the grantee was not at liberty to receive on any pretext "mahsul" for any commodity from any Mahajan or trader or any octroi, etc.
from any of the subjects.
If the 'intention was to grant the right to pine tree standing on the lands of the subjects, one would expect it to be mentioned in condition No. 2.
The mention of the Jama in the Sanad is also significant.
In the earlier Sanad the entire Jama was shown to be Rs. 32,000, because according to the statements of the officials of the Raja Sahib, the said Jama included amounts received on account of cattle grazing, etc.
; that was found to be wrong and 903 the correct Jama was found to be Rs. 26,270 10 3.
The Sanad concluded with these words: "Now the present Sanad with the name of each tappa and the number of villages and Jama thereof being entered in it is issued subject to the above mentioned.
conditions, etc.
" In the recital portion of the Sanad also it was stated that the Jagir of certain tappas, together with the number of villages comprised within the tappas and the Jama mentioned in the list, the total Jama being Rs. 26,270 10 3, was granted to Raja Jodhbir Chand.
The other conditions subject to which the grant was made showed that no sovereign rights were granted to the Jagirdar.
In para 69 at p. 96 of his report MrLyall gave a list of the principal Jagirs of Kangra and stated that Raja Jodhbir Chand had a Jama or revenue demand of Rs. 36,079 in perpetuity; he said"Out of the total jama, Rs. 6,079 are the assessment of assigned Khalsa lands which the Raja pays to Government as nazarana; Rs. 33,000 is the value of the grant, but the Raja puts his collection at Rs. 30,000 only, exclusive of Khalsa tikas".
The 'aforesaid remarks, made not very long after the grant, also support the view that the grant was primarily an assignment of land revenue and whatever other rights might have been included, the right to all pine trees on cultivated lands of the subjects was not within the grant.
We agree therefore with the High Court that on a true and proper construction of the Sanad, it is impossible to spell out of its terms a grant in favour of Raja Jodhbir Chand of the right to all pine trees on cultivated and proprietary lands.
We proceed now to examine the third ground of the claim of the appellant, viz., that part of his claim which is based on the entries in the Wajib ul arz of 1892 93 (exhibit P 5), 1899 1900 (exhibit P 6) and 1910 1915 (exhibit P 4) and other connected documents.
This part of the claim of the appellant has been the most controversial and difficult to determine.
The learned Subordinate Judge expressed the view that the aforesaid entries did not help the appellant, because they related to pine trees standing either on 904 uncultivated waste lands or nautor (recently reclaimed) lands and not to such trees on proprietary and cultivated lands.
The learned District Judge held on appeal that in the Wajib ul arz of 1892 93 (exhibit P 5) all pine (chil) trees were held to be the property of Government; this led to a dispute between the Raja and Government, and in the Wajib ul arz of 1899 1900 (exhibit P 6) and subsequent documents, an entry was made in favour of the Raja showing that Government had relinquished or surrendered their right to the Raja.
He did not agree with the learned Subordinate Judge that the entries related to pine trees standing on waste or reclaimed lands only.
The learned Judge who delivered the leading judgment of the High Court gave and considered a long string Of quotations from many documents and then came to the conclusion that the authority of the Wajib ul arz entries was open to doubt and the Raja had failed to make out his claim; the learned Judge did not clearly find however if the entries related to waste and re claimed lands only.
Learned counsel for the appellant has very strongly submitted before its that the view of the learned District Judge was correct and should have been accepted by the High Court; learned counsel for the respondents has argued, on the contrary, that the trial Judge and the learned Judges of the High Court came to a definite finding, which he has characterised as a finding of fact, with regard.
to the Wajib ul arz entries and this Court should not go behind that finding.
We do not think that these appeals can be disposed of on the short ground that this Court does not normally go behind a concurrent finding of fact.
Indeed, in respect of the Wajib ul arze entries, there is no concurrent finding in these cases; the trial Judge thought that the entries related to waste and recently reclaimed lands, whereas the High Court doubted the very authority of the entries.
Moreover, the question whether from the Wajib ul arz entries an inference of surrender or relinquishment of a sovereign right by Government can be properly drawn is not a pure question of fact, depending as it does on the 905 true scope and legal effect of those entries.
We cannot, by resorting to a short cut as it were, relieve ourselves of the task of examining the Wajib ul arz entries and considering their true scope and legal effect.
We have already referred to Mr. Barnes ' Settlement (1850 52) and pointed out that he did not undertake any actual settlement operations in Nadaun.
The next person who dealt with the settlement of Kangra was Mr. Lyall, afterwards Sir James Lyall, Lt. Governor of the Punjab.
He began his work in 1865 and wrote his report in 1872.
He also did not undertake any settlement of Nadaun.
Anderson was the next person who dealt with the settlement of Kangra.
By Notification No. 25 dated January 26 1888 a general re assessment of the land revenue of Kangra district was ordered and by Notification No. 26 of the same date a preparation of the record of rights in the Jagirs of Guler, Siba and Nadaun was undertaken.
Mr. O 'Brien undertook the settlement, but died on November 28, 1893 and it was left to Mr. Anderson to write the report.
It may be stated here that Mr. Anderson wrote two reports: one was the Forest Settlement Report of 1887 and the other was the Revised Settlement Report of Kangra of 1897.
On April 27, 1910 two other notifications were published, directing a revision of the existing record of rights in Dera and Hamirpur Tehsils (Nadaun being within Hamirpur Tehsil).
As a result, Messrs Middleton and Shuttleworth undertook a revisional settlement, which was the Settlement of 1910 15.
We have in these cases to deal with the entries made in O 'Brien 's Settlement (1892 93), Anderson 's Settlement (18991900), and the Settlement of Messrs Middleton and Shuttleworth (1910 15).
Before dealing with the actual entries made, it is necessary to refer to a few more matters arising out of the settlement operations of Messrs Barnes and Lyall.
The expressions 'ala malik ' and 'adna malik ' have been used often in the course of this litigation.
What do those expressions mean? In Mr. Douie 's Punjab Settlement Manual (1930 edition) it is stated 118 906 in para 143: "Where the proprietary right is divided the superior owner is known in settlement literature as ala malik or talukdar, and the inferior owner as adna malik. . . . . .
In cases of divided ownership the proprietary profits are shared between the two classes who have an interest in the soil".
How this distinction arose, so far as the record of rights in the Jagirs are concerned, appears from para 105 at p. 60 of Mr. Anderson 's report.
Mr. Anderson said: "The first great question for decision was the status of the Raja and of the people with respect to the land, which was actually in the occupancy of the people, and next with respect to the land not in their actual occupancy, but over which they were accustomed to graze and to do certain other acts.
Mr. O 'Brien decided that the Raja was superior proprietor or Talukdar of all lands in his Jagir, and the occupants were constituted inferior proprietors of their own holdings and of the waste land comprised within their holdings as will be shown hereafter; be never fully considered the rights in waste outside holdings.
The general grounds fir the decision may be gathered from Mr. Lyall 's Settlement Report and from the orders on the Siba Summary Settlement Report, but I quote at length the principles on which Mr. O 'Brien determined the status of occupants of land, not merely because it is necessary to explain here the action that he took, but also in order that the Civil Courts which have to decide questions as to proprietary rights may know on what grounds the present record was based".
Mr. Anderson then quoted the following extract from Mr. O 'Brien 's assessment report to explain the position: "In places where the possession of the original occupants of land was undisturbed, they were classed as inferior proprietors; but where they had acquired their first possession on land already cultivated at a recent date, or where the cultivators had admitted the Raja 's title to proprietorship during the preparation and attestation of the Jamabandis, they were 907 recorded as tenants with or without right of occupancy as the circumstances of the case suggested. . . . . . . . . . . . . .
In deciding the question old possession was respected.
Where the ryots had been proved to be in undisturbed pos session of the soil they have been recorded as inferior proprietors".
The same principles were followed in Nadaun: long possession with or without a patta or lease from the Raja was the test for recording the ryot as an inferior proprietor (adna malik).
Bearing in mind the aforesaid distinction between ala malik and adna malik, we proceed now to examine the actual entries made in the Wajib ul arz of 1892 93 (exhibit P 5), of 1899 1900 (exhibit P 6) and of 1910 15 (exhibit P 4).
In exhibit P 5 the relevant entry in para 11 was: "The owners shall, however, have no right to pine trees.
They can neither cut them nor get the same without permission, for it has been laid down in the Forest Settlement Reports that the Raja Sahib gave leases to reclaim such lands whereon the Government jungles, i.e., the ' Government pine trees exist.
For this reason, the Government maintained their right to the pine trees.
(see para.
78 of the English report regarding jungles,.)".
In exhibit P 6 the relevant entry was "Except the chil (pine) trees all the trees situated in the Khata of any person in the Tikas of the Jagir are the property of the owner of the Khata.
The chil trees growing in such Khatas in the Tikas of the Jagir are the property of Raja Sahib".
In exhibit P 4 the entry was "Excepting the pine trees all the trees standing in the Khata of any person in the Tikas of the Jagir save those proprietary lands the trees whereof have been held belonging to the Government during the recent Settlement and which have been mentioned above are the property of the owner of the Khata.
In the Tika 's of Jagir.
all the pine trees of such Khatas excepting those standing on such proprietary lands, and which have been held to be the property 908 of the Government during the recent settlement and mention whereof has been made above are the property of Raja Sahib.
" The question before us is as ' to the true scope and legal effect of these entries.
Do they establish a grant of the right to chil trees or, what is the same thing, a surrender of that right, in favour of the Raja by Government? In these cases we are not concerned with trees on public waste lands, nor with forest trees; and as the High Court has pointed out, we do not know if the lands in suit were initially private waste or recently reclaimed lands.
The Jamabandis show that they are proprietary and cultivated lands of adna maliks.
Therefore, the question before us is the right to chil trees on proprietary and cultivated lands in possession of adna maliks.
It is not disputed that under section 31 of the Punjab Land Revenue Act, 1887, Wajib ul arz is a part of the record of rights, and entries made therein in accordance with law and the provisions of Ch.
IV of the Act and the rules thereunder, shall be presumed to be true (vide section 44).
The Wajib ul arz or village administration paper is a record of existing customs regarding rights and liabilities in the estate; it is not to be used for the creation of new rights or liabilities.
(see para 295 of the Punjab Settlement Manual, pp. 146 147,1930 ed.).
In appendix VIII of the Settlement Manual, Section E, are contained instructions with regard to the Wajib ul arz and instruction No. 2 states: "The statement shall not contain entries relating to matters regulated by law, nor shall customs contrary to justice, equity or good conscience, or which have been declared to be void by any competent authority, be entered in it.
Subject to these restrictions, the statement should contain information on so many of the following matters as are pertinent to the estate: . . . . . . . . . . (h)The rights of cultivators of all classes not expressly provided for by law (for instance, rights to 909 trees or manure, and the right to plant trees) and their customary liabilities other than rent.
. . . . . . . . (j)The rights of Government to any nazul property,, forests, unclaimed, unoccupied, deserted, or waste lands, quarries, ruins or objects of antiquarian interest, spontaneous products, and other accessory interest in land included within the boundaries of the estate.
. . . . . . . . . . (1) Any other important usage affecting the rights of landowners, cultivators or other persons interested in the estate, not being a usage relating to succession and transfer of landed property".
In the cases before us, the appellant did not base his claim on custom, though referring to his right be said in his plaint "this has been the practice throughout".
What he really meant by "practice" was the land system prevailing under the old independent Katoch rulers.
We have already held that the appellant did not get the sovereign right of the independent Katoch rulers; nor did the grant made in 1848 give him any right to the royal trees.
The entry in the Wajib ul arz of 1892 93 (exhibit P 5) is not really in his favour; it states that trees of every kind shall be considered to be the property of the owners (adna maliks), but the owners shall have no right to pine trees; for this last part of the entry which is somewhat contradictory of the earlier part, a reference is made to para 78 of Anderson 's Forest Settlement Report as authority for it.
That paragraph, however, stated in clear terms "No orders have been passed by main regard to trees on fields, as the present enquiry extended only to the waste land".
It is obvious that the entry in the Wajib ul arz of 1892 93 went much beyond what was stated in para 78 of Mr. Anderson 's report, and so far as the right to pine trees on proprietary and cultivated lands was concerned, the statement made a confusion between Government jungles, recently reclaimed land and proprietary land, On its own showing, the entry was 910 not the statement of an existing custom, because it referred to para 78 of the Forest Settlement Report; far less did it show any surrender or relinquishment of a sovereign right by Government in favour of the Raja.
Indeed, it is difficult to understand how the surrender or relinquishment of such a right can be the subject of a village custom or can be within the scope of an entry in the Wajib ul arz.
The original grant in favour of Raja Jodhbir Chand was by means of a Sanad, and one would expect any additional grant or surrender to be embodied in a similar document.
At any rate, if the intention of Government was to surrender a sovereign right in favour of the Raja, one would expect such intention to be expressed in unambiguous language.
In Khalsa villages, Government did surrender their right to trees on Shamilat lands of adna maliks on the authority of letter No. 347 of January 6, 1867.
Taking the most favourable view for the appellant, the entries in the Wajib ul arz in these cases can be said to express the views of certain revenue authorities as to the rights of the Raja or the intention of Government; but the views of the revenue authorities as to the effect or construction of a grant or the intention of Government in respect of a grant, do not conclude the matter or bind the civil Courts.
(See Rajah Venkata Narasimha Appa Row Bahadur vs Rajah Narayya Appa Row Bahadur(1)).
The same comments apply to the Wajib ul arz of 1899 1900 (exhibit P 6) and of 1910 15 (exhibit P 4).
They no doubt say that the pine trees on the lands comprised within the Khatas of adna maliks are the property of the Raja Sahib.
None of them indicate, however, on what basis the right to chil trees on proprietary and cultivated lands of the adna maliks is to be held the property of the Raja Sahib.
If the revenue authorities made the entries on the basis of the land system of the old Katoch rulers or on the basis of the Sanad of 1848, they were clearly wrong.
If, however, there was a surrender by Government of the right in favour of the Raja, one would expect it to be mentioned unambiguously in the entries; one (1) [1879] L.R. 7 I.A. 38, 48.
911 would further expect the same to be mentioned in the Jamabandis (Exs. D 7 and D 8) of the adna maliks.
The Jamabandis do not, however, show any restriction on the rights of adna maliks with regard to the trees on their lands.
A reference may be made here to another document (exhibit D 2) which is an extract of the Wajib ul arz (para 12) of '1892 93, dealing with the rights of ala maliks and adna maliks.
The entry shows that the Raja Sahib was to get 15 per cent.
on the net revenue in respect of the entire land owned by the adna maliks as talukdari dues which had been fixed: the talukdari dues were fixed to compensate the Raja Sahib for all sorts of dues, such as banwaziri, domiana, etc.
It is improbable that after the fixation of such talukdari dues, a grant of a further right in respect of chil trees on the lands of adna maliks will be made but will not be specifically mentioned in para 12 of the Wajib ul arz, which dealt particularly with the rights of ala and adna maliks.
Learned counsel for the appellant drew our attention to exhibit D 6, an extract of para 11 of the Wajib ul arz, of 1914 15, at the bottom of which there is a note that the Zamindars (adna maliks) were present and every paragraph had been read out to them and the same were correct.
The argument before us is that the adna maliks ad mitted the Wajib ul arz of 1914 15 to be correct.
We cannot accept that argument; firstly, we do not think that the endorsement at the bottom of exhibit D 6 is an admission by adna maliks of the correctness of the entries made in other paragraphs of the Wajib ul arz, as for example, para 10 (exhibit P 4) which related to the rights of Government in respect of the nazul lands, etc.
Secondly, even if the endorsement amounts to such an admission as is contended for by learned counsel for the appellant, we do not think that it is conclusive or decisive of the right which the appellant is claiming.
exhibit P 2 dated May 27,1886, showed that even so far back as at that date, sonic of the adnamaliks had complained that the Raja 's men had cut and taken away some chil trees on their lands.
It is quite improbable that after such a complaint the adna maliks would admit the right of the ala malik 912 to chil trees on their lands.
In para.
296 of the Punjab Settlement Manual, Mr. Douie observed that the Wajib ul arz in the first regular settlements was sometimes a formidable document, but its real value as evidence of village custom was not always proportionate to its length.
He 'A quoted with approval the observations of Sir Arthur Brandreth to the following effect: "Some few points have been ascertained in each case, but in general the villagers did not know their customs very well, and when they put their seals to the paper, no doubt they thought it very grand, though they did not know what it was about, as they could little understand the language.
The rules are of two sorts; one, the rules laid down by Government, or points on which the whole pargana have the same custom, and, secondly, the special customs of the particular manor; these together take up a great number of pages, and the villagers are confused by the long code of rules, and merely say 'yes, yes ' and put their seals to.
the paper, hoping it is nothing very dreadful.
" A large number of decisions in which entries of the Wajib ul arz or the Riwaji i am and the value to be given to them were considered, have been cited before us.
In some of them, entries in the Wajib ul arz were accepted as correct and in others they were not so accepted, notwithstanding the statutory presumption attaching to the entries under section 44 of the Punjab Land Revenue Act, 1887.
We do not think that any useful purpose will be served by examining those decisions in detail.
The legal position is clear enough.
As was observed by the Privy Council in Dakas Khan vs Ghulam Kasim Khan(1), the Wajib ul arz, though it does not create a title, gives rise to a presumption in its support which prevails unless the presumption is property displaced It is also true that the Wajib ul arz being part of a revenue record is of greater authority than a Riwaji i am which is of general application and which is not drawn up in respect of individual villages (Gurbakhsh Singh vs Mst.
Partapo(1)).
Whether the statutory presumption (1) A.I.R. 1918 P.C. 4.
(2) Lah.
913 attaching to an entry in the Wajib ul arz has been properly displaced or not must depend on the facts of each case.
In the cases under our consideration, we hold, for the reasons already given by us, that the entries in the Wajib ul arz with regard to the right of the Raja in respect of chil trees standing on cultivated and proprietary lands of the adna maliks, do not and cannot show any existing custom of the village, the right being a sovereign right; nor do they show in unambiguous terms that the sovereign right was surrendered or relinquished in favour of the Raja.
In our view, it would be an unwarranted stretching of the presumption to hold that the entries in the Wajib ul arz make out a grant of a sovereign right in favour of the Raja; to do so would be to hold that the Wajib ul arz creates a title in favour of the Raja which it obviously cannot.
It is necessary to state here that in the Wajib ul arz of 1899 1900 (exhibit P 6) there was a reference to certain orders contained in letter No. 1353 dated March 11, 1897, from the Senior Secretary of the Financial Commissioner.
This Wajib ul arz also showed that certain amendments were made on May 26, 1914, by an order of Mr. Shuttleworth, the then Settlement Officer.
There is a further note that the amendment was cancelled on January 23, 1917.
In the High Court judgment there is a reference to the notes mentioned above and the learned Judge who gave the leading judgment observed that the aforesaid notes showed that the state of affairs prevailing at that time was some what confused and fluid.
It is probable that each revenue officer was expressing his own opinion about the matter.
An attempt was made in the High Court to get some of the unpublished original documents of Government to clarify the entries in the Wajib ul arz.
The Government of the Punjab, however, claimed privilege in respect of those documents, which claim was upheld in the High Court.
We have re examined that claim, and though the State was not a party to this litigation, we heard the learned Advocate General for the State. 914 We found the claim to be valid under the law as it stands at present.
We have assumed that the entries in the Wajib ul arz of 1899 1900 and of 1910 15 related to cultivated and proprietary lands of adna maliks, though they were entered in a paragraph which dealt with the rights of Government in respect of ownership of the nazul lands, jungles, unclaimed property, etc.
Even on that assumption, we have come to the conclusion that the entries in the Wajib ul arz do not establish the claim of the appellant that there was a surrender or relinquishment of a sovereign right in favour of his predecessor.
It remains now to notice ' some other evidence on the record.
Learned counsel for the appellant has referred us to several judgments, Exs.
P 9, P 7, P 8 and P 4 (wrongly marked as exhibit P 6).
Referring to these judgments, the learned trial Judge said that it was not clear whether those judgments related to lands which were private waste or nautor (reclaimed) lands.
Apart, however, from that difficulty, we are of the view that, the judgments do not advance the case of the appellant any further.
They proceeded primarily on the entries in the Wajib ul arz, the effect of which entries we have already considered at great length.
Admittedly, no plea of res judicata arose on these judgments, and they were merely evidence of an assertion and determination of a similar claim made by the Raja in respect of other lands within the Jagir.
As to the oral evidence in the case, none of the Courts below placed any great reliance on it.
The learned Subordinate Judge did not accept the oral evidence given on behalf of the appellant; the learned District Judge, referring to the oral evidence of the respondents, said that he could not accept that evidence in preference to the overwhelming historical and documentary evidence led by the appellant.
With regard to the appellant 's witnesses he seemed to think that some of them at least were reliable.
The learned Judges of the High Court did not refer to the oral evidence except for a slight reference to the state 915 ment of Salig Ram, the Raja 's attorney, who appears to have stated that the Raja got his rights in 1893 94; how the Raja got his rights then was not explained.
Learned counsel for the appellant has referred us to the evidence of one Babu Kailash Chander (witness No. 2 for the appellant), who was a Forest Range Officer.
This gentleman said that the trees standing on the land belonging to the landlords were exclu sively owned by the Raja Sahib.
In cross examination he admitted that he had no knowledge of the trees in suit nor did he know on which lands the trees were standing.
He admitted that he knew nothing about the rights of the Jagirdar and the landlords inter se with regard to the lands in dispute.
It is obvious that such evidence does not prove the case of the appellant.
Had the Raja been in possession of the pine trees for such a long time as he now claims, one would expect him to produce some documents showing his income, etc.
from the trees.
No such documents were produced.
For these reasons, we hold that the appellant has failed to establish his claim to the pine trees, and the decision of the High Court is correct.
The appeals fail and are dismissed.
In the circumstances of these cases, where much of the doubt as respects the right claimed arose out of the entries made in the Wajibul arz, the High Court properly directed that there would be no order for costs either in the High Court or in the Courts below.
We think that that order was correct, and we also pass no order as to costs of the hearing in this Court.
Appeals dismissed.
| The appellant as the proprietor of Nada un Jagir sued to establish his title to chil (pine) trees standing on lands within the Jagir but belonging to the respondents, on the ground that the trees belonged to him as ala malik (superior landlords and not to the respondents who were only adna maliks (inferior landlords).
The Jagir originally formed part of the territory belonging to the rulers of Kangra who were Sovereigns entitled to the chil trees.
In 1827.
28 Maharaja Ranjit Singh conquered the territory and granted Nadaun as Jagir to Raja Jodhbir Chand who was the illegitimate son of Raja Sansar Chand, the last independent ruler of Kangra.
In 1846 as a result of the first Sikh War the territory came under the dominion of the British,.
who granted a Sanad in favour of Raja Jodhbir Chand in recognition of his services.
After the second Sikh War, the British granted a fresh Sanad in respect of the Jagir of Nadaun in 1848.
Subsequent to the grant, there were settlements in 1892 93 (O 'Brien 's Settlement), 1899 1900 (Anderson 's Settlement) and 1910 1915 (Settlement of Messrs Middleton and Shuttleworth), and there were some entries in the Wajib ul arz supporting the title of the Raja to the chil trees.
The appellant who is a direct lineal descendant of Raja Jodhbir Chand claimed title to the trees, firstly, as the representative of the independent Kangra rulers, secondly, on the basis of the grant given by the British Government and, thirdly,on the strength of the entries in the Wajib ul arz.
Held:(1) The Sovereign right of the independent Kangra rulers Lo chil trees passed by conquest to the Sikh rulers and subsequently to the British; Raja Jodhbir Chand was only a Jagirdar under the Sikhs and the British, and the appellant could not therefore lay claim to the chil trees on the basis of the Sovereign right of the in.
dependent rulers.
(2)The grant of 1848 on its true construction was primarily an assignment of land revenue and whatever other rights might have been included, the right to all chil trees on the proprietary and cultivated lands of the respondents was not within the grant.
890 It is well settled that the general rule is that grants made by the Sovereign are to be construed most favourably for the Sovereign; but if the intention is obvious, a fair and liberal interpretation must be given to the grant to enable it to take effect, and the operative part, if plainly expressed, must take effect notwithstanding qualifications in the recitals.
In cases where the grant is for valuable consideration it is construed in favour of the grantee, for the honour of the Sovereign, and where two constructions are possible, one valid and the other void, that which is valid ought to be preferred, for, the honour of the Sovereign ought to be more regarded than the Sovereign 's profit.
(3)Wajib ul arz or village administration paper is a record of existing rights not expressly provided for by law and of customs and usage regarding the rights and liabilities in the estate, and though under section 44 of the Punjab Land Revenue Act, 1887, it is presumed to be true, it is not to be used for the creation of new rights and liabilities.
Entries in the wajib ul arz with regard to the right of the Raja in respect of chil trees standing on the cultivated and proprietary lands of the adna maliks, did not show any existing custom or usage, of the village, the right being a Sovereign right, and the appellant could not rely on the said entries as evidence of a grant or surrender or relinquishment of a Sovereign right by Government in his favour.
The expressions "ala malik" and "adna malik" explained in the context of the Settlement reports relating to Nadaun Jagir.
Venkata Narasimha Appa Bow Bahadur vs Rajah Narayya Appa Bow Bahadur ([1879] L.R. 7 I.A. 38), Dakas Khan vs Ghulam Kasim Khan (A.I.R. and Gurbakhsh Singh vs Mst.
Partapo ([1921] I.L.R. , referred to.
|
Summarize this legal judgement text concisely | Appeal No. 181 of 1956.
Appeal by special leave from the judgment and order dated September 5,1955, of the Judicial Commissioner 's Court, Ajmer, in Civil Writ Petition No. 108 of 1955.
M. M. Kaul and R. H. Dhebar, for the appellants.
The respondent did not appear.
November 15.
The Judgment of the Court was delivered by BHAGWATI J.
This is an appeal with special leave from the judgment of the Judicial Commissioner, Ajmer, restraining the District Magistrate, Ajmer, from holding the elections and poll to the Ajmer Municipal Committee on September 9, 1955.
The respondent claimed to be a voter of the Ajmer Municipality.
By an order dated March 12, 1953, the Ajmer Municipal Committee had been suspended and that suspension was to continue till September 11, 1955.
In view of the impending elections after the period of suspension was over, the Chief Commissioner, Ajmer, the appellant before us, framed the Ajmer State Municipalities Election Rules, 1955, in exercise of the powers conferred by section 43 of the Ajmer Merwara Municipalities Regulation, 1925 (VI of 1925) and published them in the Government Gazette dated August 4, 1955.
On August 8, 1955, he notified an election programme and also authenticated and published an electoral roll.
This electoral roll had been corrected and altered by the orders of the Sub Divisional Officer on certain days prior to August 8, 1955, but the respondent 's name was alleged to have been incorrectly described therein, his father 's name having been mentioned as Ratan Lal instead of Chitar Mal.
On August 10, 1955, he applied for the correction of his father 's name in the Parliamentary Electoral Roll and on August 16, 1955, he filed his nomination paper.
His nomination was, however, rejected on August 17, 1955, 70 the Returning Officer stating that he was not one of the electors according to the roll.
His application for rectification of the mistake in the Parliamentary Electoral Roll was also rejected on August 18, 1955, by the Electoral Registration Officer on the ground that the roll of the Municipal elections had been finally published on August 8, 1955, and therefore no correction could be made.
The respondent thereupon filed on August 26, 1955, a writ petition being Civil Writ Petition No. 108 of 1955 in the Court of the Judicial.
Commissioner at Ajmer against the appellant and the District Magistrate, Ajmer, inter alia for a mandamus against the appellant to reconstitute the Ajmer Municipal Committee by a properly made and published notification under section 8(1) of the Regulation and an order against the District Magistrate, Ajmer, restraining him from holding the elections and poll to the Ajmer Municipal Committee on September 9, 1955, as notified.
The learned Judicial Commissioner upheld the contention of the respondent in regard to the reconstitution of the Committee but did not issue any directions in regard to the same in view of the fact that the appellant had already before that date issued a notification under section 8(1) of the Regulation to reconstitute the Committee.
He also held that Rule 7 of the Election Rules was not in consonance with and was in contradiction to section 30, sub section
(2), of the Regulation and was in excess of the rule making power conferred upon him, and the elections proposed to be held on September 9, 1955, were not lawful.
He, therefore, directed the District Magistrate, Ajmer, to refrain from holding the elections and poll to the Ajmer Municipal Committee on September 9, 1955.
On an application made by the appellant for a certificate under article 133(1)(c) of the Constitution, the learned Judicial Commissioner was of opinion that the direction given by him against the District Magistrate, Ajmer, was merely not to hold elections on September 9,,1955, and as that date had already passed when the application was disposed of by him, no useful purpose would be served by granting him a certificate and he accordingly refused to grant the same.
The appellant, 71 however, approached this Court and obtained special leave under article 136 for filing an appeal against the, decision of the learned Judicial Commissioner.
When the appeal came up for hearing before us, the respondent communicated to us his desire not to appear and contest the appeal with the result that the appeal has been heard by us exparte.
At the outset we pointed out to the learned counsel for the appellant that the appeal had become academic.
The appellant had in fact reconstituted the Ajmer Municipal Committee by a proper notification under section 8(1) of the Regulation and the date on which the elections and the poll to the Ajmer Municipal Committee were to he held, viz., September 9, 1955, had also passed.
The learned counsel for the appellant, however, urged before us that the pronouncement of the learned Judicial Commissioner to the effect that Rule 7 of the Election Rules was not in consonance with and was in contradiction to section 30, sub section
(2), of the Regulation and was in excess of the rule making power conferred upon the appellant was a stumbling block in the way of the appellant holding further elections on the basis of the electoral roll as it had been authenticated and published by him on August 8, 1955.
If that pronouncement stood, it would be incumbent on the appellant to authenticate and publish another electoral roll and incur the expenses which were inevitable in that process.
He, therefore, pressed upon us that we should set aside that pronouncement so that the Municipal elections may be held hereafter without straining the attenuated finances of the Municipality.
The relevant provisions which fall to be considered by us are the following: " Section 30.
(1): A person shall not be deemed to be an elector for any purpose of this Regulation or of any rule unless he is enrolled as an elector.
(2)as amended by Act LX V of 1950: Every person who would be entitled under the Representation of the People Act, 1950 (XLIII of 1950) to be registered in the electoral roll for a Parliamentary Constituency if 72 that Constituency had been co extensive with the Municipality, and whose name is registered in the electoral roll for the Parliamentary Constituency comprising the Municipality shall be entitled to be enrolled as an elector of the Municipality.
Section 43: The Chief Commissioner may, by notification, make rules consistent with this Regulation for the purpose of regulating all or any of the following matters, namely, : (a). . . . . (b). . . . . (c)the preparation and revision of electoral rolls, and the adjudication of claims to be enrolled and objections to enrolment; Section 248.
(4): On publication in the official Gazette of any rules made under this Regulation, such rules shall have effect as if enacted in this Regulation.
Elections Rules: Rule 7 Electoral rolls: In accordance with the provisions of sub section (2) of section 30 of the Ajmer Merwara Municipalities Regulation, 1925 (VI of 1925) the electoral roll of the particular Municipality shall be the same as the final printed roll for a Parliamentary Constituency representing the area covered by that Municipality.
9 Electors: No person shall be deemed to be an elector for the purposes of these rules unless his name appears in the electoral rolls.
mentioned above It is clear from section 30, sub section
(2), of the Regulation that in order to be entitled to be enrolled as an elector of a Municipality, a person has to fulfill two conditions, viz., (1) that he should be entitled under the Re. presentation of the People Act, 1950 (XLIII of 1950) to be registered in the electoral roll for a Parliamentary Constituency if that Constituency had been co extensive with the Municipality ' nd (2) that his name should be registered in the electoral roll for a Parliamentary Constituency comprising the Municipality.
If 73 both these conditions are fulfilled he would be entitled to be enrolled as an elector of the Municipality.
In regard to the first condition reference need be made to the qualifications prescribed for being registered in the electoral roll for the Parliamentary Constituency and it is only if these qualifications are possessed by the person that he would be entitled to be so registered.
In order, therefore, to determine whether a person is entitled to be enrolled as an elector of a Municipality, it would be necessary to ascertain in the first instance whether he is entitled to be registered in the electoral roll for the Parliamentary Constituency.
Once that condition is fulfilled, it would be further necessary to consider whether his name is registered in the electoral roll for the Parliamentary Constituency.
If, in spite of his fulfilling the condition that he is entitled to be registered in the electoral roll for the Parliamentary Constituency, his name is not registered in the electoral roll for the same, he would not be entitled to be enrolled as an elector of the Municipality.
The latter condition does not require any scrutiny for its fulfillment.
The fact of his being registered in the electoral roll for the Parliamentary Constituency would be apparent on the face of the electoral roll itself.
The fulfillment of the first condition, however, would be subject to scrutiny and it would be open to any resident of the Municipality to object to the enrolment of a particular person as an elector of the Municipality.
Even in the case of the electoral roll for the Parliamentary Constituency it would be open to a person to apply for a revision of that roll by applying for a correction of the mistakes or mis descriptions which might have crept therein as also to have his name registered in the roll if it had not been so registered provided he fulfilled the first condition, viz., that he was entitled to be registered in the electoral roll for the Parliamentary Constituency.
Objections could also be filed to the enrolment of particular persons as electors in the Parliamentary Constituency and also in the Municipality.
Apart from the preparation of the electoral roll for the Municipality it would, therefore, be necessary to have a, revision of such electoral rolls and 19 74 also the adjudication of claims to be enrolled therein and objections to such enrolment.
This was clearly envisaged by the framers of the Ajmer Merwara Municipalities Regulation, 1925, and with that end in view it was provided in section 43(c) that the Chief Commissioner may by notification make rules consistent with the Regulation for the purpose of regulating inter alia the preparation and revision of electoral rolls and the adjudication of claims to be enrolled and the objections to enrolment.
Such rules when framed and published in the official Gazette were, by virtue of section 248(4) to have effect as if enacted in the Regulation.
They were to have statutory effect and were to be treated as part and parcel of the Regulation and contained therein.
Before the amendment of section 30, sub section
(2), of the Regulation by Act LXV of 1950 there were in existence sub sections
(2) and (3) of that section which prescribed the qualifications for being enrolled as electors of the Municipality.
They were, however, substituted by the amended section 30, sub section
(2), set out hereinabove.
It thus substituted for the qualifications which had till then been considered requisite for such enrolment all the qualifications which were required.
for being registered in the electoral roll for the Parliamentary Constituency.
That, however, was a provision prescribing the qualifications for the purposes of such enrolment and the object of the amendment was to adopt the electoral roll for the Parliamentary Constituency as the basis for the electoral roll of the Municipality.
It did not eliminate the further steps in the matter of the revision of such electoral roll as also the adjudication of claims to be enrolled therein and objections to such enrollments.
The amendment did not obviate the necessity of taking these further steps inspite of the electoral roll for the Parliamentary Constituency being treated as the electoral, roll of the Municipality.
By thus treating the electoral roll for the Parliamentary Constituency as the basis for the electoral roll of the Municipality, the trouble and expenses involved in the preparation of the electoral roll for the Municipality were saved but the Municipality was not absolved 75 from the obligation of providing for the revision of such electoral roll as well as the adjudication of claims to be enrolled therein and objections to such enrolment.
When the Ajmer State Municipalities Election Rules, 1955, came to be framed in exercise of the power conferred by section 43 of the Regulation, the Chief Commissioner framed Rule 7 which provided that the electoral roll for the particular Municipality shall be the same as the final printed roll for the Parliamentary Constituency representing the area covered by the Municipality.
He dispensed with the independent preparation by the Municipality of the electoral roll but did nothing further.
Rule 9 provided that no person shall be deemed to be an elector for the purpose of the Rules unless his name appeared in the electoral rolls mentioned above.
That had reference obviously to the second condition prescribed in section 30, sub section
(2), of the Regulation but did not go far enough.
It did not say that a person whose name appeared in the electoral rolls for the Parliamentary Constituency was to be deemed to be an elector for the purposes of the Rules so as to obviate the necessity of fulfilling the first condition therein prescribed and rightly so, because, if it did say so, it would be in conflict with section 30, sub section
(2), of the Regulation.
These Rules did not eliminate the scrutiny which could be made at the instance of the parties concerned as to whether a person whose name was registered in the electoral roll for the Parliamentary Constituency was in fact entitled under the Representation of the People Act, 1950 (XLIII of 1950) to be so registered and whether he possessed the qualification prescribed in that Act in this behalf nor did they eliminate the further scrutiny for the purpose of the revision of such electoral roll or the adjudication of claims to be enrolled therein and objections to such enrolment.
It is of the essence of these elections that proper electoral rolls should be maintained and in order that a proper electoral roll should be maintained it is necessary that after the preparation of the electoral roll 76 opportunity should be given to the parties concerned to scrutinize whether the persons enrolled as electors possessed the requisite qualifications.
Opportunity should also be given for the revision of the electoral roll and for the adjudication of claims to be enrolled therein and entertaining objections to such enrolnaent.
Unless this is done, the entire obligation cast upon the authorities holding the elections is not discharged and the elections held on such imperfect electoral rolls would acquire no validity and would be liable to be challenged at the instance of the parties concerned.
It was in our opinion, therefore, necessary for the Chief Commissioner to frame rules in this behalf, and in so far as the rules which were thus framed omitted these provisions they were defective.
It was urged that the expression " the final printed roll for the Parliamentary Constituency " predicated that the electoral roll for the Parliamentary Constituency had been finalised after going through the whole procedure in accordance with the provisions of the Representation of the People Act, 1950 (XLIII of 1950) and, therefore, there was no necessity for making any further provision of that nature in the matter of the electoral roll of the Municipality.
This contention is unsound for the simple reason that by using this phraseology the whole of the procedure laid down in the Representation of the People Act, 1950 (XLIII of 1950) is not bodily incorporated in the Ajmer Merwar Muni cipalities Regulation, 1925 (VI of 1925).
Neither the Regulation nor the Rules which have been framed by the Chief Commissioner in exercise of the powers conferred under section 43 of the Regulation make any mention of any such incorporation nor is it possible to urge that, merely because the electoral roll for the Parliamentary Constituency was treated as the basis for the electoral roll of the Municipality, these provisions were bodily incorporated in the Rules.
If Rules 7 and 9 above referred to were intended to form a complete code for the finalisation of the electoral roll of the Municipality they did not serve the intended purpose and were either inconsistent with the provisions of section 30, sub section
(2), of the Regulation or were defective in so far as they 77 failed to provide the proper procedure for taking of the steps therein above indicated for finalising the electoral roll of the Municipality.
If that was the true position the electoral roll of the Municipality which had been authenticated and published by the Chief Commissioner on August 8, 1955, was certainly not an electoral roll prepared in accordance with law on the basis of which the elections and poll to the Ajmer Municipal Committee could be held either on September 9, 1955, or at any time thereafter.
In the view which we hold, it is not necessary to consider whether, in the event of an inconsistency between section 30, sub section
(2), of the Regulation and the Rules framed by the Chief Commissioner in exercise of the power conferred under section 43 of the Regulation, the section would prevail or the Rules.
Suffice it to say that the electoral roll of the Ajmer Municipality which was authenticated and published by the Chief Commissioner on August 8, 1955, was not in conformity with the provisions of section 30, sub section
(2), and the relevant provisions of the Regulation and could not form the basis of any valid elections to be held to the Ajmer Municipal Committee.
Under the circumstances we see no substance in the appeal and dismiss the same.
There will be, however, no order as to costs of the appeal in so far as the respondent has not appeared and contested the appeal before us.
Appeal dismissed.
| Sub section (2) Of section 30 of the Ajmer Merwara Municipalities Regulation, 925, as amended, provided that " every person who would be entitled under the Representation of the People Act, 1950 (XLIII of 1950) to be registered in the electoral roll for a Parliamentary Constituency if that Constituency had been co extensive with the Municipality, and whose name is registered in the electoral roll for the Parliamentary Constituency comprising the Municipality, shall be entitled to be enrolled as an elector of the Municipality"; and section 43 enabled the Chief Commissioner to make rules consistent with the Regulation for the preparation and revision of electoral rolls and the adjudication of claims to be enrolled and objections to enrolment.
In exercise of this power the appellant framed Rules which, inter alia, provided that the electoral roll for the particular Municipality shall be the same as the final printed roll for the Parliamentary Constituency representing the area covered by the Municipality.
He notified an election programme and also authenticated and published an electoral roll on August 8, 1955.
The respondent whose father 's name was recited wrongly in the electoral roll applied for rectification of the mistake in the Parlia mentary Electoral Roll, on August 10, 1955, but it was rejected on the ground that the roll of the Municipal elections had been finally published on August 8, 1955, and therefore no correction could be made.
The respondent challenged the validity of the notification and the electoral roll.
Held, that under section 30 (2) Of the Ajmer Merwara Municipalities Regulation, 1925, the electoral roll for the Parliamentary constituency was only treated as the basis for the electoral roll of the Municipality and that the rules in so far as they made no provision for the revision of the electoral roll, for the adjudication of claims to be included therein or for entertaining objections to such inclusion, were defective and, therefore, the electoral roll of the Ajmer Municipality which was authenticated and published by the appellant on August 8, 1955, was not in conformity with the provisions of section 30 (2) and the relevant,provisions of the Regulation 69 and could not form the basis of any valid elections to be held to the Ajmer Municipal Committee.
|
Summarize this legal judgement text concisely | Appeal No. 182 of 1956.
Appeal by special leave from the judgment and order dated November 23, 1955, of the Labour Appellate Tribunal of India, Bombay, in Appeal No. 224 of 1953 arising out of an award (Part II) dated June 4, 1953, of the Bombay Industrial Tribunal in Reference No. (I.T.A.)No.
18 of 1951.
M. C. Setalvad,Attorney General for India,N. C. Chatterji, J. B. Dadachanji, section N. Andley and Rameshwar Nath of Rajinder Narain & Co., for the appellant.
Purshottam Tricumdas, H. R. Gokhale, K. R. Choudhury and M. R. Rangaswamy, for the respondents.
November 13.
The Judgment of the Court was delivered by S.K. DAS J.
This is an appeal by special leave from a decision of the Labour Appellate Tribunal at Bombay, dated November 23, 1955.
The Baroda Borough Municipality is the appellant, and the respondents are the workmen employed in the electricity department of the said Municipality represented mostly by the Baroda State Electric Workers Union (hereinafter called the respondent Union).
The substantial question for determination in this appeal is if the respondents, workers in a municipal department engaged in the generation, supply and sale of electric energy, are entitled to the bonus claimed out of the surplus earnings of the said department (called "profits" by the respondents) after 35 allowing for all outgoings including necessary expenditure of the department and deductions for all prior, charges.
The question is, a short one, but has an importance and consequences reaching beyond the limits of the particular case in which it has arisen.
We may first state the relevant facts.
Before May 1, 1949, on which date the former State of Baroda was merged in and integrated with the then Province of Bombay (now the Bombay State), the Baroda Electric Supply Concern was owned and managed by the State of Baroda.
On April 19, 1949, the State Government of Baroda decided to hand over the said Concern as a gift to the Baroda Municipality and communicated an order to that effect in which it was stated inter alia: It is likely that the various types of assistance, financial or otherwise, which the Baroda Municipality has been receiving up to now from the Baroda Government may not be continued to a similar extent after integration.
It is therefore very necessary to find out new sources of revenue for the Municipality so that it may continue to maintain a high standard of efficiency as far as possible. .
With this object in view the Baroda Government are pleased to hand over to the Municipality as a gift the Baroda Electric Supply Concern which at present is a Government concern including both the generation and distribution of electric power.
With the transfer of the electric concern to the Municipality the various funds of the, electric department like the Reserve Fund the Depreciation Fund etc.
are also to be transferred to the Municipality with this specific understanding that these funds should not be used for purposes other than those for which they are intended. .
The Baroda City Municipality will have to be issued licence for the generation and distribution of electricity as per Barods Electricity Act and the Municipality should immediately apply for such a licence for the supply of electric power not only within the municipal limits but within a twenty miles radius round Baroda.
The Municipality should continue the policy of the department.
to give 36 electric energy at concessional rates for irrigation pur poses in the villages, although this may not be profitable in the beginning.
The entire staff of the Baroda Electric Supply Concern will be taken up by the Municipality without an reservation and the Municipality is directed to bring into operation terms and conditions of services as are prevalent under the Bombay Government and the officers and staff should be given emoluments which they would have got had they joined Bombay Government." On April 29, 1949, a formal order of handing over was made, subject to certain directions reserving the rights of the employees in the matter of pension, gratuity, provident fund, continuity of service etc.
In 1951, there was an industrial dispute between the Baroda Borough Municipality and the workmen employed in the electric department with reference to a number of demands made by the latter, and by consent of the appellant Municipality and the respondent Union, the dispute was referred to the Industrial Tribunal, Bombay, for adjudication, by an order of the Government of Bombay dated October22,1951.
The dispute related to a large number of items, one of which was "payment of bonus equivalent to three months ' wages (including dearness allowance) for the year 1940 50 to all employee,% of the electric department including daily wage workers and temporary workers.
" The dispute was settled by agreement with regard to all other items except the item of bonus; on that item the Industrial Tribunal heard the parties and came to the conclusion that the respondents were not entitled to the bonus claimed because(1) the Municipality was not a profit making concern;(2) the balance of earnings over the outgoings of the electric department of the Municipality was not 'profit ' as that word is understood in the ordinary trading or business sense; (3) the Municipality consisted of both earning and spending departments and it was not per missible to create an invidious distinction between the different employees of the Municipality by granting bonus to the workmen in one department only; and (4) the respondents having been compensated by higher 37 scales of salary on the municipalisation of the undertaking and having got other benefits and amenities appertaining to municipal service were not entitled to claim such bonus as was granted to them during the regime of the former State owned company.
Against this decision of the Tribunal, there was an appeal to the Labour Appellate Tribunal of India at Bombay.
The Appellate Tribunal came to the conclusion that the respondents were entitled to claim bonus; it expressed the view that on the decision of this Court in D. N. Banerji vs P. R. Mukherjee (1) the expression industrial dispute ' in the , includes disputes between municipalities and their employees in branches of work that can be regarded as analogous to the carrying on of a trade or business, and if the undertaking resulted in profit during the relevant trading period, the workmen were entitled to claim bonus as of right.
On the question whether the excess of earnings over outlay of a municipal undertaking like the one under consideration here was profit or not, the Appellate Tribunal relied on the circumstances stated below for its finding that the excess was really profit: (a) the very nature of the gift to the Baroda Municipality by the State Government of Baroda showed that the concern (or undertaking) made over to the former was a profit making concern; (b) the concern was run separately and as it was a trading concern by its very nature,, the balance of earnings derived from it after allowing for all outgoings was pecuniary gain and it made no material difference to the actual nature of the gain, whether it was called surplus or profit; and (c) no distinction could be made in principle between a municipal undertaking and an undertaking by a private or public concern, if the conditions laid down for the grant of bonus in Muir Mills Co. Ltd. vs Suti Mills Mdzdoor Union, Kanpur (2) were fulfilled.
As to the payment of bonus to the employees of one department only, the appellate Tribunal said that if (1) ; (2) ; 38 the profits were not sufficiently large to admit of bonus to all employees, it was permissible to treat the profitmaking department as a separate unit for the purpose of granting bonus, unless there was some essential nexus or connection between the profit making department and other departments or some unity of purpose or parallel or co ordinate activity towards a common goal.in all the departments without which the undertaking could not be carried on to proper advantage.
The Appellate Tribunal.
pointed out that the accounts of the electricity department.
of the Baroda Municipality were separately kept and as the undertaking carried on by the electricity department of the municipality differed.
from other normal activities of the Municipality, there being ' no common nexus between them, it was open to the workmen of the electricity department to claim bonus out of the profit made by that department after making deductions for all prior charges.
The Appellate Tribunal accordingly allowed the appeal, set aside the decision of the Industrial Tribunal and remanded the case for decision on merits according to law.
It is now finally settled by the decision of this Court in D. N. Banerji vs P. R. Mukherjee (supra) that a municipal undertaking of the nature we have under consideration here is an 'industry ' within the meaning of the definition of that word in section 2(j) of the , and that the expression 'industrial dispute ' in that Act includes disputes between municipalities and their employees in branches of work that can be regarded as analogous to the carrying on of a trade or business.
The learned Attorney General who appeared for the appellant made it clear at the very out set that the questions which he wished us to consi der in this case were different from those considered and determined by the aforesaid decision.
The first contention which he placed in the forefront of his argument is this: he invited attention to our decision in Muir Mills Co. Ltd. vs Suti Mills Mazdoor Union, Kanpur (Supra) and contended that having regard to the principles laid down therein for the grant of bonus, the respondents were not entitled to claim any 39 bonus in this case because even though the undertaking in question was an 'industry ' within the meaning, of the Industial Disputes Act, 1947, there was no profit from the undertaking and the principles which govern the grant of bonus out of profits, as explained in that decision, were inapplicable to a municipal undertaking of the nature under consideration before us.
In the Muir Mills case (supra) it was observed that two conditions had to be satisfied before a demand for bonus could be justified: one was that the wages of the workmen fell short of the living standard and the other was that the industry made profits to the earning of which the workmen had contributed.
The principle for the grant of bonus was stated thus: ', 'It is fair that labour should derive some benefit if there is a surplus after meeting prior or necessary charges.
" The prior or necessary charges were then explained as (1) provision for depreciation, (2) reserves for rehabilitation, (3) a return of six per cent.
on the paid up capital and (4) a return on the working capital at a lesser rate than the return on paid up capital.
Do those principles apply in the case of a municipal undertaking of the kind in question here ? There can be no doubt that the respondents founded their claim of bonus in this case on the availability of profits after meeting prior or necessary charges.
In the statement of their claim they said, "The electric concern was treated as a commercial concern by the former Baroda State Government and it used to yield huge profits to the State.
Even after merger the municipality is treating it as a commercial concern and the concern is fielding huge profits to the municipality too.
It is submitted that all workers of the electric department should be paid bonus equivalent to three.
months wages including D.A.
The bonus should be paid to all the employees including daily wage, temporary and semi permanent workmen.
The workers are entitled to bonus both as share in profits and also &a deferred wages.
" It was decided in the Muir Mills case (supra) that bonus was not deferred wage; so the alternative claim of the respondents on the footing that bonus was deferred wage had no real basis, and their 40 claim of bonus as share in profits was the only claim which merited consideration.
In reply to that claim, the appellant said: This demand is not acceptable.
Under former Baroda Government Order No. (R) 403/63 dated 19 4 49, after serious consideration into the financial position of the Municipality after the integration of the Baroda State with the Bombay Province and with a view to find out new sources of revenue for the Municipality so that it may continue to maintain its standard of efficiency and to fulfill the obligations incumbent upon the Municipality, the Government was pleased to hand over to the Municipality the Baroda Electric Supply concern.
"The Municipality is experiencing great hardships still in meeting all its obligations and covering the lost sources of revenue.
Even including the income of the Electric Supply Concern, the municipal budget is a deficit one.
Due to want of sufficient funds, the Municipality has to give up certain schemes and works or to postpone the same. "Further, local authorities, like municipalities and local boards, are public utility institutions and the profits derived from the working of the Electric Supply Concern will all go to the Municipal treasury and city 's tax payers in general, unlike other commercial organisations whose profits are distributed only among the investing public.
" It is clear to us that having regard to the provisions of the Bombay Municipal Boroughs Act, 1925 (Bombay Act XVIII of 1925), hereinafter called the Municipal Act, under which the appellant Municipality is constituted and functions, the earnings of one department of the Municipality cannot be held to be gross profits in the ordinary commercial or trading sense; nor can, the principles governing the grant of bonus out of such profits after meeting necessary or prior charges be applied to the present case.
The relevant sections of the Municipal Act are sections 58, 63, 65, 66, 68 and 71.
We shall subsequently advert to section 58 of the Municipal Act in connection with another 41 contention of the learned Attorney General; but it is necessary to refer here to sections 63, 65, 66, 68 and 71 of the Act.
Section 63 lays down, inter alia, that all property of the nature specified in clauses (a) to (f) of sub section
(2) of the section shall be vested in and belong to the Municipality and shall, together with all other property of whatever nature or kind which may become vested in the municipality, be under its direction, management and control and shall be held and applied by it as trustee, subject to the provisions and for the purposes of the Act.
Clauses (a) to (f) of subs.
(2) of the section relate to immoveable property and permanent fixtures or works thereon.
Section 65, which is more relevant for our purpose, states inter alia that all moneys received by or on behalf of a munici pality, all taxes, fines, penalties etc.
, all proceeds of land or other property sold by the municipality and all rents accruing from its land or property and all interest, profits and other moneys accruing by gift or transfer from the Government or private individuals or otherwise, shall constitute the municipal fund and shall be held and dealt with in a manner similar to the property specified in a. 63.
Section 66 lays down that the municipal fund and all property vested in the municipality shall be applied for purposes of the Act within the limits of the municipal borough.
Section 68 lays down the duties of municipalities, one of which is the lighting of public streets, places and buildings.
This is an obligatory duty of the municipality.
Section 71 states the discretional functions of the municipality and one of such functions is the construction, maintenance, repairs, purchase of any works for the supply of electrical energy (see el.
It is worthy of note that cl.
(q1) was inserted by an amending Act in 1951 (Bombay Act 44 of 1951).
A similar amendment was made in the same year in section 66 of the Municipal Act and the effect of the amendment was that the municipality could incur expenditure to supply electrical energy not only for the use of the inhabitants of the municipal borough but also for the benefit of any person or buildings or lands in anyplace whether such place was or was not within the limits of the said 42 borough.
A scrutiny of these provisions clearly establishes two propoisition: one is that all municipal property, including moneys etc.
received by way of gift, is vested in the municipality and shall be held and applied by it as trustee subject to the provisions and for the purposes of the Municipal Act, and it is not open to the municipality to treat some of its property separately from other property and divert it for purposes other than those sanctioned by the Municipal Act; the other proposition is that there are some obligatory functions which a municipality must perform, and one of these is the lighting of public streets, places and buildings; and there are some other functions which the municipality may at it,% discretion perform either wholly or partly out of municipal property and fund, and one of these discretionalfunctions is the supply of electrical energy which is for the use of the inhabitants of the municipal borough or for the benefit of any person, buildings or lands in any place whether such place is or is not within the limits of the municipal borough.
The question now is whether, having regard to the aforesaid provisions, it was open to the Municipality to treat its electricity department, the property thereof and the income therefrom, separately from other departments and spend a part of the income for the benefit of the employees of that department only, treating it as profits of the particular department and not as part of the entire municipal fund or property.
In our opinion, such a treatment of the income of one department of the Municipality would be clearly against the provisions of the Municipal Act.
It is pertinent to refer here to Chapter XI of the Municipal Act dealing with Municipal Accounts.
Under section 209 a complete account of all receipts and expenditure of the municipality and a complete account of the actual and expected receipts and expenditure, together with a budget estimate of the income and expenditure of the municipality, have to be prepared for each year and these have to be prepared and laid before the municipality on or before a particular date.
These budget estimates have then to be sanctioned at a special 43 general meeting of the municipality.
Learned counsel for the respondents stressed two points in this connection.
He pointed out that as a matter of fact the ' Baroda Municipality kept separate accounts with regard to its electrical undertaking, including a capital account showing capital expenditure and capital receipts; separate accounts were also kept of the reserve fund, depreciation fund, provident fund etc.
It was argued that the maintenance of these separate accounts showed that the Baroda Municipality did treat the income of the electricity department separately from that of other departments, and the maintenance of such accounts did not contravene any of the provisions of the Municipal Act.
The second point stressed was that the distinction between the obligatory and discretional functions of the municipality showed that in the exercise of discretional functions the municipality might engage in an undertaking with a profit making motive.
Learned counsel for the respondents submitted before us that if there was profit from the 'electricity department was running an undertaking in exercise of the discretional functions of the Baroda Municipality, the workmen in that department would be entitled to bonus as of right.
In our opinion, these submissions are based on a misapprehension of the true position in law.
With regard to the first point, it is worthy of note that the maintenance of separate accounts of a particular department by the Municipality does not alter the nature or quality of the property or income therefrom.
The property or income is still municipal property within the meaning of sections 63 and 65 of the Municipal Act, and it can be utilised only for the purposes of the Act as laid down by section 66.
Maintenance of a separate account for a particular department is in the nature of an internal accounting arrangement; it does not really alter the quality or nature of the property or income, and for the purposes of section 209 of the Act the property or income has to be treated like all other property or income of the Munici pality in question.
In his book on Public Finance, Mr. Findlay Shirras has pointed out that the classification of public revenue or income, both of the State and 44 of municipalities, has undergone considerable change in recent years and non tax revenue of the State may be sub divided into three main classes (1) developmental revenues from the public domain and from the public undertakings, which include not only revenue from the State domain but also from the municipal domain; (2) administrative and miscellaneous revenues other than loan revenues; and (3) loan revenues (see Science of Public Finance by Findlay Shirras, Vol.
I, Book III, Chapter XIII, pages 211 212).
At page 717 (Vol. II, Book III, Chapter XXX), the learned author has posed the following question with regard to State or municipal concerns: "An important point in such concerns is the keeping of strictly commercial accounts.
Interest should be paid on capital.
Provision should also be made for depreciation of machinery and plant, for a pension fund, rents for land, and income tax in order to arrive at the true net profit.
State concerns sometimes show a surplus, but the point is how much of this is really profit?" The learned author has posed the question but given no answer.
We are of opinion that the answer has been very succinctly put in Dr. Paton 's Accountants ' Handbook (3rd edition, section 24 dealing with Governmental Accounting, page 1277).
Says Dr. Paterson: " In private business the proprietary or residual equity usually represents the ownership of individuals in the case of the corporation that of the shareholders.
In Government this residual element reflects the equity of the continuing body of citizens as a group, and in no sense belongs to particular members of the group ; it is not represented by capital stock and there are no shares with specific voting rights and dividend expectations.
" The legal position under the Municipal Act is the same.
The income of one department is the income of the municipality as a whole.
and that income is not 'Profit ' in the ordinary commercial or trading sense of being income derived from capital of particular individuals or shareholders; it may even be that the surplus of one department may dwindle into a deficit, when the entire income of the municipality is taken into consideration Vis a Vis its entire expenditure.
We have already pointed out that in the 45 present case also, the claim of the Municipality was that, even including the income of its electricity department, the municipal budget for the relevant year was a deficit one.
With regard to the second submission of; learned counsel for the respondents, nothing turns upon the distinction between obligatory and discretional functions of the municipality so far as the nature or quality of municipal property or municipal income is concerned.
The distinction referred to above does not entitle the municipality to treat the income from one department as though it were not part of the whole income of the Municipality.
Moreover, in its true nature or quality, such income is not profit in the sense in which that expression has been held to be the basis for the grant of bonus in the Muir Mills case (supra) though the word " profits " occurs in section 65 of the Municipal Act and has been loosely used in connection with State or municipal undertakings.
This brings us to the other question whether the principles laid down in the Muir Mills case (supra) for the grant of bonus can be applied in the present case.
Learned counsel for the respondents submitted before us that the gift made by the State Government of Baroda furnished the necessary capital for the municipal undertaking in question and as the reserve fund, depreciation fund etc.
had to be kept separate, there was no difficulty in applying the principles laid down in that decision to the facts of the present case.
The difficulties however arise in the following way.
Whatever was given by the State Government of Baroda to the Baroda Municipality became municipal property or municipal fund under sections 63 and 65 of ' the Act and was not capital in the sense in which a return on paid up or working capital is to be allowed" for in the matter of the grant of bonus in accordance with the decision in the Muir Mills case (supra).
Learned counsel referred us to the ordinary dictionary mean ing of the word 'capital ' and referred to Webster 's New International Dictionary (1937 edition, page 397) where one of the meanings of the word is stated to be " the amount of property owned by an individual or corporation which is used for business purposes." 46 He submitted that what was given by the Baroda State Government was capital within that meaning.
In Palgrave 's Dictionary of Political Economy, Vol. 1 (1925 edition) page 217, it has been stated that there is probably no term in economics which has given rise to so much controversy as 'capital. ' The word 'capital ' is connected with caput and in medieval Latin meant the principal sum as distinct from the interest.
Originally, the term was confined to loans of money.
In the natural course of historical development, the term 'capital ' received a wider meaning and capital came to be considered primarily as a source of profit and in ordinary thought capital is considered as wealth which yields a revenue.
Later economic theories introduced many refinements in the meaning of the Word We are not concerned with those refinements and it is unnecessary to discuss them here.
For our purpose it is sufficient to state that what the Baroda Municipality got from the State Government of Baroda merged in and became municipal property or municipal fund under the provisions of the Municipal Act and was not capital on which a return had to be earned in accordance with the principles laid down in the Muir Mills case (supra).
In our opinion, it is impossible to apply these principles in the case of a municipal undertaking of the nature we have under consideration here.
The argument of learned counsel for the respondents that once it is found that there was capital and actual profit in the sense of excess of earnings over outgoings from the undertaking in question, no distinction can be ,drawn between private enterprise and municipal enterprise, cannot therefore be accepted.
In the case 'before us, there was neither 'capital ' nor 'profit ' on which the principles laid down in Muir Mills case (supra) could operate.
We must make it clear that the question is not merely one of terminology; that is, whether the more appropriate word to use in connec tion with a municipal undertaking is surplus or profit; it is the nature or quality of the municipal property or fund which must be determinative of the question at issue, and it is on that basis that we have,come to the conclusion that in the present case there were no 47 profits of one single department of the municipality out of which the respondents could claim a bonus.
In the course of arguments before us a reference was made to certain observations contained in a Report of the Committee on Profit sharing set up by the Ministry of Industry and Supply in 1948.
With regard to the question how Government undertakings should be treated for purposes of profit sharing, the Committee said: " The answer to this question is only of academic interest, as there are no Government undertakings in the industries we have recommended for an experiment in profit sharing.
On the general question, we think that those business undertakings of Government, which aim at making a profit, and which will ordinarily be organised in the form of corporations, would automatically come under any law which governs private undertakings of a similar nature.
" We do not take those observations as deciding any question of principle; at best they express an opinion of the members of the Committee an opinion which is expressly confined to undertakings organised in the form of corporations with the aim of making a profit in the ordinary trading or business sense.
In our opinion, those observations have no apt application to a municipal undertaking meant for the purpose of augmenting municipal revenues in order to meet the municipal service demands and improve the amenities of the inhabitants of a modern municipal borough.
We proceed now to consider the second argument of the learned Attorney General.
This argument depends on the provisions of section 58 of the Municipal Act.
That section deals with the rule making power of the municipality and proviso (a) lays down that no rule or alteration or rescission of a rule made shall have effect unless and until it has been approved by the State Government.
Our attention has been drawn to cls.
(c), (f) and (1) of section 58 which enable the municipality to make rules relating, inter alia, to salaries and other allowances of the staff of officers and servants employed by the municipality; their pensions, gratuities or compassionate allowances on retirement, and provident 48 fund etc.
It was pointed out that under section 58 the Baroda Municipality had no power to make rules for the payment of bonus to its employees, because the word ' allowances ' did not include bonus; and even if such rules could be made, they required the sanction of the State Government under proviso (a) referred to above.
It was further submitted by the learned Attorney General that there were no existing rules with regard to the payment of bonus to a municipal employee.
In view of these provisions the learned Attorney General argued that it was not open to a Labour Court or Tribunal to direct the payment of bonus to a municipal employee.
We cannot accept this argument as correct.
The demand for bonus as an industrial claim is not dealt with by the Municipal Act; it is dealt with by the .
Therefore, it is not a relevant consideration whether there are provisions in the Municipal Act with regard to payment of bonus.
The provisions of the Municipal Act are relevant only for the purpose of determining the quality or nature of the municipal property or fund; those provisions cannot be stretched beyond that limited purpose for defeating a claim of bonus.
We do not therefore think that the absence of provisions in the Municipal Act for the payment of bonus to municipal employees is a consideration which is either determinative or conclusive of the question at issue before us.
If we had come to a different conclusion as respects the first contention of the learned Attorney General and his third contention to be referred to presently, the absence of suitable provisions relating to payment of bonus to municipal employees in the Municipal Act would not have stood in the way of our allowing the claim of the respondents for the payment of bonus.
We now proceed to consider the third and last contention of the learned Attorney General.
This contention centres round the question whether one department of the municipality can be isolated and a distinction made between the employees of that department and other departments in the matter of the 49 payment of bonus.
We have already pointed out that under the Municipal Act a municipality may perform various functions, some obligatory and some discretional.
The activities may be of a composite nature: ' some of the departments may be mostly earning departments and some mostly spending departments.
For example, the department which collects municipal taxes or other municipal revenue, is essentially an earning department whereas the sanitary department or other service department is essentially a spending department.
There may indeed be departments where the earning and spending may almost balance each other.
In spite of these distinctions in the internal arrangement of departments within a municipality, the property or income of the municipality remains of the same nature or quality, and it will be obviously unfair to draw a distinction between the employees of one department and the employees of another department for the payment of bonus.
The result of such a distinction will be that the staff of the spending depart ments will never be entitled to any bonus at all and instead of promoting peace and harmony amongst the employees of the municipality, a distinction like the one suggested by learned counsel for the respondents will create unrest and discontent.
Learned counsel for the respondents submitted before us that beyond the fact of single ownership, there was no other connection between the electricity department of the Municipality and its other departments.
We do not think that this submission is correct.
Under the Municipal Act the total income and expenditure of the municipality form one integrated whole; they are both for the purposes of the Act; and if the workmen of a service or spending department do not work efficiently with the result that the expenses on the obligatory functions of the municipality increase, that inefficiency is bound to affect even to dwindle or wipe out the surplus of an earning department.
For a true appreciation of the financial position of a municipality, its total income and expenditure must be considered; we must look at the whole picture, the part which is in shade as well as the part 7 50 which has caught the light for a correct appraisal of the picture.
Learned counsel for the respondents referred us to a number of decisions of Labour Tribunals where a distinction was made between a parent concern and subsidiary concerns, or even between different units of the same concern, in the matter of payment of bonus: Rohit Mills Ltd. vs Sri R. section Parmar(1), Mackinnon Mackenzie and Company 's Indian Staff Organisation vs Mackinnon Mackenzie and Company Ltd. (2), Ahmedabad Mfg. & Calico Ptg.
Co. Ltd. V. Their Workmen (a), Shaparia Dock and Steel Company vs Their Workers(,) and Minakshi Mills Ltd. vs Their Workmen Recently, we have had occasion to consider this question in Messrs. Burn & Co., Calcutta vs Their Employees (6) where we pointed out the harmful consequences which might arise if an invidious distinction were made amongst employees of the same industry.
Considering the question with reference to the facts of the present case, it is clear to us that the different activities of the Baroda Municipality constituted one integrated whole and the activities of the different departments of the Municipality were not distinct or unconnected activities so as to permit the isolation of one department from another or of an earning department from a spending department.
From this point of view also, the claim of bonus was not maintainable.
Some decisions were brought to our notice in which the question of the payment of bonus to their employees by Electric Supply Companies, not run as a State or municipal undertaking, was considered with reference to the provisions of the , and one of the points which fell for consideration there was the interpretation of clause XVII (2) (b) (xi) of Schedule VI of the .
It is not necessary to consider those decisions in the (1) (2) (3) (4) (5) (6) C.A. 325 Of 1955, decided on October 11, 1956.
51 present case, because they have no bearing on the questions which we have to consider in this case.
For the reasons given above, we hold that the Industrial Tribunal came to the correct decision that the respondents employed in the electricity department of the Baroda Municipality were not entitled to the bonus claimed, and the Labour Appellate Tribunal came to an erroneous decision on that question in its order dated November 23, 1955.
We accordingly allow the appeal and set aside the order of the Labour Appellate Tribunal.
In the circumstances of this case, we direct that the parties will bear their own costs throughout.
Appeal allowed.
| The Baroda Electric Supply Concern was owned and managed by the State of Baroda.
Immediately before the merger of the State in the Province of Bombay, the State made a gift of the Concern to the Baroda Municipality to provide it with a new source of revenue as.
aid from the State might not be continued after the merger.
Later in 1951, the workmen employed in the electricity department demanded bonus and the dispute was referred for adjudication.
The bonus was claimed on the basis that the electric Concern was a commerical concern, that it was making 'huge profits and that the workmen were entitled to bonus as a share in the profits.
The municipality resisted the demand, inter alia, on the grounds that the earnings of one department could not be treated as profits of the municipality, and that as a whole the muncipal budget for the relevant period was a deficit budget.
Held, that the workers employed in the electricity department of the municipality were not entitled to the bonus claimed.
According to the provisions of the Bombay Municipal Boroughs Act, 1925, under which the municipality is constituted and functions, the earnings of one department cannot be held to be gross profits in the ordinary commercial or trading sense.
The mere fact that separate accounts were kept of the electricity department did not alter the position, as there was one budget for the municipality as a whole and income from and expenses of all departments constituted the income and expenses of the municipality.
The different activities of the municipality constituted one integrated whole, 5 34 and the activities of the different departments were not distinct or unconnected activities so as to permit the isolation of one department from another or of an earning department from a spending department.
It would be unfair to draw a distinction between the workers of the earning department and the workers of the spending department for the payment of bonus.
Such a distinction would, instead of promoting peace and harmony among the employees of the municipality, create unrest and discontent.
D. N. Banerji vs P. R. Mukherjee, [19531 S.C.R. 302 and Muir Mills Co. Ltd. vs Suti Mills Mazdoor Union, Kanpur, ; referred to.
|
Summarize this legal judgement text concisely | minal Appeal No. 135 of 1956.
188 Appeal by special leave from the judgment and order dated November 25, 1955, of the Allahabad High Court, in Criminal Appeal No. 702 of 1955 and Referred No. 77 of 1955 arising out of the judgment and order dated May 17, 1955, of the Court of Sessions Judge, at Moradavad in Sessions Trial No. 29 of 1955.
P. section Safeer, for the appellant.
G. C. Mathur and C. P. Lal, for the respondent.
November 21.
The Judgment of the Court was delivered by IMAM J.
The appellant was sentenced to death for the marder of Daya Ram by shooting him with a country made pistol.
He was also convicted for being in possession of an unlicensed firearm under the Arms Act for which offence he was sentenced to two years rigorous imprisonment.
He appealed to the High Court of Allahabad, but his appeal was dismissed and the conviction and sentence was affirmed.
Against the decision of the Allahabad High Court the appellant obtained special leave to appeal to this Court.
According to the prosecution, the occurrence took place at about midnight of July 4, 1954, when Daya Ram was sleeping on a cot on a platform.
Near him were sleeping Gokul, Doongar and Jai Singh, while two women Ratto and Bhuri slept in a room to the north of the platform and adjoining it.
The report of the shot fired woke up these people.
According to them, they saw the appellant running towards the east.
He was accompanied by three others who were armed with lathis.
Daya Ram died almost instantaneously as the result of the injuries on his chest and stomach from where pellets were recovered at the time of the post mortem examination.
Daya Ram had been shot from a close distance because the skin was charred over the entire area of the wound.
Near the cot, on which he slept, a cartridge exhibit I. was found which was handed over to the Police Officer when he arrived for investigation.
A first information report was lodged at the police station five miles away at 8 10 a. m. on July 5, 1954.
189 The motive for the murder, as alleged by the prosecution, was that on the death of one Bhai Singh the appellant hoped to become guardian of Ratto 's property, who, however, appointed Daya Ram to take charge of it.
The appellant resented this very much.
Three days before the murder of Daya Ram there had been a quarrel between the appellant and his wife on the one side and Ratto and Bhuri on the other.
The quarrel arose over an attempt by the appellant to construct a wall over Ratto 's land. ' The appellant uttered a threat that he would soon settle with the person on whom Ratto was depending, that is to say, the deceased Daya Ram.
According to the High Court, the defence did not seriously challenge these allegations and the appellant himself admitted that Ratto wanted him to be turned out of his house.
The appellant was arrested on the night between July 5 and July 6, 1954, at a village fourteen miles away from the village of "occurrence Dhakeri.
On July 7, he informed the Sub Inspector that he was prepared to produce the pistol exhibit III.
The SubInspector and the appellant went to village Dhakeri and Kartar Singh, Mahtab Singh and Khamani were invited to witness the events that might follow.
On reaching the appellant 's house, which adjoins the resid ential house of Ratto, the appellant stated that the pistol exhibit III had been concealed by him in a corn bin.
From a secret place he took out a key and opened the lock of his house with it.
He then took the SubInspector and the witnesses to a mud corn bin inside his house, which appeared to be freshly plastered at one place.
The appellant removed the plaster at this place and from inside took out the country made 12bore pistol exhibit III, and three live 12 bore cartridges.
The cartridge exhibit I, which was found near the cot of Daya Ram, and the pistol exhibit III were sent to Shyam Narain, a Deputy Superintendent of Police, who is ,a fire arms expert of the C. I. D. of Uttar Pradesh Government.
He made scientific tests.
He came to the conclusion as the result of the various tests made by him that the cartridge Ex, I was fired from the pistol exhibit III and no other fire arm.
190 While the Sessions Judge believed the testimony of the eye witnesses, the learned Judges of the.
High Court were of the opinion that they were unable to accept the assertion of the eye witnesses that they actually saw the appellant with a pistol by the bedside of the deceased.
The High Court, however, relied upon the circumstantial evidence in the case in upholding the conviction of the appellant.
There was motive for the crime and a few days before the killing of.
Daya Ram the appellant had held out a threat against him.
The appellant was arrested fourteen miles away from his village which is the place of occurrence.
He produced a pistol exhibit
III from his house in circumstances which clearly showed that he only could have known of its existence there.
The opinion of the fire arms expert clearly established that the cartridge exhibit 1, found near the cot of Daya Ram, was fired with the pistol exhibit III produced by the appellant.
All these circumstances, in the opinion of the High Court, left no doubt in the minds of the learned Judges of that Court that the appellant murdered Daya Ram by shooting him with his pistol.
The learned Advocate for the appellant urged that the appellant could not have placed the pistol in his house and it must have been planted there by someone because none of the witnesses stated that they had seen him going to his house after the murder and the appellant was certainly not found in his house in the morning.
According to the situation of the house of the appellant and where the witnesses were immediately after the occurrence, it was impossible for the appellant to have entered his house without being seen.
It was further unlikely that after having committed the murder, the appellant, after having run away, would return to his house.
Both the Courts below, however, found no reason to disbelieve the Sub Inspector and the witnesses that the appellant had produced the pistol exhibit III from the corn bin inside his house.
The appellant had the key of the house which was hidden in a secret place and the com bin was itself freshly plastered at one place.
These circumstances clearly showed that no one but the appellant could have 191 known of the existence of the pistol in the corn bin in his house.
As to whether the appellant could or.could not have gone to his house after the occurrence that is a matter of pure speculation.
It does not appear that any witness was asked anything about it.
The High Court found that the witnesses might have caught a glimpse of the people who were fast disappearing from the scene but who had no reasonable opportunity of marking their features.
In the confusion of the occurrence the witnesses may not have observed where the culprits had disa speared except that they were seen running towards the east.
On the record, there is nothing to show that to enter the appellant 's house, after the occurrence, the appellant had necessarily to go into his house within the view of the witnesses.
It is quite unnecessary to examine this matter any further because the evidence concerning the production of the pistol exhibit III by the appellant from his house is ' clear and reliable and, therefore, it is certain that the appellant did enter his house after the occurrence without being seen by anyone.
It was next urged on behalf of the appellant, that,it was impossible for a cartridge to have been near the cot of Daya Ram, because after the shot had been fired the cartridge would still remain in the barrel of the firearm.
This again is pure speculation.
That the cartridge was ejected from the fire arm is certain.
Why it was ejected none can say.
It may be that the miscreant reloaded his weapon to meet any emergency.
The evidence of the Sub Inspector is clear that on his arrival at the place of occurrence the cartridge exhibit I was handed over to him by the witness Khamani who cannot be said to be unfavorable to the appellant.
The Courts below had no reason to disbelieve the evidence in the case that the cartridge exhibit I was found near the cot of Daya Ram and we can find no extraordinary circumstance to justify us saying that the Courts below took an erroneous view of the evidence.
On the facts found there was a motive for the murder.
Apparently, for no good reason the appellant was not found at his house on the morning of July 5, but was 192 in a village fourteen miles away at the time of his arrest.
The appellant produced the pistol exhibit III in circumstances clearly showing that he had deliberately kept it concealed.
We have no reason to doubt the evidence in this respect.
The real question is, whether it is safe to act upon the opinion of the fire arms expert that the cartridge exhibit I was fired from the pistol exhibit III produced by the appellant and none other, because without that evidence the circumstantial evidence in the case would be insufficient to convict the appellant of the crime of murder.
The opinion of 'the fire arms expert, based on the result of his tests, does not seem to have been challenged in cross examination or before the High Court.
If there is no reason to think that there is any room for error in matters of this kind and it is safe to accept the opinion of the expert, then clearly it is established that the cartridge exhibit I, found near the cot of Daya Ram, was fired from the pistol exhibit III produced by the appellant.
To satisfy ourselves we have looked into the works of some authors dealing with the marks left on cartridges and shell cases by fire arms in order to ascertain that there is no error in the opinion of the fire arms expert in the present case.
Kirk in his book "Crime Investigation" at page 346 states: "Fired cases are less often encountered in criminal investigation than are bullets, but when found they are usually of greater significance because they receive at least as clear markings as do bullets, have a greater variety of such markings, and are not ordinarily damaged in firing. . . . . . . . .
The questions which may be asked as a result of finding such materials are similar to those that require answers when only bullets are located.
In the ordinary case, quite definite answers can be given.
This is true both of shotgun shells and of cartridge cases from pistols, revolvers, and rifles. . . . . .
In general, it is possible to identify a certain firearm as having fired a particular shell or cartridge.
It is often possible to identify the type or make of gun ' which fired it, though in many instances this must be tentative or probable identification only." ` 193 After :dealing with the marks left by breech block, firing pin impressions, marks from extractors and ejectors, marks due to expansion, magazine marks and loading mechanism marks,he states, "Summarizing, the cartridge or shell case us.
ally carries markings which are quite distinctive of the gun in which the charge is fired, and can be used for positive identification of the latter.
Those marks arise from a variety of contacts with various parts of the gun, an analysis of which is useful in, determining the type of weapon in case no suspected gun is available . . . .
Thus, the recovered shell or cartridge case is one of the most useful types of physical evidence which can be found in shooting cases.
" Soderman and O 'Connel in their book "Modern Criminal Investigation" also deal with the subject and they refer to the marks from the fire pin, the extractor, the. ejector and the breech block.
After referring to comparison being made of the cartridge or shell fired from a fire arm for the purpose of test, they state at page 200, If they are in the same position in relation to one another and their general appearance is the same, one may conclude that they have been fired from a pistol of the same make.
An absolute conclusion about the origin of the shells, however, can be reached only after a photomicrographic examination of the markings from the breech block on the rear of the shell. . . . . .
Identification, with the aid of the enlargement, should not prove difficult.
The characteristic scratches can be easily seen.
A photograph of the incriminating shell and one of a comparison shell should be pasted side by side on cardboard, and the characteristic marks should be recorded with lines and ciphers, following the same method as that used in the ' identification of fingerprints.
" In Taylor 's book on Medical Jurisprudence, Tenth Edition, Vol. 1, at page 459, it is stated, " It is never safe to say that a cartridge case was not fired from a given pistol unless the marks are quite 25 194 different, and a case which bears no marks at all may quite well have been fired from the same pistol as one which leaves well defined marks.
In general, however, though it is unlikely that all marks will be equally good, it is usually possible to obtain definite information from the marks of the firing pin, extractor, ejector, or breech block.
on the base or rim, or from grooves or scratches on the surface.
In weapons of the same manufacture, the marks are of the same general nature, but in each weapon there are individual differences which usually enable it to be definitely identified.
" The expert 's evidence in this case shows that he had fired four test cartridges from the pistol exhibit III He found the individual characteristics of the chamber to have been impressed upon the test cartridges Exs. 9 and 10 and that exactly identical markings were present on the paper tube of the cartridge exhibit 1.
He made microphotographs of some of these individual marks on Exs. 1 and 10.
In giving his reasons for his opinion, the fire arms expert stated that every fire arm has individual characteristics on its breach face striking pin and chamber.
When a cartridge is fired gases.
are generated by the combustion of the powder, creating a pressure of 2 to 20 tons per square inch.
Under the effect of this pressure the cap and the paper tube of the cartridge cling firmly with the breach face striking pin and chamber and being of a softer matter the individualities of these parts are impressed upon them.
By firing a number of test cartridges from a given fire arm and comparing them under a microscope with the evidence cartridge, it can definitely be stated, if the marks are clear, whether the evidence cartridges had been fired or not from that fire arm.
It seems to us that the fire arms expert made the necessary tests and was careful in what he did.
There is no good reason for distrusting his opinion.
The learned Judges of the High Court examined the micro photographs in question and were satisfied that there was no ground for distrusting the evidence of the expert.
They were accordingly justified in coming to the conclusion that the cartridge exhibit 1, found nor the cot of Dava Ram, 195 was fired from the pistol exhibit III produced by the appellant from his house.
There can, therefore, be no room for thinking, in the circumstances established in this case, that any one else other than the appellant might have shot Daya Ram.
He was, therefore, rightly convicted for the offence of murder.
The appeal is accordingly dismissed.
| One Daya Ram had been murdered by shooting with a country made pistol.
The circumstantial evidence established against the appellant was (1) that he had a motive for the murder, (2) that three days before the murder the appellant had held out a threat to murder the deceased, (3) that a cartridge exhibit I was found near the cot of the deceased, and (4) that the appellant produced a country made pistol exhibit III from his house in circumstances which clearly showed that he alone could have known of its existence there.
The fire arms expert examined the recovered pistol and the cartridge and after making scientific tests was of the definite opinion that the cartridge exhibit I had been fired from the pistol exhibit III : Held, that the opinion of the fire arms expert conclusively proved that the cartridge exhibit I had been fired from the pistol exhibit III.
The circumstantial evidence was sufficient to establish the guilt of the appellant.
|
Summarize this legal judgement text concisely | Appeal No. 85 of 1956.
20 154 Appeal from the judgment and order dated January 8, 1954, of the High Court of Saurashtra, at Rajkot, in Civil Misc.
Application No. 70 of 1952.
R. J. Kolah and A. C. Dave, for the appellant.
Porus A. Mehta and R. H. Dhebar, for respondent No. 1. 1956.
November 23.
The Judgment of the Court was, delivered by BHAGWATI J.
This appeal with a certificate of fitness granted by the High Court of Saurashtra raises an interesting question whether the agarias working in the Salt Works at Kuda in the Rann of Cutch are workmen within the meaning of the term as defined in the , hereinafter referred to as the Act.
The facts as found by the Industrial Tribunal are not in dispute and are as follows.
The appellants are lessees of the Salt Works from the erstwhile State of Dharangadhara and also hold a licence for the manufacture of salt on the land.
The appellants require salt for the manufacture of certain chemicals and part of the salt manufactured at the Salt Works is utilised by the appellants in the manufacturing process in the Chemical Works at Dharangadhara and the remaining salt is sold to outsiders.
The appellants employ a Salt Superintendent who is in charge of the Salt Works and generally supervises the Works and the manufacture of salt carried on there.
The appellants maintain a a railway line and sidings and also have arrangements for storage of drinking water.
They also maintain a grocery shop near the Salt Works where the agarias can purchase their requirements on credit.
The salt is manufactured not from sea water but from rain water which soaking down the surface becomes impregnated with saline matter.
The operations are seasonal in character and commence sometime in October at the close of the monsoon.
Then the entire area is parceled out into plots called pattas and they are in four parallel rows intersected by the railway 155 lines.
Each agaria is allotted a patta and in general the same patta is allotted to the same agaria year after year.
If the patta is extensive it is allotted to two agarias who work the same in partnership.
At the time of such allotment, the appellants pay a sum of Rs. 400/ for each of the pattas and that is to meet the initial expenses.
Then the agarias commence their work.
They level the lands and enclose and sink wells in them.
Then the density of the water in the wells is examined by the Salt Superintendent of the appellants and then the brine is brought to the surface and collected in the reservoirs called condensers and re tained therein until it acquires by natural process a certain amount of density.
Then it is flowed into the pattas and kept there until it gets transformed 'into crystals.
The pans have got to be prepared by the agarias according to certain standards and they are tested by the Salt Superintendent.
When salt crystals begin to form in the pans they are again tested by the Salt Superintendent and only when they are of a particular quality the work of collecting salt is allowed to be commenced.
After the crystals are collected, they are loaded into the railway wagons and transported to the depots where salt is stored.
The salt is again tested there and if it is found to be of the right quality, the agarias are paid therefore at the rate of Rs. 0 5 6 per maund.
Salt which is rejected belongs to the appellants and the agarias cannot either remove the salt manufactured by them or sell it.
The account is made up at the end of the season when the advances which have been paid to them from time to time as also the amounts due from the agarias to the grocery shop are taken into account.
On a final settlement of the accounts, the amount due by the appellants to the agarias is ascertained and such balance is paid by the appellants to the agarias.
The manufacturing season comes to an end in June when the monsoon begins and then the agarias return to their villages and take up agricultural work.
The agarias work themselves with their families on the pattas allotted to them.
They are free to engage extra labour but it is they who make the payments to 156 these labourers and the appellants have nothing to do with the same.
The appellants do not prescribe any hours of work for these agarias.
No muster roll is maintained by them nor do they control how many hours in a day and for how many days in a month the agarias should work.
There are no rules as regards leave or holidays.
They are free to go out of the works as they like provided they make satisfactory arrangements for the manufacture of salt.
In about 1950, disputes arose between the agarias and the appellants as to the conditions under which the agarias should be engaged by the appellants in the manufacture of salt.
The Government of Saurashtra, by its letter of Reference dated November 5, 1951, referred the disputes for adjudication to the Industrial Tribunal, Saurashtra State, Rajkot.
The appellants contested the proceedings on the ground, inter alia, that the status of the agarias was that of independent contractors and not of workmen and that the State was not competent to refer their disputes for adjudication under section 10 of the Act.
This question was tried as a preliminary issue and by its order dated August 30, 1952, the Tribunal held that the agarias were workmen within the meaning of the Act and that the reference was intra vires and adjourned the matter for hearing on the merits.
Against this order the appellants preferred an appeal being Appeal No. 302 of 1952, before the Labour Appellate Tribunal of India, and having failed to obtain stay of further proceedings before the Industrial Tribunal pending the appeal, they moved the High Court of Saurashtra in M.P. No. 70 of 1952 under articles 226 and 227 of the Constitution for an appropriate writ to quash the reference dated November 5, 1951, on the ground that it was without jurisdiction.
Pending the disposal of this writ petition, the appellants obtained stay of further proceedings before the Industrial Tribunal and in view of the same the Labour Appellate Tribunal passed an order on September 27, 1953, dismissing the appeal leaving the question raised therein to the decision of the High Court.
By their judgment dated January 8, 1954, the learned Judges 157 of the High Court agreed with the decision of the Industrial Tribunal that the agarias were workmen within section 2(.s) of the Act and, accordingly, dismissed the application for writ.
They, however, granted a certificate under article 133(1) (c) of the Constitution and that is how the appeal comes before us.
The sole point for determination in this appeal is whether the agarias working in the Salt Works of the appellants at Kuda are workmen within the definition of that term in section 2(s) of the Act.
" Workman " has been thus defined in section 2 (s) of the Act: "(s) 'Workman ' means any person employed (including an apprentice) in any industry to do any skilled or unskilled manual or clerical work for hire or ' reward and includes, for the purposes of any proceedings under this Act in relation to an industrial dispute, a workman discharged during that dispute, but does not include any person employed in the naval, military or air service of the (Government).
" The essential condition of a person being a workman within the terms of this definition is that he should be employed to do the work in that industry, that there should be, in other words, an employment of his by the employer and that there should be the relationship between the employer and him as between employer and employee or master and servant.
Unless a person is thus employed there can be no question of his being a workman within the definition of the term as contained in the Act.
The principles according to which the relationship as between employer and employee or master and servant has got to be determined are well settled.
The test which is uniformly applied in order to determine the relationship is the existence of a right of control in respect of the manner in which the work is to be done.
A distinction is also drawn between a contract for services and a contract of service and that distinction is put in this way: " In the one case the master can order or require what is to be done while in the other case he can not only order or require what is to be done 158 but how itself it ,;hall be done." (Per Hilbery, J. in Collins vs Hertfordshire County Council (1).) The test is, however, not accepted as universally correct.
The following observations of Denning L.J., at pp. 110, III in Stevenson, Jordan and Harrison Ltd. vs Macdonald and Evans (2) are apposite in this context: "But in Cassidy vs Ministry of Health (3) Lord Justice Somervell, pointed out that test is not universally correct.
There are many contracts of service where the master cannot control the manner in which the work is to be done as in the case of a captain of a ship.
Lord Justice Somervell, went on to say: One perhaps cannot get much beyond this: 'Was the contract a contract of service within the meaning which an ordinary man would give under the words '? " I respectfully agree.
As my Lord has said, it is almost impossible to give a precise definition of the distinction.
It is often easy to recognize a contract of service when you see it, but difficult to say wherein the difference lies.
A ship 's master, a chauffeur, and a reporter on the staff of a newspaper are all employed under a contract of service; but a ship 's pilot, a taxi man, and a newspaper contributor are employed under a contract for services.
One feature which seems to run through the instances is that, under a contract of service, a man is employed as part of the business, and his work is done as an integral part of the business; whereas., under a contract for services, his work, although done for the business, is not integrated into it but is only accessory to it.
" We may also refer to a pronouncement of the House of Lords in Short vs J. & W. Henderson, Ltd. (4) where Lord Thankerton recapitulated the four indicia of a contract of service which had been referred to in the judgment under appeal, viz., (a) the master 's power of selection of his servant, (b) the payment of wages or (1) , 615.
(2) , Ill. (3) , 543 s.c. , 352 3.
(4)(1946)62T.L.R. 427,429.
159 other remuneration, (c) the master 's right to control the method of doing the work, and (d) the master 's right of suspension or dismissal, but observed: "Modern industrial conditions have so much affected the freedom of the master in cases in which no one could reasonably suggest that the employee was thereby converted into an independent contractor that, if and when an appropriate occasion arises, it will be incumbent on this House to reconsider and to restate these indicia.
For example, (a), (b) and (d) and probably also (c), are affected by the statutory provisions and ,rules which restrict the master ',% choice to men supplied by the labour bureaux, or directed to him under the Essential Work provisions, and his power of suspension or dismissal.
is similarly affected.
These matters are also affected by trade union rules which are atleast primarily made for the protection of wage earners.
" Even in that case, the House of Lords considered the right of supervision and control retained by the employers as, the only method if occasion arose of securing the proper and efficient discharge of the cargo as sufficiently determinative of the relationship between the parties and affirmed that " the principal requirement of a contract of service is the right of master in some reasonable sense to control the method of doing the work and this factor of superintendence and control has frequently been treated as critical and decisive of the legal quality of relationship.
The position in law is thus summarised in Halsburv 's Laws of England, Hailsham edition, Vol. 22, page 112, para. 191: " Whether or not, in any given case, the relation of master and servant, exists is a question of fact; but in all cases the relation imports the existence of power in the employer not only to direct what work the servant is to do, but also the manner in which the work is to be done.": and until the position is restated as contemplated in Short vs J. & W. Henderson Ltd., (supra), we may take it as the prima facie test for determining the relationship between master and servant, 160 The principle which emerges from these authorities is that the prima facie test for the determination of the relationship between master and servant is the existence of the right in the master to supervise and control the work done by the servant not only in the matter of directing what work the servant is to do but also the manner in which he shall do his work, or to borrow the words of Lord Uthwatt at page 23 in Mersey Docks and Harbour Board vs Coggins & Griffith (Liverpool) Ltd., and Another (1), " The proper test is whether or not the hirer had authority to control the manner of execution of the act in question The nature or extent of control which is requisite to establish the relationship of employer and employee must necessarily vary from business to business and is by its very nature incapable of precise definition.
As has been noted above, recent pronouncements of the Court of Appeal in England have even expressed the view that it is not necessary for holding that a person is an employee, that the employer should be proved to have exercised control over his work, that the test of control was not one of universal application and that there were many contracts in which the master could not control the manner in which the work was done (Vide observations of Somervell, L.J., in Cassidy vs Ministry of Health (supra), and Denning, L.J., in Stevenson, Jordan and Harrison Ltd. vs MacDonald and Evans (supra).) The correct method of approach, therefore, would be to consider whether having regard to the nature of the work there was due control and supervision by the employer or to use the words of Fletcher Moulton, L.J., at page 549 in Simmons vs Health Laundry Company (2): " In my ' opinion it is impossible to lay down any rule of law distinguishing the one from the other.
It is a question of fact to be decided by all the circumstances of the case.
The greater the amount of direct control exercised over the person rendering the services by the person contracting for them the stronger the (1) ; 23.
(2) [1910] 1 K.B 543, 54 550.
9 161 grounds for holding it to be a contract of service, and similarly the greater the degree of independence of such control the greater the probability that the services rendered are of the nature of professional services and that the contract is not one of service.
" The Industrial Tribunal on a consideration of thes facts in the light of the principles enunciated above, came to the conclusion that though certain features which are usually to be found in a contract of service were absent, that was due to the nature of the industry and that on the whole the status of the agarias was that of workmen and not independent contractors.
It was under the circumstances strenuously urged before ,us by the learned counsel for the respondents that the question as regards the relationship between the appellants and the agarias was a pure question of fact, that the Industrial Tribunal had jurisdiction to decide that question and had come to its own conclusion in regard thereto, that the High Court, exercising its jurisdiction under articles 226 and 227 of the Constitution, was not competent to set aside the finding of fact recorded by the Industrial Tribunal and that we, here, entertaining an appeal from the decision of the High Court, should also not interfere with that finding of fact.
Reliance was placed on the observations of Mahajan, J., as he then was, in Ebrahim Aboobakar vs Custodian General of Evacuee Property (1) "It is plain that such a writ cannot be granted to quash the decision of an inferior court within its jurisdiction on the ground that the decision is wrong.
Indeed, it must be shown before such a writ is issued that the authority which passed the 'order acted without jurisdiction or in excess of it or in violation of the principles of natural justice.
But once it is held that the court has jurisdiction but while exercising it made a mistake, the wronged.
party can only take the course prescribed by law for setting matters right inasmuch as a court has jurisdiction to decide rightly as well as wrongly. " (1) ; ,702.
21 162 There is considerable force in this contention of the respondents.
The question whether the relationship between the parties is one as between employer and employee or between master and servant is a pure question of fact.
Learned counsel for the appellants "relied upon a passage from Batt 's "Law of Master and Servant", 4th edition, at page 10: " The line between an independent contractor and a servant is often a very fine one; it is a mixed question of fact and law, and the judge has to find and select the facts which govern the true relation between the parties as to the control of the work, and then he or the jury has to say whether the person employed is a servant or a contractor.
" This statement, however, rests upon a passing observation of Mc Cardie, J. in Performing Right Society Ltd. vs Mitchell and Booker (Palais de Danse)(1) and is contrary to the oaten& of authorities which lays down that whether or not in any given case the relation of master and servant exists is purely one of fact.
(Vide Halsbury 's "Laws of England", Hailsham edition, Vol. 22, page 112, para.
191; Per Cozens Hardy, M.R. at page 547 and Per Fletcher Moulton, L.J. at page 549 in Simmons vs Heath Laundry Company (supra).
It is equally well settled that the decision of the Tribunal on a question of fact which it has jurisdiction to determine is not liable to be questioned in proceedings under article 226 of the Constitution unless at the least it is shown to be fully unsupported by evidence.
Now the argument of Mr. Kolah for the appellants is that even if all the facts found by the Tribunal are accepted they only lead to the conclusion that the agarias are independent contractors and that the finding, therefore, that they are workmen is liable to be set aside on the ground that there is no evidence to support it.
We shall, therefore, proceed to determine the correctness of this contention.
Apart from the facts narrated above in regard to which there is no dispute, there was the evidence of the Salt Superintendent of the appellants which was recorded before the Tribunal: (1) 163 "The panholders are allotted work on the salt pans by oral agreement.
The Company has no control over the panholders in regard to the hours of work or days of work.
The Company 's permission is nor sought in matter of sickness or in matter of going out to some village.
The Company has no control over the panholders as to how many labourers they should engage and what wages they should pay them.
The company 's supervision over the work of the panholders is limited to the proper quality as per requirements of the Company and as per standard determined by the Government in matter of salt.
, The company 's supervision is limited to this extent.
The Company acts in accordance with Clause 6 of the said agreement in order to get the proper quality of salt.
Panholders are not the workmen of the Company, but are contractors.
The men, who are entrusted with pattas, work themselves.
They can engage others to help them and so they do.
There is upto this day no instance that any penholder who is entrusted with a patta, has not turned up to work on it.
But we do not mind whether he himself works or not.
If any penholder after registering his name (for a patta) gets work done by others, we allow it to be done.
We own 319 pattas.
Some patta8 have two partners.
In some, one man does the job.
ID all the pans, mainly the panholders work with the help of their (respective) families.
" Clause 6 of the agreement referred to in the course of his evidence by the Salt Superintendent provided: " 6.
We bind ourselves to work as per advice and instructions of the officers appointed by them in connection with the drawing of brine or with the process of salt production in the pattas and if there is any default, negligence or slackness in executing it on our part or if we do not behave well in any way, the Managing Agent of the said Company can annul this agreement and can take possession of the patta, brine, well etc., and as a result we will not be entitled to claim any 164 sort of consideration or compensation for any half processed salt lying in our patta; or in respect of any expense incurred or labour employed in preparing kiwa patta, well bamboo lining etc.
" There was also the evidence of Shiva Daya, an agaria, who was examined on behalf of the respondents: " There is work of making enclosures and then of sinking wells.
The company supervises this work.
While the wells are being sunk, the company measures the density of the brine of wells.
In order to bring the brine of wells to the proper density, it is put in a condenser and then the Company tests this and then this brine is allowed to flow in the pattas.
The bottom of a patta is prepared after it is properly crushed under feet and after the company inspects and okays that it is alright, water is allowed to flow into it.
When salt begins to form at the bottom of a patta, an officer of the company comes and inspects it.
At the end of 21 months, the water becomes saturated, i.e., useless, and so it is drained away under the supervision of the company.
Then fresh brine is allowed to flow into the patta from the condenser.
This instruction is also given by the company 's officer.
" It was on a consideration of this evidence that the Industrial Tribunal came to the conclusion that the supervision and control exercised by the appellants extended to all stages of the manufacture from beginning to end.
We are of opinion that far from there being no evidence to support the conclusion reached by the Industrial Tribunal there were materials on the record on the basis of which it could come to the conclusion that the agarias are not independent contractors but workmen within the meaning of the Act.
Learned counsel for the appellants laid particular stress on two features in this case which, in his submission, were consistent only with the position that the agarias are independent contractors.
One is that they do piece work and the other that they employ their own labour and pay for it.
In our opinion neither of these two circumstances is decisive of the question.
As 165 regards the first, the argument of the appellants is that as, the agaria8 are under no obligation to work for fixed hours or days and are to be paid wages not per day or hours but for the quantity of salt actually produced and passed, at a certain rate,, the very basis on which the relationship of employer and employees rests is lacking, and that they can only be regarded as independent contractors.
There is, however, abundant authority in England that a person can be a workman even though he is paid not per day but by the job.
The following observations of Crompton, J. in Sadler vs Henlock (1) are pertinent in this behalf : " The test here is, whether the defendant retained the power of controlling the work.
No distinction can be drawn from the circumstances of the man being employed at so much a day or by the job.
I think that here the relation was that of master and servant, not of contractor and contractee." (See also Blake, vs Thirst (2) and Halsbury 's " Laws of England ", Hailsham edition, Vol. 22, page 119, para.
194, wherein it is stated that if a person is a worker and not a contractor, " it makes no difference that his work is piece work ".) As regards the second feature relied on for the appellants it is contended that the agaria8 are entitled to engage other persons to do the work, that these persons are engaged by the agaria8 and are paid by them, that the appellants have no control over them and that these facts can be reconciled only with the position that the agaria8 are independent contractors.
This argument, however, proceeds on a misapprehension of the true legal position.
The broad distinction between a workman and an independent contractor lies in this that while the former agrees himself to work, the latter agrees to get other persons to work.
Now a person who agrees himself to work and does so work and is, therefore, a workman does not cease to be such by reason merely of the fact that he gets other persons to work along (1) ; , 578 ; ; , 212.
(2) (1863) 32 L.J. (Exchequer) 188. 166 with him and that those persons are controlled and paid by him.
What determines whether a person is a workman or an independent contractor is whether he has agreed to work personally or not.
If he has, then he is a workman and the fact that he takes assistance from other persons would not affect his status.
The position is thus summarised in Halsbury 's 'Laws of England ', Vol. 14, pages 651 652: " The workman must have consented to give his personal services and not merely to get the work done, but if he is bound under his contract to work personally, he is not excluded from the definition, simply because he has assistance from others, who work under him." (See also Grainger vs Aynsley : Bromley vs Tams (1); Weaver vs Floyd (2) and Whitely vs Armitage (a).) In the instant case the agarias are professional labourers.
They themselves personally work along with the members of their families in the production of salt and would, therefore, be workmen.
The fact that they are free to engage others to assist them and pay for them would not,in view of the above authorities, affect their status as workmen.
There are no doubt considerable difficulties that may arise if the agarias were held to be workmen within the meaning of section 2 (s) of the Act.
Rules regarding hours of work etc., applicable to other workmen may not be conveniently applied to them and the nature as well as the manner and method of their work would be such as cannot be regulated by any directions given by the Industrial Tribunal.
These difficulties, however, are no deterrent against holding the agarias to be workmen within the meaning of the definition if they fulfil its requirements.
The Industrial Tribunal would have to very well consider what relief, if any, may possibly be granted to them having regard to all the circumstances of the case and may not be able to regulate the work to be done by the aqarias and the remuneration to be paid to them by the employer in (1) (1881) 6 Q.B.D. 182.
(2) (3) 167 the manner it is used to do in the case of other industries here the conditions of employment and the work to be done by the employees is of a different character.
These considerations would necessarily have to be borne in mind while the Industrial Tribunal is adjudicating upon the disputes which have been referred to it for adjudication.
They do not, however, militate against the conclusion which we have come to above that the decision of the Industrial Tribunal to the effect that the agarias are workmen within the definition of the term contained in section 2 (s) of the Act was justified on the materials on the record.
We accordingly see no ground for interfering with that decision and dismiss this appeal with costs.
Appeal dismissed.
| The appellants were lessees holding a license for the manufacture of salt on the demised lands.
The salt was manufactured by a class of professional labourers known as agarias from rain water that got mixed up with saline matter in the soil.
The work was seasonal in nature and commenced in October after the rains and continued till June.
Thereafter the agarias left for their own villages for cultivation work.
The demised lands were divided into plots called Pattas and allotted to the a arias with a sum of Rs. 400/ for each Patta to meet the initial expenses.
Generally the same patta was allotted to the same aigaria every year and if a patta was extensive in area, it was allotted to two agarias working in partnership.
After the manufacture of salt the agayias were paid at the rate Of 5 as.
6 pies per maund.
At the end of each season the accounts were settled and the agarias paid the balance due to them.
The agarias who worked themselves with the members of their families were free to engage extra labour on their own account and the appellants had no concern therewith.
No hours of work were prescribed, no muster rolls maintained, nor were working hours controlled by the appellants.
There were no rules as regards leave or holidays and the agarias were free to go out of the factory after making arrangements for the manufacture of salt.
The question for decision was whether in such circumstances the agarias could be held to be workmen as defined by section 2(s) Of the Industrial Disputes Act of 1947, as found by the Industrial Tribunal and agreed with by the High Court or they were independent contractors and the reference for adjudication made by the Government competent under section 10 of the Act.
Held, that the finding of the Industrial Tribunal that the agarias were workmen within the meaning of section 2(S) of the Industrial Disputes Act of 1947 was correct and the reference was competent.
The real test whether a person was a workman was whether he had been employed by the employer and a relationship of employer and employee or master and servant subsisted between them and it was well settled that the prima facie test of such 153 relationship was the existence of the right in the employer not merely to direct what work was to be done but also to control the manner in which it was to be done, the nature or extent of such control varying in different industries and being by its nature incapable of being precisely defined.
The correct approach, therefore, was to consider whether, having regard to the nature of the work, there was due control and supervision of the employer.
Mersey Docks and Harbour Board vs Coggins & Griffith (Liver Pool) Ltd., and Another ; , and Simmons vs Heath Laundry Company , referred to.
The question whether the relation between the parties was one as between an employer and employee or master and servant was a pure question of fact and where the Industrial Tribunal having jurisdiction to decide that question came to a finding, such finding of fact was not open to question in a proceeding under article 226 of the Constitution unless it could be shown to be wholly unwarranted by the evidence.
Ebrahim Aboobakar vs Custodian General of Evacuee Property ; , referred to.
Performing Right, Society Ltd. etc.
vs Mitchell and Booker (Plaise De Danse) [1924] i K.B. 762, not followed.
A person could be a workman even though he did piece work and was paid not per day but by the job or employed his own labour and paid for it.
Sadler vs Henlock ; and Blake vs Thirst (1863) 32 L.J. (Exchequer) 188, referred to.
The broad distinction between a workman and an independent contractor was that while the former would be bound by agreement to work personally and would so work the latter was to get the work done by others.
A workman would not cease to be so even though lie got other persons to work with him and paid and controlled them.
Grainger vs Aynsley : Bromley vs Tams (1881) 6 Q.B.D. 182, Weaver vs Floyd (1825) 21 L.H., Q.B. 151 and Whitely vs Armitage , referred to.
As in the instant case the agayias, who were professional labourers and personally worked with the members of their families in manufacturing the salt, were workmen within the meaning of the Act, the fact that they were free to engage others to assist them and paid for them, could not affect their status as workmen.
|
Summarize this legal judgement text concisely | riminal Appeals Nos.
20 to 23 of 1955.
Appeals by special leave from the judgment and order dated May 7, 1954, of the Madras High Court in Criminal Revision Cases Nos. 57 to 60 of 1954 and Case Referred Nos.
2 to 5 of 1954.
N. C. Chatterji, section Venkatakrishnan and section Subramanian, for the appellants.
V. K. T. Chari, Advocate General, Madras, Ganapathy Iyer and T. M. Sen, for the respondent.
November 28.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
The point for decision in these appeals is whether sections 4(2), 28, 29, 30, 31 and 32 of the Madras Prohibition Act No. X of 1937, hereinafter referred to as the Act, are unconstitutional and void.
It will be convenient first to set out the impugned statutory provisions.
Section 4, omitting what is not material runs as follows; 401 4(1) " Whoever (a) imports, exports, transports or possesses liquor or any intoxicating drug; or (g) uses, keeps or has in his possession any materials, still, utensil, implement or apparatus whatsoever for the tapping of toddy or the manufacture of liquor or any intoxicating drug; or (j) consumes or buys liquor or any intoxicating drug ; or (k) allows any of the acts aforesaid upon premises in his immediate possession, shall be punished Provided that nothing contained in this sub section shall apply to any act done under, and in accordance with, the provisions of this Act or the terms of any rule, notification, order, licence or permit issued thereunder.
(2) It shall be presumed until the contrary is shown (a) that a person accused of any offence under clauses (a) to (j) of sub section (1) has committed such offence in respect of any liquor or intoxicating drug or any still, utensil, implement or apparatus whatsoever for the tapping of toddy or the manufacture of liquor or any intoxicating drug, or any such materials as are ordinarily used in the tapping of toddy or the manufacture of liquor or any intoxicating drug, for the possession of which he is unable to account satisfactorily ; and (b) that a person accused of any offence under clause (k) of sub section (1) has committed such offence if an offence is proved to have been committed in premises in his immediate possession in respect of any liquor or intoxicating drug or any still, utensil, implement or apparatus whatsoever for the tapping of toddy or the manufacture of liquor or any intoxicating drug, or any such materials as are ordinarily used in the tapping of toddy or the manufacture of liquor or any intoxicating drug.
402 Section 28 provides that if any Collector, Prohibition Officer or Magistrate has reason to believe that an offence under section 4(1) has been committed, he may issue a warrant for search.
Section 29 confers on certain officers power to search and seize articles even without a warrant, under certain circumstances.
Section 30 provides for certain classes of officers entering any place by day or night for inspection of stills, implements, liquor and the like.
Section 31 authorises the officers empowered to make entry under sections 28, 29 or 30, to break open any door or window and remove obstacles, if otherwise they could not make entry.
Section 32 confers authority on a Prohibition Officer or any officer of the Police or Land Revenue Departments to arrest without warrant any person found committing any offence under section 4(1).
Now, the facts are that on November 18, 1953, the Prohibition Officer, Madras City, and the Deputy Commissioner of Police made a search of premises No. 28, Thanikachala Chetty Street, Thyagarayanagar, Madras, and seized several bottles of foreign liquor and glasses containing whisky and soda.
The appellant, Lakshmanan Chettiar, was residing at the premises, and the other three appellants, A. section Krishna, R. Venkataraman and V. section Krishnaswamy, were found drinking from the glass tumblers.
All the four were immediately put under arrest and in due course charge sheets were laid against them for offences under the Act.
The three appellants other than Lakshmanan Chettiar were charged under sections 4 (1) (a) and 4 (1) (j) for possession and consumption of liquor, and Lakshmanan Chettiar was charged under section 4 (1) (k) for allowing the above acts in premises in his immediate possession, a under section 12 for abetment of the offences.
He was also charged under section 4 (1) (a) on the allegation that though he was a permit holder, he was in possession of more units than were allowed under the permit, and that by reason of the proviso to that section, he had committed an offence under section 4 (1) (a).
Immediately after service of summons, the appellants filed an application unders.
432 of the Criminal Procedure Code, wherein they contended that sections 4(2) and 28 to 32 of the Act were 403 repugnant to the provisions of the Constitution, and were therefore void, and prayed that the above question might be referred for the decision of the High Court.
The Third Presidency Magistrate, before whom the proceedings were pending, allowed the application, and referred to the High Court as many as seven questions on the constitutionality of various sections of the Act.
This reference was heard by Rajamannar, C.J., and Umamaheswaram, J., who held, disagreeing with the appellants, that sections 4(2) and 28 to 32 were valid,, and answered the reference against them.
Against this judgment, the appellants have preferred the present appeals under article 136 of the Constitution.
Two contentions have been urged in support of the appeals: (1) Section 4(2) and sa.
28 to 32 of the Act are void under section 107 of the Government of India Act, 1935, which was the Constitution Act in force when the Act in question was passed, because they are repugnant to the provisions of existing Indian laws with respect to the same matter, to wit, I of 1872 and Criminal Procedure Code Act No. V of 1898, and (2) the impugned sections are repugnant to article 14 of the Constitution, and have therefore become void under article 13(1).
(1) Taking the first contention, the point for ' decision is whether the impugned provisions are hit by section 107 of the Government of India Act, 1935.
Subsection (1) of section 107, which is the relevant provision, runs as follows: "If any provision of a Provincial law is repugnant to any provision of a Federal law which the Federal legislature is competent to enact or to any provision of an existing Indian law with respect to one of the matters enumerated in the Concurrent Legislative List, then, subject to the provisions of this section, the Federal law, whether passed before or after the Provincial law, or, as the case may be, the existing Indian law, shall prevail and the Provincial law shall, to the extent of the repugnancy, be void.
" For this section to apply, two conditions must be fulfilled: (1) The provisions of the Provincial law and those of the Central legislation must both be in respect 404 of a matter which is enumerated ' in the Concurrent List, and (2) they must be repugnant to each other.
It is only when both these requirements are satisfied that the provincial law will, to the extent of the repugnancy, become void.
The first question, therefore, that has to be decided is, is the subject matter of the impugned legislation one that falls, within the Provincial List, in which case section 107 would be inapplicable, or is it one which falls within the Concurrent List, in which case the further question, whether it is repugnant to the Central legislation will have to be decided ? The Entries in the Lists which are material for the present discussion are the following: List II Provincial Legislative List.
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.
Intoxicating liquors and narcotic drugs, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors, opium and other narcotic drugs, but subject, as respects opium, to the provisions of List I and, as respects poisons and dangerous drugs, to the provisions of List 111.
Offences against laws with respect of any of the matters in this list.
List III Concurrent Legislative List.
Criminal Procedure, including all matters included in the Code of Criminal Procedure at the date of the passing of this Act.
Evidence and oaths; recognition of laws, public acts and records and judicial proceedings.
Now, it is not contested that the Madras Prohibition Act, as a whole, is a law in respect of intoxicating liquors, falling within Entry 31 of the Provincial list.
The declared object of the enactment as stated in the preamble to it is "to bring about the prohibition. of the production, manufacture, possession, export, import, transport, purchase, sale and assumption of 405 intoxicating liquors. .
And this is carried out in section 4(1), which enacts prohibition in respect of the above matters, and imposes penalties for breach of the same.
The other provisions of the Act may broadly be divided into those which are intended to effectuate section 4(1) and those which regulate the grant of licences and permits.
The legislation is thus on a topic which is reserved to the Provinces and would therefore fall outside a. 107(1) of the Constitution Act.
The argument of Mr. N. C. Chatterjee for the appellant is that though the Act is within the competence of the Provincial Legislature in so far as it prohibits possession, sale, consumption, etc., of liquor under 3.
4(1), the matters dealt with under section 4(2) and sections 28 to 32 fall not within Entry 31 of List II but within Entries 5 and 2 respectively of List III, and to that extent, the legislation is on matters enumerated in the Concurrent List.
He contends that a. 4(2) enacting as it does a presumption to be drawn by the court on certain facts being established, deals with what is purely a matter of evidence, and it is therefore not a law on intoxicating liquors but evidence.
Likewise, he argues, the provisions in sections 28 to 32 deal with matters pertaining to Criminal Procedure, such as warrants, seizure and arrest, and have no connection with intoxicating liquors.
It is accordingly contended that sections 4(2) and 28 to 32 are legislation under Entries 5 and 2 of List III, and that their validity must be tested under section 107(1).
The appellants are right in their contention that section 4(2) of the Act enacts a rule of evidence but does it follow from this that it is a law on evidence, such as is contemplated by Entry 5 in the Concurrent List ? so also sections 28 to 32 undoubtedly deal with matters of Procedure in relation to crimes, but are they for that reason to be regarded as legislation on Criminal Procedure Code within Entry 2 of List III ? The basic assumption on which the argument of the appellants rests is that the heads of legislation set out in the several Lists are so precisely drawn as to be mutually exclusive.
But then, it must be remembered that we are construing a federal Constitution, It is of the 406 essence of such a Constitution that there should be a distribution of the legislative powers of the Federation between the Centre and the Provinces.
The scheme Of distribution has varied with different Constitutions, but even when the Constitution enumerates elaborately the topics on which the Centre and the States could legislate, some overlapping of, the fields of legislation is inevitable.
The British North America Act, 1867, which established a federal Constitution for Canada, enumerated in sections 91 and 92 the topic, ,, on which the Dominion and the Provinces could respectively legislate.
Notwithstanding that the lists were framed so as to be fairly full and comprehensive, it was not long before it was found that the topics enumerated in the two sections overlapped, and the Privy Council had time and again to pass on the constitutionality of laws made by the Dominion and Provincial legislatures.
It was in this situation that the Privy Council evolved the doctrine, that for deciding whether an impugned legislation was intra vires, regard must be had to its pith and substance.
That is to say, if a statute is found in substance to relate to a topic with.
in the competence of the legislature, it should be held to be intra vires, even though it might incidentally trench on topics not within its legislative competence The extent of the encroachment on matters beyond its competence may be an element in determining whether the legislation is colourable, that is, whether in the guise of making a law on a matter within it competence, the legislature is, in truth, making a law on a subject beyond its competence.
But where that is not the position, then the fact of encroachmen does not affect the vires of the law even as regards the area of encroachment.
Vide Citizens Insurance Company of Canada vs William Parson8(1), The Attorney General of Ontario vs The Attorney General for the Dominion of Canada(1), The Attorney General of Ontari, vs The Attorney General for the Dominion(3 ), Union Colliery Company of British Columbia vs Bryden(4) Attorney General for ' Canada vs Attorney General for (1) [1881] 7 A. C. 96.
(3) (2) (4) 407 Ontario(,), Attorney General for Alberta vs AttorneyGeneral for Canada(2 ), and Board of Trustees of Letherbridge Northern Irrigation District vs Independent Order of Foresters(1).
The principles laid down in the above decisions have been applied in deciding questions as to the vires of statutes passed by the Indian legislatures under the Government of India Act, 1935.
In Subrahmanyan Chettiar vs Muttuswami Goundan(4), the question was as to whether the Madras Agriculturalist ' Relief Act IV of 1938, which was within the exclusive competence of the Provincial Legislature under Entries 20 and 21 in List 11 was ultra vires, in so far as it related to promissory notes executed by agriculturists by reason of the fact that under Entry 28, List I, "cheques, bills of exchange, promissory notes and other like instruments " were matters falling within the exclusive jurisdiction of the Centre.
In holding that the legislation was intra vires, Sir Maurice Gwyer C. J. stated the reason in these terms: " It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind adherence to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the Legislature enacting them may appear to have legislated in a forbidden sphere.
Hence the rule which has been evolved by the Judicial Committee whereby the impugned statute is examined to ascertain its ' pith and substance ' or its 'true nature and character ', for the purpose of determining whether it is legislation in respect of matters in this list or in that. . " This point arose directly for decision before the Privy Council in Prafulla 'Kumar Mukherjee vs The Bank of Commerce, Ltd. (5).
There, the question was whether the Bengal Money Lenders Act, 1940, which (1) (4) (2) (5) [1946 47] 74 I.A. 23.
(3) 53 408 limited the amount recoverable by a money lender for principal and interest on his loans, was valid in so far as it related to promissory notes.
Money lending is within the exclusive competence of the Provincial Legislature under Item 27 of List II, but promissory note is a topic reserved for the Centre, vide List 1, Item 28.
It was held by the Privy Council that the pith and substance of the impugned legislation being money lending, it was valid notwithstanding that it incidentally encroached on a field of legislation reserved for the Centre under Entry 28.
After quoting with approval the observations of Sir Maurice Gwyer C.J. in Subrahmanyan Chettiar vs Muttuswami Goundan, (supra) above quoted, Lord Porter observed: "Their Lordships agree that this passage correctly describes the grounds on which the rule is founded, and that it applies to Indian as well as to Dominion legislation. "No doubt experience of past difficulties has made the provisions of the Indian Act more exact in some particulars, and the existence of the Concurrent List has made it easier to distinguish between those matters which are essential in determining to which list particular provision should be attributed and those which are merely incidental.
But the overlapping of subjectmatter is not avoided by substituting three lists for two, or even by arranging for a hierarchy of jurisdictions.
Subjects must still overlap, and where they do, the question must be asked what in pith and substance is the effect of the enactment of which complaint is made, and in what list is its true nature and character to be found.
If these questions could not be asked, much beneficent legislation would be stifled at birth, and many of the subjects entrusted to Provincial legislation could never effectively be dealt with.
" Then, dealing with the question of the extent of the invasion by the Provincial legislation into the Federal fields, Lord Porter observed: "No doubt it is an important matter, not, as their Lordships think, because the validity of an Act can be determined by discriminating between degrees of invasion, but for the purpose of determining what is the 409 pith and substance of the impugned Act.
Its provisions may advance so far into Federal territory as to show that its true nature is not concerned with ProVincial matters, but the question is not, has it trespassed more or less, but is the trespass, whatever it be, such as to show that the pith and substance of the impugned Act is not money lending but promissory notes or banking? Once that question is determined the Act falls on one or the other side of the line and can be seen as valid or invalid according to its true content.
" Then, there is the decision of the Federal Court in Lakhi Narayan Das vs The Province of Bihar (1).
There, the question related to the validity of Ordinance No. IV of 1949 promulgated by the Governor of Bihar.
It was attacked on the ground that as a legislation in terms of the Ordinance would have been void, under section 107(1) of the Government of India Act, the Ordinance itself was void.
The object of the Ordinance was the maintenance of public order, and under Entry I of List II, that is a topic within the exclusive competence of the Province.
Then the Ordinance provided for preventive detention, imposition of collective fines, control of processions and public meetings, and there were special provisions for arrest and trial for offences under the Act.
The contention was that though the sections of the Ordinance relating to maintenance of public order might be covered by Entry I in List II, the sections constituting the offences and providing for search and trial fell within Items I and 2 of the Concurrent List, and they were void as being repugnant to the provisions of the Criminal Procedure Code.
In rejecting this contention, Mukherjea J. observed: " Thus all the provisions of the Ordinance relate to or are concerned primarily with the maintenance of public order in the Province of Bihar and provide for preventive detention and similar other measures in connection with the same.
It is true that violation of the provisions of the Ordinance or of orders passed under it have been made criminal offences but offences against laws with respect to matters specified in List 11 (1) 410 would come within Item 37 of List II itself, and have been expressly excluded from Item I of the Concurrent List.
The ancillary matters laying down the procedure for trial of such offences and the conferring of jurisdiction on certain courts for that purpose would be covered completely by Item 2 of List II and it is not necessary for the Provincial Legislature to invoke the powers under Item 2 of the Concurrent List." He accordingly held that the entire legislation fell within Entries I and 2 of List II, and that no question of repugnancy under section 107(1) arose.
This reasoning furnishes a complete answer to the contention of the appellants.
The position, then, might thus be summed up When a law is impugned on the ground.
that it is ultra vires the powers of the legislature which enacted it, what has to be ascertained is the true character of the legislation.
To do that, one must have regard to the enactment as a whole, to its objects and to the scope and effect of its provisions.
If on such examination it is found that the legislation is in substance one on a matter assigned to the legislature, then it must be held to be valid in its entirety, even though it might inci dentally trench on matters which are beyond its competence.
It would be quite an erroneous approach to the question to view such a statute not as an organic whole, but as a mere collection of sections, then disintegrate it into parts, examine under what heads of legislation those parts would severally fall, and by that process determine what portions thereof are intra vires, and what are not.
Now, the Madras Prohibition Act is, as already stated, both in form and in substance, a law relating to intoxicating liquors.
The presumptions in section 4(2) are not presumptions which are to be raised in the trial of all criminal cases, as are those enacted in the Evidence Act.
They are to be raised only in the trial of offences under section 4(1) of the Act.
They are therefore purely ancillary to the exercise of the legis lative power in respect of Entry 31 in List 11.
So also, the provisions relating to search, seizure and arrest in sections 28 to 32 are only with reference to offences 411 committed or suspected to have been committed under the Act.
They have no Operation generally or to offences which fall outside the Act.
Neither the presumptions in section 4(2) nor the provisions contained in sections 28 to 32 have any operation apart from offences created by the Act, and must, in our opinion, be held to be wholly ancillary to the legislation under Entry 31 in List II.
The Madras Prohibition Act is thus in its entirety a law within the exclusive competence of the Provincial Legislature, and the question of repugnancy under section 107(1) does not arise.
(2) It is next contended that the presumptions raised in section 4(2) of the Act, are repugnant to article 14 of the Constitution, and that the section must accordingly be declared to have become void under article 13(1).
We are unable to see how section 4(2) offends the requirement as to equality before law or the equal protection of laws.
The presumptions enacted therein have to be raised against all persons against whom the facts mentioned therein are established.
The argument of Mr. N. C. Chatterjee is that the facts set out in section 4(2) on which the presumption of guilt is raised have no reasonable relation to the offences themselves, that for example, possession of liquor can be no evidence of possession of materials or apparatus for manufacture of liquor under section 4(1)(g), nor possession of materials, apparatus for manufacture of liquor, evidence of possession or consumption of liquor under section 4(1) (a) and (j), and that therefore the impugned provision must be struck down as denying equal protection.
He relied in support of this contention on the following observations of Holmes J. in William N. McFarland vs American Sugar Refining Company (1): " As to the presumptions, of course the legislatures may go a good way in raising one or in changing the burden of proof, but there are limits.
It is essential that there shall be some rational connection between the fact proved and the ultimate fact presumed, and that the inference of one fact from proof of another shall not be so unreasonable as to be a purely arbitrary mandate.
Mobile J. & K.C.R. Co. vs Turnipseed(2)." (1) ; at 86 87 ; ; , 904.
(2) ; , 43; ; , 80.
412 The law on this subject is thus stated by Rottschaefer on Constitutional Law, 1939 Edition, at page 835: " The power of a legislature to prescribe rules of evidence is universally recognised, but it is equally well established that due process limits it in this matter.
It may establish rebuttable presumptions only if there is a rational connection between what is proved and what is permitted to be inferred therefrom.
" The law would thus appear to be based on the due ,process clause, and it is extremely doubtful whether it can have application under our Constitution.
But a reference to American authorities clearly shows that the presumptions of the kind enacted in section 4 (2) have been upheld as reasonable and not hit by the due process or equal protection clause.
In Albert J. Adams vs People of the State of New York (1), a law of New York had made it an (offence to be knowingly in possession of gambling instruments, and enacted further that possession of such instruments was presumptive evidence of knowledge.
It is thus in terms similar to section 4(1)(a) of the Act, which makes it an offence to be in possession of liquor, and to section 4(2) which raises a rebuttable presumption of guilt under section 4(1)(a).
In rejecting the contention that the presumption was a violation of the due process clause, the Court observed: " We fail to perceive any force in this argument.
The policy slips are property of an unusual character, and not likely, particularly in large quantities, to be found in the possession of innocent parties.
Like other gambling paraphernalia, their possession indicates their use or intended use, and may well raise some inference against their possessor in the absence of explanation.
Such is the effect of this statute.
Innocent persons would have no trouble in explaining the possession of these tickets, and in any event the possession is only prima facie evidence, and the party is permitted to produce such testimony as will show the truth concerning the possession of the slips.
Furthermore, it is within the established power of the state to prescribe the evidence which is to be received in the courts of its own government." (1) ; ; 413 In Robert Hawes vs State of Georgia (1), the question arose with reference to a statute of the State of Georgia, which had made it an offence to knowingly permit persons to locate in premises apparatus for distilling and manufacturing prohibited liquors.
It also enacted a presumption that when such apparatus was found in a place, the person in occupation thereof shall be presumed to have knowingly permitted the location of the apparatus.
The question was whether this presumption was repugnant to the due process clause.
In holding that it was not, the Court observed: " Distilling spirits is not an ordinary incident of a farm, and, in a prohibition state, has illicit character and purpose, and certainly is not so silent and obscure in use that one who rented a farm upon which it was or had been conducted would probably be ignorant of it.
On the contrary, it may be presumed that one on such a farm, or one who occupies it, will know what there is upon it.
It is not 'arbitrary for the state to act upon the presumption and erect it into evidence of knowledge;.
not peremptory, of course, but subject to explanation, and affording the means of explanation.
" It is therefore clear that even on the application of the due process clause, the presumptions laid down in section 4(2) cannot be struck down as unconstitutional.
We should add that the construction which the appellants seek to put on section 4 (2) that a person in possession of liquor could, under that section, be presumed to have committed an offence under section 4(1) (g) or that a person who is in possession of materials, implement or apparatus could be presumed to have committed offences under section 4 (1) (a) and (j) is not correct.
In our opinion, the matters mentioned in section 4 (2) should be read distributively in relation to the offences mentioned in section 4(1).
Possession of liquor, for example, is an offence under section 4(1) (a).
The presumption in section 4(2) is that if it is found in the possession of a person, he should be presumed to have committed the offence under section 4(1)(a), unless he could give satisfactory explanation therefor, as for example, that it must have been foisted in the place without his knowledge.
Likewise, it would be an (1) ; ; 414 offence under section 4(1)(g) to be in possession of materials, still, implement or apparatus whatsoever for the tapping of toddy or the manufacture of liquor.
Under section 4(2)(a), if a person is found to be in possession of materials or other things mentioned in the sub section, there is a presumption that he has committed an offence under section 4(1)(g), but it is open to him to account satisfactorily therefor.
The contention, therefore, that there is no reasonable relation between the presumption and the offence is, in our opinion, based on a misreading of the section.
Both the contentions urged on behalf of the appellants having failed, these appeals are dismissed.
Appeals dismissed.
| The appellants were charged before the Presidency Magistrate for offences under the Madras Prohibition Act, 1937 and when the cases were taken up for trial they raised the contentions that SS.
4(2) and 28 to 32 of the Act are void under section 107(I) of the Government of India Act, 1935, because they are repugnant to the provisions of the , and the Code of Criminal Procedure, 1898, and also because they are repugnant to article 14 Of the Constitution of India.
On their application, the Magistrate referred the questions for the opinion of the High Court under section 432 ' of the Code of Criminal Procedure.
The High Court having answered the questions against the appellants they preferred the present appeal under article 136.
Held, that the Madras Prohibition Act, 1937, is both in form and in substance a law relating to intoxicating liquors and that the presumptions in section 4(2) and the provisions relating to search, seizure and arrest in SS. 28 to 32 of the Act have no operation apart from offences created by the Act and are wholly ancillary to the exercise of the legislative power under Entry 31 in List II, Sch. 7 of the Government of India Act, 1935.
Accordingly the Act is in its entirety a law within the exclusive competence of the Provincial Legislature and the question of repugnancy under section 107(1) of the Government of India Act, 1935, does not arise.
When a law is impugned on the ground that it is ultra vires the powers of the legislature which enacted it, what has to be ascertained is the true character of the legislation.
To do that, one must have regard to the enactment as a whole, to its objects and to the scope and effect of its provisions.
If on such examination it is found that the legislation is in substance one on a matter assigned to the legislature, then it must be held to be valid in its entirety, even though it might incidentally trench on matters which are beyond its competence.
It would be quite an erroneous approach to the question to view such a statute not as an organic whole, but as a mere collection of sections, then disintegrate it into parts, examine under what heads of legislation those parts 52 400 would severally fall, and by that process determine what portions thereof are intra vires, and what are not.
Subrahmanyan Chettiar vs Muthuswami Goundain, (1940) F.C.R. 188, Pyafulla Kumar Mukherjee vs The Bank of Commerce Ltd. (1940) L.R. 74 I.A. 23 and Lakhi Narayan Das vs The Province of Bihar , relied on.
Held further, that the presumptions in section 4(2) Of the Act do not off end the requirements as to equality before law or the equal protection of laws under article 14, as they have to be raised against all persons against whom the facts mentioned therein are established.
Even assuming that the law in America that a presumption of guilt would offend the requirement of the equal protection of laws unless there is a rational connection between the act proved and the ultimate fact presumed, could have application to the Indian Constitution, on a proper reading of the sections there is a reasonable relation between the presumption raised in section 4(2) and the offences under section 4(1).
William N. McFarland vs American Sugar Refining Company, ; 24I U.S. 79; , Albert 1.
Adams vs People of the State of New York, ; and Robert Hawes vs State of Georiya, 258 U.S.
I ; , referred to.
|
Summarize this legal judgement text concisely | Appeal No. 135 of 1955.
Appeal by special leave from the judgment and order dated October 30, 1952, of the Labour Appellate Tribunal of India, Allahabad, in Misc.
Case No. C 146 of 1952.
R. R. Biswas, for the appellant.
Sukumar Ghose (amicus curiae), for the respondents.
November 28.
The Judgment of the Court was delivered by S.K. DAS J.
This is an appeal by special leave from the judgment and order of the Labour Appellate Tribunal of India at Allahabad dated October 30, 1952.
The relevant facts are these.
The Banaras Ice Factory Limited, the appellant before us, was incorporated on September 13, 1949, as a private limited company and was carrying on the business of manufacturing ice in the city of Banaras though its registered office was in Calcutta.
The factory worked as a seasonal factory and had in its employment about 25 workmen at all material times.
These workmen were employed from the month of March to the month of September 145 year.
The appellant company got into financial difficulties on account of trade depression, rise in the price, of materials and increase in the wages and emoluments of workmen.
It tried to secure a loan of Rs. 10,000/ from a Bank but met with no success.
Thereupon, it decided to close down the factory and on January 15, 1952, a notice was given to its workmen saying that the factory would be closed down with effect from January 17, 1952, and the services of the workmen would not be necessary for two months from that date.
The work.
men received their wages up to January 16, 1952.
On March 18, 1952, they were again taken into service but this temporary closing of the factory gave rise to an industrial dispute and the workmen complained that they were wrongfully laid off with effect from January 17, 1952.
The dispute was referred to the Regional Conciliation Officer, Allahabad, for adjudication.
In the meantime, that is, on June 6, 1952, the workmen gave a strike notice and as there was no coal in the factory, the appellant also gave a notice of closure on June 12, 1952.
A settlement was, however, arrived at between the parties on June 15, 1952, at the house of the Collector of Banaras.
The terms of that settlement, inter alia, were: (1) the management would withdraw its notice of closure dated June 12, 1952 ; (2) the workmen would withdraw their strike notice dated June 6, 1952; (3) there being no coal, the workers would remain on leave for a period of thirty days with effect from June 16, 1952, and would report for duty on July 16, 1952, at 8 A.M. and (4) after the workers had resumed their duty on July 16, 1952, the appellant would not terminate the services of any workmen or lay them off in future without obtaining the prior permission of the Regional Conciliation Officer, Allahabad.
On June 28, 1952, the Regional Conciliation Officer, Allahabad, gave his award in the matter of the industrial dispute between the appellant and its work , men with regard to the alleged wrongful laying off of the workmen from January 17, 1952, to March 18, 1952, 19 146 referred to above.
By his award the Regional Conciliation Officer gave full wages to the workmen for the period in question.
On July 16, 1952, none of the workmen reported for duty in accordance with the terms of the agreement referred to above, and on that date the appellant gave a notice to its workmen to the effect that the appellant found it difficult to run the factory and had decided to close it down; the workmen were informed that their services would not be required and would be terminated upon the expiry of thirty days from July 16, 1952.
The workmen, it is stated, accepted the notice and took their pay for one month (from July 16 to August 15, 1952) without any protest.
Against the award of the Regional Conciliation Officer dated June 28, 1952, the appellant filed an appeal to the Labour Appellate Tribunal on July 25, 1952.
On August 31, 1952, a complaint was made on behalf of the workmen to the Labour Appellate Tribunal under section 23 of the Industrial _ Disputes (Appellate Tribunal) Act, 1950, hereinafter referred to as the Act.
The gravamen of the complaint was that the appellant had contravened the provisions of section 22 of the Act.
because the appellant had discharged all the workmen with effect from August 15, 1952, without the permission in writing of the Labour Appellate Tribunal during the pendency before it of the appeal filed on July 25, 1952, against the award of the Regional Conciliation Officer.
The Labour Appellate Tribunal dealt with this complaint by its order dated October 30, 1952.
Before the Labour Appellate Tribunal it was urged on behalf of the appellant that there was no contravention of a. 22, because on July 16, 1952, when the notice of discharge was given by the appellant, no appeal was pending before it, the appellant 's appeal having been filed several days later, namely, on July 25, 1952.
This contention was not accepted by the Labour Appellate Tribunal on the ground that though the notice of discharge was given on July 16, 1952, the termination of service was to come into operation after one month, that is, from August 15, 1952, on which date the appeal before the Labour Appellate Tribunal was certainly pending.
As learned counsel for the 147 appellant has not again pressed this point before us, it is not necessary to say anything more about it.
A second point uroed before the Labour Appellate Tribunal was that the appellant had the right to close down the factory, when the appellant found that it was not in a position any longer to run the factory.
The agreement of June 15, 1952, did not stand in the appellant 's way, as the workmen themselves did not report for duty on July 16, 1952.
The closure being a bona fide closure, it was not necessary to obtain the permission of the Labour Appellate Tribunal and there was therefore no contravention of section 22 of the Act.
The Labour Appellate Tribunal apparently accepted the principle that the appellant had the right to close its business but took the view that permission should have been obtained before the closure.
It referred to the agreement of June 15, 1952, and held that though the appellant had the right to close its business, permission was still necessary and in the absence of such permission, the appellant was guilty of contravening cl.
(b) of section 22 of the Act, and directed that the appellant should pay its workmen full wages as compensation for the period of involuntary unemployment up to the date of its award, that is, during the period from August 16, 1952, to October 30, 1952.
Relying on the decision in J. K. Hosiery Factory vs Labour Appellate Tribunal of India (1), learned counsel for the appellant has urged three points before us.
His first point is that the termination of the services of all workmen on a real and bona fide closure of business is not 'discharge ' within the meaning of cl.
(b) of section 22 of the Act.
His second point is that if the word 'discharge ' in cl.
(b) aforesaid includes termination of services of all workmen on bona fide closure of business, then the clause is an unreasonable restriction on the fundamental right guaranteed in el.
(g) of article 19 (1) of the Constitution.
His third point is that, in any view, the Labour Appellate Tribunal, was not entitled to grant compensation to the workmen, because section 23 of the Act did not in terms entitle the Labour (1) A.I.R. 1956 All.
148 Appellate Tribunal to pass an order of compensation.
We may state here that if the appellant succeeds on the first point, it becomes unnecessary to decide the other two points.
For a consideration of the first point, we must first read sections 22 and 23 of the Act.
Section 22: " During the period of thirty days allowed for the filing of an appeal under section 10 or during the pendency of any appeal under this Act, no employer shall (a)alter, to the prejudice of the workmen concerned in such appeal, the conditions of service applicable to them immediately before the filing of such appeal, or (b)discharge or punish, whether by dismissal or otherwise, any workmen concerned in such appeal, save with the express permission in writing of the Appellate Tribunal.
" Section 23: " Where, an employer contravenes the provisions of section 22 during the pendency of proceedings before the Appellate Tribunal, any employee, aggrieved by such contravention, may make a complaint in writing, in the prescribed manner, to such Appellate Tribunal and on receipt of such complaint, the Appellate Tribunal shall decide the complaint as if it were an appeal pending before it, in accordance with the provisions of this Act and shall pronounce its decision thereon and the provisions of this Act shall apply accordingly." The short question before us is whether the word 'discharge ' occurring in cl.
(b) of section 22 includes termination of the services of all workmen on a real and bona fide closure of his business by the employer.
It is true that the word 'discharge ' is not qualified by any limitation in cl.
We must, however, take the enactment as a whole and consider section 22 with reference to the provisions of the , (XIV of 1947) which is in pari materia with the Act under our consideration.
We have had occasion to consider recently in two cases the general scheme and 149 scope of the .
In Burn & Co., Calcutta vs Their Employees(1) this Court observed that the object of all labour legislation was ' firstly, to ensure fair terms to the workmen and secondly, to prevent disputes between employers and employees so that production might not be adversely affected and the larger interests of the public might not suffer.
In Pipraich Sugar Mills Ltd. vs Pipraich Sugar Mills Mazdoor Union (2) it was observed " The objects mentioned above can have their fulfilment only in an existing and not a dead industry.
" We accepted the view expressed in Indian Metal and Metallurgical Corporation vs Industrial Tribunal(3) and K. M. Padmanabha Ayyar vs The State Of Madras (4) that the provisions of the , applied to an existing industry and not a dead industry.
The same view was reiterated in Hariprasad Shivshankar Shukla vs A. D. Divikar (5) where we held that 'retrenchment ' in cl.
(oo) of section 2 and section 25F did not include termination of the services of workmen on bona fide closure of business.
Turning now to section 22 of the Act, it is clear enough that el.
(a) applies to a running or existing industry only; when the industry itself ceases to exist, it is otiose to talk of alteration of the conditions of service of the workmen to their prejudice, because their service itself has come to an end.
The alteration referred to in cl.
(a) must therefore be an alteration in the conditions of service to the prejudice of the workmen concerned, in an existing or running industry.
Similarly, the second part of cl.
(b) relating to punishment can have application to a running or existing industry only.
When the industry itself ceases to exist, there can be no question of punishment of a workman by dismissal or otherwise.
We are then left with the word 'discharge '.
Unqualified though the word is, it must, we think, be interpreted in harmony with the general scheme and scope of the .
Our attention has been drawn to (1) ; (4) (2) 2.
(5) [1957] S.C. R.121.
(3) A.I. R. 150 the definition of 'workman ' in cl.
(s) of a. 2, which says ". for the purposes of any proceeding under this Act in relation to an industrial dispute, (the definition) includes any person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute.
" In the said definition clause also, the word 'discharge ' means discharge of a person in a running or continuing business not discharge of all workmen when the industry itself ceases to exist on a bona fide closure of business.
The true scope and effect of sections 22 and 23 of the Act were explained in The Automobile Products of India Ltd. vs Rukmaji Bala (1).
It was pointed out there that the object of section 22 was " to protect the workmen concerned in disputes which formed the subject matter of pending proceedings against victimisation " and the further object was " to ensure that proceedings in connection with industrial disputes already pending should be brought to a termination in a peaceful atmosphere and that no employer should during the pendency of these proceedings take any action of the kind mentioned in the sections which may give rise to fresh disputes likely to further exacerbate the already strained relations between the employer and the workmen.
" Those objects are capable of fulfilment in a running or continuing industry only, and not a dead industry.
There is hardly any occasion for praying for permission to lift the ban imposed by section 22, when the employer has the right to close his business and bona fide does so, with the result that the industry itself ceases to exist.
If there is no real closure but a mere pretence of a closure or it is mala fide, there Is no closure in the eye of law and the workmen can raise an industrial dispute and may even complain under a.23 of the Act.
For these reasons, we must uphold the first point taken before us on behalf of the appellant.
The Appellate Tribunal was in error in holding that the (1) ; 151 appellant had contravened cl.
(b) of section 22 of the Act.
The Appellate Tribunal did not find that the closure of the appellants business was not bona fide; on the ' contrary, in awarding compensation, it proceeded on the footing that the appellant was justified in closing its business on account of the reasons stated by it.
As to the agreement of June 15, 1952, the workmen themselves did not abide by it and the appellant 's right cannot be defeated on that ground.
In view of our decision on the first point, it becomes unnecessary to decide the other two points.
On the point of construction of section 22 of the Act,, we approve of the decision of the Allahabad High Court in J. K. Hosiery Factory vs Labour Appellate Tribunal of India (supra) but we refrain from expressing any opinion on the other points decided therein and we must not be understood to have expressed our assent, contrary to the opinion expressed by us in the case of The Automobile Product8 of India Ltd. (supra) to the view that under section 23 of the Act, it is not open to an industrial Tribunal to award compensation in an appropriate case.
In the result, the appeal is allowed and the decision of the Labour Appellate Tribunal dated the 30th October 1952 is set aside.
As the workmen did not appear before us, there will be no order for costs.
We are indebted to Mr. Sukumar Ghosh for presenting before us the case of the workmen as amicus curiae.
Appeal allowed.
| Clause (b) Of section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950 provides that during the pendency of any appeal under the Act no employer shall discharge any workmen concerned in such appeal, save with the express permission in writing of the Appellate Tribunal, and section 23 enables any employee to make a complaint in writing to such Appellate Tribunal, if the employer contravenes the provisions Of section 22 during the pendency of proceedings before the said Tribunal.
144 During the pendency of an appeal filed before the Labour, Appellate Tribunal the appellant company finding it difficult to run the factory decided to close it down and gave notice to all the workmen that their services would be terminated upon the expiry of thirty days from July 16, 1952.
On August 31, 1952, a complaint was made on behalf of the workmen to the Tribunal under section 23 Of the Act that the appellant had discharged them without the permission in writing of the Tribunal and had thereby contravened the provisions of section 22 of the Act.
It was found that the closure of the appellant 's business was bona fide.
Held, that section 22 of the Act is applicable only to an existing or running industry and that the termination of the services of all workmen, on a real and bona fide closure of business, is not 'discharge ' within the meaning of section 22(b) of the Act.
J. K. Hosiery Factory vs Labour Appellate Tribunal of India (A.I.R. 1956 All. 498), approved on the point of construction of section 22 of the Act.
Pipraich Sugar Mills Ltd. vs The Pipraich Sugar Mills Mazdoor Union followed.
|
Summarize this legal judgement text concisely | Appeals Nos. 103 & 105 of 1956.
Appeal from the judgment and order dated January 24, 1955, of the Bombay High Court in Special Civil Application No. 2546 of 1954.
123 N. A. Palkiwala and J. B. Dadachanji, section N. Andley and Rameshwvar Nath, for appellants in Civil Appeal No. 103 of 1956 M. C. Setalvad, Attorney General for India, C. K. Daphtary, Solicitor General for India, Porus A. Mehta and R. H. Dhebar, for respondents.
section M. Bose, Advocate General of West of Bengal,N. A. Palkiwala, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellant in Civil Appeal No. 105 of 1956.
Rajini Patel, M. V. Jayakar and I. N. Shroff, for respondent No. 1.
Porus A. Mehta and R. H. Dhebar, for respondents Nos. 4 & 5.
November 27.
The Judgment of the Court was delivered by section K. DAS J.
These two appeals, brought on certificates granted by the High Court of Bombay, raise common questions of law and for that reason, have been heard together.
This judgment will govern them both.
CIVIL APPEAL No. 105 OF 1956.
In Civil Appeal No. 105 of 1956 the main appellant is the Barsi Light Railway Company Limited, Kurduwadi, within the State of Bombay (hereinafter called the Railway Company).
The principal respondent is the President of the Barsi Light Railwaymen 's Union, respondent No. I to the appeal.
The General Manager, Central Railway, Bombay, and the Secretary, Railway Board, New Delhi, are respondents Nos. 4 and 5.
The facts, so far as they are relevant for our purpose, are these.
Under an agreement dated August 1, 1895, between the Secretary of State for India in Council and the Railway Company, the latter constructed, maintained and worked a light railway between Barsi Town and Barsi Road Station on the railway system, known then as the Great Indian Peninsular Railway.
It is not necessary to state here the various clauses of the aforesaid indenture of agreement except to mention 124 that it contained a clause under which the Secretary of State could purchase and take over the undertaking after giving the Railway Company not less than twelve calendar months ' notice in writing of the intention so to do.
On December 19, 1952, a notice was given to the Railway Company, for and on behalf of the President of India, by the Director of the Railway Board to the effect that the undertaking of the Railway Company would be purchased and taken over as from January 1, 1954.
The notice stated inter alia: "The President of India hereby gives this notice to the Company of the determination of the original contract of the 1st day of August, 1895, and the contract of the 26th day of August, 1902, between the Secretary of State in Council and the Barsi Light Railway Company Ltd., and of all the contracts supplemental thereto, at the expiration of 12 calendar months next after the current month and the contracts shall terminate accordingly on the expiration of 12 calendar months next after the current month and the President of India will on the 1st day of January, 1954, purchase and take over the entire railway system of the Company including all the extension and,all the railways together with all its rolling stock, machinery, equipments buildings and property etc., and together with all other things, stores and fixtures etc.
, as specified and in the manner provided in clause 43 of the Indenture of the 1st August, 1895, and in clause 63 of the Indenture of the 26th August, 1902.
" On November 11, 1953, the Railway Company served a notice on its workmen intimating that as a result of the Government of India 's decision to terminate the contract of the Railway Company and take over the railway from January 1, 1954, the services of all the workmen of the Railway Company would be terminated with effect from the afternoon of December 31, 1953.
The notice further stated that the Government of India intended to employ such of the staff of the Company as would be willing to serve on the railway on terms and conditions which were to be notified later.
On December 15, 1953, the Railway Board intimated the terms and conditions 125 on which the staff of the Railway Company would be taken over and employed by Government.
The letter by which the terms and conditions were communicated enclosed three forms one for clerical and like categories, a second for categories of staff needing training or refresher course, and a third for workshop staff and other tradesmen requiring trade testing.
In substance, the new terms and conditions as embodied in the letter and the three forms stated that the service of the staff employed by Government would be treated as continuous for certain specific purposes only, such as, contribution to provident fund, leave, passes and privilege ticket orders, educational and medical facilities etc.
It was made clear, however, that the Government Railway rules applicable to other staff appointed on the same day would be applicable to the 'staff of the Railway Company, and previous service under the Railway Company would not count for the purpose of seniority.
It appears from the statement of respondents 4 and 5 that when the undertaking was actually taken over on January 1, 1954, about 77 per cent.
of the staff of the Railway Company were re employed on the same scales of pay, about 23 per cent.
were re employed on somewhat lower scales of pay though the pay which they actually drew at the time of re employment was not affected; only about 24 of the former employees of the Railway Company declined service under the Government.
Soon after, respondent No. I filed some sixty one applications on behalf of the erstwhile workmen of the Railway Company under section 15 of the , for payment of retrenchment compensation to the said workmen under cl.
(b) of a. 25F of the (hereinafter called the Act).
The applications were made to respondent No. 3, Civil Judge (Junior Division) Madha, who was the relevant authority under the .
These applications were contested by the present appellants and several issues were framed.
Three of the issues were (1) whether the authority under the 126 , had jurisdiction to deal with and adjudicate on the claim of retrenchment compensation; (2) whether the erstwhile workmen were entitled to claim compensation under clause (b) of a. 25F of the Act ; and (3) whether they had been retrenched ' by their former employer, the present appellants, on December 31, 1953, within the meaning of the expression 'retrenchment ' in the Act.
The Civil Judge of Madha found against the workmen on issue No. I but in their favour on the other two issues.
By consent of parties, the aforesaid findings given on one of the applications (Miscellaneous Application No. 27 of 1954) governed the other applications also, and the applications were dismissed as a result of the finding on the question of jurisdiction.
Respondent No. I then moved the High Court of Bombay in Civil Application No. 2546 of 1954 and prayed for writs or appropriate directions under the provisions of articles 226 and 227 of the Constitution, for quashing the order of dismissal passed by respondent No. 3, the Civil Judge of Madha, and directing the latter to dispose of the applications before him on merits.
In the High Court the question of jurisdiction of the authority under the , was not argued, because learned counsel for the Railway Company rightly pointed out that assuming that the said authority had jurisdiction to deal with the claim of the workmen, the controversy between the parties would not come to an end by a decision on the question of jurisdiction only; because the Railway Company still contended that the workmen had not been 'retrenched ' within the meaning of the Act and were not entitled to claim compensation under al.
(b) of section 25F.
Thereupon, both parties agreed in the High Court that Civil Application No. 2546 of 1954 should not be restricted to the question of jurisdiction but should be decided on merits; that is, on the validity or otherwise of the claim of the erstwhile workmen to compensation under cl.
(b) of section 25F on the termination of their services by the Railway Company on December 31, 1953.
Learned counsel for the Railway Company agreed and undertook on behalf of 127 his client to accept whatever finding was given by the High Court on merits, subject to an appeal to this Court.
The High Court (Chagla C. J. and Dixit J.) held by its judgment and order dated January 24, 1955, that the workmen were entitled to claim compensation under clause (b) of section 25F of the Act and the Railway Company was liable to pay such compensation to them.
It is from that decision that Civil Appeal No. 105 of 1956 has been brought.
CIVIL APPEAL No. 103 OF 1956.
The facts in this appeal are somewhat different.
The main appellant is Shri Dinesh Mills Ltd., Baroda, and the principal respondent is the District Labour Officer and Inspector under the , at Baroda.
The appellant Company was running a woollen mill at Baroda for several years and had in its employ at the relevant time 450 workmen and 20 clerks.
The work was done in shifts, day and night.
On or about October 31, 1953, the appellant put up a notice declaring its intention to close down the entire mills from December 1, 1953.
On November 19,1953, this notice was withdrawn and another notice was put up declaring the intention of the appellant to close down the second shift with effect from December 20, 1953.
A third notice was put up saying that the second shift would be closed on December 20, 1953, as notified earlier, and the first shift would be closed as from January 8, 1954.
A similar notice was put up on the same date terminating the services of the clerks with effect from January 19,1954.
It was not disput ed that though the steps in the process of closure of the business of the appellant Company were staggered,.
the process was really one, and as a result of the closure the services of all 450 workmen and 20 clerks were terminated.
The appellant Company claimed that the closure of its business was bona fide, being due to heavy losses sustained by the Company.
On April 27, 1954, the principal respondent made an application to the relevant authority (respondent No. 3) under the , claiming retrenchment compensation for the workmen of the 128 appellant under el.
(b) of section 25F of the Act.
The application was contested by the appellant Company, and here again the same questions of jurisdiction of the authority under the , to deal with the claim and the maintainability of the claim under el.
(b) of is.
25F of the Act arose for decision.
The authority under the decided against the erstwhile workmen on all the important issues.
The respondent then moved the High Court of Bombay for appropriate writs or directions, and the High court (Bavdekar and Shah JJ.) held that the authority under the , bad jurisdiction to deal with the claim of retrenchment compensation; on the merits of the claim, the learned Judges felt bound to accept the decision of the Bench (Chagla C. J. and Dixit J.) in the case of the Railway Company.
Accordingly, the order of respondent No. 3 was set aside and he was directed to dispose of the application before him in accordance with law.
Civil Appeal No. 103 of 1956 is from the aforesaid decision of the High Court dated July 25, 1955.
It should be apparent from the facts stated above, though they are a little different with regard to the two appeals before us, that a common question "of law emerges therefrom, namely, whether the claim of the erstwhile workmen both of the Railway Company and of Shri Dinesh Mills Limited to compensation under cl.
(b) of section 25F of the Act is a valid claim in law.
The second question, that of jurisdiction of the authority under the , is not a live question in Civil Appeal No. 105 of 1956 after the agreement of parties in the High Court.
It does arise, however, in Civil Appeal No. 103 of 1956.
But learned counsel for the appellants in that appeal has been ingenuous enough to state that he does not wish to take our time by addressing us on that question not because he considers that the question of jurisdiction is devoid of all merit, but by reason of the fact that under the provisions of section 25 1 of the Act the claim for retrenchment compensation, if found to be legally valid, can still be enforced against the 129 appellants.
Section 19 of the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956, purports to repeal section 25 I of the principal Act, but that section has not yet been brought into force with the result that the provisions of section 25 I are still available for the recovery of retrenchment compensation.
Learned counsel has, therefore, submitted before us that these appellants will be content to abide by our decision on the principal question in these two appeals, namely, the validity or otherwise of the claim for retrenchment compensation under cl.
(b) of section 25F of the Act.
The Act which has been in force since April 1, 1947, has bad a plexus of amendments, and some of the recent amendments have been quite extensive in nature.
Section 25F occurs in Ch.
VA of the Act; that chapter dealing with 'lay off and retrenchment ' was inserted by an amending Act (Act XLIII of 1953) in 1953.
Section 25F is in these terms: "No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until (a)the workman has been given one month 's notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice: Provided that no such notice shall be necessary if the retrenchment is under an agreement which specifies a date for the termination of service; (b)the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days ' average pay for every completed year of service or any part thereof in excess of six months; and (c)notice in the prescribed manner is served on the appropriate Government." In the first part of the provisions of the section, the word used is ' retrenched ' and in cls.
(a) and (b) the word used is 'retrenchment '.
Obviously, they have 17 130 the same meaning, the only difference being that in the first part the word used is a verb and in the clauses the word is used as a noun.
It is obvious that to appreciate the true scope and effect of section 25F, we must first understand what is meant by the expression ' retrenched ' or 'retrenchment '.
By the same amending Act of 1953 a new definition was added to the definitions in section 2, being a definition of the word ' retrenchment ' in el.
(oo) of section 2.
The definition is in these terms: Section 2(oo) " retrenchment ' means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include (a) voluntary retirement of the workman; or (b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains astipulation in that behalf; or (c)termination of the service of a workman on the groundof continued ill health.
" Leaving out the excluding sub cls.
(a), (b) and (c) for the time being these sub clauses not being directly applicable to the cases under our consideration the definition when analysed consists of the following four essential requirements (a) termination of the service of a workman; (b) by the employer; (c) for any reason whatsoever; and (d)otherwise than as a punishment inflicted by way of disciplinary action.
It must be conceded that the definition is in very wide terms.
The question, however, before us is does this definition merely give effect to the ordinary, accepted notion of retrenchment in an existing or running industry by embodying the notion in apt and readily intelligible words or does it go so far beyond the accepted notion of retrenchment as to include the termination of services of all workmen in an industry when the industry itself ceases to exist on a bona fide closure or discontinuance of his business by the employer 9 Learned counsel for the appellants contend that the 131 first gives the correct meaning of the definition, while learned counsel for the principal respondents urge that by reason of the wide words used in the definition, the second gives the correct meaning of the expression retrenchment '.
There is no doubt that when the Act itself provides a dictionary for the words used, we must look into that dictionary first for an interpretation of the words used in the statute.
We are not concerned with any presumed intention of the legislature; our task is to get at the intention as expressed in the statute.
Therefore, we propose first to examine the language of the definition and see if the ordinary, accepted notion of retrenchment fits in, squarely and fairly, with the language used.
What is the ordinary, accepted notion of retrenchment in an industry ? We have had occasion to consider this question in Pipraich Sugar Mills Ltd.v.
Pipraich Sugar Mills Mazdoor Union (1) where we observed:"But retrenchment connotes in its ordinary acceptation that the business itself is being continued but that a portion of the staff or the labour force is discharged as plusage and the termination of services of all the workmen as a result of the closure of the business cannot therefore be properly described as retrenchment.
" It is true that these observations were made in connection with a case where the retrenchment took place in 1951, and we specially left open the question of the correct interpretation of the definition of 'retrenchment ' in section 2 (oo) of the Act.
But the observations do explain the meaning of retrenchment in its ordinary acceptation.
Let us now see how far that meaning fits in with the language used.
We have referred earlier to the four essential requirements of the definition, and the question is, does the ordinary meaning of retrenchment fulfil those requirements ? In our opinion, it does.
When a portion of the staff or labour force is discharged as surplusage in a continuing,; business, there are (a) termination of the service of a workman; (b) by the employer; (c) for any reason whatsoever; and (d) otherwise than as a punishment (1) , 132 inflicted by way of disciplinary action.
It has been argued that by excluding bona fide closure of business as one of the reasons for termination of the service of workmen by the employer, we are cutting down the amplitude of the expression 'for any reason whatsoever ' and reading into the definition words which do not occur there.
We agree that the adoption of the ordinary meaning gives to the expression 'for any reason whatsoever ' a somewhat narrower scope; one may say that it gets a color from the context in which the expression occurs; but we do not agree that it amounts to importing new words in the definition.
What after all is the meaning of the expression 'for any reason whatsoever '? When a portion of the staff or labour force is discharged as surplusage in a running or continuing business, the termination of service which follows may be due to a variety of reasons; e.g., for economy, rationalization in industry, installation of a new laborsaving machinery etc.
The legislature in using the expression 'for any reason whatsoever ' says in effect: "It does not matter why you are discharging the surplus; if the other requirements of the definition are fulfilled, then it is retrenchment.
" In the absence of any compelling words to indicate that the intention was even to include a bona fide closure of the whole business, it would, we think, be divorcing the expres sion altogether from its context to give it such a wide meaning as is contended for by learned counsel for the respondents.
What is being defined is retrenchment, and that is the context of the definition.
It is true that an artificial definition may include a meaning different from or in excess of the ordinary acceptation of the word which is the subject of definition; but there must then be compelling words to show that such a meaning different from or in excess of the ordinary meaning is intended.
Where, within the framework of the ordinary acceptation of the word, every single requirement of the definition clause is fulfilled, it would be wrong to take the definition as destroying the essential meaning of the word defined.
There is another way of looking at the problem.
Let us assume.
that the definition clause is so worded that 133 the requirements laid down therein are fulfilled, whether we give a restricted or a wider meaning: to that extent there is an ambiguity and the definition clause is readily capable of more than one interpretation.
What then is the position ? We must then see what light is thrown on the true view to be taken of the definition clause by other provisions of the Act or even by the aim and provisions of subsequent statutes amending the Act or dealing with the same subject matter.
In Pipraich Sugar Mills Ltd. vs Pipraich Sugar Mills Mazdoor Union (1) it was observed: "It cannot be doubted that the entire scheme of the Act assumes that there is in existence an industry, and then proceeds onto provide for various steps being taken, when a dispute arises in that industry.
Thus, the provisions of the Act relating to lock out, strike, lay off, retrenchment, conciliation and adjudication proceedings, the period during which the awards are to be in force, have meaning only if they refer to an industry which is running and not one which is closed.
" In Burn & Co., Calcutta vs Their Employees (2) this Court observed that the object of all labour legislation was firstly, to ensure fair terms to the workmen, and secondly, to prevent disputes between employers and employees so that production might not be adversely affected and the larger interests of the public might not suffer.
It was then observed in The Pipraich Sugar Mills ' case (1) (supra), " Both these objects again can have their fulfillment only in an existing and not a dead industry.
The view therefore expressed in Indian Metal and Metallurgical Corporation vs Industrial Tribunal, Madras (3) and K. M. Padmanabha Ayyar vs The State of Madras (4), that the industrial dispute to which the provisions of the Act apply is only one which arises out of an existing industry is clearly correct.
Therefore, where the business has been closed and it is either admitted or found that the closure is real and bona fide, any dispute arising with reference thereto would, as held in K. M. Padmanabha Ayyar vs The State of Madras (4), fall outside the (1) (2) ; (3) A.I.R. 1953 Madras 98.
(4) 134 purview of the .
" In view of these observations, it would be against the entire scheme of the Act to give the definition clause relating to retrenchment such a meaning as would include within the definition termination of service of all workmen by the employer when the business itself ceases to exist.
Learned counsel for the appellants in the two appeals have pointed out that the definition clause is inartistically drawn up and sub cls.
(a) and (b) of section 2 (oo) are not easily intelligible with reference to one of the essential requirements of the definition, namely, that the termination of service of the workman must be by the employer.
It has been submitted that voluntary retirement of the workmen cannot be termination of service by the employer.
We do not, however, think that sub cls.
(a), (b) and (c) are conclusive of the question before us; they, no doubt, apply to a running or continuing business only, but whether inserted by way of abundant caution or on account of excessive anxiety for clarity, they merely exclude certain categories of termination of service from the ambit of the definition.
They do not necessarily show what is to be included within the definition.
Two other cognate sections to which our attention has been drawn are sections 25G and 25H.
They are applicable, clearly enough, to a running business only.
The learned Attorney General, who has appeared for the principal respondent in one of the appeals, has pointed out that if the definition clause covers the case of termination of service in a continuing business as also termination of service on a closure of business, the circumstance that sections 25G and 25H provide for some instances of retrenchment only is no ground for holding that they exhaust all possible cases of retrenchment or that section 25F must also be restricted to a running business only.
We agree that if it is conceded that the definition clause includes cases of closure of business, no difficulty is presented by sections 25G and 25H.
But the fundamental question at issue is, does the definition clause cover cases of closure of business, when the closure is real and bona fide? The point to be emphasised in that connection is that there is no 135 provision (except perhaps section 25FF inserted in 1956 by Act XLI of 1956 to which we shall presently refer) which can be said to bring a closed or dead industry within the purview of the Act.
The provisions of the Act, almost in their entirety, deal with an existing or continuing industry.
All the provisions relating to lay off in sections 25A to 25E are also inappropriate in a dead business.
Learned counsel for the appellants have also adverted to some surprising results which would follow the wider interpretation of the definition clause.
If an employer dies and his heirs carry on the business or there is compulsory winding up of a company and the company is reconstructed or a business is converted into a limited company, or a new partner is taken into the business, there is in law a termination of service by a particular employer and a new employer appears on the scene; will the workmen in such circumstances be entitled to retrenchment compensation though they continue in service as before ? There must indeed be found very compelling reasons in the words of the statute before it can be held that such was the intention of the legislature.
We think that no such compelling reasons are available from the provisions of the Act; on the contrary, they point really one way that the Act contemplates an existing or continuing industry and not a dead industry.
This brings us to two other arguments advanced by the learned Attorney General.
One is that before the enactment of the amending Act of 1953 (Act XLIII of 1953) retrenchment had acquired a special meaning meaning which included the payment of compensation on a closure of business, and the legislature gave effect to that meaning in the definition clause and by inserting section 25F. The second argument is that section 25FF inserted in 1956 (Act XLI of 1956) is 'parliamentary exposition" of the meaning of the definition clause and of section 25F. We shall now consider these two arguments.
As to the first argument, a large number of decisions of Industrial or Lpobour Appellate Tribunals have 136 been placed before us.
The learned Attorney General has relied particularly on three decisions: The Hyderabad Vegetable Oil Products Ltd. vs Their Workers(1); Employees Of Messrs. India Reconstruction Corporation Ltd., Calcutta vs Messrs. India Reconstruction Corporation Ltd., Calcutta(") ; Kandan Textiles Ltd. vs Their Workers(3 ).
The decision in Employees of Messrs. India Reconstruction Corporation Ltd., Calcutta vs Messrs. India Reconstruction Corporation Ltd., Calcutta(2) Was considered by us in Pipraich Sugar Mills Lid.
vs Pipraich Sugar Mills Mazdoor Union(4)where we said that we were unable to accept the observation of the Tribunal that, in substance the difference between closure and normal retrenchment was one of degree only.
We are aware that in some cases Labour Appellate Tribunals awarded retrenchment compensation on closure of business, even when the closure was bona fide or justified.
We expressed our dissent from those decisions in the Pipraich Sugar Mills case(4).
When closely examined, none of those decisions show, however, that discharge of workmen on bona fide closure of business was held to fall within the meaning of normal retrenchment.
In The Hyderabad Vegetable Oil Products Ltd. vs Their Workers(1) the grounds on which compensation was allowed were (1) involuntary or forced unemployment of the workmen, (2) absence of any social security scheme like unemployment insurance and (3) financial position of the company.
On similar grounds compensation was awarded in Kandan Textiles Ltd. vs Their Workers(3) as an equitable relief, and a variety of factors were referred to as determining the appropriate relief to be given in a particular case.
We consider it unnecessary to examine all the decisions on this point, and it is enough to indicate what we consider to be the correct position in the matter.
Retrenchment means discharge of surplus workmen in an existing or continuing business; it had acquired no special meaning so as to include discharge of workmen on bona fide closure of business ' though a number of Labour Appellate Tribunals awarded compensation to (1) (1950] (3) [1954] 2 249.
(2) (4) [1956] S 872, 137 workmen on closure of business as an equitable relief for a variety of reasons.
It is reasonable to assume that in enacting section 25F, the legislature standardised the payment of compensation to workmen retrenched in the, normal or ordinary sense in an existing or Continuing industry; the legislature did away with the perplexing variety of factors for determining the appropriate relief in such cases and adopted a simple yard stick of the length of service of the retrenched workmen.
If the intention of the legislature 'was to give statutory effect to those decisions which awarded compensation on real and bona fide closure of business, the legislature would have said so instead of being content by merely adding a definition clause, every requirement of which is fulfilled by the ordinary, accepted meaning of the word 'retrenchment '.
We turn now to the second argument.
We have said that section 25FF was inserted in 1956 by amending Act XLI of 1956, which came into force on September 4,1956.
Before that date, the two decisions under appeal had been given by the Bombay High Court as also a further decision in The Hospital Mazdoor Sabha vs The State of Bombay(1) where it was held that the failure to comply with the condition for payment of compensation to an employee at the time of his retrenchment under section 25F (b) of the Act gave the employee the right to challenge his retrenchment and to contend that his services were not legally and effectively terminated.
Faced with the situation created by those decisions, the legislature stepped in and enacted section 25FF.
That section is in these terms: Notwithstanding anything contained in section 25F, no workman shall be entitled to compensation under that section by reason merely of the fact that there has been a change of employers in any case where the ownership or management of the undertaking in which he is employed is transferred whether by agreement or by operation of law, from one em ployer to another: Provided that (1) 18 138 (a)the service of the workman has not been interrupted by reason of the transfer; (b) the terms and conditions of service applicable to the workman after such transfer are not in any way less favourable to the workman than those applicable to him immediately before the transfer; and (c) the employer to whom the ownership or management of the undertaking is so transferred is, under the terms of the transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been inter rupted by the transfer.
" The section is not retrospective and does not in terms apply to any of the two cases before us.
But the question is what light does it throw on the meaning of section 25F? The learned Attorney General has placed great reliance on the non obstante clause with which the section begins, and has contended that it shows by necessary intendment that a workman whose service has been terminated by reason of a change of employers on account of a change of ownership or management will be entitled to retrenchment compensation under section 25F unless the conditions (a), (b) and (c) laid down in section 25FF are fulfilled.
This, according to the learned Attorney General, is parliamentary exposition of the true meaning of retrenchment in the definition clause and in section 25F.
At first sight there appears to be considerable force in this argument, and the learned Attorney General, has cited English and American decisions of high authority in support of his contention: Attorney General vs Clarkson (1) ; Ormond Investment Co. Ltd. vs Betts (2); George H. Cope vs Janet cope(3) Great Northern Railway Co. vs United States of America(4).
In considering the effect of section 25FF we must take note of the circumstances in which it was inserted in the Act.
The situation was that any transfer or closure of business and any change of (1)[1900] 1 Q.B. 156.
(2)[1928] A.C. 143.
(3)[1891] ; , 688.
(4)[1941] ; , 139 employer or management was judicially held to give rise to a claim for retrenchment compensation, with consequences which might result in a complete industrial deadlock.
The legislature could not declare the decisions to be incorrect, but could partially supersede their effect by an amendment of the law.
These were the circumstances in which section 25FF was enacted.
We agree with learned counsel for the appellants that the aim or object of the enactment was to supersede partially the effect of the aforesaid judicial decisions, at least with regard to the urgent matter of change of ownership or management of a business undertaking which is of quite frequent occurrence, rather than parliamentary exposition of the pre existing law; the general question of closure of business, of a lesser degree of urgency, was naturally left to be dealt with, if necessary, after the appeals had been disposed of.
We are fortified in this view by an examination of the provisions of the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956.
Be it noted that this Act was passed on August 28, 1956, only about seven days before the enactment of section 25FF.
Section 29 of the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956, inserts new schedules to the Act, and item 10 of the Third Schedule (Matters within the jurisdiction of Industrial Tribunals) is: " Retrenchment of workmen and closure of establishment"; in the Fourth Schedule, item 10 is: "Rationalisation, standardisation or improvement of plant or technique which is likely to lead to retrenchment of workmen.
" It is true that these new Schedules have not yet come into force, but the wording of the items mentioned therein shows that the legislature clearly envisaged a distinction between retrenchment and closure and retrenchment did not include closure of business; item 10 of the Fourth Schedule almost clinches the issue, because it shows how retrenchment of surplus labour may occur in a running industry.
If we are to choose between the two amending Acts of 1956 on the point of parliamentary exposition, we unhesitatingly hold that the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956 140 (Act XXXVI of 1956) is more in the nature of parliamentary exposition than the Industrial Disputes (Amendment) Act, 1956 (Act XLI of 1956) which merely supersedes the effect of certain judicial decisions.
We are aware that on the narrower interpretation of the definition clause on the basis of the ordinary, accepted connotation of retrenchment,, section 25F will apply to a continuing or running business only and section 25FF will become largely unnecessary.
We do not think that consideration need cause any difficulty; the judicial decisions on the basis of which section 25FF was enacted being held to be erroneous by us, no hardship is caused if section 25FF is rendered superfluous, because its aim is served by the correct interpretation now given of the definition clause and of the provisions of section 25F, both of which are on that interpretation brought into harmony with the rest of the Act.
A few words more about the authorities relied on by the learned Attorney General: the American decisions merely enunciate the general principle that " several Acts of Congress, dealing as they do with the same subject matter, should be construed not only as expressing the intention of Congress at the dates the several Acts were passed, but the later Acts should also be regarded as legislative interpretations of the prior ones.
" This general rule is not an inflexible rule, and as stated in the Great Northern Railway Co. vs United States of America(1), "we are not limited to the lifeless words of the statute and formalistic canons of construction in our search of the intent of Congress (Parliament in our case) and in construing a statute, we may with propriety.
recur to the history of the times when it was passed.
" That history shows indubitably the aim and purpose of the enactment of section 25FF.
As Lord Atkinson pointed out in his speech in Ormond Investment Co. Limited vs Betts (2), " an Act of Parliament does not alter the law by merely betraying an erroneous opinion of it." Legislation founded on a mistaken or erroneous assumption has not the effect of making that the law which the legislature had erroneously assumed to be so.
In the cases before us, (1) ; , 273. 94 (2) , 164.
141 the legislature proceeded on the basis of the judicial decisions then available to it, and on that basis enacted s.25FF.
We do not think that the general principle of parliamentary exposition or subsequent legislation as an aid to construction of prior Acts can be called in aid for construing the definition clause and section 25F of the Act.
For 'the reasons given above, we hold, contrary to the view expressed by the Bombay High Court, that retrenchment as defined in section 2 (oo) and as used in section 25F has no wider meaning than the ordinary, accepted connotation of the word: it means the discharge of surplus labour or staff by the employer for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, and.
it has no application where the services of all workmen have been terminated by the employer on a real and bona fide closure of business as in the case of Shri Dinesh Mills Ltd. or where the services of all workmen have been terminated by the employer on the business or undertaking being taken over by another employer in circumstances like those of the Railway Company.
Mr. Mehta, appearing for respondents Nos. 4 and 5 in Civil Appeal No. 105 of 1956, tried to make a distinction between transfer of ownership with continuation of employment (which according to him did not come within the definition) and termination of service on closure of business.
There is in fact a distinction between transfer of business and closure of business; but so far as the definition clause is concerned, both stand on the same footing if they involve termination of service of the workmen by the employer for any reason whatsoever, otherwise than as a punishment by way of disciplinary action.
On our interpretation, in no case is there any retrenchment, unless there is discharge, of surplus labour or staff in a continuing or running industry.
We have so far dealt with the question of construction of the definition clause and section 25F of the Act.
On behalf of the appellants a further question as to tile constitutional validity of section 25F has been raised.
The Argument on that question has proceeded from two 142 points of view: one of which is based on the point of view that retrenchment includes termination of service on closure of business and the other even in respect of a running or continuing business.
Under article 19 (1), sub cls.
(f) and (g), of the Constitution, all citizens have the right to acquire, hold and dispose of property and to practise any profession, or to carry on any occupation, trade or business.
Under cls.
(5) and (6) of the said Article, the right is, inter alia, subject to reasonable restrictions in the interests of the general public.
The right to carry on a business, it is contended, has three facets (a) the right to start a business, (b) the right to continue a business and (c) the right to close a business.
Section 25F of the Act, it is argued, imposes a restriction on that right, if the section is so widely interpreted as to include a closure of business.
The restriction, it is submitted, is not a reasonable restriction in the interests of the general public, because (a) it is unrelated to the capacity of the employer to pay and (b) unrelated to the needs of the employee.
From the other point of view, the argument is that even in respect of a running or continuing industry, section 25F imposes an unreasonable restriction.
Reasonableness,it is submitted, has to be considered with regard to the object of the legislation and if the direct and immediate object of section 25F is relief against involuntary unemployment, then the restriction imposed is excessive, because a provision for such relief unrelated to the period of unemployment and other relevant factors is over simplification of a complex problem.
Such over simplification, it is stated, itself amounts to an unreasonable restriction.
On the construction which we have adopted of the definition clause and of section 25F of the Act, we are relieved of the task of making any final pronouncement on this constitutional question.
On our construction, section 25F has no application to a closed or dead industry and the constitutional arguments based on a different construction need not be considered in these appeals.
So far as a running or continuing industry is concerned, an obvious answer may be that unemployment relief is not the only purpose or object of s.25F. We have pointed out 143 earlier that it is reasonable to assume that standardisation of retrenchment compensation and doing away with a perplexing variety of factors for granting retrenchment compensation may well have been the purposes of a. 25F, though the basic consideration must have been the granting of unemployment relief.
However, on our view of the construction of section 25F, no compensation need be paid by the appellants in the two appeals.
It is unnecessary therefore to decide whether, in other cases of a different character, section 25F imposes a reasonable restriction or not.
In the result, we must allow the two appeals and set aside the decisions of the High Court of Bombay in the two cases.
We hold that the appellants in the two appeals are not liable to pay any compensation under section 25F of the Act to their erstwhile workmen who were not retrenched within the meaning of that expression in that section.
In the circumstances of these two cases, the parties must bear their own costs throughout.
Appeals allowed.
| The word 'retrenchment ' as defined in section 2(oo) and the word retrenched ' in section 25F of the , as amended by Act XLIII of 1953, have no wider meaning than the ordinary accepted connotation of those words and mean the discharge of surplus labour or staff by the employer for any reason whatsoever, otherwise than as a punishment inflicted by ' way of disciplinary action, and do not include termination of services of all workmen on a bona fide closure of industry or on change of ownership or management thereof.
Pipraich Sugar Mills Ltd. vs Pipraich Sugar Mills Mazdoor Union , followed.
Burn & Co., Calcutta vs Their Employees ; , referred to.
The provisions of the Act have in view an existing and continuing industry and cls.
(a), (b) and (c) of the definition only exclude certain categories of termination of service from within its ambit but do not indicate what are to be included therein.
The word 'retrenchment ' has acquired no special meaning so as to include a discharge of workmen on a bona fide closure of an industry, as a result of certain Labour Appellate Tribunals awarding compensation to workmen on such closure as an equitable relief for a variety of reasons.
The intention of the legislature in enacting section 25F of the Act appears to have been to simplify and standardise the payment of compensation for retrenchment, as ordinarily understood, on the basis of the length of service of the retrenched workman.
The Hyderabad Vegetable Oil Products Ltd. vs Their Workers , Employees of Messrs. India Reconstruction Corporation and Kandan Textiles Ltd. vs Their Workers , considered.
Section 25FF, which was inserted into the Act by the amending Act of 1956, is not retrospective and does not apply to the instant 16 122 cases, and the object the legislature had in view in enacting the same was to partially nullify the effect of certain judicial decisions relating to the effect of a change of ownership or management and it was not intended to be a parliamentary exposition of the pre existing law.
The language of item Io of the third and fourth schedules, engrafted into the Act by section 29 Of the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956, indicates that the legislature envisaged a distinction between retrenchment and closure and the former does not include the latter.
Although on such construction, section 25F applies only to an existing industry and section 25FF becomes largely redundant, no question of any hardship arises as the judicial decisions on the basis of which section 25FF was enacted were themselves incorrect and must be overruled.
In construing a parliamentary statute the time when and the circumstances in which it was enacted may be taken into consideration and the general principle of parliamentary exposition or subsequent legislation as an aid to construction of prior legislation, can have no application where the subsequent statute itself was based on incorrect assumptions and judicial decisions based on such assumptions.
Great Northern Railway vs United States of America, 315 U.S. 262 and Ormond Investment Co. Limited vs Betts [1928] A.C. 143, referred to.
If the other conditions of the definition clause are fulfilled, the transfer of ownership or management of an industry and its closure stand on the same footing so far as the definition clause is concerned, notwithstanding that there is a distinction in fact between the two; there is, however, no retrenchment within the meaning of the definition clause unless there is a discharge of surplus labour or staff by the employer in a continuing industry, for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action.
Consequently, in the instant cases, where in one the services of all the workmen were terminated by the employer on a real and bona fide closure of the industry and in the other on a change of ownership, such termination did not amount to retrenchment within the meaning Of section 2(00) or section 25F of the Act and the appellants were not bound to pay any compensation under cl.
(b) Of section 25F of the Act.
|
Summarize this legal judgement text concisely | Appeal No. 133 of 1955.
Appeal by special leave from the judgment and order dated November 19,1954, of the Andhra High Court in Writ Petition No. 342 of 1954.
N. C. Chatterji, M. section K. Sastri and Sardar Bahadur, for the appellant.
Porus A. Mehta, T. V. R. Tatachari and T. M. Sen, for the respondent.
November 29.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
The appellant was recruited to the Madras Provincial Judicial Service as District Munsif in 1935.
In 1949 he was promoted to the office of Subordinate Judge, and on June 19, 1950, he was posted as Subordinate Judge of Masulipatnam, Krishna District.
Among the suits which he tried were O.S. No. 95 of 1946 and O.S. No. 24 of 1949, which were connected, and on July 27, 1950, arguments were heard therein, and judgment reserved.
On August 22, 1950, while judgment was still pending, Lingam 54 416 Sitarama Rao, who was the fifth defendant in both the suits, filed an application in the High Court of Madras for transferring them to some other court on the ground that the appellant was attempting through his brother to obtain bribe from the parties, and on this application, the High Court passed an order on the same date, staying the delivery of judgment.
The suits themselves were eventually transferred to the court of the Subordinate Judge of Gudivada, and the appellant was also transferred on September 16, 1950, to the Subordinate Court of Amalapuram in East Godavari District.
Thereafter, the High Court started investigation into the allegations made in the affidavit in the stay petition, and as a result of the enquiries and reports received, the following charge was framed against the appellant on April 2, 1953: " That you in or about August 1950 being at that time Additional Sub Judge, Masulipatnam, entered into a conspiracy with your brother Md. Riazuddin alias Basha for the purpose of obtaining a bribe from the parties to O.S. Nos. 24/49 and 95/46 on the file of your Court, and that, in pursuance of the conspiracy, the said Md. Riazuddin at Vijayawada attempted between 11 8 1950 and 13 8 1950 to obtain a bribe from Lingam Satya Narayana Rao and his son Lingam Seetarama Rao (the 5th defendant in both the above suits).
You are hereby required within 15 days of the receipt by you of this proceeding (i) to submit a written statement of your defence and to show cause why disciplinary action should not be taken against you in respect of the above charge, and (ii) to state whether you desire an oral enquiry to be held or only to be heard in person.
" The appellant filed his written statement in answer to the charge on June 22, 1953.
Meantime, complaints had also been received by the High Court that the appellant had committed serious irregularities in the discharge of his official duties in the Sub Court, Amalapuram, such as that he had delayed delivering judgments in the suits and appeals for an unreasonable time, that he had made false returns to the District Court, and that to cover his 417 defaults, he had altered the records of the court so as to be consistent with those returns.
Charges were framed with reference to these irregularities on January 15,1953, and further charges relating to the same matter were framed on May 6, 1953, to all of which he filed his explanation on June 22, 1953.
One of the Judges of the High Court of Madras, Balakrishna Ayyar, J., was deputed to enquire into these charges, and after making an elaborate enquiry in which several witnesses including the appellant were examined, he sent a report on October 20, 1953, that the charge of corruption was made out, and he concluded as follows: " Therefore, I find the charge proved.
What punishment should be imposed on Mr. Ghouse can be decided only after he has been heard in that regard, but, at this stage, I am inclined to take the view that he should be dismissed from service.
" With reference to the charges of irregularities, etc., Balakrishna Ayyar J. submitted his report on November 10, 1953, in which also he found that the charges were all substantially established, and he concluded as follows: "In the result, I find Mr. Ghouse guilty of the charges framed to the extent already indicated.
In respect of another charge against Mr. Ghouse, that I enquired into I expressed the view that he should be dismissed from service.
In view of that no further recommendation for punishment in respect of these charges is necessary.
Certain observations, however, may not be out of order.
A judicial officer who delays judgments, in the absence of special or extenuating circumstances, furnishes evidence of his own incompetence.
But a judicial officer who systematically sends false returns is guilty of moral turpitude.
If in addition 'he instructs members of his office to make false entries in the records of the court he would be guilty of even more blameworthy conduct.
One would hardly desire to keep such persons in service.
" These reports were considered at a meeting of the Judges of the Madras High Court on January 25,1954, and they decided that "the proper punishment to be 418 awarded to the officer as regards the two counts are (1) regarding the first charge of bribery, dismissal from service and (2) regarding the second charge of various delinquencies, such as delaying judgments, etc., removal from service." Then they passed an order on January 28, 1954, placing the appellant on suspension until further orders, and the same was communicated to him on January 30, 1954.
On April 28, 1954, the appellant filed in the High Court of Madras a petition under article 226 of the Constitution, for a writ quashing the order of suspension dated January 28, 1954, on the grounds, firstly, that under the Andhra Civil Services (Disciplinary Proceedings Tribunal) Rules, 1953, which had been published by the Andhra Government on October 22, 1953, with effect from October 1, 1953, enquiry into the conduct of Government servants on a monthly salary of Rs. 150 and above could be held only by a Tribunal to which the Government might refer the same, and that, therefore, the proceedings of the High Court of Madras after October 1, 1953, culminating in the order of suspension dated January 28, 1954, were without jurisdiction, and secondly, that the order in question was void, as it was in contravention of article 311 of the Constitution.
It must be mentioned that the State of Andhra had come into existence on October 1, 1953, but that the High Court of Madras continued to have jurisdiction over the Andhra State until July, 1954, when a separate High Court was established therefor.
The writ petition which was pending in the High Court of Madras was then transferred to the Andhra High Court.
At the hearing, the only contention that would appear to have been pressed by the appellant was that by reason of the Andhra Civil Services (Disciplinary Proceedings Tribunal) Rules, 1953, coming into force on October 1, 1953, it was only a Tribunal as provided in Rule 4 (1) (a) of those Rules that could enquire into the charges, and that the proceedings in the High Court of Madras subsequent thereto were without jurisdiction.
In rejecting this contention, the learned Judge.% observed that though Rule 4 of the Andhra Civil Services Rules differed in some respects 419 from the corresponding Rule of the Madras Civil Services Rules, 1948, the differences were of an unsubstantial character, and were due more to inexpert" drafting than to any deliberate intention to effect a change in the Madras Rules.
They further held that if the Rule in question was intended to affect the jurisdiction of the High Court to hold an enquiry into the conduct of a Subordinate judicial officer, it would be in contravention of articles 227 and 235 of the Constitution, which vested in the High Court the control and: superintendence of all the Courts in the State.
In the result, they dismissed the application.
The matter now comes before this Court in appeal under article 136 of the Constitution.
Before us, the appellant pressed both the grounds which were raised by him in his application under article 226.
On the question whether by reason of the Andhra Civil Services Rules coming into operation with effect from October 1, 1953, the High Court had ceased to have jurisdiction to proceed with the matter, it is necessary first to refer to the relevant Rules.
Rule 4 of the Madras Civil Services (Disciplinary Proceedings Tribunal) Rules, 1948, which was the Rule in force when the enquiry against the appellant was started, runs as follows: 4." The Government may, subject to the provisions of rule 5, refer to the Tribunal: (a)Cases relating to Government servants on a monthly salary.
of Rs. 150 and above, in respect of matters involving corruption on the part of such Government servants in the discharge of their official duties.
(b)All appeals to the Government from Government servants against disciplinary orders passed by heads of departments and other competent authorities on charges of corruption, and (c)any other case or class of cases which the Government consider, should be dealt with by the Tribunal.
Provided that cases arising in the Judicial Department and against Government servants in the subordinate ranks of police forces of the rank of 420 Sub Inspector and below shall not be referred to the Tribunal.
" The corresponding Rule in the Andhra Civil Services (Disciplinary Proceedings Tribunal) Rules, 1953, which came into operation from October 1, 1953, is as follows : 4 (1) " The Government shall, subject to the provisions of rule 5, refer the following cases to the Tribu nal, namely: (a) Cases relating to Government servants on a monthly salary of Rs. 150 and above in respect of matters involving corruption on the part of such Government servants in the discharge of their official duties and (b) All appeals or petitions to the Government against orders passed on charges of corruption and all disciplinary cases in which the Government propose to revise the original orders passed on such charges: Provided that it shall not be necessary to consult the Tribunal: (i) in any case in which the Tribunal has, at any previous stage, given advice in regard to the order to be passed and no fresh question has there after arisen for determination, or, (ii) where the Government propose to pass orders rejecting such appeal or petition.
(2) The Government may, subject to the provisions of rule 5, also refer to the Tribunal any other case or class of cases which, they consider should be dealt with by the Tribunal: Provided that the following cases shall not be referred to the Tribunal namely: (i) Cases arising in the Judicial Department; (ii) Cases arising against the Government servants in the subordinate ranks of the 'police forces of the rank of Sub Inspector and below, unless the cases are against them together with officers of higher ranks.
" The argument of the appellant is that whereas under the proviso to Rule 4 of the Madras Civil Services Rules, enquiries against subordinate judicial officers could not be referred to a Tribunal, under Rule 4 (1) (a) 421 of the Andhra Civil Services Rules it was obligatory on the part of the Government to refer the cases of all.
Government servants drawing a monthly salary of ' Rs. 150 and above to a Tribunal.
According to the appellant, the result of this change was that such enquiry as was held after October 1, 1953, by the High Court and all orders passed by it thereafter were bad, and that he had a right to have his case referred to and determined by the Tribunal in accordance with Rule 4 (1) (a).
There has been some argument before us as to whether the concluding proviso in Rule 4 of the Andhra Civil Services Rules qualifies both subrules (1) and (2) or only sub rule (2).
While, on the one hand, there is force in the contention of the appellant that having regard to its setting, the proviso should more properly be read as qualifying subrule (2), we are inclined to agree with the learned Judges of the High Court that, read as a whole, the Rule does not show an intention to depart from the procedure laid down in the Madras Civil Services Rules.
The point, however, is one of academic interest, as the Rule in question has subsequently been amended by G. 0.
No. 938 dated April 11, 1955, and it expressly provides that the amendment shall be deemed to have come into force on October 1, 1953.
That amendment is as follows: " In rule 4 of the said rules, the proviso occurring after sub rule (2) shall be omitted, and in lieu thereof, the following sub rule shall be inserted, namely: (3) Notwithstanding anything contained in subrule (1) or sub rule (2), the following cases shall not be referred to the Tribunal, namely: (i) cases arising in the Judicial Department; and (ii) 'cases arising against Government servants in the subordinate ranks of the Police forces of the rank of Sub Inspector and below, unless the cases are against them together with officers of higher ranks.
" By reason of this amendment, which is expressly retrospective in character, the main ground of objection on which the application of the appellant was founded, is no longer tenable.
In view of this conclusion, it becomes unnecessary.to consider the contention 422 of the respondent that Rule 4 of the Andhra Civil Services Rules could not, in any event, apply to enquiries which had been validly initiated previously thereto.
It was next contended on behalf of the appellant that as the authority which appointed him was the Governor of the Province, it was only that authority that could dismiss or remove him from service, and that the order of suspension made by the High Court on January 28, 1954, was in contravention of article 311 of the Constitution, and was, in consequence, bad.
This contention does not appear to have been pressed in the High Court, and is, moreover, without substance.
The facts are that Balakrishna Ayyar J. sent his report on the enquiry into the charges against the appellant, and expressed his opinion that he should be dismissed or removed from service.
The High Court approved of it, and passed an order on January 28, 1954, suspending him until further orders.
The report was then sent to the Government for action, and, in fact, the Andhra Government has issued a notice to the appellant on August 12, 1954, to show cause why he should not be dismissed or removed from service.
Thus, it is the appropriate authority under article 311 that proposes to take action against the appellant, and it is for that authority to pass the ultimate order in the matter.
The order passed by the High Court on January 28, 1954, is merely one of suspension pending final orders by the Government, and such an order is neither one of dismissal nor of removal from service within article 311 of the Constitution.
It was also argued that the High Court had no authority under the rules to suspend a judicial officer pending final orders of the Government.
But under Rule 13 of the Madras Civil Services (Classification, Control and Appeal) Rules, it is the High Court of Judicature at Madras that is constituted as the authority which may impose suspension pending enquiry into grave charges under rule 17(e) against the Members of the State Judicial Service.
The order in question, therefore, falls within this rule, and is perfectly intra vires.
423 It was lastly contended for the appellant that even if the High Court could hold a preliminary enquiry into the conduct of a judicial officer, it had no jurisdiction to decide the matter finally, that the findings given by Balakrishna Ayyar J. should not be held to conclude the question against the appellant, and that the Government was bound to hold a fresh enquiry and decide for itself whether the charges were well founded.
No such question was raised in the petition or in the High Court, and we must, therefore, decline to entertain it.
In the result, the appeal is dismissed with costs.
Appeal dismissed.
| The appellant was at the relevant dates posted as Subordinate Judge at Masulipatam and Amalapuram.
Charges were made against him of bribery and serious irregularities in the discharge of official duties, and they were enquired into by one of the judges of the Madras High Court who sent his reports on August 2o, ,953, and November Io, 953.
On the basis of the reports the High Court decided on January 25, 1954, that the appellant should be dismissed from service on the charge of bribery and removed from service on the charge of irregularities, and on January 28, 1954, placed him on suspension until further orders.
The appellant moved the High Court under article 226 of the Con stitution of India for quashing the order of suspension on the ground (1) that under r. 4(I)(a) of the Andhra Civil Services (Disciplinary Proceedings Tribunal) Rules, 1953, an enquiry into the 415 conduct of a Government servant drawing a monthly salary of Rs. 15o and above could be made only by a Tribunal to be appointed by the Government, and that as the rule came into, effect from October 1, 1953, the order of the Madras High Court dated January 28, 1954, was without jurisdiction, and (2) that the order was repugnant to article 31I of the Constitution of India.
The High Court dismissed the application and on appeal against the judgment.
Held:(1) that in view of the amendment of r. 4 Of the Andhra Civil Services (Disciplinary Proceedings Tribunal) Rules, 1953, on April II, 955, excluding, with retrospective effect, the jurisdiction of the Tribunal in respect of enquiries into the conduct of the judicial officers, the order of the Madras High Court dated January 28, 1954, was not open to attack.
(2)that an order of suspension pending final orders is neither one of dismissal nor of removal of service within article 311 of the Constitution.
(3)that under r. 13 of the Madras Civil Services (Classification, Control and Appeal) Rules, the High Court had the power to impose suspension pending enquiry into grave charges under r. 17(e) against the Members of the State judicial Service.
|
Summarize this legal judgement text concisely | Appeal No. 176 of 1956 and Petition No. 165 of 1955.
Appeal by special leave from the judgment and order dated March 15/23,1955 of the Orissa High Court, in Civil Reference No, 4 of 1954, 169 N. C. Chatterji, D. N. Mukherjee and R. Patinaik, for the appellant.
Porus A. Mehta and R. H. Dhebar, for respondent No. 1. 1956.
November 29.
The Judgment of the Court was delivered by S.K. DAS J.
The appellant is Shri Lalit Mohan Das, a pleader of about 25 years ' standing.
who ordinarily practiced in the Courts at Anandapur in the district of Mayur bhanj in Orissa.
The Munsif of Anandapur, one Shri L. B. N. section Deo ' drew up a proceeding under sections 13 and 14 of the , against the pleader for grossly improper conduct in the discharge of his professional duty and submitted a report to the High Court through the District Judge of Mayurbhanj on December 12, 1953.
The District Judge forwarded the report, accompanied by his opinion, to the High Court of Orissa on March 9, 1954.
The recommendation of the Munsif was that the pleader should be suspended from practice for one year.
The reference was heard by the High Court of Orissa ' and by its order dated March 15, 1955, the High Court came to the conclusion that the pleader was guilty of grave professional misconduct and suspended him from practice for a period of five years with.
effect from March 15,1955, Shri Lalit Mohan Das then obtained special leave from this Court to appeal against the judgment and order of the Orissa High Court dated March 15 /23, 1955.
He also filed a petition under article 32 of the Constitution.
Learned counsel for the petitioner has not pressed the petition under article 32 and nothing more need be said about it.
We proceed now to deal with the appeal which has been brought to this Court on special leave.
The charges against the appellant were the following On July 15, 1953, the appellant was appearing on behalf of the defendant in Suit No. 81 of 1952 pending before the Munsif of Anandapur.
On that date, there were two other suits pending before the same Munsif.
There were petitions for time in all the three suits.
22 170 The Munsif wanted to take up the oldest suit for hearing, and the oldest suit being Suit No. 54 of 1952, it was taken up first and five witnesses for the plaintiff were examined.
Suit No. 81 of 1952 was postponed to August 18, 1953.
The appellant, who appeared for the defendant in that suit, was informed of the postponement.
When so informed, the appellant made a remark in open Court and within the hearing of the Munsif to this effect: " If the Peshkar is gained over, he can do everything." He then left the Court.
The Munsif was surprised at the remark made and asked the appellant to explain his conduct, by means of a letter sent the same day.
As the appellant sent no reply, the Munsif wrote again to the appellant on July 18, 1953.
To this letter the appellant sent the following reply: "Dear Sir, I am painfully constrained to receive memo after memo for some imaginary act of mine not in any way connected with my affairs for which if any explanation is at all warranted officiallv.
For your second memo I felt it desirable as a gentleman to reply.
Further I may request you to be more polite while addressing letters to lawyers.
Yours faithfully, Sd.
L. M. Das.
Pleader.
" It is obvious that the letter of the appellant was couched in very improper terms and considerably strained the relation between the Munsif and the appellant.
The appellant, it may be stated here, was at that time the President of the Anandapur Sub Divisional Bar Association which consisted of about 14 legal practitioners.
On July 21, 1953, Shri B. Raghava Rao, who was the predecessor in office of Shri Deo, came to Anandapur.
He was the guest of Shri A. V. Ranga Rao, the Sub Divisional Officer.
One Shri N. C. Mohanty, a pleader of.
Anandapur and who was related to the appellant, came to invite the two Munsifs to a luncheon on the occasion of a housewarming ceremony.
On hearing about the trouble between Shri Deo 171 and the appellant, Shri B. Raghava Rao interceded and it appears that the appellant was persuaded to come to the house of the Sub Divisional officer and to ,say that he was sorry for what had happened in court on July 15, 1953, and that he did not happean to insult Shri Deo; Shri Deo, it appears, accepted the apology and for the time being.
the trouble between the two was smoothed over.
A second incident, however, took place on September 25, 1953.
The appellant was appearing for a defendant in another suit before the Munsif It was Suit No. 101 of 1952.
This suit was fixed for hearing on September 21, 1953.
As that date was a holiday, the suit was taken up 'on September 22, 1953.
Another suit, Suit No. 86 of 1952, was also fixed for hearing on that date but Shri N. C. Mohanty, pleader for the defendants in that suit, took time on the ground of the illness of one of the defendants, which ground was supported by a medical certificate.
In Suit No. 101 of 1952 also, the defendants applied for time.
on the ground of illness of their witnesses; but there being no medical certificate in support of the allegation of illness and no witnesses having been summoned in that suit, the learned Munsif refused to grant time, and one Shri P. N. Patnaik who also represented the defendants agreed to go on with the suit.
The suit was then heard for two days, i. e., on September 22 and 23, 1953, and at the request of the defendants ' lawyers the hearing of arguments was postponed to September 25, 1953.
On that date the appellant came to Court accompanied by his junior Shri P. N. Patnaik, for the purpose of arguing the case on behalf of the defendants.
At the very outset of his arguments the appellant made the follwing remarks:The Court is unfair to me, while the Court was fair to Mr. Misra (meaning Shri Bhagabat Prasad Misra who was appearing for the plaintiffs in that suit).
The Court is accommodating and granting adjournments to Mr. Misra while it was not accommodating me.".
The Munsif took objection to these remarks but nothing untoward happened.
The appellant concluded his arguments.
172 A third incident brought matters to a climax, and this incident took place on September 29, 1953.
The appellant was appearing for the defendants in Suit No. 6 of 1951.
In that suit a preliminary point of jurisdiction and sufficiency of court fees was raised and Shri B. Raghava Rao, the predecessor in office of Shri Deo, had dealt with the point and decided it against the appellant 's client.
A Civil Revision taken to the High Court was also rejected. 'The appellant, however, again pressed the same preliminary point and on September.
29, 1953, Shri Deo passed an order dismissing the preliminary objection.
When this order was shown to the appellant, he stood up and shouted at the top of his voice I 'I on behalf of the Bar Association, Anandapur, challenge the order of the Court,.
The Court has no principle as it is passing one kind of order in one suit and another kind of order in another suit.
" The Munsif, it appears, was disgusted at the conduct of the appellant and he stood up and, left the Court room, directing the bench clerk to send a telegram to the District Judge.
, A telegram was accordingly sent to the District Judge asking him to come to Anandapur.
The District Judge asked for a detailed report which was sent on October 1, 1953.
On October 5, 1953, the Munsif drew up a proceeding against the appellant on a charge under section 13 of the referring therein to the three incidents mentioned above.
The appellant was asked to show cause by October 26, 1953.
On November 3, 1953, the appellant denied the allegations made and took up the attitude that the Munsif was not competent to hold the enquiry on the ground that the Munsif was in the position of a complainant.
The appellant gave a different version of what happened on the three dates in question.
With regard to the incident of July 15, 1953, the appellant 's plea was that some other client had come to him.
in connection with a criminal case pending in another Court and to that client the appellant had said that an enquiry should be made from the Peshkar as to the date fixed.
With regard to the incident, on September 25, 1953, the plea of the appellant was^ total denial, and with regard to the last incident, the appellant said 173 that the Munsif behaved rudely and wanted to ' assault the appellant, for which the appellant appears, to have filed a petition to the Governor of Orissa on September 30, 1953, for according sanction for the prosecution of the Munsif.
It may be stated here that on October 8, 1953, a resolution was passed, numbered Resolution 6, which purported to be a resolution on behalf of the Bar Association, Anandapur.
The resolution was in these termis: "Resolved that on September 29, 1953, the Court 's (Munsif) action on the.
dais in rising from the chair, thumping on the table, shouting at the top of his voice, and using the words 'shut up ' against one honourable member (President) of this Bar Association is quite unprecedented.
, undesirable and affecting the prestige of the Bar and may cause apprehension in the mind of the litigant public to get fair justice.
" It may be stated that some other members of the Bar dissociated themselves from the a id resolution at a later date.
The proceeding against the appellant under the stated, as we have said earlier, on October 5, 1953, and the appellant filed his written statement on November 3, 1953.
On November 5, 1953, the Munsif sent the record to the District Judge in connection with the plea of the appellant that the enquiry should be made by some other judicial officer.
The District Judge, however, took the view that under the provisions of sections 13 and 14 of the the enquiry should be made by the Munsif himself and the records were accordingly sent back to the Munsif.
Thereafter, the appellant non co operated and did not appear at the enquiry though more than one communication was sent to ham The enquiry was concluded on December 11, 1953, and the Munsif submitted his report.
the High Court through the District Judge on December 12, 1953.
On December 22, 1953, the appellant filed an application to the Additional District Judge for time to move the High Court to get an order to have the matter heard by some other judicial officer.
One month 's time was 174 accordingly granted and the Additional District Judge, for some reason which is not very apparent, sent the record back to the learned Munsif In the meantime, the Additional District Judge, it appears, made an effort to settle the trouble.
On December 23, 1953, he met the members of the Bar Association and the Munsif at the inspection bungalow at Anandapur on his way to Mayurbhanj.
At a meeting held there, a copy of a draft resolution to be passed by the members of the Bar Association, Anandapur, was made over.
This draft resolution was in these terms: "This Association re rets very much that an incident relating to the bench clerk of the Civil Court.
should have led to the subsequent unhappy differences between the Bench and the members of the Bar.
As in the interest of the litigant public it is felt not desirable to allow these strained feelings to continue further, this Association unanimously resolves to withdraw Resolution No. 6 dated October 8, 1953, passed against the Court and communicate copies of the same to the addressees previously communicated.
It is further resolved to request the Court to see to the desirability of withdrawing the proceedings that had been started against the various members of the Bar and their registered clerks on their expressing regret to the Court individually in connection with those proceedings.
It is further resolved that the members of the Bar involved in the proceedings be requested to take immediate steps in this direction.
The Association hopes that the bench clerk who has to some extent been the cause for this friction between the Bench and the Bar would be replaced by a person from a different place at an earlier date.
" On January 8, 1954, the appellant appeared in the Court of the Munsif and filed a written apology and expressed his regret.
His signature wag taken on the order sheet and the order of that date reads: "Sri L. M. Das, pleader, appears and expresses his regret.
So the proceeding No. 2 of 1952 is dropped.
Intimate Additional District Judge.
" No resolution, however, was passed in the terms 175 suggested by the Additional District Judge.
On January 19, 1954, two resolution,% were passed in the following terms: "No. 1.
In view of the fact that past misunderstandings between the Munsif and members of the Bar caused by an incident relating to the bench clerk of the Civil Court, have been removed by amicable settlement of differences existing between both parties, it is unanimously resolved that resolution No. 6 dated October 8, 1953, stands withdrawn.
No. 2.
It is further resolved that the copies of the above resolution be sent to the addressees previously communicated of resolution No. 6 of October 8, 1953.
" The learned Munsif, it appears, wanted to see the minute book of the Bar Association, presumably to find out in what terms the proposed resolution was passed.
There was again trouble between the Munsif and the appellant over the production.
of the minute book.
Ultimately, the minute book was produced, and on February 2,1954, the Munsif expressed the view that the resolution passed did not fully carry out the terms of settlement suggested by the Additional District Judge.
Accordingly, the proceeding was re opened and the record was re submitted to the District fudge.
The District Judge thereupon sent the report of the Munsif to the High Court accompanied by his opinion.
The High Court dealt with the report with the result which we have already indicated.
The main contention of Mr. N. C. Chatterji, who has appeared on behalf of the appellant is this.
He has submitted that there was no valid reason for reviving the proceeding against the appellant, after the proceeding had been dropped on January 8, 1954, on the submission of an apology and expression of regret by his client; because, in substance and effect, the terms of the settlement suggested by the Additional District Judge had been complied with.
According to Mr. Chatterji an expression of regret having been made earlier than the passing of the resolutions on January 19, 1954, by the Anandapur Bar Association and the bench clerk having already been transferred from 176 Anandapur, the resolutions could not be in the same terms as were suggested by the Additional District Judge; but the two resolutions passed on January 19, 1954 coupled with the expression of individual regret made on January 8, 1954, complied in substance with the essential terms of the draft resolution which the Additional District Judge had made over on December 23, 1953.
Mr. Chatterji has contended that this view of the matter has not been properly considered by the High Court.
He has submitted that in view of the order passed by the learned Munsif himself on January 8, 1954, the proceeding against the appellant should be treated as having been dropped and concluded on that date.
Mr. Chatterji has also drawn our attention to ground No. VI in the petition for special leave dated May 9, 1955, in which the appellant said that he was " willing and prepared to submit before this Court expressions of unreserved regret and apology for his error of judament and indiscretion, if any, in the discharge of his professional duties.
" We cannot accept the contention of Mr. Chatterji that the order passed by the learned Munsif on January 8, 1954, had the effect of terminating and bringing to an end the proceeding against the appellant.
The learned Judges of the High Court rightly pointed out that the report of the Munsif dated December 12, 1953, was a report which was submitted to the High Court.
Under the provisions of section 14 of the , such a report had to be forwarded to the High Court by the District Judge accompanied by his opinion.
It was not open to.
the Additional District Judge to send back the record to the Munsif The efforts of the Additional District Judge were, indeed, well intentioned; but at that stage, after the Munsif had made his report to the High Court, the High Court alone Was competent to pass final orders in the matter.
Apart, however, from that difficulty, we are not satisfied that the terms of settlement suggested by the Additional District Judge were fully complied with in this case.
It is true, that the appellant did express his 177 regret and to that extent the settlement suggested by the Additional District Judge was carried out.
It is also true that by the resolutions passed on January 19, 1954, the earlier resolution of October 8, 1953, was cancelled, but one essential and important part of the terms of settlement suggested by the Additional District Judge was that the Association should express regret at what had happened.
Resolution No. I dated January 19, 1954, was so worded as to give the impression that the misunderstanding between the Munsif and the appellant was all due to the bench clerk and that misunderstanding having been removed Resolution No. 6 dated October,$, 1953, should be withdrawn.
There is nothing in the resolution to show that the appellant was in any way at fault, a fault which he had expiated I by an expression of regret.
It may be pointed out that the earlier ,resolution, Resolution No. 6 dated October 8, 1953, had been communicated to a large number of persons and authorities and the later resolution dated January 19, 1,954, passed in the diluted form in which it was passed, could hardly undo the damage which had been made by the earlier resolution.
On merits we agree with the High Court that the appellant was undoubtedly guilty of grave professional, misconduct.
A member of the Bar undoubtedly owes a duty, to his client and must place before the Court all that can fairly and reasonably be submitted on behalf of his client.
He may even submit that a particular order is not correct land may ask for a review of that order.
At the same time, a member of the 'Bar is an officer of the Court and owes a duty to the Court in which he is appearing.
He must phold the dignity and decorum of the Court and must not do any thing to.
bring the Court itself into disrepute.
The appellant before us grossly ' overstepped the limits of proprieety when he made imputation$; of partiality and unfairiness against the Munsif in open Court.
In suggesting that the Munsif followed no principle in his orders the appellant was adding insult to injury, because the 'Munsif had merely up held an order of his predecessor on the preliminary point of jurisdiction and Court fees, 23 178 which order had been upheld by the High Court in s revision.
Scandalising the Court in such manner is really polluting the very fount of justice; such conduct as the appellant indulged in was not a matter between an individual member of the Bar and a member of the judicial service; it brought into disrepute the whole administration of justice.
From that point of view, the conduct of the appellant was highly reprehensible.
The appellant gave no evidence in support of his version of the incidents, though he had an opportunity of doingso, if he so desired.
The only point left for consideration, is the question of punishment.
On a matter of this nature, this Court would be reluctant to interfere with the order of the High Court as respects the disciplinary action to be taken against a member of the Bar who has been guilty of professional misconduct.
There are, however, two mitigating circumstances.
One is that the learned Munsif himself recommended suspension of practice for one year only.
The appellant was suspended from practice with affect, from March 15,1955.
The order of suspension has now lasted for a little more than a year and eight months.
The second mitigating circumstance is that the appellant did file la written apology and expressed regret to the learned Munsif onJanuary 8, 1954.
It is unfortunate that the appellantdid not take up a more contrite attitude in the High Court.
In this Court, the appellant tried to make out that the proceeding against him should not have been revived; he however showed his willingness to offer an apology and ex pression of regret Having regard to all the circumstances, we think that the punishment imposed errs on the side of excess.
We would accordingly reduece the period of susppusion to, two years only.
In the result, the petition, under article 32 is dismissed and the appeal is,also dismissed subject to the reduction of the period of suspension as indicated above.
In the circumstances of this case, there will be, no 'order for costs.
| The appellant pleader who already had strained relation with the Munsif made certain objectionable remarks in open Court, suggesting partiality and unfairness on the part of the Munsif.
The Munsif drew up a proceeding under sections 13, 14 Of the , against the pleader and submitted a report to the High Court through the District judge.
An application to the Additional District judge was filed by the pleader, for time to move the High Court to get an order to have the matter heard by some judicial Officer other than the 168 Munsif who had made the report.
One month 's time was accordingly granted, and for some reason which is not very apparent, the Additional District judge sent the record back to the Munsif.
The Additional District judge made an effort to settle the trouble.
It was arranged that the pleader should apologise and a resolution should be passed by the members of the local Bar Association.
Accordingly, the pleader appeared in the Court of the Munsif and filed a written apology and expressed his regret, and the Munsif dropped the proceeding.
It was later found that the resolution was not passed in the terms suggested by the Additional District judge, and the terms of settlement suggested by the latter were not fully carried out.
Accordingly, the proceeding was re opened and the report was re submitted to the District judge who with his opinion forwarded the same to the High Court.
The High Court suspended the pleader for 5 years.
It was contended on behalf of the appellant that there was no valid reason for reviving the proceeding, after it had once been dropped on the submission of an apology and expression of regret.
Held, that the report under section 14 of the is a report which is submitted to the High Court.
When a report is made to the High Court by any Civil judge subordinate to the District judge, the report shall be made through the District judge and the report must be accompanied by the opinion of such judge.
Once the report has been made, it is not open to the District judge to send back the record to the Subordinate Civil judge, and no order passed by the Subordinate Civil judge can have the effect of terminating or bringing to an end the proceeding.
The High Court alone is competent to pass final orders on the report.
A member of the Bar is an officer of the Court, and though he owes a duty to his client and must place before the Court all that can fairly and reasonably be submitted on behalf of his client, he also owes a duty to the Court and must uphold the dignity and decorum of the Court in which he is appearing.
Making amputations of partiality and unfairness against the subordinate Civil judge in open Court is scandalizing the Court in such a way as to pollute the very fount of justice ; such conduct is not a matter between an individual member of the Bar and a member of the judicial Service.
With regard to disciplinary action against a member of the Bar, the Supreme Court would be reluctant to interfere with the order of the High Court unless there are clear mitigating circumstances.
|
Summarize this legal judgement text concisely | Appeal No. 132 of 1956.
Appeal by special leave from the judgment and order dated May 16, 1955, of the Election Tribunal, Bhatinda, in Election Petition No. 14 of 1954.
C. K. Daphtary, Solicitor General of India, J. B. Dadachanji, section N. Andley, Rameshwar Nath and K. C. Puri, for the appellant.
N.C. Chatterji, A. N. Sinha and Gopal Singh, for respondent No. 1. 1956.
December 20.
The Judgment of the Court was delivered by VENKATARAMA AIYAR J.
The appellant was one of the candidates who stood for election to the Legislative Assembly of the Paterson and East Punjab States Union from the Farber Constituency in the General Elections held in 1954.
He secured the largest number of votes, and was declared duly elected.
The result was notified in the Official Gazette on February 27, 1954, and the return of the election expenses was published therein on May 2, 1954.
On May 18, 1954, the first respondent filed a petition under section 81 of the Representation of the People Act No. XLIII of 1951, hereinafter referred to as the Act, and therein he prayed that the election of the appellant might be declared void on the ground that We and his agents had committed various corrupt and illegal practices, of which particulars were given.
The appellant filed a written statement denying these allegations.
He therein raised the further contention that the election petition had not been presented within the time limited by law, and was, therefore, liable to be dismissed.
Rule 119, which prescribes the period within which election petitions have to be filed, runs, so far as it is material, as follows: 119.
"Time within which an election petition shall be presented : An election petition calling in question an election may, 27 210 (a) in the case where such petition is against a returned candidate, be presented under section 81 at any time after the date of publication of the name, of such candidate under section 67 but not later than fourteen days from the date of publication of the notice in the Official Gazette under rule 113 that the return of election expenses of such candidate and the declaration made in respect thereof have been lodged with the Returning Officer ," The last date for filing the petition, according to this Rule, was May 16, 1954, but that happened to be a Sunday and the day following had been declared a public holiday.
The first respondent accordingly presented his petition on May 18, 1954, and in paragraph 6 stated as follows: " The offices were closed on 16th and 17th; the petition is, therefore, well within limitation." On this,, the Election Commission passed the following order : "The petition was filed on l8 5 1954.
But for the fact that 16 5 1954 and 17 5 1954 were holidays, the petition would have been time barred.
Admit.
" The plea put forward by the appellant in his written statement based on Rule 119(a) was that whatever might have been the reason therefor, the fact was that the petition had not been filed "not later than fourteen days" from the publication of the return of the election expenses, which was on May 2, 1954, and that it was, therefore, not presented within the time prescribed.
The Tribunal overruled this plea on the ground that under Rule 2(6) of the Election Rules, the General Clauses Act X of 1897 was applicable in interpreting them, and that under section 10 of that Act, the election petition was presented within the time allowed by Rule 119(a).
On the merits, the Tribunal held that of the grounds put forward in the Election Petition, one and only one had been substantiated, and that was that the appellant had 'employed for payment, in connection with his election, 25 persons in addition to the number of persons allowed under Rule 118 read along with Schedule VI thereto, and had thereby 211 committed the major corrupt practice mentioned in section 123(7) of the Act.
The Tribunal accordingly declared the election void under section 100(2)(b) of the Act.
It also observed that on its finding aforesaid, the appellant had incurred the disqualification enacted in sections 140(1)(a) and 140(2) of the Act.
Against this decision, the appellant has preferred this appeal by special leave.
On behalf of the appellant, two contentions have been pressed before us: (1) that the election petition was presented beyond the time prescribed by Rule 119(a), and should have been dismissed under section 90 (4) of the Act; and (2) that on the findings recorded by the Tribunal, the conclusion that Rule 118 had been contravened does not follow and is erroneous.
The first question turns on the interpretation of section 10 of the General Clauses Act, which is as follows: "Where by any Central Act or Regulation made after the commencement of this Act, any act or proceeding is directed or allowed to be done or taken in any Court or office on a certain day or within a prescribed period, then if the Court or office is closed on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the Court or office is open.
" The contention of Mr. Solicitor General on behalf of the appellant is that this section can apply on its own terms only when the act in question is to be done " within a prescribed period", that under Rule 119(a) the petition has to be filed "not later than" fourteen days, that the two expressions do not mean the same thing, the words of the Rule being more peremptory, and that accordingly section 10 of the General Clauses Act cannot be invoked in aid of a petition presented under Rule 119, later than fourteen days.
In support of this contention, he invites our attention to some of the Rules in which the expression "the time within which" is used, as for example, Rule 123, and he argues that when a statute uses two different expressions, they must be construed as used in two different senses.
He also points out that whenever the Legislature intended 212 that if the last date on which an act could be performed fell on a holiday, it could be validly performed on the next working day, it said so, as in the proviso to section 37 of the Act, and that there would be no need for such a provision, if section 10 of the General Clauses Act were intended generally to apply.
This argument proceeds on an interpretation of section 10 of the General Clauses Act which, in our opinion,is erroneous.
Broadly stated, the object of the section is to enable a person to do what he could have done on a holiday, on the next working day.
Where, therefore, a period is prescribed for the performance of an act in a court or office, and that period expires on a holiday, then according to the section the act should be considered to have been done within that period, if it is done on the next day on which the court or office is open.
For that section to apply, therefore, all that is requisite is that there should be a period pres cribed, and that period should expire on a holiday.
Now, it cannot be denied that the period of fourteen days provided in Rule I 1 9 (a) for presentation of an election petition is a period prescribed, and that is its true character, whether the words used are " within fourteen days" or "not later than fourteen days".
That the distinction sought to be made by the appellant between these two expressions is without substance will be clear beyond all doubt, when regard is had to section 81 of the Act.
Section 81 (1) enacts that the election petition may be presented "within such time as may be prescribed, and it is under this section that Rule 119 has been framed.
It is obvious that the rule making authority could not have intended to go further than what the section itself had enacted, and if the language of the Rule is construed in conjunction with and under the coverage of the section under which it is framed, the words "not later than fourteen days" must be held to mean the same thing as "within a period of fourteen days".
Reference in this connection should be made to the heading of Rule 119 which is, " Time within which an election petition shall be presented ".
We entertain no doubt that the legislature has used both 213 the expressions As meaning the same thing, and there are accordingly no grounds for holding that section 10 is not applicable to petitions falling within Rule 119.
We are also unable to read in the proviso to section 37 of the Act an intention generally to exclude the operation of section 10 of the General Clauses Act in the construction of the Rules, as that will be against the plain language of Rule 2 (6).
It should be noted that proviso applies only to section 30 (c) of the Act, and it is possible that the Legislature might have considered it doubtful whether section 30 (c) would, having regard to its terms, fall within section 10 of the General Clauses Act and enacted the province abundant cauterize.
The operation of such a beneficent enactment as a. 10 of the General Clauses Act is not, in our opinion, to be cut down on such unsubstantial grounds as have been urged before us.
We are accordingly of opinion that the petition which the respondent filed on May 18, 1954, is entitled to the protection afforded by that section and is in time.
We should add that the appellant also raised the contention that if we agreed with him that the election petition was not presented in time, we should hold that the order of the Election Commission admitting the petition was not one of condonation within the proviso to section 85, because that proceeded on the footing that the petition was in time, and did not amount to a decision that if it was not, there were sufficient grounds for excusing the delay.
We are not disposed to agree with this contention; but in the view which we have taken that the petition is in time, it is unnecessary to consider it.
Then the next question and that is one of substance is whether there has been contravention of Rule 118.
The material facts are that the appellant is the quondam ruler of Faridkot, which enjoyed during the British regime the status of an independent State, and came in for judicial recognition as such in Sirdar Gurdyal 'Singh vs Rajah of Faridkote (1), and, after Independence, became merged in the State of Pepsu.
The (1) (I894) L.R. 21 I.A. 171.
214 appellant continues to retain a large staff of subordinates, and the charge of the first respondent in his petition was that as many as 54 of them were employed for purposes of election, and that Rule 118 had thus been violated.
Rule 118 is as follows: , "No person other than, or in addition to, those specified in Schedule VI shall be employed for payment by a candidate or his election agent in connection with an election." Under Schedule VI, a candidate for election may employ for payment in connection with election (1) one election agent, (2) one counting agent, (3) one clerk and one messenger, (4) one polling agent and two relief polling agents for each polling station or where a polling station has more than one polling booth, for each polling booth and (5) one messenger for each polling station, or for each polling booth, if a polling station has more than one booth.
The finding of the Tribunal on this question is as follows: " . it is clear that 25 persons named in the foregoing paragraphs took part in the election campaign of respondent No. I apart from any duties they may have performed as polling agents.
Now admittedly all these persons are paid employees of respondent No. 1.
As their number exceeds the statutory number provided in Rule 118, respondent No. I is undoubtedly guilty of a major corrupt practice under section 123 (7).
A question however arises whether the fact that these persons were already in the employ of respondent No. I and were not specially engaged for purposes of election, would take them out of purview of Rule 118.
In our judgment it would not." Then, dealing with the question as to whether the return of election expenses made by the appellant was false in that it did not include anything on account of the services of the 25 employees, the Tribunal says: " We have held under Issue No. 3 that respondent No. I did utilise the services of 25 of his employees for furthering his election prospects.
Now there is no evidence on the record to show that these employees 215 were engaged specifically for the purposes of election.
All of them had been in the service of respondent No. I for a long time before the election in normal course.
Therefore, there is no reason why the emoluments paid should be charged to the election account.
However, if any additional allowances were paid to these persons that would certainly be chargeable to the election account.
But there is no evidence on the record to show that any such allowance was paid.
" Now, the question is whether on these facts there is a contravention of Rule 118.
The contention of Mr. Solicitor General for the appellant is that the Rule would apply only if 'the employment of the persons was specifically for work in connection with the election and such employment was for payment.
In other words, according to him it is only employment ad hoc for the election that ' is within the mischief of the Rule.
On behalf of the respondent Mr. N. C. Chatter bee contends that it is not necessary for the Rule to operate that there should have been an employment specially for the purpose of the election, and that it would be sufficient if the persons who did work in connection with the election were in the employment of the candidate, and that employment carried with it payment of salary or remuneration.
In our opinion, neither of these contentions is wellfounded.
Rule 118 does not require that the person engaged by a candidate to work in the election should have been specially employed for the purpose of the election.
It is sufficient, on the wording of the Rule, that person is employed in connection with the election.
At the same time, the requirements of Rule 118 are not satisfied by proving merely that the person does work in connection with the election.
That work must be done under a contract of employment.
Thus, if the candidate has been maintaining a regular staff of his own and its members have been doing personal service to him and he has been paying them and then the election supervenes, and off and on he sets them on election work but they continue to do their normal work as members of his staff, it cannot 216 be said of them that they have been employed in connection with the election.
But if, on the other hand, he takes them out of their normal work and puts them on whole time or substantially whole time work in connection with the election, that would amount to converting their general employment into one in connection with the election.
It will be a question of fact in each case whether what the candidate has done amounts merely to asking the members of the staff to do casual work in connection with the election in addition to their normal duties, or whether it amounts to suspending the work normally done by them and assigning to them election work instead.
Then again, it is a condition for the application of the Rule that the employment of the person must be for payment.
If the members of the staff continue to do their normal work and do casual work in connection with the election, the payment of salary to them would be a payment on account of their employment as such members of the staff and not in connection with the election.
Rule 118 would not apply to that case, as there is neither an employment in connection with the election, nor a payment on account of such employment.
Indeed, the salary paid to the members would not even be election expenses liable to be included in the return.
But if, in the above case, the members are paid extra for their work, such extra payment will have to be included in the return of election expenses, though it 'may be that Rule 118 itself might have no application for the reason that there is no employment for election and the payment is not in respect of such employment.
If, however, the members of the staff are switched off from their normal work and turned on to election work so that it could be said that work has been assigned to them in supersession of their normal work, then the salary paid to them could rightly be regarded as payment for work in connection with election within Rule 118.
That being our view on the construction of Rule 118, we shall now proceed to consider what the position is, on the authorities cited before us.
217 In the Hartlepools Case(1) the question arose with reference to one Butler who was the general secratary of Mr. Furness, the returned candidate, and certain clerks in a company in which Mr. Furness, had considerable influence.
All these persons had taken part in the election.
As regards Butler, Phillimore J. observed that if it could be held that at the time ' of his employment his duties included also work in elections if and when they, were held, then a proportionate part of his salary should be regarded as election expenses; but, on the facts, he held that it was no part of the duties of Butler in respect of his standing employment to be election agent when called upon, and that, therefore, no part of his salary need be shown as election expenses.
As put by Pickford, J., in Ins concurring judgment, Butler was paid " his salary as private secretary and was not paid anything as election agent ".
Counsel for the appellant relies on these observations, and argues that on the finding of the Tribunal that the 25 men had been in service for a, long time, there could be no question, of their having been employed for work in connection with election, and that they were, therefore, neither election agents nor was the salary paid to them payment on account of any employment in connection with the election.
But then, considering the effect of the clerks of the company taking part in the election, Phillimore J. observed: " .
I am certainly inclined to think that if a business man takes his business clerks and employs them for election work which, if he had not business clerks, would be normally done by paid clerks, he ought to return their salaries as part of his expenses." Counsel for respondent strongly relies on these obser vations.
But then, the point was not actually decided by Philimore, J., as the evidence relatinig to the matter was incomplete, and Pickford, J. expressly reserved his opinion on the question.
In view of the remarks of Sankey, J., in the Borough of Oxford Case (2), in the (1) 28 (2) , 56 57 218 course of his argument, it is doubtful,,how far the observations ' of Phillimore, J. quoted above could be accepted as good law.
They Were, however,.
adopted in two decisions of the Election Tribunals of this country, to which our attention was invited by Mr. Chatterjee.
In the Amritsar Case(1), the following observation occurs: We also consider that if any man in the service of the respondent were put on election work, their wages for the period should have been shown in the return.
(See Hartlepools Case(2) ".
The words " put on election work " in this passage suggest that the employees had been taken out of their original work.
As there is no discussion of the present question, the authority of this decision is, in any event, little.
In Farrukhabad Case(3), this passage,, as also the observations of Phillimore, J., we 're quoted, and in accordance therewith, it was held that the salaries of Tilakdhari Singh, Kundan Singh and Drigpal Singh for the period they worked in connection with the election of the respondent Nol should have been shown in the return It was found in that case that Tilakdhari Singh worked exclusively for 30 days in connections with the election and Kundan Singh and Drigpal Singh would appear to have similarly devoted themselves to election work for certain periods.
None of these cases has considered what would amount to employment in connection with election, when the persons had been previously employed on other work; and they throw no light on the present question.
The position may thsu be summed up : (1)For Rule 118 to apply, two conditions must be satisfied, viz., there should have been an employment by the candidate of a person in connection with,an election, and such employment should have been for payment.
(1) [1924] Hammond 's Election Cases 83.
(2) (3) [1927] Hammond 's Election Cases 349.
219 (2) Where a person has been in the employment of the candidate even prior to his election and his duties do not include work in election 'and he takes part in election, whether he is to be regarded as employed in connection with the election will depend on the nature of the work which he performs during the election.
(3) When the work which he does in election is ', casual and is in addition to the normal work for which, he has been employed , he is not within Rule l 18.
if his work in connection with the election is such that he could be regarded as having been taken 'out of his previous work and put on election work, then he would be within Rule 118.
(4) Whether a person who has been previously employed by the candidate on other work should held to have been employed in connection with election is a question of fact to be decided on the evidence in each case.
In the present case, the finding is that 25 persons belonging to the staff of the appellant had taken part in the election.
It has been found that they had been in the service of the appellant for a long time and that their appointment was not colorable for election purposes.
It has also been found that they were not paid anything extra for what work they might have done in connection with the election.
But there is no finding that having regard to the work which they are proved to have done, they must be taken to have been relieved of their original work and put on election work.
In the absence of such a finding, it cannot be held that Rule II 8 had been infringed.
It is possible that the Election Tribunal did not appreciate the true legal position and has in consequence failed to record the findings requisite for a decision on Rule 118, and that would be a good ground on which we could, if the Justice of the case required it, set aside the order and direct the matter to be heard afresh and disposed of by another Tribunal in accordance with law.
But we do not consider that this is a fit case for passing such an order.
The evidence adduced by the first respondent is very 220 largely, to the effect that the appellant 's men did election work in the morning or in the evening, that is , out of office hours.
That shows that the work the staff was in addition to their normal duties, and on the, principles stated above, they could not be held to have been employed in connection with the election.
As the first respondent does not appear himself to have under , stood the true position under Rule 118 and has failed to adduce, evidence requisite for a decision of the question, he must fail, the burden being on him to establish that Rule had been infringed.
In the result, this appeal is allowed, the order of the, Election Tribunal is set aside and the election petition of the first respondent will stand dismissed.
As the parties have each succeeded on one issue and failed on another, they will bear their own costs, throughout.
Appeal allowed.
| The last day for filing the election petition was a Sunday and the day following was a public holiday.
The petition was presented on the next day after the public holiday.
Held, that section 10 of the General Clauses Act was applicable and that the petition was presented within time.
The appellant, who retains a large staff of subordinates, was charged with employing 54 of them for purposes of the election in violation of Rule 118, and with failure to include their salaries in the return of his election expenses.
The election tribunal found that 25 of the old paid employees of the appellant took part in his election campaign, that their number exceeded the statutory number provided by Rule 118 and that consequently the appellant was guilty of a major corrupt practice under section 123 (7) of the Representation of the People Act, 1951.
The tribunal further held that there was no evidence to show that the employees were engaged specifically for the purposes of the election, that they had been in the service of the appellant for a long time and that the emoluments paid to them were not election expenses.
In the result the tribunal set aside the election of the appellant: Held, that where a person has been in the employment of a candidate even prior to his election and his duties do not include election work but he takes part in the election, and the work which he does is casual and is in addition to his normal work, he is not within Rule 118.
But if the work in connection with the election is such that he could be regarded as having been taken out of his normal work and put on election work, then he would be within Rule 118.
Hartlepooles Case, and Borough of Oxford Case, , referred to.
If the members of the staff of a candidate do their normal work and do casual work in connection with the election, the payment of salary to them would be payment on account of their 209 employment as such members of the staff and not in connec tion with the election.
|
Summarize this legal judgement text concisely | Appeals Nos. 279 and 280 of 1955.
Appeal from the Judgment and Order dated July 7 1953, of the Assam High Court in Civil Rules Nos. 147 and 148 of 1952, 47 360 C. K. Dophtary, Solicitor General of India, P. K. Goswami, section N. Mukherji and B. N. Ghosh, for the appellants in both appeals.
Purshottam Tricumdas and Naunit Lal, for respondent No. 2 in C.A. No. 280/56.
Naunit Lal, for respondent No. I in both Appeals.
December 21.
The Judgment of the Court was delivered by BHAGWATI J.
,These two appeals with certificates under article 133 (1) (c) of the Constitution are directed against a judgment of the High Court of Judicature in Assam dismissing the appellants ' application under article 226 challenging the orders of the first respondent Shri B. L. Sen, Deputy Commissioner, Sibsagar, whereby he allowed the applications filed on behalf of the labourers employed in the Teok Tea Estate and the Dalim Tea Estate under section 20 of the (Act XI of 1948), hereinafter referred to as the Act.
On March 11, 1952, the Government of Assam, in exercise of the powers conferred by section 3 read with sub section
(2) of section 5 of the Act issued the following notification: " No. GLR.
352/51/56.
In exercise of the powers conferred by section 3 read with sub section (2) of section 5 of the (XI of 1948), as amended, the Governor of Assam, having considered the advice of the committee appointed under clause (a) of sub section (1) of section 5 of the said Act, is pleased to fix minimum wages, which will come into force with effect from the 30th March, 1952, consisting of basic wages and dearness allowance in terms of clause (1) of sub section 1 of section 4 of the said Act, at the rates as specified in the schedule hereto annexed payable to employees employed in tea plantations in the different districts of Assam.
These rates are exclusive of concessions enjoyed by the workers in respect of supplies of foodstuffs and other essential commodities and other amenities which will continue unaffected.
The existing 361 tasks and hours of work may continue until further orders.
SCHEDULE.
ORDINARY UNSKILLED LABOUR Adult male.
Adult female.
(16 years & above) (16 years & above) Basic D.A. Total.
BasicD.A.Total.
(p.d.) (p.d.) (p.d.)(p.d.)(p.d.)(p.d.
Rest Rs. Rs. of Assam As.12/ As.6/ 1 /21 As.
11/ As.
5 Valley.
By notification No. GLR. 44/51, dated the 16th April, 1952, the said Government introduced the Minimum Wages Rules which, inter alia, provided: "Rule 24.
Number of hours of work which shall constitute a normal working day. (1) The number of hours which shall constitute normal working day shall be (a)in the case of an adult, 9 hours; subject to a maximum of 48 hours in a week; . . . . . . . . . " By another notification No. GLR. 352/51 dated May 12, 1952, the said Government explained that the word " may " mentioned in the notification dated March 11, 1952, will have the force of " shall ".
The result was that in cl.
(2) of the said notification, the last sentence ran as: "The existing tasks and hours of work shall continue until further orders.
Prior to the fixation of the minimum wages (consisting of basic wages and dearness allowance as aforesaid, the labourers engaged in plucking tea leave,% in these tea estates used to be paid basic wages for male labourers at as.
8/ per day for plucking 16 seers of green leaves and for female labourers at as.
6/ per day for plucking 12 seers of green leaves.
This was the work load or task in respect of which the basic wages of as.
8/ and as.
6/ respectively were paid to these labourers apart from the dearness allowance in addition to such basic wages.
If the labourers plucked larger quantities of green leaves they used to be 362 paid by way of ticca extra wages at the rate of 6 ps.
per seer in excess of 16 seers and 12 seers respectively.
It may be noted that the payment of basic wages on the above computation also worked out at the rate of 6 ps.
per seer of green leaves plucked by the labourers.
Even after the fixation of the minimum wages by the said notification, the managers of these tea estates continued to pay to the labourers wages at the rate of 6 ps.
per seer of green leaves plucked by them.
They, however, in view of the fact that as.
12/ per day were fixed as the basic wages for the male labourers and as.
II / per day as the basic wages for the female labourers, refused to make any extra payment to them on the basis of 6 ps.
per seer unless the green leaves plucked by them exceeded 24 seers and 22 seers respectively, thus maintaining their old standard of payment on the basis of 6 ps.
per seer.
The labourers contended that the existing work load or task at the date of the said notification was 16 seers for male labourers and 12 seers for female labourers and they were entitled to such extra payment at the rate of 6 ps.
per seer for leaves plucked by them in excess of the 16 seers and 12 seers respectively.
There was a difference thus in payment, of as.
4/ per day in the case of male labourers and as.
51 per day in the case of female labourers and they claimed that the managers of the tea estates should pay them the basic wages of as.
12/per day and as.
I I/ per day respectively for the work load or task of 16 seers for male labourers and 12 seers for female labourers and extra wages at the rate of 6 ps.
per seer of leaves plucked by them in excess of those quantities.
This claim of theirs was the subject matter of the applications filed on their behalf before the Deputy Commissioner, Sibsagar, under section 20(2) of the Act.
The applicants asked for directions under a. 20(3) to the managers, of the tea estates for payment of the difference between the minimum wages fixed by the Government and the wages actually paid to them from March 30, 1952, which was the date from which the notification came into force.
The managers of the 363 estates contested these applications mainly on two grounds; viz., (1) that the applications were not maintainable under section 20 of the Act, and (2) that there was no fixed workload or task in respect of plucking for earning daily basic wages before the introduction of the minimum wages.
The Deputy Commissioner, Sibsagar, who was the authority appointed under the Act to hear the claims arising out of the payment of less than the minimum rates of wages to these labourers, entertained the applications, recorded evidence and heard arguments addressed to him by both the parties.
As regards the first objection, he held that, if the applicants ' version was true there was a clear case of payment of less than the minimum wages fixed by the Government and the applications were maintainable under section 20 of the Act.
As regards the second objection, he came to the conclusion on the evidence recorded before him that there was a work load or task of 16 seers for male labourers and 12 seers for female labourers in respect of the daily basic wages of as.
8/ and as.
6/ respectively earned by them before the fixation of the minimum wages by the said notification, that such work load or task was the basis of the fixation of the minimum wages consisting, inter alia, of the basic wages of as.
12/ per day for male labourers and as.
II/ per day for female labourers and that the labourers were, therefore, entitled to extra payment for green leaves plucked by them in excess of 16 seers and 12 seers respectively at the rate of 6 ps.
per seer.
He accordingly ordered that the managers must pay the labourers engaged in plucking tea leaves the minimum basic wages at the rate of as.
12/ per day to the male labourers for 16 seers of green leaves and as.
11/ per day to the female labourers for 12 seers of green leaves and extra wages at the rate of 6 ps.
per seer for green leaves plucked in excess of those quantities.
The managers of the estates thereupon filed applications under article 226 of the Constitution before the High Court of Judicature in Assam raising the same contentions which had been negatived by the Deputy Commissioner, Sibsagar.
The High Court dismissed 364 these applications and granted the certificates under article 133(1)(c) and that is how these appeals come before us.
It is urged in the first instance that the notification dated March 11, 1952, fixed only I a minimum time rate ' and no more.
Under section 3 (2) of the Act it was competent to the Government to fix (a) a minimum rate of wages for time work (called " a minimum time rate"), (b) a minimum rate of wages for piece work (called " a minimum piece rate ") or (c) a minimum rate to be applied in the case of employees employed on piece work for the purpose of securing to such, employees a minimum rate of wages on a time work basis (called " a guaranteed time rate ") and what was done by the Government was to fix " a minimum time rate" within the meaning of section 3 (2) (a) so that the labourers were to be paid the basic wages mentioned in the Schedule regardless of their out turn of work.
If this contention is correct, the labourers would not be entitled to any extra wages for the quantities of green leaves plucked by them in excess of the 16 seers or 12 seers per day which was alleged to be the existing work load or task at the date of the notification.
It is, therefore ', urged that prior to such fixation of minimum wages there was no work load or task for the labourers engaged in plucking tea leaves.
This contention is obviously unsound.
Both the Deputy Commissioner, Sibsagar, and the High Court found as a fact that before the fixation of the minimum 'wages as above, there was a basic work load or task of 16 seers of leaves for the male labourers and 12 seers of leaves for the female labourers.
This was proved by the evidence of the Hazira Moharers of these estates and this was recognized by the Government itself when it stated in the notification that " the existing tasks and hours of work shall continue until further orders.
" If the minimum basic wages were fixed irrespective of existing work load or task and what was fixed was " a minimum time rate " as contended by the appellants there was no need whatever to mention this in the notification.
The direction that the existing workload or task was to continue until further orders on the 365 contrary goes to show that the basic wages mentioned in the Schedule were correlated to the existing workload or task and as.
12/ for the male labourers and as.
11/ for the female labourers were fixed in regard to the existing work load or task of 16 seers of tea leaves to be plucked by the male labourers and 12 seers of tea leaves to be plucked by the female labourers.
It is argued that the continuance of the existing work load or task which was thus provided for had no relation to the basic wages which were fixed for the male and female labourers respectively but was only intended to prevent the employers from increasing the existing work load or task with a view to make up for the increase in basic wages.
This argument, however, does not take count of the fact that there was existing at the date of the notification a work load or task which was the basis of the payments used to be made to the labourers, the basic wages paid to them being calculated at the rate of 6 ps.
per seer of tea leaves plucked by them.
The labourers were thus being paid the basic wages of as.
8/ for male labourers and as.
6/for female labourers for the work load or task of plucking 16 seers and 12 seers of tea leaves respectively and the sole intention of the Government in issuing the notification was to increase these basic wages of as. 8/and as.
6/ to as.
12/ and as.
II/ respectively while maintaining the same basic work load or task assigned to the male and female labourers.
If the intention was not to correlate these basic wages to the basic work load or task which already existed and if the same state of affairs was to continue, viz., that the labourers would continue to be paid the basic wages on the computation of 6 ps.
per seer of green leaves plucked by them, there was no sense whatever in increasing the basic wages from as.
8/ to as.
12/ for male labourers and from as.
6/ to as.
II/ for female labourers as was sought to be done by issuing the notification in question.
The acceptance of the contention of the appellants would mean that no advantage whatever was sought to be conferred by the Government on the labourers engaged in plucking leaves in these tea estates which intention can scarcely be 366 attributed to the Government.
We are, therefore, of opinion that what was fixed by the notification was not merely " a minimum time rate" irrespective of the existing work load or task which used to be performed by the labourers but was a ' minimum wage which, though fixed for time work, was necessarily correlated to the work load or task then being performed by these labourers so that whatever extra work was done by the labourers in excess of the existing work load or task of plucking 16 seers of tea leaves in the case of male labourers and 12 seers of tea leaves in the case of female labourers had to be paid for in accordance with the practice then prevailing, whether it was based on agreement or ticca or custom, at the rate of 6 ps.
per seer.
The conclusions reached in this behalf both by the Deputy Commissioner, Sibsagar, and the High Court are, therefore, correct and cannot be challenged.
The appellants, however, contend that this is not a case of payment of less than the minimum rates of wages and the claims, if any, of the labourers do not fall within section 20 of the Act.
The tea estates in question have never refused to pay and are in fact paying to the labourers the basic wages of as.
12/ per day for male labourers and as.
II / per day for female labourers and the grievance, if any, of the labourers is that they have not been paid the extra wages calculated on the basis of 6 ps.
per seer for tea leaves plucked by them in excess of the basic work load or task of 16 seers for male labourers and 12 seers for female labourers.
This claim of the labourers, therefore, amounts to a claim for extra wages over and above the basic wages of as.
12/ and as.
II/ per day respectively which are being paid to them and, therefore, is not a claim arising out of the payment of less than the minimum rates of wages within the meaning of section 20(1) of the Act and the Deputy Commissioner, Sibsagar, had no jurisdiction to entertain such claim.
Section 20 so far as is material for our purposes provides: " 20.
Claims. (1)The appropriate Government may, by notification in the official Gazette, appoint any Commissioner 367 for Workmen 's Compensation or other officer with experience as a Judge of a Civil Court or as a stipendiary Magistrate to be the Authority to hear and decide for any specified area all claims arising out of payment of less than the minimum rates of wages to employees employed or paid in.
that area.
(2)Where an employee is paid less than the minimum rates of wages fixed for his class of work under this Act, the employee himself, or any legal practitioner or any official of a registered trade union authorised in writing to act on his behalf, or any Inspector, or any person acting with the permission of the Authority appointed under sub section (1), may apply to such Authority for a direction under sub.
section (3):. . . (3)When any application under sub section (2) is entertained, the Authority shall hear the applicant and the employer or give them an opportunity of being heard, and after such further enquiry if any as it may consider necessary, may, without prejudice to any other penalty to which the employer may be liable under this Act, direct the payment to the employee of the amount by which the minimum wages payable to him exceed the amount actually paid,, together with the payment of such compensation as the Authority may think fit, not exceeding ten times the amount of such excess and the Authority may direct payment of such compensation in cases where the excess is paid by the employer to the employee before the disposal of the application.
(6) Every direction of the Authority under this section shall be final.
It is argued that the authority appointed under section 20(1) of the Act is invested with the powers of hearing and deciding claims arising out of the payment of less than the minimum rates of wages and is authorised to hear the applicant and the employer or give them an opportunity of being heard, and, after such further enquiry, as it may consider necessary, to give directions under section 20(3) of the Act which directions are final and not subject to any appeal or 368 revision by any higher authority.
Such drastic powers could not have been meant to be exercised when there are complicated questions of law or fact but could be exercised only in cases where the, quantum of minimum wages fixed by the notification in question could be determined by the authority on a plain reading of the terms, thereof.
Then and then only would the authority have jurisdiction to entertain such claims and give the necessary direction,% having the attribute of finality.
In the instant cases before us, not only did the matters involve complicated questions of fact which required recording of evidence by the authority but they also involved the construction of the notification which was by no means felicitously worded.
The existing tasks which were to continue until further orders were not at all patent and if the determination thereof had to be made by the authority appointed under section 20(1) of the Act, it would involve, in cases of dispute, recording of considerable evidence and an adjudication of the same after a consideration of the arguments advanced before the authority by both the parties.
There is in the instant cases moreover a further difficulty and it is that there are two rival contentions which can, with equal force, be urged by the respective parties.
The appellants contend that they have all throughout been paying to the laborers, after the date of the notification in question, basic wages at the rate of as.
12/ per day for male labourers and as.
1 1 / per day for the female labourers and there is no instance which has been cited on behalf of the respondents where, anything less then the minimum basic wages thus fixed by the Government has ever been paid.
The claim of the labourers comes to this that they have not been paid the extra wages for plucking green leaves in excess of the basic work load or task of 16 seers and 12 seers respectively.
Such claim for extra wages certainly does not amount to a claim arising out of the payment of less than the minimum rates of wages.
It is, on the other hand, contended on behalf of the respondents that the basic wages of as.
12/. per day for male labourers and as.
II/ per 369 day for female labourers fixed under the notification are correlated to the existing work load, or task of plucking green leaves weighing 16 Beers and 12 seers respectively and if they are entitled to the payment of these basic wages on their putting forward that much quantity of work, the non payment by the managers.of these tea ' estates to them of any extra wages on the computation of 6 ps.
per extra seer un less they plucked 24 seers and 22 seers of green leaves respectively is tantamount to nonpayment of the; minimum basic wages of as.
12/ and as.
11/ respectively as fixed in the notification.
"We do not, propose to decide this question of jurisdiction as in the instant cases we have, in addition to the determination of the Deputy Commissioner, Sibsagar, the adjudication of the main disputes between the parties by the High Court itself.
I Whatever infirmities might possibly have attached to the orders passed by the Deputy Commissioner, Sibsagar, on the score of want of jurisdiction, we feel that having regard to the circumstance that the matters have been pending since September, 1952, right up to the end of the year 1956, no useful purpose will be served by our interfering at this stage, as the Deputy Commissioner, Sibsagar, and the High Court both came to the same conclusion, a conclusion which we also have endorsed above, that the labourers are entitled to be paid the basic wages of as.
12/ per day,for male labourers and as.
11/ per day for female labourers for the work.:load or task of plucking 16 seers and 12 seers of green leaves respectively and they are entitled to extra wages for every seer of green leaves plucked by.
them I over and above these quantities of 16 seers and 12 ,seers respectively, at the.
computation of 6 Ps.
per seer.
There are moreover special reasons why we should not interfere with the orders of the Deputy Commissioner, Sibsagar, in these appeals.
The matters do not come to us by way of appeal directly from the orders of the Deputy Commissioner, Sibsagar.
They were the subject, in the first instance, of proceedings under article 226 of the Constitution in the High Court 370 of Assam.
Proceedings by way of certiorari are not of course ".
(Vide Halsbury 's Laws of England ', Hailsham Edition, Vol. 9, para 1480 and 1481, pp. 877 878).
The High Court of Assam had the power to refuse the writs if it was satisfied that there was no failure of justice, and in these appeals which are directed, against the orders of the High.
Court in applications under article 226, we could refuse to interfere unless we are satisfied that the justice of the, case requires it.
But we are not so satisfied.
We are of opinion that, having regard to the merits which have been concurrently foundint favour of the respondents both by the De Duty Commissioner,, Sibsagar, and the High (Court, we should decline to interfere.
This being the point of substance which has been decided in favour of the respondents, we are of the opinion that the appeals are liable to be dismissed.
We accordingly dismiss them but having regard to the particular circumstances which we have adverted to before, we order that each party will bear and pay its own costs of these appeals.
Appeals dismissed.
| The labourers were being paid the basic wages of as.
8/ for male labourers and as.
6/ for female labourers for the work load or task of plucking 16 seers and 12 seers of green tea leaves respectively each day.
If the labourers plucked larger quantities of leaves they were paid extra wages at the rate of 6 Ps.
per seer in excess of 16 seers and 12 seers respectively.
The Government issued a notification under section 3 read with section 5 (2) of the , increasing the rates of basic wages to as.
I2/and as.
11/ respectively.
The management thereafter refused to make any extra payment to the labourers at the rate of 6 Ps.
per seer unless the leaves plucked by them exceeded 24 seers and 22 seers respectively.
Held, that the sole intention of the Government in issuing the notification was to increase the basic wages while maintaining the same basic work load or task assigned to the labourers, so that whatever extra work was done by the labourers in excess of the existing work load or task of plucking 16 seers and 12 seers of tea leaves by the male and female labourers respectively, bad still to be paid for at the rate of 6 Ps.
per seer.
Quaere: Whether the claim for the extra wages amounts to a claim arising out of the payment of less than the minimum rates of wages within the meaning of section 20 (2) of the .
A writ of certiorari cannot be had as a matter of course.
The High Court is entitled to refuse the writ if it is satisfied that there was no failure of justice.
The Supreme Court declines to interfere, in appeal, with the discretion of the High Court unless it is satisfied that the justice of the case requires such interference.
|
Summarize this legal judgement text concisely | Appeals Nos. 333 335 of 1955 and Petitions Nos. 65, 182 and 203 of 1956.
Appeals by special leave from the judgment and order dated April 15, 1955, of the Punjab High Court at Chandigarh in Civil Writs Nos.
131 133 of 1955 and Petitions under Article 32 of the Constitution of India for the enforcement of fundamental rights.
Veda Vyasa, Bhagirath Das and M. L. Kapur for the appellants.
Veda Vyasa, section K. Kapur and N. H. Hingorani, forthe petitioners in Petitions Nos. 65 and 182 of 195.5.
Veda Vyasa, Bhagirath Das and B. P. Maheshwari, for the petitioner in Petition No. 203 of 1956.
section M. Sikri, Advocate General of Punjab, Jindra Lal and T. M. Sen, for respondent No. 2 in the Appeals and respondents Nos. 1 and 2 in the Petitions.
Sadhan Chandra Gupta, Bawa Shiv Charan Singh and Janardhan Sharma, for respondent No. 3 in the appeals and in Petitions Nos. 182 and 203 of 1956.
Porus A. Mehta and T. M. Sen, for the Intervener in Appeal No. 333 of 1955 (Attorney General of India on behalf of the Union of India).
337 Veda Vyasa, section K. Kapur and N. H. Hingorani, for the Interveners in the appeals (petitioners in Petitions Nos. 65 and 182 of 1956).
January 10.
The Judgment of the Court was delivered by BHAGWATI J.
These three appeals with special leave from the orders of the High Court of Punjab and three petitions under article 32 of the Constitution challenge the vires of the (XIV of 1947), hereinafter referred to as the Act.
The appellants in the three appeals are engaged in the manufacture and production of textiles.
There were disputes between them and their workmen, and, by two notifications each dated March 4, 1955, in regard to the first two of them and by a notification dated February 25, 1955, in respect of the third, the State of Punjab, respondent No. 2, referred the said disputes for adjudication to the 2nd Punjab Industrial Tribunal, Amritsar, respondent No. 1, who entered upon the said references and issued notices to the appellants to file their written statements.
The appellants in Civil Appeal No. 335 of 1955 filed their written statement on March 31, 1955, without prejudice to their contentions that respondent No. 2 was not competent to refer the disputes for adjudication by respondent No. I and that respondent No. I had no jurisdiction to entertain the reference.
The appellants in Civil Appeals Nos. 333 and 334 of 1955 were called upon to file their written statements on or before April 23, 1955, which they did raising the same objections as to the competency_ of respondent No. 2 and the jurisdiction of respondent No. 1.
On April 14, 1955, however, the appellants in all the three appeals filed writ petitions in the High Court under article 226 of the Constitution against, inter alia, respondents Nos.I and 2 asking for writs in the nature of prohibition restraining respondent No. 1 from proceeding with the references, writs in the nature of certiorari directing respondent No. 1 to transmit the records of the proceedings for being quashed and writs in the nature of mandamus directing respondent No. 2 43 338 to cancel the notifications under which the said references had been made.
The grounds which were urged in support of these applications were that their mills were controlled industries within the definition of the term contained in el.(ee) of section 2 of the Act as amended by section 32 of Act LXV of 1951, that they were engaged in the production and manufacture of textile goods and were a textile industry within the meaning of the word 'textiles" as mentioned in the First Schedule to Industry (Development and Regulation) Act, 1951, and had been declared an industry of which the Union Government had taken control within the meaning of the said Act, that the disputes purporting to be referred by respondent No. 2 to respondent No. 1 were industrial disputes concerning a controlled industry specified in this behalf by the Central Government and that, therefore, the appropriate Government for the purposes of the Act so far as their mills were concerned was the Union Government and not respondent No. 2 and that respondent No. 2 had no jurisdiction or authority to refer the existing or apprehended disputes between them and their workmen to respondent No. I and the references being invalid there was no jurisdiction in respondent No. 1 to entertain the said references.
These petitions came up for hearing before a Division Bench of the High Court consisting of the learned Chief Justice and Mr. Justice Kapur who dismissed the same in limine observing that they were premature, obviously meaning that respondent No. I could determine the objection in regard to its jurisdiction to entertain the references and unless and until it did so the appellants had no cause of action to file the said petitions.
It appears that on or about April 12, 1955, a Division Bench of the said High Court consisting of the learned Chief Justice and Mr. Justice Falshaw had admitted a writ petition based on the very same grounds and had granted a stay of proceedings before respondent No. 1 therein.
It further appears that on April 18, 1955, the very same Bench which dismissed the petitions of the appellants in limine on April 15, 1955, admitted a writ petition filed by the Saraswati 339 Sugar Syndicate Ltd., inter alia, against respondent No. 2 wherein, besides the grounds urged in their writ petitions, an additional ground questioning the constitutionality of section 10 of the Act had also been urged and ordered the stay of proceedings before the Industrial Tribunal.
The appellants filed on April 18, 1955, applications before the High Court for leave to appeal, to this Court and for stay of further proceedings before respondent No. 1.
Notices were issued by the High Court to the respondents in those applications but stay of further proceedings was refused.
The appellants having come to know of the order passed by the Division Bench of the High Court on April 18, 1955, on the writ petition of the Saraswati Sugar Syndicate Ltd., filed petitions on April 19,1955, for review of the orders dated April 15, 1955, dismissing their writ petitions in limine.
In these petitions for review the appellants, with a view to bring their applications within the ratio of the writ petition of the Saraswati Sugar Syndicate Ltd., alleged that their counsel had inadvertently failed to raise the contention that section 10 of the Act was ultra vires the Constitution.
The High Court was prepared to issue notices to the respondents but was not prepared to grant the stay of further proceedings with the result that on the request of the counsel for the appellants the said petitions for review were dismissed on April 20, 1955.
On April 25, 1955, the appellants filed petitions in this Court for special leave to appeal under article 136 of the Constitution.
In these petitions for special leave, they contended that section 10 of the Act was void and infringed the fundamental right guaranteed under article 14 of the Constitution "being discriminatory in its ambit".
Special leave was granted to all the three appellants by this Court on May 2, 1955, and an order for consolidation of these appeals was made on June 1, 1955.
This plea as to the unconstitutionality of section 10 of the Act was elaborated by the appellants in para 12 of their statement of the case filed before us: " That section 10 of the is also ultra vires of the Constitution of India,as it conflicts with the provisions of article 14 of the 340 Constitution.
The section is discriminatory in ambit and scope.
It confers on the appropriate Government unregulated and arbitrary powers inasmuch as no rules have been made to justify differentiation between parties similarly situated and circumstanced in every respect.
There is no rational basis of classification providing different procedures for dealing with the same or similar matters.
The reference to a Board under section 10 (1) (c) of the Act is certainly more beneficial, speedy, inexpensive and less cumbersome."
Not content with merely challenging the constitutionality of section 10 of the Act, the appellants in Civil Appeal No: 333 of 1955 filed in this Court on October 3, 1956, a petition under article 32 of the Constitution, being Petition No. 203 of 1956, challenging the vires of the whole Act on various grounds which had not been urged in the proceedings taken by the appellants till then.
We shall not enumerate all these grounds but refer at the appropriate place only to those contentions which were urged before us by the learned coun sel at the hearing.
A similar petition under article 32 of the Constitution had been filed by the Atlas Cycle Industries Ltd., on September 15, 1956, being Petition No. 182 of 1956, containing identical grounds of attack against the constitutionality of the Act.
A notification had been issued on April 27, 1956, by the State of Punjab referring the industrial disputes between them and their workmen for adjudication by the 2nd Industrial Tribunal and they asked for a writ of certiorari quashing the said reference and writs of mandamus and/or prohibition directing the State of Punjab to withdraw the said reference from the Industrial Tribunal and prohibiting the Industrial Tribunal from proceeding with the same.
Petition No. 65 of 1956 had been filed on March 21, 1956, by five workmen of the Indian Sugar and General Engineering Corporation.Ltd., carrying on an undertaking in the name and style of the Saraswati Engineering Works.
A notification had been issued by the State of Punjab referring the disputes which had 341 arisen between them and their workmen to the 2nd Industrial Tribunal and one of the matters thus referred for adjudication was whether the workmen dismissed or discharged after July 15, 1955, should be reinstated.
The petitioners were temporary hands employed by the Saraswati Engineering Works in place of the permanent workmen who had been dismissed or discharged after July 15, 1955, and they, in the interests of themselves and 200 other employees who were in the same category, apprehended that if the Industrial Tribunal ordered the reinstatement of the permanent workmen who had been dismissed or discharged, they would be out of employment.
They had apparently the support of the Saraswati Engineering Works who were keen to retain them in their employ and filed the petition challenging the constitutionality of the Act on identical grounds.
Besides thus challenging the vires of the Act, they also urged in their petition that the undertaking was a controlled industry and the appropriate Government which was competent to make the reference was the Union Government and not the State of Punjab.
They also asked for the same reliefs as in Petition No. 182 of 1956.
The Attorney General of India asked for and obtained leave to intervene on behalf of the Union of India at the hearing of the Civil Appeals Nos.
333 to 335 of 1955 and so did the petitioners in both the Petitions Nos.
182 of 1956 and 65 of 1956.
These petitions along with Petition No. 203 of 1956 were set down for hearing and final disposal after the Civil Appeals Nos. 333 to 335 of 1955 and all of them were heard together.
This common judgment will govern the decision in all.
It may be noted at the outset that the question as to the various undertakings being controlled industries and the appropriate Government for making the references of the industrial disputes arising between them and their workmen being the Union Government and not the State of Punjab which was the very basis of the writ petitions filed in the High Court and was also one of the grounds oil which special leave.
to 342 appeal had been obtained from this Court was ultimately abandoned in the course of the hearing before us and nothing more need be said about it.
The only contention which has been urged before us in these three special leave appeals and the three article 32 petitions is in regard to the vires of the Act.
In order to appreciate the grounds of attack against the constitutionality of the Act it is necessary to briefly survey the, provisions of the Act as it stood before the amendments made by the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956 (XXXVI of 1956).
The Act was passed, as the preamble shows, with the express purpose of making provision for the investigation and settlement of industrial disputes and for certain other purposes therein appearing.
Section 2(j) defines " industry " to mean any business, trade, undertaking, manufacture or calling of employers and includes any calling, ,service, employment, handicraft or industrial occupation or avocation of workmen.
Section 2(k) defines an " industrial dispute " to mean 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 nonemployment or the terms of employment or with the conditions of labour, of any person.
Chapter II of the Act sets out the authorities under the Act and they are (1) The Works Committee, (2) Conciliation Officers,(3) Boards of Conciliation, (4) Courts of Enquiry, and (5) Industrial Tribunals.
These are different authorities with different powers and the purposes for which they are set up and their functions are prescribed in the Act.
The Works Committee consists of representatives of employers and workmen engaged in a particular establishment and is constituted in the prescribed manner in order to promote measures for securing and preserving amity and good relations between the employers and workmen and to that end to comment upon matters of their common interest or concern and endeavour to compose any material difference of opinion in respect of such matters.
The Conciliation Officers are appointed by notification by 343 the appropriate Government charged with the duty of mediating in and promoting the settlement of industrial disputes.
Boards of Conciliation are constituted by notification by the appropriate Government as occasion arises for promoting the settlement of industrial disputes.
Courts of Enquiry are constituted by notification by the appropriate Government as occasion arises for enquiring into any matter appearing to be connected with or relevant to an industrial dispute.
Industrial Tribunals are constituted by the appropriate Government for the adjudication of indus trial disputes in accordance with the provisions of the Act.
Chapter III provides for reference of disputes to Boards, Courts or Tribunals and the relevant portion of section 10 provides as under: " 10.
(1) Where the appropriate Government is of opinion that any industrial dispute exists or is apprehended, it may at any time, by order in writing (a) refer the dispute to a Board for promoting a settlement thereof; or (b)refer any matter appearing to be connected with or relevant to the dispute to a Court for enquiry ; or (c)refer the dispute or any matter appearing to be connected with, or relevant to, the dispute, to a Tribunal for adjudication: Provided that where the dispute relates to a. public utility service and a notice under section 22 has been given, the appropriate Government shall, unless it considers that the notice ha been frivolously or vexatiously given or that it would be inexpedient so to do, make a reference under this sub section notwithstanding that any other proceedings under this Act in respect of the dispute may have commenced.
" Chapter IV prescribes the procedure, powers and duties of the several authorities.
The Conciliation Officers are enjoined for the purpose of bringing about a settlement of a dispute, without delay to investigate the dispute and all matters affecting the merits and the right settlement thereof and are also empowered to do all such things as they think fit for the purpose of inducing the parties to come to an amicable settlement 344 of the dispute.
If a settlement of the dispute or of any of the matters in dispute is arrived at in the course of conciliation proceedings, they are to send a report thereof to the appropriate Government together with a memorandum of the settlement signed by the parties to the dispute.
If no such settlement is arrived at, the Conciliation Officers have, as soon as practicable and after the close of the investigation, to send to the appropriate Government a full report setting forth the proceedings and steps taken by them for ascertaining the facts and circumstances relating to the dispute land for bringing about a settlement thereof together with a full statement of such facts and circumstances, their findings thereon, the reasons on account of which, in their opinion, a settlement could not be arrived at and their recommendations for the determination of the dispute.
If, on a consideration of such report the appropriate Government is satisfied that there is a case for reference to a Board or Tribunal.
, it may make such reference.
The Boards of Conciliation to whom a dispute may be referred under the Act are enjoined to endeavour to bring about a settlement of the same and for this purpose they are, in such manner as they think fit and without delay, to investigate the dispute and all matters affecting the.
merits and the right settlement thereof and are also empowered to do all such things as they think fit for the purpose of inducing the parties to come to a fair and amicable settlement of the dispute.
If a settlement of the dispute or of any of the matters is arrived at in the course of the conciliation proceedings they are to send a report thereof to the appropriate Government together with a memorandum of the settlement signed by the parties to the dispute.
If no such settlement is arrived at they are, as soon as practicable after the close of the investigation, to send to the appropriate Government a full report setting forth the proceedings and steps taken by them for ascertaining the facts and circumstances relating to the dispute and for bringing about a settlement thereof together with a full statement of such facts and circumstances, their findings thereon the reasons on account of which, in their opinion, a ' 345 settlement could not be arrived at and their recommendations for the determination of the dispute.
The Courts of Enquiry are enjoined to enquire into the matters referred to them and report thereon to the appropriate Government.
The Industrial Tribunals to whom an industrial dispute may be referred for adjudication are to hold their proceedings expeditiously and, as soon as, practicable on the conclusion thereof, submit their award to the appropriate Government.
Section 19, sub sections(3), (4) and (6)prescribe the period of operation of awards: " 19.
(3) An award shall, subject to the provisions of this section, remain in operation for a period of one year: Provided that the appropriate Government may reduce the said period and fix such period as it thinks fit: Provided further that the appropriate Government may, before the expiry of the said period, extend the period of operation by any period not exceeding one year at a time as it thinks fit so, however, that the total period of operation of any award does not exceed three years from the date on which it came into operation.
(4) Where the appropriate Government, whether of its own motion or on the application of any party bound by the award, considers that since the award was made, there has been a material change in the circumstances on which it was based, the appropriate Government may refer the award or part of it to a Tribunal for decision whether the period of operation should not, by reason of such change, be, shortened and the decision if the Tribunal on such reference shall subject to the provision for appeal, be final.
(6) Notwithstanding the expiry of the period of operation under sub section (3), the award shall continue to be binding on the parties until a period of two months has elapsed from the date on which notice is given by any party or parties intimating its intention to terminate the award." Chapter V contains provisions in regard to the proof strikes and outs and declares what are illegal strikes and lock outs for the purpose of the Act, 44 346 Chapter V A was introduced by Act XLIII of 1953 and contains provisions in regard to the lay off and retrenchment of workmen.
The other provisions of the Act are not relevant for the purpose of this enquiry and need not be referred to.
It follows from this survey of the relevant provisions of the Act that the different authorities which are constituted under the Act are set up with different ends in view and are invested with powers and duties necessary for the achievement of the purposes for which they are set up.
The appropriate Government is invested with a discretion to choose one or the other of the authorities for the purpose of investigation and settlement of industrial disputes and whether it sets up one authority or the other for the achievement of the desired ends depends upon its appraisement of the situation as it obtains in a particular industry or establishment.
The Works Committees are set up with the object of avoiding such a clash of interest or material differences of opinion as would otherwise lead to industrial disputes.
If the measures adopted by the Works Committees do not achieve the end in view and industrial disputes arise or are apprehended to arise between the employers and the workmen, Conciliation Officers may be appointed by the appropriate Government charged with the duty of mediating in and promoting settlement of industrial disputes.
If the Conciliation Officers succeed in bringing about a settlement between the employers and the workmen, such settlements are to be signed by the parties to the disputes ; but if in spite of the endeavours of the Conciliation.
Officers properly directed in that behalf no settlement is arrived at between the parties, the Conciliation Officers are to send a full report in the manner indicated above so that the appropriate Government may have before it complete materials in order to enable it to come to a conclusion whether there is a case for reference to a Board or Tribunal at the case may be.
If the appropriate Government is satisfied that there is a case for reference to, a Board of Conciliation, it may constitute such Board for promoting the settlement of the industrial dispute consisting of a Chairman and 2 or 4 other members 347 as it thinks fit, charged with the duty of doing all such things as it thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement of the dispute.
If the Board succeeds in arriving at a settlement, a report thereof together with a memorandum of the settlement will be sent by it to the appropriate Government but if no such settlement is arrived at the Board will, send to the appropriate Government a full report in the manner indicated above including its recommendations for the determination of the dispute.
It may be noted that a reference to the Board of Conciliation is but a preliminary step for the settlement of the industrial dispute and the report made by it in the event of a failure to bring about such settlement will furnish materials to the appropriate Government to make up its mind whether it will refer the dispute for adjudication to an Industrial Tribunal.
Before, however, any such reference is made by the appropriate Government it may set up a Court of Enquiry for the purpose of enquiring into any matter appearing to be 'connected with or relevant to an industrial dispute.
The Court of Enquiry will enquire into those matters and report thereon to the appropriate Government within six months from the commencement of the enquiry.
That report will furnish materials to the appropriate Government for finally determining whether the industrial dispute shall be referred by it for adjudication to the Industrial Tribunal.
It may be that the report of the Court of Enquiry discloses circumstances under which the appropriate Government considers that it is not necessary to refer the industrial dispute for adjudication to the Industrial Tribunal.
In that event the matter will end there and.
the appropriate, Government may await further developments before referring the industrial dispute for adjudication to the Industrial Tribunal.
If,, on the other hand, the materials embodied in the report of the Court of Enquiry disclose circumstances which make it necessary for the appropriate Government to refer the industrial dispute for adjudication to the Industrial Tribunal, the appropriate Government will constitute an Industrial Tribunal for adjudication 348 of the industrial dispute in accordance with the provisions of the Act.
The Industrial Tribunal would then adjudicate upon such dispute and submit its award to the appropriate Government.
These are the steps which are contemplated in the manner indicated in section 10 of the Act for reference of disputes to Boards, Courts or Tribunals.
It is not necessary that all these steps should be taken seriatim one after the other.
Whether one or the other of the steps should be taken by the appropriate Government must depend upon the exigencies of the situation, the imminence of industrial strife resulting in cessation or interruption of industrial production and breach of industrial peace end angering public tranquility and law and order.
If the matter brooks delay the appropriate Government may start conciliation proceedings culminating in a reference to a Board of Conciliation and also Court of Enquiry, if need be, before a fulfledged.
reference is made to.
an Industrial Tribunal If, on the other hand, the matter brooks no, delay the appropriate Government may possibly refer the dispute to a Board of Conciliation before referring it for adjudication to an Industrial Tribunal or may straightaway refer it for adjudication by the Industrial Tribunal.
What step would be taken by the appropriate Government in the matter of the industrial dispute must, therefore, be determined by the surrounding circumstances, and the discretion vested in the appropriate Government for setting up one or the other of the authorities for the purpose of investigation and settlement of industrial disputes must be exercised by it having regard to the exigencies of the situation and the objects to be achieved.
No hard and fast rule can be laid down as to the setting up of one or the other of the authorities for the purpose of bringing about the ,desired end which is the settlement of industrial dis putes and promotion of industrial peace and, it is hardly legitimate to say that such discretion as is vested in the appropriate Government will be exercised "with an evil eye and an unequal hand.
" It is contended in the first instance that the provisions of the Act are violative of the fundamental 349 rights enshrined in article 14 and article 19(1) (f) and (g) of the Constitution ; that it is open to the appropriate Government to differentiate between the parties ,similarly placed and circumstanced in every respect and in the absence of any rules made in this behalf the appropriate Government has unregulated and arbitrary powers to discriminate between the parties; that there is no rational basis of classification providing different treatment for different parties and it, is open to the appropriate Government, in one case, to refer the industrial dispute to a Court of Enquiry, and in another case to refer it to an Industrial Tribunal and that the procedures before the Courts of Enquiry and before the Industrial Tribunals are different, the one before the Courts of Enquiry being less onerous and less: prejudicial to the parties than that before the Industrial Tribunals.
It is submitted that the reports of the Courts of Enquiry are quite innocuous whereas the awards of the Industrial Tribunals are binding on the parties and are.
backed up by sanctions behind them, and in regard to the, periods of operation also, it is open to the appropriate Government, in one case to reduce the same to an extent which will make them negligible in point, of time whereas in another case it is open to it to extend the periods even.
upto three years from the dates on.
which the awards came into operation and the appropriate Government may, in the exercise of its unfettered and uncontrolled discretion, adopt different measures in the case of different parties so as to discriminate between them and work to the prejudice of those less fortunately,situated.
It is also contended that these discriminatory provisions being inextricably interwoven with the rest of the provisions of the Act or being such that the Central Legislature would not have enacted the rest of the provisions of the Act without including the same therein, the whole of the Act is ultra vires the Constitution.
We are unable to accept these contentions.
Having regard to the provisions of the Act hereinbefore set out it is clear that section 10 is not discriminatory in its ambit and the appropriate Government is at liberty 350 as and when the occasion arises to refer the industrial disputes arising or threatening to arise between the employers and the workmen to one or the other of the authorities according to the exigencies of the situation.
No two cases are alike in nature and the industrial disputes which arise or are apprehended to arise in particular establishments or undertakings require to be treated having regard to the situation prevailing in the same.
There cannot be any classification and the reference to one or the other of the authorities has necessarily got to be determined in the exercise of its best discretion by the appropriate Government.
Such discretion is not an unfettered or an uncontrolled discretion nor an unguided one because the criteria for the exercise of such discretion are to be found within the terms of the Act itself.
The various authorities are to be set up with particular ends in view and it is the achievement of the particular ends that guides the discretion of the appropriate Government in the matter of setting up one or the other of them.
The purpose sought to be achieved by the Act has been well defined in the preamble? to the Act.
The scope of industrial disputes is defined in section 2(k) of the Act and there are also provisions contained in the other sections of the Act which relate to strikes and lock outs, lay off and retrenchment as also the conditions of service, etc., remaining unchanged during the pendency of proceedings.
These and analogous provision,s sufficiently indicate the purpose and scope of the Act as also the various industrial disputes which may arise between the employers and their workmen which may have to be referred for settlement to the various authorities under the Act.
The achievement of one or the other of the objects in view by such references to the Boards of Conciliation or Courts of Enquiry or Industrial Tribunals must guide and control the exercise.
of the discretion in that behalf by the appropriate Government and there is no scope, therefore, for the argument that the appropriate Government would be in a position to discriminate between one party and the other.
351 Apart from the references to be thus made to the Boards of Conciliation, Courts of Enquiry or Industrial Tribunals, the appropriate Government is also given the powers to prescribe the period of duration of the award made by the Industrial Tribunal.
Normally the award is to be in operation for one year from the date of its commencement.
The circumstances, however, may have changed between the date of the reference and the date of the, award and power is thus given to the appropriate Government to reduce the said period and fix such period as it thinks fit.
Power is also given to the appropriate Government, if the circumstances warrant that decision, to extend the period of operation by any period not exceeding one year at a time as it thinks fit before the expiry of the normal period of one year , provided however that the total period of operation of any award does not exceed three years from the. date on which the same came into operation.
This power is to be exercised, if, in the opinion of the appropriate Government, the circumstances have not so changed as to warrant the parties to the industrial dispute to ask for a change in the terms of the award and in that event the award may continue to be in operation for the maximum period of three years from the date of its commencement.
The case in which there has been a material change in the circumstances on which the award has been based is mentioned in section 19(4) of the Act and there the appropriate Government, whether of its own motion or on an application of any of the parties bound by the award is empowered to refer the award or a part thereof to a Tribunal if it is satisfied about such material change in the circumstances for a decision whether the period of operation should not by reason of such change be shortened and the decision of the Tribunal on such reference, subject to the provision for appeal, is declared to be final.
It appears, therefore, that all the various possibilities are thought of by those who framed this legislation and wide discretion has been given to the appropriate Government to same having regard to the case or 352 to refer the question of the reduction of the period of operation to an Industrial Tribunal in case there has been a material change in the circumstances on which the award was based.
Here also it cannot be urged that there is an unguided and unfettered discretion in the matter of changing the period of operation of the award.
The appropriate Government cannot merely by its own volition change the period without having regard to the circumstances of a particular case.
There is no warrant for the suggestion that such discretion will be exercised by the appropriate Government arbitrarily or capriciously or so as to prejudice the interest of any of the parties concerned.
The basic idea underlying all the provisions of the Act is the, settlement of industrial disputes and the promotion of industrial peace so that production may not be interrupted and the community in general may be benefited.
This is the end which has got to be kept in ' view by the appropriate Government when exercising the discretion which is vested in it in the matter of making the reference to one or the other of the authorities under the Act and also in the matter of carrying out the various provisions contained in the other sections of the Act including the curtailment or extension of the period of operation of the award of the Industrial Tribunal.
We are, of opinion that there is no substance in the contention urged before us that the relevant provisions of the Act and in particular a. 10 thereof are unconstitutional and void as infringing the fundamental rights guaranteed under article 14 and article 19 (1) (f) and (g) of the Constitution.
If these provisions are thus intra vires there is no need to consider the further argument advanced before us that these provisions are so inextricably interwoven with the other provisions of the Act or are such that the Legislature would not haven acted the other provi sions of the Act without, :incorporating the same therein.
It is next contended that the Industrial Tribunals to whom industrial disputes are referred for adjudication by the appropriate Government are legislating in the guise of adjudication and this amounts to delegation 353 of the powers of legislation which it was not competent to the Central Legislature to do.
The argument is that the Industrial Courts 'are not bound to follow the provisions of the ordinary law of the land as enacted in the Indian Contract Act, the Payment of Wages Act, the Workmen 's Compensation Act, the Indian Limitation Act and the like, but are authorised by the terms of the Act to lay down their own code of conduct in regard to industrial relations and their own policy in regard to the promotion of industrial peace.
This, it is submitted is legislation and the Legislature hat in effect abdicated its powers in favour of the Industrial Courts.
The provisions in regard to reinstatement of dismissed or discharged employees, the provisions in regard to lay off and retrenchment and the provisions in regard to strikes and lock outs, amongst others, are pointed out as introducing provisions contrary to the positive law of the land and as laying down a code of conduct or policy, and reference is made in this behalf to a decision of the Federal Court in Western India Automobile Association vs Industrial Tribunal, Bombay, and Others (1) and two decisions of the Madras High Court, viz., The Electro Mechanical Industries Ltd., Madras vs The Industrial Tribunal No. 2 for Engineering Firms and Type Foundries, Fort St. George, Madras, and Another(1) and Shree Meenakshi Mills Ltd. vs State of Madras (3).
It has to be remembered, however, that 'the functions of the Industrial Tribunals, while adjudicating upon the industrial disputes referred to them for adjudication, are quite different from those of arbitration tribunals in commercial matters.
As has been observed by Ludwig Teller in 'Labour Disputes and Collective Bargaining ', Vol. 1, p. 536: " Then too, industrial arbitration may involve the extension of an existing agreement, or the making of a new one, or in general the creation of new obligations or modifications of old ones, while commercial arbitration generally concerns itself with interpretation of (1)[1949] F.C.R. 321.
(3)[1951] IT M.L.J. 382.
(2) [1950] II M.L.J.479.
354 existing obligations and disputes relating to existing agreements.
" It was also observed by the Privy Council in Labour Relations Board of Saskatchewan vs John East Iron Works, Ltd.(1), while referring to a claim for reinstatement by a dismissed employee as one of the typical matters in dispute between employers and employees: " The jurisdiction of the Board (Labour Relations Board). . is not invoked by the employee for the enforcement of his contractual rights: those, whatever they may be, he can assert elsewhere.
But his reinstatement, which the terms of his contract of employment might not by themselves justify, is the means by which labour practices regarded as unfair are frustrated and the policy of collective bargaining as a road to industrial peace is secured.
It is in the fight of this new conception of industrial relations that the question to be determined by the Board must be viewed."
After quoting these observations of the Privy Council, Rajamannar, C. J., pointed out in Shree Meenakshi Mills Ltd. vs State of Madras (2) at p. 388: " The essential object of all recent labour legislation has been not so much to lay down categorically the mutual rights and liabilities of employer and employees as to provide recourse to a given form of procedure for the settlement of disputes in the interests of the maintenance of peaceful relations between parties, without apparent conflicts such as are likely to interrupt production and entail other dangers.
It is with this object that in the United States there has been legislation arranging for the adjustment of conflicting interests by collective bargaining.
In Great Britain there have been Acts like the Industrial Courts Act, 1919, which provides for Industrial Courts to enquire into and decide trade disputes.
There is also provision for Conciliation Boards under the Conciliation Act, 1896.
In fact, our is modelled on these two British Acts.
" (1) (2) [1951] II M.L.J. 382.
355 This being the object of the enactment of the Act by the Central Legislature, the powers vested in the Industrial Tribunals in the matter of the settlement of industrial disputes referred to them for adjudication, wide though they may be but guided as they are by considerations of policy as indicated above, can hardly be characterised as legislative powers.
No doubt they lay down certain general principles to be observed in regard to the determination of bonus, reinstatement of dismissed or discharged employees and other allied topics but they are enunciated mainly with the object of promoting industrial peace while settling particular industrial disputes referred to them.
These principles or rules of conduct, though they are applied as precedents by the Industrial Tribunals while adjudicating upon other similar industrial disputes referred to them, are not rules of law strictly so called and do not amount to legislation by the Industrial Tribunals.
Even if the analogy of the Court,% of Law be applied to the Industrial Tribunals, the Industrial Tribunals at best lay down or declare what the principles or the rules of conduct governing the relations between employers and the employees should be.
A declaration of the principles or rules of conduct governing the relations between the parties appearing before the Industrial Tribunals is quite different from legislation which would be binding on all parties and indeed there is no provision in the Act which confers on the Industrial Tribunals either the power to make rules which would have statutory effect or the power to legislate in regard to certain matters which crop up between employers and employees.
In the absence of any such provision, the mere fact that the Industrial Tribunals, while pronouncing awards in the several industrial disputes referred for their adjudication by the appropriate Government, lay down certain principles or rules of conduct for the guidance of employers and employees, does not amount to exercise of any legislative power and no question of their being invested with.
any legislative powers can arise.
So far as delegated legislation is concerned, abstract definitions of the difference between the judicial and 356 the legislative functions have been offered (See the distinction drawn by Mr. Justice Field in the SinkingFund case (1)), but they are of little use when applied to a situation of complicated facts.
The function of a Court is to decide cases and leading jurists recognize that in the decision of many cases a Court must fill interstices in legislation.
A legislator cannot anticipate every possible legal problem; neither can he do justice in cases after they had arisen.
This inherent limitation in the legislative process makes it essential that there must be some elasticity in the judicial process.
Even the ordinary courts of law apply the principles of justice, equity and good conscience in many cases; e. g., cages in tort and other cases where the law is not codified or does not in terms cover the problem under consideration.
The Industrial Courts are to adjudicate on the disputes between employers and their workmen etc., and in the course of such adjudication they must determine the "rights" and "wrongs" of the claim,% made, and in so doing they are undoubtedly free to apply the principles of justice, equity and good conscience, keeping in view the further principle that their jurisdiction is invoked not for the enforcement of mere contractual rights but for preventing labour practices regarded as unfair and for restoring industrial peace on the basis of collective bargaining.
The process does not cease to be judicial by reason of that elasticity or by reason of the application of the principles of justice, equity and good conscience.
It is not necessary to discuss the various authorities to which we have been referred on the nature and scope of the legislative process.
Suffice it to say that there is neither legislation nor delegated legislation in the awards which are pronounced by the Industrial Tribunals while adjudicating upon the industrial disputes referred to them for adjudication and this contention is devoid of any force.
It is lastly contended that the Act was not within the legislative competence of the Central Legislature inasmuch as the definition of the term " industry " in (1) ; , 761 ; ; , 5i6.357 section 2(j) of the Act comprises industrial as well as non-industrial concerns and the Act which was expressly enacted with the object of investigation and settlement of industrial disputes is not covered by Entry 29 of List III of the Seventh Schedule to the Government of India Act, 1935.
That Entry relates to ",Trade unions; industrial and labour disputes" and it is urged that industrial disputes being the subject of legislation, there was no warrant for defining the term ,industry " so as to include therein labour disputes and those too in non industrial concerns.
The definition of industry contained in section 2(j) of the Act being comprehensive enough to include labour disputes in non industrial concerns, it is not possible to separate the ultra vires part of that definition from the intra vires part of it with the result that the whole of the definition must be held to be ultra vires and in so far as it permeated the whole of the Act, the Act as a whole should be declared void.
This argument is sought to be supported by drawing our attention to certain decisions of the Industrial Tribunals which have included hospitals, educational institutions And even the business of Chartered Accountants within the definition of " industry " contained in the Act and it is urged that if such non industrial concerns are also included in the definition of the term industry.
", the Act is certainly ultra vires Entry 29.
We need not pause to consider whether the decisions of the Industrial Tribunals above referred to are correct.
That will have to be done when the question is raised directly before us for adjudication.
The fact that the Industrial Tribunals have put an extended construction on the term " industry " is no reason for holding that the definition itself is bad or ultra vires.
what we have got to see is whether the definition of the term " industry " is within the legislative competence of the Central Legislature and on a prima facie reading of the same we are not prepared to say that the same is unwarranted or not covered by Entry 29.
A wrong application of the definition to cases which are not strictly covered by it cannot vitiate the definition if otherwise it is not open to challenge.
It 46 358 should be noted that, according to the preamble, the Act was enacted not only for settlement of industrial disputes but for other purposes also.
It is open to the respondents also to justify the definition of the term " industry " as contained in section 2(j) of the Act by having resort to Entry 27 of the same List which refers to ,Welfare of labour; conditions of labour ; provident funds; employers ' liability and workmen 's compensation; health insurance, including invalidity pensions; old age pensions The definition of the term " industry " including as it does any calling, service, employment, handicraft, or industrial occupation or avocation of workmen, would, therefore, be justified under this Entry even if the same is not covered by Entry 29 above referred to.
The Entries in the Legislative Lists should not be given a narrow construction, they include within their scope and ambit all ancillary matters which, legitimately come within the topics mentioned therein.
In the matters before us, moreover, the concerns or undertakings are all industrial concerns and fall squarely within the definition of the term " industry " strictly so called and it is not open to the pursuers, situated as they are, to challenge the same.
This contention also has no substance and must be rejected.
It, therefore, follows that the Act is intra Vires the Constitution and Civil Appeals Nos. 333,334 and 335 of 1955 as also Petitions Nos. 203, 182 and 65 of 1956 must be dismissed.
There will, however, be one set of costs payable by the appellants in Civil Appeals Nos. 333 to 335 of 1955 to the respondents therein So far as Petitions Nos.
203 of 1956, 182 of 1956 and 65 of 1956 are concerned, each party will bear and Pay its respective costs thereof.
Appeals and Petitions dismissed.
| The disputes between the appellants and their workmen were referred to the Industrial Tribunal for adjudication by the appropriate Government, under the provisions of the .
It was contended for the appellants that the reference to the Tribunal was bad because (1) the Act was ultra vires the Constitution inasmuch as its provisions are ,Violative of the fundamental rights enshrined in article 14 and article 19 (1) (f) and (g) of the Constitution, (2) the Industrial Tribunals are legislating in the guise of adjudication,, and this amounts to delegation of the powers of legislation which it was not competent to the Central Legislature to do so, and (3) the definition of the term " industry '. comprises industrial as well as non industrial concerns and, therefore, the Act was not within the legislative competence of the Central Legislature under Entry 29 of List III of the Seventh Schedule to the Government of India Act, 1935.
Held: (1) The , is not unconstitutional and the provisions of the Act do not contravene articles 14 and 19 (1) (f) and (g) of the Constitution.
The basic idea underlying all the provisions of the Act is the settlement of industrial disputes and the promotion of industrial peace so that production may not be interrupted and the community in general may be benefited, and the appropriate Government has, therefore, a discretion in the matter of making the reference to one or other of the Authorities under the Act and also in the matter of carrying out the, various provisions of the Act, including the curtailment or extension of the period 'of 136 preperation of the award of the Tribunal, having regard to the.
exigencies of the situation and the objects to be achieved.
(2) Industrial Tribunals while settling particular industrial disputes referred to them, lay down certain general principles to be observed in regard to the determination of bonus, reinstatement of dismissed or discharged employee,% and other allied topics mainly with the object of promoting industrial peace, but these principles or rules of conduct, though they are applied as precedents by the Industrial Tribunals while adjudicating upon other similar industrial disputes referred to them, are not rules of law and do not amount to legislation.
(3) The Act is not ultra vires the legislature, as the matters included within the definition of the term " industry " are within the legislative competence of the Central Legislature under Entries 27 and 29 of List III of the Seventh Schedule to the Government of India Act, 1935.
|
Summarize this legal judgement text concisely | Nos. 97, 97A, 44, 86 to 88, 111, 112, 85, 158, 211 to 251 and 225 to 229 of 1956.
Under Article 32 of the Constitution of India for the enforcement of Fundamental Rights ' N. C. Chatterji A. K. Sen, B. P. Maheshwari and Tarachan Brijmohan Lal, for the petitioners in Petitions Nos. 97 and 97A of 1956.
N. C. Chatterji and V. section Sawhney, for the petitioners in Petitions Nos.
44., 86 to 88, Ill and 112 of 1956.
N. C. Chatterji and D. N. Mukherji, for the petitioners in Petition No. 85 of 1956.
Purshottam Tirukumdas and 0.
P. Lal, for the petitioners in Petitions Nos.
211 to 215 of 1956.
section C. Isaacs and K. R. Chaudhuri.
for the petitioners in Petitions Nos.
225 to 229 of 1956.
Bhagirth Das and M. L. Kapur, for the petitioner in petition No. 158 of 1956.
C. K. Daphtary, Solicitor General of India, G. N. Joshi, Porpus A. Mehta and R. H. Dhebar, for the respondents (Union, of India, the Central Board of Revenue and various Income tax Officers in all petitions.) B. Sen and P. K. Ghose, for the State of West Bengal (Respondents Nos. 2 and 3 in Petitions Nos.211 to 215 of 1956).
December 21.
The Judgment of the Court was delivered by BHAGWATI J.
These petitions under article 32 of the Constitution raise a common question of law whether section 5 (7A) of the Indian Income tax Act, hereinafter 236 called the Act, is ultra vires the Constitution as infringing the fundamental rights enshrined in article 14 and article 19 (1) (g).
The facts which led to the filing of the petitions 'nay be shortly stated.
petitions Nos.
97 & 97 A of 1956: The petitioners are M/s. pannalal Binjrai, Oilmill owners, merchants and commission agents, carrying on business at Sahibganj in the district of Santhal Pargans, having their branch at 94 Lower Chitpur Road, Culcutta, petitioner No. 1, and R. B. Jamuna Das Chowdhury, resident of the same place and erstwhile karta of the Hindu undivided family, which carried on business in the name and style of M/S. Pannalal Binjr petetioner No. 2.
Before September 28, 1954, they, being assessed by the Income tax officer, Special Circle, Patna.
On September 28, 1954, the Central Board of Revenue made an order transferring their cases to the Income.tax Officer, Central Circle XI, Calcutta.
On January 22, 1955, the Central Board of Revenue transferred the cases of petitioner No. 2 to the Income tax Officer Central Circle VI,Delhi, and on July 12, 1955, it similarly transferred the cases of petitioner No. I to the same officer.
Prior to June 29, 1959, he had been assessed to income tax by the Income tax Officer, Special Survey Circle VII, Calcutta.
On June 29, 1955, the Central Board of Revenue transferred his case to the Income tax Officer, Special Circle, Ambala,, and the said officer continued the proceedings in the transferred case and also instituted further proceedings against the petitioner and assessed him under section 23 (4) of the Act for the assessment years 1946 47 and 1947 48.
Demands were made upon the petitioner for payment of the amount of income tax thus assessed whereupon he filed this petition impeaching the validity of the order of the Central Board 'of Revenue dated June 29, 1955, and the proceedings entertained by the Income tax Officer, Special ' Circle, Ambala,on the ground that section 5 (7A) of the Act was ultra vires the Constitution.
Before October 20, 1953, they were being assessed by the Income tax Officer,, Hoshiarpur, but on that date their case was transferred under section 5 (7A) of the Act by the Commissioner of Income tax to the Income tax Officer, Special Circle, Ambala.
The said officer continued the said case and reopened the assessment for the years 1944 45 to 1050 51 and completed the assessment for the assessment, years 1947 48, 1950 51 and 1951 52.
These petitioners also thereupon filed the petition challenging the validity of the order of transfer made by the Commissioner of Income tax on October 20, 1953, and the proceedings entertained by the Income tax Officer, Special Circle, Ambala, thereafter, on the same ground of the ultra vires character of section 5 (7A) of the Act.
of M/s bhagwan Das Sud & Sons and the cases of both these petitionrs were transferred to the Income tax Officer, Special 238 Circle, Ambala, as above, by the said respective orders.
Petitions Nos. 86, 87, 88, 111, 112 and 158 of 1956: These petitions may be compendiously described as the Amritsar group.
The petitioner in Petition No. 86/56 is Sardar Gurdial Singh, son of section Narain Singh.
The petitioner in Petition No. 87/56 is Dr. Sarmukh Singh, son of section Narain Singh.
The petitioner in Petition No. 112156 is section Ram Singh, soil of section Narain Singh.
These three are brothers and the petitioner in Petition No. 88/56 is the father, section Narain Singh, son of section Basdev Singh.
The father and the three sons were the directors in the Hindustan Embroidery Mills (Private) Ltd., petitioner No. 1 in Petition No. 111/56, which is located at Chheharta near Amritsar.
All these petitioners were, prior to the orders of transfer made by the Commissioner of Income tax under section 5(7A) of the Act, being assessed by the Income tax Officer, 'A ' Ward, Amritsar, but their cases were transferred on or about June 29, 1953, from the Income tax Officer, 'A ' Ward, Amritsar, to the Income tax Officer, Special Circle, Amritsar.
These cases were continued by the latter officer and notices under a. 34 of the Act were also issued by him against them for the assessment years 1947 48 to ' 1951 52.
Each one of them filed a separate petition challenging the said orders of transfer by the Commissioner of Income tax and the proceedings entertained by the Income tax Office r, Special Circle, Amritsar, against them on the score of the unconstitutionality of section 5 (7A) of the Act.
The petitioner in Petition No. 158/56 is one Shri Ram Saran Das Kapur, the head and karta of the Hindu undivided family carrying on business outside Ghee Mandi Gate, Amritsar.
His case also whichprior to the order complained against, was being entertained by the Income tax Officer, 'F ' Ward, Amritsar, was transferred on some date in 1954 by an order of the Commissioner of Income tax under section 5(7A) of the Act to the Income tax Officer, Special Circle, Amritsar.
No objection wag taken by the 239 petitioner to this order of transfer until after the assess.
ment order was passed against him but he also challenged the validity of the said order of transfer and the proceedings entertained by the Income tax Officer, Special Circle, Amritsar, thereafter, on the same grounds as the other petitioners.
Petitions NOs.211 to 215 of 1956: These petitions may be described as the Sriram Jhabarmull group.
Though ' separately filed, the petitioner in each of them is the same individuals Nandram Agarwalla, who is the sole proprietor Of a business which he carries on under the name and style of I Sriram Jhabarmull '.
It is a business, inter alia, of import and export of piece goods ' as commission agents, and dealers in raw wool and other materials.
The principal place of business is at Kalimpong, in the district of Darjeeling, though there is also a branch at Calcutta.
Prior to the orders of the Commissioner of Income tax under section 5(7A) of the Act complained against, the petitioner was being assessed by the Income tax Officer, Jalpaiguri, Darjeeling.
On June 8, 1946, there was a further transfer assigning the cases to the Income tax Officer, Central Circle 1, Calcutta, and on July 27, 1946, orders were passed by the Commissioner of Income tax Central, Calcutta, under section 5(7A) transferring the cases of the petitioner to the Income tax Officer, Central Circle IV, Calcutta.
These are the orders which are complained against as unconstitutional and void invalidating the proceedings which were continued and subsequently instituted by the Income tax Officer, Central Circle IV, Calcutta, against the petitioner on the score of the unconstitutionality of section 5(7A) of the Act.
It may be noted, however that these orders were all prior to the Constitution and 240 having been made on July 27, 1946, as aforesaid were followed up by completed assessment proceedings in respect of the said respective years and also certificate proceedings under section 46(2) of the Act.
There were further orders dated December 15, 1947, and sometime in September, 1948, transferring the cases of the petitioner from the Income tax Officer, Central Circle IV, Calcutta, to the Income tax Officer, Central Circle 1, Calcutta, and back from him to the Income tax Officer, Central Circle,IV Calcutta.
dated July 27, 1946, which was passed under section 5(7A) of the Act.
Petitions Nos.
225 to 229 of 1956: These Petitions may be classed as the Raichur group.
They concern the assessment for the respective assessment years 1950 5l, 1951 52, 1952 53, 1953 54 and 1954 55.
The petitioner in each of them is the same individual, one Kalloor Siddannal who resides and carries on business in Raichur in the State of Hyderabad as commission agent and distributor of agricultural products.
Income tax was first imposed in the Hyderabad State in 1946 by a special Act of the Legislature and the petitioner was assessed under the Hyderabad Income tax Act by the Additional Income tax Officer, Raichur, for the assessment years 1948 49 and 1949 50.
As from April 1, 195o, the Indian Income tax Act was applied to Hyderabad but the Additional Income tax Officer, Raichur, continued to assess the petitioner.
The cases in respect of the assessment years 1950 51, 1951 52 and 1952 53 were pending before that officer and proceedings were taken in connection with the assessment for those years.
On December 21, 1953, however, the Commissioner of Income tax Hyderabad, issued a notification under section 5(7) ordering that the case of the petitioner should be transferred from the Additional income tax Officer, Raichur, to the Income tax Officer, Special Circle, Hyderabad.
The latter officer continued the assessment proceedings and issued notices under section 22(.4) of the Act on July 1, 1954, November 2, 1954, November 30,1954, 241 December 19, 1954, and March 11, 1955, in respect of the said years of assessment.
Assessments for the said years were made on March 21, 1955, and on April 24, 1955, the petitioner made an application under section 27 of the Act to reopen the assessment for the year 1950 51 as on default under section 23 (4) of the Act.
It appears, however, that shortly before May 19, 1955, the Commissioner of Income tax, Hyderabad, made another order under section 5 (7A) and section 64 (5)(b) of the Act transferring all the cases of the petitioner to the main Income tax Officer, Raichur.
Curiously enough, the petitioner challenged both the orders one dated December 21, 1953, and the other made sometime in May, 1955, under section 5 (7A) of the Act and the proceedings continued and instituted by the respective officers thereunder as unconstitutional and void on the ground that section 5 (7A) was ultra vires the Constitution even though ultimately he was being assessed by the main Income tax Officer, Raichur, under the latter order.
This is the common question in regard to the ultra vires character of section 5 (7A) of the Act which is raised in all these petitions, though in regard to each group there are several questions of fact involving the consideration of the discriminatory character of the specific orders passed therein which we shall deal with hereafter in their appropriate places.
Section 5 (7A) of the Act runs as under: " 5 (7A) : The Commissioner of Income tax may transfer any ease from one Income tax Officer subordinate to him to another, and the Central Board of Revenue may transfer any case from any one Income tax Officer to another.
Such transfer may be made at any 'stage of the proceedings, and shall not render necessary the reissue of any notice already issued by the Income tax Officer from whom the case is transferred.
" This sub section was inserted by section 3 of the Indian Income tax Amendment Act, 1940 (XL of 1940) which was passed as a result of the decision of the Bombay High Court in Dayaldas Kushiram vs Commissioner of Income tax, (Central) (1) I.L.R. , 31 242 By the Indian Income tax Amendment Act, 1956 (XXVI of 1956) an explanation was added to section 5(7A) in the terms following as a result of the decision of this Court in Bidi Supply Co. v The Union of India(1): " Explanation : In this sub section, I case ' in relation to any person whose name is specified in the order of transfer means all proceedings under this Act in respect of any year which may be pending on the date of the transfer,, and includes all proceedings under this Act which may be commenced after the date of the transfer in respect of any year.
" Section 5(7A) together with the explanation thus falls to be considered by us in these petitions.
The argument on behalf of the petitioners is that a. 64, sub sections(1) and (2) of the Act confer upon the assessee a valuable right and he is entitled to tell the taxing authorities that he shall not be called upon to attend at different places and thus upset his business.
Section 5(7A) invests the Commissioner of Income tax and the Central Board of Revenue with naked and arbitrary power to transfer any case from any one Income tax Officer to another without any limitation in point of time, a power which is unguided and uncontrolled and is discriminatory in its nature and it is open to the Commissioner of Income tax or the Central Board of Revenue to pick out the case of one assessee from those of others in a like situation and transfer the same from one State to another or from one end of India to the other without 'specifying any object and without giving any reason, thus subjecting the particular assessee to discriminatory treatment whereas the other assessees similarly situated with him would continue to be assessed at the places where they reside or carry on business under section 64 (1) and (2) of the Act.
The discrimination involved in section 5(7A) is substantial in character and, therefore, infringes the fundamental right enshrined,in article 14 of the Constitution.
It also infringes article 19 (1) (g) in so far as it imposes an unreasonable restriction on the fundamental right to carry on trade or business (Vide Himmatlal Harilal Mehta vs The State of Madhya Pradesh(1)).
The very same question as regards the unconstitutionality of section 5(7A) of the Act had come up for decision before this Court in Bidi Supply Co. vs The Union of India (supra).
The case of the assessee there had been transferred by the Central Board of Revenue under section 5(7A) of the get from the Income tax Officer, District 111, Calcutta, to the Income tax Officer, Special Circle, Ranchi.
The order was an omnibus wholesale order of transfer expressed in general terms without any reference to any particular case and with out any limitation as to time and was challenged as void on the ground that section 5(7A) under which it had been passed was unconstitutional.
This Court, by a majority judgment, after discussing the general principles underlying article 14, did not adjudicate upon that question, observing at p. 276: "We do not consider it necessary, for the purpose of this case, to pause to consider whether the constitutionality of Sub section.(7A) of section 5 can be Supported on the principle of any reasonable classification laid down by this Court or whether the Act lays down any principle for guiding or regulating the exercise of discretion by the Commissioner or Board of Revenue or whether the sub section confers an unguided and arbitrary power on those authorities to pick and choose individual assessee and place that assessee at a disadvantage in comparison with other assessees.
All assessees are entitled to the benefit of those provisions except where a particular case or cases of a particular assessee for a particular year or years is or are transferred under sub section (7A) of section 5, assuming that section to be valid and if a particular case or cases is or are transferred his right under section 64 still remains as regards his other case or cases.
" The majority judgment then proceeded to consider the effect of such an omnibus order unlimited in point of time on the rights of the assessee and further observed in that context at p. 277: " This order is calculated to inflict considerable inconvenience and harassment on the petitioner.
Its books of account will have to be produced before the Income tax Officer, Special Circle, Ranchi a place hundreds of miles from Calcutta, which is its place of business.
There may be no suitable place where they can put up during that period.
There will certainly be extra expenditure to be incurred by it by way of railway fare, freight and hotel expenses.
Therefore the reality of the discrimination cannot be gainsaid.
In the circumstances this substantial discrimination has been inflicted on the petitioner by an executive fiat which is not founded on any law and no question of reasonable classification for purposes of legislation can arise.
Here "the State" which includes its Income tax department has by an illegal order denied to the petitioner, as compared with other Bidi mer chants who are similarly situate, equality before the law or the equal protection of the laws and the petitioner can legitimately complain of an infraction of his fundamental right under Article 14 of the Constitution.
" The question as to the constitutionality of section 5 (7A) of the Act was thus left open and the decision turned merely on the construction of the impugned order.
245 Learned counsel for the petitioners, however, lays particular stress on the observations of Bose, J., in the minority judgment which he delivered in that case whereby he held that sections 5 (7A) and 64 (5) (b) of the Act were themselves ultra vires article 14 of the Constitution and not merely the order of the Central Board of Revenue.
The learned Judge referred to a passage from the judgment of Fazl Ali, J., in The State of West Bengal vs Anwar Ali Sarkar(1) and also pointed out the decision of this Court in M/S. Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh and Two Others(2) and observed: " What is the position here? There is no hearing, no reasons are recorded: just peremptory orders transferring the case from one place to another without any warning; and the power given by the Act is to transfer from one end of India to the other; nor is that power unused.
We have before us in this Court a case pending in which a transfer has been ordered from Calcutta in West Bengal to Ambala in the Punjab." (p. 283) "
If the Legislature itself had done here what the Central Board of Revenue has done and had passed an Act in the bald terms of the order made here transferring the case of this petitioner, picked out from others in a like situation, from one State to another, or from one end of India to the other, without specifying any object and without giving any reason, it would, in my judgment, have been bad.
I am unable to see how the position is bettered because the Central Board of Revenue has done this and not Parliament." (p. 284 5) "
In my opinion, the power of transfer can only be conferred if it is hedged round with reasonable restrictions, the absence or existence of which can in the last instance be determined by the courts; and the exercise of the power must be in conformity with the rules of natural justice, that is to say, the parties affected must be heard when that is reasonably possible, and the reasons for the order must be reduced, however briefly, to writing so that men may know that (1) ; , 309 310.`(2) ; 246 the powers conferred on these quasi judicial bodies are being justly and properly exercised." (p. 287)
The answer furnished on behalf of the State to this argument is fourfold: (i)that the provision contained in section 5 (7A) of the Act is a measure of administrative convenience enacted with a view to more conveniently and effectively deal with the cases of the assessees where the Commissioner of Income tax considers it necessary or desirable to transfer any case from one Income tax Officer subordinate to him to another or the Central Board of Revenue similarly considers it necessary or desirable to transfer any case from any one Income tax Officer to another.
The real object with which section 5 (7A) was inserted by the Indian Income tax Amendment Act, 1940 (XL of 1940), has been thus set out in the affidavit of Shri V. Gouri Shankar, Under Secretary, Central Board of Revenue, dated November 19, 1956, which is the pattern of all the affidavits filed on behalf of the State in these petitions: " 4.
I say that the provisions of section 5 (7A) were inserted by the Income tax Amendment Act, XL of 1940, with the object of minimising certain procedural difficulties.
Before this amendment was passed there was no specific provision in the Act for transferring a case from one Income tax Officer to another except by a long and circuitous course even at the request of the assessees.
In order therefore to be able to transfer the case from one 1.
to another either because of the request of the assessee or for dealing with cases involving special features such as cases of assessees involving widespread activities and large ramifications or inter related transactions, power to transfer cases was conferred upon the Central Board of Revenue and the Commissioner of Income tax as the case may be.
I say that the provisions of section 5 (7A) ate thus administrative in character. . (ii)that the assessee whose case is thus transferred is not subjected to any discriminatory procedure in the matter of his assessment.
The Income tax Officer to whom his case is transferred deals with it under the same procedure which is laid down in the relevant 247 provisions of the Act.
The decision of the Income tax Officer is subject to appeal before the Appellate Assistant Commissioner and the assessee has the further right to appeal to the Income tax Appellate Tribunal and to approach the High Court and ultimately the Supreme Court, as provided in the Act.
All assessees, whether they are assessed by the Income tax Officer of the area where they reside or carry on business or their cases are transferred from one Income tax Officer to another, are subject to the same procedure and are entitled to the same rights and privileges in the matter of redress of their grievances, if any, and there is no dis crimination whatever between assessees and assessees; (iii)that the right, if any, conferred upon the assessee under section 64 (1) and (2) of the Act is not an absolute right but is circumscribed by the exigencies of tax collection and can be negatived as it has been in cases where the Commissioner of Income tax or the Central Board of Revenue, as the case may be, think it necessary or desirable to transfer his case from one Income tax Officer to another under section 5 (7A) of the Act having regard to all the circumstances of the case.
The argument of inconvenience is thus sought to be met in the same affidavit: " 5. 1 further say that as a result of any transfer that may be made under the provisions of section 5 (7A) there is no discriminatory treatment with regard to the procedure and that no privileges and rights which are given to the assessees by the Income tax Act are taken away nor is the assessee exposed to any increased prejudice, punitary consequences or differential treatment.
I say that in cases where transfers under this section are made otherwise than on request from assessees, the convenience of the assessees is taken into consideration by placing the case in the hands of an Income tax Officer who is nearest to the area where it will be convenient for the assessee to attend.
If on account of administrative exigencies this is not possible and the assessee requests that the examination of accounts or evidence to be taken should be in a place convenient to him, the I.T.O. complies with the request 248 of the assessee and holds the hearing at the place requested.
" Even if there be a difference between assessees who reside or carry on business in a particular area by reason of such transfers the difference is not material.
It is only a minor deviation from a general standard and does not amount to a denial of equal rights; (iv)that the power which is thus vested is a discretionary power and is not necessarily discriminatory in its nature and that abuse of power is not to be easily assumed where discretion is vested in such high officials of the State.
Even if abuse of power may sometimes occur, the validity of the provision cannot be contested because of such apprehension.
What may be struck down in such cases is not the provision itself but the discriminatory application thereof.
The petitioners rejoin by relying upon the following passage from the judgment of Fazl Ali, J., in The State Of West Bengal vs Anwar Ali Sarkar, (Supra), which was referred to by Bose, J., in his minority judgment in Bidi Supply Co. vs The Union of India, (Supra), at page 281: " It was suggested that the reply to this query is that the Act itself being general and applicable to all persons and to all offenses, cannot be Said to discriminate in favour of or against any particular case or classes of persons or cases, and if any charge of discrimination can be leveled at all, it can be levelled only against the act of the executive authority if the Act is misused.
This kind of argument however does not appear to me to solve the difficulty.
The result of accepting it would be that even where discrimination is quite evident one cannot challenge the Act simply because it Is couched in general terms; and one cannot also challenge the act of the executive authority whose duty it is to administer the Act, because that authority will say: I am not to blame as I am acting under the Act.
It is clear that if the argument were to be ,accepted, article 14 could be easily defeated.
I think the fallacy of the argument lies in overlooking the fact that the I insidious discrimination complained of is incorporated in the Act itself ', it being so drafted 249 that whenever any discrimination is made such discrimination would be ultimately traceable to it.
The pivot of the whole argument of the petitioners is the provisions contained in section 64(1) and (2) of the Act which prescribe the place of assessment.
They are: " 64.
(1) Where an assessee carries on a business, profession or vocation at any place, he shall be assessed by the Income tax Officer of the area in which that place is situate or, where the business, profession or vocation is carried on in more places than one, by the Income tax Officer of the area in which the principal place of his business, profession or vocation is situate.
(2)In all other cases, an assessee shall be assessed by the Income tax Officer of the area in which he resides.
" These provisions were construed by the Bombay High Court in Dayaldas Kushiram vs Commissioner Income tax, (Central), (supra), and Beaumont, C.J., observed at p. 657: " In my opinion section 64 was intended to ensure that as far as practicable an assessee should be assessed locally, and the area to which an Income tax Officer is appointed must, so far as the 'exigencies of tax collection allow, bear some reasonable relation to the place where the assessee carries on business or resides." Kania, J., as he then was, went a step further and stated at p. 660: "A plain reading of the section shows that the same is imperative in terms.
It also gives to the assessee a valuable right.
He is entitled to tell the taxing authorities that he shall not be called upon to attend at different places and thus upset his business.
" The learned Judges there appear to have treated the provisions of section 64(1) and (2) more as a question of right than as a matter of convenience only.
If there were thus a right conferred upon the assessee by the provisions of section 64(1) and (2) of the Act and that right continues to be enjoyed.
by all the assessees except the 32 250 assessee whose case is transferred under section 5(7A) of the Act to another Income tax Officer outside the area where he resides or carries on business, the assessee can urge that, as compared with those other assessees, he is discriminated against and is subjected to inconvenience and harassment.
It is, therefore, necessary to consider whether any such right is conferred upon the assessee by section 64(1) and (2) of the Act.
Prima facie it would appear that an assessee is entitled under those provisions to be assessed by the Income tax Officer of the particular area where he ,resides or carries on business.
Even where a question arises as to the place of assessment such question is under section 64(3) to be determined by the Commissioner or the Commissioners concerned if the question is between places in more States than one or by the Central Board of Revenue if the latter are, not in agreement and the assessee is given an opportunity of representing his views before any such question is determined.
This provision also goes to show that the convenience of the assessee is the main consideration in determining the place of assessment.
Even so the exigencies of tax collection have got to be considered and the primary object of the Act, viz., the assessment of income tax, has got to be achieved.
The hierarchy of income tax authorities which is set up under Chapter 11 of the Act has been so set up with a view to assess the proper income tax payable by the assessee and whether the one or the other of the authorities will proceed to assess a particular assessee has got to be determined not only having regard to the convenience of the assessee but also the exigencies of tax collection.
In order to assess the tax payable by an assessee more conveniently and efficiently it may be necessary to have him assessed by an Income tax Officer of an area other than the one in which, he resides or carries on business.
It may be that the nature and volume of his business operations are such as require investigation into his affairs in a place other than the one where he resides or carries on business or that he is so, connected with various other individuals or organiza tions in the way of his earning his income as to render 251 such extra tertitorial investigation necessary: before he may be properly assessed.
These are but instances of the various situations which may arise wherein it may be thought necessary by the Income tax authorities to transfer his case from the Income tax, Officer of the area in which he resides or carries on business to, another Income tax Officer whether functioning in the same State or beyond it.
This aspect of the question wag emphasized by Beaumont, C.J., in Dayaldas Kushiram vs Commissioner of Income tax, (Central), (supra), at page 146, when he used the expression " as far as practicable " in connection with the assessee 's right to be assessed locally and the expression " so far as exigencies of tax collection allow " in connection with the appointment of the Income tax Officer to assess the tax payable by the particular assessee.
In the later case of Dayaldas Kushiram vs Commissioner of Income tax, (Central)(1), Beaumont, C.J., expressed himself as follows: " The Income tax Act does not determine the place of assessment.
What it does is to determine the Officer who is to have power to assess and in some cases it does so by reference to locality but I apprehend that an appeal would be not against an order of the Commissioner as to the place of assessment, but against the order of assessment of the Income tax, Officer," thus stating in effect that this section does not give a right to the assessee to have his assessment, at a parti cular place but determines the Income tax Officer who is to have power to assess him.
This aspect was further emphasized by the Federal Court in Wallace Brothers & Co. vs Commissioner of, Income tax, Bombay, Sind & Baluchistan (2), where Spens, C.J., observed: Clause (3) of section 64 provides that any question as to the place of assessment shall be determined ' by the Commissioner or by the Central Board of Revenue Proviso 3 to the clause enacts that if the place of assessment is called in question by the assessee, the Income tax Officer shall, if not satisfied, with the (1) , 101.(2) A.I.R. 1945 F.C. 9,13.252 correctness of the claim, refer the matter for determination under this sub section before assessment is made.
These provisions clearly indicate that the matter is more one of administrative convenience than of jurisdiction and that in any event it is not one for adjudication by the Court.
" It may be noted, however, that in the passage at page 276 of the majority judgment in Bidi Supply Co. vs The Union of India (supra), this court regarded the benefit conferred on the assessee by these provisions of a. 64(1) and (2) of the Act as a right and it is, too late in the day for us to say that no such right to be assessed by the Income tax Officer of the particular area, where he resides or carries on his business is conferred on the assessee.
This right, however, according to the authorities above referred to, is hedged in with the limitation that it has to yield to the exigencies of tax collection.
The position, therefore, is that the determination of the, question whether a particular Income tax Officer should assess the case of the assessee depends on (1) the convenience of the assessee as posited in section 64 (1) and (2) of the Act, and (2) the exigencies of tax collection and it would be open to the Commissioner of Income tax and the Central Board of Revenue who are the highest amongst the Income tax.
Authorities under the Act to transfer the case of a particular assessee from the Income tax Officer of the area within which he resides or carries on business to any other Income tax Officer if the exigencies of tax collection warrant the same.
It is further to be noted that the infringement of such a right by the order of transfer, under section 5 (7A) of the Act is not a material infringement.
It is only a deviation of a minor character from the general standard and does not necessarily involve a denial of equal rights for the simple reason that even after such transfer the case is dealt with under the normal procedure which is prescribed in the Act.
The production and investigation of the books of account, the enquiries to be made by the Income tax Officer and the whole of the procedure as to assessment including the further 253 appeals after the assessment is made by the Incometax Officer are the same in a transferred case as in others which remain with the Income tax Officer of the area in which the other assesees reside or carry on business.
There is thus no differential treatment and no scope for the argument that the particular assessee is discriminated against with reference to others similarly situated.
It was observed by this Court in, M. K. Gopalan vs The State of Madhya Pradesh(1): " In support of the objection raised under article 14 of the Constitution, reliance is placed on the decision of this Court in Anwar Ali Sarkar 's case.
In the pre ' sent case, the Special Magistrate under section 14 of the Criminal Procedure Code has to try the case entirely under the normal procedure, and 'no discrimination of the kind contemplated by the decision in Anwar Ali Sarkar 'd case and the other cases following it arises here.
A law vesting discretion in an authority under such circumstances cannot be said to be discriminatory as such, and is therefore not hit by article 14 of the Constitution.
There is, therefore, no substance in this contention."
To a similar effect were the observations of Mukherjea, J., as he then was, in The State of West Bengal vs Anwar Ali Sarkar, (supra), at p. 325: "I agree with the Attorney General that if the differences are not material, there may not be any discrimination in the proper sense of the word and minor deviations from the general standard might not amount to denial of equal rights deemed never at any time to have applied to an assessee where, in consequence of any transfer made under section 5 (7A), a particular Income tax Officer has been charged with the function of assessing that assessee.
section 64 (5) was incorporated by the Income tax Law Amendment Act, 1940 (XL of 1940) simultaneously with section 5 (7A).
It is ' therefore, urged that an assesse whose case has been thus transferred has no right under section 64 (1) and (2) and those assessees alone who do not come within the purview of section 64 (5) can have the benefit of section 64 (1) and (2).
This argument, however, ignores the fact that section 5 (7A) is the very basis of the enactment of the relevant provision in section 64 (5) and if a. 5 (7A) cannot stand by virtue of its being discriminatory in character, the relevant portion of section 64 (5) also must fall with it.
It is then contended that a. 5 (7A) is in itself discriminatory and violative of the fundamental right en shrined in article 14.
The power which is vested in the Commissioner of Income tax and the Central Board of Revenue is a naked and arbitrary power unguided and uncontrolled by any rules.
No rules have been framed and no directions given which would regulate or guide their discretion or on the basis of which such transfers can be made and the whole matter is left to the unrestrained will of the Commissioner of Income tax or the Central Board of Revenue without there being anything which could ensure a proper execution of the power or operate as a check upon the injustice that might result from the improper execution of the same.
To use the words of Mr. Justice Matthews in the case of Yick Wo vs Hopkins(1): ". when we remember that this action or nonaction may proceed from enmity or prejudice, from partisan zeal or animosity, from favoritism and other improper influences and motives easy of concealment and difficult to be detected and exposed, it becomes unnecessary to suggest or comment upon the injustice capable of being wrought under cover of such a power, for that becomes apparent to every one who gives to the subject a moment 's consideration." , 373; , 227.255
In other words, " it is not a question of an uncon stitutional administration of a statute otherwise valid on its face but here the unconstitutionality is writ large on the face of the statute itself " (Per Das, J., as he then was, in The State of West Bengal vs Anwar Ali, Sarkar, (supra) at p. 346).
It has to be remembered that the purpose of the Act is to levy income tax, assess and collect the same.
The preamble of the Act does not say so in terms it being an Act to consolidate and amend the law relating to income tax and super tax but that is the purpose of the Act as disclosed in the preamble of the First Indian Income tax Act of 1886 (Act II of 1886).
It follows, therefore, that all the provisions contained in the Act have been designed with the object of achieving that purpose.
There is in the first instance, the charge of income tax.
Then we find set up the various authorities in the hierarchy who are entrusted with the function of assessing the income tax, the Central Board of Revenue being at the apex.
There is also an Appellate Tribunal which is established for hearing appeals against the decisions of the Appellate Assistant Commissioners.
Then follow the provisions in regard to taxable income, mode of assessment and cognate provisions.
The Income tax Officers are invested with the duty ' of assessing the income tax of the assessees in the first instance.
The Assistant Commissioners of Income tax, are the appellate authorities over the decisions of the Income tax Officers and the Income tax Appellate Tribunal is the final appellate authority barring of course references under section 66(1) of the Act to the High Court on questions of law.
The Commissioners of Income tax and the Central Board of Revenue are mainly administrative authorities over the Income tax Officers and the Assistant Commissioners of Income tax and they are to distribute and control the work to be done by these authorities.
All officers and persons employed in the execution of the Act are to observe and follow the orders instructions and directions of the.
Central Board of Revenue which is the highest authority in the hierarchy and, even though normally in accordance 256 with the provisions of section 64 (1) and (2) the work of assessment is to be done by the Income tax Officers of the area within which the assessees reside or carry on business, power is given by section 5(7A) to the Commissioner of Income tax to transfer any case from one Income tax Officer subordinate to him to another and to the Central Board of Revenue to transfer any case from any one Income tax Officer to another.
This is the administrative machinery which is set up for assessing the incomes of the assessees which are chargeable to income tax.
There is, therefore, considerable force in the contention which has been urged on behalf of the State that section 5(7A) is a provision for administrative convenience.
Nevertheless this power which is given to the Commissioner of Income tax and the Central Board of Revenue has to be exercised in a manner which is not discriminatory.
No rules or directions having been laid down in regard to the exercise of that power in particular cases, the appropriate authority has to determine what are the proper cases in which such power should be exercised having regard to the object of the Act and the ends to be achieved.
The cases of the assessees which come for assessment before the income tax authorities are of various types and no one case is similar to another.
there are complications introduced by the very nature of the business which is carried on by the assessees and there may be, in particular cases, such widespread activities and large ramifications or inter related transactions as might require for the convenient and efficient assessment of income tax the transfer of such cases from one Income tax Officer to another.
In such cases the Commissioner of Income tax or the Central Board of Revenue, as the case may be, has to exercise its discretion with due regard to the exigencies of tax collection.
Even though there may be a common attribute between the assesses whose case is thus transferred and the assessees; who continue to be assessed by the Income tax Officer of the area within which they reside or carry on business, the other attributes would not be common.
One assessee may 257 have such widespread activities and ramifications as would require his case to be transferred from the Income tax Officer of the particular area to an Income tax Officer of another area in the same State or in another State, which may be called " X ".
Another assessee, though belonging to a similar category may be more conveniently and efficiently assessed in another area whether situated within the State or without it, called " Y ".
The considerations which will weigh with the Commissioner of Income tax or the Central Board of Revenue in transferring the cases of such assessee either to the area " X " or the area " Y " will depend upon the particular circumstances of each case and no hard and fast rule can be laid down for determining whether the particular case should , be transferred at 'all or to an Income tax Officer of a particular area.
Such discretion would necessarily have to be vested in the authority concerned and merely because the case of a particular assessee is transferred from the Income tax Officer of an area within which he resides or carries on business to another Income tax Officer whether wit in or without the State will not by itself be sufficient to characterize the exercise of the discretion as discriminatory.
Even if there is a possibility of discriminatory treatment of persons falling within the same group or category, such possibility cannot necessarily invalidate the piece of legislation.
It may also be remembered that this power is vested not in minor officials but in top ranking authorities like the Commissioner of Income tax and the Central Board of Revenue who act on the information supplied to them by the Income tax Officers concerned.
This power is discretionary and not necessarily discriminatory and abuse of power cannot be easily assumed where the discretion is vested in such high officials.
(Vide Matajog Dobey vs H. section Bhari(1)).
There is moreover a presumption that public officials will discharge their duties honestly and in accordance with the rules of law.
(Vide People of the State of (1) ; , 932.33 258 New York vs John E. Van De Carr, etc.(1)
It has also been observed by this Court in A. Thangal Kunju Musaliar vs M. Venkitachalam Potti(2) with reference to the possibility of discrimination between assessees in the matter of the reference of their cases to the Income tax Investigation Commission that " It is to be presumed, unless the, contrary were shown, that the 'administration of a particular law would be done I not with an evil eye and unequal hand ' and the selection made by the Government of the cases of persons to be referred for investigation by the Commission would not be discriminatory." This presumption, however, cannot be stretched too far and cannot be carried to the extent of always holding that there must be some undisclosed and unknown reason for subjecting certain individuals or corporations to hostile and discriminatory treatment (Vide Gulf, Colorado, etc.
vs W. H. Ellis (3)).
There may be cases where improper execution of power will result in injustice to the parties.
It is pointed that it will be next to impossible for the assessee to challenge a particular order made by the Commissioner of Income tax or the Central Board of Revenue, as the case may be, as discriminatory because the reasons.
which actuated the authority in making the order will be known to itself not being recorded in the body of the order itself or communicated to the assesse.
This apprehension is, however, ill founded.
Though the (1) ; (1905) 310 199 U.S. 552; (2) (1955)2 section C. R. 1196.
(3) ; ; 41 L.Ed. 666.
(4) [1955] I S.C.R. 140.
259 burden of proving that there is an abuse of power,lies on the assessee who challenges the order as discriminatory, such burden is not by way of proof to the hilt.
There are instances where in the case of an accused person rebutting a presumption or proving an.
exception which will exonerate him from the liability for the offence with which he has been charged, the burden is held to be discharged by evidence satisfying the jury of the probability of that which the accused is called upon to establish (Vide Rex vs Carr Briant (1)), or in the case of a detenue under the Preventive Detention Act seeking to make out a case of want of bona fides in the detaining authority, the burden of proof is held not to be one which requires proof to the hilt but such as will render the absence of bona fides reasonably probable (Vide Ratanlal Gupta vs The District Magistrat of Ganjam also Brundaban Chandra Dhir Narendra vs The State of Orissa (Revenue Department) (3)).
If, in a particular ,case, the assessee seeks to impeach the order of transfer is an abuse of power pointing out circumstances which prima facie and without anything more would make out the exercise of the power discriminatory qua him, it will be incumbent on the authority to explain the circumstances under which the order has been made.
The court will, in that event, scrutinize these Circumstances having particular regard to the object sought to be achieved by the enactment of section 5(7A) of the Act as set out in para 4 of the affidavit of Shri V. Gouri Shankar, Under Secretary, Central Board of Revenue, quoted above, and come to its own conclusion as to the bona fides of the order and if it is not satisfied that the order was made by the authorities in bona fide exercise of the power vested in them under section 5(7A) of the Act, it will certainly quash the lame.
(3) I.L.R. 1952 Cuttack 529, 573.260 record.
The observations of Fazl Ali, J., in The State of West Bengal vs Anwar Ali Sarkar, (supra), at pages 309 310 that the authority will say " I am not to blame as I am acting under the Act " will not necessarily save the order from being challenged because even though the authority purported to act under the Act its action will be subject to scrutiny in the manner indicated above and will be liable to be set aside if it was found to be mala fide or discriminatory qua the assessee.
Particular stress is laid on behalf of the petitioners on the observations at page 277 of the majority judgment in Bidi Supply Co. vs The Union of India, (supra), which in the context of the omnibus wholesale order in question emphasized the substantial discrimination to which the assessee there had been subjected as compared with other bidi merchants who were similarly situated.
The inconvenience and harassiment to which the assessee was thus put were considered to be violative of article 14 of the Constitution and it is urged that section 5 (7A) is unconstitutional in Boar as it is open to the Commissioner of Income tax or the Central Board of Revenue, as the case may be, to make an order of transfer subjecting the assessee to such inconvenience and harassment at their sweet will and pleasure.
This argument of inconvenience, however, is not conclusive.
There is no fundamental right in an assessee to be assessed in a particular area or locality.
Even considered in the context of section 64 (1) and (2) of the Act this right which is conferred upon the assessee to be assessed in a particular area or locality is not an absolute right but is subject to the exigencies of tax collection.
The difference, if any, created in the position of the assessee qua others who continue to be assessed by the Income tax Officer of the area in which they reside or carry on business is not a material difference but a minor deviation from the general standard and would, therefore, not amount to the denial of equal rights (Per Mukherjea, J., as he then was, in The State of West Bengal vs Anwar Ali Sarkar., (supra), at 261 p. 325)).
There is also the further fact to be borne mind that this inconvenience to the assessee is sough to be minimised by the authority concerned transferring the case of such assessee to the Income tax Officer who is nearest to the area where it would be convenient for the assessee to attend and if, on account of administrative exigencies, this is not possible an the assessee requests that the examination of account or evidence to be taken should be in a place convenient to him, by the Income tax Officer complying with the request of the assessee and holding the hearing at the place requested.
We are bound to take the statement contained in para 5 of the affidavit of Shri.V. Gouri Shankar at its face value and if this is done as it should be, the assessee will not be put to any inconvenience or harassment and the proper balance between the rights of the subject and public interest will be preserved.
It is, therefore, clear that the power which is veste in the Commissioner of Income tax or the Central Board of Revenue, as the case may be, under section 5 (7A) of the Act is not a naked and arbitrary power, unfettered, unguided or uncontrolled so as to enable the authority to pick and choose one assessee out of those similarly circumstanced thus subjecting him to discriminatory treatment as compared with others who fall within the same category.
The power is guided and controlled by the purpose which is to be achieved by the Act itself, viz., the charge of income tax, the assessment and collection thereof, and is to be exercised for the more convenient and efficient collection of the tax A wide discretion is given to the authorities concerned for the achievement of that purpose, in the matter of the transfer of the cases of the assessees from one Income tax Officer to another and it cannot be urged that such power which is vested in the authorities is discriminatory in its nature.
There is a broad distinction between discretion which has to be exercised with regard to a fundamental right guaranteed by the Constitution and some other right which is given by the statute.
If the statute deals with a right which is not fundamental in character 262 the statute can take it away but a fundamental right the statute cannot take away.
Where, for example, a discretion is given in the matter of issuing licences for carrying on trade, profession or business or where restrictions are imposed on freedom of speech, etc., by a imposition of censorship, the discretion must be controlled by clear rules so as to come within the category of reasonable restrictions.
Discretion of that nature must be differentiated from discretion in respect of matters not involving fundamental rights such as transfers of cases.
An inconvenience resulting from a change of place or venue occurs when any case is transferred from one place to another but it is not open to a party to say that a fundamental right has been infringed by such transfer.
Ili other words, the discretion vested has to be looked at from two points of view, ViZ., (1) does it admit of the possibility of any real and substantial discrimination, and (2) does it impinge on a fundamental right guaranteed by the Constitution? Article 14 can be invoked only when both these conditions are satisfied.
Applying this test, it is clear that the discretion which is vested in the Com missioner of Income tax or the Central Board of Reevenue, as the case may be, under section 5 (7A) is not at all discriminatory.
It follows, therefore, that section 5 (7A) of the Act is not violative of article 14 of the Constitution and also does not impose any unreasonable restriction on the fundamental right to carry on trade or business enshrined in article 19 (1) (g) of the Constitution.
If there is any abuse of power it can be remedied by appropriate action either under article 226 or under article 32 of the constitution and what can be struck down is not the provision contained in section 5 (7A) of the Act but the order passed thereunder which may be mala fide or violative,of these fundamental rights.
This challenge of the vires of section 5 (7A) of the Act, therefore, fails.
We may, however, before we leave this topic observe that it would be prudent if the principles of natural justice are, followed, where circumstances permit, before any order of transfer under section 5 (7A) of the Act is made by the Commissioner of Income tax or the 263 Central Board of Revenue, as the case may be, and notice is given to the party affected and he is afforded a reasonable opportunity of representing his views on the question and the reasons of the order are reduced however briefly to writing.
It is significant that when any question arises under section 64 as to the place of assessment and is determined by the Commissioner or Commissioners or by the Central Board of Revenue, as the case may be, the assessee is given an opportunity under section 64(3) of representing his views before any such question is determined.
If an opportunity is given to the assessee in such case, it is all the more ,surprising to find that, when an order of transfer under section 5(7A) is made transferring the case of the assessee from one Income tax 'Officer to another irrespective of the area or locality where he resides or carries on business, he should not be given such an opportunity.
There is no presumption against the bona fides or the honesty of an assessee and normally the Income tax authorities would not be justified in refusing to an assessee a reasonable opportunity of representing his views when any order to the prejudice of the normal procedure laid down in section 64 (1) and (2) of the Act is sought to be made against him, be it a transfer from one Income tax Officer to another within the State or from an Income tax Officer within the State to an Income tax Officer without it, except of course where the very object of the transfer would be frustrated if notice was given to the party affected.
If the reasons for making the order are reduced however briefly to writing it will also help the assessee in appreciating the circumstances which make it necessary or desirable for the Commissioner of Income tax or the Central Board of Revenue, as the case may be, to transfer his case under section 5(7A) of the Act and it will also help the court in determining the bona fides of the order as passed if and when the same is challenged in court as mala fide or discriminatory.
It is to be hoped that the Income tax authorities will observe the above procedure wherever feasible.
The next point of attack is that the orders which Were made by the Commissioner of Income tax or the 264 Central Board of Revenue, as the case may be, in these petitions are omnibus wholesale orders of transfer coming within the mischief of Bidi Supply Co. vs The Union of India, (supra), and are, therefore, hit by the majority judgment in that case.
The answer of the State is that the orders are valid by virtue of the explanation to section 5(7A) which was added by the Indian Income tax Amendment Act, 1956 (26 of 1956).
The main structure of section 5(7A) was, however, maintained and the explanation was added thereto in order to expand the connotation of the word " case " which was used in section 5(7A).
The manner in which this result was brought about is subject to criticism that the word ,case" was thus really equated with the word " file " and when a case of a particular assessee was transferred under section 5(7A) it was meant that his whole file would be transferred from one Income tax Officer to another.
This inartistic mode appears, however to be adopted by the supposed necessity of maintaining section 5(7A) in the form in which it stood but what we have got to see is whether the desired result has been achieved by adding the explanation in the manner in which it was done.
Reading section 5(7A) and the explanation thereto, it is clear that when any case of a particular asssssee which is pending before an Income tax Officer is transferred from that officer to another Income tax Officer whether within the State or without it, all proceedings which are pending against him under the Act in respect of the same year as also previous years are meant to be transferred simultaneously and all proceedings under the 265 Act which may be commenced after the date of such transfer in respect of any year whatever are also included therei in so that the Income tax Officer to whom such case is transferred would be in a position to continue the pending proceedings and also institute further proceedings against the assessee in respect of any year.
The proceedings pending at the date of transfer can be thus continued but in the case of such proceedings the provision in regard to the issue of notices contained in the main body of section 5(7A) would apply and it would not be necessary to reissue any notice already issued by the Income tax Officer from whom the case is transferred.
This provision applies to pending proceedings which have been transferred leaving unaffected the further proceedings which may be commenced against the assessee after the date of the transfer where fresh notices would have to be issued.
It is, however, contended that the cases of the assessee which have been already closed in the previous years cannot be reopened by the Income tax Officer to whom the case of the assessee is thus transferred and the words " after the date of transfer in respect of any year " occurring at the end of the explanation are sought to be construed to mean " after the date of the transfer in respect of the year of transfer " thus rendering it incompetent to the Income tax Officer to whom the case is transferred to institute further proceedings in respect of cases of the assessee which have been already closed before the date of transfer.
This contention is, in our opinion, unsound.
The words used are " in respect of any year" and not " in respect of the year ".
Moreover they are to be read with the preceding words "may be commenced " and not with the words "after the date of transfer".
A proper reading of the explanation will be that the inclusive part thereof refers to all proceedings under the Act which may be commenced in respect of any year after the date of the transfer.
The date of the transfer has relation only to the particular year in which the case of the assessee is thus transferred and to attach the words " in respect of any year " to the words " after 34 266 the date of transfer" do not make any sense.
The words " in respect of any year " appropriately go with the words " which may commenced" and read in this juxtaposition render the inclusive part of the explanation susceptible of a proper meaning.
The language of the explanation read in the manner suggested above is thus sufficient to dispel this contention of the petitioners.
it follows, therefore, that the omnibus wholesale orders of transfer made against the petitioners by the Commissioner of Income tax or the Central Board of Revenue, as the case may be, are saved by the explanation to section 5(7A) and are not unconstitutional and void: It remains now to consider whether the individual orders against the petitioners are discriminatory in fact or are mala fide and in abuse of the power vested in the Commissioner of Income tax or the Central Board of Revenue, as the case may be, under section 5(7A) of the Act.
Petitions Nos.
211 to 215 of 1956, i.e., the Shiram Jhabarmull group, may be dealt with in the first instance as they have a peculiar characteristic of their own.
The orders complained against in these petitions were all made by the Commissioner of Income tax Central, Calcutta, on July 27, 1946, and further proceedings were entertained against the petitioners by the Income tax Officer, Central Circle IV, Calcutta, immeasurable thereafter.
All these proceedings culminated in assessment orders and certificate proceedings under section 46(2) of the Act were also taken by the authorities against the petitioners for recovery of the tax so assessed before the advent of the Constitution.
The question, therefore, arises whether these orders of transfer can be challenged by the petitioners as unconstitutional and void.
It is settled that article 13 of the Constitution has no retrospective effect and if, therefore, any action was taken before the commencement of the Constitution in pursuance of the provisions of any law which was a valid law at the time when such action was taken, such action cannot be challenged and the law under 267 which such action was taken cannot be questioned as unconstitutional and void on the score of its infringing the fundamental rights enshrined in Part III of the Constitution (See Keshavan Madhava Menon vs The State of Bombay(1)).
The following observations of Das, J., as he then was, at p. 235 of that case, may be appropriately referred to in this context: "As already explained, article 13(1) only has the effect of nullifying or rendering all inconsistent existing laws ineffectual or nugatory and devoid of any legal force or binding effect only with respect to the exercise of fundamental rights on and after the date of the commencement of the Constitution.
It has no retrospective effect and if, therefore, an act was done before the commencement of the Constitution in contravention of any law which, after the Constitution, becomes void with respect to the exercise of any of the fundamental rights, the inconsistent law is not wiped out so far as the past act is concerned, for, to say that it is, will be to give the law retrospective effect. .
So far as the past acts are concerned the law exists, notwithstanding that it does not exist with respect to the future exercise of fundamental rights." (See also Syed Qasim Razvi vs The State of Hyderabad(2) and Laxmanappa Hanumanthappa Jamkhandi vs Union of India(1)).
It is clear, therefore, that the petitioners are not entitled to complain against the said orders of transfer dated July 27, 1946.
225 to 229 of 1956, i.e., the Raichur group, and Petitions Nos. 86, 87, 88, 111, 112 and 158 of 1956, i.e., the Amritsar group, all belong to the same category.
In the first group, there was an order of transfer on December 21, 1953, passed by the Commissioner of Income tax, Hyderabad, transferring the cases of the petitioner from the Additional Income tax Officer, Raichur, to the Income tax, Officer, Special Circle, Hyderabad.
There was, however, an order passed by the Commissioner shortly before May 19, 1955, transferring the cases of the petitioner from the Income tax (1) ; , 235.
(2) (3) ; 268 Officer, Special Circle, Hyderabad, to the main Income tax Officer, Raichur.
The petitioner thus reverted to the Income tax Officer, Raichur, and it passes one 's imagination what possible argument he can urge on the score of inconvenience and harassment.
The whole attitude of the petitioner is motivated by an intention to delay the payment of income tax legitimately due by him to the Revenue trying to take advantage of a mere technicality.
In the second group, there were orders passed by the Commissioner of Income tax transferring the cases of the petitioners from the Income tax Officer, "AWard, Amritsar, or the Income tax Officer, 'F 'Ward, Amritsar, to the Income tax Officer, Special Circle, Amritsar.
Both these officers were situated in the same building and under the same roof.
The argument of inconvenience and harassment can, under these circumstances, be hardly advanced by them.
There is moreover another feature which is common to both these groups and it is that none of the petitioners raised any objection to their cases being transferred in the manner stated above and in fact submitted to the jurisdiction of the Income tax Officers to whom their cases had been transferred.
It was only after our decision in Bidi Supply Co. vs The Union of India, (supra), was pronounced on March 20, 1956, that these petitioners woke up and asserted their alleged rights, the Amritsar group on April 20, 1956, and the Raichur group on November 5, 1956.
If they acquiesced in the jurisdiction of the Income tax Officers to whom their cases were transferred, they were certainly not entitled to invoke the jurisdiction of this Court under article 32.
It is well settled that such conduct of the petitioners would disentitle them to any relief at the hands of this Court (Vide Halsbury 's Laws of England ', Vol.
II, 3rd Ed., p. 140, para 265; Rex vs Tabrum, Ex Parte Dash(1); 0. A. 0.
K. Lakshmanan Chettiar vs Commissioner, Corporation of Madras and Chief Judge,Court of Small Causes, Madras(2) ).
The orders of transfer made by the Commissioner of Income tax or the Central Board of Revenue, as the (1) (2) [1927] 1.
L. R. 269 case may be, against the three groups of petitioners, viz., Sriram Jhabarmull group, the Raichur group and the Amritsar group, cannot, therefore, be challenged by them as unconstitutional and void This leaves two sets of petitioners, the petitioners in Petitions Nos.
97 & 97 A of 1956 and the petitioners in Petitions Nos.
44/56 and 85/56.
Petitions Nos.
97 & 97 A of 1956 : The petitioners are oilmill owners, merchants and commission agents, carrying on business at Sahibganj in the district of Santhal Parganas and have a branch at 97, Lower Chitpur Road, Calcutta.
They were alleged to have concealed income exceeding Rs. 8 lakhs and indulged in business activities spread over a wide area resulting in large profits not disclosed in the books of account or in the various returns filed by them.
After the judgment of this Court in Surajmull Mohta & Co. vs A. V. Viswanatha Sastri(2), about 320 cases referred to the Income tax Investigation Commission under section 5 (4) of Taxation on Income Investigation Commission Act (XXX of 1947) were affected and had to be reopened under section 34 (IA) of the Income tax Act.
To dispose of these cases, "since they involved many back years ' cases" quickly and promptly, special circles without reference to area were created at Bombay and Calcutta, because the existing circles, whose hands were full, could not take up this extra work.
These 320 cases were distributed between these circles on the basis of the geographical area to which these assessees belonged.
The petitioners belonged to Bihar and had a branch at Calcutta and their cases were, therefore, allotted to one of the Central Circles at Calcutta.
Later on in October 1954, this Court struck down section 5 (1) of the Taxation on Income Investigation Commission Act (XXX of 1947) in Meenakshi Mills Ltd. vs Viswanatha Sastri.
(2 ) and as a result thereof cases referred under that section and pending with the (I) [1055] 1 S.C. R. 448.
(2) [1955] I S.C. R. 787.
270 Income tax Investigation Commission on July 17,1954, could not be preceded with under the provisions of that Act.
These cases numbering about 470 had to be reopened under section 34 (1A) of the Income tax Act.
The Government thought that as in the earlier lot of cases, it would help speedier disposal of the cases, if they were allotted to Income tax Officers appointed without reference to area to deal with the same.
In addition to the circles already created in Bombay and Calcutta, five more circles at Calcutta and 4 more circles at Bombay and 9 more circles at important centers such as Kanpur, Ahmedabad, Madras and Delhi were set up to deal with all these cases.
As a result of the influx of these cases, it was found that the 9 circles at Calcutta had about 280 cases of assessees belonging to Calcutta itself to dispose of and therefore cases not belonging to that area had to be taken out and assigned to one of the newly created circles, Where the work load was low.
It was found then that Central Circle VI had a lower work load compared to other circles and, therefore, the cases of the petitioners were transferred to the Income tax Officer, Central Circle VI, Delhi.
Having regard to these circumstances which are disclosed in the affidavits of Shri V. Gouri Shankar, Under Secretary, Central Board of Revenue, dated November 19, 1956, and December 3, 1956, it is clear that the transfer of the cases of the petitioners, firstly, from the Income tax Officer, Special Circle, Patna, to the Income tax Officer, Central Circle XI, Calcutta, and next, from the latter officer to the Income tax Officer, Central Circle VI, Delhi, were made as a matter of administrative convenience only.
It further appear; from the said affidavits that the examination of accounts and the evidence was done at the places desired by the assessees in order to suit their convenience and the Income tax Officers were instructed accordingly.
As a matter of fact the Income tax Officer, Central Circle VI, Delhi, went to Sahibganj and examined the accounts there in the case of the petitioner No. 1 and when the assessee voluntarily requested the Income tax Officer to have 271 the examination done at Delhi (the assessee had then come to Delhi for some other work of his) the Income tax Officer promptly posted the case and examined the accounts.
If these were the circumstances under which the cases of the petitioners were transferred from Patna to Calcutta and from Calcutta to Delhi and the petitioners were afforded all conveniences in the matter of the examination of their accounts and evidence, there is no basis for the charge that the orders of transfer made against these petitioners were in any manner whatever discriminatory.
Petitions Nos. 44 and 85 of 1956 The petitioner in Petition No. 44/56 is Shri A. L. Sud who originally belonged to Hoshiarpur district in Punjab and since 1948 resides and has his office in Calcutta.
Bhagwan Das Sud as the karta thereof.
This Hindu undivided family has been carrying on business at Hoshiarpur and at various other places like Bareilly, Calcutta and Bombay.
The said joint family of Bhagwan Das Sud & Sons was alleged to have evaded income tax to a large extent and had inter related transactions in respect of their dealings, the petitioner being a copartner of the said joint family.
It was, therefore, considered necessary in order to have a proper assessment of the petitioner 's income that his case also should be dealt with by the Income tax Officer assessing the joint family and the petitioner was informed that, in the matter of hearing, he would be put to least inconvenience.
These were the circumstances under which his case was transferred from the Income tax Officer, Survey Circle, Calcutta, to the Income tax Officer, Special Circle, Ambala, by an order of the Central Board of Revenue dated June 29, 1955.
The case of M/S. Bhagwan Das Sud & Sons, petitioners in Petition No. 85/56; had already been 272 transferred by the Commissioner of Income tax from the Income tax Officer, Hoshiarpur, to the Income tax Officer, Special Circle, Ambala, by an order under section 5(7A) of the Act dated October 20, 1953.
The petitioners had their office at Hoshiarpur in Punjab but their activities were scattered in various parts of India some of them being in Assam, Bombay, Bareilly, Calcutta and Kanpur in respect of the contracts they undertook with the Government and other parties.
They were alleged to have concealed income assessable to income tax exceeding Rs. 30 lakhs and it was thought necessary to make proper investigation of their widespread activities resulting ' in extensive evasion of income tax.
These were the circumstances under which their case was transferred to the Incometax Officer, Special Circle, Ambala, as above.
That officer, however, agreed to examine the accounts and evidence at Hoshiarpur itself to suit the convenience of the petitioners but the petitioners did not agree on the ground that their Advocate was to come from Delhi and therefore Ambala would suit them as well.
The cases of both the petitioners thus came to be transferred from the respective Income tax Officers who used to assess them at Calcutta and Hoshiarpur respectively to the Income tax Officer, Special Circle, Ambala, and all conveniences were afforded to them in the matter of the examination of their accounts and evidence.
The argument of discrimination and inconvenience and harassment thus loses all its force and the orders of transfer made against them cannot be challenged as in any way discriminatory.
It may be noted that in the last mentioned four petitions, viz., Petitions Nos. 97 & 97 A of 1956 and Petitions Nos.
44/56 and 85/56, the Central Board of Revenue or the Commissioner of Income tax, as the case may be, instructed the Income tax Officers concerned to minimise the inconvenience caused to the assessees and even proceed to their respective residences or places of business in order to examine the accounts and evidence.
Inspite of the denials of the assessees in the affidavits which they filed in 273 rejoinder, we presume that such facilities will continue to be afforded to them in the future and the inconvenience and harassment which would otherwise be caused to them will be avoided.
A humane and considerate administration of the relevant provisions of the Income tax Act would go a long way in allaying the apprehensions of the assessees and if that is done in the true spirit, no assessee will be in a position to charge the Revenue with administering the provisions of the Act with " an evil eye and unequal hand ".
We have, therefore, come to the conclusion that there is no substance in these petitions and they should be dismissed with costs.
There will, be, however, one set of costs between respondents in each of the petitions and one set of costs in each group of these petitions, viz., (1) Petitions Nos.97 & 97 A of 1956, (2) Petitions Nos.44/56 and 85/56, (3) Petitions Nos. 86/56, 87/56, 88/56, 111/56, 112/56 and 158/56, (4) Petitions Nos.211 to 215 of 1956, and (5) Petitions Nos. 225 to 229 of 1956.
| These petitions on behalf of the assessees raised the common question as to the constitutionality of section 5(7 A) of the Indian Income tax Act, which was raised but not decided by this Court in Bidi Supply Co. V. The Union of India, ; Reliance was placed on the observations of Bose, J. in his Minority judgment in that case and it was contended that the section read with the explanation, subsequently added to it as a result of that decision,conferred arbitrary and uncontrolled powers of transfer on the Income tax Commissioner and the Central Board of Revenue, was discriminatory and violative of the provisions of article 14 and imposed an unreasonable restriction on the right to carry on trade or business in contravention of article 19(1)(g) of the Constitution.
It was further contended that the omnibus wholesale orders of transfer made without any reference to any particular case or without any limitation as to time were inconvenient and discriminatory and ran counter to the majority judgment in that case.
The contention of the Central Board of Revenue, supported by affidavits filed on its behalf, was that the section was intended to minimize administrative inconvenience, there was no discrimination after transfer because the same relevant provisions of the Act as applied to others similarly situated, were applied after the transfer and any resulting inconvenience to the assessee was sought to be minimised by transferring his case either to the nearest area or, where that was not feasible, by examining his accounts or evidence, if required by him, at a place suited to his convenience and that the wholesale omnibus orders of transfer were covered by the explanation: Held, that section 5(7A) of the Indian Income tax Act was a measure of administrative convenience, was constitutionally valid and did not infringe any of the fundamental rights conferred by articles 14 and (19)(g) of the Constitution and the orders of transfer in question were saved by the explanation: to that section and. were constitutionally valid.
30 234 The right conferred on the assessee by section 64(1) and (2) of the Act was not an absolute right and must be subject to the primary object of the Act itself, namely, the assessment and collection of income tax, and where the exigencies of tax collection so required, the Commissioner of Income tax or the Central Board of Revenue had the power under section 5(7A) of the Act to transfer his case to some other officer outside the area where he resided or carried on business and any difference in his position created thereby as compared to that of others similarly situated would be no more than a minor deviation from the general standard and would not amount to a denial of equality before the law.
This discretionary power vested in the Authorities by the section to override the statutory right of the assessee must be distinguished from the discretion that has to be exercised in respect of a fundamental right guaranteed by the Constitution and the two tests to judge whether it was discriminatory would be, (I) whether it admitted of the possibility of any real and substantial discrimination and (2) whether it impinged on a fundamental right guaranteed by the Constitution and, so judged, the discretion vested in the Authorities by section 5(7 A) of the Act was not at all discriminatory nor did the section impose any unreasonable restriction on the fundamental right to carry on trade or business.
Bidi Supply Co. vs The Union of India, ; M.K. Gopalan vs The State of Madhya Pradesh, (1955) I S.C.R.168 ; The State of West Bengal vs Anwar Ali Sarkay, ; ; Dayaldas Kushiram vs Commissioner of Income tax, (Central),, I.L.R. ; Dayaldas Kushiram vs Commissioner of Income tax, Central, ; and Wallace Brothers & Co., Ltd. vs Commissioner of Income tax, Bombay, Sind & Baluchistan, A.I.R. 1945 F.C. 9, discussed.
The explanation added to the section by the Amending Act XXVI Of 1956, was intended to expand the connotation of the ' term 'case ' used in the section and included both pending proceedings as also other proceedings under the Act which might be commenced in respect of any year after the date of transfer and as such the orders in question were not unconstitutional or void.
The Income Tax Authorities, however, must be held bound by the statements made in their affidavits and where an assessee could make out a prima facie case of a mala fide or discriminatory exercise of the discretion ' vested in them, the Court will scrutinise the circumstances in the light of those statements and where necessary quash an abuse of the power under articles 226 and 32 Of the Constitution.
Ratanlal Gupta vs The District Magistrate of Ganjam, I.L.R. 1951 Cuttack 441 and Brundaban; Chandra Dhir Narendra vs 235 The State of Orissa (Revenue Department), I.L.R. 1952 Cuttack 529, referred to.
The Income tax Authorities should follow the rules of natural justice and, where feasible, give notice of the intended transfer to the assessee concerned in order that he may re_ resent his view of the matter and record the reasons of the transfer, however briefly, to enable the Court to judge whether such transfer was mala fide or discriminatory, if and when challenged.
|
Summarize this legal judgement text concisely | ivil Appeal No. 357 of 1957.
Appeal by special leave from the judgment and order dated February 28, 1956, of the Allahabad High Court (Lucknow Bench) in Misc.
Case No. 4 of 1955 and Civil Revision No. 189 of 1955, arising out of the order dated August 6, 1955 of the Civil Judge, Sitapur in Suit No. 16 of 1953.
Vidya Sagar, for the appellant.
Iqbal Ahmad, section N. Andley and Rameshwar Nath, for the respondent.
January 22.
The following Judgment of the Court was delivered by SARKAR J.
The respondent, a scheduled bank, sued the appellant in the court of the Civil Judge, Sitapore in Uttar Pradesh, for the recovery of money due under an instrument of mortgage.
The appellant contested the suit on several grounds one of which was that he was entitled to relief under the Uttar Pradesh Zamindar 's Debt Reduction Act (U.P. XV of 1953) which reduced the amount recoverable on a debt as defined in it.
Now a debt was defined in the Act in these terms: 2(f): "debt" means an advance in cash or in kind and includes any transaction which is in substance a debt but does not include an advance as aforesaid made on or after the first day of July, 1952 or a debt due to (i) the Central Government or Government of any State ; (ii) a local authority; (iii) a scheduled bank; (iv) a co operative society; and 1152 (v) a waqf, trust or endowment for a charitable or religious purpose only.
(vi) a person, where the debt was advanced on his behalf by the Court of Wards to a ward.
As the respondent was a scheduled bank the debt due to it from the appellant was not a debt within this definition and consequently, no relief would appear to be available to the appellant under the Act in respect of that debt.
The appellant, however, contended that the definition in so far as it excluded certain debts offended article 14 of the Constitution in as much as it made an arbitrary distinction between several classes of debtors and denied the excluded debtors, the equal protection of the law and that hence that portion of the definition which excluded certain debts was invalid and should be struck out and the rest of the definition should be left as operative.
If the appellant 's contention was justified, the definition would have to run as follows: "debt" means an advance in cash or in coin and includes any transaction which is in substance a debt, and would then include the debt due by the appellant to the respondent.
If this was the correct position, then the appellant would be entitled to all the reliefs granted by the Act.
This defence, therefore, raised a question as to the validity of a provision in the Act.
So the appellant made an application to the Civil Judge, Sitapur, under the proviso to section 113 of the Code of Civil Procedure asking him to state a case for the opinion of the High Court at Allahabad to which he was subordinate as to the invalidity of the impugned portion of the definition.
That proviso is in these terms: Provided that where the Court is satisfied that a case pending before it involves a question as to the validity of any Act, Ordinance or Regulation or of any provision contained in an Act, Ordinance or Regulation, the determination of which is necessary for the disposal of the case, and is of opinion that such Act, Ordinance, Regulation or provision is invalid or inoperative, but has not been so declared by 1153 the High Court to which that Court is subordinate or by the Supreme Court, the Court shall state a case setting out its opinion and the reasons therefor, and refer the same for the opinion of the High Court.
The learned Civil Judge took the view that the impugned portion of the definition infringed article 14 of the Constitution as it made an arbitrary distinction between several classes of debtors and was therefore invalid, but he held that it was not necessary for the disposal of the case to decide such question of invalidity because even if it was decided in favour of the appellant, the result would be to exclude the entire definition from the Act as the offending portion was not severable from the rest and the appellant would, therefore, be in any event left without the protection of the Act.
In this view of the matter he held that the proviso to section 113 of the Code did not apply and dismissed the application under it.
The appellant then made an application to the High Court at Allahabad for a revision of the order of the learned Civil Judge.
He at the same time made another application to the High Court under article 228 of the Constitution.
That article is in these terms: If the High Court is satisfied that a case pending in a court subordinate to it involves a substantial question of law as to the interpretation of this Constitution the determination of which is necessary for the disposal of the case, it shall withdraw the case and may (a) either dispose of the case itself, or (b) determine the said question of law and return the case to the court from which the case has been so withdrawn together with a copy of its judgment on such question, and the said court shall on receipt thereof proceed to dispose of the case in conformity with such judgment.
The appellant in the latter application prayed that the High Court might be pleased to withdraw the case and either dispose it of itself, or determine the question of the validity of the defintion of debt in the Act and return the case to the court of the Civil Judge, 1154 Sitapur, for final disposal in accordance with such determination.
The High Court disposed of both the applications by one judgment.
It held that there was no dispute as to the constitutional principle which was clear, namely, that every citizen was entitled to the equal protection of the laws and that any enactment which infringed that principle, is to that extent void, and that the only dispute was whether the impugned portion of the definition of a " debt " in the Act was severable from the rest and that was not a question of the interpretation of any provision of the Constitution but one of the construction of the Act itself.
The High Court also held that even if any question of the interpretation of the Constitution arose, a determination of that question was not necessary for the dispogal of the case.
In this view of the matter the High Court dismissed the application in revision and also that under article 228.
From this judgment the present appeal has been filed.
It seems clear to us that the question raised by the appellant in this case comes within the proviso to section 113 of the Code as also article 228 of the Constitution.
The question contemplated by the proviso to section 113 of the Code is as to the validity of an Act or of a provision in it while article 228 of the Constitution has in view a question as to the interpretation of the Constitution.
Now the question raised in the present case is as to the validity of a provision in the Zamindar 's Debt Reduction Act.
This question is, however, also a question as to the interpretation of the Constitution, for the validity of the provision is challenged on the ground that it contravenes an article of the Constitution.
The point that really arises in this appeal is whether it is necessary for the disposal of the case to decide the question of the validity of a portion of the definition of a debt in the Act .
All other conditions necessary for an order being made under the proviso to section 113 of the Code or article 228 of the Constitution exist and as to this there is no serious dispute.
It is 1155 not necessary for us therefore to discuss these conditions.
The courts below held that in either view of the question of the validity of the impugned portion of the definition of a debt, the appellant would be without, the remedy which he sought, because that portion of the definition was not severable from the rest, and therefore it was not necessary to decide that question to dispose of the case.
We are unable to agree with this view.
The question of the validity of the definition in so far as it excluded certain debts having been raised and pressed by the appellant, it had to be decided by the court.
Without a decision of that question the case could not be disposed of.
The fact that in the view of the court the impugned part of the% definition was not severable from the rest and there ' fore in any view of the question as to the validity of the impugned part, the appellant would not get any relief, did not alter the position.
The question as to the severability of the impugned part of the definition from the rest would arise only after it had been decided that the impugned part was invalid and so to be able to say that the impugned part of the definition was not severable from the rest, it had first to be held that that part was invalid.
It could not be said that as the impugned part was not severable from the rest it was not necessary for the disposal of the case to decide the question of the validity of the impugned part.
We, therefore, hold that it is necessary to decide the question of the validity of the impugned part of the definition to dispose of the case.
This appeal is hence allowed.
The High Court will withdraw the case and either dispose it of itself or determine the question of the validity of the definition of a debt in the Zamindar 's Debt Reduction Act and return the case to the Civil Judge, Sitapur, for disposal in accordance with its determination of the ' question.
The appellant will get the costs of this appeal.
Appeal allowed.
| The respondent, a scheduled bank, sued the appellant for recovery of money under a mortgage.
The appellant claimed reduction of the debt under the Uttar Pradesh Zamindari Debt Reduction Act, 1953.
An advance or debt due to a scheduled bank was excluded from the definition of "debt" given in the Act.
The appellant contended that the definition in so far as it excluded certain debts offended article 14 Of the Constitution as it made an arbitrary distinction between several classes of debtors.
The appellant applied to the court under the proviso to section 113 of the Code of Civil Procedure praying that a case be stated for the opinion of the High Court as to the validity of the impugned portion of the definition.
The Court rejected the application.
The appellant made an application in revision to the High Court and also an application under article 228 of the Constitution for withdrawing the case for a decision of the question of the validity of the definition.
The High Court dismissed the applications.
The Courts below held that in either view of the question as to the validity of the impugned portion of the definition, the appellant would be left without the remedy which he sought, because that portion of the definition was not severable from the rest and the whole definition would have to be excluded and therefore it was not necessary to decide that question to dispose of the case 1151 Held, that the question raised by the appellant came both within the proviso to section 113 of the Code and article 228 Of the Constitution.
The question whether the impugned part of the definition contravened article 14 was a question as to the interpretation of the Constitution and that question must be decided first.
The question of severability could arise only after that question had been decided and the impugned part held invalid.
|
Summarize this legal judgement text concisely | Appeal No. 219 of 1953.
Appeal from the judgment and decree dated June 26, 1952, of the Bombay High Court in Appeal No. 20 of 1952 arising out of the judgment and decree dated December 17, 1951, of the said High Court in its ordinary Original Civil Jurisdiction in Suit No. 1623 of 1948.
C. K. Daphtary, Solicitor General of India, M. N. Gharekhan and M. section K. Sastri, for the appellants.
H. D. Banaji, D. P. Madon, section N. Andley, Rameshwar Nath and J. B. Dadachanji, for the respondents.
January 22.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
This appeal arises out of a suit instituted by the appellants in the High Court of Bombay for damages for conversion estimated at Rs. 4,71,670 15 0.
The suit was decreed by Shah J. sitting on the Original Side, but his judgment was reversed on appeal.
by Chagla C.J. and Gajendragadkar J.
Against this judgment, the plaintiffs have 57 440 preferred the present appeal on a certificate under article 133(1)(a) of the Constitution.
Messrs. Maitland Craig Lubricants Ltd. is an American Company engaged in the manufacture and sale of lubricants.
It carried on business in India with its head office at Calcutta and a branch office at Bombay.
The second plaintiff, H. J. Leach, was employed during the years 1933 to 1935 in the Bombay branch of the said Company.
Subsequent thereto, the Company closed its Bombay branch, and eventually wound up its Calcutta office as well, and thereafter its business was taken over firstly by Ewing and Company and then by the defendants.
After he left the service of Maitland Craig Lubricants Ltd., Mr. Leach started business as seller of lubricants on his own account and was importing them through the defendants.
On June 6, 1941, they entered into an agreement, exhibit A, under which Mr. Leach was given an exclusive right to sell lubricants of the make of Maitland Craig Lubricants Ltd., within the limits of Bombay Presidency, Central Provinces, Rajputana and such parts of Central India and Hyderabad as might be determined by the defendants.
The agreement was to continue for a period of five years "unless sooner determined in the manner hereunder provided.
" Clause 14 of the agreement runs as follows: "Notwithstanding anything hereinbefore contained this agreement shall be terminable by either of the parties hereto upon giving to the other three calendar months previous notice in writing expiring at any time but without prejudice to the rights and liabilities of the parties respectively which shall have accrued prior to such termination.
" Clause 16 provides that the agreement was personal to the selling agent, and that he was not to assign or attempt to assign his rights thereunder without the consent of the defendants in writing first obtained.
It is common ground that the dealings between the parties continued on the basis of this agreement during the relevant period.
On March 18, 1944, the first plaintiff, which is a Joint Stock Company, was incorporated under the provisions 441 of the Indian Companies Act, and on March 30, 1944, the second plaintiff assigned his business to it.
On June 13, 1945, the defendants wrote to the second plaintiff that they were cancelling the agency constituted under the agreement dated June 6, 1941, as he had assigned the same to the first plaintiff without obtaining their consent in writing as provided therein.
Before that date, however, the defendants had placed orders for import from America of certain goods which the plaintiffs had required, but these goods were actually received by them after the cancellation of the contract.
The plaintiffs called upon them to deliver those goods to them, but they refused to do so.
Thereupon, the plaintiffs instituted the present suit for damages for conversion alleging that the goods in question were due to them under Government quotas comprised in Nos.
P.L. 1004 to 1007, and that the defendants who had ordered them on their behalf had themselves no title to them.
The plaintiffs also averred that in importing those goods the defendants were acting as their agents.
The defendants repudiated this claim.
They contended that far from they being the agents of the plaintiffs, it was the second plaintiff who was their agent, and that the property in the goods was with the defendants and that the action for damages for conversion was not maintainable.
The suit was tried by Shah J. who held that the plaintiffs were not the agents of the defendants, that the goods in question had been imported by the latter on behalf of the former, and that in refusing to deliver the same to them, the defendants were guilty of conversion.
He accordingly passed a decree referring the suit to the Commissioner for ascertaining the damages.
On appeal, Chagla C.J. and Gajendragadkar J. held that on the terms of the agreement dated June 6, 1941, on which the suit was based, the title to the goods imported by the defendants vested in them, and that it would pass to the plaintiffs only when the defendants endorsed the shipping documents in their favour, and that as that had not been done, the claim for damages on the basis of conversion was misconceived.
They accordingly allowed the appeal, and dismissed the suit.
442 Now, the contention of the appellants before us is that on the facts proved, they were entitled to damages on the basis of conversion.
There is no dispute as to the position in law.
Before the plaintiffs can maintain an action in trover, they must establish that they had title to the goods in question and that further they were entitled to possession thereof when they called upon the defendants to deliver them.
If the parties stood in the relation of sellers and purchasers with reference to the transactions, then the plaintiffs must show that the property in the goods, which initially was with the defendants, passed to them in accordance with the provisions of the Sale of Goods Act.
If, however, the defendants imported the goods as agents of the plaintiffs, then the title to them could undoubtedly be with the latter, and the only question then would be whether the former were entitled to retain possession, as they would be if they had paid the price of the goods on behalf of the principal, and had not been reimbursed that amount.
This question, however, would not arise on the facts of this case, as the defendants denied the title of the plaintiffs to the goods, and there was no refusal by the latter to pay the price.
The main question that arises for determination, therefore, is as to the relationship in which the parties stood with reference to the suit transactions.
It is conceded that to start with, it is the agreement, exhibit A, that governs the rights of the parties.
It is therefore necessary to examine its terms to ascertain the true relationship of the parties thereunder.
It has been already mentioned that under this agreement Mr. Leach was constituted the selling agent of the defendants in certain areas specified therein.
Under exhibit A, the second plaintiff was not to sell the goods below a certain price, and they were also to be sold with the mark, Mait land Craig Lubricants Ltd. The course of business was that the second plaintiff used to intimate to the defendants his requirements.
They would then import those goods in their own names from America under c.i.f. contracts.
After importing them, they would fix their own price for those goods and 443 endorse the shipping documents in favour of the second plaintiff, who would be entitled to clear them at the harbour on payment of 80 per cent.
of the price, the balance of 20 per cent.
being payable on the delivery of the goods by him to his purchasers.
The sales to be effected by the second plaintiff within the area to his own customers were matters which concerned only him and his purchasers.
The defendants had nothing to do with them.
Under cl. 6, the second plaintiff had to "keep the value of his stocks at all times fully insured against fire risk.
" Clause 13 is as follows: " The relationship between parties hereto shall be that of principal and principal only and the selling agent shall have no authority whatsoever except such as may be conferred upon him in writing by the firm to transact any business in the name of the firm or to bind the firm by any contract, agreement or undertaking with or to any third party." In contrast with these terms, there is cl. 4, which provides that the defendants would themselves supply to the Indian Stores Department all their requirements of lubricants within the territory allotted to the second plaintiff, who was to act as their agent in clearing the goods and delivering them to the authorities.
And for this, the second plaintiff was to be paid a commission.
It is clear that the agreement read as a whole is a composite one consisting of two distinct matters.
So far as cl. 4 is concerned, the second plaintiff was merely an agent of the defendants.
As regards the other clauses, the true relationship is, as stated in cl. 13, that the second plaintiff was purchaser of the goods from the defendants, and the conditions relating to the minimum price at which they could be sold and the marking of the goods with the name of Maitland Craig Lubricants Ltd. were only intended to protect their trade interests but that once the shipping document were endorsed by the defendants to the second plaintiff, he became the owner of those goods.
The object of the insurance clause was obviously to safeguard the interests of the defendants with reference to the balance price payable by the second plaintiff.
In this case, we 444 are not concerned with any goods consigned by the defendants for supply to the Government under cl. 4 but with goods which were imported by them for meeting the requirements of the plaintiffs.
The relationship of the parties with reference to those goods, if it is governed by this agreement, is undoubtedly that neither party is agent of the other, and that the defendants are the sellers and the plaintiffs are the purchasers.
If so, the title to the goods would pass to the plaintiffs only when the defendants appropriated them to the contract, as for example, by endorsing the shipping documents, and as that had not been done, the claim for damages on the ground of conversion would be misconceived.
The learned Solicitor General who appeared for the appellants, did not dispute that this was the position under exhibit A.
But he contended that the relationship of seller and purchaser created by the agreement became modified when the Government introduced the licence system.
That was introduced in August ,September, 1941, while the war was on, with a view to regulate and control imports.
The system adopted was that every importer was required to give a statement as to they extent of his import business during the preceding years, and on the basis of that statement, a licence was given to him to import up to a limit.
On September 26, 1941, the second plaintiff applied to the Controller for a licence to import lubricants stating that he had been doing that business for seven years and giving particulars as to the volume of his business.
Sometime in November, a licence was granted to him by the Government.
The defendants also applied for a licence to import lubricants based on the volume of their business and obtained it.
That licence did not include the quantity which they sold to the second plaintiff, and thus the two licences were mutually exclusive.
Mr. Leach would have been himself entitled under the licence to import goods directly from America, but he chose to import them through the defendants as before, because under the terms of the agreement, exhibit A, he would have to pay only 80 per cent.
of the price when clearing the goods.
There was, 445 however, this change in the character of the transaction, that whereas before the licence system the defendants were the purchasers from American Companies under c.i.f. contracts and they then sold the goods to the second plaintiff on a price fixed by them, under the licence system the price payable to them was only what they themselves had to pay to the American sellers with an addition by way of commission on the transaction.
Now, the argument of the appellants is that as they were the persons entitled to import the goods under the licence granted to them, in importing them on their requisition the defendants must be held to have acted for them, and that the relationship between them was no longer one of seller and purchaser under exhibit A but of agent and principal.
To this, the answer of Mr. Banaji, learned counsel for the respondents, was twofold.
He contended firstly that in applying for and obtaining the licence in his own name, the second plaintiff was merely acting as the agent of the defendants, and secondly that the present contention was not raised in the plaint and was, therefore, not open to the appellants.
On the first contention he referred us to the correspondence which passed between the parties at the relevant period.
On September 5, 1941, the defendants wrote to the second plaintiff to send particulars of certain shipments consigned to him so that they could include them in their application for licence, and on September 11, 1941, they further wrote to him that those goods were not to be included in hi,, application for licence.
But the second plaintiff was obviously not agreeable to it, and actually included those very shipments in his application for licence dated September 26, 1941.
The defendants did not pursue the matter further, and wrote to the second plaintiff or December 10, 1941, to intimate to them the number and date of his import licence and continued to import goods for him on the basis of that licence.
Counsel for respondents relied on a letter dated December 11, 1941 in which the defendants advised the second plaintiff to join a group of oil merchants, which was to be formed at Bombay, but that was obviously by way of adviced 446 to him as a customer.
This evidence is too inconclusive and too slender to support the contention that the second plaintiff obtained the licence as the agent of the defendants.
On the other hand, if the true position of the second plaintiff under exhibit A was that he was a. purchaser of goods, then the sales by him of those goods were as owner and the licence issued to him on the basis of those sales must have been given to him in his own right and not as agent of the defendants.
This wag the finding of Shah J. and that has not been reversed on appeal, and we are in agreement with it.
It is next contended that the entire plaint is framed on the footing that the rights of the parties are governed by exhibit A, that there is no averment therein that that agreement had been cancelled or modified, and that a new agreement had been substituted after the licence system was introduced, that the evidence of Mr. Leach in the box was also that exhibit A was in force throughout the period, and that therefore it was not open to the appellants now to contend that the rela tionship of seller and purchaser under exhibit A had been altered into one of agent and principal.
It is true that the plaint proceeds on the basis that exhibit A is in force, and there is no allegation that it had been modified.
But exhibit A had not been wholly abandoned.
It was still in force governing the relationship of the parties in respect of various matters such as delivery of goods on payment of 80 per cent.
of the price.
The plaint does refer to the introduction of the licence system, and the defendants clearly knew as much of the true position thereunder as the plaintiffs, and there could be no question 's surprise.
Under the circumstances, if the rights of the parties had to be determined on the basis of the licence system, we would have hesitated to non suit the appellants merely on the ground that the effect of that system had not been expressly stated in the plaint.
But then, the licence system itself came to an end in March April, 1942, and was replaced by what is known as " Lease and Lend " scheme.
It was under this scheme that the goods which form the subjectmatter of this litigation were imported, and we have therefore to examine what the rights of the parties 447 are with reference to the incidents of that scheme taken along with exhibit A, which is admitted by the appellants to have been in force.
This scheme was introduced by the Government of India as a war measure to facilitate the import of certain essential goods and to conserve them for the effective prosecution of the war.
Oil and lubricants were among the goods which were controlled under this scheme.
Under it, the Government prohibited the direct import of oil and lubricants from America through private agencies, whether individuals, firms or companies and took upon itself to import the required quantity.
An association of importers and dealers in Calcutta called the Central Lubricants Advisory Committee (C.L.A.C.) was formed, and importers were to write to the Committee what quantity they required to be imported on their behalf.
This Committee was a private body, and served as a liaison between the importers and the Government.
A similar Committee was formed at Bombay called the Bombay Lubricants Advisory Committee (B.L.A.C.).
The procedure adopted in the import of goods was this: the importers were to state their requirements to the Committee which sent the same to the Government.
Then on intimation given by the Government authorities, the dealers would have to make deposits on account of the price to be paid for the goods.
The Government had a purchasing agent in America and he would be required by them to purchase the requisite goods and to arrange to get them transhipped to the destinations in India mentioned by the several dealers.
The shipping documents would be taken in the name of the Government and on payment of the bills endorsed over to the importer for clearance at the harbour.
The features of the system to be noticed are that it was the Government who was the importer of the goods and the dealers became entitled to the goods only on the shipping documents being endorsed to them by the Government.
Now, so far as the plaintiffs are concerned, the facts are that they made no deposits with the Government, 58 448 and their names were not in the list of traders for whom the Government imported the goods.
They had direct dealings only with the defendants and sent their requirements to them.
The defendants would in their application to the Government include what the plaintiffs required as well as what they themselves required and make the necessary deposits for all the goods.
But all that would stand only in their name.
Though it would be possible to ascertain by reference to the correspondence between the parties which of the orders placed by the defendants with the Government related to the requirements of the plaintiffs, so far as the Government itself was concerned it knew only of the defendants as importers, and it was in their name that.
it would endorse the shipping documents, and it was only when the defendants in their turn endorsed the same to them that the plaintiffs would get title to the goods, and the evidence of Mr. Leach makes it clear that this had not been done, as regards the shipments with which the suit is con cerned.
This is what he says in his deposition. " The goods were shipped all to the order of the Government of India Separate documents were drawn up in respect of the consignments which were to be supplied to each of the trader according to his requirement submitted to Government.
The traders who submitted their requirements cleared the goods by paying the amount of the bills.
The Government did not make any allocation to me.
I depended on the defendants for obtaining my requirements from the Government.
I did not make any cash deposit as required of the dealer.
1 made no deposit with the Government in respect of the quantity which I wanted.
The entire deposit was made with the Government by the defendants even in respect of my requirements.
The defendants endorsed over the documents in my favour for goods which were meant for me.
Excepting for the admitted portions the documents for remaining part of PL.
1004 to 1007 were not handed over to me or endorsed in my favour, except to the extent to which the goods were delivered," 449 The evidence of Sir John Burder for the defendants was "the shipping documents were received in the name of the defendants ".
It is thus clearly established that with reference to the goods comprised in P.L. 1004 to 1007, which formed the subject matter of the suit, the shipping documents had not been made out in the name of the plaintiffs, nor had the defendants in whose names they were taken, endorsed the same to them.
That being so, unless the plaintiffs established that the defendants were importing the goods as their agents, they would not have title to them, and the claim for damages on the basis of conversion must fail.
We should mention that the appellants relied on some of the letters written by the defendants as showing that they recognised the plaintiffs as having the title to the goods.
Thus, on August 12, 1944, the defendants wrote to the plaintiffs " We confirm that the consignment is for you ", and on March 24, 1945, they wrote, " We enclose herewith a statement showing quantities and grades that have been ordered by Government on your account against order P.L. 1006/10" But these statements are quite consistent with the position of the defendants as sellers who had ordered the goods on the requisition of the plaintiffs, and do not import that title thereto had passed to them, which could be only after the goods came into existence and were appropriated.
That did not happen in this case, and the shipping documents continued in the name of the defendants.
We therefore agree with the learned Judges that on the pleadings and on the evidence the claim for damages on the footing of conversion must fail.
That would entail the dismissal of this appeal, but the plaintiffs have applied to this Court for amendment of the plaint by raising, in the alternative, a claim for damages for breach of contract for non delivery of the goods.
The respondents resist the application.
They contend that the amendment introduces anew cause of action, that a suit on that cause of action could now be barred by limitation, that the plaintiffs had ample opportunity to amend 450 their plaint but that they failed to do so, and that owing to lapse of time the defendants would be seriously prejudiced if this new claim were allowed to be raised.
There is considerable force in the objections.
But after giving due weight to them, we are of opinion that this is a fit case in which the amendment ought to be allowed.
The plaintiffs do not claim any damages for wrongful termination of the agreement, exhibit A, by the notice dated June 13, 1945.
What they claim is only damages for non delivery of goods in respect of orders placed by them and accepted by the defendants prior to the termination of the agreement by that notice.
Clause 14 of the agreement expressly reserves that right to the plaintiffs.
The suit being founded on exhibit A, a claim based on Cl.
14 thereof cannot be said to be foreign to the scope of the suit.
Schedule E to the plaint mentions the several indents in respect of which the defendants had committed default by refusing to deliver the goods, and the damages claimed are also stated therein.
The plaintiffs seek by their amendment only to claim damages in respect of those consignments.
The prayer in the plaint is itself general and merely claims damages.
Thus, all the allegations which are necessary for sustaining a claim for damages for breach of contract are already in the plaint.
What is lacking is only the allegation that the plaintiffs are, in the alternative, entitled to claim damages for breach of contract by the defendants in not delivering the goods.
It is no doubt, true that courts would, as a rule, decline to allow amendments, if a fresh suit on the amended claim would be barred by limitation on the date of the application.
But that is a factor to be taken into account in exercise of the discretion as to whether amendment should be ordered, and does not affect the power of the court to order it, if that is required in the interests of justice.
In Charan Das vs Amir Khan (1) the Privy Council observed: " That there was full power to make the amendment cannot be disputed, and though such a power (1) [1920] 47 I.A. 255.
451 should not as a, rule be exercised where the effect is to take away from a defendants, legal right which has accrued to him by lapse of time, yet there are cases where such considerations are out weighed by the special circumstances of the case.
Vide also Kisan Das vs Rachappa In the present case, apart from the contents of the plaint already set out, there is the fact that the defendants cancelled the contract without strictly complying with the terms of cl. 14.
The ground on which they repudiated the contract was that the second plaintiff had assigned his interests to the first plaintiff ; but the record shows that subsequent to the assignment the defendants had business transactions with both the plaintiffs and therefore the ground for cancellation appears to have been a mere device to deprive the plaintiffs of the benefits of the orders which they had placed.
We are of opinion that the justice of the case requires that the amendment should be granted.
The plaintiffs will accordingly be allowed to amend the plaint as follows: " 12(a) In the alternative and without prejudice to the claim on the footing of conversion, the plaintiffs say that by reason of the facts aforesaid, there was a contract between the parties whereby the defendants undertook to supply and deliver to the plaintiffs (or either of them) the goods ordered out by Government on their (the plaintiffs ') account and included in the quotas PL.
1004 PL.
The said goods arrived in Bombay, but the defendants failed and neglected to deliver the same though demanded, and in fact repudiated their obligation to deliver.
The plaintiffs say that they were always ready and willing to pay for and take delivery of the same.
The defendants at all material times well knew that the plaintiffs had purchased the same for resale and for fulfilment of contracts of sale and supply.
The plaintiffs claim damages as per particulars.
" This appeal must accordingly be allowed, the decree under appeal set aside, and the suit remanded for (1) Bombay 644.
452 rehearing to the trial court.
The defendants will file their written statement to the amended claim and the suit will be tried and disposed of in accordance with law.
There remains the question of costs.
As the plaintiffs are getting an indulgence, they must pay the costs of the defendants both in the suit and in the appeal to the Bombay High Court.
So far as costs of this appeal are concerned, as the defendants persisted in their contention that the plaintiffs were only acting as their agents, a contention which, if upheld, would have furnished a conclusive answer to the amended claim as well, we direct the parties to bear their own costs in this Court.
Appeal allowed.
Case remanded.
| The appellants filed a suit for damages for conversion against the respondents on the allegations that the respondents were the agents of the appellants, that the appellants had placed orders for certain goods with the respondents, and that the respondents had actually imported the goods but refused to deliver them to the appellants.
The suit was dismissed on the findings that the parties stood in the relationship of seller and purchaser, and not agent and principal and that the title in the goods could only pass to the appellants when the respondents appropriated them to the appellants ' contracts.
In appeal before the Supreme Court, the appellants applied for amendment of the plaint by raising, in the alternative, a claim for damages for breach of contract for nondelivery of the goods.
All the allegations necessary for sustaining a claim for damages for breach of contract were already present in the plaint and the only allegation lacking was that the appellants were, in the alternative, entitled to claim damages for breach of contract by the non delivery of the goods.
But a fresh suit on the amended claim was barred by limitation on the date of the application.
Held, that this was a fit case in which the amendment should be allowed.
The fact that a fresh suit on the amended claim was (1) A.I.R. [1954] Raj. 211.
439 barred by limitation is a factor to be taken into consideration in the exercise of the discretion as to whether the amendment should be ordered or not, and does not affect the power of the court to order it, if that is required in the interests of justice.
Charan Das vs Amir Khan, L.R. 47 I.A. 225 and Kisan Das vs Rachappa, Bombay 644, followed.
To maintain an action in trover the plaintiffs must establish that they had title to the goods in question and that further they were entitled to possession thereof when they called upon the defendants to deliver them.
If the parties stood in the relation of sellers and purchasers with reference to the transactions, then the plaintiffs must show that the property in the goods, which initially was with the defendants had passed to them in accordance with the provisions of the Sale of Goods Act.
If, however, the defendants imported the goods as agents of the plaintiffs, then the title to them would undoubtedly be with the latter, and the only question then would be whether the former were entitled to retain possession, as they would be if they had paid the price on behalf of the principals, and had not been reimbursed that amount.
|
Summarize this legal judgement text concisely | Appeal No. 178 of 1955.
Appeal by special leave from the judgment and decree dated December 3, 1951, of the High Court of Judicature at Madras in Second Appeal No. 766 of 1947 against the decree dated November 19, 1946, of the District Court of Anantapur in Appeal No. 130 of 1945 arising out of the decree dated January 31, 1945, of the Court of Subordinate Judge, Anantapur, in Original Suit No. 10 of 1944.
M. C. Setalvad, Attorney General of India, P. Ram Reddy, K. Sundararajan and M. section K. Aiyangar, for the appellant.
C. K. Daphtary, Solicitor General of India, and K. R. Chaudhury, for the respondent.
December 5.
The Judgment of the Court was delivered by JAGANNADHADAS J.
The plaintiff in the action out of which this appeal arises brought a suit for declaration of his title to a one third share in the suit properties and for partition and recovery of that share.
The suit was dismissed as having been barred by limitation and adverse possession.
On appeal the District Judge reversed the decision and decreed the suit.
High Court maintained the decree of the District Judge on second appeal.
Hence this appeal before us on special 197 leave by the first defendant in the action, who is the appellant before us.
The main question that arises in the appeal is whether the plaintiff has lost his right to a one third, share in the suit property by adverse possession.
The property in suit belonged to one Venkata Reddy.
He died an infant on Augutst 25, 1927.
At that time, the properties were in the possession of the matemal uncles of the father of the deceased Venkata Reddy.
One Hanimi Reddy, an agnatic relation of Venkata Reddy, filed a suit O.S. No. 26 of 1927 for recovery of the properties from 'the said matemal uncles and obtained a decree therein on March 15, 1929.
A Receiver was appointed for the properties in February, 1928, during the pendency of the suit and presumably the properties were in his possession.
This appears from the decree which shows that it directed the Receiver to deliver possession to the successful plaintiff in that suit ' Hanimi Reddy obtained actual possession of these properties on January 20, 1930, and continued in possession till he died on August 16, 1936.
The first defendant in the present action who is the appellant before us is a son of the brother of Hanimi Reddy and came into possession of all the properties as Hanimi Reddy 's heir.
The respondent before us is the plaintiff.
The present suit was brought on the allegation that the plaintiff and the second defendant in the suit, his brother, were agnatic relations of Venkata Reddy, of the same degree as Hanimi Reddy and that all the three were equal co heirs of Venkata Reddy and succeeded to his properties, as such on his death.
It was alleged that though Hanimi Reddy filed the prior suit and obtained possession of the properties thereunder, he did so as one of the do heirs, with the consent of the plaintiff and the second defendant and that he was enjoying the properties jointly with the plaintiff and his brother as tenants in common but that the first defendant, who came into possession on the death of Hanimi Reddy denied the title of the plaintiff and his brother in or about the year 1940.
The plaint in the present action was filed originally in the District Munsif s Court on October 23, 1941, and was ordered 198 to be returned for presentation; to the District Judge 's Court on November 30, 1942.
It was actually re presented in that Court on December 2, 1942.
One of thequestions raised in the suit was that the, suit was, barred by limitation on the ground that it must be taken to have been ingtituted not on October(23, [1941], but on December 2, 1942.
This plea was upheld by the trial Court.
On first appeal the District Judge held that the plaintiff is entitled to the benefit of a. 14 of the Limitation Act and that the suit must be taken as having been instituted on October 23, 19419 and is; therefore, in time.
He accordingly decreed, the suit.
In the High Court the question as to whether the plaintiff was entitled to the benefit of.
14 of the, Limitation Act, though raised, was not finally decided.
It was held that the possession of Hanimi Reddy was not adverse to the plaintiff and that accordingly he was entitled to the decree as prayed for.
The question as to the non availability of the benefit of section 14 of the Limitation Act to the plaintiff in the present suit has not been, urged before us and the finding of the District Judge that the plaint must be taken to have been validly presented on October 23, 1941, stands.
That date must, therefore, be taken to be the commencement of the action for the purposes of this appeal.
It will be noticed that this date is more than fourteen years from the date when the succession opened to the properties of Venkata Reddy on August 25, 1927, but is less than twelve years after Hanimi Reddy obtained actual possession in execution of his decree on January 20, 1930.
The contention of the learned Attomey General for the appellant first defendant is that the possession of Hanimi Reddy was adverse, that the plaintiff as well as the second defendant lost their right by the adverse possession of Hanimi Reddy and his successor, the first defendant, and that for this purpose not only the period from January 20, 1930, up to October 23, 1941, is to be counted but also the prior period during the pendency of Hanimi Reddy 's suit when the Receiver was in possession of the suit properties.
It is the.
validity of 199 these two parts of the argument which has to be considered.
It will be convenient to consider in the first instance whether or not the possession of Hanimi Reddy from January 20, 1930, up to the date of his death in 1936 was adverse to his co heirs.
The :facts relevant for this pur ,pose are the following.
At the date when Venkata Reddy died his properties were in the custody of the two maternal uncles of his father.
Hanimi Reddy filed his suit on the allegation, as already stated above, that he was the nearest agnatic relation alive of the deceased minor Venkata Reddy and as his next rightful heir to succeed to all the estate, movable and immovable, of the said minor, set forth in the schedules thereto.
He appended a genealogical tree to his plaint which showed his relationship io Venkata Reddy through a common ancestor and showed only the two lines of himself and Venkata Reddy.
Plaintiff and the second defendant belong to another line emanating from the same common ancestor but that line was not shown and the plaintiff and second defendant were ignored.
The first defendant in the present suit did not admit the relationship of plaintiff and second defendant in his written statement.
He disputed that the father of the plaintiff and second defendant was descended from the common ancestor either by birth or by adoption, as shown in the genealogical table attached to the present plaint.
It is possible that this may have been the reason for Hanimi Reddy ignoring the plaintiff and the second defendant in his suit.
However this may be, at the trial in this suit it was admitted that the plaintiff and the second defendant are the agnatic relations of Venkata Reddy of the same degree as Hanimi Reddy.
The defendants in the earlier suit who were in possession on that date claimed to retain possession on behalf of an alleged illatom sonin law (of Venkata Reddy 's father) a son of the second defendant therein.
It may be mentioned that in that part of the country (Andhra) an illatom son in law is a boy incorporated into the family with a view to give a daughter in marriage and is customarily recognised as an heir in the absence of a natural born son, This 200 claim appears to have been negatived and the suit was decreed.
During the pendency of the suit a Receiver was appointed in February, 1928.
He presumably took possession though the date of his taking possession is not on the record.
The decree in that suit dated March 15, 1929, is as follows: "This Court doth order and decree that plaintiff do recover possession of immovable property and movables in the possession of the Receiver.
" It is in the evidence of the first defendant himself as D.W. I that the properties, were taken possession of by Hanimi Reddy on January 20, 1930.
The plaintiff examined himself as P.W. 1 to substantiate the case as set out in his plaint that he and the second defendant and Hanimi Reddy were enjoying the properties jointly as tenants in common.
The relevant portion of his evidence is as follows: "Annu Reddy (Hanimi Reddy) uncle of defendant " and myself filed 0.
section No. 26 of 1927, District Court, Anantapur same as O.S. No. 24 of 1928, Sub Court, Anantapur for the properties of the deceased Venkata Reddy.
As Hanimi Reddy was the eldest member, he was attending to the conduct of that suit.
I was also coming to Court along with him.
The suit ended in our favour.
Hanimi Reddy took possession through Court after the decree in the year 1930.
Since then both Hanimi Reddy and myself have been in joint possession and enjoyment of the same.
" In cross examination he said as follows: "I told Hanimi Reddy that I would also join him as a party in O.S. 24 of 1928.
He said there was no need for me to join and that he would give my share to me. . . .
I did nut file any application to be impleaded as a defendant. . . .
I have nothing in writing to show that Hanimi Reddy was giving me any produce from the suit lands.
" The first defendant filed the plaint, judgment and decree in Hanimi Reddy 's suit as also pattas, cist receipts and lease deeds taken by Hanimi Reddy in his time.
With reference to this evidence the trial Court found as follows; 201 "The documents filed on behalf of the first defendant completely establish that Hanimi Reddy filed the suit in his individual capacity and obtained possession thereof.
There is nothing to indicate that either the plaintiff or the second defendant took any interest in those proceedings. . . .
There is no evidence of Hanimi Reddy having given any produce to the plaintiff or to the second defendant. . .
The plaintiff and the second defendant have been excluded from participation of profits to their knowledge since 1930.
" The learned District Judge found on appeal (when the same was remanded to him for a finding by the High Court) as follows: "I have no hesitation in holding that the plaintiff had nothing to do with the institution or conduct of the suit 0.
section No. 24 of 1928 on the file of the Sub Court of Anantapur, and that he never had any actual joint enjoyment of suit properties with the late D. Hanimi Reddy or the first defendant.
" He has not given a finding as to whether the non participation of the profits by the plaintiff and the second defendant was in the nature of exclusion to their knowledge.
But there are some admitted and relevant facts brought out in evidence which are significant.
The present evidence as well 'as the ' plaint in the earlier suit of 1927 show clearly that all the parties including Hanimi Reddy were residents of village Mamuduru.
All the suit properties are situated in that village itself; as appears from,the schedules to the plaint in the earlier suit.
Hanimi Reddy and the plaintiff were fairly closely related as appears from the plaintiff 's admission as follows: "My brother in law who is also the nephew of Hanimi Reddy was staying with Hanimi Reddy.
My father in law and defendant No. 1 's father in law is the same.
" On these facts the question that arises is whether, in law, the possession of Hanimi Reddy from January, 20, 1930, onwards was adverse to the plaintiff and the second defendant.
26 202 Now, the ordinary classical requirement of adverse possession is that it should be nec vi nec clam nec precario.
(See Secretary of State for India vs Debendra Lal Khan(1)).
The possession required must be adequate in continuity, in publicity and in extent to show that it is possession adverse to the competitor.
(Se(,, Radhamoni Debi vs Collector of Khulna(2)).
But it is well settled that in order.
to establish adverse possession of one co heir as against another it is not enough to show that one out of them is in sole possession and enjoyment of the profits of the properties.
Ouster of the non possessing co heir by the co heir in possession, who claims his possession to be.
adverse, should be made out.
The possession of one co heir is considered, in law, as possession of all the co heirs.
When one co heir is found to be in possession of the properties it is presumed to be on the basis of joint title.
The coheir in possession cannot render his possession adverse to the other co heir not in possession merely by any secret hostile animus on his own part in derogation of the other co heir 's title.
(See Corea vs Appuhamy(3)).
It is a settled rule of law that as between co heirs there must be evidence of open assertion of hostile title, coupled with exclusive possession and enjoyment by one of them to the knowledge of the other so as to constitute ouster.
This does not necessarily mean that there must be an express demand by one and denial by the other.
There are cases which have held that adverse possession and ouster can be inferred when one co heir takes and maintains notorious exclusive possession in assertion of hostile title and continues in such possession for a very considerable time and the excluded heir ' takes no steps to vindicate his title.
Whether that line of cases is right or wrong we need not pause to consider.
It is sufficient to notice that the Privy Council in N. Varada Pillai vs Jeevarathnammal(4) q uotes, apparently with approval, a passage from Culley vs Deod Taylerson(5) which indicates that such a situation may Tell lead to an inference of (1) [1933] L.R. 6i I.A. 78, 82.
(2) [1900] L.R. 27 I.A. 136, 140.
(3) (4) A.I.R. 1919 P.C. 44, 47.
(5) 3 P. & D. 539; 52 R.R. 566.
203 ouster "if other circumstances concur".
(See also Govindrao vs Rajabai(1)).
It may be further mentioned that it is well settled that the burden of making out ouster is on the person claiming to displace the lawful title of a co heir by his adverse possession.
In the present case there can be no doubt that Hanimi Reddy obtained sole possession of the suit properties after the death of Venkata Reddy on the basis of an action against third parties in which he claimed to be the sole nearest male agnate having title to all the properties.
After obtaining possession he was in continuous and undisputed possession of the properties till his death enjoying all the profits thereof.
No doubt in an ordinary case such possession and enjoyment has to be attributed to his lawful title, he being one of the co heirs.
But the plaint in the suit of 1927 and the decree therein render it reasonably clear that he filed the suit and obtained possession on the basis of his having exclusive title ignoring his coheirs.
It is urged that knowledge of the assertion of such exclusive title averred in a plaint cannot be imputed to other co heirs who are not parties to the suit.
But in this case it is not difficult on the evidence to ,say that the plaintiff and the second defendant must have been fully aware, at the time, of the nature of the claim made by Hanimi Reddy in the prior litigation and on the basis of which he obtained possession.
That knowledge is implicit in the very case that they have put forward in the present plaint.
Their case is that the prior suit was brought by Hanimi Reddy with the consent of the plaintiff and the second defendant and on their behalf.
No doubt that specific case has been found against them and that finding is yes judicata between the parties.
But there is no reason why the admission as to the knowledge of the nature of the litigation and the contents of the plaint which such a case necessarily implies should not be attributed at least to the present plaintiff.
It appears reasonable to think that the plaintiff being unable to explain his inaction for over fourteen years after the death of Venkata Reddy has been constrained to put (1) A. I. R. 204 forward a false case that the prior suit by Hanimi Reddy was with his consent and on his behalf.
It is significant that the plaintiff has remained silent with out asserting his right during Hanimi Reddy 's lifetime, and comes forward with this suit after his death, rendering it difficult to ascertain whether the fact of Hanimi Reddy completely ignoring the existence of the plaintiff and the second defendant as co heirs was not in denial of their relationship and consequently of their title as co heirs to their knowledge.
The fact that even so late as in the written statement of the first defendant relationship is denied may be indicative as to why Hanimi Reddy ignored the plaintiff and the second defendant and why they remained silent.
The learned Judges of the High Court thought that there was nothing to show that Hanimi Reddy was aware that plaintiff and second defendant had any rights in the properties as co heirs.
This assumption is contrary to the admission of mutual knowledge of each other 's rights implicit in the plaintiff 's case that Hanimi Reddy brought his suit with the consent of the plaintiff.
In such circumstances and especially having regard to the fact that both the plaintiff and Hanimi Reddy were living in the same village and the plaintiff has put forward a false explanation to account for ' his inaction, a Court of fact might well have inferred ouster.
Sitting on an appeal in special leave, however, we do not feel it desirable to decide the case on this ground.
We, therefore, proceed to consider the further question that arises in the case, viz., whether the Receiver 's possession can be tacked on to Hanimi Reddy 's possession, on the assumption that Hanimi Reddy 's possession on and from January 209 1940, was adverse to the plaintiff.
The learned Attorney General urges that prior possession of the Receiver pending the suit must be treated as possession on behalf of Hanimi Reddy with the animus of claming sole and exclusive title disclosed in his plaint.
In support of this contention he relies on the well known legal principle that when a Court takes possession of properties through its Receiver, such Receiver 's possession is that of all the 205 parties to the action according to their titles.
(See Kerr on Receivers, 12th Ed., p. 153).
In Woodroffe on the Law relating to Receivers (4th Ed.) at p. 63 the legal position is stated as follows: " The Receiver being the officer of the Court from which he derives his appointment, his possession is exclusively the possession of the Court, the property being regarded as in the custody of the law, in gremio legis, for the benefit of whoever may be ultimately determined to be entitled thereto.
" But does this doctrine enable a person who was not previously in possession of the suit properties, to claim that the Receiver must be deemed to have taken possession adversely to the true owner, on his behalf, merely because he ultimately succeeds in getting a decree for possession against the defendant therein who was previously in possession without title.
A 'Receiver is an officer of the Court and is not a particular agent of any party to the suit, notwithstanding that in law his possession is ultimately, treated as possession of the successful party on the termination of the suit.
To treat such Receiver as plaintiff 's agent for the purpose of initiating adverse possession by the plaintiff would be to impute wrong doing to the Court and its officers.
The doctrine of Receiver 's possession being that of the successful party cannot, in our opinion, be pushed to the extent of enabling a person who was initially out of possession to claim the tacking on of Receiver 's possession to his subsequent adverse possession.
The position may conceivably be different where the defendant in the suit was previously in adverse possession against the real owner and the Receiver has taken possession from him and restores it back to him on the successful termination of the suit in his favour.
In such a case the question that would arise would be different, viz., whether the interim possession of the Receiver would be a; dis continuance or abandonment of possession or interrupt.
ion of the adverse possession.
We are not concerned with it in this case and express no opinion on it.
The matter may be looked at from another point of view.
It is well settled that limitation cannot begin 206 to run against a person unless at the time that person is legally in a position to vindicate his title by action.
Mitra 's Tagore Law Lectures on Limitation and Prescription (6th Ed.) Vol.1, Lecture VI, at p. 159, quoting from Angell on Limitation, this Principle is stated in the following terms: " An adverse holding is an actual and exclusive appropriation of land commenced and continued under a claim of right, either under an openly avowed claim, or under a constructive claim (arising from the acts and circumstances attending the appropriation), to hold the land against him who was in possession.
(Angell, sections 390 and 398).
It is the intention to claim adversely accompanied by such an invasion of the rights of the opposite party as gives him a cause of action which constitutes adverse possession.
" Consonant with this principle the commencement of adverse possession, in favour of a person, implies that person is in actual possession, at the time, with a notorious hostile claim of exclusive title, to repel which, the true owner would then be in a position to maintain an action.
It would follow that whatever may be the animus or intention of a person wanting to acquire title by adverse possession his adverse possession cannot commence until he obtains actual possession with the requisite animus.
In the leading case of Agency Company vs Short(1) the Privy Council points out that there is discontinuance of adverse possession when possession has been abandoned and gives as the reason therefor, at p. 798, as follows: " There is no one against whom he (the rightful owner) can bring his action.
" It is clearly implied therein that adverse possession cannot commence without actual possession which can furnish cause of action.
This principle has been also.explained in Dwijendra Narain Roy vs Joges Chandra De(2) at p. 609 by Mookerjee J. as follows : The substance of the matter is that time runs when the cause of action accrues, and a. cause of action accrues, when there is in existence a person who can (1) (2) A.I.R. 1924 Cal.
6oo, 207 sue and another who can be sued. .
The cause of action arises when and only when the aggrieved party has the right to apply to the proper tribunals for relief.
The statute (of limitation) does not attach to a claim for which there is as yet no right of action and does not run against a right for which there is no corresponding remedy or for which judgment cannot be obtained.
Consequently the true test to determine when a cause of action has accrued is to ascertain the time when plaintiff could first have maintained his action to a successful result.
" In the present case, the co heirs out of possession such as the plaintiff and the second defendant were not obliged to bring a suit for possession against Hanimi Reddy until such time as Hanimi Reddy obtained actual possession.
Indeed during the time when the Receiver was in possession, obviously, they could not sue him for possession to vindicate their title.
Nor were they obliged during that time to file a futile suit for possession either against Hanimi Reddy or against the defendants in Hanimi Reddy 's suit when neither of them was in possession.
It appears to us, therefore, that the adverse possession of Hanimi Reddy, if any, as against his co heirs could not commence when the Receiver was in possession.
It follows that assuming that the possession of Hanimi Reddy from January 20, 1930, was in fact adverse and amounted to ouster of the co heirs such adverse possession was not adequate in time by October 23, 1941, the date of suit, to displace the title of the plaintiff.
It follows that the plaintiff respondent before us is entitled to the decree which he has obtained and that the decision of the High Court is, in our view, correct, though on different grounds.
It may be mentioned that objection has been raised on behalf of the respondents before us that the question" of tacking on Receiver 's possession was not in issue in the lower Courts and should not be allowed to be raised here.
In the view we have taken it is unnecessary to deal with this objection.
In the result the appeal is dismissed with costs.
Appeal dismissed.
| V died an infant in 1927 and H, an agnatic relation.
filed a, suit for the recovery of the properties belonging to V which were in the possession of third parties, on the ground that he was the sole nearest male agnate entitled to all the properties.
During the pendency of the suit a Receiver was appointed for the properties in February, 1928.
The suit having been decreed H obtained possession of the properties from the Receiver on January 20, 1930, and after his death in 1936, his nephew, the appellant, got into possession as His heir.
On October 23, 1941, the respondent brought the present suit for the recovery of a one third share of the properties from the appellant on the footing that he and his brother were agnatic relations of V of the same degree as H, that all the three were equal co heirs of V and that H obtained the decree and got into possession on behalf of all the co heirs.
The appellant resisted the suit and contended that the respondent lost his right by the adverse possession of H and his successor and that for this purpose not only the period from January 20, 1930, to October 23, 1941, was to be counted, but also the prior period when the Receiver was in possession of the properties during the pendency of H 's suit.
it was found that the; respondent 's case that H obtained the decree and got possession, from the Receiver on behalf of the other co heirs was not true : Held, that the respondent did not lose his right by adverse possession.
Even assuming that H 's possession from January 20, 1930, was adverse and amounted to ouster of the other co heirs, such adverse possession was not adequate in time to displace the title of the respondent and the period during which the Receiver was in possession could not be added, because (1) the Receiver 's 196 possession could not be tacked on to H 's possession, as a Receiver is an officer of the Court and is not the agent of any party to the suit and notwithstanding that in law his possession is ultimately treated as possession of the successful party on the termination of the suit, he could not be considered as the agent of such party with ' the animus of claiming sole and exclusive title with the view to initiate adverse possession ; and (2) during the time of the Receiver 's possession the respondent could not sue H, and limitation could not therefore run against him.
The possession of one co heir is considered, in law, as possession of all the co heirs and in order to establish adverse possession ouster of the non possessing co heir should be made out and as between them there must be evidence of open assertion of hostile title, coupled with exclusive possession and enjoyment by one of them to the knowledge of the other so as to constitute ouster.
|
Summarize this legal judgement text concisely | Appeal No. 228 of 1953.
Appeal by special leave from the Judgment and Decree dated September 6,1951, of the Bombay High Court in Appeal No. 496 of 1950 from the Judgment and Decree dated March 31, 1950, of the Civil Judge, Senior Division, Kolhapur in Civil Suit No. 23 of 1949.
section C. Isaacs, section N. Andley, Rameshwar Nath and J. B. Dadachanji, for the appellant.
Achhru Ram, G. A. Desai and Naunit Lal, for respondents Nos. 1 and 2. 1957.
February 7.
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 Bombay dates September 6, 1951, by which the said High Court set aside on appeal the decree passed by the Civil Judge (Senior Division) Kolhapur, in Civil Suit No. 23/49 and allowed an amendment of the plaint at the appellate stage, subject to certain conditions, in the circumstances stated below.
The appellant before us was defendant No. 1 in the suit.
Respondents 1 and 2 are the heirs of the original plaintiff and respondent No. 3 was defendant No. 2 in the action.
In 1942 the original plaintiff filed a suit against respondent No. 3 for possession of the suit properties and obtained a decree in ejectment on March 28, 1944.
This decree was confirmed in appeal on July 9, 1945.
On a further appeal, the then Supreme Court of Kolhapur affirmed the decree on April 2, 1946.
In the meantime, the original plaintiff made an application for execution of the decree but was resisted or 597 obstructed by the present appellant in obtaining possession of the said properties.
He then made an application under XXI, r. 97 of the Code of Civil Procedure, complaining of such resistance or obstruction.
This application was heard and dismissed under 0.XXI, r. 99 of the Code of Civil Procedure, on April 12, 1947.
On March 12, 1948, the original plaintiff instituted the suit (out of which this appeal has arisen) under 0.XXI, r. 103 of the Code of Civil Procedure, for a declaration that he was entitled to recover possession of the suit properties from the present appellant who was impleaded as the first defendant.
Prior to its amendment, the plaint stated: "Defendant No. 2 in collusion with defendant No. 1 caused objection to be submitted against the said execution.
The plaintiff had conducted misc.Suit No. 5/1946 for getting possession of the suit properties, getting the objection removed.
However, that miscellaneous proceeding has been decided against the plaintiff.
Therefore, the plaintiff has filed the present suit for getting declared that the plaintiff has right to take possession of the suit property against defendants Nos.I and 2.
" Apart from the decree obtained in the earlier suit, no particular averments were made as to the facts or grounds on which the plaintiff based his title, to the properties in suit as against the appellant.
An application was made on behalf of the present appellant on November 20, 1948, in which it was pointed out that the plaintiff filed the suit on the basis of the decision in an earlier suit to which the present appellant was not a party.
It was then stated: " As the defendant is not a party in the said decree, the plaintiff will not acquire any ownership whatever against the defendant from the said decree.
And the plaintiff has not given even the slightest explanation as to how he has ownership against the defendant.
So permission should not be hereafter given to the plaintiff to make amendment in respect of showing ownership".
A copy of this application was made over to the learned pleader for the plaintiff who noted thereon as follows: "The plaintiff 's suit is under 0.XXI, r. 103 of the Code of Civil Procedure.
Hence relief which can be 598 granted as per this provision may be granted.
" An objection was also taken with regard to the description of the suit properties in the schedule.
This objection was however met by making the necessary amendment.
On December 20, 1949) the present appellant filed his written statement and, inter alia, took the objection that the, suit was not maintainable against him as the plaint disclosed no cause of action so far as he was concerned.
A preliminary issue was then struck on January 19, 1950, which raised ' the question whether the suit as framed was tenable against the appellant.
When the trial of this issue began, an application was made on March 29, 1950, on behalf of the original plaintiff for permission to give further and better particulars of the claim made in the plaint, and for that purpose the plaintiff wanted to insert a new paragraph as para 1(a) in the plaint and a few sentences in para 3.
It is necessary to quote these here, because these were the amendments subsequently allowed by the learned Judges of the High Court of Bombay by their order dated September 6, 1951.
The new paragraph was in these terms: " In the Ichalkaranji village there are two independent Patil families 'taxima, viz., Mulki (Revenue) Patil and Police Patil.
The suit properties are the Inam lands in the Police, Patil family.
A woman by name Bhagirathibai, wife of Shivagonda Patil, was the Navwali 'warchi Vatandar ' (representative Vatandar) of the Police Patil family.
This woman died in the year 1936.
Due to the death of the woman the plaintiff acquired heirship ownership over the suit property as the near heir.
The suit properties were in the possession and under the vahiwat of defendant No. 2 without right.
Therefore, the plaintiff filed Suit No. 3/1942 for getting declared his ownership of the suit property and for getting the possession thereof.
In Appeal No. 9/44 and Supreme Appeal No. 5/46 preferred therefrom the plaintiff was unanimously declared to be the heir and the owner and the possession of the suit properties had been granted to the plaintiff.
" The sentences to be added to paragraph 3 were: " Defendant No. 1 is from the Mulki 599 (Revenue) Patil family.
He has nothing to do with the suit property in the Police Patil family.
" By his order dated March 31, 1950, the learned Civil Judge rejected the application and on the same day he dismissed the suit on the ground that the plaint made out no case of title against defendant No. 1, appellant before us, who was not a Party to the earlier suit in ejectment in which the plaintiff had obtained a decree against defendant No. 2.
From this judgment and decree of the learned Civil Judge an appeal was taken to the High Court of Bombay and the learned Judges of the High Court allowed an amendment of the plaint after putting the plaintiff on terms as to costs, etc.
While allowing the amendment the learned Judges observed: " We realise that by doing what we propose to do we may deprive the first defendant of a very valuable right which he claims he has acquired, namely, that of pleading a bar of limitation against the amended plaint, but we are guided more in this matter by regard to the principles of substantial justice and we think that if we can make sufficient compensation to the first defendant by making drastic orders of costs in his favour and against the plaintiff, we shall not be doing any injustice to him.
This is, after all, a question of title to the property and we would be justified in making this observation that when the suit in ejectment was filed by Shidgonda against Pirgonda Annappa in the year 1942 he based it on his title to the suit property and it was only against Pirgonda Annappa that he had obtained the decree.
When this decree which he had obtained against Pirgonda Annappa, the second defendant, was mentioned as a starting point in the plaint as it came to be filed, it would not be stretching too much of a point in favour of the plaintiff to observe that the decree which he had obtained against the second defendant, having been obtained on the strength of his title to the suit property, was really one of his documents of title. . . .
So far as the first defendant was concerned, the averment necessary under 0 XXI, r. 103, of the Code of Civil Procedure, was that the, first defendant was wrongfully obstructing 600 the plaintiff from obtaining possession of the suit property in execution of the decree which he had obtained against the 2nd defendant in a suit regularly constituted in that behalf.
This being the position, we think we are not doing any injustice to the first defendant if we allow the plaintiff to amend his plaint even at this late stage by putting in the paragraphs in the plaint as suggested by him in his application for further and better particulars filed in March 1950."
The appellant then obtained special leave from this Court, and filed the present appeal.
The main point which has been argued before us on behalf of the appellant is that in the circumstances of this case the learned Judges of the High Court were wrong in allowing an amendment of the plaint at such a late stage.
It may be stated here that learned counsel for the appellant did not argue that the appellate Court had no jurisdiction or power to allow the amendment.
His submission was that even though the appellate Court had such power or ' jurisdiction, that power should not have been exercised in the circumstances of the present case.
Two such circumstances were greatly emphasised before us.
One was that the period of limitation for a suit under 0.XXI, r. 103, of the Code of Civil Procedure, had already expired before March 29, 1950, on which date the application for amendment or for giving further and better particulars was made.
The second circumstance which learned counsel for the appellant emphasised was that the attention of the plaintiff to the defect in the original plaint had been drawn by the application filed on behalf of the appellant on November 20, 1948, and in spite of that application, no amendment war, asked for till March 29, 1950.
Both these circumstances were fully considered by the learned Judges of the High Court.
It is worthy of note that the period of limitation for a suit under 0.XXI, r. 103 of the Code of Civil Procedure, namely, one year from the date of the adverse order made under r. 99 of 0.XXI, bad expired some time before November 20,1948, on which date the appellant made 601 his first application pointing out the defect in the plaint, the adverse order under 0.XXI, r. 99, having been made on April 12, 1947.
The application which the appellant made on November 20, 1948, had not the merit of such beneficent purpose as is now sought to be made out by learned counsel for the appellant.
When the application was made, the period of limitation had already expired, and the appellant very clearly said that no permission should be given to the plaintiff to make an amendment thereafter.
We do not therefore think that the appellant can make much capital out of the application made on his behalf on November 20, 1948.
Recently, we have had occasion to consider a similar prayer for amendment in L. J. Leach & Co. vs Jardine Skinner & Co. (1) where, in allowing an amendment of the plaint in an appeal before us, we said: " It is no doubt true that courts would, as a rule, decline to allow amendments, if a fresh suit on the amended claim would be barred by limitation on the date of the application.
But that is a factor to be taken into account in exercise of the discretion as to whether amendment should be ordered, and does not affect the power of the court to order it, if that is required in the interests of justice."
", These observations were made in a case where damages were, originally claimed on the footing of conversion of goods.
We held, in agreement with the learned Judges of the High Court, that on the evidence the claim for damages on the footing of conversion must fail.
The plaintiffs then applied to this Court for amendment of the plaint by raising, in the alternative, a claim for damages for breach of contract for non delivery of the goods.
The application was resisted by the respondents and one of the grounds of resistance was that the period of limitation had expired.
We accepted as correct the decision in Charan Das vs Amir Khan (2) which laid down that " though there was full power to make the amendment, such a power should not, as a rule be exercised where the effect was to take away from a defendant, a legal right which had accrued to him by (1) ; , (2) [1920] L.R. 47 I.A. 255.
602 lapse of time; yet there were cases where such consi derations were outweighed by the special circumstances of the case ".
As pointed out in Charan Das ' case (1), the power exercised was undoubtedly one within the discretion of the learned Judges.
All that can be urged is that the discretion was exercised on a wrong principle.
We do not think that it was so exercised in the present case The facts of the present case are very similar to those of the case before their Lordships of the Privy Council.
In the latter, the respondents sued for a declaration of their right of pre emption over certain land, a form of suit which would not lie having regard to the proviso to section 42 of the Specific Relief Act (I of 1877).
The trial Judge and the first appellate Court refused to allow the plaint to be amended by claiming possession on pre emption, since the time had expired for bringing a suit to enforce the right.
Upon a second appeal the Court allowed the amendment to be made, there being no ground for suspecting that the plaintiffs had not acted in good faith, and the proposed amendment not altering the nature of the relief sought.
In the case before us, there was a similar defect in the plaint , and the trial Judge refused to allow the plaint to be amended on the ground that the period of limitation for a suit under 0.XXI, r. 103, of the Code of Civil Procedure, had expired.
The learned Judges of the High Court rightly pointed out that the mistake in the trial Court was more that of the learned pleader and the proposed amendment did not alter the nature of the reliefs sought.
Learned counsel for the appellant referred us to the decision in Kisandas Bupchand vs Rachappa Vithoba and placed great reliance on the observations of Beaman J. at P. 655: " In my opinion, two simple tests, and two only, need to be applied, in order to ascertain whether a given case is within the principle.
First, could the party asking to amend obtain the same quantity of relief without the amendment ? If not, then it follows necessarily that the proposed amendment places the other party at a disadvantage, it allows his opponent to obtain more from him than he would have been able to obtain but for the amendment.
Second, in those circumstances, can the party thus placed at a disadvantage be compensated for it by costs ?
If not, then the amendment ought not, unless the case is so peculiar as to be taken out of the scope of the rule, to be allowed.
" He contended that the first test laid down in the aforesaid observations was not fulfilled in the present case.
We do not agree with this contention.
First, it is not feasible nor advisable to encase a discretionary power within the strait jacket of an inflexible formula.
Second , we do not think that the " quantity of relief," an expression somewhat difficult of appreciation or application in all circumstances, was in any way affected by the amendments allowed to be made in this case.
What happened in the present case was that there was a defect in the plaint which stood in the way of the plaintiff asking for the reliefs he asked for; that defect was removed by the amendments.
The quality and quantity of the reliefs sought remained the same; whether the reliefs should be granted or not is a different matter as to which we are not called upon to express any opinion at this stage.
We think that the correct principles were enunciated by Batchelor J. in his judgment in the same Case, ViZ., Kisandas Rupchand 's case(1), when he said at pp.649 650: "All amendments ought to be allowed which satisfy the two conditions (a) of not working injustice to the other side, and (b) of being necessary for the purpose of determining the real questions in controversy between the parties. . but I refrain from citing further authorities, as, in my opinion, they all lay down precisely the same doctrine.
That doctrine, as I understand it, is that amendments should be refused only where the other party cannot be placed in the same position as if the pleading had been originally correct, but the amendment would cause him an injury which could not be compensated in costs.
It is merely a particular case of this general rule that where a plaintiff seeks to amend by setting up a fresh claim in respect of a cause of action which since the institution of the suit had become barred by limitation, the amendment must be refused; to allow it would be to cause the defendant an injury which could not be compensated in costs by depriving him of a good defence to the claim.
The ultimate test therefore still remains the same: can the amendment be allowed without injustice to the other side,, or can it not?"
Batchelor J. made these observations in a case where the claim was for dissolution of partnership and accounts, the plaintiffs alleging that in pursuance of, a partnership agreement they had delivered Rs. 4,001 worth of cloth to, the defendants.
The Subordinate Judge found that the plaintiffs did, deliver the cloth, but came to the conclusion that no partnership was created.
At the appellate stage, the plaintiffs; abandoned the plea of partnership and prayed for leave to amend by adding a prayer for the. recovery of Rs. 4,001.
At that date the claim for the money was barred by limitation.
It was held that the amendment was rightly allowed, as the claim was not a new claim.
The same principles, we hold, should apply in the present case.
The amendments do not really introduce a new case, and the application filed by the appellant himself showed that he was not taken by surprise; nor did he have to meet a new claim set up for the first time after the expiry of the period of limitation.
For these reasons, we see no I merit in the appeal, which is accordingly dismissed with costs.
Appeal dismissed.
| section obtained a decree of, ejectment against the third respon dent and while attempting to take possession of the properties ir execution of the decree he was obstructed by the appellant and the application for removal of the obstruction was dismissed by the Court on April 12, 1947.
He thereupon filed the present suil on March 12, 1948, under 0.
XXI, r. 103, of the Code of Civil Procedure, for a declaration that he was entitled to recovery possession of the suit properties, impleading the appellant and the third respondent.
In the plaint, apart from the decree obtained in the earlier suit no particular averments were made as to the facts or grounds on which the plaintiff based his title to the suit properties as against the appellant.
Both in his application dated November 2o, 1948, and in his written statement, the appellant,objected to the maintainability of the suit on the grounds that he was not a party to the previous suit and that the plaint disclosed no cause of action against him.
On March 20, 1950, when the suit was taken up for trial on the preliminary issue as to whether the suit as framed was tenable, an application was made by the plaintiff for the amendment of the plaint by giving further and better particulars of the claim made in the plaint.
The trial judge rejected the application and dismissed the suit, but the High Court, on appeal, allowed the application.
The appellant appealed by special leave and contended that the application for amendment should not have been allowed because (1) on the date of the application for amendment, the period of limitation for a suit under 0.
XXI, r. 103, Code of Civil Procedure, had already expired, and (2) though the attention of the plaintiff to the defect in the original plaint 'had been drawn as early as November 2o, 1948, no application for amendment was made till.
March 29, 1950.
Held, that the application for amendment was rightly allowed by the High Court, because the amendments did not really introduce any new case nor alter the nature of the reliefs sought, and, though the application was made after the expiry of the period of limitation for a suit under 0.
XXI, r. 103, Code of Civil Procedure, the appellant did not have to 77 596 meet anew case and he was not taken by surprise; nor did he have to meet a new claim set up for the first time after the expiry of the period of limitation.
Charan Das vs Amir Khan (L. R. 47 I.A. 255), relied on.
L. J. Leach & Co. vs Jardine Skinner & CO.
([1957] S.C.R. 438), followed.
Observations of Batchelor J. in Kisandas Rupchand vs Rachappa Vithoba (I.L.R. , 649), approved.
|
Summarize this legal judgement text concisely | minal ' Appeal No. 93 of 1956.
Appeal by special leave from the judgment and order dated the April 14, 1955, of the Bombay High Court in Criminal Appeal No. 156 of 1955 and Criminal Revision Application No. 435 of 1955 arising out of Judgment dated the January 3,1955, of the Court of 636 the Additional Chief Presidency Magistrate, Bombay, in Case No. 9/p of 1954.
Purshottam Tricumdas, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellant.
C. K. Daphtary, Solicitor General of India, Porus A. Mehta and R. H. Dhebar, for the respondent.
February 12.
The Judgment of the Court was delivered by BHAGWATI J.
This appeal with special leave under article 136 of the Constitution raises the question whether the High Denomination Bank Notes (Demonetisation) Ordinance, 1946 (Ordinance No. III of 1946) promulgated by the Governor General of India on January 12, 1946, was in operation on July 11, 1953, when the offence under section 7 read with section 4 thereof was committed by the appellant herein.
The appellant who was the accused No. 1 before the Additional Chief Presidency Magistrate 's Court, Bombay, was charged along with the accused Nos. 2, 3, 5 and 6 with having on or about July II, 1953, transferred by sale 10 High Denomination Bank Notes of the Denomination of Rs. 1,000 each to one Velji Lakhamshi Joshi for Rs. 1,800 at the rate of Rs. 180 per note and thus contravened the provisions of section 4 of the Ordinance and committed an offence punishable under section 7 of the Ordinance read with section 109 of the Indian Penal Code.
A preliminary objection was urged by the learned counsel for the appellant that the said Ordinance was not in operation at the date when the offence was alleged to have been committed and that therefore the prosecution was not maintainable.
This objection was overruled by the learned Presidency Magistrate and the trial ended in the conviction of the appellant along with the co accused of the offence with which they had been charged.
The appellant was sentenced to pay a fine of Rs. 8,000 and in default suffer six months ' rigorous imprisonment and the co accused of the appellant were awarded varying sentences of fine with which however we are not concerned.
The appellant took an appeal to the High Court of Judicature at Bombay being Criminal Appeal No. 156 637 of 1955.
The State of Bombay, the respondent herein, also filed an application for enhancement of the sentence, being Criminal Revision Application No. 435 of 1955.
The co accused of the appellant had also filed appeals against their convictions and sentences of fine imposed upon them and all these appeals and the application of the respondent were heard together by a Division, Bench of the High Court.
The High Court agreed with the learned Presidency Magistrate in regard to the finding of fact and held that the appellant had in fact transferred by sale 10 High Denomination Bank Notes of Rs. 1,000 each to the possession of Velji Lakhamshi and his act fell within the prohibition enacted in section 4 of the Ordinance.
The High Court also overruled the contentions which were urged before it in regard to the Ordinance having lapsed and ceased to be in operation before July 11, 1953, the date on which the offence was alleged to have been committed.
It accordingly confirmed the conviction recorded against the appellant by the learned Additional Chief Presidency Magistrate.
In regard to the sentence the High Court saw no ground for enhancing the same and confirmed the sentence of fine of Rs. 8,000 and in default six months ' rigorous imprisonment which had been awarded by the learned Presidency Magistrate to the appellant.
The appellant applied to the High Court for a certificate under article 134 (1) (c) of the Constitution.
The said application was however dismissed by the High Court with the result that he applied for and obtained from this Court special leave under article 136 of the Constitution.
The decision of this appeal turns on the construction of section 72 of the 9th Sch.
of the Government of India Act, 1935 (25 and 26 Geo.
42) and section 1 (3) of the India and Burma (Emergency Provisions) Act, 1940 (3 and 4 Geo.
Section 72 of the 9th sch.
of the Government of India Act, 1935, read as follows: " The Governor General may, in cases of emergency, make and promulgate ordinances for the peace and good Government of British India or any part thereof, and any ordinance so made shall, for the 638 space of not more than six months from its promulgation, have the like force of law as an Act passed by the Indian Legislature; but the power of making ordinances under this section is subject to the like restrictions as the power of the Indian Legislature to make laws; and any ordinance made under this section is subject to the like disallowance as an Act passed by the Indian Legislature, and may be controlled or ,superseded by any such Acts.
" Section 1 (3) of the India and Burma (Emergency Provisions) Act, 1940, ran as under: " Section seventy two of the Government of India Act, (which, as set out in the Ninth Schedule to the Government of India Act, 1935, confers on the Governor General power to make Ordinances in cases of emergency) shall, as respects Ordinances made during the period specified in section three of this Act, have effect as if the words "for the space of not more than six months from its promulgation" were omitted; and, notwithstanding the provision in the said section seventy two that the power of making Ordinances thereunder is subject to the like restrictions as the power of the Indian Legislature to make laws (a) Ordinances may, during the said period, be made under that section affecting the Army Act, the Air Force Act, or the Naval Discipline Act; and (b) Section one hundred and eleven of the Government of India Act, 1935 (which exempts certain British subjects from certain Indian Laws) shall not apply to any ordinance made under the said section seventy two during that period.
" Section 3 referred to hereinabove was in the terms following: " The period referred to in the preceding sections is the period beginning with the date of the passing of this Act and ending with such date as His Majesty may by Order in Council declare to be the end of the emergency which was the occasion of the passing of this Act.
" The India and Burma (Emergency Provisions) Act, 1940, was passed on June 27, 1940 , and was an Act to 639 make emergency provisions with respect to Government of India and Burma.
On April 1, 1946, was published in the Gazette of India Extraordinary His Majesty 's Order in Council called " The India and Burma (Termination of Emergency) Order, 1946 ".
By the said order the period of emergency referred to in section 3 of the India and Burma (Emergency Provisions) Act, 1940, was declared to have ended on April 1, 1946.
The period specified in section 3 of the said Act thus extended from June 27, 1940, to April 1, 1946.
The Ordinance in question was promulgated on January 12, 1946, and was therefore within the said period.
The argument which was addressed before us by the learned counsel for the appellant based on these provisions was (a) that as soon as the declaration that the emergency was at an end was made on April 1, 1946, the original position was restored and the Ordinance in question which had been promulgated in exercise of the emergency powers ipso facto lapsed when the emergency was declared to have ended, (b) that, in the alternative, section 72.
of the 9th Sch.
of the Government of India Act, 1935, having been thus restored with effect from April 1, 1946, one must look to its terms as they originally stood to justify the continuance of the ordinance in question after April 1, 1946, whensoever it may have been promulgated.
It will be useful at this stage to see what was the scheme provided in the Government of India Act, 1935, for enacting legislative measures.
It may be noted that the Act envisaged the establishment of the Federation of India.
Part II, ch. 3 provided for the constitution of the Federal Legislature which was to consist of two chambers known respectively as the Council of States and the House of Assembly.
The normal legislative procedure required a bill to be passed by both the Chambers of the Federal Legislature and assented to by the Governor General.
There was a distribution of legislative powers between the Federal Legislature and the Provincial Legislatures and the Federal Legislature was invested with the power to make laws for.
the whole or any part of British India or for any Federated State with respect to any of the matters enumerated 640 in the Federal Legislative List and any of the matters enumerated in the Concurrent Legislative List.
Power was however given, to the Federal Legislature, if the Governor General in his discretion declared by a "Proclamation of Emergency" that a grave emergency existed whereby the security of India was threatened, whether by war or internal disturbance, to make laws for a Province or any part thereof with respect to any of the matters enumerated in the Provincial Legislative List.
These were the powers of the Federal Legislature to enact legislative measures.
The Governor General was, however, conferred certain legislative powers in Part II, ch. 4.
Power was conferred upon him to promulgate Ordinances if at any time when the Federal Legislature was not in session he was satisfied that circumstances existed which rendered it necessary for him to take immediate action.
Ordinances thus promulgated were to have the same force and effect as Acts of the Federal Legislature assented to by the Governor General.
But every such Ordinance would cease to operate at the expiration of six months from the re assembly of the Legislature.
Similar power was conferred upon the Governor General to promulgate Ordinances if at any time he was satisfied that circumstances existed which rendered it necessary for him to take immediate action for the purpose of enabling him satisfactorily to discharge his functions in so far as he was required in the exercise thereof to act in his discretion or to exercise his individual judgment.
Such Ordinances also were to have the same force and effect as the Acts of the Federal Legislature assented to by the Governor General and were to continue in operation for such period not exceeding six months as may be specified therein but could by subsequent Ordinances be extended for a further period not exceeding six months.
Power was also conferred upon the Governor General if at any time it appeared to him that for the purpose of enabling him satisfactorily to discharge his functions in so far as he was required in the exercise thereof to act in his discretion or, to exercise his individual judgment it was essential that provision should be made by legislation, to enact I SUPREME COURT REPORTS 641 Governor General 's Acts which when enacted were to have the same force and effect as Acts of the Federal Legislature assented to by the Governor General.
These were the special legislative powers conferred upon the Governor General which could be exercised by him when the normal legislative procedure could not be resorted to.
It is worthy of note however that howsoever and under whatever circumstances the legislative powers vested in the Governor General were exercised by him, the Governor General 's Acts thus enacted and the Ordinances thus promulgated were equated with the Acts of the Federal Legislature assented to by the Governor General.
Part XIII enacted Transitional Provisions.
A period of time was bound to elapse between the commencement of Part III of the Act which related to the Governor 's Provinces and the establishment of the Federation and section 317 of the Act continued in force certain provisions of the Government of India Act with amendments consequential on the provisions of the Act set out in the 9th Sch.
thereof until the estab lishment of the Federation.
Section 72 above quoted formed part of the 9th Sch.
under the caption " Indian Legislature" and conferred upon the Governor General power to make and promulgate Ordinances for the peace and good Government of British India or any part thereof in cases of emergency.
Ordinances thus promulgated by the Governor General in exercise of the power thus conferred upon him were to continue in operation for the space of not more than six months from the date of their promulgation and were to have the like force of law as Acts passed by the Indian Legislature.
They were also equated with the.
Acts passed by the Indian Legislature by having resort to the normal legislative procedure set out in the Government of India Act.
Even though the Governor General 's Acts and the Ordinances promulgated by him were thus equated with the Acts passed by the Federal Legislature or the Indian Legislature as the case may be, the period of duration thereof had to be determined.
Every statute for which no time is limited is I 642 SUPREME COURT REPORTS [1957] called a perpetual Act, and its duration is prima facie perpetual.
It continues in force until it is repealed.
(Vide Craies on Statute Law, 5th Ed.
p. 374; Halsbury 's Laws of England, Hailsham Ed., Vol.
XXXI, p. 511, para.
If an Act contains a proviso that it is to continue in force only for a certain specified time, it is called a Temporary Act.
This result would follow not only from the terms of the Act itself but also from the fact that it was intended only as a temporary measure.
This ratio has also been applied to emergency measures which continue during the subsistence of the emergency but lapse with the cessation thereof.
It was therefore contended that Ordinances promulgated under the emergency powers vested in the Governor General would be in operation during the period of emergency but would cease to be in operation once the emergency was declared to have ended.
In the instant case before us the Ordinance in question was promulgated in exercise of the emergency powers vested in the Governor General under section 72 of the 9th Sch.
of the Government of India Act, 1935, and it was urged that the Ordinance thus promulgated would cease to be in operation after the emergency was declared to have ended on April 1, 1946, by the India and Burma (Termination of Emergency) Order, 1946, in spite of the words of limitation " for the space of not more than six months from its promulgation " having been omitted from section 72 by section 1(3) of the India and Burma (Emergency Provisions) Act, 1940.
Reliance was placed in support of this contention on the observations of Vardachariar C. J. in King Emperor vs Benoari Lall Sharma and others(1): " Legislation by Ordinance has no doubt been given the same effect as ordinary legislation and the ambit as to the subject matter is the same in both cases.
But there are two fundamental points of difference which have a material bearing on the present question: One is that by the very terms of s.72 of the Ninth Schedule to the Constitution Act, the operation of the Ordinance is limited to a period of (1) , 137.
643 six months (and even now it is only temporary, though the particular limit has been removed), and secondly, it is avowedly the exercise of a special power intended to meet an emergency." Zafrulla Khan J. also had expressed himself to the same effect in King Emperor vs Sibnath Banerjee (1): " The legislature can at any time enact a measure and such measure can remain in force without any limit of time; but the exercise of the Ordinance making power is limited in two ways (1) by the limitation as to the circumstances in which it can be exercised, and (ii) by the limitation as to the time during which any measure so enacted can remain in operation.
The existence of an emergency is a condition precedent to the exercise of the power.
The fact that the Court cannot go behind a declaration of emergency made by the Ordinance making authority cannot affect this question.
The power was intended to be availed of and could be availed of only in an emergency, whereas ordinary legislation is not governed by any such limitation.
Similarly, an Ordinance is necessarily of limited duration, whether under section 72 or under the terms of the India and Burma (Emergency Provisions) Act of 1940.
" An argument was accordingly addressed before us that even though the Ordinance in question had been promulgated during the period specified in a. 3 of the India and Burma (Emergency Provisions) Act, 1940, viz., between June 27, 1940, and April 1, 1946, and section 72 of the 9th Sch.
of the Government of India Act, 1935, was to be read with the omission of the words " for the space of not more than six months from its promulgation " therefrom, the effect of such omission was not to continue the duration of the Ordinance in question in any event beyond April 1, 1946.
The Ordinance lapsed or ceased to be in operation on the, declaration having been made on April 1, 1946, that the emergency had ended.
This argument however ignores the fact that whatever Governor General 's Acts were enacted or (1) , 12. 83 644 Ordinances promulgated by him in exercise of his special legislative powers or in exercise of the emergency_ power conferred upon him by section 72 of the 9th Sch.
of the Government of India Act, 1935, were all equated with the Acts of the Federal Legislature or the Indian Legislature, as the case may be, assented to by the Governor General.
If there was a limitation to be found in the Acts or the Ordinances themselves in regard to the duration thereof the same was to prevail.
But if no time was limited in the enactment itself for its duration it was to continue in force until it was repealed.
If by the operation of section 1 (3) of the India and Burma (Emergency Provisions) Act, 1940, the words " for the space of not more than six months from its promulgation " were omitted from section 72 during the period specified in section 3 of that Act, viz., June 27,1940 to April 1, 1946, there was no limitation of the period of duration of the Ordinance in question and the Ordinance having the like force of law as an Act passed by the Indian Legislature without any limitation on its duration was to continue in force until it was repealed.
The emergency under which the Governor General was invested with the power to make and promulgate Ordinances for the peace and good government of British India or any part thereof under section 72 was the condition of the exercise of such power, by the Governor General and did not impose any limitation on the duration of the Ordinances thus promulgated.
For determining the duration of such Ordinances one had to look to the substantive provisions of section 72 which in terms enacted and laid down the limitation of "not more than six months from its promulgation " on the life of the Ordinance.
If these words had not been omitted by section 1 (3) of the India and Burma (Emergency Provisions) Act, 1940, the Ordinances thus promulgated would have been of a duration of not more than six months from their promulgation.
Once these words were omitted by a. 1 (3) of the India and Burma (Emergency Provisions) Act, 1940, section 72 of the 9th Sch.
of the Government of India Act, 1935, would read as under: 645 The Governor General may, in cases of emergency, make and promulgate ordinances for the peace and good government of British India or any part thereof and any ordinance so made shall. . . have the like force of law as an Act passed by the Indian Legislature; but the power of making ordinances under this section is subject to the like restrictions as the power of the Indian Legislature to make laws; and the like disallowance as an Act passed by the Indian Legislature, and may be controlled or superseded by any such Act.
" The effect of the deletion of these words from section 72 leaving the section to be read as above had the necessary effect of equating the Ordinances which were promulgated between June 27, 1940, and April 1, 1946, with Acts passed by the Indian Legislature without any limitation of time as regards their duration.
Ordinances thus promulgated were perpetual in duration and continued in force until they were repealed.
This position was considered by the Federal Court in J. K. Gas Plant Manufacturing Co., (Rampur) Ltd. and others vs King Emperor (1) where Spens C. J. observed: " These Ordinances were made under the powers conferred on the Governor General by section 72 of the Ninth Schedule to the Constitution Act, as amended by the India and Burma (Emergency Provisions) Act, 1940 (3 & 4 Geo.
6, Ch. 33).
Under the said section 72, as it originally stood, Ordinances were limited to an effective life of six months only from the date of promulgation.
Sub section (3) of section I of the said Act, however, provided that in respect of Ordinances made under section 72 during the period specified in section 3 of the Act, section 72 should have effect as if the words ,for the space of not more than six months from its promulgation" were omitted.
The period specified in section 3 of the Act is " the period beginning with the date of the passing of this Act and ending with such date as His Majesty may by Order in Council declare to be the end of the emergency which was the occasion of the passing of this Act.
" The date of `the passing of the (1) , 161. 646 said Act was the 27th June, 1940, and the emergency was not notified to have come to an end on the 1st April, 1946.
It was contended on behalf of the appellants that the true construction to be given to section 72 as so amended was in effect to substitute in section 72 in respect of the duration of an Ordinance, the period specified in section 3 of the Act for the original six months ' period and that accordingly on the expiration of that period, viz., on the 1st April, 1946, Ordinances made after the passing of the Act automatically came to an end.
It was not made very clear how one could arrive at such a construction.
It appears to be based on the suggestion that the power to promulgate an Ordinance under section 72 was by the section confined to the existence of an emergency, Cf: the words in the sub section "in cases of emergency ", and that the Act was intituled an Act to make emergency provision with respect to the Government of India and Burma and defined the period of emergency.
Unless therefore the construction contended for by the appellants was accepted no period would be provided for the continuance of these Ordinances, and that could not have been the intention of the legislature, as the ordinance making power of the Governor General was recognised as temporary only.
In our opinion, the emergency on the happening of which an Ordinance can be promulgated is separate and distinct from and must not be confused with the, emergency which occasioned the pawing of the Act and the clear effect of the words of the, Act on section 72 is that Ordinances promulgated under that subsection during the period specified in section 3 of the Act are subject to no time limit as regards their existence and validity, unless imposed by the Ordinances themselves, or other amending or repealing legislation, whether by Ordinance or other.
In our judgment, it is clear that the second Lahore Tribunal did not cease to exist or to have jurisdiction in the case under appeal by reason of the expiration on the 1st April, 1946, of the period specified in section 3 of the Act in question.
" In our opinion, the above observations of Spens C. J. enunciate the correct position.
The Ordinance in 641 question having been promulgated during the period between June 27, 1940, 'and April 1, 1946, was perpetual in duration and continued in force until it was repealed.
Our attention has not been drawn to any subsequent Ordinance or Act of the Indian Legislature amending or repealing the said Ordinance with the result that it continues to be in force and was in operation on July 11, 1953, the date on which the offence in question was committed by the appellant.
This position was recognized in the Adaptation of Laws Order, 1950, issued under the Constitution Of India.
In the Second Schedule to the said Order were contained several Central Ordinances enacted between 1940 and 1946 including the High Denomination Bank Notes (Demonetisation) Ordinance, 1946 (Ordinance No. III of 1946) where in section II thereof the words " Part A States and Part C States " were to be sub stituted for "the provinces".
It is not necessary to refer to the other Ordinances appearing in this compilation but suffice it to say that in respect of all the Ordinances which were thus promulgated by the Governor General in exercise of the power conferred upon him under section 72 of the 9th Sch.
of the Government of India Act, 1935, the continuance thereof even after April 1, 1946, was predicated and the adaptations prescribed in the Adaptation of Laws Order, 1950, issued under the Constitution of India were made applicable thereto.
This position is further supported by referring to the relevant provisions of the (II of 1934).
Section 26 of that Act provided ill (1) Subject to the provisions of sub section (2), every bank note shall be legal tender at any place in India in payment or on account for the amount expressed therein, and shall be guaranteed by the Central Government.
(2)On recommendation of the Central Board the Central Government may, by notification in the Gazette of India, declare that, with effect from such date as may be specified in the notification, any series of bank notes of any denomination, shall cease to be legal tender save at such office or a agency of the bank and to such extent as may be specified in the notification.
648 Under section 1 (2) of the Act as it stood, the Act extended to whole of India excepting the State of Jammu and Kashmir.
The ' High Denomination Bank Notes (Demonetisation) Ordinance, 1946 (Ordinance No. III of 1946) declared that Denomination Notes of the denominational value of Rs. 500, Rs. 1,000 or Rs. 10,000 ceased to be legal tender in payment or on account at any place in British India on the expiry of January 12, 1946.
The Ordinance having continued in operation even after the declaration of the emergency having come to an end was made on April 1, 1946, the said notes continued to be ineffective as legal tender in India, though the position in Jammu and Kashmir in regard to the same could not be affected by reason of the , not having been made applicable to the State of Jammu and Kashmir as stated above.
On September 25, 1956, however, the (LXII of 1956) being an Act to provide for the extension of certain laws to the State of Jammu and Kashmir was passed by the Parliament.
In the Schedule to that Act was contained the (II of 1934).
The words " except the State of Jammu and Kashmir" were omitted from section 1, sub section
(2) and section 26A was added after section 26 of the Act.
Section 26A provides: ,, Notwithstanding anything contained in section 26, no bank note of the denominational value of five hundred rupees, one thousand rupees or ten thousand rupees issued before the 13th day of January, 1946, shall be legal tender in payment or on account for the amount expressed therein.
The law in the State of Jammu and Kashmir with regard to these High Denomination Bank Notes issued before January 13, 1946, was thus brought into line with the law as it obtained in the rest of India.
This would certainly have not been done but for the acceptance of the position that the Ordinance in question continued in operation even after April 1, 1946, and was in operation right throughout even after April 1, 1946.
649 The alternative argument addressed before us by the learned counsel for the appellant need not detain us at all, for the simple reason that reading section 72 in the manner suggested would be tantamount to giving a retrospective effect to the section as it originally stood in regard to Ordinances which had been promulgated between June 27, 1940, and April 1, 1946.
There is nothing to justify such retrospective operation.
As regards such Ordinances the period of their duration had to be determined having regard to the provisions of section 72 as they stood with the omission of the words " for the space of not more than six months from its promulgation " therefrom during tHe period specified in section 3 of the India and Burma (Emergency Provisions) Act, 1940, and the Ordinance in question was therefore not limited to the space of not more than six months from the date of its promulgation but was perpetual in its duration with the result that it continues in operation until it is repealed.
There is no warrant for reading the provisions of section 72 with the omitted words restored to their original position after April 1, 1946, while determining the duration of the Ordinances which had been promulgated between June 27, 1940, and April 1, 1946.
Both the contentions urged by the learned counsel for the appellant before us having thus failed, it follows that the High Denomination Bank Notes (Demonetization) Ordinance, 1946 (Ordinance No. III of 1946) was in operation on July 11, 1953, the date on which the offence was committed by the appellant and the appellant was rightly convicted by both the courts below.
The appeal will accordingly stand dismissed.
Appeal dismissed.
| Under section 72 Of the 9th Sch.
of the Government of India Act, 1935: " The Governor General may, in cases of emergency, make and promulgate ordinances . and any ordinance so made shall, for the space of not more than six months from its promulgation, have the like force of law as an Act passed by the Indian Legislature . " ; section I (3) of the India and Burma (Emergency Provisions) Act, 1940, provided that section 72 Of the Government of India Act, 1935, shall as respects Ordinances made during the period beginning with June 27, 1940, the date of the passing of that Act, and ending with such date as His Majesty may by Order in Council declare to be the end of the emergency, have effect as if 635 the words " for the space of not more than six months from its promulgation " were omitted.
The appellant was prosecuted for having on July 11, 1953, contravened the provisions of section 4 of the High Denomination Bank Notes (Demonetisation) Ordinance, 1946.
The Ordinance was promulgated by the Governor General of India on January 12, 1946, but on April 1, 1946, an Order in Council was published in the Gazette of India Extraordinary whereby the period of emergency referred to in the India and Burma (Emergency Provisions) Act, 1940, was declared to have ended on April 1, 1946.
It was contended for the appellant that the Ordinance in question was not in operation on the date when the offence was alleged to have been committed and that therefore the prosecution was not maintainable, because (1) the Ordinance had been promulgated in exercise of the emergency powers and that it lapsed ipso facto on April 1, 1946, when the declaration was made that the emergency was at an end; and (2) section 72 of the 9th Sch.
of the Government of India Act, 1935, having been restored with effect from April 1, 1946, one must look to its terms as they originally stood, to justify the continuance of the Ordinance after April I, 1946.
Held, that the deletion of the words " for the space of not more than six months from its promulgation " from section 72 of the 9th Sch.
of the Government of India Act, 1935, by section 1 (3) of the India and Burma (Emergency Provisions) Act, 1940, had the effect of equating Ordinances which were promulgated between June 27, 1940, and April I, 1946, with Acts passed by the Indian Legislature without any limitation of time as regards their duration, and therefore continuing in force until they were repealed.
Though after April I, 1946, section 72 Of the 9th Sch.
of the Government of India Act, 1935, was restored in its original form, the continuance of the Ordinance in question after that date had to be determined having regard to the terms of the section as they stood on the date of such promulgation, as there was nothing to justify retrospective operation of the section so restored.
J. K. Gas Plant Manufacturing Co. (Rampur) Ltd. and others vs King Emperor, , relied on.
|
Summarize this legal judgement text concisely | o. 115 of 1956, and Petition No. 132 of 1956.
Petitions under Article 32 of the Constitution of India for the enforcement of fundamental rights.
B. D. Sharma, for the petitioners.
C. K. Daphtary, Solicitor General of India, Porus A. Mehta and R. H. Dhebar, for the respondents, 651 1957.
February 13.
The Judgment of the Court was delivered by section K. DAS J.
These two petitions for the issue of appropriate writs restraining the respondents from prosecuting and trying the two petitioners 'on certain criminal charges in circumstances to be presently stated, raise the same question of law and have been heard together.
This judgment will govern them both.
Baij Nath Prasad Tripathi, petitioner in Petition No. 115 of 1956, was a Sub inspector of Police in the then State of Bhopal.
He was prosecuted in the Court of Shri B. K. Puranik, Special Judge, Bhopal, and convicted of offences under section 161, Indian Penal Code, and section 5 of the Prevention of Corruption Act, 1947.
He was sentenced to nine months ' rigorous imprisonment on each count.
He preferred an appeal against the conviction and sentences to the Judicial Commissioner of Bhopal.
The Judicial Commissioner held by his judGment dated March 7, 1956, that no sanction according to law had been given for the prosecution of the petitioner and the Special JudGe had no jurisdiction to take cognizance of the case; the trial was accordingly ab initio invalid and liable to be quashed.
He accordingly set aside the conviction and quashed the entire proceedings before the Special Judge.
He then observed: "The parties would thus be relegated to the position as if no legal charge sheet had been submitted against the appellant." On April 4, 1956, the Chief Commissioner of Bhopal passed an order under section 7(2) of the Criminal Law Amendment Act, 1952 (No. XLVI of 1952) that the petitioner shall be tried by Shri section N. Shri vastava, Special Judge, Bhopal, for certain offences under the Prevention of Corruption Act read with section 161, Indian Penal Code.
The case of the petitioner is that he cannot be prosecuted and tried again for the same offences under the aforesaid order of April 4, 1956.
Sudhakar Dube, petitioner in Petition No. 132 of.
1956, was also a Sub Inspector of Police in the then State of Bhopal.
He was also prosecuted in the Court of Shri B. K. Puranik, Special Judge, Bhopal, on a 84 652 charge of having accepted illegal gratification for showing official favour to one Panna Lal.
The learned Special Judge by an order dated January 10, 1956, came to the conclusion that no legal sanction for the prosecution of the petitioner had been given by the competent authority and the sanction given by the Inspector.
General of Police was not valid in law; he therefore held that the whole trial was null and void and he could not take cognizance of the offences in question.
Accordingly he quashed the proceedings.
On February 7, 1956, the Chief Secretary to the Government of Bhopal accorded fresh sanction for the prosecution of the petitioner for offences under section 161, Indian Penal Code, and section 5 of the Prevention of Corruption Act.
The petitioner then moved this Court for appropriate writs restraining the respondents from prosecuting and trying him for the offences stated in the fresh sanction aforesaid.
On behalf of both the petitioners the contention is that by reason of cl.
(2) of article 20 of the Constitution and section 403 of the Code of Criminal Procedure, the petitioners cannot now be tried 'for the offences in question.
It is necessary to read here some of the relevant sections bearing on the point at issue.
Section 6 of the Criminal Law Amendment Act, 1952 (prior to the amendment made in 1955), so far as is relevant for our purpose, is in these terms : "6.
(1) The State Government may, by notification in the Official Gazette, appoint as many special Judges as may be necessary for such area or areas as may be specified in the notification Co try the following offences, namely: (a) an offence punishable under section 161, section 165, or section 165 A of the Indian Penal Code (Act XLV of 1860), or sub section (2) of section 5 of the Prevention of Corruption Act, 1947 (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" '.
Sub section (1) of section 7 of the same Act lays down: "7.
(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (Act V of 1898) or in 655 any other law the offences specified in subsection (I of section 6 shall be triable by special Judges only".
The same section also states that when trying any case, a special Judge may also try any offence other than an offence specified in section 6 with which the accused may, under the Code of Criminal Procedure, 1898, be charged at the same trial.
It is not necessary for our purpose to read the other sections "of the Criminal Law Amendment Act, 1952.
We then go to the Prevention of Corruption Act, 1947, section 6 whereof is relevant for our purpose.
That section is in these terms: " 6.
(1) No Court shall, take cognizance of an offence punishable under section 16l or section 165 of the Indian Penal Code or under sub section (2) of section 5 of this Act, alleged to have been committed by a public servant except with the previous sanction,(a) in the case of a person who is employed in connection with the affairs of the Union and is not removable from his office save by or with the sanction of the Central Government. . [of the] Central Government; (b) in the case of a person who is employed in connection with the affairs of [a State] and is not removable from his office save by or with the sanction of the State Government. . . [of the] State Government; (c) in the case of any other person, of the authority competent to remove him from his office.
(2) Where for any reason whatsoever any doubt arises whether the previous sanction as required under sub section (1) should be given by the Central or State Government or any other authority, such sanction shall be given by that Government or authority which would have been competent to remove, the public servant from his office at the time when the offence was alleged to have been committed.
" It is under this section that sanction was necessary for the prosecution of the petitioners.
Clause (2) of article 20 of the Constitution, on which the petitioners rely, states: 654 "No person shall be prosecuted and punished for the same offence more than once.
" Section 403 (1) of the Code of Criminal Procedure, on which learned counsel for the petitioners has placed the greatest reliance, is in these terms: " A person who has once been tried by a Court of competent jurisdiction for ail offence and convicted or acquitted of such offence shall, while such conviction or acquittal remains in force, not be liable to be tried again for the same offence, nor on the same facts for any other offence for which a different charge from the one made against him might have been made under section 236, or for which he might have been convicted under section 237." Now, it is necessary to state that the point taken by learned counsel for the petitioners is really concluded by three decisions (a) one of the Privy Council,(b) another of the Federal Court and (c) the third of this Court itself.
The Privy Council decision is in Yusofalli Mulla vs The King (1); the Federal Court decision in Basdeo Agarwalla vs King Emperor (2) ; and the decision of this Court (not yet reported) was given in Budha Mal vs State of Delhi (3) on October 3, 1952.
The Privy Council decision is directly in point, and it was there held that the whole basis of section 403 (1) was that the first trial should have been before a Court competent to hear and determine the case and to record a verdict of conviction or acquittal; if the Court was not so competent, as for example where the required sanction for the prosecution was not obtained, it was irrelevant that it was competent to try other cases of the same class or indeed the case against the particular accused in different circumstances, for example if a sanction had been obtained.
So is the decision of this Court where the following observations were made with regard to the point in question: " Section 403, Criminal Procedure Code, applies to cases where the acquittal order has been made by a Court of competent jurisdiction but it does not bar (1) A.I.R. 1949 P.C. 264.
(2) (3) Criminal Appeal No. 17 Of 1952 decided on October 3, 1952.
655 a retrial of the accused in cases where such an order has been made by a court which had no jurisdiction to take cognizance of the case.
It is quite apparent on this record that in the absence of a valid sanction the trial of the appellant in the first instance was by: a magistrate who had no jurisdiction to try him.
" After the pronouncements made in the decisions referred to above, it is really unnecessary to embark on a further or fuller discussion of the point raised, except merely to state that we have heard learned counsel for the petitioners who made a vain attempt with a crusading pertinacity worthy of a better cause, to show that the Privy Council decision was wrong and the decision of this Court required reconsideration, and having heard learned counsel in full, we are of the view that the decisions referred to above state the legal position correctly.
It is clear beyond any doubt that el.
(2) of article 20 of the Constitution has no application in these two cases.
The petitioners are not being prosecuted and punished for the same offence more than once,, the earlier proceedings having been held to be null and void.
With regard to section 403, Code of Criminal Procedure, it is enough to state that the petitioners were not tried, in the earlier proceedings, by a Court of competent jurisdiction, nor is there any conviction or acquittal in force within the meaning of section 403.
(1) of the Code, to stand as a bar against their trial for the same offences.
Learned counsel for the petitioners invited our attention to sections 190, 191, 192, 529 and 530 of the Code of Criminal Procedure and submitted that in certain circumstances the Code drew a distinction between 'jurisdiction ' and I taking cognizance '.
The whole fabric of the argument of learned counsel was founded on this distinction.
Assuming, however, that in certain cases one Magistrate may take cognizance and another Magistrate may try an accused person, it is difficult to appreciate how any Court can try the petitioners of these cases in the absence of a sanction in view of the mandatory provisions of section 6 of the Prevention of Corruption Act, 1947.
If no Court can take cognizance of the offences in question without a legal sanction, it is obvious 666 that no Court can be said to be a Court of competent jurisdiction to try those offences and that any trial in the absence of such sanction must be null and void, and the sections of the Code on which learned counsel 1 for the petitioners relied have really No. bearing on the matter.
Section 530 of the Code is really against the contention of learned counsel, for it states, inter alia, that if any Magistrate not being empowered by law to try all offender, tries him, then the proceedings shall be void.
Section 529 (e) is merely an exception in the matter of taking cognizance of an offence under section 190, sub section
(1), cls.
(a) and (b); it has no bearing in a case where sanction is necessary and no sanction in accordance with law has been obtained.
As part of his arguments, learned counsel for the petitioners referred to certain observations made by Braund J. in a decision of the Allahabad High Court, Basdeo vs Emperor (1), where the learned Judge drew a distinction between 'taking cognizance ' and 'jurisdiction '.
The distinction was drawn in a case where a Magistrate duly empowered to commit cases to the Sessions Court committed ail accused person to the Court of Session in disregard of the provisions of section 254 of the Code of Criminal Procedure, and the question was whether the irregularity so committed rendered the Sessions Court incompetent to try the case.
The facts there were entirely different from the facts of the present cases and there was no occasion nor necessity for considering such mandatory provisions as are contained in section 6 of the Prevention of Corruption Act.
We do not think that the observations made in that case can be pressed in service in support of the argument of learned counsel for the petitioners in these cases, treating those observations as though they laid down any abstract propositions of law not dependent on the context of the facts in connection with which they were made.
Out of deference to learned counsel for the petitioners, we have indicated and considered very briefly the arguments advanced before us.
As we have said (1) A.I.R. T045 All.
657 before, the point is really concluded by decisions of the highest tribunal, decisions which correctly lay down the law.
The result therefore is that these petitions are devoid of all merit and must be dismissed.
Petitions dismissed.
| The accused was tried and convicted by a Special judge for offences under section 161 of the Indian Penal Code and section 5 of the Prevention of Corruption Act.
On appeal the whole proceedings were quashed as being ab initio invalid for want of proper sanction.
The authorities accorded fresh sanction and directed the accused to be tried by a Special judge for the same offences.
It was contended by the accused that the second trial was barred by article 20 (2) of the Constitution of India and by section 403 Of the Code of Criminal Procedure.
Held, that the trial was not barred.
article 20 (2) had no application in the case.
The accused was not being prosecuted and punished for the same offence more than once, the earlier proceedings having been held to be null and void.
The accused was not tried in the earlier proceedings by a Court of competent jurisdiction, nor was there any conviction or acquittal in force within the meaning of section 403(1) of the Code to stand as a bar against the trial for the same offence.
Yusofalli 'Mulla vs The King, A.I.R. (1949) P. C. 264, Basdeo Agarwalla vs King Emperor, and Budha Mal vs of Delhi, Criminal Appeal No. 17 Of 1952, decided on October 1952, followed.
|
Summarize this legal judgement text concisely | Appeals Nos. 346 to 363 of 1956.
Appeals under Article 132(1) of the Constitution of India from the Judgment and Order dated May 23, 1956, of the Assam High Court in Civil Rules Nos. 26, 31, 32 and 33 of 1956 and the Judgment and Order dated June 12, 1956, of the said High Court in Civil Rules Nos. 45, 48, 49, 64, 65, 69, 71, 82 and, 85 of 1956.
section M. Lahiri, Advocate General of Assam, A.V. Vishwanatha Sastri and Naunit Lal, for the appellant in Appeals Nos. 346 to 358.
A. V. Vishwanatha Sastri, Fakhruddin Ali Ahmed and Naunit Lal, for the appellant, in Appeal No. 359.
N. C. Chatterjee, Fakhruddin Ali Ahmed and Naunit Lal, for the appellants in Appeals Nos. 360 and 361.
Fakhruddin Ali Ahmed and Naunit Lal, for the appellants in Appeals Nos. 362 and 363, 38 298 C.K. Daphtary, Solicitor General of India, B. Chaudhuri, section N. Andley, Rameshwar Nath.
J. B. Dadachanji, P. L. Vohra and section C. Das, for the respondents Nos. 1 & 2 in Appeals Nos. 346 and 359, and for respondent No. 1 in Appeal No. 347.
P. B. Das, B. Chaudhuri, section N. Andley, Remeshwar Nath, J. B. Dadachanji, P. L. Vohra and section C. Das, for respondent No. 1 in Appeals Nos. 349, 350, 352, 353, 355, 356, 358, 360, 361 and 362, for respondent No. 5 in Appeals Nos. 351, 357, 361 and 363 and for respondent No. 6 in Appeal No. 356.
K. P. Gupta, for respondent No. 1 in Appeals Nos. 357 and 363.
January 31.
The Judgment of the Court was delivered by DAS C.J.
This judgment will dispose of the above noted 18 several Civil Appeals filed in this Court on certificate of fitness granted by the High Court of Assam under article 132 of the Constitution of India.
The appeals Nos. 346, 347, 348, 349 and 359, are directed against the judgment of the said High Court passed on May 23, 1956, in Civil Rules Nos. 26, 31, 32 and 33 of 1956 issued by the said High Court on several petitions filed under article 226 of the Constitution.
The rest of the appeals arise out of nine other Civil Rules issued in nine other similar writ applications, which were disposed of by the judgment pronounced by the said High Court on June 12, 1956, which simply followed its previous judgment dated May 23, 1956.
Each of these appeals raises the question of the vires of section 3(3) of the Assam Revenue Tribunal (Transfer of Powers) Act, 1948 (Assam Act No. 4 of 1948) which is hereinafter referred to as " the 1948 Act " and of the ' validity of the notification No. Rex.
184/52/39 issued by the Governor of Assam on July 5, 1955, in exercise of powers conferred on him by sub a.
(3) of a. 3 of the said Act appointing the Commissioner of Hills Division and, Appeals as, the appellate authority under the 1948 Act.
All the appeals were accordingly heard together.
299 In order to correctly appreciate the question raised before us it is necessary at this stage to refer to certain relevant statutory provisions and rules.
In 1910 was passed the Eastern Bengal and Assam Excise Act 1910 (E.B. aild Assam Act 1 of 1910) which is hereinafter called " the 1910 Act.
" It is an Act to consolidate and amend the law in force in Eastern Bengal and Assam relating to the import, export, transport, manufacture, sale and possession of intoxicant liquor and intoxicant drug,%.
Sub section (2) of section 3 as amended and adapted, defines " Board " as meaning the Provincial Government of Assam.
Chapter II of the Act deals with establishments and control.
Section 8 makes provision for the appointment of officers and the conferment, withdrawal and delegation of powers on them.
Section 9 of the Act, which is of importance, was as follows: 9(1) In all proceedings under this Act, the Excise Commissioner and the Commissioner of the Division shall be subject to the control of the Board, and the Collector shall be subject to the control of the Excise Commissioner and the Board, and shall also, in such cases and such matters as the Provincial Government may specify, be subject to the control of the Commissioner of the Division.
(2)Orders passed under this Act or under any rule made hereunder shall be appealable as follows in manner prescribed by such rules as the Provincial Government may make in this behalf (a)to the District Collector, any order passed by a Collector other than the District Collector; (b)to the Excise Comniissiouer or, in such cases and such matters as the Provincial Government may specify, to the Commissioner of the Divisions, any order passed by the District Collector; and (c)to the Board, any order passed by the Excise Commissioner or by the Commissioner of a Division.
(3)In cases not provided for by clauses (a), (b) and (c) of sub section (2), orders passed under this Act or under rules made hereunder shall be appealable in such cases and to such authorities as the Provincial Government may declare by rules made in this behalf.
300 (4) The Board, the Excise Commissioner, the Commissioner of the Division (in such cases and such matters as the Provincial Government may specify), or the District Collector may call for the proceedings held by any officer or person subordinate to it or him or subject to its or his control and pass such orders thereon as it or he may think fit.
Chapter III deals with import, export and transport ' of intoxicants.
Manufacture, possession,and sale of intoxicants are dealt with in Chapter IV.
Section 18 prohibits the sale of intoxicants except under the authority and in accordance with the terms and conditions of a licence granted by the Collector or the Excise Commissioner in that behalf and makes certain provisions by way of exception to such prohibition.
Chapter V provides for the imposition of duties and fees, either generally or for any specified local area, on any excisable article imported, exported, transported or manufactured under any licence granted under section 15 or section 16 of the Act and the method of levy of such duty.
Chapter VI makes provision for the form and the conditions of grant of licences permits and passes.
Section 28 of this chapter makes it obligatory on the Collector to take such measures as may best enable him to ascertain local public opinion in, regard to the licensing and location of shops.
Section 29 makes provision for the cancellation or suspension of licences, permits or passes.
Under section 32 no person to whom a licence has been granted shall have any claim to the renewal of such licence or any claim to compensation on the determination thereof Chapter VII lays down general provisions.
Included in that chapter is section 36, which confers power on the Provincial Government to make rules for the purpose of carrying out the provisions of the Act or any other law for the time being in force relating to the Excise Revenue.
Under sub section
(2) els.
(g), (h) and (1) of this section specific power is given to the Provincial Government to make rules regulating the periods for which and, the persons to whom licences for the sale of any intoxicant may be granted, prescribing the procedure to be followed and the matters to be ascertained before any 301 licence for such sale is granted and laying down, in the case of any intoxicant, the manner in which the duty on such article shall be levied.
Prevention, detection and investigation of offences are dealt with in chapter VIII.
Chapter IX provides for penalties and procedure.
In exercise of the powers conferred on it by section 36 the Provincial Government of Assam have made elaborate rules.
Part IV of the rules deals with licences, settlements and fees, duration and number of licences, location of shop&, ascertainment of local public opinion, the procedure for settlement, prohibition on grant, of retail licence to certain persons, grant of licence and so on and so forth.
A perusal of the Act and rules will make it clear that no person has any absolute right to sell liquor and that the purpose of the Act and the rules is to control and restrict the consumption of intoxicating liquors, such control and restriction being obviously necessary for the preservation of public health and morals, and to raise revenue.
Then came the Government of India Act, 1935.
It was brought into operation on April I,, 1937.
Section 296 of the Act, 'on which the main controversy in these appeals turns, before its adaptation ran as follows: 296 (1) No member of the Federal or a Provincial Legislature shall be a member of any tribunal in British India having 'jurisdiction to entertain appeals or revise decisions in revenue cases.
(2)If in any Province an such jurisdiction as aforesaid was, immediately before the commencement of Part III of this Act, vested in the Local Government, the Governor shall constitute a tribunal, consisting of such person or persons as he, exercising his individual judgment, may think fit to exercise the same jurisdiction until other provision in that behalf is made by Act of the Provincial Legislature.
(3)There shall be paid to the members of any tribunal constituted under the last preceding subsection, such salaries and allowances as the Governor exercising his individual judgment may determine, and 302 those salaries and, allowances shall be charged on the revenues of the Province.
It will. be recalled that under a. 9 of the 1910 Act the Board, which by a. 3(2) thereof meant the Provincial Government, was the final appellate authority.
The Provincial Government was composed of ministers who were necessarily members of the Legislature.
In fact, in Assam the ministers used to function as the Board and exercise the final appellate authority under section 9 of the 1910 Act.
The policy of Parliament was that such practice must be discontinued and hence it introduced a prohibition against it by sub section
(1) of section 296 quoted above The intention of Parliament was not, however, to do away with the right of final appeal but to preserve it.
The ban imposed by sub section
(1) prevented the Board, meaning the Provincial Government, from functioning as the final appellate authority under the 1910 Act.
Therefore, some provision had to be made to set up some other body to exercise that appellate power.
Accordingly Parliament, by sub section
(2) of section 296, empowered the Governor of those provinces where the appellate authority was, prior to the commencement of that Act, vested in the Provincial Government, to constitute a tribunal to exercise the same jurisdiction.
The tribunal so constituted by the Governor was to exercise jurisdiction until other provision in that behalf was made by the Legislature.
In exercise of powers conferred on him by sub section
(2) of that section the Governor of Assam constituted a single member Tribunal called at first the Board and later as the Assam Revenue Tribunal.
From, time to time the personnel of this tribunal was charged by notifications issued in that behalf.
The Assam Revenue Tribunal so constituted by the Governor functioned until 1946, when the Assam Revenue Tribunal Act, 1946 (Assam Act II of 1946) hereinafter referred to as " the 1946 Act " was passed.
Sub section (1) of a. 3 of the 1946 Act provided that the Provincial Government should constitute a tribunal to be called the Assam Revenue Tribunal consisting of a President and two, members.
Sub section (2) 303 fixed their period of service as five years.
The qualifi cations of the President and the members were prescribed by sub section
(3) and provision was made by sub section
(4.) for filling up of vacancies.
Sub section (5) provided that the president and the non official members should be paid such salary as might be prescribed, i,e., prescribed by rules made under the Act.
Powers and functions of the tribunal were defined by Ps 5 and 6 of the Act.
Sub section (2) of section 5 conferred on the tribunal jurisdiction to entertain appeals and revise the decisions in all revenue cases arising under the provisions of the enactments specified in the schedule in which such jurisdiction was vested in the Provincial Government immediately before the Act.
The schedule set out nine enactments.
Section 7 prohibited any further appeal or revision against any order passed by the tribunal.
Section 8, however, conferred on the tribunal power to review its own orders.
Section 9 abolished the Assam Revenue Tribunal constituted by the Governor and provided that all appeals and applications for revision pending before the said tribunal should be deemed to have been instituted before the tribunal constituted under this Act and directed the same to be decided by this tribunal as if they were instituted before it.
In exercise of powers so conferred on it the Provincial Government constituted a three member tribunal to exercise the final appellate authority.
Thus, broadly speaking, under the 1910 Act up to March 31, 1937, appeals lay under section 9 from the Deputy Commissioner to the Excise Commissioner and from the latter to the Board, that is to say, the Provincial Government.
On and from April 1, 1937, when the Government of India Act, 1935 came into force up to June 1946 when the 1946 Act was passed appeals lay from the Deputy Commissioner to the Excise Commissioner and from the latter to the one member tribunal constituted by the Governor of Assam and after the enactment of the 1946 Act, Which abolished the Governor 's tribunal, appeals 1 say from the Deputy Commissioner to the Excise Commissioner and from 304 the latter to the three member tribunal constituted under the 1946 Act.
On April 5, 1948, a High Court was established for the province of Assam.
On April 6, 1948, the Assam Revenue Tribunal (Transfer of Powers) Act, 1948 (Assam IV of 1948), received the assent of the Governor of Assam.
It was published in the official gazette on April 8, 1948, and was brought into force on the same day by a notification issued by the Provincial Government under a. 1 (3).
Section 3 of this 1948 Act runs as follows: 3 (1) Subject to the provisions of sub section (3) of this section the Assam High Court shall exercise such jurisdiction to entertain appeals and revise decisions in revenue cases as was vested in the Provincial Government immediately before the first day of April, 1937 under any law for the time being in force.
(2)in particular and without prejudice to the generality of the foregoing provision the Assam High Court shall have jurisdiction to entertain appeals and revise decisions in all revenue cases arising under the provisions of the enactments specified in Schedule A in which such jurisdiction was vested in the Provincial Government immediately before the first day of April 1937, and (3)Without prejudice to the foregoing provisions the authority appointed by general or special order of the Provincial Government shall exercise such jurisdiction to entertain appeals and revise decisions in matters arising under the provisions of the enactments ,specified in Schedule B as is exercised now by the Revenue Tribunal and was vested in the Provincial Government before the first day of April 1937, and (4)The Assam High Court and the authority appointed by Provincial Government shall have jurisdiction to entertain appeals and revise decisions within the field of jurisdiction respectively transferred by this Act to the Assam High Court and the authority appointed by the Provincial Government in oases specified in section 7 (2).
, The drafting of this section is, indeed curious, for while sub a.
(1) starts with the words of reservation 305 namely 'subject to the provisions of sub section
(3) of this section ' and sub section
(2) is without prejudice to the generality of sub section
(1), sub section
(3) is expressed to be "without prejudice to the foregoing provisions", that, is to say the provisions of sub sections
(1) and (2).
Section 5 prohibits any appeal or revision against any orders passed by the Assam High Court or the "authority referred to in section 3 (3)" in exercise of its powers of appeal or revision under the Act.
Section 6 confers power on the Assam High Court or the "authority referred to in section 3 (3)" to review its own decision or order under certain conditions.
Section 7 provides for the abolition of the Assam Revenue Tribunal and the disposal of pending cases before the same.
It runs as follows: "7 (1) From the date on which this Act comes into force The Assam Revenue Tribunal shall be deemed to have been abolished; and the President and members thereof shall be deemed to have relinquished their posts as President and members of the Tribunal.
(2)The appeals and applications for revision pending before the said Tribunal on the date on which this Act comes into force shall be deemed to have been instituted before the Assam High Court or the authority referred to in section 3 (3) according to the field of jurisdiction transferred by this Act to the High Court and the aforesaid authority respectively and shall be decided as if they were instituted before the Assam High Court or the authority as the case may be.
" It is difficult to appreciate the propriety of the use of the word 'deemed ' in sub section
(1) of section 7 and this vagueness has given rise to some argument before us which will be dealt with later on.
Section 8 confers power on the Assam High Court to make rules by notification in the official gazette consistent with the provisions of this Act for carrying out the purpose of this Act and like power is conferred on the Provincial Government to make rules for the, guidance of the authority appointed by it "as contemplated by section 3 (3)".
The Act contains two schedules.
Schedule A contains five enactments, namely, the first four and the ninth enactment referred to in the schedule of the 39 306 1946 Act, and sch.
B contains the remaining four enactments of the schedule to the 1946 Act.
Under section 3 the appeals and revisions arising out of the enactments specified in sch.
A are to be dealt with by the High Court and those arising out of the enactments specified in sch.
B are to be dealt with by the authority appointed by general or special order of the Provincial Government.
In exercise of powers conferred on it by section 3 (3) of the 1948 Act the Provincial Government from time to time issued notifications appointing persons to exercise the power of the appellate authority.
When the Act came into force on April 8, 1948 the Revenue Secratary was appointed the appellate authority.
Curiously enough, however, on June 15, 1948, the Minister of Excise to the Government of Assam was appointed as the appellate authority.
This was promptly challenged as a flagrant violation of the provisions of section 296 (1) of the Government of India Act, 1935, and was ultimately declared to be invalid by the Assam High Court.
Thereafter fresh notifications were issued on September 15, 1952, and May 11, 1955, each superseding the immediately previous notification.
On June 2, 1955, a new post called the Commissioner of Hills Divisions and Appeals was created and Notification No. Rex.
184/52/39 was issued on July 5, 1955, whereby the Commissioner of Hills Divisions and Appeals was appointed as the appellate authority after cancellation of the preceding notification dated the May 11, 1955.
In 1955 arose the question of.
granting licence and settlements of country spirit shops in different areas for the year 1956 57.
Rival claimants submitted their respective applications.
The Deputy Commissioner on the advice of the Advisory Committee, made orders for settlements in favour of certain persons.
Appeals were promptly preferred by the disappointed claimants to the Excise Commissioner.
The Excise Commissioner in some cases upheld the orders of the Deputy Commissioner and in some cases reversed his orders and directed licence to issue to some other claimants.
The party dissatisfied with the order of the Excise Commissioner went up on further appeal to the appellate 305 namely subject to the provisions of sub section
(3) of this section ' and sub section
(2) is without prejudice to the generality of sub section
(1), sub section
(3) is expressed to be "without prejudice to the foregoing provisions", that, is to say the provisions of sub sections
(1) and (2).
Section 5 prohibits any appeal or revision against any orders passed by the Assam High Court or the "authority referred to in section 3 (3)" in exercise of its powers of appeal or revision under the Act.
Section 6 confers power on the Assam High Court or the "authority referred to in section 3 (3)" to review its own decision or order under certain conditions.
Section 7 provides for the abolition of the Assam Revenue Tribunal and the disposal of pending cases before the same.
It runs as follows: "7 (1) From the date on which this Act comes into force The Assam Revenue Tribunal shall be deemed to have been abolished and the President and members thereof shall be deemed to have relinquished their posts as President and members of the Tribunal.
(2)The appeals and applications for revision pending before the said Tribunal on the date on which this Act comes into force shall be deemed to have been instituted before the Assam High Court or the authority referred to in section 3 (3) according to the field of jurisdiction transferred by this Act to the High Court and the aforesaid authority respectively and shall be decided as if they were instituted before the Assam High Court or the authority as the case may be.
" It is difficult to appreciate the propriety of the use of the word 'deemed ' in sub section
(1) of section 7 and this vagueness has given rise to some argument before us which will be dealt with later on.
Section 8 confers power on the Assam High Court to make rules by notification in the official gazette consistent with the provisions of this Act for carrying out the purpose of this Act and like power is conferred on the Provincial Government to make rules for the, guidance of the authority appointed by it "as contemplated by section 3 (3)".
The Act contains two schedules,.
Schedule A contains five enactments, namely, the first four and the ninth enactment referred to in the schedule of the 39 306 1946 Act, and sch.
B contains the remaining four enactments of the schedule to the 1946 Act.
Under section 3 the Is appeals and revisions arising out of the enactments specified in sch.
A are to be dealt with by the High Court and those arising out of the enactments specified in sch.
B are to be dealt with by the authority appointed by general or special order of the Provincial Government.
In exercise of powers conferred on it by section 3 (3) of the 1948 Act the Provincial Government from time to time issued notifications appointing persons to exercise the power of the appellate authority.
When the Act came into force on April 8, 1948, the Revenue Secretary was appointed the appellate authority.
Curiously enough, however, on June 15, 1948, the Minister of Excise to the Government of Assam was appointed as the appellate authority.
This was promptly challenged as a flagrant violation of the provisions of section 296 (1) of the Government of India Act, 1935, and was ultimately declared to be invalid by the Assam High Court.
Thereafter fresh notifications were issued on September 15, 1952, and May 11, 1955, each superseding the immediately previous notification.
On June 2, 1955, a new post called the Commissioner of Hills Divisions and Appeals was created and Notification No. Rex.
184/52/39 was issued on July 5, 1955, whereby the Commissioner of Hills Divisions and Appeals was appointed as the appellate authority after cancellation of the preceding notification dated the May 11, 1955.
In 1955 arose the question of.
granting licence and settlements of country spirit shops in different areas for the year 1956 57.
Rival claimants submitted their respective applications.
The Deputy Commissioner on the advice of the Advisory Committee, made orders for settlements in favour of certain persons.
Appeals were promptly preferred by the disappointed claimants to the Excise Commissioner.
The Excise Commissioner in some cases upheld the orders of the Deputy Commissioner and in some cases reversed his orders and directed licence to issue to some other claimants.
The party dissatisfied with the order of the Excise Commissioner went up on further appeal to the appellate 307 authority constituted by the last mentioned Notification of the Provincial Government.
In some cases the, appellate authority upheld the orders of the Excise ' Commissioner, in some cases it reversed the same and restored the orders of the Deputy Commissioner and in some cases it reversed the orders of the Excise Commissioner and did not restore the orders of the Deputy Commissioner but made orders for the grant of licences to third parties who were also claimants for such licences.
Parties dissatisfied with the order made by the appellate authority filed petitions under article 226 of the Constitution of India for appropriate writs quashing the orders of the Appellate Authority and, the several Civil Rules herein before referred to were issued to the respondents to show cause why the write prayed for should not be issued.
Civil Rules Nos. 26, 31, 32 and 33, all of 1956, were taken up for hearing together by the High Court.
At the hearing before the High Court three points were raised on behalf of the petitioners, namely: (1) That section 3(3) of the 1948 Act was bad, because (a) it was repugnant to section 296 (2) and (b) it conferred essential legislative power on the Provincial Government and amounted to excessive delegation of legislative power; (2) that Notification No. Rex.
184/52/39 issued on July 5, 1955, was repugnant to the whole scheme and policy of section 9 of the 1910 Act; and (3) that assuming that section 3(3) of the 1948 Act was valid the power of the Provincial Government to appoint an appellate authority came to an end once the authority had been appointed.
On the first point the High Court took the view that section 296(2) placed an obligation on the Provincial Legislature to constitute a tribunal but the Provincial Legislature failed to carry out this positive mandate and left the constitution of the appellate authority to the Provincial Government in violation of the obligation enjoined upon it by section 296(2).
This reading of a. 296(2) later on was further emphasized and appears to have been the central theme running throughout the judgment of the High Court.
The High Court also 308 took the view that, apart from section 296(2), section 3(3) of the 1948 Act constituted an excessive delegation of legislative power conferred on the Provincial Legislature by sections 99 and 100 of the Government of India Act, 1935, read with entries 2, 31 and 40 of list II of the Seventh schedule thereto.
The High Court also upheld the petitioner 's contention that the Notification dated July 5, 1955, was repugnant to section 9 of the 1910 Act.
In the view the High Court took on the first two points it did not express any opinion on the third point.
In the result the High Court held that section 3(3) of the 1948 Act and the said Notification were void and ' that the appellate authority which heard the revenue appeals had not been validly or lawfully constituted and that, therefore, its decisions were nullities.
The High Court accordingly issued appropriate writs quashing the said orders.
The other Civil Rule& came up for hearing later on and were disposed of by another judgment of the High Court pronounced on June 12, 1956, which simply followed its earlier decision and accordingly the High Court issued similar writs quashing the said orders.
The State of Assam as well as some of 'the parties have come up on appeal with the requisite certificate from the High Court as herein before mentioned.
The main attack on the part of the State of Assam was directed against the High Court 's view that section 3(3) of the 1948 Act was void on the two grounds referred to in the judgment.
As already indicated the principal theme running throughout that judgment was that section 296(2) of the Government of India Act, 1935 had placed an obligation on the Provincial Legislature to constitute a tribunal.
We are unable to accept this reading of that section.
The purpose of section 296 was to deal with courts of appeal in revenue cases.
By sub section
(1) it imposed a ban on the members of the Federal or Provincial Legislature and prohibited them from becoming members of any tribunal in British India having jurisdiction to entertain appeals or revise decisions in revenue cases.
It appears that in some of the provinces such jurisdiction was, immediately before the commencement of Part III of the Government of 309 India Act, vested in the local government, which in effect meant ministers, who of necessity had to be members of the Legislature.
Having imposed the ban and at the same time intending that the right of final appeal, should be maintained, Parliament had to make provision for preserving this right of final appeal in those provinces in which such jurisdiction was, immediately before the commencement of Part III of the Act, vested in the local Government.
Accordingly Parliament authorized the Governor to constitute a tribunal consisting of such person or persons as he, exercising his individual judgment, might think fit, to exercise the same jurisdiction.
In sections 99 and 100 read with the several entries in List II Parliament had already authorised the Provincial Legislatures to make laws with respect to the jurisdiction and powers of all courts except the Federal Court (entry 2), Intoxicating and, Narcotic Drugs (entry 31) and Duties of Excise (Entry 40).
Evidently Parliament did not intend that the power to constitute a tribunal so conferred on Provincial Legislatures of those provinces in which appellate jurisdiction was, at the date of that Act, vested in the local government should be affected or whittled down by the constitution of a tribunal by the Governor under sub section
(2) and accordingly it provided that the tribunal constituted by the Governor to exercise the appellate jurisdiction should continue 64 until other provision in that behalf " was made by the Act of the Provincial Legislature.
The concluding clause in the section clearly indicated the point of time up to which the Governor 's tribunal was to function.
The purpose of the section was clearly not to impose any restriction on the legislative power conferred on the Provincial Legislatures by sections 99 and 100 read with the aforesaid entries in list II of the Seventh schedule.
Sub section (2) of section 296 imposed no compulsion whatever on the Provincial Legislature to make " other provision in that behalf ".
Indeed no provision in that behalf was made by the Assam Legislature until it enacted the 1946 Act.
We are unable, with great respect, to read into section 296(2) any mandate requiring the Provincial Legislature to make 310 any provision.
On the contrary it was left entirely to the Provincial Legislature in the provinces referred to therein to make or not to make any law under the entries referred to above and the only effective provision.
of that sub section was to authorise the Governor to constitute a tribunal and to fix a terminus a quo up to which the Governor 's tribunal could continue to function.
Learned counsel appearing for the respondents have not sought to support the extreme construction put upon section 296(2) by the High Court.
They have, however, pointed out that the Governor 's tribunal was to continue until other provision " in that behalf " was made by the Provincial Legislature and contended that some meaning must be given to the words "in that behalf".
They argued that those words related back and referred to the constitution of the tribunal by the Governor, that so read the meaning of the subsection plainly was that the Governor 's tribunal was to continue to function until the Provincial Legislate are made other provision for the constitution of a tribunal of its own.
They conceded that the power of the Provincial Legislature to constitute a tribunal was not derived from section 296 (2) but was conferred on it by sections 99 and 100 read with the relevant entries in List 11 of the Seventh schedule, but they contended that the provision that until in exercise of those powers the Provincial Legislature constituted a tribunal the Governors tribunal would continue clearly indicated that the Governor 's tribunal was to be a temporary body and this circumstance impliedly imposed on the Provincial Legislature an obligation requiring it to exercise its power only for constituting a tribunal.
We are unable to accept this contention.
The Governor was empowered to constitute a tribunal to exercise the same jurisdiction as was, immediately before, the commencement of Part III of the Government of India Act, 1935, vested in the Provincial Government.
The tribunal so constituted by the Governor was to function until other provision was made "in that behalf".
The words "in that behalf" need; not necessarily relate back to the constitution of a tribunal.
Learned counsel 311 for the appellants suggest that the words "other provision in that behalf" may grammatically refer to what preceded immediately, namely, to the exercise of the same jurisdiction.
In other words they contend that the sub section means that the Governor 's tribunal would continue to exercise the jurisdiction until other provision in that behalf, that is to say, other provision for or with respect to the exercise of the same jurisdiction was made by Act of the Provincial Legislature.
It is pointed out that the construction suggested by learned counsel for the respondents would lead us to the conclusion that the intendedly of the concluding part of the Sub section was to impose a fetter on the legislative powers of the Provincial Legislatures of those provinces referred to in the subsection so that they could constitute a tribunal if they ever wanted to exercise their legislative powers under the entries mentioned above but could make no other provision with respect to the exercise of such jurisdiction as was being exercised by the Provincial Government at the commencement of the Government of India Act, 1935.
On this construction the Legislatures of those provinces only would be prevented from abolishing the right of final appeal, while other provinces in which the appellate jurisdiction was not, at the date of the commencement of Part III of the Government of India Act, 1935, being exercised by the local government would be free to abolish the right of final appeal.
A construction which leads to such a result should, they contend, be avoided, if possible.
The criticisms advanced against the construction put upon section 296 (2) by the High Court which has been pressed upon us in a slightly modified form as hereinbelow mentioned do not appear to us to be wholly untenable or devoid of substance.
We need not, however, base our decision on those considerations, for on a plain reading of section 296 (2) its purpose clearly was to authorize the Governors of certain provinces to constitute a tribunal and to prescribe a time limit up to which the tribunal so constituted by him was to exercise the appellate jurisdiction.
Beyond this the sub section was not intended to go, It was not concerned with the legislative 312 powers of the Provincial Legislatures which had ,already been prescribed by sections 99 and 100 read with List 11 of the Seventh schedule.
It imposed no compulsion on the Provincial Legislatures to make any law or to impose any restriction whatever on the legislative powers of the Provincial Legislatures.
The critical concluding clause in sub section
(2) only fixed a terminus a quo and did nothing further.
Even assuming that the construction suggested by learned counsel for the respondents were to be accepted, namely, that section 296 (2) imposed an obligation on the Provincial Legislature to constitute a tribunal, we take the view, for reasons to be presently stated, that obligation has in substance been fully discharged by section 3(3) of the 1948 Act and this leads us to a consideration of the second point founded on the doctrine of delegation of power.
It was said that apart from the questions whether section 296 (2) contained a mandate and whether the Provincial Legislature had obeyed the same, section 3 (3) of the 1948 Act must be struck down on the ground that the Provincial Legislature had not exercised its essential legislative functions, under sections 99 and 100 read with the aforesaid entries but had delegated it to the Provincial Government without laying down any policy or principle to guide the latter in exercising the same.
Reference was made to the 1946 Act and it was urged that Act prima facie carried out the obligations placed upon the legislature by section 296 (2) and that apart from that question that Act laid down the policy and principle, namely, the number of members of the tribunal, their qualifications, functions, and term of their office and remuneration and that the only authority which the legislature by that Act delegated to the Provincial Government was to select the personnel of the tribunal.
In comparison it was pointed out that the 1948 Act did not lay down any legislative policy or principle by which the Provincial Government was to be guided in the exercise of the delegated power.
By doing so the Provincial Legislature had in effect abdicated its function and made the Provincial Government a parallel legislative authority to constitute a 313 tribunal.
In short, as stated by the High Court, the legislature told the Provincial Government " you appoint the tribunal as and when you like instead of my doing so.
" The legislature, it was contended, could not in this way part with its essential legislative functions.
Elaborate arguments were advanced before us as to the permissible limit of delegation of legislative power and reference was made to numerous authorities English, American and Indian, ranging from Burke 's case (1) to In be, (2) and finally to Raj Narain Singh vs The Chairman, Patna Administration Committee(3).
In the view we have taken of the true meaning and effect of the 1948 Act it is, however, not necessary for us to embark upon a discussion on the baffling subject of delegation of legislative powers and the permissible limits thereof as to which there is considerable scope for divergence of opinion.
In order to correctly interpret the 1948 Act one has to have a clear conception of the circumstances in which and the purpose for which that statute came to be enacted.
It will be recalled that there was the 1910 Act dealing with the excise law in force in Eastern Bengal and Assam.
That Act set out a hierarchy of appellate authority as will appear from section 9(2) of that Act hereinbelow quoted.
Then came the Government of India Act, 1935, section 296(2) of which authorised the Governor to constitute a tribunal to exercise the appellate jurisdiction that was, immediately before the commencement of that Act, being exercised by the Provincial Government.
The Governor 's tribunal was to exercise such jurisdiction until the Provincial Legislature made other provision with respect thereto.
By the 1946 Act the Assam Legislature made other provision for the exercise of the final appellate powers by the tribunal constituted by the Provincial Government in exercise of the powers conferred on it by section 3 of that Act.
Jurisdiction was conferred on the Tribunal to entertain appeals and revise decisions in all revenue cases arising under the 1. 3. ; 40 2.
[T951] section C. R. 747.
314 provisions of the nine enactments specified in the schedule thereto, and in all cases which stood transferred to the Tribunal from the Assam Revenue Tribunal constituted by the Governor as specified in section 9.
The High Court of Assam had just been established on April 5, 1948.
The purpose of the 1948 Act, as recited in its preamble, was to transfer the power,% and jurisdiction exercised by the revenue tribunal to the Assam High Court and to an authority appointed by general or special order of the Provincial Government.
Section 3, which has been quoted above, constituted the Assam High Court as the appellate authority for exercising such jurisdiction to entertain appeals and revise decisions in revenue cases as was vested in the Provincial Government immediately before April 1, 1937, and in particular in all revenue cases arising under the provisions of the enactments specified in sch.
A to the Act.
By Sub section
(3) of section 3 power was conferred on the Authority appointed by general or special order of the Provincial Government to exercise such jurisdiction to entertain appeals and revise decisions in matters arising under the provisions of enactments specified in sch.
B to the Act as was then exercised by the revenue tribunal and was vested in the Provincial Government before April 1, 1937.
Turning to the schedules to the Act it will be noticed that the first four and the ninth item of the schedule to the 1946 Act have been set out in sch.
A to the 1948 Act and items 5 to 8 of the schedule to the 1946 Act have been assigned to sch.
B to the 1948 Act.
By section 7 of the 1948 Act the Assam Revenue Tribunal is to be deemed to have been abolished and the President and the members thereof are to be deemed to have relinquished their posts as President and members of the tribunal.
Sub section (2) of that section transfers the appeals and applications for revision pending before the Assam Revenue Tribunal to the Assam High Court or the authority referred to in section 3(3) according to the field of jurisdiction transferred by the 1948 Act to the High Court and the aforesaid authority respectively and directs that the High Court and the aforesaid authority should decide such appeals 315 and applications for revision as if they were instituted before the Assam High Court or the authority as the case may be.
Section 8 confers rule making power on, amongst others, the Provincial Government for the guidance of the Authority appointed by it as contemplated by section 3(3).
Reading the relevant provisions of the Act it is quite clear that the Assam Legislature had applied its mind and determined that the Assam Revenue Tribunal constituted under the 1946 Act should be abolished; that the Legislature applied its mind and further determined that the jurisdiction and powers of the Assam Revenue Tribunal should be distributed between two bodies, namely, those specified in schedule A should go to the High Court and those specified in schedule B to the Authority referred to in section 3(3).
At one stage of the arguments an endeavour was made to find out a rational basis of the distribution of the appellate powers between the two bodies.
It was stated that the appeals or revisions in which Government was interested were sent to the High Court.
A reference to the enactments in the schedules does not bear out this basis of distribution, for the Government may quite clearly be interested in appeals and revisions arising under the Assam Forest Regulation, which is assigned to schedule B as item (iii) thereof.
It was also said that the appeals and revisions with respect to revenue matters have been assigned to the High Court.
But some of the enactments specified in sch.
B relate to revenue.
It is, therefore, futile to try and ascertain a logical basis for the distribution of the appellate authority between the two bodies.
Nor do we think that it is necessary at all to divine any rational basis for such distribution.
It is enough to say that the legislature in its wisdom and in the interest of smooth administration has thought fit to assign some of the appellate and revisional powers exercised by the Assam Revenue Tribunal to the High Court and the rest to the Authority referred to in section 3(3).
Two alternative arguments have been advanced before us on the assumption that the Assam Legislature was labouring under some mistake or misapprehension.
316 In the first place it was urged that the legislature was under the mistaken belief that the tribunal set up under the 1946 Act though abolished for the purpose of that Act remained nevertheless as an existing tribunal for the purpose of the 1948 Act.
This argument is founded on the inartistic use of the word "deemed" in section 7(1) of the 1948 Act.
But this argument cannot hold good for a moment in view of sub section
(2) of that section, whereby the appeals and applications for revision pending before the Assam Revenue Tribunal on and from the date of the 1948 Act were to be deemed to have been instituted before the Assam High Court or the Authority referred to in section 3(3) and the Assam High Court or the said Authority was directed to decide such appeals and applications as if they were instituted before the Assam High Court or the Authority as the case might be.
This shows that the Assam High Court and the Authority are, therefore, bodies quite different from the old Assam Revenue Tribunal.
Therefore, it cannot possibly be argued that the old 1946 Act tribunal, notwithstanding its abolition, continued to exist for the purpose of the 1948 Act, for sub section (2) of section 7 quite clearly authorised the High Court and the Authority referred to in section 3(3) but not the 1946 Act Tribunal to decide the appeals and applications for revision, which were pending before the old Assam Revenue Tribunal.
The alternative argument was that the legislature in enacting the 1948 Act proceeded on the basis that the power to set up a tribunal resided in the Provincial Government and not in the legislature and that, there fore, the 1948 Act did not purport to be an Act for constituting an appellate tribunal but that the purpose of the Act was only to distribute the appellate powers as recited in its preamble.
It was argued that by this Act the legislature did not itself constitute a tribunal nor authorise the Provincial Government to set up a tribunal.
It was further contended that assuming that the legislature had authorised the Provincial Government to set, up a tribunal then there had been an excess of delegation of legislative power.
We are unable to accept the correctness of this alternative 317 argument.
There is no particular form of expression that is necessary for constituting a tribunal.
The Assam High Court was undoubtedly an existing tribunal, but apart from section 3(1) and (2) that High Court was not an appellate authority having jurisdiction to entertain appeals and revise decisions in all revenue cases arising under the provisions of the enactments specified in schedule A to the Act.
It is the 1948 Act which, by sub sections
(1) and (2) of section 3, constitutes the Assam High Court as the appellate authority for exercising such Jurisdiction and this it has done by simply saying that the Assam High Court shall exercise such jurisdiction or the Assam High Court shall have jurisdiction to entertain appeals and to revise decisions.
If the language of sub sections
(1) and (2) of section 3 is sufficient to constitute the Assam High Court as an appellate authority why does not the language of sub section
(3) of the same section amount to the constitution of the Authority referred to therein as the appellate authority to exercise such jurisdiction to entertain appeals and revise decisions in matters arising under the provisions of the enactments specified in schedule B thereto ? The sub section has undoubtedly been very inartistically and inaptly drafted.
The intention of the framers of the sub section, however, appears to be quite clear that the legislature itself applied its mind and constituted an appellate authority.
If that were not so then after the abolition of the Assam Revenue Tribunal, which took effect on the date of the Act there would result a vacuum as regards the exercise of jurisdiction to entertain appeals and revisions under the provisions of the enactments specified in schedule B and there would be no authority to deal with the pending appeals and revisions or future appeals and revisions arising under those several enactments.
It is further to be noticed that the sub section uses the word "appointed" and not "constituted".
The word "appointed" is inappropriate to signify the constitution of any authority but is quite proper to signify the selection of the personnel of the already constituted authority to exercise the appellate powers of that authority.
In order to give a rational meaning to the 318 whole Act one is driven to the conclusion that by subs.
(3) the legislature itself constituted the authority and only left it to the Provincial Government to appoint persons to man that authority and to perform the duties of that authority.
It appears to be the usual practice of Indian legislatures to constitute authorities in this manner.
In support of such legislative practice reference may be made to the following enactments: 1.The (Act No. IV of 1924), Section 2. 2.
The (Act V of 1923),Section 20. 3.
Bengal Board of Revenue Act, 1913, Sections 3 and 4. 4.
The (Act IV of 1939),Section 64. 5.
The (Act LXIII of 1948),Section 107.
Schedule Districts Act (XIV of 1874), Section 6. 7.
Essential Supplies (Temporary Powers) Act,1946, Section 4. 8.
Assam Act XVII of 1947 (Sales Tax Act),Section 30.
Bombay Act V of 1946 (Sales Tax Act),Section 21.
Bengal Raw Jute Taxation Act (XI of 1941),Section 21.
Extra Provincial Jurisdiction Act, 1947 (Central Act XLVII of 1947), Sections 3 and 4. 12.
Garo Hills Regulation I of 1882, Section 6. 13.
Assam Requisition and Control of Vehicles Act (Act XXXII of 1950), section 9.
Assam Adhiars Protection and Regulation Act, 1948 (Act XII of 1948), Section 9. 15.
Assam Forest Product Acquisition Act (XXXI of 1950), Section 7.
"Appointed" does not necessarily mean already appointed.
It may also mean "to be appointed" at any future time.
When a person is appointed by the Provincial Government after the date of the Act, he may immediately thereafter be well described as a person appointed by the Provincial Government.
319 It is next suggested that even if the legislature itself constituted the authority it, nevertheless,, delegated essential legislative functions with respect to the appointment of members, for the legislature had not laid down any policy or principle as to the number, qualification, remuneration or period of service of persons to be appointed to perform the duties of the tribunal.
We do not think that there is any force in this contention.
Section 296(2) of the Government of India Act, 1935, itself, which authorised the Governor to constitute a tribunal did not indicate any qualification for the eligibility of the persons to be appointed as members of the tribunal.
It is clear that the tribunal was to sit in appeal over the decision of the Excise Commissioner and that by itself gives some indication that the person or persons to be appointed to the tribunal should have the requisite capacity and competency to deal with appeals from such high officials.
We do not consider that there has been an excessive dele gation of legislative power.
It was finally urged that the intention of the legislature ' in enacting the impugned Act was to give effect, inter alia, to the provisions of the Excise Act and that there was nothing in any portion of the impugned Act to indicate that the intention of the legislature was to effect the repeal of the provisions of section 9 of the 1910 Act.
There was no question, it was said, of any implied repeal of any portion of section 9.
This argument overlooks the fact that in Assam the "Board" meant the Provincial Government.
Section 296 (1) debarred the members of the legislature, which included the ministers, from exercising any appellate authority and section 296 (2) authorised the Governor to constitute a tribunal to exercise the appellate jurisdiction which was being exercised by the Provincial Government immediately before the commencement, of the Government of India Act, 1935.
Therefore, the jurisdiction of the Board meaning the Provincial Government under a. 9 of the 1910 Act was taken away and vested first in the Governor 's tribunal and there after in the Assam Revenue Tribunal constituted under the 1946 Act, and this appellate jurisdiction was 320 by the 1948 Act distributed between the Assam High Court and the authority referred to in section 3 (3) of the last mentioned Act.
There is, in the circumstances, nothing in the impugned Act which is repugnant to section 9 (2) as modified by s.296 of the Government of India Act, 1935.
It was next pointed out that the Excise Commissioner and the Commissioner of a Division had almost co ordinate powers under the scheme of section 9, that the powers of the Commissioner of a Division were more restricted as they related only to matters specified by the Provincial Government and that there was no provision in section 9 for any appeal to the Commissioner of a Division against the orders of the Excise Commissioner.
This is true enough, but the "Board" meaning the Provincial Government bad been superseded by section 296(2) of the Government of India Act, 1935, whereby the Assam Revenue Tribunal was constituted by the Governor as the authority to entertain appeals and revisions from the Excise Commissioner.
The Governor 's tribunal was replaced by the Assam Revenue Tribunal constituted under the 1946 Act, which in its turn was replaced by two authorities, namely, the Assam High Court and the Authority referred to in section 3(3) of the 1948 Act.
We see no impropriety in the Commissioner of Hills Division and Appeals, assuming that he is the same as the Commissioner of a Division, being appointed as the authority to entertain appeals from the Excise Commissioner.
It is true that appeal from the decision of the Commissioner of a Division in matters specified by the Provincial Government lay initially to the Board and thereafter to the Governor 's tribunal and then to the Assam Revenue Tribunal and finally to the tribunal referred to in section 3 (3) of the 1948 Act.
The possibility of an appeal from the decision of the Com missioner of a Division coming up before the authority referred to in section 3 (3) cannot in our opinion affect the validity of the Notification whereby the Commissioner of Hills Division and Appeals was appointed as the authority contemplated by section 3 (3).
At the highest it may be that the Commissioner of Hills Division and Appeals exercising the powers of the authority referred 321 to under section 3 (3) may be disqualified from entertaining appeals from his own order, but that does not affect his power to entertain appeals from the Excise Commissioner.
Even that situation will not arise, for under r. 341 of the Excise Rules appeals arising out of cases decided in the excluded areas by the Commissioner of Hills Division and reseals would go to the Governor.
In any event the drop not appear to be any repugnancy between the Notification and the so called principle or policy of a. 9 of the 1910 Act as regards the hearing of appeals from the decisions of the Excise Commissioner.
In our opinion there is no substance in this point.
No other point of law or fact has been urged before us.
In our opinion for reasons stated above the judgments of the HIgh Court appealed from should be set aside and those of the appellate authority should be restored.
All the appeals are accordingly allowed.
The controversy, it seems to us, arose by reason of the inartistic drafting of the relevant enactment and in the premises, although the State of Assam,has succeeded in the appeals filed by it, we make no order as to costs in its favour in any of the appeals filed by it.
The successful appellants in the other appeals will get the costs of their respective appeals from the respondents in those appeals including the State of Assam.
Appeals allowed.
| 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.
|
Summarize this legal judgement text concisely | 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.
| In fulfilment of an ante nuptial promise made on the occasion of the settlement of the terms of marriage of her daughter, a Hindu widow, governed by the Benares School of Hindu Law, executed a registered deed of gift in respect Of 4 houses allotted to her share by a partition decree, in favour of her daughter as her marriage dowry about two years after the marriage.
The partition decree gave her a, right to the income, but no right to part with the corpus of the property to the prejudice of the reversioners.
Her step sons brought a suit for a declaration that the deed of gift was void and inoperative beyond her lifetime and could not bind the reversioners.
The trial court found that the gifted properties constituted a reasonable portion of the estate, but that the gift not having been made at 453 the time of the marriage or on the occasion of the Gowna (Dwiragaman) ceremony in accordance with the provisions of section I 23 Of the Transfer of Property Act, was not binding on the reversioners beyond the lifetime of the widow and decreed the suit.
The High Court found that the widow had made the ante nuptial promise, but that the gift having been made about two years after the marriage or the Gowna ceremony, the provisions of the Transfer of Property Act relating to gifts stood in the way of considering the same as having been made on the occasion of the marriage but implemented later, and affirmed the decision of the trial court, although the gifted houses were found to constitute a reasonable portion of her husband 's estate.
The contentions in appeal on behalf of the widow and the daughter were (1) that the widow had the power in Hindu Law, as it stood before the enactment of the , to execute the deed of gift in question and (2) that section 14 Of the said Act bad the effect of making them full owners of the property in suit.
Held, that the deed of gift in favour of the daughter was valid in law and binding on the reversioners and the appeal must succeed.
Under the Benares School of Hindu Law, as it stood prior to the enactment of the , as also under the partition decree, the properties allotted to the widow constituted her widow 's estate as on inheritance and she had no absolute right of disposal over them.
Bhugwandeen Doobey vs Myna Baee, (1868) II M. 1.
A, 487, referred to.
Debi Mangal Prasad Singh vs Mahadeo Prasad Singh, (1912) L. R. 39 1.
A. 121, followed.
In Hindu Law the marriage of a daughter is a pious act and confers direct spiritual benefit on the father and a widow has the power to make a gift of a reasonable portion of her husband 's estate as marriage dowry to the daughter, even after the marriage, in fulfilment of an ante nuptial promise, whether she makes the I sankalpa ' at the time of the marriage or not.
Ganga Bisheshar vs Pirthi Pal, (1880) 1.
L. R. 2 All. 635, disapproved.
Case law reviewed.
This power of the widow is one conferred on her by Hindu Law and is not affected by the provisions of section 123 of the Transfer of Property Act, though the gift to be legally effective must be made in the manner prescribed by that section.
Although there is no doubt that sub section
(1) Of section 14 Of the , gives a retrospective operation to the provisions of that section so as to make a fermale Hindu a 454 full owner of immoveable property acquired either at a partition or by way of gift, it is not necessary in the present case to examine the true nature and scope of section 14 Of the Act.
|
Summarize this legal judgement text concisely | Appeals Nos. 64 to 66 of 1954.
Appeals under article 132(1) of the Constitution of India from the Judgment and Order dated the 13th February, 1954, of the High Court of Judicature at Bombay in Special Applications Nos. 259, 288 and 289 of 1954 respectively.
M. C. Setalvad, Attorney General for India, and C. K. Daphtary, Solicitor General for India (G. N. Joshi, M. M. Desai, Porus A. Mehta and P. G. Gokhale, with them) for the appellant in all the appeals.
N. A. Palkhivala, J. B. Dadachanji, J. K. Munshi and Rajinder Narain for respondents Nos. 1 and 2 in C. A. No. 64.
Frank Anthony, J. B. Dadachanji, J. K. Munshi and Rajinder Narain for respondent No. 3.
N. A. Palkhivala, J. B. Dadachanji, J. K. Munshi and Rajinder Narain for the respondent No. I in C. A, No. 65.
571 Frank Anthony and Rajinder Narain for respondent No. 2.
N. A. Palkhivala, Frank Anthony, J. B. DadachanjiJ. K. ' Munshi and Rajinder Narain for respondent No. I in C. A. No. 66.
Frank Anthony, J. B. Dadachanji, J. K. Munshi and Rajinder Narain for respondent No. 2. 1954.
May 26.
The Judgment of the Court was delivered by DAS J.
These three appeals, filed by the State of Bombay, with a certificate granted by the Bombay High Court, are directed against the Judgment and Order pronounced by that High Court on the 15th February, 1954, on three Civil Applications under article 226.
By that Judgment and Order the High Court held that the circular order No. SSN 2054(a) issued by the State of Bombay, Education Department, on the 6th January, 1954, was bad in that it contravened the provisions of article 29(2) and article 337 and directed the issue of a writ prohibiting the State from enforcing the order against the authorities of Barnes High School established and run by the Education Society of Bombay (hereinafter referred as the Society).
The Society, which is the first respondent in Appeal No. 64 of 1954, is a Joint Stock Company incorporated under the Indian Companies Act, 1913.
The other two respondents in that appeal Venble Archdeacon A. section H. Johnson and Mrs. Glynne Howell are members and Directors of the Society.
The Ven 'ble Archdeacon A. section H. Johnson is also the Secretary of the Society.
Both of them are citizens of India and are members of the Anglo Indian Community.
The mother tongue of these respondents as of other members of the Anglo Indian Community is English.
In the State of Bombay there are in all 1403 Secondary Schools.
1285 of these Schools import education through the medium of some language other than English.
The remaining 118 Schools have adopted English as the medium of instruction.
Thirty out of these 118 Schools are Anglo Indian Schools.
In these thirty Schools there are three thousand Anglo Indian 572 students forming 37 per cent.
of the total number of students receiving instruction in those Anglo Indian Schools.
The rest 63 per cent.
consist of non Anglo Indian students.
In furtherance of its object the Society in 1925 established and since then has been conducting and running a School known as Barnes High School at Deolali in Nasik District in the State of Bombay.
The School is a recognized Anglo Indian School having Primary, Secondary and High School classes.
The School receives considerable aid from the State.
The total number of students in the School in December, 1953, was 415, out of which 212 were Anglo Indians and the remaining 203 belonged to other Indian Communities.
In all the classes in the said School English is used as the medium of instruction and has been so used since the inception of the School.
The entire staff of the School consist of 17 teachers who, with the exception of one, are trained and qualified to teach only in English, the exception being the teacher who teaches Hindi which is, the second language taught in that School.
On the 16th December, 1953, the Inspector of Anglo Indian Schools, Bombay State, and Educational Inspector, Greater Bombay, sent a circular letter to the Headmaster of Barnes High School intimating that the Government had under consideration the issue of orders regulating admissions to Schools in which the medium of instruction was English.
The orders under consideration were stated to be on the following lines, namely, (1) that from the next School year admissions to English medium School should only be confined to children belonging to the Anglo Indian and European Communities, and (2) that those pupils who, 'prior to the issue of the orders, were studying in recognized Primary or Secondary English medium Schools, could continue to do so.
The letter in conclusion advised the Headmaster not to make any admission for the academic year beginning from January, 1954, of pupils other than Anglo Indians or Europeans pending further orders which, it was said, would issue shortly.
The contemplated order came on the 6th January, 1954, in the shape of circular No. SSN 2054(a) headed 573 "Admissions to Schools teaching through the medium of English".
In paragraphs 1, 2 and 3 of this circular reference was made to the development of the policy of the Government regarding the medium of instruction at the Primary and Secondary stages of education.
It was pointed out that since 1926 27 the University of Bombay permitted pupils to answer questions in modern Indian languages at the Matriculation examination in all subjects except English and other foreign languages and that this had resulted in 1285 out of 1403 schools in the State ceasing to use English as the medium of lnstruction.
It was then stated that in 1948 instructions were issued to all English teaching schools that admissions to such Schools should ordinarily be restricted to pupils who did not speak any of the regional languages of the State or whose mother tongue was English.
It was said that in 1951, after a review of the position, a general policy had been laid down to the effect that admission to such schools should be restricted only to four categories of children therein mentioned.
Reference was then made to the recommendations of the Secondary Education Commission that the mother tongue or the regional language should generally be the medium of instruction throughout the Secondary school stage, subject to the.
provision for special facilities for linguistic minorities.
In paragraph 4 of the Circular order it was stated that the Government felt that the stage had then been reached for the discontinuance of English as a medium of instruction and that the Government had decided that subject to the facilities to be given to linguistic minorities all special and interim concessions in respect of admission to Schools (including Anglo Indian Schools) using English as the medium of instruction, should thereafter be withdrawn.
Then came the operative part of the order, the relevant portion of which is set out below: "5.
Government has accordingly decided as follows : Subject to the exceptions hereinafter provided, no primary or secondary school shall from the date of these orders admit to a class where English is used as 574 a medium of instruction any pupil other than a pupil belonging to a section of citizens the language of which is English namely, Anglo Indians and citizens of nonAsiatic descent.
" There were three exceptions made to this general order in favour of three categories of students who, prior to the date of the order, were studying through the medium of English.
Provision was made for admission of foreign pupils, other than those of Asiatic descent, belonging to foreign possessions in India, to Schools using English as a medium of instruction or to any other School of their choice.
The concluding paragraph of the Order was in the following terms : "7.
All Schools (including Anglo Indian Schools) using English as a medium of instruction should regulate admissions according to this circular.
With a view to facilitating the admission of pupils who under these orders are not intended to be educated through the medium of English, these schools are advised to open progressively divisions of Standards using Hindi or an Indian language as the medium of instruction, starting from Standard I in 1954.
Government will be prepared to consider the payment of additional grant on merits for this purpose.
" The above order was followed by another Circular No. SSN 2054 (b) issued on the same date drawing the attention of the heads of all Anglo Indian Schools to the Circular No. SSN 2054(a) of the same date, and requesting them to regulate thereafter admissions to their Schools in accordance with that circular.
It was stated that the orders in that circular were not intended to affect the total grant available for distribution to Anglo Indian Schools under the Constitution but that the Government would be prepared to consider, in consultation with the State Board of Anglo Indiain Education, whether in consequence of this order, any change was necessary in the existing procedure for the equitable distribution of the total grant among individual Anglo Indian Schools.
In conclusion the attention of the Headmasters was particularly invited to the concluding sentence of paragraph 7 of that circular order, and it was pointed out that 575 the grants contemplated therein were intended to be in addition to, the grants available under article 337.
Major Pinto, who is a citizen of India, belongs to the Indian Christian Community.
He claims that his mother tongue, as that of a section of the Indian Christian Community, is English and that his entire family speak and use English at home.
Two of his sons were then studying in the Barnes High School and were being educated through the medium of English.
On 2nd February, 1954, Major Pinto accompanied by his daughter Brenda approached the Headmaster of Barnes High School seeking admission for her to the said School.
He was informed by the Headmaster about the order issued by the State of Bombay on the 6th January, 1954, and was told that, in view of the said order, the Headmaster was compelled to refuse admission to her since she did not belong to the AngloIndian Community nor was she of non Asiatic descent, although she had all the necessary qualifications for admission to the said School.
Dr. Mahadeo Eknath Gujar is also a citizen of India and is a member of the Guzrati Hindu Community.
His mother tongue is Guzrati.
I le desires that his son Gopal Mahadeo Gujar should become a medical practitioner and go abroad for higher medical studies and qualifications and thought that his son should be educated through the medium of English.
He found the Barnes High School, which teaches through the medium of English, as suitable for the needs of his son.
Accordingly on the 1st February, 1954, Dr. Gujar accompanied by his son approached the Headmaster of Barnes High School seeking admission for his son to the said School but the Headmaster, in view of the Government Circular Order, felt bound to turn down such request as the boy did not belong to the AngloIndian Community and was not of non Asiatic descent, although he had all the necessary qualifications for admission to the school.
There have been similar other applications for admission which have had to be rejected on similar grounds, 576 Thereupon the Society and Ven 'ble Archdeacon A.S.H. Johnson and Mrs. Glynne Howell in February, 1954, presented before the High Court of Bombay the Special Civil Application No ' 259 of 1954 under article 226 of the Constitution praying for the issue of a writ in the nature of mandamus restraining the State of Bombay, its Officers, servants and agents from enforcing the said order and from taking any steps or proceedings in 'enforcement of the same and compelling the respondent to withdraw or cancel the said purported order and to allow the petitioner to admit to any standard in the said school any children of nonAnglo Indian citizens or citizens of Asiatic descent and to educate them through the medium of English language.
Likewise Major Pinto and his daughter Brenda and Dr. Gujar and his son Gopal made similar applications, being Nos. 288 and 289 of 1954 respectively, praying for similar reliefs.
The three applications were consolidated on llth February, 1954, and were heard together and were disposed of by the same Judg ment and Order pronounced on the 15th February, 1954.
The High Court accepted the petitions and made an order as prayed.
The State of Bombay has now come up in appeal against the said Orders.
On the facts of these cases two questions arise namely (1) as to the right of students who are not Anglo Indians or who are of Asiatic descent to be admitted to Barnes High School which is a recognized Anglo Indian School which imparts education through the medium of English, and (2) as to the right of the said Barnes High School to admit non Anglo Indian students and students of Asiatic descent.
The ques tions, thus confined to the particular facts of these cases, appear to us to admit of a very simple solution, as will be presently explained.
Re (1) : As already indicated Barnes High School is a recognized Anglo Indian School which has all along been imparting education through the medium of English.
It receives aid out of State funds.
The daughter of Major Pinto and the son of Dr. Gujar are citizens of India and they claim admission to Barnes High School in exercise of the fundamental right said 577 to have been guaranteed to them by article 29(2) of the Constitution.
The School has declined to admit either of them in view of the circular order of the State of Bombay.
The provisions of the circular order, issued by the State of Bombay oh the 6th January, 1954, have already been summarised above.
The operative portion of the order, set forth in clause 5 thereof, clearly forbids all Primary or Secondary Schools, where English is used as a medium of instruc.
tion, to admit to any class any pupil other than a pupil belonging to a section of citizens, the language of which is English namely Anglo Indians and citizens of non Asiatic descent.
The learned Attorney Generalcontends that this clause does not limit admission only, to Anglo Indians and citizens of non Asiatic descent, but permits admission of pupils belonging to any other section of citizens the language of which is English.
He points out that, one of the meanings of the word II namely " as given in Oxford English Dictionary, Volume VII, p. 16 is " that id to say " and he then refers us to the decision of the Federal Court in Bhola Prasad vs The King Emperor (1), where it was stated that the words "that is to say " were explanatory or illustrative words and not words either of amplification or limitation.
It should, however, be remembered that those observations were made in connection with one of the Legislative heads, namely entry No. 31 of the Provincial Legislative List.
The fundamental proposition enunciated in The Queen vs Burah (2) was that Indian Legislatures within their own sphere had plenary powers of legislation as large and of the same nature as those of Parliament itself.
In that view of the matter every entry in the legislative list had to be given the widest connotation and it was in that context that the words " that is to say," relied upon by the learned Attorney General, were interpreted in that way by the Federal Court.
To do otherwise would have been to cut down the generality of the legislative head itself.
The same reason cannot apply to the construc tion of the Government order in the present case for the considerations that applied in the case before the (1) at p. 25.
(2) 74 578 Federal Court have no application here.
Ordinarily the word " namely " imports enumeration of what is comprised in the preceding clause.
In other words it ordinarily serves the purpose of equating what follows with the clause described before.
There is good deal of force, therefore, in the araument that the order restricts admission only to Anglo Indians and citizens of nonAsiatic descent whose language is English.
This inter.
pretation finds support from the decision mentioned in clause 4 to withdraw all special and interim concessions in respect of admissioni to Schools referred to in clause 4.
Facilities to linguistic minorities provided for in the circular order, therefore, may be read as contem plating facilities to be given only to the Anglo Indians and citizens of non Asiatic descent.
Assuming, however, that under the impugned order a section of citizens, other than Anglo Indians and citizens of non Asiatic descent, whose language is English, may also get admission, even then citizens,, whose language is not English, are certainly debarred by the order from admission to a School where English is used as 'a medium of instruction in all the clases.
Article 29(2) ex facie puts no limitation or qualification on the expression " citizen.
" Therefore, the construction sought to be put upon clause 5 does not apparently help the learned Attorney General, for even on that construction the order will contravene the provisions of article 29(2).
The learned Attorney General then falls back upon two contentions to avoid the applicability of article 29(2).
In the first place he contends that article 29(2) does not confer any fundamental right on all citizens generally but guarantees the rights of citizens of minority groups by providing that they must not be denied admission to educational institutions maintained by the State or receiving aid out of State funds on grounds only of religion, race, caste, language or any of them and he refers us to the marginal note to the article.
This is certainly a new contention put forward before us for the first time.
It does not appear to have been specifically taken in the affidavits in opposition filed in the High Court and there is no indication in the 579 Judgment under appeal that it was advanced in this form before the High Court.
Nor was this point specifically made a ground of appeal in the petition for leave to appeal to this Court.
Apart from this, the contention appears to us to be devoid of merit.
Article 29(1) gives protection to any section of the citizens having a distinct language, script or culture by guaranteeing their right to conserve the same.
Article 30(1) secures to all minorities, whether based on religion or language, the right to establish and administer educational institutions of their choice.
Now suppose the State maintains an educational institution to help conserving the distinct language, script or culture of a section of the citizens or makes grants in aid of an educational institution established by a minority community based on religion or language to conserve their distinct language, script or culture, who can claim the protection of article 29(2) in the matter of admission into any such institution ? Surely the citizens of the very section whose language, script or culture is sought to be conserved by the institution or the citizens who belong to the very minority group which has established and is administering the institution, do not need any protection against themselves and therefore article 29(2) is not designed for the protection of this section or this minority.
Nor do we see any reason to limit article 29(2) to citizens belonging to a minority group other than the section or the minorities referred to in article 29(1) or article 30(1), for the citizens, who do not belong# to any minority group, may quite conceivably need this protection just as much as the citizens of such other minority groups.
If it is urged that the citizens of the majority group are amply protected by article 15 and do not require the protection of article 29(2), then there are several obvious answers to that argument.
The language of article 29(2) is wide and unqualified and may well cover all citizens whether they belong to the majority or minority group.
Article 15 protects all citizens against the State whereas the protection of article 29(2) extends against the State or anybody who denies the right conferred by it.
Further article 15 protects all citizens against discrimination generally but article 29(2) is a protection against a particular 580 species of wrong namely denial of admission into educational institutions of the specified kind.
In the next place article 15 is quite general and wide in its terms and applies to all citizens, whether they belong to the majority or minority groups, and gives protection to all the citizens against discrimination by the State on certain specific grounds.
Article 29(2) confers a special right on citizens for admission into educational institutions maintained or aided by the State.
To limit this right only to citizens belonging to minority groups will be to provide a double protection for such citizens and to hold that the citizens of the majority group have no special educational rights in the nature of a right to be admitted into an educational institution for the maintenance of which they make contributions by way of taxes.
We see no cogent reason for such discrimination.
The heading under which articles 29 and 30 are ground together namely " 'Cultural and Educational Rights " is quite general and does not in terms contemplate such differentiation.
If the fact that the institution is maintained or aided out of State funds is the basis of this guaranteed right then all citizens, irrespective of whether they belong to the majority or minority groups, are alike entitled to the protection of this fundamental right.
In view of all these considerations the marginal note alone, on which the AttorneyGeneral relies, cannot be read as controlling the plain meaning of the language in which article 29(2) has been couched.
Indeed in The State of Madras vs Srimathi Champakam Dorairajan (1), this Court has already held as follows: " It will be noticed that while clause (1) protects the language, script or culture of a section of the citizens, clause (2) guarantees the fundamental right of an individual citizen.
The right to.
get admission into any educational institution of the kind mentioned in clause (2) is a right which an individual citizen has as a citizen and not as a member of any community or class of citizens.
" In our judgment this part of the contention of the learned Attorney General cannot be sustained.
(1) ; at P. 530.
581 The second part of the arguments of the learned Attorney General hinges upon the word "I only " to be found in article 29(2).
His contention is that the impugned order does not deny admission to any citizen on the ground only of religion, race, caste, language or any of them.
He maintains with considerable emphasis.
that it is incumbent on the State to secure the advancement of Hindi which is ultimately to be our National language and he stresses the desirability of or even the necessity, generally acknowledged by educationists, for imparting education through the medium of the pupil 's mother tongue.
We have had equally emphatic rejoinder from learned counsel appearing for the different respondents.
Characterising the impugned circular as an unwarranted and wanton encroachment on the liberty of the parents and guardians to direct the education and upbringing of their children and wards reliance has been placed on the following observations of McReynolds J. in Pierce vs Society of Sisters of Holy Names(1) : " The fundamental theory of liberty upon which all Governments in this Union repose excludes any general power of the state to standardize its children by forcing them to accept instruction from public teachers only.
The child is not the mere creature of the state; those who nurture him and direct his destiny have the right, coupled with the high duty, to recognize and prepare him for additional obligations.
" It is also urged that the main, if not the sole, object of the impugned order is to discriminate against, and if possible to stifle the language of the Anglo Indian Community in utter disregard of the constitutional inhibition.
It is pointed out that to compel the Anglo Indian Schools to open parallel classes in any Indian language will not necessarily facilitate the advancement of the Hindi language for the language adopted for such parallel classes may not be Hindi.
Further the opening of parallel classes in the same School with an Indian language as the medium of instruction while the pupils in the other classes are taught in English will certainly not be conducive to or promote the conservation of the distinct language, script or culture which (1) ; 268 U.S. 508; at p. 1078.
582 is guaranteed by article 29(1) to the Anglo Indian Community as a section of the citizens.
It is equally difficult, it is said, to appreciate why the salutory principle of imparting education through the medium of the pupil 's mother tongue should require that a pupil whose mother tongue is not English but is, say, Guzrati, should be debarred from getting admission only into an Anglo Indian School where the medium of instruction is English but not from being admitted into a School where the medium of instruction is a regional language, say Konkani, which is not the mother tongue of the pupil.
The rival arguments thus formulated on both sides involve questions of State policy on education with which the Court has no concern.
The American decisions founded on the 14th amendment which refers to due process of law may not be quite helpful in interpretation of our article 29.
We must, therefore, evaluate the argument of the learned Attorney General on purely legal considerations bearing.
on the question of construction of article 29(2).
The learned Attorney General submits that the impugned order does not deny to pupils who are not Anglo Indians or citizens of non Asiatic descent, admission into an Anglo Indian School only on the ground of religion, race, caste, language or any of them but on the ground that such denial will promote the advancement of the national language and facilitate the imparting of education through the medium of the pupil 's mother tongue.
He relies on a number of decisions of the High Courts, e.g., Yusuf Abdul Aziz vs State (1), Sm.
Anjali Roy vs State of West Bengal (), The State of Bombay vs Narasu AppaMali (3), Srinivasa Ayyar vs
Saraswathi Ammaland Dattatraraya Motiram More vs State of BombayThese decisions, it should, be noted, were concernedwith discrimination prohibited by article 15 which deals with discrimina.
tion generally and not with denial of admission into educational institutions of certain kinds prohibited by article 29(2).
It may also be mentioned that this (1) A.I.R 1951 Bom, 470.
(2) A.I.R 1952 Cal.
(3) A.I.R. 1952 Bom.
(4) A.I.R. 1952 Mad. 193.
(5) A.I.R. 1953 Bom.
583 Court upheld the actual decision in the first mentioned Bombay case not on clause (1) but on clause(3) of article 15.
These cases, therefore, have no direct bearing on article 29(2).
The arguments advanced by the learned Attorney General overlook the distinction between the object or motive underlying the impugned order and the mode and manner adopted therein for achieving that object.
The object or motive attributed by the learned Attorney General to the impugned order is.
undoubtedly a laudable one but its validity has to be judged by the method of Its operation and its effect on the fundamental right guaranteed by article 29(2).
A similar question of construction arose in the case of Punjab Province vs Daulat Singh (1).
One of the ques tions in that case was whether the provision of the new section 13 A of the Punjab Alienation of Land Act was ultra vires the Provincial Legislature as contravening sub section (1) of section 298 of the Government of India Act, 1935, in that in some cases that section would operate as a prohibition on the ground of descent alone.
Beaumont J. in his dissenting judgment took the view that it was necessary for the Court to consider the scope and object of the Act which was impugned so as to determine the ground on which such Act was based, and that if the only basis for the Act was discrimination on one or more of the grounds specified in section 298 sub section (1) then the Act was bad but that if the true basis of the Act was something different the Act was not invalidated because one of its effects might be to invoke such discrimination In delivering the Judgment of the Board Lord Thankerton at page 74 rejected this view in the words following: " Their Lordships are unable to accept this as the correct test.
In their view, it is not a question of whether the impugned Act is based only on one or more of the grounds specified in section 298 sub section (1), ,but whether its operation may result in a prohibition only on these grounds.
The proper test as to whether there is a contravention of the sub section is to ascertain the reaction of the impugned Act on the personal right conferred by the subsection, and, while the scope (1) (1916) L.R. 73 I.A. 59, 584 and object of the Act may be of assistance in deter.
mining the effect of the operation of the Act on a proper construction of its provisions, if the effect of the Act so determined involves an infringement of such personal right, the object of the Act, however laudable, will not obviate the prohibition of sub section (1).
" Granting that the object of the impugned order before us was what is claimed for it by the learned Attorney General, the question still remains as to how that object has been sought to be achieved.
Obviously that is sought to be done by denying to all pupils, whose mother tongue is not English, admission into any School were the medium of instruction is English.
Whatever the object, the immediate ground and direct cause for the denial is that the.
mother tongue of the pupil is not English.
Adapting the language of Lord Thankerton, it may be said that the laudable object of the impugned order does not obviate the prohibition of article 29(2) because the effect of the order involves an infringement of this fundamental right, and that effect is brought about by denying admission only on the ground of language.
The same principle is implicit in the decision of this Court in The State, of Madras vs Srimathi Champakam Dorairajan (1).
There also the object of the impugned communal G.O. was to advance the interest of educationally backward classes of citizens but, that object notwithstanding, this Court struck down the order as unconstitutional because the modus operandi to achieve that object was directly based only on one of the forbidden grounds specified in the article.
In our opinion the impugned order offends against the fundamental right guaranteed to all citizens by article 29(2).
Re. 2: Coming to the second question as to whether the impugned order infringes any constitutional right of Barnes High School, the learned AttorneyGeneral contends that although any section of the citizens having distinct language, script or culture of its own,has under article 29(1) the right to conserve the same and although all minorities, whether based on religion or language, have, under article 30(1), the right (1) ; at p. 530. 585 to establish and administer educational institutions of their choice, nevertheless such sections.
or minorities cannot question the power of the State to make reasonable regulations for all Schools including a requirement that they should give instruction in a particular language which is regarded as the national language or to prescribe a curriculum for institutions which it supports.
Undoubtedly the powers of the State in this behalf cannot be lightly questioned and certainly not in so far as their exercise is not inconsistent with or contrary to the fundamental rights guaranteed to the citizens.
Indeed in the cases of Robert T. Meyer vs State of Nebraska (1) and August Bartels V. State of Iowa (2) the Supreme Court of the United States definitely held that the State 's police power in regard to education could not be permitted to override the liberty protected by the 14th amendment to the Federal Constitution.
That is how those cases have been understood by writers on American Constitutional Law.
[See Cooley 's Constitutional Limitations, Volume 11, page 1345, and Willis, page 64.] The statutes impugned in these cases provided: (1)That no person should teach any subject to any person in any language other than the English language, and (2)That languages other than English may be taught only after the pupil had passed the 8th grade.
A contravention of those two sections was made punishable.
In the first mentioned case only the first part of the prohibition was challenged and struck down and in the second case both the provisions were declared invalid.
The learned Attorney General informed us that in 29 States in U.S.A. legislation had made compulsory provision for English as the medium of instruction.
Those statutes do not appear to have been tested in Court and the Attorney General cannot, therefore, derive much comfort from the fact that 29 States have by legislation adopted English as the medium of instruction.
The learned Attorney General (1) ; ; (2) ; ; , 75 586 also relies on the case of Ottawa Separate Schools Trustees vs Mackell(1).
That case does not help him either, because in that case the schools were classified as denominational purely on the ground of religion.
They were not classified according to race or language.
It was contended that the kind of school that the trustees were authorised to provide was the school where education was to be given in such language as the trustees thought fit.
Their Lordships of the Judicial Committee rejected this contention with the following observations: " Their Lordships are unable to agree with this view.
The 'kind ' of school referred to in sub section
8 of section 79 is, in their opinion, the grade or character of school, for example, 'a girls ' School, ' 'a boys ' school, ' or 'an infants ' school, ' and a I kind ' of school, within the meaning of that sub section, is not a school where any special language is in common use.
" Where, however, a minority like the Anglo Indian Community, which is based, inter alia, on religion and language, has the fundamental right to conserve its language, script and culture under article 29(1) and has the right to establish and administer educational institutions of their choice under article 30(1), surely then there must be implicit in such fundamental right the right to impart instruction in their own institutions to the children of their own Community in their own language.
To hold otherwise will be to deprive article 29(1) and article 30(1) of the greater part of their contents.
Such being the fundamental right, the police power of the State to determine the medium of instruction must yield to this fundamental right to the extent it is necessary to give effect to it and cannot be permitted to run counter to it.
We now pass on to article 337 which is in Part XVI under the heading " Special Provisions relating to certain classes.
" Article 337 secures to the Anglo Indian Community certain special grants made by the Union and by each State in respect of education.
The second paragraph of that article provides for progressive diminution of such grant until such special grant (1) , 587 ceases at the end of ten years from the commencement of the Constitution as mentioned in the first proviso to that article.
The second proviso runs as follows: " Provided further that no educational institution shall be entitled to receive any grant under this article unless at least forty per cent.
of the annual admissions therein are made available to members of communities other than the Anglo Indian community.
" It is clear, therefore, that the Constitution has imposed upon the educational institution run by the Anglo Indian Community, as a condition of such special grant, the duty that at least 40 per cent.
of the annual admissions therein must be made available to members of communities other than the Anglo Indian Community.
This is undoubtedly a constitutional obligation.
In so far as clause 5 of the impugned order enjoins that no Primary or Secondary school shall from the date of this order admit to a class where English is used as the medium of instruction any pupil other than the children of Anglo Indians or of citizens of non Asiatic descent, it quite clearly prevents the Anglo Indian Schools including Barnes High School from performing their constitutional obligations and exposes them to the risk of losing the special grant.
The learned Attorney General refers to clause 7 of the impugned order and suggests that the authorities of Anglo Indian Schools may still discharge their constitutional obligations by following the advice given to them in that concluding clause.
The proviso to article 337 does not impose any obligation on the Anglo Indian Community as a condition for receipt of the special grant other than that at least 40 per cent.
of the annual admissions should be made available to non Anglo Indian pupils.
The advice, tendered by the State to the Anglo Indian Schools by clause 7 of the impugned order, will, if the same be followed, necessarily impose an additional burden on the, Anglo Indian Schools to which they are not subjected by the Constitution itself.
The covering circular No. SSN 2054(b), which was issued on the same day, throws out the covert hint of the possibility, in consequence of the impugned order, of some change becoming necessary in the existing procedure for the 588 equitable distribution of the total grant among AngloIndian Schools, although the impugned order was not intended to affect the total grant available for distribution to Anglo Indian Schools under the Constitution.
If, in the light of the covering circular, clause 7 is to ,be treated as operative, in the sense that a noncompliance with it will entail loss of the whole or part of this grant as a result of the change ' in the existing procedure for the equitable distribution, then it undoubtedly adds to article 337 of the Constitution a further condition for the receipt by Anglo Indian Schools, of the special grant secured to them by that article.
On the other hand if clause 7 is to be treated merely as advice, which may or may not be accepted or acted upon,then clause 5 will amount to An absolute prohibition against the admission of pupils who are not AngloIndians or citizens of non Asiatic descent into AngloIndian Schools and will compel the authorities of such Schools to commit a breach of their Constitutional obligation under article 337 and thereby forfeit their constitutional right to the special grants.
In either view of the matter the impugned order cannot but be regarded as unconstitutional.
In our opinion the second question raised in these appeals must also, in view of article 337, be answered against the State.
The result of the foregoing discussion is that these appeals must be dismissed and we order accordingly.
The State must pay the costs of the respondents.
Appeals dismissed.
| The Education Society of Bombay (respondent No. 1) has been running a recognised Anglo Indian School called Barnes High School at Deolali which receives aid from the State of Bombay.
J and G are its Directors.
English is used in the said school as the medium of instruction.
The mother tongue of the Anglo Indians is English.
The State of Bombay issued a circular order on 6th January, 1954, headed " Admission to Schools teaching through the medium of English.
" The operative portion of the order enjoined that no primary or secondary school shall from the date of the order admit to a class where English is used as the medium 569 of instruction any pupil other than a pupil belonging to a section of citizens the language of which is English namely, Anglo Indians and citizens of non Asiatic descent.
One P, a citizen of India and member of Indian Christian Community alleging English to be the mother tongue of his daughter, and one M, a citizen of India and member of Gujrati Hindu Community alleging Gujrati to be the mother tongue of his son, were refused admission to the school for their respective wards on the basis of the aforesaid order dated 6th January, 1964.
The Society and its two Directors presented an application under article 226 of the Constitution in the High Court of Bombay praying for the issue of a Writ in the nature of Mandamus restraining the State of Bombay and its officers from enforcing the said order and to allow the petitioners to admit in the school any children of non Anglo Indian citizens or citizens of the Asiatic descent and to educate them through the medium of English.
Similar applications were made by P and his daughter and by M and his son.
All these applications were consolidated, heard together and accepted by the High Court which made an order as prayed.
The State of Bombay came in appeal before the Supreme Court.
Held: (1) that the impugned order denying the right of students who are not Anglo Indians or are of Asiatic descent to be admitted to a recognised Anglo Indian School (in this case the Barnes High School) which receives aid from the State and which imparts education through the medium of English is void and unenforceable as it offends against the fundamental right guaranteed to all citizens by article 29(2) of the Constitution, because (a)The language of article 29(2) of the Constitution is wide and unqualified and covers all citizens whether they belong to the majority or minority group.
(b)The protection given by the said article extends against the State or anybody who denies the right conferred by it.
(a)The said article confers a special right on citizens for admission into the educational institutions maintained or aided by the State.
(d)The marginal note referring to minorities does not control the plain meaning of the language in which article 29(2) has been couched.
The word " namely " imports enumeration of what is comprised in the preceding clause.
In other words it equates what follows with the clause described before.
(2)Barnes High School at Deolali and other Anglo Indian School shave a right to admit non Anglo Indian students and students of Asiatic descent inasmuch as article 337 proviso 2 imposes an obligation on the Anglo Indian Schools to make available at least 40 per cent.
of the annual admissions to non Anglo Indian students as a condition precedent of their receiving grant from the Government and the impugned order is unconstitutional as it 73 570 prevents the Anglo Indian schools from performing their constitutional obligation and exposes them to the risk of forfeiting their constitutional right to the special grant.
In view of the fundamental right guaranteed to a minority like the Anglo Indian community under article 29(1) to conserve its own language, script and culture and the right to establish and administer educational institutions of its own choice under article 30(1) there is implicit therein the right to impart instruction in its own institutions to the children of its own community in its own language and the State by its police power cannot determine the medium of instruction in opposition to such fundamental right.
Bhola Prasad vs The King Emperor ([1942] F.C.R. 17, 25), The Queen vs Burah , The State of Madras vs Srimathi Champakam Dorairajan ( [1951] S.C.R. 525), Pierce vs Society of Sisters of Holy Names (268 U.S. 508), Yusuf Abdul Aziz vs State (A.I.R. , Sm.
Anjali Boy vs State of West Bengal (A.I.R. , The State of Bombay vs Narasu Appal Mali (A.I.R. 1952) Bom.
84), Srinivasa Aiyar vs Saraswathi Ammal (A.I.R. 1952 Vad. 193), Dattatraya Motiram More vs State of Bombay (A.I.R. , Punjab Province vs Daulat Singh (1946 L.R. 73 I.A. 59), Robert V. Meyer vs State of Nebraska (262 U.S. 390), August Bartels vs State of Iowa ; and Ottawa Separate Schools Trustees vs Mackell (L.R. 1917 A.C. 62) referred to.
|
Summarize this legal judgement text concisely | minal Appeal No. 150 of 1956.
Appeal by special leave from the Judgment and order dated October 18, 1955, of the Allahabad High Court in Government Appeal No. 60 of 1953 arising out of the judgment and order dated July 8, 1952, of the Court of Sessions Judge at Bareilly in Criminal Sessions Trial No. 27 of 1952.
Daulat Ram Prem and P. C. Agarwala, for the appellant, 658 Gyan Chand Mathur and C. P. Lal, for the respondent.
February 14.
The Judgment of the Court was delivered by KAPUR J.
The appellant along with one Qudrat Ullah was tried for the murder of one Sabir.
The latter was tried under section 302 read with section 114 of the Indian Penal Code for abetment, and the former under section 302 I.P.C.
Both the accused were acquitted by the learned Sessions Judge of Bareilly.
But the State took an appeal to the Allahabad High Court against the appellant only and the judgment of acquittal in his case was reversed and he was convicted under section 302 I.P.C. and sentenced to 'transportation for life '.
Against the judgment of the High Court the appellant has brought this appeal by Special Leave.
The facts which have given rise to the appeal are that Sabir was murdered on the 11th May, 195 1, at about 6 30 p.m.
The First Information Report was made by Qudrat Ullah the other accused at 6 45 p.m. the same day, i.e., within about 15 minutes of the occurrence.
The prosecution case was that there was an exchange of abuses between the deceased and the appellant near the shop of the First Informant, Qudrat Ullah.
The cause of the quarrel was that on the evening of the occurrence while Qudrat Ullah was sitting in his shop and the deceased was sitting just below the shop, the appellant came out of his house and on seeing him, the deceased asked him as to why he was in such a " dishevelled condition ", which annoyed the appellant and gave rise to an exchange of abuses.
On hearing this noise, the prosecution witnesses arrived at the spot and saw the appellant and the deceased grappling with each other.
The appellant is stated to have asked Qudrat Ullah to hand over a knife to him which Qudrat Ullah did; this knife is exhibit I II ', with which the appellant stabbed the deceased and then fled away.
As a result of the injuries the deceased fell down infront of Qudrat Ullah 's shop; some witnesses have stated that he fell on the wooden plank in front of the shop.
Qudrat Ullah picked up the knife which had been 659 dropped by the appellant, put the deceased in a rickshaw and took him to the hospital from where he went to the Police Station and made the First Information Report.
An objection has been taken to the admissibility of this report as it was made by a person who was a co accused.
A First Information Report is not a substantivepiece of evidence and can only be used to corroborate the statement of the maker under section 157 of the Evidence Act or to contradict it under section 145 of that Act.
It cannot be used as evidence against the maker at the trial if he himself becomes an accused, nor to corroborate or contradict other witnesses.
In this case, therefore, it is not evidence.
The Sub Inspector went to the spot, started investigation and arrested the appellant the same evening at his house.
The postmortem examination of the deceased showed injuries on the person of the deceased and, according to the doctor.
, death was due to shock and haemorrhage on account of the punctured wound in the chest, causing injuries to the lungs and these injuries could be caused with a sharp edged weapon.
The appellant and the deceased both belong to a sect of Jogis.
Evidence discloses that the deceased and the appellant were quite friendly with each other, and so were the deceased and Qudrat Ullah, who is a butcher and had a shop which is a part of his house.
Adjacent to the shop is the house of the appellant.
Eye witnesses of the occurrence were Yad Ali, P.W. 1, Banne, P.W. 2 and Mohd. Ahmed, P.W. 3.
Having been told by the sister of the deceased as to the occurrence, Ashraft, P.W. 4 came to the spot later and found the deceased lying unconscious.
Shakir, P.W. 5, younger brother of the deceased, on arriving near the shop of Qudrat Ullah heard the appellant and the deceased exchanging abuses, but was not a witness of the assault ' as just at that time he had gone, at the request of Qudrat Ullah, to fill his Chillum for the hookka and when he came back he found the deceased lying unconscious and the appellant running away towards his house.
The evidence of Yad Ali P. W. 1, is that he heard an exchange of abuses between the deceased and the appellant and when he moved about 4 or 5 paces he 660 saw them grappling with each other.
The appellant had the deceased ,in his grip", he asked Qudrat Ullah to hand over a knife to him which the latter did and with it the appellant stabbed the deceased and then went away to his house.
The statement of Banne is similar and so is the statement of Mohd. Ahmed, P. W. 3.
This evidence was not accepted by the learned Sessions Judge and he acquitted both the accused.
The State took an appeal only against the appellant which was allowed by the High Court.
It held " We may concede that the eye witnesses have falsely implicated Qudrat Ullah by deposing that he handed over his knife to the respondent on his demand.
There was no enmity between him and Sabir and he bad no motive to get him killed by the respondent.
It does not at all appear probable that after abetting the murder of Sabir he at once took him on a rickshaw to the hospital and from there went at once to the police station and lodged a report against the respondent.
This conduct of Qudrat Ullah is so inconsistent with the part said to have been played by him in the occurrence that we have little hesitation in rejecting the evidence about the part played by him.
" The High Court, however, accepted the.
testimony of the eye witnesses as against the appellant 's guilt and observed: "We are satisfied that the prosecution has fully established the, case against the respondent.
There is not the slightest doubt about his guilt.
The presumption of innocence has been fully rebutted by the prosecution.
The case against him does not become doubtful merely because the learned Sessions Judge said that there was a doubt about his guilt." The learned Judges also came to the conclusion that the view taken by the learned trial Judge was ;one " which no reasonable person could have taken.
It was a wholly erroneous view of the evidence which has resulted in gross miscarriage of justice inasmuch as a murderer escapes punishment",.
In the circumstances of the case and considering that there was some provocation, the High Court sentenced the appellant to I transportation for life.
661 There is a passage in the Judgment of the High Court which appears to us to be disconsolate and indicative of a wrong approach in deciding the guilt of an accused person.
Although the learned Judges recognised the principle that the onus was not on the accused, yet one of the observations is such that it comes perilously near to putting the burden on the accused if it does not actually do so.
The High Court has said: The respondent himself did not have the courage to say that he did not find them at the spot.
If 'he were innocent, he must have come out of his house immediately on hearing the noise and must have known who was present there and; who was not" This passage is so destructive of the cardinal principle of criminal jurisprudence as to the presumed innocence of an accused person till otherwise proved that it has become necessary to reiterate the rule stated by eminent authorities ". that it is the duty of the prosecution to prove the prisoner 's guilt subject to any statutory exception.
" it was next contended that the witnesses had falsely implicated Qudrat Ullah and because of that the Court should have rejected the testimony of these witnesses as against the appellant also.
The well known maxim falsus in uno falsus in omnibus was relied upon by the appellant.
The argument raised was that because the witnesses who had also deposed against Qudrat Ullah by saying that he had handed over the knife to the appellant had not been believed by the Courts below as against him, the High Court should not have accepted the evidence of these witnesses to convict the appellant.
This maxim has not received general acceptance in different jurisdictions in India; nor has this maxim come to occupy the status of a rule of law.
It is merely a rule of caution.
All that it amounts to is that in such cases the testimony may be disregarded and not that it must be disregarded.
One American author has stated: (1) Woolmington vs The Director of Public Prosecutions, ; 662 SUPREME COURT REPORTS [1957] validity. . and secondly, in point of utility because it merely tells the jury what they may do in any, event, not what they must do or must not do, and therefore, it is a superfluous form of words.
It is also in practice pernicious. . " (1) The doctrine merely involves the question of weight of evidence which a court may apply in a given set of circumstances but it is not what may be called " a mandatory rule of evidence ".
Counsel for the appellant drew our attention to a passage from an unreported judgment of the Privy Council, I Chaubarja Singh vs Bhuneshwari Prasal Pal.
" The defendants own evidence and that of several of his witnesses is of no use to, him.
He cannot contend that any court of law can place reliance on the oath of people who have admittedly given false evidence upon the other branches of the case.
" This passage is a very slender foundation, if at all, for conferring on the doctrine the status of anything higher than a rule of caution and the Privy Council cannot be said to have given their weighty approval to any such controversial rule which has been termed as " worthless", "absolutely false as a maxim of life" and "in practice pernicious" in works of undoubted authority on the law of evidence (2).
The High Court was not unmindful of what the witnesses stated as to Qudrat Ullah 's part in the commission of the offence and having taken that into consideration, it said: " While the learned Sessions Judge was right in acquitting Qudrat Ullah, he was completely wrong in acquitting the respondent of whose guilt there was not the slightest doubt.
The direct evidence made out a clear case against him and there was no sound reason for disregarding it.
" After discussing the evidence of the witnesses and the discrepancies pointed out by the appellant the High Court held " there is not the slightest doubt about his guilt." (1) Wigmore on Evidence Vol.
III para 1009.
(2j Wigmere Vol.
III para 1009.
663 It was because of the above two contentions raised by counsel for the appellant and because it was a case of reversal of a judgment of acquittal that we allowed counsel to go into the evidence which he analysed and drew our attention to its salient features and to the discrepancies in the statements of witnesses and the improbabilities of the case; but we are satisfied that the learned Judges were justified in coming to the conclusion they did and the view of the trial judge was rightly displaced.
Upon a review of the evidence of the prosecution witnesses we have come ,to the conclusion that the appellant was rightly convicted.
The appeal is, therefore, dismissed and the judgment of the High Court is affirmed.
A appeal dismissed.
| A first information report is not a substantive piece of evidence and can only be used to corroborate the statement of the maker under section I57 Of the Evidence Act or to contradict it under section 145 of that Act.
It cannot be used as evidence against the maker at the trial if he himself becomes an accused, nor to corroborate or contradict other witnesses, It is a cardinal principle of criminal jurisprudence that the innocence of an accused person is presumed till otherwise proved.
It is the duty of the prosecution to prove the guilt of the accused subject to any statutory exception.
The maxim falsus in uno, falsus in omnibus has not received general acceptance in different jurisdictions in India, nor has it come to occupy the status of a rule of law.
It is merely a rule of caution.
All that it amounts to is that in such cases the testimony may be disregarded and not that it must be disregarded.
The doctrine merely involves the question of weight of evidence which a court may apply in a given set of circumstances but it is not a mandatory rule of evidence,
|
Summarize this legal judgement text concisely | Appeal No. 234 of 1959.
Appeal from the order dated February 15, 1957 of the Bombay High Court of Judicature at Nagpur in Special Civil Application No. 2 N of 1956.
section P. Varma, for appellant No. 1.
597 B. section Shastri and Ganpat Rai, for respondent No. 1.
B. R. L. Iyengar and T. M. Sen, for respondent No. 2. 1961.
March 28.
The Judgment of the Court was delivered by KAPUR, J.
This is an appeal on a certificate by the High Court of Bombay against the judgment and order of that Court passed on a petition under article 226 of the Constitution by the present appellants in regard to the legality of the notification levying an octroi duty on certain goods.
The appellants are some of the ratepayers of the Municipal Committee of Shegaon which is respondent No. I in this appeal.
The other respondent is the State of Bombay.
The appellants were carrying on trade and business which involved their bringing goods within the limits of the Municipal Committee.
On July 25,1954, the Municipal Committee passed a resolution for tile purpose of levying an octroi duty instead of terminal tax.
This resolution was published in the State Gazette on June 29, 1956, along with rules for assessment.
Oil August 4, 1956, objections were invited to the proposed tax.
The objections by the first appellant were filed on August 4, 1956, and by some others on August 5 and 6.
At a meeting of the Municipal Committee dated August 16, 1956, the objections of the other appellants were rejected as being time barred and those by the first appellant were rejected because it was the only objector whose objections were within time.
Some representations were made by the first appellant to the Government and a few days later the other objectors also made similar representations but the Government issued the notification sanctioning the imposition of the tax and the Draft Rules on October 27, 1956, though the Gazette Notifications were published on two separate dates, i.e., October 30 and October 31, 1956.
The appellants then filed a petition under article 226 in the High Court of Bombay at Nagpur challenging the legality of the, imposition of the tax.
Two main grounds were urged (1) that the notification was ultra 598 vires because section 67 of the C. P. & Berar Municipalities Act, 1922 (Act II of 1922), hereinafter termed the 'Act ', had not been complied with and (2) that the rate of tax in regard to certain articles was unauthorised in that it was more than the maximum which could be levied under the law.
The High Court rejected the first ground but accepted the second objection and gave relief accordingly.
Appellants Nos.
2 to 6 have not taken steps for the prosecution of the appeal and the appeal, in so far as it relates to them, is dismissed for non prosecution.
The appellant No. 1 before us has challenged the vires of the imposition on two grounds: (1) that all the steps necessary for the imposition of the octroi duty had not been taken and therefore section 67 had not been complied with and (2) that as a matter of fact there was no notification imposing an octroi duty.
For the purpose of the decision of these objections it is necessary to refer to the scheme of the Act, Chapter IX of which relates to the imposition, assessment and collection of taxes.
Section 66 enumerates the taxes which may be imposed and section 67 prescribes the procedure for imposing taxes.
Section 67 reads as under: Section 67(1) "A committee may at a special meeting, pass a resolution to propose the imposition of any tax under section 66.
(2) When such a resolution has been passed, the committee Bhall publish in accordance with rules made under this Act, a notice defining the class of persons or description of property proposed to be taxed, the amount or rate of the tax to be imposed and the system of assessment to be ' adopted.
(3) Any inhabitant of the municipality objecting to the proposed tax may, in thirty days from the publication of the notice, submit his objection in writing to the committee.
(4) The committee shall take the proposal and a objections received thereto into consideration at a special meeting, and may modify the proposals so as not to affect their substance and may then forward them to the Provincial Government along with all objections received, its decisions thereon 599 and its reasons therefore.
If the committee decided to modify the proposals so as to affect their substance it shall publish them again in the manner prescribed in sub section (2).
(5) The Provincial Government, on receiving such proposals may sanction or refuse to sanction the same, or sanction them subject to such modifications as it may think fit, or return them to the committee for further consideration: (6). . . . . . . (7) If any proposals for taxation have been sanctioned under sub Section (5) the Provincial Government may, by notification direct the imposition of the tax as sanctioned from such date as may be specified in such notification, and thereupon, the tax shall come into effect as from the date so speci fied.
A notification of the imposition of a tax under this section shall be conclusive evidence that the tax has been imposed in accordance with the provision of this Act.
" The objection to the vires of the notification in regard to procedure is that the objections raised by appellant No. 1, though within time, were"not considered on their merits and were rejected merely on the ground that there was only one objector and as this was one of the essential steps for the validity of the imposition it could not be said that section 67 had been complied with; and the imposition was therefore invalid.
The High Court rejected this plea because of section 67(8), although it found that non consideration of the objections was an error in procedure.
The language of sub section (8) lends support to this view.
It provides that the issuance of the notification imposing a tax shall be conclusive evidence that the tax had been imposed in accordance with the provisions of the Act.
But it was argued that as a matter of fact there was no notification imposing the tax and therefore the question of conclusive evidence does not arise.
This, in our opinion, is not established.
As stated above, there were two notifications issued 600 by the Government both of October 27, 1956.
One was published in the Gazette on October 30, 1956, and the other on the following day.
The first notification was as follows: "No. 4963 5869 M XIII.
In exercise of the pow ers conferred by sections 71, 76 and 85 of the Central Provinces and Berar Municipalities Act, 1922 (11 of 1922), the State Government are pleased to sanction the following draft rules for assessment, collection and refund of the octroi tax within the limits of the Shegaon Municipality, in the Buldana District.
The rules shall come into force from the date of their publication in the 'Madhya Pradesh Gazette Extraordinary ' ".
And the second notification stated: "No. 4962 5869 M XIII.
In exercise of the pow ers conferred by sub section (2) of section 67 of the Central Provinces and Berar Municipalities Act, 1922 (II of 1922), the State Government are pleased to confirm the following draft rules for the imposition of the octroi tax within the limits of the SHEGAON MUNICIPAL COMMITTEE, in the Buldana district, under clause (c) of sub section (1) of section 66 of the said Act, on animals and goods brought for sale, expenditure or use in supersession of the rules of terminal tax, sanctioned under Notification No. 3716 B VIII dated the 15th February, 1921.
The rules shall come into force from the date of their publication in the 'Madhya Pradesh Gazette Extraordinary" '.
The first notification purports to be in exercise of the powers under section 71 which relates to Rules for assessment and for preventing evasion of assessment of taxes; section 76 which provides for collection of taxes and section 85 which relates to refunds.
That notification therefore lays down the various rules and other matters necessary for the collection of taxes.
The second notification on the face of it is under sub section
(2) of section 67.
It appears to us that this is a mistake and should have been under sub a.
(7) of section 67.
By this notification the State Government confirmed the draft rules for 601 the imposition of the octroi duty which in the context must mean imposition of the tax because the very first rule states: Rule 1 "Octroi shall ordinarily be levied on commodities included in the following classes and specified in the schedule hereto annexed and at the rates therein entered".
The various classes of articles and commodities on which octroi was to be levied are then set out and then the exceptions and explanations are given.
With these rules are the schedules specifying the goods under each class which are liable to octroi duty and the rate at which the octroi duty was chargeable.
This notification therefore clearly is one which directs imposition of octroi and falls within sub section (7) of section 67 and having been notified in the Gazette it is conclusive evidence of the tax having been imposed in accordance with the provisions of the Act and it cannot be challenged on the ground that all the necessary steps had not been taken.
In our opinion this appeal is without force and is therefore dismissed with costs.
Appeal dismissed.
| The respondent Municipality passed a resolution under s.67(1) of the C.P. & Berar Municipal Act, 1922, for the purpose of levying an octroi duty which was published in the State Gazette along with the rules for assessment.
Objections were invited to the said proposed tax, and only one objection was filed within time which was also rejected.
The Government gave its sanction to the imposition of the tax and draft Rules by two Notifications.
The appellants filed a petition challenging the legality of the imposition of the tax inter alia on the ground that the notifications were ultra vires.
They contended that all steps necessary for the imposition of tax had not been taken and that objections raised within time by the respondent No. 1 were not considered on their merits and were rejected merely on the ground that there was only one objector; as this was one of the essential steps for the validity: of the imposition of tax it could not be said that section 67 of the Act had been complied with, therefore the imposition was invalid.
Held, that where the Government Notification clearly was one which directed imposition of Octroi Tax it fell within subs.
( 7) of section 67 of the Act and having been once notified in the Gazette sub section
(8) of section 67 of the Act came into operation and the issue of the notification was conclusive evidence of the Tax having been imposed in accordance with the provisions of the Act, and it could not be challenged on the ground that all necessary steps had Rot been taken.
|
Summarize this legal judgement text concisely | Appeal No. 374 of 1956.
Appeal by special leave from the judgment and order dated December 19, 1955, of the Assam High Court in Revenue Appeal No. 33(M) of 1955.
Civil Rule No. 76 of 1955.
Fakhruddin Ali Ahmed and K. R. Chaudhry, for the appellant.
D. N. Mukherjee, for respondent No. 1.
section M. Lahiri, Advocate General of Assam, and Naunit Lal, for respondents Nos. 2 and 3, 62 480 1957.
January 29.
The Judgment of the Court was delivered by BHAGWATI J.
This appeal with special leave ' arises out of a judgment of the Assam High Court in Revenue Appeal No. 33 (M) of 1955 and Civil Rule No. 76 of 1955.
The State of Assam, respondent No. 3, had settled the Charduar Brahmaputra Fishery with the respondent No. I for a period of three years, viz., from April 1, 1954, to March 31, 1957, at an annual zama of Rs. 19,600 Under r. 12 of the Fishery Rules.
The Deputy Commissioner of Darrang, respondent No. 2, received some reports against the respondent No. 1 alleging violation of cl.
VI of the Fishery lease and also of certain other conditions of ' the lease.
He obtained reports from the Sub Deputy Collector and the Extra Assistant Commissioner in regard to these allegations and came to the conclusion that respondent No. 1 had created under lease in favour of certain persons and cancelled the settlement of the fishery.
It appears that after such cancellation, respondent No. 3, purporting to act again under r. 12, settled the said fishery with the appellant with effect from May 4, 1955, and respondent No. 1 was directed to give up possession thereof with effect from that date.
Respondent No. 1 thereupon obtained a Rule from the Assam High Court alleging that the said settlement was absolutely illegal and the fishery had to be settled pro perly according to the rules under which these settlements are usually made.
A Revenue Appeal was also filed against the order of respondent No. 2 under rule 11 of section 1 of the Fishery Rules and both the Rule and the Revenue Appeal were heard together by the Assam High Court.
The High Court had already on August 31, 1955, delivered a judgment in Civil Rule NO.
56 of 1955, Nuruddin Ahmed vs State of Assam (1), declaring r. 12 of the Fishery Rules "ultra vires the State Government" and therefore invalid and unenforceable.
It followed that judgment and held that the respondent No. 3 had no jurisdiction to make a settlement under (1) A.I.R. 1956 Assam 48.
481 r. 12 of the ' Fishery Rules with the respondent No. I and the order of cancellation should be upheld on that ground alone.
The appeal of respondent No. I was accordingly dismissed.
In regard to the appellant also the High Court came to the same conclusion and held that the settlement made by respondent No. 3 in his favour was entirely without jurisdiction.
The Rule obtained by respondent No. I was accordingly made absolute.
The result was that the settlements made by respondent No. 3 with respondent No. I and the appellant were both set aside and the authorities were directed to make a fresh settlement of the fishery ' in question according to the existing Fishery Rules.
The State of Assam had not obtained any leave to appeal against the decision of the High Court in Nuruddin Ahmed vs State of Assam (1), and was apparently content with the decision that r. 12 of the Fishery Rules was ultra vires.
The appellant, however, obtained special leave to appeal against the decision of the High Court which set aside the settlement of the Fishery made by respondent No. 3 along with him and impleaded the State of Assam as respondent No. 3 along with respondent No. 1.
The appellant was interested in establishing that r. 12 of the Fishery Rules was intra vires the State of Assam had acquiesced in the position that the rule was ultra vires but in so far as it was added as respondent No. 3 in this appeal it took up the position that r. 12 of the Fishery Rules was intra vires, a position which it had not so far chosen to sustain by appealing against the decision of the High Court in Nuruddin Ahmed vs State of Assam (1) or in the present case but which it tried to support as it were by the back door by appearing in this appeal and supporting the appellant.
Respondent No. 1 appears to have been in a similar quandary.
If the appellant gained his point and had it established that the rule was intra vires the settlement of the fishery by respondent No. 3 with respondent No. I would have been with jurisdiction and the cancellation by respondent No. 2 would have been void and inoperative.
This relief was, however, not (1) A. 1.
R. 482 available to respondent No. 1 inasmuch as it had not appealed against the judgment of the High Court.
Nor did it suit it to adopt that position because not more ,than 21 months were left for the lease to run and at the end of that period it would have found itself in the same invidious position in which it was when the allegations in regard to the breach of the conditions of the fishery lease had been made against it.
Respondent No. 1, therefore, at the hearing of the appeal adopted the peculiar attitude of supporting the judgment of the High Court and of contending that r. 12 of the Fishery Rules was ultra vires.
That was the only basis on which the settlement made by respondent No. 3 with the appellant could be set at naught and no further comment is needed on the obviously inconsistent attitude adopted by respondent No. 1.
The issue which was, therefore, contested between the appellant supported as he was by respondent No. 3, the State of Assam.
and respondent No. I was as to the intra vires character of 12 of the Fishery Rules.
It will be appropriate at this stage to set out the relevant provisions of the Assam Land and Revenue Regulation, 1886 (Regulation I of 1886), and the rules for the settlement of fisheries made by the State of Assam thereunder: "Section 16.
Right of fishery.
The Deputy Commissioner, with the previous sanction of the Provincial Government, may, by proclamation published in the prescribed manner, declare any collection of water, running or still,.
to be a, fishery ; and no right in any fishery so declared shall be deemed to have been acquired by the public or any person, either ' before or after the commencement of this Regulation, except as provided in the Rules made under section 155; Provided that nothing in this section shall affect any express grant of a right to fish made by or on behalf of the British Government, or any fishery rights acquired by a proprietor before the commencement of this Regulation, or the acquisition by a proprietor of such rights in any fishery forming after the commencement of this Regulation in this estate".
483 "Section 155.
Additional power to make rules.
The Provincial Government may, in addition to the other matters for which he (sic) is empowered by this Regulation to make rules, consistent with this regulation, relating to the following matters: (f) the granting of licences, or the farming of the right. . . to fish in fisheries proclaimed under section 16. . . . " "Rule 12 of the Fishery Rules: No fishery shall be settled otherwise than by sale except by the State Government.
The order of settlement passed by the State Government shall be final: Provided that the State Government may introduce the tender system of settlement of fisheries in place of sale by auction system whenever it is considered necessary.
" This rule occurs in chapter X of the Assam Land Revenue Manual, Vol.
I (6th ed.) headed " Rules for settlement of fisheries ".
This chapter is divided into four sections: Section I General and settlement of fisheries.
Section 11 Miscellaneous.
Section III Sanctuaries, and Section IV Rulesfor settlement of fisheries by tender system.
The normal procedure for settlement of fisheries prescribed in r. 3 of section I is by auction sales in regard to all registered fisheries held under leases expiring on the last day of the current year or which at the last previous auction were reserved for sale under r. 9.
After making provision for the place of sale, condition, , of sale, execution of leases and confirmation of sale, provision is made in r. 1 1 for appeal to the Assam High Court against all orders of a Deputy Commissioner or Sub Divisional Officer passed under the rules and it is provided that there shall be no appeal against an order of settlement passed by the State Government under r. 12.
Then follows r. 12 set out hereinabove which provides that no fishery shall be settled otherwise than by sale except by the State Government and a proviso is enacted to this rule enabling, the State Government 484 to introduce the tender system of settlement of fisheries in place of the auction system whenever it is considered necessary.
The rest of the provisions of section I and those of sections II and III are not necessary to be set out for the purpose of this appeal but reference may be made to the provisions of section IV which contains rules for settlement of fisheries by tender system.
Rule 42 provides that the Government may from time to time select any fishery or fisheries to be settled by tender system and instruct the Deputy Commissioner to lease them out for any specified period and the procedure to be adopted in the Settlement of fisheries by tender system is therein provided.
It will be seen from the above summary of the relevant rules that the normal procedure for settlement of fisheries is by holding auction sales.
Power is, however, given to the State Government to introduce the tender system of settlement of fisheries in place of the auction system whenever it is considered necessary and if the Government selects any fishery or fisheries to be settled by tender system and instructs the Deputy Commissioner to lease them out for any specified period acting in exercise of that power, section IV prescribes the procedure for settlement of fisheries by tender system.
The question, therefore, which arises for our determination is whether there is any power conferred on the State Government by these rules to settle fisheries otherwise than by sale, e.g., by individual settlements without a settlement thereof by auction system or by tender system.
We May here dispose of an argument which was urged oil behalf of Respondent No. I before us and which appears to have found favour with the High Court that r. 12 of the Fishery Rules which is the source of that power was ultra vires and repugnant to section 16 of the Assam Land Revenue Regulation I of 1886.
That section deals with the right of fishery and provides that the Deputy Commissioner, with 'the previous sanction of the State Government, may by a proclamation declare any collection of water to be fishery and no right in a fishery so declared shall be deemed to have been acquired by the public or by any person 485 except as provided in the rules made under section 155.
The instances before us are not covered by the proviso and we shall, therefore, make no mention of the same.
The only relevant enquiry is whether there was any, rule validly enacted under section 155 which enabled the State Government to settle the fishery otherwise than by sale by making an individual settlement thereof with Respondent No. I or the appellant in the manner in which it was done.
There is absolutely nothing in the provisions of section 16 which would go to show what are the principles on which such rules for the acquisition of fishery rights by the public or any person have to be made nor is there anything therein to indicate any policy which has to guide the State Government in the making of such rules.
The whole thing is left to the discretion of the State Government which is empowered by section 155, inter alia, to make rules relating to the granting of licences and the farming of the right to fish in fisheries proclaimed under section 16 consistent with the Regulation.
No doubt the State Government would also be bound by such rules and would not be entitled to make any settlement of fishery rights unless and until there was a rule made in that behalf under section 155.
It would not be open to the State Government to contend that it had absolute property in these fishery rights and it was, therefore, entitled to settle them in any manner whatever.
Unless, therefore, the action of the State Government could be justified by reference to any rule made under section 155 it would not avail the appellant.
Reliance is accordingly placed on the provisions of r. 12 of the Fishery Rules and it is submitted that under that rule specific power is given to the State Government to settle the fishery rights otherwise than by sale.
The State Government is thereby invested with the power to settle fishery rights even by individual settlements without following the auction system or the tender system.
Even though this power is not vested in the State Government by express provision made in that behalf, the context of rule 12 sufficiently indicates the intention of the rule making authority.
After having prescribed the procedure by way of auction sales in 486 rr.1 to 11 of section 1, a prohibition against the settlement of fishery rights otherwise than by sale is enacted in r. 12 except in the case of the State Government.
No fishery is to be settled otherwise than by sale and that prohibition is general in terms but an exception is carved out in favour of the State Government in terms which are only capable of the construction that the State Government shall have the power of settling fishery rights otherwise than by sale.
No limitation is placed on this power which is thus vested in the State Government and if the State Government is em powered to settle fishery rights otherwise than by sale it can do so by adopting the tender system if it thought it desirable to do so or even by entering into individual settlements if the circumstances of the case so warranted.
Apart from the adoption of the tender system in place of the auction system, circumstances may conceivably arise where either by reason of the cancellation or relinquishment of fishery lease before the expiration of the period thereof and having regard to the situation then obtaining, it may not be feasible or desirable to sell fishery rights for the unexpired portion of such a lease either by public auction or by inviting tenders and the State Government may, under those circumstances, consider it desirable to enter into individual settlement of the fishery rights so as to earn for the State as much of revenue as possible.
No fetter can be placed on the discretion of the State Government in this behalf and the State Government would be the best judge of the situation and would be in a position to determine what procedure to adopt in the matter of the settlement of fishery rights other.
wise than by sale.
There is nothing in the provisions of section IV containing rules for settlement of fisheries by tender system which militates against the above position.
We are, therefore, of opinion that r. 12 specifically empowers the State Government to settle the fishery rights otherwise than by sale and there is no conflict at all between the provisions of section 16 of the Assam Land and Revenue Regulation, I of 1886, and r. 12 of the Fishery Rules.
The decision of this appeal turns 487 on the construction of r. 12 and we fail to understand how the question of the intra vires or the ultra vires character of r. 12 at all arises.
The whole of the argument addressed before us on behalf of respondent,.
No. I is based on a misconception and can not be sustained.
The decision of this Court in State of Assam vs Keshab Prasad Singh (1), on which the learned judges of the Assam High Court apparently based their judgment in Nuruddin Ahmed vs State of Assam(1) did not touch the present controversy and it follows that that was clearly wrong and cannot be supported.
The result, therefore, is that this appeal will be allowed and the settlement of fishery rights by respondent No. 3 with the appellant declared valid and operative.
Logically enough respondent No. 1 also would have been entitled to a similar relief but there are various questions of fact involved in the determination of the question whether the fishery lease in his favour was validly cancelled by respondent No. 2.
Respondent No. I moreover has disclaimed such benefits by adopting the contention that r. 12 of the fishery rights was ultra vires.
We, therefore, do not think that respondent No. 1 is entitled to any relief on the basis of this judgment.
Respondent No. 3, the only person vitally interested in the decision of this issue will, in spite of its entry having been by the back door, be entitled to the benefit of this judgment, an un sought relief that it will get as a result of our decision on the main point in controversy.
Under the peculiar circumstances of the case we feel that the proper order for costs should be that each party will bear and pay its respective costs of this appeal and we do order accordingly.
Appeal allowed.
(1) ; (2) A.I.R. 1956 Assam 48.
| Section 16 of the Assam Land Revenue Regulation, 1 of 1886 defines " right of fishery " and section 155(f) empowers the Provincial Government to make rules for " the granting of licences, or the farming of the right. . to fish in the fisheries".
The State Government accordingly framed the Fishery Rules and r. 12 thereof provides that no fishery shall be settled otherwise than by sale except by the State Government.
It was contended that r. 12 was ultra vires the Provincial Government and was repugnant to section 16 of the Regulation.
Held, that r. 12 is not ultra vires ' and is not repugnant to section 16 of the Regulation.
There is nothing in section 16 which indicates the principles or the policy on which the rules for the acquisition of fishery rights are to be framed.
The whole thing is left to the discretion of the State Government.
Held further, that r. 12 specifically empowers the State Government to settle the fishery rights otherwise than by sale, e.g., by individual settlements.
Nuruddin Ahmed vs State of Assam, A. I. R. overruled.
State of Assam vs Keshab Prasad Singh, ; not applicable.
|
Summarize this legal judgement text concisely | Appeals No&323 and 324 of 1956.
Appeal from the judgment and orders dated April 27, and July 13, 1956, of the Madras High Court in Writ Appeals Nos.
42 and 88 of 1956 arising out of the orders dated March 23, and July 9, 1956, of the said High Court in Writ Petitions Nos. 333 and 564 of 1956.
A. V. Viswanatha Sastri, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellant.
Daphtary, Solicitor General of India,, R. Gan.
pathy Iyer and R. Gopalkrishnan, for respondents Nos. 3 and 4.
665 1957.
February 19.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
These are appeals against the judgment of the High Court of Madras on a certificate given under article 133 (1) (c) of the Constitution, and they raise a question of some importance as to the true legal character of a permit when it is renewed under the provisions of the (IV of 1939) hereinafter referred to as the Act.
In order to appreciate the contentions of the parties, it is necessary to state the material facts leading up to the present dispute.
Towards the end of 1952, the appropriate authorities under the Act decided to grant two additional permits for stage carriages in the Ondipudur Agricultural College route in the town of Coimbatore in the State of Madras,, and invited applications therefor under section 57 of the Act.
There were as many as 39 applicants, and by his order dated December 3, 1952, the Regional Transport Authority granted one permit to applicant No. 24, the Thondamuthur Trading Company Ltd., and another to applicant No. 30, the V.C.K. Bus Service.
There were appeals by some of the unsuccessful applicants to the Central Road Traffic Board, which by its order dated February 19, 1953, set aside the order of the Regional Transport Authority and granted the permits, one to Stanes Transports Ltd., and another to Thirumalaiswami Goundar.
Revisions were preferred against this order by the aggrieved applicants under section 64 A of the Act, and by its order dated July 9, 1953, the Government confirmed the grant of the permit to Stanes Transports ,Ltd., but set aside the permit given to Thirumalaiswami Goundar, and granted it instead to Annamalai Bus Transport Ltd. Thereupon, applicants Nos. 24 and 30 moved the High Court of Madras under Aft. 226 for a writ of certiorari to quash the order of the Central Road Traffic Board dated February 19, 1953 and of the Government dated July 9, 1953; but the applications were dismissed by Rajagopala Ayyangar J. on March 8, 1954.
Against the orders of dismissal, Writ Appeals Nos. 31 and 32 of 1954 were preferred, and they were 666 dismissed by Rajamannar C. J. and Panchapakesa Ayyar J. on March 21, 1956.
It should be mentioned that the operation of 'the order dated February 19, 1953 was stayed pending the disposal of the revision under section 64 A and the writ proceedings in the High Court, with the result that both Thondamuthur Trading Company Ltd. and V.C.K. Bus Service which had been granted permits by the Regional Transport Authority on December 3, 1952, continued to run their buses notwithstanding cancellation of those permits on February 19, 1953.
It should also be mentioned that in June 1954 the business of the V.C.K. Bus Service which was the grantee of one of the permits under the order of the Regional Transport Authority dated December 3, 1952, was taken over by a Company called the V.C.K. Bus Service Ltd., which is the appellant before us, and by an order of the Regional Transport Authority dated July 7, 1954, it was recognised as the transferee of the permit granted to V.C.K. Bus Service.
To continue the narrative, the permit which was the subject matter of the litigation aforesaid was for a period of one year and a half, and it expired on June 30, 1954.
Before its expiry, the appellant applied on April 15, 1954, for a renewal thereof for a period of three years.
This application was duly notified under s.57, and objections to the grant were preferred by both Stanes Transports Ltd., and Annamalai Bus Transport Ltd. On September 5, 1954, the Regional Transport Authority granted a permit to the appellant for a period of one year from July 1, 1954 to June 30, 1955, obviously in the expectation that Writ Appeals Nos. 31 and 32 of 1954 would by then have been decided.
On March 19, 1955,the appellant again applied for a renewal of the permit, and that was also notified under section 57, and no objections having been filed to the grant thereof, the Regional Transport Authority by his order dated June 23, 1955, renewed the permit for a period of three years from July 1, 1955 to June 30, 1958.
It is this permit that forms the subject matter of the present litigation.
It has been already stated that Writ Appeals Nos. 31 and 32 of 1954 were dismissed on March 21, 1956.
667 Apprehending that the Regional Transport Authority might, in view of the judgment of the High Court, cancel the permit which was renewed on June 23, 1955, the appellant filed Writ Petition No. 333 of 1956 for a Writ of Prohibition restraining the Regional Transport Authority from Cancelling the permit, and that was dismissed by Rajagopala Ayyangar J. on the ground that when the original permit was set aside, the renewal thereof fell to the ground.
The appellant filed Writ Appeal No. 42 of 1956 against this order, and that was heard by Rajamannar C. J. and Panchapakesa Ayyar J. who by their judgment dated April 27, 1956, held, following a previous decision of that Court in K. Muthuvadivelu vs Regional Transport Officer(1) that the renewal having been obtained on the basis of a permit which had been subsequently cancelled, it could not be regarded as a fresh permit, that when the original permit was set aside, it must be taken to be non est for all purposes, and that the renewal must therefore be held to be a nullity.
In the result, they dismissed the appeal, but granted a certificate under article 133(1)(c), observing that the case raised a point of general importance, which was stated by them in these terms: When an application for renewal of a permit is made and granted and eventually it is held that the original permit was itself wrongly granted, does the renewed permit subsist for the period for which it was renewed, or does it automatically cease to be in force when it is finally decided that the original permit was not granted validly ? This matter now comes before us in Civil Appeal No, 323 of 1956.
After the High Court delivered its judgment in Writ Appeal No. 42 of 1956 on April 27, 1956, the respondents herein, viz., Stanes Transports Ltd., and Annamalai Bus Transport Ltd., applied to the Regional Transport Authority to grant them permits in accordance with the decisions of the High Court, and on May 5, 1956, the Regional Transport Authority cancelled the permit granted by him on June 23, 1955, in favour (1) A.I.R. 1956 Mad.
86 668 of the appellant, and granted permits instead to the respondents.
Thereupon, the appellant filed Writ Petition No. 554 of 1956 for a writ of certiorari to quash the order dated May 5, 1956, on the grounds which had been put forward in Writ Petition No. 333 of 1956 and Writ Appeal No. 42 of 1956.
That petition was dismissed by Rajagopalan J. on July 9, 1956, and the Writ Appeal No. 88 of 1956 filed against that order was dismissed by Rajamannar C. J. and Panchapa kesa Ayyar J. on July 13, 1956.
Leave to appeal against that judgment was also given under article 133 (1) (c), as the subject matter thereof was the same as that of Writ Appeal No. 42 of 1956 in respect of which leave had already been granted.
Civil Appeal No. 324, of 1956 relates to this matter.
Thus, both the appeals relate to the same matter, and raise the same point for determination.
Mr. A. V. Viswanatha Sastri, learned counsel who appeared in support of the appeals, contends that the view taken by the learned Judges of the High Court that when a permit is set aside by higher authorities, it should be treated as wholly non existent, and that, in consequence, a renewal thereof must be held to be void, is not sound, that on a correct interpretation of sections 57 and 58, a renewal is practically in the nature of a new grant, that the permit which was granted to the appellant for the period July 1, 1955 to June 30, 1958, though styled a renewal, was in substance a fresh permit, and that the fact that the old permit was set aside did not therefore affect the rights of the appellant under this permit.
He also argues that the Act and the rules framed thereunder contain elaborate provisions as to when a permit could be cancelled, forming in themselves a complete code on the subject, that the cancellation of the original permit is not one of the grounds on which a renewed permit could be set aside, and that the order of the Regional Transport Authority dated May 5, 1956, was therefore ultra vires.
The contention of the learned Solicitor General for the.
respondents is that when a permit is renewed, the renewal is, on a true construction of the provisions of the Act, in substance as in name a continuation of the 669 previous permit, and that, in consequence, when the, grant of a permit is set aside by a higher authority, the renewal thereof must also stand automatically set aside, and that further even if a renewed permit is not to be regarded as a continuation of the original permit,, seeing that it is granted on the basis of that permit it should be held to be subject to an implied term that it should cease if the original permit is cancelled.
The two points that arise for decision on these contentions are: (1) when a permit is renewed, is it a continuation of the original permit, or is it, in fact, a new one? and (2) if a renewed permit is not a continuation of the original permit, is the grant of it subject to the implied condition that it is liable to be cancelled, if the original permit is cancelled ? On the first question, it is necessary to refer to certain provisions of the Act material thereto.
Section,57 prescribes the procedure to be followed in the grant of stage carriage permits.
Under sub section
(2), applications therefor have to be made not less than six weeks before the date appointed by the Regional Transport Authority therefor.
Sub section (3) requires that they should be: published in the prescribed manner, and provision is made for representations being made in connection therewith.
When any representation is so received, sub section
(5) provides that the person making it is to be given an.
opportunity of being heard thereon in person or by a, duly authorised representative, and that the application for permit is to be disposed of at a public hearing.
Section 58 deals with renewals, and is as follows: (1) " A permit other than a temporary permit issued under section 62 shall be effective without renewal for such period, not less than three years and not more than five years, as the Regional Transport Authority may in its discretion specify in the permit: Provided that in the case of a permit issued or renewed within two years of the commencement of this Act, the permit shall be effective without renewal for such period of less than three years as the Provincial Government may prescribe.
670 (2) A permit may be renewed on an application made and disposed of as if it were an application for a permit: Provided that, other conditions being equal, an application for renewal shall be given preference over new applications for permits.
" The contention of the learned counsel for the appellant based on section 58 (2) is that under the Act an application for renewal is to be dealt with exactly as an application for a new permit, that it is to be notified under section 57 and representations have to be called for in connection herewith and considered at a public hearing, that though the grant of the previous permit furnishes a ground of preference, it is subject to the limitation that the other conditions are equal and is thus only one of several factors to be taken into account, and that therefore when a renewal is actually granted, it is on an independent consideration of the merits and it cannot be distinguished from a fresh grant.
It was further argued that the proviso to section 58(2) meant little, because it was well established that the grant of a permit was not a matter of right, and the authorities under the Act would be acting within their powers if they refused an application for renewal and granted a fresh permit to a new applicant.
It was also contended that though the statute spoke of a renewal of a permit, that expression did not accurately bring out the true position, because in legal terminology, renewal imports that the transaction which is renewed, as for example, a lease, is to operate for a further period but on the same terms, but that when a permit was renewed, it was open to the authorities to impose new conditions, to alter the period during which it was to operate and generally to modify its terms, and that therefore the use of the word ,renewal " should not lead to the.
inference that it was the original permit that was being continued.
There is force in these contentions, but there are other provisions bearing on this question, and when they are reviewed as a whole, it is abundantly clear that the intention of the legislature was to treat a renewal as a continuation of the previous permit.
To 671 start with, section 58(1) enacts that a permit shall be effective for the period specified therein, but this is qualified by the words " without renewal ".
Therefore, when there is a renewal, the effective period is not the original period specified, but the period up to which the renewal is granted.
That indicates that the life of a renewed permit is one and continuous.
The matter is placed beyond doubt when we turn to the rules which have been framed under the Act.
Rule 184 (1) provides that when a renewal is granted, it shall be endorsed on the permit itself, and Form No. 33, which is prescribed therefor is as follows: " This permit is hereby renewed up to the day of. . 19 Thus, what is renewed is " this permit".
In this connection, reference must be made to the definition of " permit " in section 2(2) of the Act 'as " the document issued by a Provincial or Regional Transport Authority Rule 1985 is very material for the purpose of the present discussion, and it runs as follows: If an application for the renewal of a permit has been made in accordance with these rules and the prescribed fee paid by the prescribed date, the permit shall continue to be effective until orders are passed on the application or until the expiry of three months from the date of receipt of the application whichever is earlier.
If orders on the application are not passed within three months from the date of receipt of the application, the permit holder shall be entitled to have the permit renewed by the Transport Authority for the period specified in the application or for one year whichever is less and the Transport Authority shall call upon the permit holder to produce the registration certificate or certificates and Part B or Parts A and B of the permit, as the case may be, and endorse the renewal in Parts A and B of the permit accordingly and return them to the permit holder ".
Under this rule, when an application for renewal is made, the permit already granted is to be in force 'until an order is passed thereon, and what is more important, if no order is passed within three months, 672 the permit 'becomes automatically renewed for the ,,period mentioned in the rule.
This goes a long way to support the contention of the respondents that on the scheme of the Act, renewal is a continuation of the original permit.
It should also be mentioned that the rules provide for different forms for an application for fresh permit and one for renewal, and the fee to be paid along with those applications is also different.
A reading of the relevant provisions of the Act and of the rules leads indubitably to the conclusion that a renewal is a continuation of the permit previously granted.
The fact that the grant of renewal is not a matter of course, or that it is open to the authorities to impose fresh conditions at the time of renewal does not, when the permit is in fact renewed, alter its character as a renewal.
We shall now consider the authorities cited by learned counsel for the appellant as supporting the view that a renewal under the Act is in the same position as a fresh permit.
In Mahabir Motor Co. vs Bihar State(1), the point for decision was whether an appeal lay under section 64 (f) against an order granting a renewal of a permit.
The contention before the Court was that the Act made a distinction between the grant of a permit and a renewal thereof, and that as section 64 (f), provided only for an appeal against an order granting a permit, no appeal lay against an order granting a renewal.
In repelling this contention the Court observed "Both grant.
and renewal stand more or less on the same footing by reason of sections 47, 57 and 58 of the . .
This observation has reference to the procedure to be followed in the renewal of a permit and the right of appeal given under a. 64 as part of that procedure.
It has, no bearing on the character of a permit when it is renewed.
Another decision on which the appellant strongly relied is Anjiah vs Regional Transport Officer, Guntur There, the, facts were that an order of suspension had been passed for breach of one of the (1) Patna 429.
(2) [1956] Andhra Law Times 347. ] 673 conditions of the permit.
The correctness of the order was challenged before higher authorities, but without success.
Meantime, the period fixed in the permit had expired, and it had been renewed.
The question was whether the period of suspension could be enforced against the renewed permit.
It was held by the Andhra High Court that it could not be, because the renewal was, in essence, a new permit and not a mere continuance of the old one.
The reason for ' this decision was thus stated in the judgment: " There is no right of renewal as such and when a permit is renewed, there is no right either, on the part of the permit holder to insist upon the continuance of the old terms.
It would be undesirable that there should be any such restrictions upon the right of the authorities to grant the permit to anybody they choose or subject to any conditions that they think it to be necessary to impose, provided that they are acting all the time in the public interest and subject to the provisions of the and the.
Rules made thereunder.
" These considerations, though not without force, can.
not, in our opinion, outweigh the inference to be drawn from the other provisions to which we have made reference and for the reasons already given, we are unable to agree with this decision.
In the view that we have taken that under the provisions of the Act and the rules, a renewal is a continuation of the original permit, there can be no doubt as to what the rights of the appellant are.
When the proprietor of V. C. K. Bus Service was granted a permit by the Regional Transport Authority on December 3, 1952, that grant was subject to the result of the decision of the higher authorities.
On September 5, 1954, when the permit was renewed in favour of the appellant, that was subject to the decision of the High Court in Writ Appeal No. 32 of 1954, which was then pending.
When the renewed permit dated September 5, 1954, was again renewed on June 23, 1955, that was likewise subject to the result of the decision in Writ Appeal No. 32 of 1954.
When the High Court by its judgment dated March 674 21, 1956, passed in the said Writ Appeal upheld the cancellation of the permit which had been granted by the Regional Transport Authority on December 3, 1952 to V. C. K. Bus Service, the permit renewed on June 23, 1955, became ineffective at least as from that date.
The Regional Transport Authority was therefore right in treating it as having become void, and granting by his order dated May 5, 1956, permits to the respondents.
The second question arises on the alternative contention advanced by the respondents that even if the renewal is to be regarded, not as a continuation of the original permit but as an independent grant, it must be held to have been subject to an implied condition that if the original permit is ultimately set aside, the renewal thereof should come to an end.
Mr. Sastri, learned counsel for the appellant, disputes the correctness of this contention.
He argues that when there is a document embodying the terms ' of a contract, it is not permissible to imply therein a condition, if that will contradict or vary any terms contained in it, that to read into the permit a condition that it is to cease if the decision of the High Court went against the appellant, ' would be to modify the terms contained therein that it is to be effective upto June 30, 1958, and that it could not therefore be implied.
He also relies on the following observation of Lord Parker in P. A. Tamplin Steamship Company Limited vs AngloMexican Petroleum Products Company Limited (1) : " This principle is one of contract law, depending on some term or condition to be implied in the contract itself and not on something entirely dehors the contract which brings the contract to an end.
It is, of course, impossible to imply in a contract any term or condition inconsistent with its express provisions, or with the intention of the parties as gathered from those provisions.
" It is undoubted law that when the terms of a contract or grant are reduced to writing, no condition can be implied therein, which will be inconsistent with its express terms.
But the contention of the respondents (1) , 422. 675 involves no conflict with this principle.
They do not seek to obtain any modification or alteration of the terms of the permit, leaving it to operate subject to such modification or alteration.
They want that the whole permit with all its terms as to duration and otherwise should be held to have become inoperative.
What they are pleading is a condition subsequent on the happening of which the permit will cease, and to that situation the observation quoted above has no application.
Reference may be made in this connection to the following observation occurring later in the speech of Lord Parker in F. A. Tamplin Steamship Company Limited vs Anglo Mexican Petroleum Products Company, Limited (supra): " Moreover, some conditions can be more readily implied than others.
Speaking generally, it seems to me easier to imply a condition precedent defeating a contract before its execution has commenced than a condition subsequent defeating the contract when it is part performed." Thus, there is no legal obstacle to implying a condition that the renewal should stand cancelled if the right of the appellant to the original permit was negatived by the High Court.
That brings us on to the question of fact, whether on an examination of the permit and of the circum.
stances under which it came to be granted, we can infer that it was the intention of the Regional Transport Authority to renew the permit subject to the result of the decision of the High Court in the appeal which was then pending before it.
The permit granted to the V. C. K. Bus Service on December 3, 1952, had been cancelled on February 19, 1953, and it was only by reason of the stay orders that the bus was permitted to run.
When the appellant applied for renewal on April 15, 1954, there was opposition to the grant thereof from both the respondents herein, based on the decision of the Government dated July 9, 1953, and it was in view of their objection that the Regional Transport Authority renewed the permit for one year from July 1, 1954 to June 30, 1955.
It is true that 87 676 when the appellant applied again for renewal on March 19, 1955, the respondents did not raise objection thereto, but as the appeals in the High Court were still pending, they had good reason to believe that the renewal would not affect whatever rights might be declared in their favour by the High Court.
As all the papers relating to the grant of the original permit and the subsequent proceedings were part of the record before the Regional Transport Authority when he renewed the permit on June 23, 1955, it is impossible to resist the conclusion that he really intended to renew the permit only subject to the decision of the High Court.
It is of the utmost importance in this connection to bear in mind that the appellant applied not for a fresh permit but for a renewal, and in sanctioning it, the Regional Transport Authority expressly acted in exercise of his powers under Rule 134 A read with section 58 of the Act, and if he did not expressly provide that it was subject to the decision of the High Court, it must be because he must have considered that that was implicit in the fact of its being only a renewal.
That that is how the appellant understood it is clear beyond doubt from the proceedings taken by it immediately after the High Court pronounced its judgment.
But it is argued for the appellant on the strength of the decision in Veerappa Pillai vs Raman & Raman Ltd.(1) that the mere knowledge on the part of the authorities that the rights of the parties were under litigation is not a sufficient ground to import a condition in the permit that it is subject to the result of that litigation, when in its terms it is unconditional.
We do not read that decision as authority for any such broad contention.
There, the question related to five permits, which had been originally granted to one Balasubramania.
Raman and Raman Ltd. obtained a transfer of the relative buses, and applied to the transport authorities for transfer of the permits to itself.
Then, Veerappa having subsequently obtained a transfer of the same buses from Balasubramania, (1) ; 677 applied to have the permits transferred in his name.
On October 3, 1944, he also instituted a suit in the Sub Court, Kumbakonam, to establish his title to the buses against Raman and Raman Ltd., and that was decreed in his favour on May 2, 1946.
Raman and Raman Ltd. appealed against this decision to the Madras High Court, which by its judgment dated September 2, 1949, reversed the decree of the Sub Court and held that it was entitled to the buses.
While these proceedings were going on, the transport authorities suspended on March 28, 1944, the permits which had been granted to Balasubramania and instead, they were issuing temporary permits from time to time to Veerappa, who had been appointed receiver in the suit in the Sub Court, Kumbakonam.
On March 29, 1949, the Government decided to discontinue the policy of granting temporary permits indefinitely, and accordingly granted permanent permits, to Veerappa.
Then on October 14, 1949, Veerappa applied for renewal of these permanent permits, and that was granted by the Regional Transport Authority on January 3,1950.
The question was whether this order was bad on the ground that it was inconsistent with the decision of the High Court that it was Raman and Raman Ltd., that had obtained a valid title to the buses.
This Court held that the ownership of the buses was only one of the factors to be taken into account in granting the permits, and that as the Regional Transport Authority granted the renewal on an appreciation of all the facts, his decision was not liable to be questioned in proceedings under article 226.
It should be noted that the renewal which was granted on January 3, 1950, was of permanent permits granted in pursuance of the, order of the Government dated March 29, 1949, which had quite plainly declared as a matter of policy that notwithstanding the pendency of litigation between the parties, permanent permits should be granted to Veerappa.
There can be no question of implying thereafter a condition that they were subject to the decision of the Court.
Moreover, the renewal was granted on January 3, 1950, after the litigation had ended on September 2, 1949, and any attack on that order could only be by 678 way of appeal against it, and that had not been done, We are of opinion that the decision in Veerappa Pillai vs Raman & Raman Ltd. (1) is of no assistance to the appellant.
In the result, we affirm the decision of the High Court both on the ground that the renewal dated June 23, 1955, is a continuation of the permit granted on December 3, 1952, and must fall to the ground when that stood finally set aside by the judgment of the High Court in Writ Appeal No. 32 of 1954 dated March 21, 1956, and on the ground that it was an implied condition of that renewal that it was to be subject to the decision of the High Court in that appeal, and that in the event which had happened, it had ceased to be effective.
These appeals fail, and are dismissed with costs in Civil Appeal No. 323 of 1956.
Appeals dismissed.
| The appellant was granted a permit for stage carriage by the Regional Transport Authority under the provisions of the , but on appeal to the appellate authority, the Central Road Traffic Board, by the unsuccessful applicants the order granting the permit was set aside and the order of the Central Road Traffic Board was approved by the Government in revision.
The appellant, thereupon, moved the High Court for a writ of certiorari to quash the proceedings of the Central Road Traffic Board and the Goverment.
During the pendency of these proceedings there was a stay of operation of the order setting aside the grant of the permit to the Appellant, with the result that be continued to run his buses notwithstanding the cancellation of his permit.
Before the expiry of the period fixed in the original 664 permit, he applied for and got a renewal of the permit from the Regional Transport Authority under section 58 of the Act.
The High Court finally dismissed the application for a writ of certiorari and 'the question arose as to the validity of the renewal of the permit in view of the High Court 's decision.
The matter was raised before the High Court once again by proceedings under article 226 of the Constitution and the High Court held that the renewal having been obtained on the basis of a permit which had been subsequently cancelled, it could not be regarded as a fresh permit, that when the original permit was set aside, it must be taken to be non est for all purposes, and I that the renewal must therefore be held to be a nullity.
The appellant appealed to the Supreme Court.
Held:(1) Under the provisions of the Motor Vehicles Act, 1949 and the rules framed thereunder, a renewal is a continuation of the original permit.
When the original permit was renewed in favour of the appellant it was subject to the decision of the High Court in the proceedings under article 226 of the Constitution which were then pending and, therefore, when the order granting the original permit was fin ally set aside the renewed permit became void.
Anjiah vs Regional Transport Officer, Guntur, 1956 Andhra Law Times, 347, disapproved.
(2)When the appellant applied for a renewal of his permit under section 58 of the Act and not merely for a fresh permit the order of the Regional Transport Authority granting the renewal must be held to have been made subject to the implied condition that the right of the appellant to the original permit is recognized by the High Court and that accordingly, in the event that had happened, the renewed permit ceased to, be effective.,.
Veerappa Pillai vs Raman & Raman Ltd., ; , explained and distinguished.
|
Summarize this legal judgement text concisely | minal Appeal No. 149 of 1954.
Appeal by special leave from the judgment and order dated October 20, 1953, of the Bombay High Court in Criminal Appeal No. 349 of 1953.
680 section A. Desai and I. N. Shroff, for the appellant.
Porus A. Mehta and R. H. Dhebar, for the respondent.
February 19.
The Judgment of the Court was delivered by BHAGWATI J.
This appeal with special leave under article 136 of the Constitution is directed against a judgment of the High Court of Judicature at Bombay setting aside the acquittal of the appellant by the Court of the Presidency Magistrate, 19th Court, Bombay and ordering his re trial by the Court of the Special Judge, Greater Bombay in accordance with the provisions of the Criminal Law Amendment Act, 1952 (Act XLVI of 1952).
The appellant was accused No. 3 in the Court of the learned Presidencv Magistrate.
Accused No. 1 was the Mehta in the employ of a firm called Messrs. M. M. Baxabhoy & Co., accused No. 2 was the mana.
ger of the said firm.
The appellant and accused Nos. 4 and 5 were Receivers of the firm in litigation in regard to it.
They were all charged with offences under section 161 read with section 116 and further read either with section 109 or section 114 of the Indian Penal Code for offering to one Jibhai Chhotalal Barot, a sub inspector of police attached to the Anti Corruption Branch of the C. 1.
D. the sum of Rs. 1,25,000 as illegal gratification other than legal remuneration as ' a motive or reward for his showing favour to the accused and to the firm M/s. M. M. Baxabhoy & Co., in the exercise of his official functions.
The offence was alleged to have been committed on July 28, 1950, and the accused were charge sheeted on June 16, 1951; the trial commenced on July 14, 1951 and charges were framed on September 27, 1951.
40 witnesses were examined and 226 documents were exhibited in the course of the trial, and the prosecution closed its case on July 15, 1952.
During the course of the trial the Criminal Law Amendment Act, 1952 (XLVI of 1952) hereinafter called the impugned Act was enacted by Parliament 681 on July 28, 1952, being an Act further to amend the Indian Penal Code and the Code of Criminal Procedure, 1898 and to provide for a more speedy trial of certain offences, viz., offences punishable under section 161,s.165 or section 165A of the Indian Penal Code or sub section 2 of section 5 of the Prevention of Corruption Act, 1947 (ActII of 1947) and any conspiracy to commit or any attempt to commit or any abetment of any of the offences specified above.
The learned Presidency Magistrate proceeded with the trial and after the examination of the appellant under section 342 of the Code of Criminal Procedure, the appellant filed his written statement on August 14, 1952.
The addresses commenced thereafter.
The prosecution commenced its address on August 26, 1952, ending it on September 5, 1952.
The defence thereafter addressed the learned Magistrate.
In the meantime on September 23, 1952, the Government of Bombay by a notification appointed a Special Judge to try offences specified above and this appointment was notified in the Official Gazette on September 26, 1952.
The defence concluded its address on September 26, 1952 and the learned Presidency Magistrate delivered his judgment on September 29, 1952, whereby he convicted the Accused Nos.
I and 2 of the offences with which they were charged and sentenced them each to nine months rigorous imprisonment and a fine of Rs. 1,000 in default 6 months ' rigorous imprisonment.
He however acquitted the appellant and the accused Nos. 4 and 5 of these offences.
The accused No. 2 carried an appeal before the High Court of Bombay being Criminal Appeal No. 1304 of 1952.
The State of Bombay also thereupon filed an appeal against the acquittal of the appellant and accused Nos. 4 and 5 being Criminal Appeal No. 349 of 1953.
In the memorandum of appeal in Criminal Appeal No. 349 of 1953 a point was taken that the learned Presidency Magistrate had no jurisdiction to continue the trial and acquit the appellant and accused Nos. 4 and 5 as the same was ousted by the impugned Act.
It was contended that since the date the said Act came into force the Special Judge alone 682 had jurisdiction to try the accused for the offence under section 161 read with section 116 of the Indian Penal Code, that the duty of the learned Presidency Magistrate was to transfer this case to the Court of the Special Judge for Greater Bombay, specially appointed to try such offences by the impugned Act and that the order of acquittal of the appellant and accused Nos. 4 and 5 was therefore erroneous in law being without jurisdiction.
Both these Criminal Appeals came up for hearing before a Bench of the Bombay High Court consisting of Bavadekar & Vyas JJ.
These appeals were heard only on the preliminary point as to the jurisdiction of the learned Presidency Magistrate to try and decide the case.
In reply to the point as to jurisdiction which had been taken by the State of Bombay, the appellant and the accused Nos. 4 and 5 urged that the provisions of the impugned Act were violative of the principle of equal protection of laws contained in article 14 of the Constitution and therefore the impugned Act was ultra vires the Constitution.
If that was so, it was contended, the learned Presidency Magistrate had jurisdiction to continue the trial in spite of the commencement of the impugned Act and the order of acquittal of the appellant and accused Nos. 4 and 5 recorded by him was correct.
The learned judges of the High Court rejected this contention of the appellant and held that the impugned Act was intra vires and that the learned Presidency Magistrate had no jurisdiction to try the case after the commencement of the impugned Act.
The learned Magistrate 's order convicting the accused No. 2 and acquitting the appellant and the accused Nos. 4 and 5 complained of by the State of Bombay was accordingly set aside.
The High Court ordered a re trial of the appellant and the other accused by the Court of the Special Judge, Greater Bombay, and remanded the case for disposal according to law.
The appellant applied to the High Court for a certificate under article 134 (1) (c) of the Constitution which was however refused.
The appellant thereafter 683 applied for and obtained from this Court special leave to appeal against the judgment and order passed by the High Court.
This is how the appeal has come up for hearing and final disposal before us.
It will be convenient at this stage to set out the relevant provisions of the impugned Act.
As already noted the preamble to the Act stated that it was an Act further to amend the Indian Penal Code and the Code of Criminal Procedure, 1898, and to provide for a more speedy trial of certain offences.
Section 5 of the Act inserted sub section
(2 B) in section 337 of the Code of Criminal Procedure, 1898 and provided that in every case where the offence is punishable under section 161 or section 165 or section 165 A of the Indian Penal Code or sub section
(2) of section 5 of the Prevention of Corruption Act, 1947, . . . . . . . then notwithstanding anything contained in sub section
(2 A), the Magistrate shall, without making any further enquiry, send the case for trial to the Court of the Special Judge appointed under the impugned Act.
This amendment was to remain in force for a period of two years from the commence ment of the impugned Act, but was subsequently incorporated in the Code of Criminal Procedure, 1898, as section 337 (2 B) by section 59 (b) of the Code of Criminal Procedure Amendment Act, 1955 (Act XXVI of 1955).
Section 6 of the Act provided for the appointment of Special Judges and empowered the State Governments by notification in the Official Gazette to appoint as many Special Judges as may be necessary for such area or areas as may be specified in the notification to try the following offences, namely: (a) an offence punishable under section 161, section 165 or section 165 A of the Indian Penal Code or sub section
(2) of section 5 of the Prevention of Corruption Act, 1947; and (b) any conspiracy to commit or any attempt to commit or any abetment of the offences specified in el.
(a) above.
Section 6 (2) laid down the qualifications for the appointment of a Special Judge and provided that: a person shall not be qualified for appointment as a Special Judge under this Act unless he was or had been 88 684 a Sessions Judge or an Additional Sessions Judge or an Assistant Sessions Judge under the Code of Criminal Procedure, 1898.
Section 7 of the Act is important and provided that notwithstanding anything contained in the Code of Criminal Procedure, 1898 or any other law the offences specified in sub section
(1) of section 6 shall be triable by special judges only.
Section 7(2) further provided that when trying any case, a Special Judge.
may also try any offence other than an offence specified in section 6 with which the accused may, under the Code of Criminal Procedure, 1898 be charged at the same trial.
The procedure and powers of special judges were laid down in section 6 of the Act.
A Special Judge was empowered to take cognizance of offences without the accused being committed to him for trial, and in trying the accused persons, he was to follow the procedure prescribed by the Code of Criminal Procedure, 1898 for the trial of warrant cases by magistrates.
A Special Judge was also empowered to tender a pardon to any person supposed to have been directly or indirectly concerned in, or privy to, an offence on condition of his making a full and true disclosure of the whole circumstances within his knowledge relating to the offence and to every other person concerned, whether as a principal or abetter, in the commission thereof.
Save as above the provisions of the Criminal Procedure Code, 1898 were so far as they were not inconsistent with the Act made applicable to the proceedings before a Special Judge.
and for the purposes of the said provisions, the Court of the Special Judge was deemed to be a Court of Sessions trying cases without a jury or without the aid of assessors.
A Special Judge was empowered to pass upon any person convicted by him any sentence authorised by law for the punishment of the offences of which such person was convicted.
Section 9 of the Act provided for appeal and revision and the High Court was to exercise as far as applicable all the powers conferred by Chapters XXXI and XXXII of the Code of Criminal Procedure, 1898 on the High Court, as if the Court of the Special Judge were a Court of Sessions trying cases without a jury within the local limits of the jurisdiction of the High Court.
685 Section 10 is also important and provided for the transfer of certain cases pending before magistrates.
It was laid down that all cases triable by a Special Judge under section 7, which immediately before the commencement of the Act, were pending before any Magistrate shall, on such commencement, be forwarded for trial to the Special Judge having jurisdiction over such cases.
It is clear from the provisions of the impugned Act set out hereinabove that the intention of the legislature in enacting the same was to amend the Indian Penal Code and the Code of Criminal Procedure, 1898 with a view to provide for a more speedy trial of offences punishable under sections 161, 165 or 165 A, of the Indian Penal Code or sub section
(2) of section 5 of the Prevention of Corruption Act, 1947.
Special Judges of the status of a Sessions Judge or an Additional Sessions Judge or an Assistant Sessions Judge were to be appointed for the purpose of trying these offences and these offences were made triable only by these Special Judges.
Not only were the special judges invested with the exclusive jurisdiction to try these offences but they were also empowered while trying any case involving these offences to try any offence other than those offences with which the accused may, under the Code of Criminal Procedure, 1898 be charged at the same trial.
Committal proceedings were also done away with and the special judges were empowered to take cognizance of these offences without the accused being committed to them for trial and were empowered to try the accused persons of the same by following the procedure prescribed by the Code of Criminal Procedure, 1898, for the trial of warrant cases by magistrates.
The courts of the Special Judges were deemed to be courts of Sessions trying cases without a jury or without the aid of assessors and were also empowered to pass upon the persons convicted by them of any offence any sentence authorised by law for the punishment of such offences.
The powers of appeal and revision vested in the High Court were to be exercised as if the courts of Special Judges were the courts of sessions trying cases without a jury or without the aid of assessors within the local limits 686 of the jurisdiction of the High Court.
The procedure for trial before the Special Judges was thus assimilated to that obtaining in the case of trial of the accused by the courts of sessions.
Having thus provided for the trial by Special Judges of these offences which would be triable by them after the commencement of the impugned Act, the Act further provided for a transfer of cases falling within that category but pending before the magistrates.
It may be noted that the other provisions of the Act were prospective in operation and could not affect pending cases as such.
Provision had therefore to be made for divesting the magistrates who had already taken cognizance of these cases, of jurisdiction to try the same any further and for the transfer of such pending cases to the special judges who were.
appointed under the Act.
The cases which were pending before the courts of sessions did not require to be so transferred because they would be tried by the procedure obtaining in the courts of sessions and nothing further required to be done.
The cases which were pending before the Magistrates however required to be transferred to the Special Judges because otherwise the Magistrates would continue to try the same and would have to ' commit them to the courts of sessions, they themselves being unable to mete out the enhanced punishment which could be meted out to the accused on conviction.
The Committal proceedings were sought to be eliminated by the impugned Act and the Special Judges were empowered to try these cases as if they were courts of sessions trying cases without a jury or without the aid of assessors.
It was therefore provided that cases falling under this category which were pending before the magistrates should on the commencement of the impugned Act be forwarded for trial to the special judges having jurisdiction over such cases.
This provision was made when these cases triable by the Special Judges under section 7 of the Act were pending before the magistrates and the magistrates trying the same were ipso facto divested of the jurisdiction to try the same any further, the Special Judges appointed Under the Act having been invested with exclusive 687 jurisdiction to try the same after the commencement of the Act.
If this was the position under the impugned Act it followed without anything more that the instant case which was pending before the learned Presidency Magistrate on July 28, 1952, which was the date of the commencement of the Act, could not proceed any further before him.
By the operation of section 7 of the impugned Act, the learned Presidency Magistrate was divested of jurisdiction to try it and whatever proceedings were continued before him after July 28, 1952, were without jurisdiction and void.
The examination of the appellant under section 342 of the Code of Criminal Procedure and the further proceedings by way of filing of the written statement and the arguments addressed by the prosecution as well as the defence were all without jurisdiction and so were the orders of conviction of the accused Nos.
I and 2 and the acquittal of the appellant and the accused Nos. 4 and 5.
It was however contended by the learned counsel for the appellant before us that the provisions of the impugned Act were violative of the fundamental right enshrined in article 14 of the Constitution and were therefore ultra vires.
The respondents on the other hand urged that there was no classification at all and even if there was one, it was based on intelligible differentia and had a rational relation to the object sought to be achieved.
The provisions of the impugned Act in substance amended the Indian Penal Code and the Code of Criminal Procedure, 1898 pro tanto making the speci.
fied offences triable by special judges and all persons who committed these offences became punishable by higher sentences and were subjected to, procedure for trial of warrant cases, the courts of the special judges being deemed to be courts of sessions trying cases without a jury or without the aid of asessors.
It can therefore be legitimately urged that there was no classifi cation at all, the provisions thus enacted being equally applicable to all citizens alike without any discrimination whatever.
688 The matter was however argued before the High Court and also before us on the basis that the offenders who committed these specified offences formed a group or category by themselves and were classified as distinct from the offenders who committed the other offences under the Indian Penal Code.
We do not want to express any opinion as to whether there is any classification discernible within the provisions of the impugned Act, but will proceed to deal with this aspect of the question on the assumption that there was such a classification intended to be made by the Legislature while enacting the impugned Act.
The principles underlying article 14 of the Constitution have been completely thrashed out in the several decisions of this Court ere this.
The earliest pronouncement of this Court on the meaning and scope of article 14 was made in the case of Chiranjit Lal Chowdhury vs The Union of India(1).
The principles enunciated in that case were summarized by Fazl Ali J. as follows in The State of Bombay vs F. N. Balsara (2) : (1) The presumption is always in favour of the constitutionality of an enactment, since it must be assumed that the legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and its discriminations are based on adequate grounds.
(2) The presumption may be rebutted in certain cases by showing that on the face of the statute, there is no classification at all and no difference peculiar to any individual or class and not applicable to any other individual or class, and yet the law hits only a particular individual or class.
(3) The principle of equality does not mean that every law must have universal application for all persons who are not by nature, attainment or circumstances in the same position, and the varying needs of different classes of persons often require separate treatment.
(4) The principle does not take away from the State the power of classifying persons for legitimate purposes.
(1) [1950] S.C.R. p. 869.
(2) ; , at P. 708.
689 (5) Every classification is in some degree likely to produce some inequality, and mere production of inequality is not enough.
(6) If a law deals equally with members of a well defined class, it is not obnoxious and it is not open to the charge of denial of equal protection on the ground that it has no application to other persons.
(7) While reasonable classification is permissible, such classification must be based upon some real and substantial distinction bearing a reasonable and just relation to the object sought to be attained, and the classification cannot be made arbitrarily and without any substantial basis.
" The latest pronouncement on this topic is to be found in the judgment of this Court in the case of Budhan Choudhry and Others vs The State of Bihar (1) where it was observed as follows: " The provisions of article 14 of the Constitution have come up for discussion before this Court in a number of cases, namely, Chiranjit Lal Chowdhury vs The Union of India (supra), The State of Bombay vs F. N. Balsara (supra), The State of West Bengal vs Anwar Ali Sarkar (2 Kathi Raning Rawat vs The State of Saurashtra(3), Lachmandas Kewalram Ahuja vs The State of Bombay (4) Syed Qasim Razvi vs The State of Hyderabad(5) and Habeeb Mohamad vs The State of Hyderabad(6) It is, therefore, not necessary to enter upon any length discussion as to the meaning, scope and effect of the article in question.
It is now well established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation.
In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) that differentia must have a rational relation to the object sought to be achieved (1) [1955] I S.C.R. I045 at p. 1048.(4) [1952] S.C.R. 710.
(2) [1052] S.C.R. 284.(5) (3) ; 690 by the statute in question.
The classification may be founded on a different base namely, geographical, or according to objects or occupations or the like.
What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration.
It is also well established by the decisions of this Court that article 14 condemns discrimination not only by a substantive law but also by a law of procedure We have to scrutinize the provisions of the impugned Act in the light of the principles enunciated above.
The first question which we have to address to ourselves is whether there is in the impugned Act a reasonable classification for the purposes of legislation.
It we look to the provisions of the impugned Act closely it would appear that the legislature classified the offences punishable under sections 161, 165 or 165 A of the Indian Penal Code or sub section 2 of section 5 of the Prevention of Corruption Act, 1947 in one group or category.
They were offences relating to bribery or corruption by public servants and were thus appropriately classified in one group or category.
The classification was founded on an intelligible differentia which distinguished the offenders thus grouped together from those left out of the group.
The persons who committed these offences of bribery or corruption would form a class by themselves quite distinct from those offenders who could be dealt with by the normal provisions contained in the Indian Penal Code or the Code of Criminal Procedure, 1898 and if the offenders falling within this group or category were thus singled out for special treatment, there would be no question of any discriminatory treatment being meted out to, them as compared with other offenders who did not fall within the same group or category and who continued to be treated under the normal procedure.
The next question to consider is whether this differentia had a rational relation to the object sought to be achieved by the impugned Act.
The preamble of the Act showed that it was enacted for providing a more speedy trial of certain offences.
An argument was however addressed before us based on certain 691 observations of Mahajan J. (as he then was) at page 314, and Mukherjea J. (as he then was) at p. 328 in Anwar Ali Sarkar 's Case(1) quoted at page 43 by Patanjali Sastri C.J. in the case of Kedar Nath Bajoria V.
The State of West Bengal (2) that the speedier trial of offences could not afford a reasonable basis for such classification.
Standing by themselves these passages might lend support to the contention urged before us by the learned counsel for the appellant.
It must be noted, however, that this ratio was not held to be conclusive by this Court in Kedar Nath Bajoria 's Case(2) where this Court held: " (1) That when a law like the present one is impugned on the ground that it contravenes article 14 of the Constitution the real issue to be decided is whether, having regard to the underlying purpose and policy of the Act as disclosed by its title, preamble and provisions, the classification of the offences for the trial of which the Special Court is set up and a special procedure is laid down can be said to be unreasonable or arbitrary and therefore violative of the equal protection clause; (2) having regard to the fact that the types of offences specified in the Schedule to the Act were very common and widely prevalent during the post war period and has to be checked effectively and speedily tried, the legislation in question must be regarded as having been based on a perfectly intelligent principle of classification, having a clear and reasonable relation to the object sought to be achieved, and it did not in any way contravene article 14 of the Constitution.
" In the instant case, bribery and corruption having been rampant and the need for weeding them out having been urgently felt, it was necessary to enact measures for the purpose of 'eliminating all possible delay in bringing the offenders to book.
It was with that end in view that provisions were enacted in the impugned Act for speedier trial of the said offences by the appointment of special judges who were invested with exclusive jurisdiction to try the same and were also empowered to take cognizance thereof without the (1) ; 89 (2) ; 692 accused being committed to them for trial, and follow ,the procedure prescribed for the trial of warrant cases by magistrates.
The proceedings before the Special Judges were thus assimilated to those before the courts of sessions for trying cases without a jury or without the aid of assessors and the powers of appeal and revision invested in the High Court were also similarly circumscribed.
All these provisions had the necessary effect of bringing about a speedier trial of these offences and it cannot be denied that this intelligible differentia had rational relation to the object sought to be achieved by the impugned Act.
Both these conditions were thus fulfilled and it could not be urged that the provisions of the impugned Act were in any manner violative of article '14 of the Constitution.
It was next contended that even if the impugned Act was intra vires, the learned Presidency Magistrate trying the case of the appellant was not divested of jurisdiction to try the same after the commencement of the impugned Act and the acquittal of the appellant recorded by him could not be set aside.
Reliance was placed upon section 10 of the impugned Act in support of this contention.
It was urged that even though the case related to the offence mentioned in section 6(1) of the Act and was thus triable exclusively by the Special Judge, no Special Judge was appointed by the State Govern ment by notification in the Official Gazette until September 26,1952, that the arguments were concluded and the trial came to an end also on September 26, 1952 and the only thing which remained to be done thereafter was the pronouncement of the judgment by the learned Presidency Magistrate and that therefore even though the case may be deemed to have been pending before the learned Magistrate there was no occasion for forwarding the same for trial to the Special Judge appointed by the State Government on September 26, 1952.
We do not accept this contention.
It cannot be denied that on July 28,1952, the date of the commencement of the impugned Act the case of the appellant was pending before the learned Presidency Magistrate.
On that day the prosecution had closed its case and S.C.R. SUPREME COURT REPORTS 693 the appellant had not yet been called upon to enter upon his defence.
The examination of the appellant under section 342 of the Code of Criminal Procedure took place after that date.
The appellant filed his written statement on August 14, 1952 and the addresses by the prosecution as well as the defence continued right up to September 26, 1952.
The word " pending " is thus defined in Stroud 's Judicial Dictionary, 3rd Edition, Vol.
III, p. 2141: PENDING: (1) A legal proceeding is "pending" as soon as commenced and until it is concluded, i.e., so long as the Court having original cognizance of it can make an order on the matters in issue, or to be dealt with, therein.
Similar are the observations of Jessel, M. R.
In re Clagett 's Estate, Fordham vs Clagett (1): " What is the meaning of the word " pending " ? In my opinion, it includes every insolvency in which any proceeding can by any possibility be taken.
That I think is the meaning of the word " pending. . . . . . . . .
A cause is said to be pending in a Court of justice when any proceeding can be taken in it.
That is the test.
" There is no doubt therefore that the case of the appellant was not concluded and was pending before the learned Presidency Magistrate at the date of the commencement of the impugned Act.
We were however told that as many as 40 witnesses had been examined and 226 documents exhibited in the course of the trial before the learned Presidency Magistrate and it could not have been intended by the Legislature when enacting section 10 of the impugned Act that a case where everything had been finished except the addresses and the pronouncement of the judgment should be forwarded for trial before the Special Judge appointed under the Act.
The fallacy underlying this argument is that on July 28, 1952, when the impugned Act.
came into, operation the trial even in the restricted sense of the term had not been concluded.
The prosecution had closed its case but the appellant (1) at p. 653.
694 lad yet to enter upon his defence and lead evidence, if any, in reply to the case set up by the prosecution.
The same was the position even on September 26, 1952, when by a notification in the Official Gazette the Special Judge was appointed having jurisdiction over such cases.
The notification came into operation from the commencement of September 26, 1952, which was immediately after the mid night of September 25, 1952 and the defence address had not concluded by this time but was continued when the learned Presidency Magistrate 's Court assembled at 11 a. m. on September 26, 1952 and was concluded thereafter.
The word " trial " is also defined in Stroud 's Judicial Dictionary, 3rd Edition, Vol.
IV, at page 3092: TRIAL: (1) A "trial" is the conclusion, by a competent tribunal, of questions in issue in legal proceedings whether civil or criminal.
(2) The " trial " (Criminal Justice Act, 1948 (11 & 12 Geo.
C. 58) section 23 (1) is not complete until sentence has been passed or the offender has been ordered to be discharged (R. vs Grant The trial of the appellant therefore could not be said to have been concluded on July 28, 1952 and even on the September 26, 1952, assuming for the sake of argument that the effective commencement of the impugned Act could not be said to have come about until the Special Judge was appointed by the State Government by notification in the Official Gazette.
This contention of the appellant therefore is in any event devoid of substance.
We are aware that in cases like the present one, the provisions contained in section 10 of the impugned Act would work to the prejudice of the appellant in that he would be subjected to a re trial before the Special Judge having jurisdiction over the case involving a re hearing of the whole case with 40 witnesses to be examined and 226 documents to be exhibited.
The time which would have to be spent, the anxiety which the appellant would have to undergo, the expenses which he Would have to make in the matter of his defence by competent counsel and the possibility Which he would have to face of the Special Judge trying the same coming to a conclusion different 695 from the one which was reached by the learned Presidency Magistrate are all considerations which would have made us consider his case very sympathetically and try to find out ways and means whereby he would be saved these troubles and tribulations.
The words of section 10 of the impugned Act however are very clear and categorical and are not capable of being construed in any other manner except that all cases triable by the Special Judges which were pending immediately before the commencement of the impugned Act before any magistrate must be forwarded for trial to the Special Judge having jurisdiction over such cases, the magistrates having cognizance of the same and trying them being divested of jurisdiction to proceed further with the trial thereof immediately after the commencement of the Act.
The only persons who were invested with jurisdiction to try these cases after the commencement of the impugned Act were the Special Judges having jurisdiction over the same and whatever Was done by the magistrates thereafter was without jurisdiction and void.
The case of the appellant is unfortunate.
For ought we know the Special Judge trying him would acquit him of the offence with which he has been charged in the same manner as the learned Presidency Magistrate himself did, but there is no escape from the fact that he will have to face a re trial and undergo the expenses and anxiety in defending himself over again.
We have therefore come to the conclusion that the order for re trial of the appellant made by the High Court was correct and the appeal must be dismissed.
We hope and trust that the re trial before the Special Judge will be conducted with all possible dispatch and the trial will be concluded as early as possible.
The appeal will accordingly stand dismissed.
Appeal dismissed.
| The appellant and four others were being tried before the Presidency Magistrate, Bombay for charges under section 161 read with 116 and further read with section 109 or section 114 of the Indian Penal Code.
During the pendency of the trial the Criminal Law Amendment Act, 952 (XLVI Of 1952) was enacted by Parliament and came into force on July 28, 952.
The Act provided for the trial of all offences punishable under sections 161, 165 or 165 A, of the Indian Penal Code, or sub section
(2) Of section 5, of the Prevention of Corruption Act, 1947 exclusively by Special judges and directed the transfer of all such trials pending on the date of the coming (1) ; 679 into force of the Act to Special Judges.
The Presidency Magistrate continued the trial and acquitted the appellant.
Upon appeal by the State Government, the High Court held that from the date of the commencement of the Act the Presidency Magistrate lost all jurisdiction to continue the trial and ordered a retrial by the Special judge.
It was contended that the Act was void as it violated article 14 Of the Constitution and consequently could not affect the jurisdiction of the Presidency Magistrate to continue the trial.
Held, that the Act did not violate article 14 Of the Constitution.
The Legislature classified the offences punishable under sections 161, 165 or 165 A of the Indian Penal Code or sub section 2 Of section 5 of the Prevention of Corruption Act, 1947 in one group or category.
They were offences relating to bribery or corruption by public servants and were appropriately classified in one group or category.
The classification was founded on an intelligible differentia which distinguished the offenders thus grouped together from those left out of the group.
This intelligible differentia had rational relation to the object sought to be achieved by the Act, the object being to provide for speedier trials of the said offences.
Bribery and corruption having been rampant and the need for weeding them out having been urgently felt, it was necessary to enact the measure for the purpose of eliminating all possible delay in bringing the offenders to book.
The State of Bombay vs F. N. Balsara, (195I) S.C.R. 682, Budhan Chowdhary others vs The State of Bihar, (1955) S.C.R.1945 and Kedar Nath Bajoria vs The State of West Bengal, (1954) S.C.R 30, applied.
There is no doubt that the case of the appellant was not concluded and was pending before the Presidency Magistrate on July 28, 1952, the date of the commencement of the Act.
The fact that the Special judge was not appointed until September 26, 1952, on which date the arguments for the prosecution and the defence were concluded did not affect the position.
Even if it be assumed that the Act did not effectively commence until the Special judge was appointed by the notification of September 26, 1952, which came into effect immediately after the midnight of September 25, 1952, the trial of the appellant could not be said to have concluded before that, for a trial is not complete until either the sentence has been passed or the accused has been ordered to be discharged.
|
Summarize this legal judgement text concisely | o. 119 of 1955 with Petition for Special Leave to Appeal No. 140 of 1955.
Petition under Article 32 of the Constitution for the enforcement of fundamental rights and petition under Article 136 of the Constitution for `special leave to appeal from the judgment and order dated March 29, 1955, of the Bombay High Court in appeal No. 63 of 1954.
Hardayal Hardy and R.Jethmalani, for the petitioner.
C. K. Daphtary, Solicitor General of India, Porus A. Mehta and R. H. Dhebar, for the respondent.; 1957.
March 5.
The Judgment of the Court was delivered by SINHA J.
By this petition under article 32 of the Constitution and Petition No. 140 of 1955 for special leave to appeal from the judgment of the Bombay High Court dated March 29, 1955, in Appeal No. 63 of 1954 confirming that of a single Judge of that Court dated April 21, 1954, the petitioner challenges the constitutionality of the Bombay Land Requisition Act (Act XXXIII), 1948, hereinafter referred to as "The Act", and the enforceability 'of the order dated January 27, 1954, made by the Governor of Bombay in pursuance of section 6(4)(a) of the Act.
The petitioner is the widow of one Dharamdas Chellaram, who was a tenant of the premises in question.
The said Dharamdas Chellaram died in November 1953, leaving him surviving his widow and a daughter.
The petitioner alleged that she had been occupying the premises in question as a member of her husband 's family since 1938 and that the tenant aforesaid had at no material date ceased to occupy the premises.
She also alleged that one Narottam Das Dharamsey Patel was a mere lodger who war, occupying a portion of the premises by leave and licence of her husband.
The said Narottamdas had no interest 724 in the premises in question and had, as a matter of fact, vacated the portion in his occupation some time in the year 1953.
On behalf of the State of Bombay, the respondent, it has been stated on affidavit by the Accommodation Officer that it is not a fact that the petitioner resided in the premises in question and that the facts were that the said Dharamdas, the tenant, had vacated the premises in October 1952 and had handed over possession of the premises to the said Narottamdas Dharamsey Patel.
Hence it is alleged that it was not a fact that at the time of her husband 's death in November 1953 the petitioner was residing in the premises in question.
These facts had been stated before the High Court also on an affidavit made in opposition to the petitioner 's case in the High Court.
The petitioner 's grievance is that towards the end of January 1954 she found pasted on the outer door of the premises an order dated January 27, 1954, said to have been made by the Governor of Bombay and which is said to be the occasion for her moving the High Court of Bombay for a writ of mandamus against the State of Bombay to refrain from giving effect to the aforesaid Order.
The Order impugned is in these terms: "No. RA (1) M 13067 Office of the Controller of Accommodation, Jehangir Building, Mahatma Gandhi Road, Bombay, January 27, 1954.
Order Whereas, on inquiry it is found that the premises specified below had become vacant in the month of October 1952 ; Now, therefore, in exercise of the powers conferred by clause (a) of sub section (4) of section 6 of the Bombay Land Requisition Act, 1948 (Bombay Act XXXIII of 1948) the Government of Bombay is pleased to requisition the said premises for a public purpose, namely, for housing a Bombay State Government servant.
Premise,s Flat No. 3 on the 1st floor of the Building known as Hem Prabha situated at 68, Marine Drive, Bombay.
By order and in the name of Governor of Bombay.
" This Order was meant to be served on (1) Shri Hirabhai H. Patel, admittedly the landlord of the premises,(2) Shri Narottam Dharamsey Patel aforesaid, and (3) Shri Dharamdas Chellaram, who, as already indicated, was dead at the date the Order was made.
The petitioner challenged the validity of the Order of requisition set out above.
Her petition was heard by Tendolkar J. who by his judgment dated April 21, 1954, dismissed the same.
The petitioner moved this Court for an appropriate writ, direction or order under article 32 of the Constitution, challenging the vires of the Act, as also the legal efficacy of the Order impugned.
She also filed a petition praying for special leave to appeal from the judgment aforesaid of the Bombay High Court.
Both the matters have been heard together and will be governed by this judgment.
Before dealing with the contentions raised on behalf of the petitioner, it is convenient first to set out, in so far as it is necessary, the legislative history of the law impugned and its certain salient features which are relevant for purposes of this case.
This Act was passed by the Provincial Legislature of Bombay on April 11, 1948, on being empowered by the Governor General in exercise of powers conferred on him by section 104 of the Government of India Act, 1935.
Initially it was to remain in force until March 31, 1950.
But by the amending Act, Bombay Land Requisition (Amendment) Act, 1950 (Bombay Act No. 11 of 1950) published on March 28, 1950, its life was extended up to the end of March 1952.
By the amending Act, sections 8 A, 8 B and 9 A were added making substantial changes which need not be set out here, as they do not enter into the controversy.
The life of the Act was subsequently extended further, up to the end of December 1958.
By the Bombay Land Requisition (Second Amendment) Act, 1950 (Act XXXIX of 1950), the Act was further amended so as to substitute the words "the purpose of the State or any other public purpose" for the word,, "any purpose" in section 5 of the Act.
This was obviously done to satisfy the requirements of article 31 of the 726 Constitution.
Consequential changes were also made in sections 6 and 7 of the Act.
By section 6 of the amending Act it was provided that "The amendments made by this Act shall.
be deemed to have been and always to have been made with effect from the 26th January 1950. . . .
Thus the amendment was given retrospective operation.
The provisions of sections 5, 6 and 13 after the amendments aforesaid (omitting the portions not necessary for our purpose) are in these terms : "5.
(1) If in the opinion of the State Government it is necessary or expedient so to do, the State Government may by order in writing requisition any land for purpose, of the State or any other public purpose: Provided that no building or part thereof wherein the owner, the landlord or the tenant, as the case may be, has actually resided for a continuous period of six months immediately preceding the date of the order shall be requisitioned under this section.
(2)Where any building or part thereof is to be requisitioned under sub section (1), the State Government shall make such enquiry as it deems fit and make a declaration in the order of requisition that the owner, the landlord or the tenant, as the case may be, has not actually resided therein for a continuous period of six months immediately preceding the date of the order and such declaration shall be conclusive evidence that the owner, landlord or tenant has not so resided.
6.(1) If any premises situate in ail area specified by the State Government by notification in the Official Gazette, are vacant on the date of such notification and wherever any such premises are vacant or become vacant after such date by reason of the landlord, the tenant or the sub tenant, as the case may be, ceasing to occupy the premises or by reason of the release of the premises from requisition or by reason of the premises being newly erected or reconstructed or for any other reason the landlord of such premises shall give intimation thereof in the prescribed form to an officer authorised in this behalf by the State Government.
727 (4) Whether or not an intimation under sub section (1)is given and notwithstanding anything contained in section 5, the State Government may by order in writing (a) requisition the premises for the purpose of the State or any other public purpose and may use or deal with the premises for any such purpose in such manner as may appear to it to be expedient, or Provided that where an order is to be made under clause (a) requisitioning the premises in respect of which no intimation is given by the landlord, the State Government shall make such inquirv as it deems fit and make a declaration in the order that the promises were vacant or had become vacant, on or after the date referred to in sub section (1) and such declaration shall be conclusive evidence that the premises were or had so become vacant: Explanation For the purposes of this section, (a) premises which are in the occupation of the landlord, the tenant or the sub tenant, as the case may be, shall be deemed to be or become vacant when such landlord ceases to be in occupation or when such tenant or sub tenant ceases to be in occupation upon termination of his tenancy, eviction, assignment or transfer in any other manner of his interest in the premises or otherwise, notwithstanding any instrument or occupation by any other person prior to the date when such landlord, tenant or sub tenant so ceases to be in occupation; 13.(1) Every order made under sections 5, 6, 7, 8 A or 8 B or sub section (7) of section 9 or section 12 shall (a)if it is an order of a general nature or affecting a class of persons, be published in the mariner prescribed by rules made in this behalf (b)if it is an order affecting an individual, corporation, or firm, be served in the manner provided for the service of a summons in Rule 2 of Order XXIX or Rule 3 of Order XXX, as the case may be, in the First Schedule of the Code of Civil Procedure, 1908 ; 728 (c)if it is an order affecting an individual person other than a corporation or firm, be served on the person (i)personally, by delivering or tendering to him the order, or (ii) by post, or (iii) where the person cannot be found, by leaving an authentic copy of the order with some adult male member of his family or by affixing such copy to some conspicuous part of the premises in which he is known to have last resided or carried on business or worked for gain.
(2) Where a question arises whether a person was duly informed of an order made in pursuance of sections 5, 6, 7, 8 A or 8 B or, sub section (7) of section 9 or section 12 compliance with the requirements of subsection (1) shall be conclusive Proof that he was so informed; but failure to comply with the said requirements shall not preclude proof by other means that he was so informed, or affect the validity of the order.(Underlining ours). . . . . . .
At the outset it is necessary to state that the main grounds of attack against the constitutionality of the Act based on such fundamental rights as are recognised by articles 19(1)(f) and 31(2) of the Constitution must be overruled in view of the decision of the Constitution Bench of this Court in State of Bombau vs Bhanji Munji (1).
In that case this Court upheld the validity of the Act with reference to the provisions of the articles aforesaid of the constitution.
But the learned counsel for the petitioner contended that he attacked the vires of the Act on grounds other than those which had been specifically dealt with by this Court in the decision just referred to.
We now proceed to deal with those fresh grounds on their merits.
It was contended that the Act became invalid on January 26, 1950, inasmuch as it was in conflict with article 31(2) of the Constitution.
The Act was, therefore, as good as dead by the time Act 11 of 1950 extending the life of the Act was enacted as aforesaid.
The Act being void, its extension by Act II of 1950 was equally void, (1) [1955] 1 S.C.R. 777.
729 Similarly, it was further argued that the amendments effected by the amending Act II of 1950 and Act XXXIX of 1950 required the assent of the President and that as admittedly no such assent had been given, they had no effect as provided in article 31(3) of the Constitution.
This chain of submissions is founded on the admitted non compliance with the requirements of article 31(3).
It has not been contended that the Act when passed on April 11, 1948, was not good law.
It is also clear that the Act is not covered by the provisions of el.
(6) of article 31.
The Act is thus covered by the saving clause, el. 5(a), being an existing law other than a law to which the provisions of cl.
(6) apply.
The Act, therefore, would be valid even if the provisions of el.
(2) of article 31 are not in terms fully satisfied, in so far as the Act did not before its amendment by Act XXXIX of 1950 contain the expression "for a public purpose".
As already pointed out, this Court in the case of The State of Bombay vs Bhanji Munji (1) has laid it down that the Act was not invalid even after the commencement of the Constitution simply because it is not provided in express terms that the acquisition or requisition had to be for a public purpose, provided that from the whole tenor and intendment of the Act it could be gathered that the requisition was for a public purpose, and for the benefit of the community at large.
The amending Act only made explicit what had been left to be gathered from the whole tenor of the Act, as pointed out by this Court in the case cited above.
, The 'argument that the amending Acts, II of 1950 and XXXIX of 1950, required the assent of the President under el.
(3) of article 31 has, therefore, no force.
Act 11 of 1950, in so far as it affects the present controversy, only extended the life of the Act by two years and Act XXXIX of 1950 only made explicit what was not so in the Act as originally passed, and are not such laws as come within the purview of cl.
(3) of article 31 inasmuch as those Acts are merely an extension or explanatory of the substantive Act which is an existing ,law within the meaning of the Constitution.
Clause (3) (1) [1955] 1 S.C.R. 777.
91 730 of article 31 in terms applies to a law made by the legislature of a State, after the commencement of the Constitution; whereas the Act had been passed in its substantive form in April 1948.
Hence, there is no difficulty in holding that the Act which was good law before the commencement of the Constitution did not become void under article 13 of the Constitution, because there was nothing in the Act which was inconsistent with the provisions of Part III of the Constitution.
If the Act was good law after the commencement of the Constitution, it follows that the amendments aforesaid made in 1950, were equally good law, even though the assent of the President had not been obtained.
Secondly, the decision of this Court in The State of Bombay vs Bhanji Munji (1) (supra) itself has ruled to the contrary with reference to the provisions of article 31 (2).
We cannot, therefore, go back upon our decision in the case aforesaid.
On these considerations the petition under article
32 of the Constitution must fail on the ground that no fundamental rights of the petitioner as would entitle her to seek redress from this Court, have been contravened.
It remains to consider the other arguments advanced on behalf of the petitioner which have a bearing on the petition for special leave to appeal from the judgment of the Bombay High Court.
It has been contended that sections 5 and 6 of the Act quoted above and underlined by us have made certain matters conclusive, so that the High Court or even this Court could not go behind the order of the State Government holding that the tenant had not resided in the premises for a continuous period of six months immediately preceding the date of the order (section 5), or that the premises had become vacant in the month of October 1952, as stated in the Order impugned in this case.
It is contended that the legislature had, by making those provisions rendering those matters conclusively proved, impaired the powers of the High Court under article 226 and of this Court under article 32 of the Constitution.
Another branch of the argument is that the declaration of vacancy is dependent upon a collateral fact which has (1) [1955] 1 S.C.R. 777. 731 to be found by the Government on such enquiry as it may deem fit and proper and its conclusion on such a collateral fact could not be placed by the Act beyond scrutiny by the High Court or by this Court.
In this connection it was also argued that on the question of vacancy the finding of the State Government may be conclusive on the "factual aspect" but not on the "legal aspect" of the matter.
In other words, it was contended that it was still open to the courts to find whether the facts found constituted in law "vacancy" as defined in the Act.
In this connection strong reliance was placed on the following observations of the Judicial Committee of the Privy Council in the case of Hubli Electricity Co. Ltd. vs Province of Bombay(1) at pages 65 and 66: " The question what obligations are imposed on licensees by or under the Act is a question of law.
Their Lordships do not read the section as making the government the arbiter on the construction of the Act or as to the obligations it imposes.
Doubtless the government must, in expressing an opinion for the purpose of the section, also entertain a view as to the question of law.
But its view on law is not decisive.
If in arriving at a conclusion it appeared that the government had given effect to a wrong apprehension of the obligations imposed on the licensee by or under the Act the result would be that the Government had not expressed such an opinion as is referred to in the section.
" There are several answers to this contention.
In the first place, it is well settled that observations made with reference to the construction of one statute cannot be applied with reference to the provisions of another statute which is not in pari materia with the statute which forms the subject matter of the previous decision.
The Judicial Committee was dealing with the provisions of section 4(1) of the , which did not contain the words "conclusive evidence" or any words to that effect.
That decision of the Judicial Committee, if it can at all be applied to the Act now before us, is against the petitioner in so far as (1) [1948] L.R. 76 I.A. 57.
732 it has construed the words "opinion of the Provincial Government".
Those words or words of similar import appear in the beginning of section 5.
In the words of the Judicial Committee, those words signify the subjective opinion of the Government and not an opinion subject to objective tests.
The observations quoted above only show that on a proper construction of the provisions of the statute then before the Judicial Committee, the opinion of the Government, if it was made nonjusticiable, was confined to the question of whether there had been a willful and unreasonably prolonged default, but did not cover the question of the opinion of Government relating to the obligations imposed by the statute on the licensee, by or under the Act.
Hence those observations are absolutely of no assistance to the petitioner on the question of the full implication of the rule making certain matters "conclusive evidence" under the provisions of sections 5 and 6 of the Act.
This question appears to have been canvassed in a number of cases in the High Court of Bombay.
In the case of Jagatchandra vs Bombay Province( ') Tendolkar J. had ruled that the declaration made by the Government shall be conclusive evidence with regard to all facts involved in the determination of vacancy but that it was not conclusive with regard to the inferences to be drawn from or the legal consequences of such facts.
The correctness of that proposition was questioned in another case before another learned, Judge of that Court, Shah J., who referred it to be determined by a larger Bench.
Chagla C.J. and Gajendragadkar J. (now one of us) examined that question in some detail and overruled the decision of Tendolkar J. (Vide Mohsinali Mohomed Ali vs The State of Bombay(2).
The Bombay High Court in the last mentioned case held that on a declaration being made by the State Government that there was a vacancy, it was conclusive both as to the facts and the constituent elements of "vacancy", as understood under the Act.
The High Court relied in this connection on the observations of the Judicial (1) A.I.R. 1950 Bom.
(2) [1951] 53 Bom.
L.R. 94; A.I.R. 1951 Bom, 303.
733 Committee of the Privy Council in Moosa Goolam Ari vs Ebrahim Goolam Ariff(1) and of Lord Cairns in Peel 's case(2), and of Lord Parker of Waddington in Bowan vs Secular Society Ltd.(3).
In this connection the learned counsel for the petitioner also pressed in aid of his argument the well known distinction between the jurisdiction of a court or authority to decide a certain fact as one of the issues in the controversy and certain collateral facts on which the jurisdiction to determine the controversy could arise.
It was argued that the finding on the question of vacancy by the State Government was a "jurisdictional fact" in the sense that unless it was found that there was a vacancy, the jurisdiction of the State Government to make the declaration and to requisition the permises could not arise.
This aspect of the matter has been considered by this Court in the case of Rai Brij Raj Krishna vs section K. Shau & Brothers(4).
That case concerned the construction of the provisions of the Bihar Buildings (Lease, Rent and Eviction) Control Act (Bihar Act 111) of 1947.
This Court held that, the Controller had been vested with the jurisdiction to determine all questions including the question whether or not there was non payment of rent and on finding that there was default in the payment of rent, with the jurisdiction to order eviction of the tenant.
The finding of the question of default was not a jurisdictional finding in the sense in which learned counsel for the petitioner asks us to hold with reference to the finding of the State Government in this case that there has been a vacancy.
In the reported case this Court held further that even if the Controller had wrongly decided the question of default in the payment of rent, his effective order oil the question of eviction could not be challenged in a court of law.
Mr. Justice Fazl Ali delivering the judgment of the court made reference to the well known observations of Lord Esher, M.R. in the case of Queen vs Commisssioners for Special Purposes of the Income tax(") and to (1) [1912] L.R 39 I.A. 237.
(2) (3) (4) ; (5) , 319.
734 the observations of the Privy Council in the case of the Colonial Bank of Australasia vs Willan(1).
After referring to those observations and to the provisions of the statute then before the Court, this Court held that the Act empowered the Controller alone to decide whether or not there was 'non payment of rent and that decision was essential to his order for eviction of the tenant under section 11.
That decision of the Controller, the Court further held, could not be challenged in a court of law.
The decision of this Court just referred to is an apt illustration of the rule which applies with equal force to the provisions of the Act now before us.
The Act has made a specific provision to the effect that the determination on the questions referred to in sections 5 and 6 of the Act by the State Government shall be conclusive evidence of the declaration so made.
But that does not mean that the jurisdiction of the High Court under article 226 or of this Court under article 32 or on appeal has been impaired.
In a proper case the High Court or this Court in the exercise of its special jurisdiction under the Constitution has the power to determine how far the provisions of the statute have or have not been complied with.
But the special powers aforesaid of this Court or of the High Court cannot extend to reopening a finding by the State Government under section 5 of the Act that the tenant has not actually resided in the premises for a continuous period of six months immediately preceding the date of the order or under section 6 that the premises bad become vacant at about the time indicated in the order impugned.
Those are not collateral matters which could on proper evidence be reopened by the courts.
of law.
The legislature in its wisdom has made those declarations conclusive and it is not for this Court to question that wisdom.
As an offshoot of the argument that we have just been examining it was contended on behalf of the petitioner that Explanation (a) to section 6 quoted above contemplates a vacancy when a tenant omitting other words not necessary) " ceases to be in occupation upon (1) [1874]5 P.C. 417,443.
735 termination of his tenancy, eviction, or assignment or transfer in any other manner of his interest in the premises or otherwise ".
The argument proceeds further to the effect that in the instant case admittedly there was no termination, eviction, assignment or transfer and that the words " or otherwise " must be construed as ejusdem generis with the, words immediately preceding them: and that therefore on the facts as admitted even in the affidavit filed on behalf of the Government there was in law no vacancy.
In the first place, as already indicated, we cannot go behind the declaration made by the Government that there was a vacancy.
In the second place, the rule of ejusdem generis sought to be pressed in aid of the petitioner can possibly have no application.
The legislature has been cautious and thorough going enough to bar all avenues of escape by using the words " or otherwise ".
Those words are not words of limitation but of extension so as to cover all possible ways in which a vacancy may occur.
Generally speaking, a tenant 's occupation of his premises ceases when his tenancy is terminated by acts of parties or by operation of law or by eviction by the landlord or by assignment or transfer of the tenant 's interest.
But the legislature, when it used the words " or otherwise ", apparently intended to cover other cases which may not come within the.
meaning of the preceding clauses, for example, a case where the tenant 's occupation has ceased as a result of trespass by a third party.
The legislature, in our opinion, intended to cover all possible cases of vacancy occurring due to any reasons whatsoever.
Hence, far from using those words ejusdem generis with the preceding clauses of the explanation, the legislature used those words in an all inclusive sense.
No decided case of any court, holding that the words "or otherwise" have ever been used in the sense contended for on behalf of the petitioner, has been brought to our notice.
On the other hand, by way of illustration of decisions to the contrary may be cited the case of Skinner & Co. vs Shew & Co. (1).
In that case the Court of Appeal (1) [1893] 1 Ch.
D 4I3, 736 had to consider the words of section 32 of the Patents Designs & Trade Marks Act, 1883 (46 & 47 Vict.
c. 57), to the following effect: "Where any person claiming to be the patentee of any invention, by circulars, advertisements or otherwise threatens any other person With any legal proceedings. .
Their Lordships repelled the contention that the words "or otherwise" occurring in that section had to be read ejusdem generis with "circulars", and "advertisements".
They observed that by so doing they will be cutting down the intendment of the provisions of the statute when clearly the word,,; "or otherwise" had been used with a contrary intention.
The rule of ejusdem generis is intended to be applied where general words have been used following particular and specific words of the same nature on the established rule of construction that the legislature presumed to use the general words in a restricted sense; that is to say, as belonging to the same genus as the particular and specific words.
Such a restricted meaning has to be given to words of general import only where the context of the whole scheme of legislation requires it.
But where the context and the object and mischief of the enactment do not require such restricted meaning to be attached to words of general import, it becomes the duty of the courts to give those words their plain and ordinary meaning.
In our opinion, in the context of the object and mischief of the enactment there is no room for the application of the rule of ejusdem generis.
Hence it follows that the vacancy as declared by the order impugned in this case, even though it may not be covered by the specific words used, is certainly covered by the legal import of the words "or otherwise".
The only other contention which remains to be dealt with is that the order impugned in this case is not enforceable because it was directed against the petitioner 's husband, who was dead at the date of the order, besides the other two persons indicated in it who were not concerned with the premises.
In our opinion, there is no substance in this contention either.
An order like the one passed under section 6(4)(a) of the Act 737 is not in the nature of an order in judicial proceedings between the Government on the one hand and other parties named.
If the proceedings were intended by the Act in the sense of judicial or quasi judicial proceedings between named parties, it may have been legitimately argued that an order passed against a dead man is a complete nullity.
But the order proceeds on the basis that the tenant had ceased to be in occupation of the premises in October 1952, apparently by reason of the fact that he had handed over possession of the premises to the so called "lodger" or "paying guest".
Admittedly the petitioner 's husband died after October 1952.
The occupation by the said Narottamdas Dharamsey Patel was in the nature of an unauthorised occupation.
The fact that the petitioner 's husband was dead on the date of the order impugned has only this effect that in so far as it mentions his name as one of the persons to be served under section 13 of the Act should be erased from the order But even so, it does not affect the enforceability of the same.
section 13 lays down the different modes of service of an order passed under the Act according as the order is of a general nature or affecting a class of persons or an individual, corporation or firm.
We are here concerned with the case of an individual and the section lays down that it can be served either personally by delivering or tendering the order to him or by post or where he cannot be found, by affixing a copy of the order to some conspicuous part of the premises in which he is known to have last resided.
As the petitioner 's husband had died before the date of the order impugned, it could affect only the so called "lodger" who had been, on the findings, left in occupation of the premises after October 1952.
He has not made any complaint about non service.
The only other person who could be affected by the order, if at all, is the petitioner herself.
She has admitted that she came to know of the order in question at about the time it had been made, because she found a copy of the order affixed at the outer door of the premises.
Thus admittedly, the petitioner had timely notice of 95 738 the order impugned.
Hence in the instant case there is no need to apply the rule of conclusive proof as laid down in sub section
(2) of section 13.
In any event, as the concluding words of the section have provided, any irregularity or failure to comply with the requirements of the section cannot "affect the validity of the order".
As all the grounds urged in support of the petitions fail, they are dismissed with costs, one set.
Petitions dismiss`ed.
| By these two petitions, the petitioner challenged the constitutional validity of the Bombay Land Requisition Act, 1948, as amended by the two amending Acts of 1950, and the enforceability of an order of requisition made by the Governor of Bombay under section 6 (4) (a) of the Act.
The petitioner as the widow of the tenant claimed to be in possession, while the case made on behalf of the Government was that the tenant had before his death vacated the premises and handed over possession to a lodger.
A copy of the order of requisition was affixed to the premises and the petitioner moved the High Court for a writ of mandamus, but the petition was dismissed.
The Act was passed by the State Legislature on April 11, 1948, and by the first amending Act its life was extended for two years and by the second the words " the purpose of the State or any other public purpose" were substituted for the words ,,any purpose" occurring in section 5 of the Act with retrospective effect from the date of the Constitution.
The Act came up for consideration in a previous decision of this Court and arguments were confined to grounds other than those specifically covered by that decision.
It was contended on behalf of the petitioner that the Act was in conflict with article 3I (2) and became invalid at the commencement of the Constitution and the amending Acts, for which the assent of the President had admittedly not been obtained, were ineffective under article 31 (3) of the Constitution.
It was further contended that sections 5 and 6 of the Act which made the relevant findings of the Government conclusive had the effect of impairing the powers of the Court, that it was nevertheless open to the Court to judge whether the facts found constituted vacancy in law and, lastly that the order in question was ineffective as the tenant was dead on the date it was made.
Held, that the contentions raised on behalf of the petitioner must be negatived.
93 722 The constitutional validity of the Act was no longer open to question under articles 19 (1) (f) and 31 (2) of the Constitution in view of the decision of this Court in State of Bombay vs Bhanji Munji (1955) 1 S.C.R. 777.
The Act, which did not obviously come within the mischief of cl.
(6) of article 31, fell within the saving clause, cl. 5 (a), of the Article and was an existing law within the meaning of the Constitution and, therefore, valid at the commencement of the Constitution, although it did not contain the expression " for a public purpose " as required by cl.
(2) of the Article.
Clause (3) of the Article, which in terms applied to laws made after the commencement of the Constitution, had no application to the amending Acts which were in no way concerned with the main substantive provisions of the Act already passed, and the want of the President 's assent in no way affected their validity.
As the Act was valid at the commencement of the Constitution and continued to be so thereafter, not being in any way inconsistent with the provisions of Part III of the Constitution so as to attract the operation of article 13, the Amending Acts were equally valid in law.
Held further, that although in a proper case the High Court or this Court in the exercise of their special jurisdictions under the Constitution had power to determine how far the provisions of the Act had or had not been complied with, the finding of the State Government under section 5 Of the Act that the tenant had not actually resided in the premises for a continuous period of six months immediately preceding the date of the order,and that under s.6, the premises had become vacant at about the time indicated in the order, are conclusive and not collateral so as to be liable to be re opened and could not, therefore, be questioned either in this Court under article 32 or in the High Court under article 226 of the Constitution.
Rai Brij Raj Krishna vs section K. Shaw, ; applied.
Hubli Electricity Co. Ltd. vs Province of Bombay, (1948) L.R. 76 I.A. 57, held inapplicable.
Mohsinali Mohomed Ali vs The State of Bombay, (1951) 53 Bom.
L.R. 94: A.I.R. 1951 Bom.
303, referred to.
The words " or otherwise " occurring in explanation (a) to section 6 of the Act could not be construed as ejusdem generis with the words immediately preceding them and must be held to cover all possible cases of vacancy due to any reason whatsoever.
Skinner & Co. vs Shaw & Co., (I893) , referred to.
An order of requisition passed under section 6 (4) (a) of the Act was not of the nature of an order passed in a judicial proceeding and the death of one of the parties could not make it wholly ineffective, the only consequence being that his name as one of 723 the parties to be served under section 13 Of the Act must be removed from the order.
|
Summarize this legal judgement text concisely | Appeal No. 132 of 1954.
Appeal by special leave from the judgment and order dated April 30, 1953, of the Circuit Bench of the Punjab High Court at Delhi in Civil Writ Application No. 314 of 1952.
Ram Lal Anand and section N. Anand, for the appellant.
R.Ganpathy Iyer and R. H. Dhebar, for respondent No. 1.
A.N. Grover and K. L. Mehta, for the respondent No. 2. 1957.
March 7.
The Judgment of the Court was delivered by IMAM J.
The respondent Jagan Nath filed a petition under article 226 of the Constitution in the Punjab High Court which was allowed.
The High Court ordered the respondent The Union of India and the appellant Sohan Lal to forthwith restore possession of house No. 35 situated in West Patel Nagar, Delhi to Jagan Nath.
Against this order of the High Court the appellant applied for and obtained special leave to appeal to this Court.
Jagan Nath is a displaced person and a refugee from Pakistan.
The Government of India had devised various schemes for the rehabilitation of refugees.
One 740 of these was a scheme for sale of certain houses constructed by the Government of India for refugees in West Patel Nagar.
It was not intended under the scheme to entertain applications from displaced persons who had already been allotted agricultural land in East Punjab.
A limited number of houses known as 'box type tenements" were constructed.
According to he procedure prescribed in order to give effect to the scheme, only those displaced persons, who were registered before the 15th of August, 1948, and were gain fully employed, were eligible for allotment of a house.
A displaced person wishing to apply for allotment of a house was required to submit an application in the prescribed form offering to purchase a house in West Patel Nagar.
If the applicant was prima facie eligible, he could be instructed to deposit the sale price of the house in the treasury, his eligibility to be verified later on Permission to deposit the sale price did not mean that his eligibility had been accepted.
After payment of the sale price the applicant could be required to produce proof of his eligibility.
A list would be prepared of all the applicants who had deposited the sale price and whose eligibility had been verified.
If the number of the applicants was in excess of the available number of houses, those, whose treasury challans bore a later date, would be excluded and their money refunded.
The applicants whose names were included in the final list would be required to pay the ground.
rent by a specified date.
A particular house would be allotted to an applicant by drawing lots.
Jagan Nath had got himself registered as a refugee on December 31, 1947.
He had made his application in the prescribed form.
He had deposited the sum of Rs. 5,600 as the sale price after his prima facie eligibility had been accepted.
He had also deposited the ground rent for the plot on which the house had been built, having been informed previously that it had been decided to allot him a two roomed enclosed verandah "box type" house in West Patel Nagar.
He was informed that the allotment of a particular house would be decided by drawing lots at site on February 15, 1952, at 3 p.m.
As the result of the drawing of lots, house No. 35, the 741 property in dispute in this appeal, fell to his lot.
According to Jagan Nath, on May 10, 1952, the Accommodation Officer in his absence removed the members of his family along with his entire belongings to the house in dispute in a truck and he and his family thus entered into possession of the house in dispute.
Jagan Nath, however, was evicted from the house in dispute on September 27, 1952, by virtue of a warrant of eviction dated September 11, 1952, purporting to have been issued under section 25 of Ordinance III of 1952.
After his eviction,possession of the house in dispute was given to the appellant on October 3, 1952.
The appellant, who is also a displaced person, had applied on February 27, 1952, for allotment of a house in West Patel Nagar.
He had made the deposit of Rs. 5,600 as sale price and had apparently complied with all the necessary conditions for allotment of a house to him and the house in dispute was allotted to him on July 31, 1952.
The appellant has been in possession of the disputed house since October 3, 1952.
The appellant 's main contention has been that, having regard to the circumstances of 'the case, the High Court erred in making the order it did which presumably purported to be in the nature of a writ of mandamus.
There was a serious dispute on questions of fact between the parties and also whether Jagan Nath had acquired in law any title to the property in dispute.
Proceedings by way of a writ were not appropriate in a case where the decision of the Court would amount to a decree declaring Jagan Nath 's title and ordering restoration of possession.
The proper remedy open to Jagan Nath was to get his title declared in the ordinary way in a Civil Court.
The alternative remedy of obtaining relief by a writ of mandamus or an order in the nature of mandamus could only be had if the facts were not in dispute and Jagan Nath 's title to the property in dispute was clear.
It was further contended on behalf of the appellant that a writ of mandamus or an order in the nature of mandamus could not be made against the appellant, a private individual.
He had come into lawful possession and there was no evidence of collusion 742 between him and the Union of India and there was no finding by the High Court that the appellant had acted in collusion with the Union of India as a result of which Jagan Nath was dispossessed of the property in dispute and the same was allotted to him.
On behalf of Jagan Nath, it was urged that when he entered into possession of the property in dispute he did not do so as a trespasser.
He had been inducted on the property by the Accommodation Officer.
He could not have been illegally evicted.
section 3 of the Public Premises (Eviction) Act, 1950 (Act No. XXVII of 1950), required a notice to be served upon him directing him to vacate the premises within 15 days from the date of the service of the notice upon him before he could be evicted.
This was not done and he had been evicted without complying with the mandatory provisions of a. 3 of the said Act.
His eviction was a high handed act of the Government without any legal justification whatsoever.
The Union of India which had illegaly evicted him should be ordered to restore possession of the property in dispute to him and as the eviction was at the instance of the appellant, he should also be directed to restore possession of the said property to Jagan Nath.
Reliance was placed upon certain decisions of the High Courts of Punjab in Khushal Singh vs Shri Rameshwar Dayal, Deputy Commissioner, Delhi (1), Hyderabad in G. Kistareddy vs Commr.
of City Police, Hyderabad (2) and Pepsu in Mohinder Singh vs State of Pepsu (1), as well as certain observations in the judgment of this Court in the case of Wazir Chand vs The state of Himachal Pradesh (4) in support of the proposition that, as Jagan Nath was in possession and he had been illegally evicted, he was entitled to have property, from which he had been illegally evicted, restored to him.
We do not propose to enquire into the merits of the rival claims of title to the property in dispute set up by the appellant and Jagan Nath.
If we were to do so, we would be entering into a field of investigation which is more appropriate for a Civil Court in a properly constituted suit to do rather than for a Court exercising (1) I.L.R. [1954] Punjab 211.
(2) A.I.R. (3) (4) ; S.C.R. 743 the prerogative of issuing writs.
There are questions of fact and law which are in dispute requiring determination before the respective claims of the parties to this appeal can be decided.
Before the property in dispute can be restored to Jagan Nath it will be necessary to declare that he had title in that property and was entitled to recover possession of it.
This would in effect amount to passing a decree in his favour.
In the circumstances to be mentioned hereafter, it is a matter for serious consideration whether in proceedings under article 226 of the Constitution such a declaration ought to be made and restoration of the property to Jagan Nath be ordered.
Jagan Nath had entered into a transaction with the Union of India upto a certain stage with respect to the property in dispute, but no letter of allotment had been issued him.
Indeed, he had been informed, when certain facts became known, that the property in question could not be allotted to him as he was a displaced person who had been allotted land in East Punjab.
As between Jagan Nath and the Union of India it will be necessary to decide what rights were acquired by the former in the property upto the stage when the latter informed Jagan Nath that the property would not be allotted to him.
Another question for decision will be whether Jagan Nath was allowed to enter into possession of the property because it was allotted to him or under a misapprehension as the Union of India was misled by the contents of his application.
The case of the Union of India is that under the scheme Jagan Nath was not eligible for allotment of a house in West Patel Nagar, as it was subsequently discovered that he had been allotted, previous to his application, agricultural land in the District of Hissar.
Being satisfied that Jagan Nath was not eligible for allotment, the Union of India refused to allot to him the tenement No. 35, West Patel Nagar and allotment of that house was made to the appellant who was found to be eligible in every way.
The appellant was accordingly given possession of the property after Jagan Nath 's eviction.
The appelant had complied with all the conditions imposed by 744 the Union of India and a letter of allotment was actually issued to him and he entered into possession of the property in dispute under the authority of the Union of India.
Did the appellant thereby acquire a legal right to hold the property as a against Jagan Nath? In our opinion, all these questions should be decided in a properly constituted suit in a Civil Court rather than in proceedings under article 226 of the Constitution.
The eviction of Jagan Nath was in contravention of the express provisions of section 3 of the Public Premises (Eviction) Act.
His eviction, therefore, was illegal.
He was entitled to be evicted in due course of law and a writ of mandamus could issue to or an order in the nature of mandamus could be made against the Union of India to restore possession of the property to Jagan Natb from which he had been evicted the property was still in the possession of the Union of India.
The property in dispute, however, is in possession of the appellant.
There is no evidence and no finding of the High Court that the appellant was in collusion with the Union of India or that he had knowledge that the eviction of Jagan Nath was illegal.
Normally, a writ of mandamus does not issue to or an order in the nature of mandamus is not made against a private individual.
Such an order is made against a person directing him to do some particular thing, specified in the order, which appertains to his office and is in the nature of a public duty (Halsbury 's Laws of England Vol.
11, Lord Simonds Edition, p. 84).
If it had been proved that the Union of India and the appellant had colluded, and the transaction between them was merely colourable, entered into with a view to deprive Jagan Nath of his rights, jurisdiction to issue a writ to or make an order in the nature of mandamus against the appellant might be said to exist in a Court.
We have not been able to find a direct authority to cover a case like the one before us, but it would appear that so far as election to an office is concerned, a mandamus to restore, admit, or elect to an office will not be granted unless the office is vacant.
If the office is in fact full, proceedings must be taken by way of injunction or election petition to oust the party.
in 745 possession and that a mandamus will go only on the supposition that there is nobody holding the office in question.
In R. vs Chester Corporation (1) it was held that it is an inflexible rule of law that where a person has been de facto elected to a corporate office, and has accepted and acted in the office, the validity of the election and the title to the office can only be tried by proceeding on a quo warranto information.
A mandamus will not lie unless the election can be shown to be merely colourable.
We cannot see why in principle there should be a distinction made between such a case and the case of a person, who has, apparently, entered into bona fide possession of a property without knowledge that any person had been illegally evicted therefrom.
In our opinion, the High Court erred in allowing the application of Jagan Nath filed under article 226 of the Constitution and making the order it did.
The appeal is accordingly allowed and the order of the High Court is set aside.
In the circumstances of the present case, however, we are of the opinion that each party should bear his own costs in this Court and in the High Court.
Appeal allowed.
| J, a displaced person, was found Prima facie entitled to allotment of a house and the Accommodation Officer moved his family into the house on May 10, 1952, but no letter of allotment was issued to him.
Later, when certain facts became known which in the opinion of the Union of India disentitled j to the allotment, he was informed that the house could not be allotted to him.
j was evicted from the house on September 27, 1952, without being given 15 days notice as required by section 3 of the Public Premises Eviction Act (XXVII of 1950).
The house was then allotted to S and he was given possession on October 3, 1952.
J filed a petition under article 226 of the Constitution in the High Court.
The High Court ordered the Union of India and also S to restore possession of the house to J. S appealed.
Held, that the High Court erred in issuing the writ of mandamus.
There was a serious dispute on questions of fact between the parties and also whether j had acquired any title to the property in dispute.
Proceedings by way of a Writ were not appropriate in a case where the decision of the Court would amount to a decree declaring a party 's title and ordering restoration of possession.
The proper remedy in such a case is by way of a title suit in a Civil Court.
The alternative remedy of obtaining relief by a 739 writ of mandamus or an order in the nature of mandamus could only be had if the facts were not in dispute and the title to the.
property in dispute was clear.
As the eviction of J was illegal on account of the failure to give him notice under section 3 Of the Public Premises Eviction Act a writ of mandamus might have issued to the Union if the property had still been in its possession.
But no such writ could issue to S as, normally, it does not issue to a private individual.
If it had been proved that the Union and S had colluded, and the transaction between them was merely colourable, entered into with a view to deprive J of his rights, jurisdiction to issue the writ might be said to exist in the Court.
The writ however could not issue to S who had, apparently, entered into bona fide possession of the house without knowledge that J had been illegally evicted therefrom.
R. vs Chestey Corporation, , applied.
|
Summarize this legal judgement text concisely | minal Appeal No. 130 of 1955.
I Appeal under Article 134 (1) (C) of the Constitution of India from the judgment and order dated March 11, 1955, of the Allahabad High Court (Lucknow Bench) at Lucknow in Criminal Revision No. 60 of 1954 arising out of the judgment and order dated February 21, 1954, of the Sessions Judge at Gonda in Criminal Appeal No. 292 of 1953.
G.C. Mathur and C. P. Lal, for the appellant.
March 26.
The Judgment of the Court was delivered by IMAM J.
This is an appeal by the State of Uttar Pradesh against the decision of the Allahabad High Court on a certificate granted by that Court that the case was a fit one for appeal to this Court, 771 The undisputed facts are that one Mohammad Yasin was prosecuted under section 379, Indian Penal Code.
He was released on bail.
The respondent along with one Ram Narain stood surety for him, having executed surety bonds under section 499 of the Code of Criminal Procedure, undertaking to produce the accused Yasin before the Court to answer the charge and to forfeit Rs. 500 each to King Emperor Qaisar e Hind as a, penalty if they failed to do so.
Yasin absconded; All attempts to secure his presence before the Court were of no avail.
Consequently notices were issued under section 514 of the Code of Criminal Procedure to the sureties to show cause why their bonds should not be forfeited.
The Magistrate ' after giving the matter his consideration, ordered their bonds to be forfeited to the extent of Rs. 300 each.
The respondent appealed to the Sessions Judge of Gonda who dismissed his appeal.
Dissatisfied with the orders of the Magistrate and the Sessions Judge, the respondent filed a criminal revision in the High I Court and Mulla J. allowed his application and set aside the order of the Magistrate forfeiting the bond executed by him.
At the request of the Government Advocate the learned Judge granted the requisite certificate by virtue of which the present appeal is before us.
The only question for consideration is whether the bond executed by the respondent was one under the Code of Criminal Procedure and therefore capable of being forfeited in accordance with the provisions of section 514, Criminal Procedure Code.
Section 499 of the Code, requires that before any person is released on bail or released on his own bond, a bond for such sum of money as the police officer or Court, as the case may be, thinks sufficient shall be executed by such person, and, when he is released on bail, by one or more sufficient sureties conditioned that such person shall attend at the time and place mentioned in the bond, and shall continue so: to attend until otherwise directed by the police officer or Court, as the case may be.
In Schedule V of the Code of Criminal Procedure various forms are set out and a. 555 of the Code provides that ,subject to the power conferred by section 554 and by 772 article 227 of the Constitution, the forms set forth in that Schedule, with such variation as the circumstances of each case require, may be used for the respective purposes therein mentioned, and if used shall be sufficient.
Form XLII of that Schedule sets forth the contents of a bond to be executed by an accused and his surety.
The bond is in two parts one part to be signed by the accused and the other part to be signed by his surety or sureties.
Both the accused and the sureties in executing such a bond guarantee the attendance of the accused in Court whenever called upon to answer the charge against him and in case of default also bind themselves to forfeit to Government the specified sum of money mentioned therein.
This is what the bond should state since the Adaptation of Laws Order, 1950, dated January 26, 1950. 'Previous to that Order the word Government did not appear in the bond.
By virtue of cl. 4 of the said Order, whenever an expression mentioned in column 1 of the Table thereunder occurred (otherwise than in a title or preamble or in a citation or description of an enactment) in an existing Central or Provincial Law whether an Act, Ordinance or Regulation mentioned in the Schedules to the Order, then unless that expression was by the Order expressly directed to be otherwise adapted or modified, or to stand unmodified, or to be omitted, there shall be substituted therefor the expression set opposite to it in column, 2 of the said Table.
In column 1 of the Table the words " Crown " " Her Majesty " and " His Majesty " appear and against them in column 2 the word 'Government" appears.
The plain reading of this clause is that wherever the words " Crown ", "Her Majesty " or " His Majesty " appear, for them, the word " Government " shall be substituted in the existing Central or Provincial Laws mentioned in the First Schedule to the Order.
The Code of Criminal Procedure is one of the Central Laws mentioned in the said Schedule wherein Schedule V of the Code of Criminal Procedure is mentioned and the Order directs that throughout Schedule V of the Criminal Procedure Code, except where otherwise provided, for the words " Her Majesty The Queen 773 and "His Majesty The King" the word "Government" shall be substituted.
Previous to the Adaptation of Laws Order, 1950, there was the Adaptation of Laws Order, 1948 and the words "Empress of India" appearing in the bond were repealed and in place thereof the, words " Her Majesty the Queen " were substituted.
India attained Dominion status in 1947 and became a Republic in 1950.
The Adaptation of Laws Order, 1948 and that of 1950 were consequential upon the change of status of India into a Dominion and then into a Sovereign Republic.
Since January 26, 1950, therefore, no bond executed in favour of the Empress of India could be said to be a bond executed under the Code of Criminal Procedure.
The bond which the respondent had executed was to forfeit to the King Emperor a certain sum of money if he made default in procuring the attendance of the accused before the court.
He did not execute a bond by which he bound himself to forfeit the said sum either to the Government of the Union of India or that of the State of Uttar Pradesh.
The bond executed: by him in 1953 was a bond unknown to the law of the Republic of India under the Code of Criminal Procedure at the time of its execution.
Section 514 of the Criminal Procedure Code empowers a court to forfeit a bond which has been executed under the provisions of that Code and since the bond executed by the respondent is not one under the Code of Criminal Procedure, resort could not be had to the provisions of section 514 of the Code to forfeit the same.
It was, however, urged on behalf of the State that under cl. 4 of the Adaptation of Laws Order, 1950, the form of the bond stood amended by the substitution of the word "Government" therein in place and stead of the words "Her Majesty The Queen" and the bond should be read accordingly.
The words King Emperor Qaisar e Hind must be deemed as no longer existing in the forfeited bond.
Clause 4 of the Order, however, directs that the word "Government" shall be substituted for the words " Crown ", " Her Majesty " and " His Majesty ".
There is no mention therein of the words King Emperor or Emperor of India, Queen Empress or Empress of India or Qaisar e Hind as being so 774 substituted.
The words King Emperor Qaisar e Hind in the bond executed by the respondent cannot therefore be read, by virtue of cl. 4 of the Order, to mean Government.
There has undoubtedly been some error, carelessness or negligence on the part of those on whom a duty lay to make the necessary changes in the phraseology of the bond set out in Schedule V of the Code of Criminal Procedure to be executed under section 499.
The fact, however, remains that the respondent had not bound himself either to the Government of the Union of India or that of the State of Uttar Pradesh to have his bond forfeited on his failure to produce the accused before the court and he is entitled to say that no order of forfeiture could be passed against him with respect to a bond which was not one under the Code and which was one unknown to the law, as contained in the Code, at the, time of its execution.
The objection raised by the respondent to the order forfeiting the bond executed by him is a substantial one and the said order was made under a, misapprehension that it could be made under section 514 of the Code of Criminal Procedure.
The appeal is accordingly dismissed.
Appeal dismissed.
| In 1953 the respondent executed a surety bond undertaking to produce, the accused before the Magistrate and to forfeit Rs. 500 to King Emperor, Qaisar e Hind as penalty if he failed to do so.
Upon his failure to produce the accused, the Magistrate forfeited the bond to the extent of Rs. 300.
The contention of the respondent was that the bond not being in favour of the Government, could not be forfeited.
Held, that the bond was a bond unknown to the law of the Republic of India under the Code of Criminal Procedure at the time of its execution and could not be forfeited.
The respondent did not execute a bond by which he bound himself to forfeit the said sum either to the Government of the Union of India or that of the State of Uttar Pradesh.
To ' be a valid bond, the undertaking should have been to forfeit to the Government and not to the King Emperor.
The words King Emperor Qaisar e Hind in the bond executed by the respondent could not be read, by virtue Of cl. 4 of the Adaptation of Laws Order, 1950, to mean Government.
|
Summarize this legal judgement text concisely | ivil Appeal No. 232 of 1955.
Appeal under Article 132 (1) of the Constitution of India from the Judgment and Order dated November 24, 1954, of the former Travancore Cochin High Court in Original Petition No. 53 of 1954.
T.N. Subramania Iyer and R. Ganapathy Iyer, for the appellant.
K.S. Krishnaswamy Iyengar and Sardar Bahadur, for the respondent.
April 2.
The Judgment of the Court was delivered by BHAGWATI J.
This appeal with a certificate of fitness under article 132 (1) of the Constitution is directed against the order of the High Court of Travancore Cochin dismissing the Original Petition No. 53 of 1954 filed by the appellant under article 226 for quashing the order of the Sales Tax Officer, 2nd Circle, Quilon, assessing him to sales tax on a net assessable turnover of Rs. 7,54,144 8 4 for the year 1951 52 (1st April, 1951 to 31st March, 1952) and for issuing proper directions to the Sales Tax Authorities to assess the same according to law.
The appellant is a registered manufacturer of cocoanut oil and cake who has obtained a certificate of registration in Form VI as per sub r.
(i) of r. 20 of the Travancore Cochin General Sales Tax Rules, 1950.
The business of the appellant for the purposes of this appeal consisted in the ' purchase of copra, manufacture of cocoanut oil and cake and sale of the same to parties inside the State of Travancore Cochin and sale of the oil to parties outside the State.
In the year 1951 52, the appellant purchased copra of the value of Rs. 7,16,048 1 4 and after manufacturing oil therefrom in his oil mills he sold the oil partly in the State and partly outside the State and the cake 839 entirely within the State.
, The total value of the oil sold was Rs. 6,76,719 0 11 out of which the sales outside the State were of the value of Rs. 3,67,816 10 1 and the value of the cake sold in the State was Rs. 67,155 155.
The total gross turnover of the appellant was thus Rs. 14,59,923 1 8 and he claimed to deduct therefrom the whole of the purchase price of the copra under r. 7 (1) (k) read with r. 20.
The net turnover according to him was therefore only Rs. 7,43,875 0 4 and he claimed to deduct out of this a further sum of Rs. 3,67,816 10 1 being the sale price of oil in inter State transactions which could not be taxed under article 286 of the Constitution, thus showing a net assessable turnover of only Rs. 3,76 058 6 3.
The Sales Tax Officer, 2nd Circle, Quilon, however fixed the net assessable turnover of the appellant at Rs. 7,54,144 8 4.
He took the purchase value of the copra at Rs. 7,16,048 1 4 but added thereto Rs. 3,08,902 6 10 and Rs. 67,155 15 5 being the respective values of the oil and the cake sold inside the State, excluding the sale price of inter State sales of oil, namely, Rs. 3,67,816 10 1, from such computation.
Having thus excluded the sale price of inter State sales of oil, he deducted only the value of the copra corresponding to the oil sold inside the State namely, Rs. 3,35,216 0 0, as against the sum of Rs.7,16,048 1 4 deducted by the appellant.
He added a sum of Rs. 3,385 0 3 being the price of gum sold by the appellant and deducted a further sum of Rs. 6,130 15 6 being the sales tax collected by him.
He thus arrived at the net assessable turnover of Rs. 7,54,144 8 4 and assessed the appellant for sales tax on the same.
The appellant preferred an appeal to the Assistant Sales Tax Commissioner (S.T.A. No. 1480 of 1953 54) who dismissed the same by his order dated May 10, 1954.
A further petition to the Government for redress met with the same fate and the appellant thereupon filed the petition in the High Court of Travancore.
Cochin being O.P. No. 53 of 1954 with the result indicated above.
The decision of this appeal turns on the construction of the relevant provisions of the Travancore Cochin 340 General Sales Tax Act, 1125 (Act XI of 1125 M.E.) and the Travancore Cochin General Sales Tax Rules, 1950, made thereunder which may be conveniently set out here.
The preamble to the Act stated that it was enacted to provide for the levy of a general tax on the sale of goods in the United State of Travancore and Cochin.
Section 2 (j) defined a " sale " as under: " Sale " with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration. . . .
Explanation (2) Notwithstanding anything to the contrary in the Sale of Goods Act for the time being in force, the sale or purchase of any goods shall be deemed for the purpose of the Act, to have taken place in the United State wherever the contract of sale or purchase might have been made.
" Section 2 (k) defined " turnover " as " the aggregate amount for which goods are either bought by or sold by a dealer, whether for cash or for deferred payment or other valuable consideration, provided that the proceeds of the sale by a person of agricultural or horticultural produce grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover. " An explanation was added to this definition ' which is, however, not material for our purpose.
Section 3 was the charging section and it provided for levy of taxes on sales of goods in the terms following: " (1) Subject to the provisions of this Act;(a) every dealer shall pay for each year a tax on his total turnover for such year; and (b) the tax shall be calculated at the rate of three pies for every Indian rupee in such turnover. . . (3) A dealer whose total turnover in any year is less than ten thousand Indian rupees shall not be liable to pay any tax for that year under sub section_ (1) or sub section (2).
841 (4) For the purposes of this section and the other provisions of this Act turnover shall be determined in accordance with such rules as may be prescribed.
(5) The taxes under sub sections (1) and (2) shall be assessed, levied, and collected in such manner and in such instalments, if any, as may be prescribed.
Provided that: (i) in respect of the same transaction of sale, the buyer or the seller but not both, as determined by such rules as may be prescribed, shall be taxed; (ii) where a dealer has been taxed in respect of the purchase of any goods in accordance with the rules referred to in clause (i) of this proviso, he shall not be taxed again in respect of any sale of such goods effected by him." Section 4 enacted that the provisions of the charging section shall not apply to the sale of electrical energy and any goods other than arrack and foreign liquor on which duty is or may be levied under the Travancore or Cochin Abkari Act, or the Travancore or Cochin Opium Act.
Section 24 conferred upon the Government power to make rules to carry out the purposes of the Act.
The Act as originally enacted received the assent of the Rajpramukh on January 5, 1950.
After the advent of the Constitution, however, the Act was amended by the Travancore Cochin General Sales Tax (Amendment) Act, 1951, and section 26 was added thereto which ran as under: ' " Notwithstanding anything contained in this Act : (a) a tax on the sale or purchase of goods shall not be imposed under this Act (i) where such sale or purchase takes place outside the State of Travancore Cochin; or (ii) where such sale or purchase takes place in the course of import of the goods into, or export of the goods out of, the territory of India ; (b) a tax on the sale or purchase of any goods shall not, after the 31st day of March, 1951, be imposed where such sale or purchase takes place in the course of inter State trade or commerce except in so far as Parliament may by law otherwise provide.
(2) The explanation to 842 clause (1) of article 286 of the Constitution of India shall apply for the interpretation of sub clause (i) of clause(a) of sub section (1).
" The Travancore Cochin General Sales Tax Rules, 1950, which were made by_the Government under the rule making power conferred upon it by sub sections 4 & 5 of section 3 read with section 24 of the Act laid down inter alia the provisions in regard to the determination of the total turnover of a dealer which was liable to be taxed.
Rule 4 provided for the determination of the gross turnover: " (1) Save as provided in sub rule (2) the gross turnover of a dealer for the purposes of these rules ,shall be the amount for which goods are sold by him.
(2) In the case of the undermentioned goods the gross turnover of a dealer for the purposes of these rules shall be the amount for which the goods are.
bought by him.
(a) Cocoanut, copra, ground nut and its kernel.
(b) Cashew, and its kernel.
Rule 7 provided that the tax or taxes under section 3 or 5 or the notification,or notifications under section 6 shall be levied on the net turnover of a dealer.
It further provided that in determining the net turnover, the amounts specified in cls.
(a) to (k) were, subject to the conditions specified therein, to be deducted from the gross turnover.
Clause (k) is relevant for our purpose.
It specified " all amounts which a registered manufacturer of cocoanut and/or groundnut oil and cake may be entitled to deduct from his gross turnover under Rule 20 subject to the conditions specified in the rule. " Rule 20 so far as it is material for our purpose provided: " 1.
Any dealer who manufactures cocoanut/ groundnut oil and cake from cocoanut and/or copra or groundnut and/or/kernel purchased by him may on application to the assessing authority having jurisdiction over the area in which he carries on his business, 843 be registered as a manufacturer of cocoanut/groundnut oil and cake and a certificate issued in Form VI. 2.
Every such manufacturer shall be entitled to a deduction under clause (k) of sub rule (i) of rule 7 equal to the value of the cocoanut and/or copra or groundnut and/or kernel purchased and converted by him into oil and cake provided that the amount for which the oil is sold is included in his turnover.
" It is not necessary to refer to any other rule for the purposes of this appeal.
The main controversy between the parties centres on the method of calculation of the net turnover.
The appellant contends that in the calculation of such net turnover he is entitled to include the total value of the oil sold by him, viz., Rs. 6,76,719 0 11, irrespective of the fact whether these sales were effected inside the State or outside the State and deduct therefrom the total value of copra purchased by him from which the whole quantity of oil sold by him was manufactured, viz., Rs. 7,16,048 1 4.
The resultant figure, according to him, represents the net assessable turnover on which the Sales Tax Authorities would be entitled to assess him to sales tax if the position in law was as is stood before the amendment of the Act by the Travancore Cochin General Sales Tax (Amendment) Act, 1951.
He next contends that section 26 which was added to the Act by the Travancore Cochin General Sales Tax (Amendment) Act 1951, prohibits the levy amongst others of a tax on the sale or purchase of goods where such sale or purchase takes place in the course of inter State trade or commerce.
This is an overriding provision which, it is contended, entitled him to deduct the value of the oil sold outside the State, viz., Rs. 3,67,816 10 1, from the assessable turnover arrived at as above.
The result of this mode of calculation is that he claims to deduct from the gross turnover the whole of the purchase price of copra, viz., Rs. 7,16,048 1 4 and not the purchase price of copra which can be allocated to his sales of oil inside the State.
The Sales Tax Authorities on the other hand, contend that the appellant is not entitled to take into 844 computation at all his 'sales of oil outside the State and is also not entitled to deduct from his gross turnover the purchase price of copra allocated to the oil sold to persons outside the State.
They claim to lift the whole of these sales of oil outside the State inclusive of the purchase price of the copra which can be allocated to them out of the calculations of the net turnover because of the provisions of section 26 set out above, relying upon the non obstante provision contained therein, viz., "Notwithstanding anything contained in this Act, a tax on the sale or purchase of goods shall not be imposed under this Act where such sale or purchase takes place in the course of inter State trade or commerce.
" We have to decide which of these calculations of the net turnover is correct having regard to the relevant provisions of the Act and the rules made there under.
The definition of 'sale" contained in section 2 (j) is wide enough to include, the sales of oil manufactured by the appellant whether these sales are effected inside the State or outside the State.
The definition of " turnover " contained in section 2 (k) of the Act also makes no distinction between the sales inside the State and out,side the State.
The " turnover " is there defined as the aggregate amount for which goods are either bought or 3old by a dealer and, that definition comprises within its scope both these types of sales whether inside the State or outside the State.
This turnover of a dealer is under section 3, sub section
(4) to be determined in accordance with such rules as may be prescribed.
Rule 4 made by the Government under the rule making power prescribes that the gross turnover of a dealer for the purposes of the rules shall be the amount for which the goods are sold by him.
This rule also does not make any distinction between sales inside the State or outside the State.
After having thus provided for the inclusion of all sales within the gross turnover, r. 7 provides that the tax or taxes under section 3 (which is the charging section) shall be levied on the net turnover of a dealer.
Such net turnover is to be arrived at after deducting from the gross turnover various 845 amounts specified in cls.
(a) to (k) thereof and cl.
(k) provides that a registered manufacturer of cocoanut and/or groundnut oil and cake will be entitled to deduct from his gross turnover such amounts as are mentioned in r. 20 subject to the conditions specified therein.
The deduction under r. 20 is available to a dealer who manufactures cocoanut/groundnut oil and cake from cocoanut and " /or copra or groundnut and/or kernel purchased by him and he is entitled to deduct the value of the cocoanut and/or copra or groundnut and/or kernel purchased and converted by him into oil and cake provided that the amount for which the oil is sold is included in his turnover.
Here also we find no distinction made between sales inside the State or outside the State.
On a prima facie reading of these provisions contained in the Act and the rules made thereunder it would appear that a manufacturer of cocoanut or groundnut oil and cake would be entitled to include in his gross turnover the total value of the oil sold by him Whether inside the State or outside the State and to deduct from such gross turnover the whole of the value of the copra purchased by him and converted into oil and cake irrespective of the fact whether such oil or cake was sold by him inside the State or outside the State.
The only thing which he had to do under r. 20, sub r.(2) was to include the amount for which the oil is sold in his turnover and he would then under r. 7(1)(k) be entitled to deduct from his gross turnover the whole of the price of the copra purchased and converted by him into oil and cake, again irrespective of the fact whether the same had been sold by him inside the State or outside the State.
This was certainly the position as it obtained prior to the addition of the section 26 to the Act by the Travancore Cochin General Sales Tax (Amendment) Act, 1951.
We have, therefore., to consider what is the impact of section 26 on the other provisions of the Act and the rules made thereunder.
The High Court decided against the appellant observing that the definitions given in section (2)(j) and (k) of the Act applied only in the absence of "anything 109 846 repugnant in the subject or context", and on a perusal of the relevant provisions of the Act and the rules made thereunder, it was of opinion that these definitions were clearly inapplicable for the following reasons: "There can be no doubt that what has been intended is a taxation of copra at the purchase point and the avoidance of sales tax in respect of the oil extracted by a registered manufacturer from such copra to the extent of the value of the copra used for the said manufacture in all those cases where but for the concession he would have been liable to pay both the purchase tax on copra and the sales tax on oil under the Travancore Cochin General Sales Tax Act, 1125.
In other words, the object is the avoidance of a double taxation by the State, one at the purchase point of copra and the other at the sale point of oil, and it is impossible to invoke the definition and say that the concession will be available to a registered manufacturer even in those cases where only one and not both the taxes can be realized from him under the provisions of the Act.
" The answer given by the learned counsel for the appellant to the above reasoning was that in fiscal statutes what you have got to look to is not the spirit of the statute but the letter of the law; and if you could not bring a particular tax within the letter of the law, the subject could not be made liable for the same.
Our attention was drawn in this connection to the observations of Lord Russell of Killowen in Inland Revenue Commissioners vs Duke of Westminster(1) : "I confess that I view with disfavour the doctrine that in taxation cases the subject is to be taxed if in accordance with a Court 's view of what it considers the substance of the transaction, the Court thinks that the case falls within the contemplation or spirit of the statute.
The subject is not taxable by inference or by analogy, but only by the plain words of a statute applicable to the facts and circumstances of his case." As Lord Cairns said many years ago in Partington vs The Attorney General (1): "As I understand the (1) , 24.
(2)(1869) , 122.
847 principle of all fiscal legislation it is this: if the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be.
On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be.
" The passage was quoted with approval by the Privy Council in the Bank of Chettinad vs Income Tax Commissioner (1) and the Privy Council registered its protest against the suggestion that in revenue cases "the substance of the matter" may be regarded as distinguished from the strict legal position.
(See also F. L. Smidth & Co. vs F. Greenwood (2)).
It is no doubt true that in construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law.
If the Revenue satisfies the Court that the case falls strictly within the provisions of the law, the subject can be taxed.
If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter.
We must of necessity, therefore, have regard to the actual provisions of the Act and the rules made thereunder before we can come to the conclusion that the appellant was liable to assessment as contended by the Sales Tax Authorities.
It may be noted at the outset that the main bulk of the Sales Tax Acts enacted by the various Provincial Legislatures was enacted before the Constitution.
There were on the Statute Book various Sales Tax Acts enacted by the Provincial Legislatures, viz., Bihar Sales Tax Act, 1947, Bengal Finance (Sales Tax) Act, 1941, Madhya Pradesh Sales Tax Act, 1947, Madras Sales Tax Act, 1939, Mysore Sales Tax Act, 1948, Orissa Sales Tax Act, 1947, East Punjab General Sales Tax Act, 1948, and the Uttar Pradesh Sales Tax Act, (1) A.I.R. (1940) P.C. 183.
(2) VIII T.C. 193, 206, 348 1948, all of which levied sales tax on a more or less uniform basis bringing within their ken not only the sales which were actually effected within the territory but also sales where adopting the nexus theory eve1 one of the ingredients of sale was found to have taken place within the territory.
The Assam Sales Tax Act, 1947, and the Hyderabad General Sales Tax Act, 1950, also followed the same pattern.
When the Constitution came to be inaugurated on January 26, 1950, article 286(2) laid down restrictions on the State Legislatures to enact laws imposing or authorising the imposition of tax on the sale or purchase of goods in certain cases therein specified, so that after January 26, 1950, no State could impose a tax on the sale or purchase of goods falling within these categories.
The Sales Tax Acts enacted by the various Provincial Legislatures had, therefore, to be brought in line with this provision of the Constitution and various expedients were devised by the State Legislatures in order to effectuate this object.
This object was sought to be achieved in the main bulk of the Sales Tax Acts by adding towards the end of the Acts sections like section 26 of the Travancore Cochin General Sales Tax Act, 1125, incorporating therein the terms of article 286 of the Constitution.
The non obstante provision was thus enacted in the main bulk of the Sales Tax Acts which laid down: "Notwithstanding anything contained in this Act the tax on the sales or purchase of goods shall not be imposed under this Act where. . . (and the provisions of article 286 were in terms incorporated therein).
" A different expedient was adopted in the Assam Sales Tax Act, 1947 and the Hyderabad General Sales Tax Act, 1950.
The Assam Sales Tax Act, 1947, had incorporated therein an addition to the charging section (section 3 of the Act) and section 3 (1 A) which was inserted by section 3 of the Assam Sales Tax (Amendment) Act, 1947 (Assam Act IV of 1951) was to the following effect: "Nothing in sub section (1) shall,except in cases covered by the first proviso to sub section (12) of section 2 of this Act be deemed to render any dealer 849 liable to tax on the sale of goods where such sale takes place: (1) outside the State of Assam; (2) in the course of the import of the goods into, or export of the goods out of, the territory of India; or (3) in the course of inter State trade or commerce except in so far as Parliament may by law otherwise provide.
The Hyderabad General Sales Tax Act, 1950 had a similar provision incorporated in its definition of sale given in section 2 (k) of the Act.
The Explanation (2) which was substituted for the original Explanation (2) by section 2 of the Hyderabad General Sales Tax (Amendment) Act, 1950 (Hyderabad Act XXXII of 1950) read as under: Explanation (2) " Notwithstanding anything to the contrary in any other law for the time being in force, a transfer of goods in respect of which no tax can be imposed by reason of the provision contained in Article 286 of the Constitution, shall not be deemed to be "sale" within the meaning of this clause.
" A further expedient which was adopted in this connection may be noted in r. 5 of the Bombay Sales Tax Rules, 1952, enacted under the Bombay Sales Tax Act, 1952 (Bombay Act XXIV of 1952), which authorised the deduction of certain sales coming within article 286 of the Constitution while calculating the taxable turnover of a dealer.
We are not called upon to express any opinion as to whether the incorporation of the provisions of article 286 of the Constitution in the charging section as it was done in the Assam Sales Tax Act, 1947, or in the definition of "sale" as it was done in the Hyderabad General Sales Tax Act, 1950, or even in the rules in regard to the calculation of taxable turnover as it was done in the Bombay Sales Tax Rules, 1952, had the effect of taking the sales falling within the categories specified in article 286 out of the purview of the respective Sales Tax Acts, so that they would not be included at all within the calculation of the net turnover on which only the sales tax could be levied.
What was done in the instant case before us as in the bulk of the Sales 850 Tax Acts above noted was the incorporation of those provisions of article 286 of the Constitution therein by adding a non obstante provision at the end of the respective Sales Tax Acts in the manner above indicated.
The definition of "sale" was not amended nor was the charging section.
The rules as to the calculation of the net turnover also remained the same, without any deduction in regard to sales coming within article 286 of the Constitution being incorporated therein, with the result that the Sales Tax Authorities founded themselves upon the non obstante provision incorporated in the Act by the addition of section 26 therein by the Travancore Cochin General Sales Tax (Amendment) Act, 1951.
What, then, is the effect of this non obstante provision ? This Court in Aswani Kumar Ghosh vs Arabinda Bose (1) made the following observations in connection with the non obstante clause: "It should first be ascertained what the enacting part of the section provides on a fair construction of the words used according to their natural and ordinary meaning, and the non obstante clause is to be understood as operating to set aside as no longer valid anything contained in relevant existing laws which is inconsistent with the new enactment.
" The same ratio applies to the construction of the non obstante provision contained in section 26 of the Act with reference to all the other provisions of the Act that preceded the same.
In our opinion, section 26 of the Act, in cases falling within the categories specified under article 286 of the Constitution has the effect of setting at nought and of obliterating in regard thereto the provisions contained in the Act relating to the imposition of tax on the sale or purchase of such goods and in particular the provisions contained in the charging section and the provisions contained in r. 20 (2) and other provisions which are incidental to the process of levying such tax.
So far as sales falling within the categories specified in article 286 of the Constitution and the corresponding section 26 of the Act are concerned, they are, as it were, (1) ; , 21, 22.
851 taken out of the purview of the Act and no effect is to be given to those provisions which would otherwise have been applicable if section 26 had not been added to the Act.
If these provisions of the Act and the rules made thereunder do not apply to.
the sales falling within those categories, the value thereof cannot be included in the turnover of the dealer and no question would &rise of the applicability of r. 7 (1) (k) and r. 20 (2) at all to these cases.
The amount for which the oil is sold in inter State trade or commerce would not be lawfully included in the turnover of the dealer and if the amount for which such oil is sold cannot thus be included in his turnover no occasion would arise for the deduction under r. 7 (1) (k) of the value of the cocoanut and/or copra or groundnut and/or kernel purchased and converted by the dealer into such oil and cake.
A distinction was sought to be made between the inclusion of the value of such oil in the turnover of the dealer for the purpose of assessment and the levy of tax thereupon.
It was urged that the inclusion of such oil in the turnover for the purpose of assessment was quite distinct from the liability for tax which was the only thing prohibited by section 26 of the Act and therefore the value of such oil could be lawfully included in the turnover involving as a necessary consequence the deduction of the value of the copra purchased by the dealer and converted by him into such oil from such turnover, the resultant turnover being the net turnover for the purposes of assessment, the value of the oil sold in the course of inter State trade or commerce being further deducted therefrom by reason of the operation of section 26 of the Act, thus making in effect a distinction between assessable turnover and the taxable turnover.
Reliance was placed in support of this position on the observations of this Court in Messrs. Chatturam Horilram Ltd. vs Commissioner of Income Tax, Bihar and Orissa(1): " As has been pointed out by the Federal Court in Chatturam vs C.I.T., Bihar(,) (quoting from the (1) ; , 297.
(2) , 126.
852 judgment of Lord Dunedin in Whitney vs Commissioners of Inland Revenue (1) '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 person 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 particularises 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 appellant, however, forgets that the three stages in the imposition of a tax which are laid down here predicate, in the first instance, a declaration of liability as the starting point.
If there is a liability to tax, imposed under the terms of the taxing statute, then follow the provisions in regard to the assessment of such liability.
If there is no liability to tax there cannot be any assessment either.
Sales or purchases in respect of which there is no liability to tax imposed by the statute cannot at all be included in the calculation of turnover for the purpose of assessment and the exact sum which the dealer is liable to pay must be ascertained without any reference whatever to the same '.
There is a broad distinction between the provisions contained in the statute in regard to the exemptions of tax or refund or rebate of tax on the one hand and in regard to the non liability to tax or non imposition of tax on the other.
In the former case, but for the provisions as regards the exemptions or refund or rebate of tax, the sales or purchases would have to be included in the gross turnover of the dealer because they are prima facie liable to tax and the only thing which the dealer is entitled to in respect thereof is the deduction from the gross turnover in order to arrive at the net turnover on which the tax can be imposed.
In the latter case, the sales or purchases are exempted from taxation altogether.
The Legislature cannot enact a law imposing or authorising the imposition of a tax thereupon and they are not liable to any such imposition (1) 853 of tax.
If they are thus not liable to tax, no tax can be levied or imposed on them and they do not come within the purview of the Act at all.
The very fact of their non liability to tax is sufficient to exclude them from the calculation of the gross turnover as well as the net turnover on which sales tax can be levied or imposed.
If this distinction is borne in mind, it is clear that section 26 of the Act enacts a provision with regard to nonliability of these transactions to tax and these transactions were therefore taken out of the purview of the Act.
We are therefore of opinion that the non obstante provision contained in section 26 of the Act has the effect of taking these transactions out of the purview of the Act with the result that the dealer is not required nor is he entitled to include them in the calculations of his turnover liable to tax thereunder.
This position is not at all affected by the provision with regard to registration and submissions of returns of the sales tax by the dealers under the Act.
The legislature, in spite of its disability in the matter of the imposition of sales tax by virtue of the provisions of article 286 of the Constitution, may for the purposes of the registration of a dealer and submission of the returns of sales tax include these transactions in the dealer 's turnover.
Such inclusion, however, for the purposes aforesaid would not affect the non liability of these transactions to levy or imposition of sales tax by virtue of the provisions of article 286 of the Constitution and the corresponding provision enacted in the Act, as above.
We are, therefore, of opinion that the conclusion reached by We are therefore therefore, of opinion that the conclusion reached by the High Court was correct; the calculations of the net turnover made by the Sales Tax Authorities were also correct; and this appeal must stand dismissed with costs.
Appeal dismissed.
| The business of the appellant consisted in the purchase of copra, manufacture of cocoanut oil and cake therefrom and sale of oil and cake to parties inside the State of Travancore Cochin and sale of oil to parties outside the State.
Before the coming into force of the Constitution of India, under the provisions of the Travancore Cochin General Sales Tax Act, 1125, and the rules made thereunder, for the purposes of assessment to sales tax, the appellant wag entitled to include in his gross turnover the total value of the oil sold by him whether inside the State or outside the State and to deduct therefrom the whole of the value of the copra purchased by him.
Subsequently, in 1951, the Act was amended by the addition of section 26 which, inter alia, provided: "Notwithstanding anything contained in this Act. a tax on the sale or purchase of any goods shall not, after the 31st day of March, 1951, be imposed where such sale or purchase takes place in the course of inter ,State trade. .
For the year 1951 1952, the Sales Tax Officer assessed the appellant to sales tax on a net assessable turnover by taking the value of the whole of the copra purchased by him, adding thereto the respective values of the oil and the cake sold inside the State and deducting only the value of the copra corresponding to the oil sold inside the State.
It was contended for the appellant that in the calculation of the net turnover he was entitled to include the total value of the oil sold by him, both inside and outside the State, and deduct therefrom the total value of the copra purchased by him, and further that, under the overriding provision of the Act under section 26, he was entitled to have the value of the oil sold outside the State deducted.
Held, that the calculation made by the Sales Tax Officer of the net turnover was correct.
The non obstante provision contained in section 26 of the Act has the effect of taking transactions relating to inter State trade out of the purview of the Act and they are excluded in the calculation 108 838 of the gross turnover as well as the net turnover on which sales tax can be assessed.
Aswani Kumar Ghosh vs Arabinda Bose, ; , relied on.
|
Summarize this legal judgement text concisely | iminal Appeal No. 33 of 1955.
Appeal under Articles 132 (1) and 134 (1) (c) of the Constitution of India from the Judgment and Order dated June 30, 1954, of the Court of Judicial Commissioner, Kutch in Criminal Revision Application No. 13 of 1952.
Porus A. Mehta and B. H. Dhebar, for the appellant.
H. J. Umrigar, for the respondent.
March 7.
The Judgment of the Court was delivered by KAPUR J.
Two important questions arise for decision in this case of a small magnitude and the State has filed this appeal not for the purpose of obtaining a conviction but because of the importance of the questions raised and implications of the judgment 747 of the Judicial Commissioner.
The respondent was convicted of an offence under section 12(a) of the Bombay Prevention of Gambling Act (Act IV of 1887 hereinafter termed the Bombay Act) as applied to Kutch and was sentenced to a fine of Rs. 50 or in default simple imprisonment for 15 days and for feiture of the amounts recovered from the respondent at the time of the commission of the offence.
He took a ' revision to the Judicial Commissioner of Kutch, who hold that the Act under which the respondent had been convicted had not been validly extended to and was not.
in force in the State of Kutch.
It is the correctness of this decision which has been canvassed before us.
There was sufficient evidence against the respondent which was accepted by the trying magistrate; and if the Act was validly extended to and was in operation in the State of Kutch, his conviction by the learned magistrate was correct and his acquittal by the learned Judicial Commissioner erroneous.
On June 7, 1951, the respondent, it was alleged committed the offence he was charged with He was convicted by the magistrate on July 26, 1951, and his revision to the Sessions Judge was dismissed.
He then took a revision to the Judicial Commissioner of Kutch who allowed his petition on June.
30, 1954, and granted a certificate under articles 132(1) and 134(1) of the Constitution.
Kutch before 1948 was what was called an Indian State.
The Maharao of Kutch handed over the gover.
nance of the State to the Dominion of India on June 1, 1948 and thus the whole administration of the State passed to the Dominion and it became a Centrally administered area.
On July 31, 1949, the then Central Government issued under section 4 of the Extra Provincial Jurisdiction Act (Act XLVII of 1947), an order called the Kutch (Application of Laws) Order, 1949.
Under cl. 3 of this order certain enactments were applied to Kutch with effect from the date of the commencement of the order.
One of these enactments was the Bombay Act.
Clauses 4 and 6 of this order are important and may be quoted; 748 4.
"Except as otherwise specifically provided in the first schedule to this order the enactments applied by this order shall be construed as if references therein to the authorities and territories mentioned in the first column of the table hereunder printed were references to the authorities and territories, respectively, mentioned opposite thereto in the second column of the said table.
TABLE.
Provincial Government, Governor The Chief Commissioner of Kutch.
or Chief Controlling Revenue Authority.
Government The Central Government or the Chief Commissioner, as the con text may require.
High Court Court of the judicial Commissioner, Kutch.
Provinces of India, any Province Kutch or any part thereof of India or any part thereof.
The Province or Presidency of Kutch or any part thereof.
Bombay or any part thereof.
" Any Court may construe the provisions of any enactment, rule, regulation, general order or byelaw applied to Kutch or any part thereof by this order, with such modifications not affecting the substance as may be necessary or proper in the circumstances.
" On August 1, 1949, Kutch became a Chief Commissioner 's province under the States Merger (Chief Commissioners Provinces) Order, 1949.
Clause 2(1)(c) of this order is as follows: " As from the appointed day, the parts of States specified in the Second Schedule to this order shall be administered in all respects as if they were a Chief Commissioner 's Province, and shall be known as Chief Commissioner 's Province of Kutch.
" The Second Schedule gives the parts of the pre 1947 Indian States which were to comprise the Chief Commissioner 's Province of Kutch.
Under el. 4 of this Order all laws which were in force including orders made under section 4 of the Extra Provincial Jurisdiction Act of 1947, were to continue in force until replaced.
On January 1, 1950, Merged States ' Laws Act (Act LIX of 1949), came into force.
By this Act certain Central Acts were extended to the province of Kutch 749 including the General Clauses Act (Act X of 1897).
On January 26, 1950, the Constitution of India came into force and Adaptation of Laws Order, 1950, was promulgated the same day.
Clause 4(1) of this order provides: "Whenever an expression mentioned in column 1 of the table hereunder printed occurs (otherwise than in a title or preamble or in a citation or description of an enactment) in an (existing Central or Provincial Laws) whether an Act, Ordinance or Regulation mentioned in the Schedule to this Order or not, then, unless that expression is by this Order expressly directed to be otherwise adapted or modified, or to stand unmodified, or to be omitted, there shall be substituted therefor the expression set opposite to it in column 2 of the said Table, and there shall also be made in any sentence in which the expression occurs such consequential amendments as the rules of grammar may require." The necessary portions of the table are: Province (except where it occurs in any expression mentioned above) State Provincial. . .
State Provinces (except where it occurs in any expression mentioned above).
States Clauses 15 and 16 in (Part III) Supplementary, are as follows: 15.
" Save as is otherwise provided by this Order, all powers which under any law in force in India or any part thereof were, immediately before the appointed day, vested in or exercisable by any person or authority shall continue to be so vested or exercisable until other provision is made by some legislature or authority empowered to regulate the matter in question." 16.
" Subject to the provisions of this Order any reference, by whatever form of words in any existing law to any authority competent at the date of the passing of that law to exercise any powers or authorities, or to discharge any functions, in any part of India shall, where a corresponding new authority has been constituted by or under the Constitution, have 750 effect until duly repealed or amended as if it were a reference to that new authority.
" On November 28, 1950 the Chief Commissioner of Kutch issued the following notification: In exercise of the powers vested in him under section I of the Bombay Prevention of Gambling Act, '1887 (IV of 1887) as applied to Kutch by the Kutch (Application of Laws) Order, 1949 the Chief Commissioner has been pleased to order that all the provisions of the said Act shall come into force throughout the whole of Kutch with immediate effect.
" On a consideration of all the Acts and Orders as well as the above mentioned Adaptation of Laws Order, of 1950, the learned Judicial Commisioner was of the opinion that , all such powers vested in or exercisable by any other person or authority before 26 1 1950 ceased to be so vested or exercisable by that person or authority ", and, therefore, only the President, whether exercising the powers himself or through the Chief Commissioner, could exercise the powers of a State Government and the Chief Commissioner himself could not.
His finding therefore was that the Chief Commissioner could not issue the above notification of November 28, 1950.
In its appeal against the Order of acquittal by the learned Judicial Commissioner, the State has raised two questions: (1)that the Bombay Act had been validly extended to and was in force in the whole of Kutch because of the Kutch (Application of Laws) Order, 1949 and thus any contravention of that Act became punishable under the Act, and (2)That even if the Bombay Act was not thus extended to Kutch, the Act became applicable to the State of Kutch by the issuing of the notification of November28, 1950, and therefore, the respondent was rightly convicted and the conviction was wrongly set aside by the learned Judicial Commissioner.
In: order to decide the first contention we have to see what is the effect of the various provisions of the Acts and Orders above referred to.
In cl. 4 of the 751 Kutch (Application of Laws) Order, 1949, the words; used are shall be construed as if reference therein. .
In our opinion all that these words mean is I shall be read as ' and if that is how these words are understood then wherever in the Bombay Act the words 'Provincial Government ' are used they have to be read as the Chief Commissioner of Kutch; the word Government has to be read as the " Chief Commissioner of Kutch"; and the Province or the " Presidency of Bombay " as " Kutch or any part thereof ".
If the Bombay Act is so read, then at the time when the Constitution came into force the words Provincial Government or Government or Province or Presidency of Bombay were no longer in the Act which had become applicable to the State of Kutch.
On the other hand, the words there must be taken to be Chief Commissioner of Kutch, and Kutch or any part thereof, respectively.
The fallacy in the learned Judicial Commissioner 's judgment lies in this that due effect was not given to these words which had become substituted, but emphasis was laid on the words 'shall be construed as ' as if these words had been used for the purposes of interpretation of the different words in the Bombay.
Act rather than implying substitution of the corresponding words.
In this view of the matter cl. 2 (1) (c) of the States Merger (Chief Commissioners ' Provinces) Order, 1949 which provided for the administration of the State of Kutch as if it was a Chief Commissioner 's Province, would not affect the position nor would the extension of the General Clauses Act under the Merged States ' Laws Act.
Clause 4 of the Adaptation of Laws Order, 1950 only substituted in place of the words Province, Provincial and Provinces the words State or States, wherever they occurred in any existing law, and the effect of cls.
15 and 16 of that order was the continuance of the powers vested in the authorities in whom they had previously been vested.
The position which therefore emerges on a combined reading of these various clauses is that in Bombay Act, as applied to Kutch, the words I Presidency of Bombay ' were to be replaced by the.
words 'Kutch or any part thereof ' and the I Provincial 752 Government ' by the I Chief Commissioner of Kutch ' and the powers which had been given to the different authorities under the different Acts were to continue to remain in the person or persons in whom they were already vested.
As the powers had been vested in the Chief Commissioner under the provisions of these various Acts and Orders, they continued to remain so vested and the General Clauses Act did not have any operational effect on these various words which were used in the Bombay Act as modified and applied to Kutch. ,SO understood, section 1 of the Bombay Act would read as follows: " This Act may be cited as the Bombay Prevention of Gambling Act, 1887.
All or any of its provisions may be extended from time to time by the Chief Commissioner of Kutch by an order published in the " Official Gazette " to any local area in Kutch or any part thereof." The Chief Commissioner of Kutch may, from time to time, by an order published as aforesaid, cancel or vary any order made by it under this section.
" The portion of this section, viz., "It extends to the city of Bombay, to the Island of Salsette, to all Railways and railway Station houses without the said city and island and to all places not more than three miles distant from any part of such station houses respectively " would not continue in the Act as applied to Kutch because these parts are not in the State of " Kutch or any part thereof " and cl. 6 of the Kutch (Application of Laws) Order, 1949 would come into operation for the purpose.
It was then contended that by the mere application of the Bombay Act to Kutch it became operative and came into force in the whole of Kutch.
This argument suffers from the infirmity that in its application to Kutch section 1 of the Bombay Act would have to be excluded which would be an incorrect way of looking at the question.
The true position is that the whole of the Act including amended section 1 as given above, became applicable to Kutch and therefore a notification 753 ,was necessary before it could be brought into force in any part of Kutch.
It was applied to Kutch, but its provisions were not in operation before the notification; and in our opinion, the judgment of Baxi J. C. in Agaria Osman Alarakhya vs The Kutch State (1) which has been followed in the case now before us, to the extent that it dealt with the necessity of a notification under section 1 of the Bombay Act, was correctly decided; and therefore, the first contention raised by counsel for the appellant is unsustainable and we hold that without a notification, the Bombay Act, could not be held to have been validly applied to the State of Kutch.
This brings us to the second question, i.e., the validity of the notification issued on November 28, 1950.
The learned Judicial Commissioner held: " The Chief Commissioner of a Part C State can act to such extent as he is authorised by the President to do.
These being the provisions of the Constitution, the Bombay Act must be construed with the adaptation that the rule of construction mentioned in the Kutch (Application of Laws) Order, 1949 is deleted.
Hence, even if substitution of expression as mentioned in para 4 of the Adaptation of Laws Order, 1950 is not made, the rule of construction mentioned in the Kutch (Application of Laws) Order, 1949 for construing the expression I Provincial Government ' as the I Chief Commissioner, Kutch ' does not survive.
" Article 239 of the Constitution relates to administration of Part C States and provides: " Subject to the other provisions of this Part, a State specified in Part C of the First Schedule shall be administered by the President acting, to such extent as he thinks fit, through a Chief Commissioner or a Lieutenant Governor to be appointed by him. . .
This Article has been relied upon for urging that in a Part C State, the administration had to be carried on by the President acting through a Chief Commissioner.
But this does not take away the powers of the Chief Commissioner given to him under any other Statute or (1) A.I.R. (1951) Kutch 9.
97 754 Order.
The Chief Commissioner of Kutch under section I of the Bombay Act, had the power to issue notifications making that Act operative in Kutch or any part of Kutch and those powers were not affected by article 239 of the Constitution particularly because of el.
15 of the Adaptation of Laws Order, 1950, which preserved these powers of the Chief Commissioner.
Therefore, the notification issued by the Chief Commissioner on November 28, 1950 was valid and issued under legal authority; and the Act came into force in the parts to which the notification made it so applicable.
We have therefore, come to the conclusion that the learned Judge was in error in holding that the notification was not a valid one and in so far as that was the basis of the acquittal of the accused, the judgment under appeal must be set aside.
In the result the appeal of the State is allowed, the judgment of the learned Judicial Commissioner acquitting the respondent is set aside and that of the learned Magistrate sentencing him to a fine of Rs. 50 and sentence in default and of forfeiture restored.
Appeal allowed.
| By cl. 3 of the Kutch (Application of Laws) Order, 1949, the Bombay Prevention of Gambling Act (Bom.
IV of 1887) was made applicable to Kutch.
Clause 4 of the Order provided that the Acts applied to Kutch by the Order " shall be construed " as if (1) vs Chester, Mayor, etc.) 96 746 references therein to the authorities and territories were references to the authorities and territories of Kutch as set out in that clause.
The words "shall be construed as " mean "shall be read as" and: consequently wherever in the Bombay Act the words " Provincial Government " or " Government " are used, they have to be read as " Chief Commissioner of Kutch and the words ,Province or the Presidency of Bombay " as Kutch or any part thereof ".
So understood, section 1 of the Bombay Act as applied to Kutch provided that all or any of the provisions of that Act may be extended from time to time by the Chief Commissioner of Kutch by an order published in the Official Gazette to any, local area in Kutch or any part thereof.
The contention that the Bombay Act had been validly extended to and was in force in the whole of Kutch because of the Kutch (Application of Laws) Order, 1949, is not sound.
The true position is that the whole of the Act including amended section 1 became applicable to Kutch and, therefore, a notification was necessary before it could be brought into force in any part of Kutch.
The Chief Commissioner issued a notification on November 28, 195o, bringing all the provisions of the Bombay Act into force throughout the whole of Kutch with immediate effect.
The Chief Commissioner of Kutch under section 1 of the Bombay Act, had powers to issue the notification making that Act operative in Kutch or in any part of Kutch and those powers were not affected by article 239 Of the Constitution.
The notification was valid and the Act came into force in the parts of the State to which the notification made it applicable.
|
Summarize this legal judgement text concisely | : 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 accused was tried by a Special Judge for offences under section 409 Of the Indian Penal Code and section 5(2) of the Prevention of Corruption Act.
He was convicted under section 409 but the judge held that the accused could not be tried under section 5(2) as there had been no investigation by a police officer not below the rank of a Deputy Superintendent of Police.
Upon appeal by the accused against the conviction under section 409, the High Court applying the doctrine of autrefois acquit held that the order of the judge in respect of the charge under section 5(2) was tantamount to an acquittal for that offence and on the same facts no conviction could be had under section 409 : Held, that the offences under section 409 of the Indian Penal Code and under section 5(2) of the Prevention of Corruption Act were distinct and separate and there could be no objection to a trial and conviction under section 469 even if the accused had been acquitted under section 5(2).
Om Prakash Gupta vs The State Of U.P., ; , applied.
Section 403(1) of the Code of Criminal Procedure has no application where there is only one trial for several offences, of some of which the accused person is acquitted though convicted of one.
Article 20 of the Constitution also does not apply where the accused had not already been, tried: and acquitted for the same offence in an earlier trial, 869 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.
|
Summarize this legal judgement text concisely | Appeal No. 213 of 1956.
Appeal from the judgment and decree dated Septem.
ber 22, 1954, of the Allahabad High Court in Special Appeal No. 8 of 1954 arising out of the judgment and decree dated January 6, 1954 of the said High Court in Civil Miscellaneous Writ Petition No. 651 of 1953.
section P. Sinha and section N. Mukherjee, for the appellant.
G. G. Mathur and C. P. Lal, for respondent No. 2.
756 1957.
March 20.
The Judgment of the Court was delivered by KAPUR J.
The ground on which the appellant company seeks to have the order of the Industrial Tribunal set aside is that no industrial 'dispute existed within the meaning of the expression as used in the U.P. (XXVIII of 1947) (hereinafter called the U.P. Act) and consequently the U.P. Government had no power to make the reference in question.
I Industrial Dispute ' is defined in section 2 of the U.P. Act as having the same meaning assigned to it as in section 2 of the (here inafter termed the Central Act).
There this expression has been defined in section 2 (k) to mean : " 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.
" The controversy between the parties arose in the following circumstances: Tajammul Hussain, respondent No. 3 was employed as a lino typist by the appellant company.
He was dismissed on May 8, 1952, on, allegations of incompetence under r. 12 (ii) of the Standing Orders of the appellant company.
It was alleged that the dismissal of Respondent No. 3 was welcomed by his co workers and other workmen in the employ of the appellant company and they made no grievance of it, nor did they espouse his cause.
The case of respondent No. 3 was not taken up by any union of workers of the appellant company nor by any of the unions of workmen employed in similar or allied trades, but the U.P. Working Journalists Union, Lucknow, with which respondent No. 3 had no connection whatsoever, took the matter to the Conciliation Board, Allahabad.
Ultimately, the U.P. Government made a reference to the Industrial Tribunal on June 3, 1953, by notification; the prefatory words of which are: 757 " Whereas an industrial dispute in respect of the matters hereinafter specified exists between the concern known as Newspapers Ltd., Allahabad and its workmen; and whereas in the opinion of the Governor it is necessary so to do for the maintenance of public order and I for maintaining employment.
One of the questions referred was: " ' Whether the services of Sri Tajammul Hussain Lino Operator were wrongfully terminated by the Management On February 13, 1953, the State Industrial Tribunal at Allahabad decided in favour of respondent No. 3 and ordered his reinstatement " without break of continuity of service " and also ordered the payment of his wages for the period during which he "remained dismissed".
An appeal was taken by the appellant company to the Labour Appellate Tribunal, who by its ,order dated February 24, 1953, affirmed the order of the Tribunal with costs.
The appellant company then moved a petition in the Allahabad High Court under article 226 of the Constitution but this was dismissed by Bhargava J. on January 6, 1954, and a Special appeal against this judgment was also dismissed.
The appellant company has come up in appeal with a certificate under article 133 (1) (c) of the Constitution.
The controversy which arises in this case is whether a dispute between an employer and a single workman falls within the definition of I industrial dispute ' as used in the U.P. Act.
In order to resolve this controversy, it is necessary to refer to the scheme of the U.P. Act and the relevant rules made thereunder.
The preamble of the Act runs: " to provide for powers to prevent strikes and look outs, and for the settlement of industrial disputes and other incidental matters ".
Section 3 of the Act confers certain powers on the State Government for the purpose of prevention of strikes, lock outs, etc.
The portion of this section relevant for the purpose of this appeal reads as follows: If in the opinion of the State Government, it is necessary or expedient so to do for securing the public safety or convenience, or the maintenance of public 758 order or supplies and services essential to the life of the community, or for maintaining employment, it may, by general or special order, make provision (c) for appointing industrial courts; (d) for referring any industrial dispute for conciliation or adjudication in the manner provided in the order (g) for any incidental or supplementary matters, which appear to the State Government necessary or expedient for the purpose of the order; " Under section 23 of the Act, the State Government can make rules consistent with the Act for giving effect to the provisions of the Act.
Under clauses (b), (c), (d) and (g) of section 3 and under section 8 of the U.P. Act, rules governing Conciliation Boards and Industrial Tribunals in U.P. were promulgated by Notification No. 615 (LL) XVIII 7 (LL) 1951, dated Lucknow, March 15, 1951.
Rule 4 deals with the reference of disputes to Conciliation Boards.
The relevant portions of this rule are: ,,Any workman or an employer or a registered association or trade union of employers or registered trade union of workmen or any federation of such associations or trade unions or where no registered trade union of workmen exists in any particular concern or industry, the representatives not more than 5 in number of the workmen in that concern or the industry, duly elected in this behalf by a majority of the workmen employed in that concern or industry, as the case may be, at a meeting held for the purpose, may by application in writing move a Conciliation Officer of the area for settlement of any industrial dispute by conciliation.
The application shall clearly state the industrial dispute or disputes.
" Rule 5 deals with proceedings and the power of inclusion of other undertakings.
The proviso to this rule is: " Provided that if the Board of its own motion or on an application made to it, is of the opinion that any question involved in any such dispute or matter affects or is likely to affect more than one workman in the same concern or industry or business or more 759 than one concern in the same industry or business, constituted within the jurisdiction of the Conciliation Board, it shall include in its proceedings relating to such dispute or order every such workman or concern or where there is a registered trade union covering the, majority of such concerns of workmen, such trade unions." Rules 7 to 11 A deal with Industrial Tribunals.
Rule 10 gives power to the Government to make a reference of any dispute to the Industrial Tribunal either on its own motion or after considering the Report of the Conciliation Board made under r. 6.
Rule 15(1) which deals with the representation of parties to the dispute provides: " The parties may in their discretion be represented before a Board or Tribunal or an Adjudicator (1) In the case of a workman by (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 sub clause (a) is affiliated ; (c) Where the workman is not a member of any registered trade union, by an officer of any registered trade union connected with, or by any other workman employed in the same industry or business, if so authorised in writing by the workman.
" The language of section 36(1) of the Central Act is almost identical.
Rule 27 prohibits strikes and look outs; and r. 28 gives finality and conclusiveness to the orders made or directions given.
The use of the word 'workmen ' in the plural in the definition of industrial dispute ' does not by itself exclude the applicability of the Act to an individual dispute because under a. 13(2) of the General Clauses Act subject. . . (2) words in the singular shall include the plural and vice versa," 760 But in order to get its true import it is necessary to view the enactment in retrospect, the reasons for enacting it, the evils it was to end and the objects it was to subserve.
The Act has therefore to be viewed as a whole and its intention determined by construing all the constituent parts of the Act together and not by taking detached sections or to take one word here and another there.
Exposition " ex visceribus actus " is applicable.
Lincoln College 's Case (1).
So construed the provisions of the U.P. Act show that the machinery of the Act has been devised with the object of maintaining industrial peace so as to prevent interference with public safety or public order or with the maintenance of supplies and services essential to the life of the community or of employment.
The Act is based on the necessity of achieving collective amity between labour and capital by means of conciliation, mediation and adjudication.
The object of the Act is the prevention of industrial strife, strikes and lock outs and the promotion of industrial peace and not to take the place of the ordinary tribunals of the land for the enforcement of contracts between an employer and an individual workman.
Thus viewed the provisions of the Act lead to the conclusion that its applicability to an individual dispute as opposed to dispute involving a group of workmen is excluded unless it acquires the general characteristics of an industrial dispute, viz., the workmen as a body or a considerable section of them make common cause with the individual workman and thus create conditions contemplated by section 3 of the U.P. Act which is the foundation of State Governmental action under that Act.
The other provisions which follow that section only subserve the carrying out of the objects of the Acts specified therein.
The use of the word workman in the singular in rr. 4, 5 and 15 forms the basis of the argument for the inclusion of an individual dispute in the expression industrial dispute.
But this suffers from more infirmities than one.
Rule 4 authorises a workman to (1) ; 761 apply to a Conciliation Officer for the settlement of an industrial dispute.
The meaning sought to be given to this word is inconsistent with the language of the latter part of that rule; or where no registered trade union of workmen exists in any concern or industry, the representatives not more than 5 in number of the workmen. . duly elected.
" The first proviso to r. 5 is no surer foundation for the argument because in the context it can only be interpreted to mean that, should there be an industrial dispute then all workmen who may individually be the cause of the dispute or are to be affected by its decision should get notices of the proceedings.
Similarly, r. 15 only provides for the representation of " a workman " even if he is only one by an officer of a trade union or other person mentioned in the rule.
Besides, section 13(2) of the General Clauses Act as to the interpretation of the singular and the plural consider ably reduces the efficacy of the argument, which altogether loses its force in view of r. 26 which is as follows : " During the pendency of any conciliation proceeding or proceedings before the Tribunal or an Adjudicator in respect of any dispute an employer shall not (a) alter to the prejudice of the workmen concerned in such dispute the conditions of service applicable to them immediately before the commencement of such proceedings or (b) discharge or punish, whether such punishment is by dismissal or otherwise, any workman concerned in such dispute save with the express permission in writing of a Conciliation Officer of the area concerned irrespective of the fact whether the dispute is pending before a Board or the Tribunal or an Adjudicator.
" The use of the words " workmen" and " workman in the above rule is indicative of the intention of the Act being applicable to collective disputes and not to individual ones, and this is fortified by the finality and the binding effect to awards by r. 28 and more speciall.v by a. 18 of the Central Act which makes 98 762 awards binding not only on the individuals present or represented but on all the workmen employed in the establishment and even on future entrants.
Another objection to reading these rules in the manner above suggested is that it would be tantamount to enlarging the scope of the expression 'industrial dispute ' and the powers conferred on the State Government under section 3 of the U. P. Act.
The executive cannot under the power of framing rules and regulations clothe itself with powers which the Statute itself does not give and which are inconsistent with the interpretation put on the expression 'industrial dispute '.
The cardinal rule in regard to promulgation of bye laws or making rules is that they must be legi fidei rationi consona, and therefore all regulations which are contrary or repugnant to statutes under which they are made are ineffective.
If the expression I industrial dispute ' as ordinarily understood and, construed conveys a dispute between an employer on the one hand and the workmen acting collectively on the other, then the definition of those words cannot be widened by a statutory rule or regulation promulgated under the Statute or by Executive fiat.
I The notification in the present case was under section 3(c), (d) and (g) and under section 8 which deal with (c) the appointment of industrial Courts, (d) referring any industrial disputes and (g) incidental or supplementary matters.
The Executive may in the exercise of these powers make such regulations which are necessary but under that garb it cannot extend the definition of the term industrial disputes, nor is this extended meaning necessary to subserve the objects of the Act.
I In our opinion therefore rules 4, 5 and 15 of the Rules cannot be a valid foundation for sustaining the argument raised that an individual dispute was within the definition of 'industrial dispute '.
Ordinarily, an award of a tribunal binds or affects the rights of parties to the proceedings but awards of Industrial Tribunals have extended implications and may affect the rights of all workmen of a concern or undertaking end even the future entrants.
This doctrine of 763 representation which enlarges the meaning of 'parties ' in the U.P. & Central Acts is an essential idea associated with industrial disputes and support , collectiveness as opposed to individualism.
See Latham C. J. in Metal Trades Employers Association vs Amalgamated Engineering Union(1).
Then there is the prohibition under r. 26 of the U.P. Act and section 33 of the Central Act against any change in conditions of service during the pendency of the proceedings the object of which is to ensure discipline and industrial truce during that period which also supports the basic idea of collectiveness in 'industrial disputes '.
In Central Provinces Transport Services Ltd. V. Raghunath Gopal Patwardhan (2), this Court observed that decided cases in India disclose three views as to the meaning of 'industrial dispute ' (i) a dispute between an employer and a single workman cannot be an 'industrial dispute '; (ii) it can be an industrial dispute; and (iii) it can not per se be an industrial dispute but may become one if taken up by a trade union or a number of workmen.
This Court discussed the scope of industrial dispute as defined in section 2(k), of the Central Act, and after referring to the conflict of judicial opinion as to its applicability to the case of a dispute between an employer and a single workman further observed: of the last of the three views stated above, and there is considerable reason behind it.
Notwithstanding that the language of section 2(k) is wide enough to cover a dispute between an employer and a single employee, the scheme of the does appear to contemplate that the machinery provided therein should be set in motion, to settle only disputes which involve the rights of workmen as a class and that a dispute touching the individual rights of a workman was not intended to be the subject of an adjudication under the Act, when the same had not been taken up by the union or a number of workmen." (1) ; (2) ; 764 Although the question did not directly arise, this Court in D .
N. Banerji vs P. R. Mukherjee and others(1) discussed the meaning of the expression 'industrial dispute ' and was of the opinion that it "conveys the meaning to the ordinary mind that the dispute must be such as would affect large groups of workmen and employers ranged on opposite sides.
But at the same time, having regard to the modern conditions of society where capital an labour have organised themselves into groups for the purpose of fighting their disputes and settling them on the basis of the theory that in union is strength, and collective bargaining has come to stay, a single employee 'section case might develop into an industrial dispute, when as often happens, it is taken up by the trade union of which he is a member and there is a concerted demand by the employees for redress".
This view is in consonance with the basic idea underlying modern industrial legislation.
The interpretation given to the corresponding phrase "trade dispute" in English law and "industrial dispute" in Australian Law also accords with this view and in the absence of an express provision to the contrary or necessary intendment there is no reason to give a different interpretation to the expression in the Indian Statute.
According to English decisions an individual dispute of a workman is not included in 'trade dispute ' which corresponds to 'Industrial Dispute ' in the Indian Act.
In the English Trade Disputes Act of 1906 and 1919 as also in Reg.
58 AA of the Defence (General) Regulation, 1939, 'trade dispute ' was defined in language very similar to 'industrial dispute ' in the Indian Statute.
Dealing with a trade dispute, Lord Shaw in Conway v, Wade (2) said,: " But I cannot see my way to hold that "trade dispute" necessarily includes accordingly every case of person al difference between any one workman and one or more of his fellows.
It is true that after a, certain stage even such a dispute, although originally grounded, (1) ; , 310.
(2) , 520.
765 it may be, upon personal animosity, may come to be a subject in which sides are taken, and may develop into a situation of a general aspect containing the characteristics of a trade dispute; but until it reaches that stage I cannot hold that a trade dispute necessarily exists." Lord Wright observed in National Association of Local Government Officers vs Bolton Corporation (1) " I think the same may be said of the Industrial Courts Act and of reg.
58 AA, in both of which the word 'trade ' is used in the very wide connotation which it bears in the modem legislation dealing with conditions of employment, particularly in relation to matters of collective bargaining and the like. " Ex parte Keable Press Ltd.(2) was an instance of an individual dispute developing into a 'trade dispute ' because.
of the strike by a union to enforce the rein statement of dismissed workman.
That was how this term (trade dispute) was interpreted by the Court of Appeal in R. vs National Arbitration Tribunal(3) after taking into consideration the definition of the word 'dispute '.
In Australian cases also, without specific reference to any definition of the phrase the courts have excluded individual disputes from the scope of industrial disputes.
In Jumbunna Coal Mine vs Victorian Coal Miners Association (4), Griffths C.J. observed: " An industrial dispute exists where a considerable number of employees engaged in some branch of industry make common cause in demanding from or refusing to their employers (whether one or more) some change in the conditions of employment which is denied to them. . . . . . . . . " Similarly in Federated Saw Mills & Co. Employees of Australasia vs James Moore & Son Proprietory Ltd. (5), Griffths C.J. gave the characteristics of an industrial dispute as follows: " It is necessary at the outset to consider the meaning which the term 'industrial dispute ' conveyed (1) , 185.
(2) (3) (4) [1908] 6 C.L.R. 309, 332.
(5) ; , 487, 488.
766 in 1900 to the, minds of persons conversant with the English language. . . . "The word 'industrial denotes two qualities which distinguish them from ordinary private disputes between individuals, namely (2) that on one side at least of the dispute the disputants are a body of men acting collectively and not individually.
" Isaacs J. in George Hudson Ltd. vs Australian Timber Workers ' Union(1) stated: "The very nature of an 'industrial dispute ', as distinguished from an individual dispute, is to obtain new industrisl conditions, not merely for the specific individuals then working It is & 'battle by the claimants, not for themselves alone and not as against the respondents alone, but by the claimants so far.
as they represent their class According to Griffths C.J. "The term "industrial dispute" connotes a, real and substantial difference having some element of persistency, and likely, if not adjusted, to endanger the industrial peace of the community".
Vide Federated Saw Mills Case(2) at p. 488.
The same meaning was attached to the expression by Latham C.J. in Metal Traders Employers Association vs Amwlgamated Engineering Union(3) at p. 403: "Industrial disputes are essentially group contests there is always an industrial group on at least one side.
A claim of an individual employee against his employer is not in itself an industrial dispute We shall now refer to the Indian decisions which bear on this question.
Rajamannar C.J. in Kandan Textile Ltd. vs The Industrial Tribunal,,Madras and another(4) held that the definition of industrial dispute is wide enough to cover a dispute between an employer and an individual workman but taking into consideration section 18 of the Central Act he was of the opinion that such an extended definition cannot be given to it in section 2(k) of the Central Act.
Mack J. agreed with the decision of Rajamannar C. J. but he said that the case of an English language.
, (1) (1923] ; , 441.
(2) ; , 487, 488.
(3) ; , 403.
(4) A.I.R. 1951 Madras 616.
767 individual workman if taken up by the worker 's union makes such a dispute an industrial dispute.
In that case 1 1 items of difference were referred to the Industrial Tribunal.
, One of the items in dispute was the wrongful removal of a workman, Sundaram by name.
In the ', High Court an objection was taken to the legality of the award on the ground that no industrial dispute existed and that there was no material before the Government on the basis of which it could make a reference.
It was held that the dispute as to a single workman was not an industrial dispute.
Kandan Textile Ltd. case (1) was followed in United Commercial Bank, Ltd. vs The Commissioner of Labour, Madras (2) which was a case under section 41 of the Madras Shops and Establishments Act and the right of appeal given to an individual employee against the order of the employer dispensing with his services under section 41(2) of Madras Shops and Establishments Act was challenged on the ground that it had been taken away by the Central Act.
It was held that an individual worker had the right to appeal.
Vishwanatha Sastri J. in his judgment referred with approval to the distinction made between an individual dispute and an industrial dispute in Kandan Textile Ltd. vs Industrial Tribunal, Madras (supra).
The second view that such a dispute falls within the definition of the word "industrial dispute" is supported by a decision of a Full Bench of the Labour Appellate Tribunal Swadeshi Cotton Mills Co. Ltd. vs Their Workmen (3) There the question was mainly decided on the basis of section 33 A of the Central Act (introduced in 1950) which gives the right to an individual workman dismissed or dealt with contrary to section 33 of the Act during an industrial dispute to raise the matter before a tribunal.
The introduction of section 33 A would not alter the construction to be placed on the phrase 'industrial dispute '.
On the contrary it supports the view that an individual dispute is not comprised in that phrase.
In view of what has been said above, we are of the opinion that in so far as that case lay& down (3) 768 that a dispute raised by an individual workman as to his personal grievance is within an industrial dispute, it cannot be said to have been correctly decided.
The cases which support the third view are the following: J. Chowdhury vs M. C. Bannerjee (1) Was a case in which a lino operator was removed from service on the ground of his negligence and arrears of work.
The matter was referred to the Industrial Tribunal under the Central Act.
The Management moved the High Court under article 226 of the Constitution and section 45 of the Specific Relief Act and it was held that the Tribunal had no jurisdiction to entertain the matter as on a perusal of the various sections of the Central Act including sections 10 and 18 the dispute of an individual workman was not covered by the term industrial dispute. ' In Bilash Chandra Mitra vs Balmer Lawrie & Co. a suit was brought for the recovery of arrears of wages on the basis of an award of an Industrial Tribunal and one of the issues raised was ' whether an 'individual dispute ' fell within 'industrial dispute '.
Following the judgment in I. Chowdhury vs M. C. Bannerjee (1), Bose J. held that it did not.
Another case in which this view was held is N. 1.
Assurance Co. vs C. G. I. Tribunal (3).
There the Government referred the question of dismissal of an employee of an Assurance Co. and it was not proved that his case was taken up by the employees association.
The same view was adopted in Standard Vacuum Oil Co. vs Industrial Tribunal (4).
In Lakshmi Talkies, Madras vs Munuswami and Others (5), Balakrishna Ayyar J. held that an industrial dispute ' arises where a case of an individual workman is espoused by a union.
The same view was taken in Lynus & Co. vs Hemanta Kumar Samanta (6).
The view taken in these cases is in accord with the interpretation we have put on the expression 'Industrial dispute ' as defined in the U. P. Act or the Central Act.
(1) (2) [1953] A? C.W.N. tog.
(3) [l953] I.L.R. 32 Patna 181 (4) I.L.R. [1952] Trav.
Co. 432.
(5) [1055] L.L.J. 477. '(6) , 769 Taking into consideration the whole tenor of the Act and the decisions of this Court the decided cases to the extent that they take a contrary view, i.e., an individual dispute is comprised in an 'industrial dispute ' must unless there is something peculiar as to facts, be In spite of the fact that the making of a reference by the Government under the is the exercise of its administrative powers, that is not destructive of the rights of an aggrieved party to show that what was referred was not an 'industrial dispute ' at all and therefore the jurisdiction of the Industrial Tribunal to make the award can be questioned, even though the factual existence of a dispute may not be subject to a party 's challenge.
State of Madras vs C. P. Sarathy (1), It may also be noted that the notification issued by the U. P. Government on January 3, 1953, already quoted proceeds on the assumption that a dispute exists between the "employer and his workmen".
The points of dispute in the reference, however, comprise the wrongful termination of the service of only Tajammul Hussain, a lino operator.
The words used in the first part of the notification show that the Government was labouring under the misapprehension that this dispute was between the employer on the one hand and his workmen on the other, which, in fact it was not.
Tajammul Hussain could not be termed work , men (in the plural) nor could the U. P. Working Journalists Union be called "his workmen" nor is there any indication that the individual dispute had got transformed into an industrial dispute.
The very basis, therefore, of the reference was bad and must be held to be so.
We would, therefore, allow this appeal with costs.
Appeal allowed.
(1) , 347.
| A dispute between an employer and a single workman does not fall within the definition of " industrial dispute " under the U.P. industrial Disputes Act, 1947.
But though the applicability of the Act to an individual dispute as opposed to a dispute involving a group of workmen is excluded, if the workmen as a body or a consicrerable section of them make common cause with the individual workman then such a dispute would be an industrial dispute.
755 Central Provinces Transport Service Ltd. v Raghunath Gopal Patwardhan, ; and D. N. Banerji vs P. R. Mukherjee; , , referred to.
Swadeshi Cotton Mills Co. Ltd. vs Their Workmen, (1953) I L.L.J. 757, in so far as it decided that a dispute raised by an, individual workman is within an industrial dispute, disapproved.
Case law reviewed.
The third respondent was employed as a lino typist by the appellant company but on allegations of incompetence he was dismissed from service.
His case was not taken up by any union of workers of the appellant company nor by any of the unions of workmen employed in similar or allied trades, but the U.P. Working journalists Union, Lucknow, with which the third respondent had no connection took the matter to the Conciliation Board, Allahabad, and ultimately the Government made a reference to the Industrial Tribunal by a notification in which one of the points for determination referred was as to whether the services of the third respondent were wrongfully terminated by the management.
The legality of the reference was challenged by the appellant and the question was raised as to whether a dispute between an employer and a single workman falls within the definition of "industrial dispute" under the U.P.
Held, that the reference was bad because the dispute was not between the employer on the one hand and his workmen on the other, nor could the U.P. Working journalists Union be called " his workmen ", within the meaning of the U. P.
Though the making of a reference by the Government under the Act is the exercise of its administrative powers, an aggrieved party can question the jurisdiction of the Industrial Tribunal to show that what was referred was not an industrial dispute.
State of Madras vs C. P. Sarathy, , referred to.
|
Summarize this legal judgement text concisely | etition No. 252 of 1956.
Petition under Article 32 of the Constitution for the enforcement of fundamental rights.
Veda Vyasa, section K. Kapur and Ganpat Rai, for the petitioner.
G. C. Mathur and C. P. Lal, for the respondent.
April 5.
The Judgment of the Court was delivered by DAS C.J.
This is a petition filed under article 32 of the Constitution of India praying for a declaration that section 295A of the Indian Penal Code is ultra vires and unconstitutional and for a writ in the nature of certiorari quashing the petitioner 's conviction under that section and for ancillary reliefs.
The material facts lie within a narrow compass.
The petitioner is the editor, printer and publisher of a monthly magazine called Gaurakshak.
The magazine is devoted to cow protection.
In July or August, 1954, a Hindi Daily newspaper named 'Amrit Patrika ' of Allahabad printed and published an article or a cartoon about a donkey on which an agitation was started by the muslims of Uttar Pradesh.
The editor and printer and publisher of 'Amrit Patrika ' were prosecuted by the State, but they have been eventually acquitted by the High Court of Allahabad.
In the meantime, in its issue for the month of Kartik Samvat 2009, corresponding to November, 1952, an article was published in the petitioner 's magazine 'Gaurakshak. ' On December 12, 1952, the State Government ordered the prosecution of the petitioner on the basis of the said article.
Accordingly on June 8, 1953,acomplaint was filed in the court of the District Magistrate, Kanpur, 111 862 by the Senior Superintendent of Police, Kanpur, against the petitioner for offences under sections 153A and 295A of the Indian Penal Code.
The Magistrate by his order dated August 5, 1953, charged the petitioner under sections 153A and 295A and committed the petitioner to the Sessions Court of Kanpur for trial.
The petitioner pleaded not guilty.
The learned Sessions Judge, by his judgment dated November 16, 1953, acquitted the petitioner of the charge under section 153 Abut convicted him under section 295A and sentenced him to 18 months rigorous imprisonment and a fine of Rs. 2,000 and, in default of payment of the fine, to further rigorous imprisonment of 4 months.
The petitioner filed an appeal to the High Court at Allahabad.
The learned Single Judge, by his judgment dated October 25, 1956, held that the article was published with the deliberate and malicious intention of outraging the religious feelings of muslims and that the petitioner was guilty under section 295A of the Indian Penal Code.
The learned Judge, however, reduced the sentence of imprisonment to 12 months and the fine from Rs. 2,000 to Rs. 250 only.
An application for certificate to appeal to this Court under articles 132 and 134 having been rejected by the High Court on October 30, 1956, the petitioner moved this Court for special leave to appeal from the judgment of the Allahabad High Court dated October 25, 1956.
The petitioner also on December 5, 1956, presented the present petition under article 32 for the reliefs mentioned above.
The petitioner also made an application in this Court along with the writ petition for stay of the sentence passed on him.
On December 18, 1956, both the stay application and the petition for special leave were dismissed by this Court.
The petition under article 32 has now come up for hearing.
Presumably the petitioner has surrendered and is undergoing the sentence of imprisonment.
Learned counsel appearing in support of this petition urges that section 295A of the Indian Penal Code is ultra vires and void inasmuch as it interferes with the petitioner 's right to freedom of speech and expression guaranteed to him as a citizen of India by article 19(1)(a) of our Constitution.
The contention is that this section 863 cannot be supported as a law imposing reasonable restrictions on the exercise of the right conferred by article 19(1)(a) as provided in cl.
(2) of the said Article.
Learned counsel says that the interest of public order is the only thing in cl.
(2) which may possibly be relied upon by the State as affording a justification for its claim for the validity of the impugned section.
A law interfering with the freedom of speech and expression and imposing a punishment for its breach may, says counsel, be "in the interests of public order" only if the likelihood of public disorder is made an ingredient of the offence and the prevention of public disorder is a matter of proximate and not remote consideration.
Learned counsel points out that insulting the religion or the religious beliefs of a class of citizens of India may not lead to public disorder in all cases although it may do so in some case.
Therefore, where a law purports, as the impugned section does, to authorise the imposition of restriction on the exercise of the fundamental right to freedom of speech and expression in language wide enough to cover restrictions both within and without the limitation of constitutionally permissible legislative action affecting such right, the court should not uphold it even in so far as it may be applied within the constitutionally permissible limits as it is not severable.
So long as the possibility of its being applied for purposes not sanctioned by the Constitution cannot be ruled out it must, according to learned counsel, be held to be wholly unconstitutional and void.
Reference has been made to the cases of Romesh Thappar vs The St ate of Madras(1) and Brij Bushan vs The State of Delhi (2).
In Romesh Thappar 's case, in exercise of powers conferred on him by section 9(1 A) of the Madras Maintenance of Public Order Act, 1949, the Governor of Madras, being satisfied that for the purpose of securing public safety and the maintenance of public order it war,.
necessary so to do, prohibited the entry into or the circulation, sale or distribution in the State of Madras or any part thereof of the newspaper entitled 'Cross Roads ', an English Weekly published at Bombay.
(1) ; (2) ; 864 The impugned section section
9(1 A) was a law enacted for the purpose of securing the public safety and the maintenance of public order. 'Public order ' was said to be an expression of wide connotation and to signify that state of tranquillity which prevailed among the members of a political society as a result of the internal regulation enforced by the Government which they had established. 'Public safety ' used in that section was taken as part of the wider concept of 'public order '.
Clause (2) of article 19, as it stood then, protected a law relating, inter alia, to a matter which undermined the security of or tended to overthrow the State.
Some breach of public safety or public order may conceivably undermine the security of or tend to overthrow the State, but equally conceivably many breaches of public safety or public order may not have that tendency.
Therefore, a law which imposes restrictions on the freedom of speech and expression for preventing a breach of public safety or public order which may not undermine the security of the State or tend to overthrow the State cannot claim the protection of cl.
(2) of article 19.
Section 9(1 A) was challenged as it embraced both species of activities referred to above and as the section was not severable, the whole section was held to be bad.
In Brij Bushan 's case (supra) the validity of section 7(1)(c) of the East Punjab Public Safety Act, 1949, as extended to the Province of Delhi, came.
up for consideration.
That section provided that "the Provincial Government or any authority authorised by it in this behalf, if satisfied that such action is necessary for preventing or combating any activity prejudicial to the public safety or the maintenance of public order, may, by order in writing addressed to the printer, publisher or editor, require that any matter relating to a particular subject or class of subjects shall before publication be submitted for scrutiny".
It was held by this Court (Fazl Ali J. dissenting) that inasmuch as the section authorised the imposition of restrictions on the fundamental right to freedom of speech and expression guaranteed by article 19(1)(a) for the purposes of preventing activities prejudicial to 865 public safety and maintenance of public order, it was not a law solely relating to a matter which undermined the security of or tended to overthrow the State within the meaning Of Cl.
(2) of article 19 as it then stood.
The principles laid down in Romesh Thappar 's case were applied to this case and the law was held to be void.
The case of Chintaman Rao vs The State of Madhya Pradesh (1) has also been relied upon in support of the contention that where the language employed in the Statute is wide enough to cover restrictions on a fundamental right both within and without the limits of constitutionally permissible legislative action affecting the right and the possibility of its being applied for purposes not sanctioned by the Constitution cannot be ruled out, the law must be held to be wholly void.
After this Court decided the cases of Romesh Thappar (supra) and Brij Bushan (supra), cl.
(2) of article 19 of the Constitution was amended.
Clause (2), as amended, protects a law in so far as such law imposes reasonable restrictions on the exercise of the right conferred by sub cl.
(a) of cl.
(1) of article 19 "in the interests of the security of the State, friendly relations with foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence." The question for our consideration is whether the impugned section can be properly said to be a law imposing reasonable restrictions on the exercise of the fundamental right to freedom of speech and expression in the interests of public order.
It will be noticed that the language employed in the amended clause is "in the interests of" and not "for the maintenance of".
As one of us pointed out in Debi Soron vs The State of Bihar(2), the expression "in the interests of" makes the ambit of the protection very wide.
A law may not have been designed to directly maintain public order and yet it may have been enacted in the interests of public order.
It is pointed out that section 295A has been included in chapter XV of the Indian Penal Code which deals with offences relating to religion and not in chapter VIII (1) ; (2) A.I.R. (1954) Patna 254.
866 which deals with offences against the public tranquillity and from this circumstance it is faintly sought to be urged, therefore, that offences relating to religion have no bearing on the maintenance of public order, or tranquillity and, consequently, a law creating an offence relating to religion and imposing restrictions on the right to freedom of speech and expression cannot claim the protection of el.
(2) of article 19.
A reference to articles 25 and 26 of the Constitution, which guarantee the right to freedom of religion, will show that the argument is utterly untenable.
The right to freedom of religion assured by those Articles is expressly made subject to public order, morality and health.
Therefore, it cannot be predicated that freedom of religion can have no bearing whatever on the maintenance of public order or that a law creating an offence relating to religion cannot under any circumstances be said to have been enacted in the interests of public order.
These two Articles in terms contemplate that restrictions may be imposed on the rights guaranteed by them in the interests of public order.
Learned counsel then shifted his ground and formulated his objection in a slightly different way.
Insults to the religion or the religious beliefs of a class of citizens of India may, says learned counsel, lead to public disorders in some cases, but in many cases they may not do so and,, therefore, a law which imposes restrictions on the citizens ' freedom of speech and expression by simply making insult to religion an offence will cover both varieties of insults, i.e., those which may lead to public disorders as well as.those which may not.
The law in so far as it covers the first variety may be said to have been enacted in the interests of public order within the meaning of el.
(2) of article 19, but in so far as it covers the remaining variety will not fall within that clause.
The argument then concludes that so long as the possibility of the law being applied for purposes not sanctioned by the Constitution cannot be ruled out, the entire law should be held to be unconstitutional and void.
We are unable, in view of the language used in the impugned section, 867 to accede to this argument.
In the first place el.
(2) of article 19 protects a law imposing reasonable restrictions on the exercise of the right to freedom of speech and expression "in the interests of" public order, which is much wider than "for maintenance of" public order.
If, therefore, certain activities have a tendency to cause public disorder, a law penalising such activities as an offence cannot but be held to be a law imposing reasonable restriction "in the interests of public order" although in some cases those activities may not actually lead to a breach of public order.
In the next place section 295A does not penalise any and every act of insult to or attempt to insult the religion or the religious beliefs of a class of citizens but it penalises only those acts of insults to or those varieties of attempts to insult the religion or the religious beliefs of a class of citizens, which are perpetrated with the deliberate and malicious intention of outraging the religious feelings of that class.
Insults to religion offered unwittingly or carelessly or without any deli.
berate or malicious intention to outrage the religious feelings of that class do not come within the section.
It only Punishes the aggravated form of insult to religion when it is perpetrated with the deliberate and malicious intention of outraging the religious feelings of that class.
The calculated tendency of this aggravated form of insult is clearly to disrupt the public order and the section, which penalises such activities, is well within the protection of cl.
(2) of article 19 as being a law imposing reasonable restrictions on the exercise of the right to freedom of speech and expression guaranteed by article 19(1)(a).
Having regard to the ingredients of the offence created by the impugned section, there cannot, in our opinion, be any possibility of this law being applied for purposes not sanctioned by the Constitution.
In other words, the language employed in the section is not wide enough to cover restrictions both within and without the limits of constitutionally permissible legislative action affecting the fundamental right guaranteed by article 19(1)(s) and consequently, the question of severability does not 868 arise and the decisions relied upon by learned counsel for the petitioner have no application to this case.
For the reasons stated above, the impugned section falls well within the protection of el.
(2) of article 19 and this application must, therefore, be dismissed.
Application dismissed.
| This was a petition challenging the constitutional validity of section 295A of the Indian Penal Code and for quashing the petitioner 's conviction thereunder for publishing an article in a monthly magazine of which he was the printer, publisher and the editor.
It was contended on his behalf that the impugned section infringed his fundamental right to freedom of speech and expression conferred by article 19(1)(a) of the Constitution and was not a law imposing reasonable restrictions on the right in the interests of public order under cl.
(2) of article 19, which alone could have afforded a justification for it.
Held, that section 295A of the Indian Penal Code was well within the protection of Cl.
(2) of article 19 of the Constitution and its validity was beyond question.
The expression "in the interests of" occurring in the amended Cl.
(2) of article 19 had the effect of making the protection afforded by that clause very wide and a law not directly designed to maintain public order would well be within its protection if such activities as it penalised had a tendency to cause public disorder.
Debi Soron vs The State of Bihar, A.I.R. (1954) Pat. 254, referred to.
It was absurd to suggest that insult to religion as an offence could have no bearing on public order so as to attract cl.
(2) Of article 19 in view of the provisions of articles 25 and 26 of the Constitution which, while guaranteeing freedom of religion, expressly made it subject to public order.
861 Nor, having regard to the language and ingredients of section 295A of the Indian Penal Code, could it be contended that the restrictions imposed by it could be used for purposes other than those falling within the limits of the Constitution.
Romesh Thappar vs The State of Madras, ; ; Brij Bushan vs The State of Delhi, ; and Chintaman Rao vs The State of Madhya Pradesh, (1950) S.C.R. 759, held inapplicable.
|
Summarize this legal judgement text concisely | riminal Appeals Nos. 22 and 23 of 1957.
Appeals by special leave from the judgment and order dated August 7, 1956, of the Punjab High Court at Chandigarh in Criminal Appeals Nos. 253 and 250 of 1956 and Murder Reference No. 38 of 1956 arising out of the judgment and order dated May 21, 1956, of the Court of Additional Sessions Judge at Ludhiana in Trial No. 17 of 1956 and Case No. 9 of 1956.
Gyan Chand Mathur, for the appellant in Criminal Appeal No. 22 of 1957.
R. L. Kohli, for the appellant in Criminal Appeal No. 23 of 1957.
Gopal Singh and T. M. Sen, for the respondent in both the appeals.
April 10.
The Judgment of the Court was delivered by J.
GAJENDRAGADKAR J. Harbans Singh, Gurdial Singh and Sarwan Singh were charged in the court of the learned Additional Sessions Judge at Ludhiana with having committed an offence of murder punishable under section 302 of the Indian Penal Code.
The case against them was that they, along with Banta Singh, the approver, had intentionally caused the death of Gurdev Singh by inflicting injuries on his person with kirpan, toki and dang on November 23, 1955, within the limits of the village Sohian, police station Jagraon.
The learned trial judge held that the charge framed against all the three accused had been proved beyond a reasonable doubt.
That is why he convicted them of the offence charged and sentenced each one of them to death.
On appeal to the High Court of Punjab, the order of conviction and sentence imposed against Harbans Singh and Sarwan Singh was confirmed whereas the order of conviction and sentence against Gurdial Singh was set aside and he was ordered to be acquitted and discharged.
Accused No. 1, Harbans 955 Singh, and accused No. 3, Sarwan Singh, have come to this Court in appeal by special leave.
It would be convenient to state the prosecution case very briefly at the outset.
Gurdev Singh, the victim of the assault, was the brother of accused No. 1.
It appears that the father of the two brothers had left the Ga village some years ago and is apparently no longer alive.
Harbans Singh was a shirker and a waster and that made Gurdev Singh impatient.
When Gurdev Singh tried to improve Harbans Singh, Harbans Singh resented Gurdev Singh 's efforts and his irritation and annoyance had reached such a stage and extent that he began to plan his murder.
According to the story of the prosecution, Harbans Singh got in touch with his friends Sarwan Singh and Gurdial Singh and requested them to assist him in his plan to get rid of his brother.
It appears that Gurdial Singh himself was on inimical terms with Gurdev Singh because he was angry with Gurdev Singh for having cut jokes with his sister.
A few days before the commission of the offence, Harbans Singh and Sarwan Singh were sitting on a canal bank near their village enjoying their drink when Banta Singh joined them.
He was also asked to partake of the liquor and was told about the plan to murder Gurdev Singh.
A few days later there was another meeting between these three men and it was agreed that an attempt should be made to procure arms for the purpose of carrying out the plan Rakha was accordingly approached and as a result of the negotiations he sold a country made pistol and a cart ridge for Rs. 40 to Sarwan Singh.
Rakha was also requested to join the conspiracy.
He was however unwilling to respond and though he did not openly say 'no ' to the proposal, at the material time he refused to join the conspirators.
On the day of the offence itself, Sarwan Singh, Gurdial Singh and Banta Singh went by a bus together and got down near the road which leads to the village Sohian.
Then they proceeded on foot until they met Harbans Singh near the canal minor.
Harbans Singh then advised his co conspirators to hide themselves in the bushes.
He then fetched a bottle of liquor and all the four drank from it, This 956 took them to sunset time, when Harbans Singh left the place and promised his friends that he would send his brother to the place where they would lie concealed.
He also told them that he would give a signal as soon as his brother would approach the place of their concealment by clapping his hands.
In accordance with this plan Harbans Singh persuaded his brother to go ahead.
Sarwan Singh then coughDed and this raised an apprehension in the mind of Gurdev Singh that people for him.
So he some may be lying in wait called out to his brother Harbans Singh and said that he suspected that there were some people there.
Harbans Singh assured him that he would soon join.
Meanwhile, according to plan, the three assailants emerged from their place of concealment and attacked Gurdev Singh.
Harbans Singh also arrived on the scene and joined them in the assault.
The prosecution case is that Harbans Singh was armed with a kirpan, Gurdial Singh with a lathi, the approver Banta Singh with a toki and Sarwan Singh used a kirpan.
The attack was undoubtedly brutal and callous and it resulted in as many as 69 incised wounds and two contused injuries which had been caused with a blunt weapon.
Having assaulted (Gurdev Singh in this brutal manner his assailants ran away.
Harbans Singh returned to his village and raised a hue and cry.
He complained that his brother had been carried away by a number of persons and he pretended that his brother 's assailants were Darshan Singh, Jagat Singh, Gurnam Singh and Banta Singh of the village Pona.
The villagers , however, found that Harbans Singh was not keen on joining them in rendering help to the victim or in pursuing his assailants.
Finally, however, he was persuaded to accompany the villagers and the villagers in the company of Harbans Singh reached the stop where Gurdev Singh 's body was found in a pool of blood.
Thereafter Harbans Singh went to the police station and made a report of the occurrence at about 10 30 p.m.
He alleged in his report that his brother had been murdered by the aforesaid four persons of the village of Pona.
Purporting to act on this report, the police 957 reached the spot in the early hours of the next morning and so the investigation commenced.
It is clear that the police had their own doubts about the truth of the report made by Harbans Singh from the start and they suspected that it was Harbans Singh and his friends who were concerned with the commission of this foul offence.
Sarwan Singh, Gurdial Singh and Banta Singh were arrested on November 25 and Harbans Singh on November 26.
The investigating officer recovered from the person of Sarwan Singh a blood stained shirt and chadar and obtained from Sarwan Singh 's house a pistol and an empty cartridge on information given by him from the person of Gurdial Singh a blood stained turban was recovered and the information given by him led to the discovery of a stick or lathi.
This lathi was blood stained.
From Banta Singh 's person a blood stained chadar was recovered and the information given by him led to the discovery of a kirpan and a toki from a well in which they were thrown after the commission of the offence.
The prosecution also alleges that, on the information given by Harbans Singh, some blood stained clothes were recovered from Gurdev Kaur sister of Gurdial Singh.
It appears that, on November 30, Sarwan Singh offered to make a confessional statement and the confession was in fact recorded on the same day.
On December 2, Banta Singh was given pardon and made an approver.
That in brief is the prosecution case.
All the three accused deny any connection with the commission of the offence.
The learned Sessions Judge held that Banta Singh was a reliable witness.
Since Banta Singh is, however, an approver the learned Judge considered whether his evidence had received the requisite corroboration in material particulars and he held that it did.
The learned Judge also found that the confession made by Sarwan Singh was voluntary and true and in his opinion the evidence of Rakha and the other circumstantial evidence with regard to the blood stained clothes of the respective accused persons and the recovery of the weapons afforded sufficient corroboration in material particulars.
That is how he reached the conclusion that the charge of murder has 958 been proved against all the three accused.
On appeal it has been held by the learned Judges of the High Court of Punjab that the evidence given by the approver, Banta Singh, against accused Gurdial Singh was very discrepant and therefore unreliable and so they found that the case against Gurdial Singh had not been proved beyond a reasonable doubt.
In the result Gurdial Singh was acquitted; but the view taken by the learned Judges in respect of the prosecution case against Harbans Singh and Sarwan Singh was that the approver 's evidence supplied the basis for the prosecution case against them and since it was corroborated by circumstantial evidence to which reference has already been made and by the confession of Sarwan Singh, there was no difficulty in confirming the order of conviction and sentence passed against these two accused persons.
It is this view which is challenged before us by the two appellants in the present appeals.
Since the present appeals have been filed by special leave under article 136 of the Constitution, it would normally not be open to the appellants to raise questions of fact before us.
Prima facie the orders of conviction and sentence passed against the appellants are based on concurrent findings of fact and we would be slow to interfere with such findings unless we are satisfied that the said findings are vitiated by errors of law or that the conclusions reached by the courts below are so patently opposed to well established principles of judicial approach, that they can be characterised as wholly unjustified and even perverse.
On behalf of Harbans Singh, it has been urged.
before us by Mr. Kohli that the judgment of the High Court of Punjab suffers from a serious infirmity in that, in dealing with the evidence of the approver, the learned Judges do not appear to have addressed themselves to the preliminary question as to whether the approver is a reliable witness or not.
The problem posed by the evidence given by an.
approver has been considered by the Privy Council and courts in India on several occasions.
It is hardly necessary to deal at length with the true legal position in this matter.
An accomplice is undoubtedly a competent witness under 959 the Indian Evidence Act.
There can be, however, no doubt that the very fact that he has participated in ,the commission of the offence introduces a serious stain in his evidence and courts are naturally reluctant to act on such tainted evidence unless it is corroborated in material particulars by other independent evidence.
It would not be right to expect that such independent corroboration should cover the whole of the prosecution story or even all the material particulars.
If such a view is adopted it would render the evidence of the accomplice wholly superfluous.
On the other hand, it would not be safe to act upon such evidence merely because it is corroborated in minor particulars or incidental details because, in such a case, corroboration does not afford the necessary assurance that the main story disclosed by the approver can be reasonably and safely accepted as true.
But it must never be forgotten that before the court reaches the stage of considering the question of corroboration and its adequacy or otherwise, the first initial and essential question to consider is whether even as an accomplice the approver is a reliable witness.
If the answer to this question is against the approver then there is an end of the matter, and no question as to whether his evidence is corroborated or not falls to be considered.
In other words, the appreciation of an approver 's evidence has to satisfy a double test.
His evidence must show that he is a reliable witness and that is a test which is common to all witnesses.
If this test is satisfied the second test which still remains to be applied is that the approver 's evidence must receive sufficient corroboration.
This test is special to the cases of weak or tainted evidence like that of the approver.
Mr. Kohli 's contention is that since the learned Judges of the High Court of Punjab have failed to address themselves to this initial question, their appreciation of the approver 's evidence suffers from a serious infirmity.
In our opinion, this contention is well founded.
We have carefully read the judgment delivered by the High Court but we find no indication in the whole of the judgment that the learned Judges considered the character of the approver 's evidence and reached the 960 conclusion that it was the evidence given by a reliable witness.
The only statement which we find in the judgment dealing with this topic is that " since the main evidence in the case consists of the testimony of the approver it is necessary to consider the case of each J. appellant individually.
" With respect, this observation is open to the criticism which has been made against it by Mr. Kohli.
The argument that the character of the approver 's evidence has not been considered by the High Court cannot be characterised as merely academic or theoretical in the present case because, as we will presently point out, the evidence of the approver is so thoroughly discrepant that it would be difficult to resist the conclusion that the approver in the present case is a wholly unreliable witness.
Indeed it may be legitimate to point out that the learned Judges of the High Court have themselves criticised the evidence of the approver in dealing with the prosecution case against Gurdial Singh and have ultimately found that the account given by the approver is unreliable and, though there was circumstantial evidence which raised an amount of suspicion against Gurdial Singh, that would not be enough to sustain his conviction.
It seems to us that if it was found that the approver 's account against one of the accused persons was wholly discrepant, this finding itself should inevitably have led the court to scrutinise his evidence in respect of the other accused persons with greater caution.
Besides, it is somewhat unfortunate that the attention of the learned Judges of the High Court was presumably not drawn to the still more serious discrepancies in the evidence of the approver in regard to the part assigned to Harbans Singh in the commission of the offence.
In the evidence ' given by the approver before the trial court, he has definitely and unequivocally implicated Harbans Singh in the commission of the offence.
It has been brought out in the cross examination that in the very first statement made by the approver before the investigating officer on November 25 he had made statements about Harbans Singh which are wholly inconsistent with the subsequent story.
In this statement, the 961 approver had definitely stated that only the three of them were concerned with the commission of the offence, himself, Sarwan Singh and Gurdial Singh.
He had also stated clearly in the said statement that Harbans Singh did not join in murdering Gurdev Singh.
It is remarkable that in regard to almost every material particular about the part played by Harbans Singh in the commission of the offence the story disclosed by the approver at the trial is inconsistent with his first statement before the police.
In his statement at the trial, the approver assigns Gurdial Singh the possession of lathi and according to him Gurdial Singh subsequently took up the kirpan from Sarwan Singh and murdered Gurdev Singh after which Harbans Singh himself gave a blow with it at the neck of the victim.
In his statement before the police, the approver had said that Gurdial Singh had carried a kirpan.
We are deliberately not referring to the several other minor discrepancies which have been brought out in the evidence of the approver in his cross examination.
In our opinion, the discrepancies brought out in the evidence of the approver qua the prosecution case against Gurdial Singh coupled with the more serious discrepancies in his evidence in the prosecution case against Harbans Singh lead to only one conclusion and that is that the approver has no regard for truth.
It is true that in his second statement recorded on November 29, the approver substantially changed his first story and involved Harbans Singh in the commission of the offence, and in that sense, his second statement can be said to be consistent with his evidence at the trial.
But we cannot lose sight of the fact that, within three days after the recording of his second statement, he was granted pardon and his statement was recorded under section 164 of the Code of Criminal Procedure on the same day.
Therefore it would be legitimate for the accused to contend that the additions made by the approver in his subsequent statement may be the result of promise held out to him that he would be granted pardon.
Apart from this consideration, in view of the positive statements made by the approver in his first recorded statement, there can be no doubt 124 962 that the subsequent allegations against Harbans Singh are improvements and are the result of his decision to involve Harbans Singh in the commission of the offence.
If this was a case where the statements made by the approver on subsequent occasions merely added details which were not included in the first statement, it may perhaps have been a different matter.
It is true that omissions have not always the same significance as contradictions; but in the present case it is patent that the two sets of statements are wholly inconsistent and irreconcilable and that obviously leads to a very serious infirmity in the character of the witness.
It is indeed to be regretted that the attention of the learned Judges of the High Court was not drawn to this aspect of the matter and they were not invited to consider the initial question as to whether the approver, Banta Singh, was a reliable witness at all.
Every person who is a competent witness is not a reliable witness and the test of reliability has to be satisfied by an approver all the more before the question of corroboration of his evidence is considered by criminal courts.
If the evidence of the approver is discarded as being unreliable the case against Harbans Singh must inevitably fail.
No doubt there are some circumstances against him on which the prosecution relies.
The evidence of Rakha (P.W.8) would show that Harbans Singh and the other accused persons were concerned with the purchase of a pistol from Rakha.
Incidentally this pistol has not been used in the commission of the offence at all and that, in the circumstances, it is difficult to explain.
However, the purchase of a pistol from Rakha may merely raise a suspicion against Harbans Singh but suspicions, however strong, cannot take the place of proof.
Harbans Singh had injuries on his person and the conduct of Harbans Singh soon after the commission of the offence was very suspicious.
That again may raise a suspicion against Harbans Singh but without the basis of the approver 's evidence the suspicious circumstances can play no effective part in a criminal trial.
The discovery of clothes alleged to have been made at 963 the place of Gurdev Kaur cannot be pressed into service against Harbans Singh because Gurdev Kaur herself has not been examined and the importance of the recovery of a kirpan and a red scabbard from the spot cannot obviously be exaggerated.
In our opinion, there is no doubt whatever that, if the approver 's evidence is rejected as unreliable, the other evidence on which the prosecution relied against Harbans Singh cannot possibly sustain his conviction of the offence of murder.
We must, therefore, hold that the finding of the learned Judges of the High Court that the offence of murder has been proved against Harbans Singh is vitiated by a serious infirmity to which we have just referred and must be reversed.
If the learned Judges have failed to address themselves to the initial question of law before dealing with the merits of the approver and if, in dealing with his evidence, they have failed to take into account the glaring and obvious inconsistencies in the account given by the approver, it is open to the appellant to challenge the validity of their conclusion.
In the result, the appeal preferred by Harbans Singh must be allowed, the order of conviction and sentence passed against him must be set aside and he must be acquitted and discharged.
That takes us to the case of accused No. 3, Sarwan Singh.
We have already pointed out that the order of conviction passed against Sarwan Singh is in the words of the judgment of the High Court based on the fact that " there is the evidence of the approver and it is corroborated in every particular by his own confessional statement ".
Besides, there is other circumstantial evidence to which reference has already been made in narrating the prosecution story at the beginning of this judgment.
It would at once be noticed that, if we come to the conclusion that the approver is an unreliable witness, the basis of the evidence of the approver on which the learned Judges of the High Court proceeded even while dealing with the case against Sarwan Singh has been shaken.
If, in our opinion, the approver is unworthy of credit, then it would not be possible to consider the question 964 of the corroboration that his evidence receives from the confessional statement made by Sarwan Singh himself.
It is, however, true that Sarwan Singh has made a confession and in law it would be open to the court to convict him on this confession itself though he has retracted his confession at a later stage.
Nevertheless usually courts require some corroboration to the confessional statement before convicting an accused person on such a statement.
What amount of corroboration would be necessary in such a case would always be a question of fact to be determined in the light of the circumstances of each case.
In the present case, the learned Sessions Judge has considered the question about the voluntary character of the confession made by Sarwan Singh and has found in favour of the prosecution.
The judgment of the High Court shows that the learned Judges agreed with the view of the learned trial Judge mainly because the evidence of the Magistrate who recorded the confession appeared to the learned Judges to show that the confession was voluntary.
It is this view which is seriously challenged before us by Mr. Mathur on behalf of Sarwan Singh.
Prima facie whether or not the confession is voluntary would be a question of fact and we would be reluctant to interfere with a finding on such a question of fact unless we are satisfied that the impugned finding has been reached without applying the true and relevant legal tests in the matter.
As in the case of the evidence given by the approver, so too unfortunately in the case of the confession of Sarwan Singh the attention of the learned Judges below does not appear to have been drawn to some salient and grave features which have a material bearing on the question about the voluntary character of the confession.
Sarwan Singh was arrested on November 25.
His clothes were found blood stained and he is alleged to have been inclined to help the prosecution by making the statement which led to the discovery of incriminating articles.
All this happened on the 25th itself and yet, without any ostensible explanation or justification, Sarwan Singh was kept in police custody until November 30.
That is one fact 965 which is to be borne in mind in dealing with the voluntary character of his confession.
What happened on November 30 is still more significant.
On this day he was sent to the Magistrate to record his confessional statement.
The evidence of the Magistrate Mr. Grover shows that the accused was produced before him at about 2 30 p.m.
He was given about half an hour to( think about the statement which he was going to make and soon thereafter the confessional statement was recorded.
It is true that the Magistrate did put to the accused the questions prescribed by the circulars issued by the High Court of Punjab.
Even so, when the learned Magistrate was asked why he did not give more time to the accused before his confessional statement was recorded, his reply was frank and honest.
He said that the accused seemed to insist upon making a statement straightaway.
The Police Sub Inspector who had taken the accused to the Magistrate was apparently standing in the verandah outside in the Magistrate 's office.
The doors of the office were closed but the fact still remains that the Sub Inspector was standing outside.
The evidence of the Magistrate also shows that, soon after the statement was finished, the Sub Inspector went to the Magistrate 's room again.
The person of the accused showed some injuries and.
yet the learned Magistrate did not enquire how the accused came to be injured.
It is in the light of these circumstances that the question falls to be considered whether the confession made by the accused can be regarded as voluntary.
It is hardly necessary to emphasize that the act of recording confessions under section 164 of the Code of Criminal Procedure is a very solemn act and, in discharging his duties under the said section, the Magistrate must take care to see that the requirements of sub section
(3) of section 164 are fully satisfied.
It would of course be necessary in every case to put the questions prescribed by the High Court circulars but the questions intended to be put under sub section (3) of section 164 should not be allowed to become a matter of a mere mechanical enquiry.
No element of casualness should be allowed to creep in and the Magistrate should be fully satisfied that the confessional statement which the accused 966 wants to make is in fact and in substance voluntary.
Incidentally, we may invite the attention of the High Court of Punjab to the fact that the circulars issued by the High Court of Punjab in the matter of the procedure to be followed, and questions to be put to the accused, by Magistrates recording confessions under section 164 may be revised and suitable amendments and additions made in the said circulars in the light of similar circulars issued by the High Courts of Uttar Pradesh, Bombay and Madras.
The whole object of putting questions to an accused person who offers to confess is to obtain an assurance of the fact that the confession is not caused by any inducement, threat or promise having reference to the charge against the accused person as mentioned in section 24 of the Indian Evidence Act.
There can be no doubt that, when an accused person is produced before the Magistrate by the investigating officer, it is of utmost importance that the mind of the accused person should be completely freed from any possible influence of the police and the effective way of securing such freedom from fear to the accused person is to send him to jail custody and give him adequate time to consider whether he should make a confession at all.
It would naturally be difficult to lay down any hard and fast rule as to the time which should be allowed to an accused person in any given case.
However, speaking generally, it would, we think, be reasonable to insist upon giving an accused person at least 24 hours to decide whether or not he should make a confession.
Where there may be reason to suspect that the accused has been persuaded or coerced to make a confession, even longer period may have to be given to him before his statement is recorded.
In our opinion, in the circumstances of this case it is impossible to accept the view that enough time was given to the accused to think over the matter.
Indeed, any Magistrate with enough criminal experience would have immediately decided to give longer time to Sarwan Singh in the present case for the obvious reason that Sarwan Singh appeared to the learned Magistrate to be keen on making a confession straightaway.
The learned Magistrate himself has fairly stated that he would 967 have given him longer time but for his insistence to make a confession without delay.
This insistence on the part of Sarwan Singh to make a confession immediately should have put the learned Magistrate on his guard because it obviously bore, traces of police pressure or inducement.
Unfortunately, the effect of the failure of the learned Magistrate to ' grant enough time to the accused to consider the matter has not been considered by the learned Sessions Judge and has been wholly ignored by the learned Judges of the High Court.
Besides, in neither court below has any attention been paid to the fact that Sarwan Singh appeared to have been kept in police custody without any justification between November 26 and November 30.
We have carefully considered all the relevant facts bearing on this question and we see no escape from the conclusion that the failure of the learned Judges of the High Court to take into account these material facts has introduced a serious legal infirmity in their conclusion that the confession made by Sarwan Singh is voluntary.
That is why we think we must reverse this conclusion.
There is, besides, another fact which is equally fatal to the. prosecution case.
Even if the confession is held to be voluntary, it must also be established that the confession is true and for the purpose of dealing with this question it would be necessary to examine the confession and compare it with the rest of the prosecution evidence and the probabilities in the case.
In our opinion, some material points mentioned in the confessional statement are not shown to be true.
Sarwan Singh says that when Gurdev Singh was assaulted he and his brother Harbans Singh were walking together.
On the other hand the prosecution story is that Harbans Singh had first contacted his accomplices and had told them that he would send Gurdev Singh towards the spot where the accomplices would lie in wait for him.
The story further is that when Gurdev Singh suspected that there were some people near about he shouted to Harbans Singh and before Harbans Singh came on the spot assault had begun.
This part of the prosecution story as deposed to by the 968 approver is inconsistent with the material statement in the confession.
According to the confession, Dial Singh gave a Dang blow to Gurdev Singh on the head from the front.
This statement is not borne out by medical evidence.
There does not appear to be a corresponding injury on the head of the victim.
Sarwan Singh says that he took the kirpan which was first used by Harbans Singh and gave two blows to Gurdev Singh on his thigh.
This statement again is not borne out by the medical evidence about the injuries on the body of the victim.
Similarly, the statement of Sarwan Singh that the handle of the kirpan was broken and he got his finger injured with it is not easily reconcilable with the medical evidence about the injury itself.
Unfortunately these discrepancies between the confessional statement and the main prosecution evidence given by the approver have not been noticed by the learned Judges of the High Court.
Indeed, after having found that the confession was voluntary,it appears to have been assumed by the learned Judges that the confession was true and that, in our opinion, is another infirmity in the conclusion reached by the High Court.
That leaves the other circumstances which have been proved against Sarwan Singh to be considered.
There were injuries on his person.
They are thus described by the doctor: " 1.
A superficial incised wound with a scab, 3/8" x 1/12" on the left side of the face, just above the left moustache.
2.An abrasion with a scab 1/2" x 1/4" on the outer surface of the middle digit of the left ring finger.
An abrasion with a scab 1/8" x 1/8" on the outer surface of the middle digit of the left little finger.
4.An abrasion with a scab 1/4" x 1/4" on the outer surface of the terminal inter digital joint of the left little finger.
All the injuries were simple and of about two days duration.
Injury No. 1 was caused by sharpedged weapon and the rest by some blunt weapon.
" 969 In his cross examination Dr. Singh admitted that injury No. I could have been caused by razor blade as suggested by the counsel for Sarwan Singh and injuries Nos. 2 to 4 could have been caused by rubbing against some hard substance.
In other words, on medical evidence it is difficult to reject the explanation of the accused as unreasonable or palpably untrue.
Then we have the evidence of blood stains on the shirt and chadar worn by Sarwan Singh.
If the explanation given by Sarwan Singh about his injuries is not unreasonable then the presence of blood stains on his dress cannot be seriously pressed against him.
The evidence of Rakha about the negotiations and purchase of a pistol from him and about the part of Sarwan Singh in that transaction no doubt may suggest that Sarwan Singh was associated with the criminals but that is very far from proving the charge of murder against him.
Incidentally, as we have already observed, if the pistol was purchased it is difficult to understand why it was not used.
Then we have the evidence of the shoes which were found on the spot.
The evidence of the shoe maker Santa Singh suggests that he had identified the pair of shoes as belonging to Sarwan Singh that very night.
According to him, he has been manufacturing shoes like this pair though not on a large scale ' Unfortunately, in his examination under section 342 of the Code, no question had been put to Sarwan Singh about these shoes.
It is not unlikely that Sarwan Singh may have offered to demonstrate that the shoes did not fit in with his feet.
In any event, failure to give him an opportunity to explain the circumstances by putting an appropriate question to him under section 342 justifies his argument that this circumstance should not be used against him.
Besides, like the evidence given by Rakha, the identity of the shoes would also be a very minor circumstance in relation to the charge of murder for which Sarwan Singh is being tried.
The result is that, if the approver 's evidence is discarded as unworthy of credit and his own retracted confession is excluded from consideration as not being voluntary or true, whatever circumstantial evidence remains is obviously insufficient to 125 970 bring home to Sarwan Singh the charge framed against him.
If that be the true position, we must hold that the learned Judges of the High Court were in error in convicting Sarwan Singh of the offence of murder.
It is no doubt a matter of regret that a foul cold blooded and cruel murder like the present should go unpunished.
It may be as Mr. Gopal Singh strenuously urged before us that there is an element of truth in the prosecution story against both the appellants.
Mr. Gopal Singh contended that considered as a whole, the prosecution story may be true; but between 'may be true ' and 'must be true ' there is inevitably a long distance to travel and the whole of this distance must be covered by legal, reliable and unimpeachable evidence.
We have carefully considered all the arguments which Mr. Gopal Singh urged before us; but we do not think it would be possible to regard the approver as a reliable witness or to hold that the confession of Sarwan Singh is voluntary or true.
In the result, the appeal preferred by Sarwan Singh must be allowed, the order of conviction and sentence passed against him must be set aside and he must be acquitted and discharged.
Apppeals allowed.
| The appellants and G were convicted of the offence of murder by the Sessions Court on the basis of the evidence of the approver, which it considered reliable, and the confession made by the first appellant which it found to be voluntary and true.
The High Court held that the evidence of the approver as against G was very discrepant and.
unreliable and set aside his conviction but, nevertheless, confirmed the conviction of the appellants.
The appellants appealed to the Supreme Court.
It was found (1) that the statement originally made by the approver as against the second appellant was wholly inconsistent and irreconcilable with the evidence given by him in Court and that the High Court did not consider the question as to whether the approver was a reliable witness at all, (2) that the Magistrate who recorded the confession did not fully comply with the procedure to be adopted to ensure that it was voluntary, (3) that the prosecution story as deposed to by the approver was inconsistent with the material statement in the confession, and (4) that the High Court while deciding whether the confession was voluntary assumed that it was true.
Held, that the conviction of the appellants must be set aside.
The appreciation of an approver 's evidence has to satisfy a double test.
It must show that be is a reliable witness and that his evidence receives sufficient corroboration.
The act of recording confessions under section 164 of the Code of Criminal Procedure is a solemn one and in discharging his duties under the said section the Magistrate must take care to see that the requirements of sub section
(3) Of section 164 are fully satisfied.
When an accused person is produced before the Magistrate by the investigating officer, it is of the utmost importance that the mind of the accused person should be completely freed from any possible influence of the police and he must be sent to jail custody and given adequate time to consider whether he should make a confession at all.
Ordinarily, he should be given at least 24 hours to decide.
Even if a confession is voluntary, it must also be established that it is true and, for that purpose, it is necessary to examine it 123 954 and compare it with the rest of the prosecution evidence and the probabilities of the case.
|
Summarize this legal judgement text concisely | riminal Appeal No. 50 of 1957.
Appeal by special leave from the judgment and order dated January 27, 1956, of the Rajasthan High Court at Jodhpur in Criminal Appeal No. 119 of 1954 arising out of the judgment and order dated March 23, 1954, of the Court of the Sessions Judge at Ganganagar in Original Criminal Case No. 74 of 1953.
Mohan Behari Lal, for the appellant.
Kan Singh and T. M. Sen, for the respondent.
1957 April 2.
The Judgment of the Court was delivered by KAPUR J.
Bhagwandas and Netram are two brothers who along with Mt. Rameshwari, a daughter 855 of the former, were tried by the Sessions Judge of Ganganagar for an offence under section 302 of the Indian Penal Code but were acquitted.
On appeal to the High Court of Rajasthan, the order of acquittal of Bhagwandas and Netram was reversed and they were convicted under s.302 read with section 34 and sentenced to transportation for life.
The order as to Mt. Rameshwari was affirmed and she was acquitted.
The convicted persons have obtained Special Leave to appeal under article 136 of the Constitution.
he appeal is founded on two grounds: (1) that there was no evidence against the appellants sufficient to warrant a conviction and (2) that there were no compelling reasons for reversal of the judgment of acquittal.
According to the prosecution the canal after a temporary ' closure restarted flowing on May 5, 1953.
And although it was not his turn of water the deceased Shivlal was allowed to take the water to irrigate his fields.
On May 6 the canal was flowing to its full capacity and Shivlal was to take his turn of water which was of 6 hours duration from 8 a.m. to 2 p.m. but he watered his lands from 8 a.m. to 10 30 a.m. because the village diggi (pond) which was empty had to be filled up.
Mirab Ram Karan P. W. 1 with the consent of Shivlal diverted the water for the purpose of filling up the diggi, promising him (Shivlal) to.
get him the rest of his turn of water, i.e., for 3 1/2 hours after the diggi had been filled up.
The diggi was filled up by 1 p.m. on the 7th.
Shivlal then wanted to divert the water into his field but Bhagwandas prevented him from doing so claiming the turn to be his.
According to Ram Karan Mirab P. W. I the turn of Bhagwandas was after Surta whose turn was next to that of Shivlal.
As Shivlal was prevented from taking his turn of water he started walking towards the village saying that he would go and speak to Mirab.
Bhagwandas thereupon shouted that " the enemy was going " and hit Shivlal on the head with a kassi.
Netram then hit Shivlal with lathi as a result of which he fell down and then both beat Shivlal, and 856 Mt. Rameshwari also, it was alleged, joined in this beating with a wooden handle of a kassi.
This occurrence was witnessed by Hazari P. W. 3 who was grazing his camels in the field of Surta.
He went up to the place where the beating was going on and shouted to the assailants who " went away " leaving their kassi behind.
Hazari found Shivlal seriously injured and unconscious.
He sprinkled some water on his face which revived Shivlal and the latter asked Hazari to take him to the Thana but Hazari helped him to walk up to the Khala (threshing floor) of Hukma which was at a short distance from that place.
Hazari P. W. 3 has stated that he left Shivlal with Jora, Jagmal, Bhogar, Begaram and Binja, and on their asking him he (Hazari) told them what he had seen.
Shivlal was then taken to Raisinghnagar by Bhaggu and Jagmal on a she camel to the shop of Gyani ham P. W. 4.
There Shivlal told Gyani Ram also that Bhagwandas, Netram and Rameshwari had assaulted him because of the water ' dispute and also asked Gyani Ram to send for his son Ram Pratap and his Artya (Commission Agent) Ishardas.
Ram Pratap came at about 6 p. m. Shivlal repeated the story to him and was then taken to the hospital by Jagmal, Bhaggu and others.
At the hospital he was treated by the doctor P. W.
I I but died the following day (8th) at 8 15 a. m.
The First Information Report was based on a written report exhibit P 1 by Ram Pratap s/o Shivlal.
It was recorded on May 7 at about 7 30 p. m.
The prosecution supported their case by the evidence of two eye witnesses, dying declarations made to 3 persons and on the recovery of the kassi.
They produced two eye witnesses Begaram P. W. 2 and Hazari P. W. 3.
The dying declarations were made to three persons first to Jora P. W. 7, later to Gyaniram P. W. 4 at his shop and lastly to Ram Pratap P. W. 5 who arrived at the shop at 6 p. m.
If the dying declaration was made to this witness it must have been at that time.
According to the doctor 's evidence Shivlal was unconscious when he was brought to the hospital at 5 p. m, He had 15 injuries on his body, out of which 857 injury No. 1 was with a sharp edged weapon and injury No. 2 with a blunt weapon and both these injuries were grievous and were " individually and collectively fatal sufficient to cause death.
" The learned Sessions Judge disbelieved the whole evidence and acquitted the accused.
He was of the opinion that the evidence produced by the prosecution was not " free from suspicion and not sufficient to convict them ".
Begaram P. W. 2 was disbelieved both by the Sessions Judge and the High Court.
The learned Sessions Judge described Hazari as a " facile fluent liar " but his testimony was accepted by the High Court.
Both courts rejected the statement of Ram Pratap but the statements of Gyaniram and Jora were accepted by the High Court although they were rejected by the Sessions Judge.
The High Court has relied upon the testimony of one eye witness Hazari P. W. 3 and two witnesses before whom Shivlal is alleged to have made two dying declarations.
There are apparent contradictions between the testimony of Hazari and Bega.
The learned High Court Judges disposed of this by saying that Bega 's presence "on the spot is open to grave doubts.
As such it is, in our opinion, not proper to contradict the statement of a man who was present on the spot by using the statement of another man who was in all probability not there." The learned Judges have made the following significant observation in regard to Hazari: " It seems to us that Hazari had said this because the prosecution was producing Bega, and he must have been asked to say that Bega was also present.
So far as the story of Hazari about the incident itself is concerned, nothing has been brought out in his cross examination to throw doubts on this part of his statement.
" They also pointed out, but attached no importance, to other contradictions in the statements of Hazari made before the trial court and before the Police.
If as observed by the learned Judges of the High Court, Hazari had mentioned the presence of Bega merely I 858 because the latter was to be produced as a prosecution witness and because he (Hazari) had been asked to mention it, then it would detract so materially from his reliability that it would be dangerous to accept his testimony as being of any great value which is still more diminished by the finding as to the innocence of Mt. Rameshwari. ' The other piece of evidence which the prosecution relied upon was the two dying declarations made by Shivlal to Gyaniram P. W. 4 and Jora P. W. 7.
Besides the infirmities which the testimony of these two witnesses (Gyaniram P. W. 4 and Jora P. W. 1) suffered from due to material contradictions in their respective statements made at various stages of the case and which have been pointed out by the learned Sessions Judge who said about Gyaniram: " In such a state of affairs I refuse to put any weight and value to the statement of Gyaniram. . . . their evidence cannot be a sure foundation for maintaining the conviction if the statement of Hazari the sole eye witness is disregarded, as it must be disregarded in this case; because ordinarily a dying declaration of the kind which the prosecution has relied upon is by itself insufficient for sustaining a conviction on a charge of murder.
The learned Sessions Judge was of the opinion that the evidence of the doctor P. W. II made the story that Shivlal could walk for a little distance upto the Khala of Hukma or was able to talk so as to make a dying declaration, improbable.
But the learned Judges of the High Court disposed of this matter by saying that the doctor was comparatively young and that his statement was not in accord with the opinion expressed in books on Medical Jurisprudence by authors like Modi and Lyon.
But it cannot be said that the opinions of these authors were given in regard to circumstances exactly similar to those which arose in the case now before us nor is this a satisfactory way of disposing of the evidence of an expert unless, the passages which are sought to discredit his opinion are put to him.
This Court in Sundarlal vs The State of Madhya Pradesh (1) disapproved of Judges drawing (1) A.I.R. 1954 section C. 28 859 conclusions adverse to the accused by relying upon such passages in the absence of their being put to medical witnesses.
The learned Judges of the High Court were, therefore, in error in accepting the testimony of these witnesses in support of the correctness of the two dying declarations nor could the statement of the deceased alleged to have been made in the circumstances of this case be considered sufficient to support the conviction of the accused.
The recovery of the kassi is a wholly neutral circumstance because it has not been proved that it belonged to Bhagwandas.
Although this Court will not interfere with the findings of the High Court because its conclusions on the evidence as to the guilt or innocence of the accused differ from that of the High Court, yet where the evidence is such that no Tribunal could legitimately infer from it that the accused is guilty this court would set aside the conviction.
The Judicial Committee of the Privy Council in Stephen Seneviratne vs The King (1) in setting aside an order of conviction said : ".
. there are here no grounds on the evidence, taken as a whole, upon which any Tribunal could properly, as a matter of legitimate inference, arrive at a conclusion that the appellant was guilty. .
In our view the evidence in the present case is of such quality and no legitimate inference of guilt of the accused could properly be drawn.
The second point on which the judgment of the High Court is assailed is the lack of compelling reasons for setting aside the judgment of acquittal.
This court has held that the High Court should not set aside an acquittal unless there are " substantial and compelling " reasons for doing so.
Surajpal Singh vs State(1) Ajmer Singh vs The State of Punjab (3) Aher Raja Khima vs The State of Saurastra (4).
The judgment of the High Court does not disclose any such reasons justifying interference with the findings of the trial Court.
(1) A.I.R. 1936 P.C. 289, 299.
(2) ; , 201.
(3) ; , 423, (4) ; 860 We would, therefore, allow this appeal, set aside the judgment of the Rajasthan High Court, restore that of the Sessions Judge and order the acquittal of the accused.
Appeal allowed.
| The High Court should not set aside an acquittal unless there are "substantial and compelling" reasons for doing so.
Surajpal Singh vs State, ; , Ajmer Singh vs The State of Punjab; , , Aher Raja Khima vs The State of Saurashtra; , , followed.
It is not a satisfactory way of disposing of the evidence of an expert witness to discredit it by reference to text books unless the passages which are sought to discredit his opinion are put to him.
Sunderlal vs The State of Madhya Pradesh, A.I.R. (1954) S.C. 28, followed.
Although the Supreme Court will not interfere with the find ings of the High Court because its conclusions on the evidence as to the guilt or innocence of the accused differ from that of the High Court, yet where the evidence is such that no tribunal could legitimately infer from it that the accused is guilty the Supreme Court would set aside the conviction.
Stephen Seneviratne vs The King, A.I.R. (1936) P.C. 289, relied on.
|
Summarize this legal judgement text concisely | Criminal Appeal No. 145 A of 1954.
972 Appeal under Article 132(1) of the Constitution of India from the Judgment and Order dated July 23, 1954, of the Madras High Court in Criminal Miscellaneous Petition No. 922 of 1954.
Porus A. Mehta and R. H. Dhebar, for the appellants.
B. Pocker and B. K. B. Naidu, for the respondent.
April 11.
The Judgment of the Court was delivered by IMAM J.
The appellant obtained a certificate from the Madras High Court to the effect that the case involved a substantial question of law as to the interpretation of the Constitution under article 132(1), in consequence of which the present appeal is before us.
The respondent had filed a petition in the High Court under section 491 of the Code of Criminal Procedure praying that directions in the nature of habeas corpus may be issued for his production before That Court to be dealt with according to law and for his release from imprisonment.
The respondent had been arrested on June 1, 1954 in pursuance of a warrant issued on March 10, 1954 by the Collector of Malabar under section 48 of the Madras Revenue Recovery Act (Madras Act 11 of 1864) (hereinafter referred to as the Act).
The circumstances, as stated in the affidavits filed by the Collector and the Income Tax Officer of Kozikhode in the High Court, which led to the respondent 's arrest, were, that he had been assessed to income tax for various assessment years and the total amount of tax remaining outstanding against him, in round figures, was Rs. 70,000.
Some amount was recovered by the Collector in pursuance of a certificate issued by the Income Tax Officer under section 46(2) of the Indian Income Tax Act and bY the Income Tax Officer himself under section 46(5)A of the said Act.
After deducting the amount so realised the arrears of income tax were about Rs. 61,668 and odd for the assessment Years 1943 44, 1945 46 to 1948 49.
Meanwhile the Income Tax Officer had made enquiries into the affairs of the respondent and had discovered that he had sold certain properties of his between November 18, 1947 and March 25, 1948 to 973 the tune of about Rs. 23,100.
Demand notice had been served upon him on November 6, 1947 and the series of transactions of sale started on November 18, 1947.
Out of the said sum of Rs. 23,100, the respondent paid arrears of tax to the extent of Rs. 10,500 only.
Enquiries also revealed that although the respondent had closed his business at Cannanore in August, 1947, he had set up a firm in 1948 at Tellichery carrying on an identical business in the name of V.P. Abdul Azeez & Bros. consisting of his one major and four minor sons.
The respondent had alleged that the capital of this firm was mainly supplied from the sale of jewels belonging to his wife, that is, Abdul Azeez 's mother.
He denied that the above mentioned firm belonged to him.
In the assessment proceedings before the Income Tax Officer concerning the firm V.P. Abdul Azeez & Bros., the source of these jewels was gone into, but it was found that the same had not been proved and it was held that the business of V.P. Abdul Azeez & Bros. belonged to the respondent.
All these facts were communicated to the Collector by the Income Tax Officer who made independent enquiries for himself and had reason to believe that the respondent was wilfully withholding payment of arrears of tax and had been guilty of fraudulent conduct in evading payment of tax.
As a certificate had already been issued to him by the Income Tax Officer under section 46(2) of the Indian Income Tax Act, the Collector proceeded under section 48 of the Act to issue a warrant of arrest against the respondent in consequence of which he was arrested and lodged in Central Jail, Cannanore.
In the High Court, the petition under section 491, Criminal Procedure Code, was heard by Mack and Krishna.
swamy Nayudu JJ.
which was allowed and they ordered that the respondent be set at liberty as his arrest was illegal.
Mack J. thought that section 48 of the Act was ultra vires the Constitution as it offended article 22.
He did not deal at length with the argument that section 48 offended article 21 as he was of the opinion that if that section was ultra vires, then the respondent had not been arrested in accordance with procedure, established by 974 Saw and his arrest and imprisonment had been unlawful.
On the other hand, if section 48 was intra vires the Constitution, then the respondent had been lawfully deprived if his personal liberty.
He was further of the opinion that section 46(2) of the Indian Income Tax Act was ultra vires as it offended article 14 of the Constitution.
Krishnaswami Nayudu J. was of the opinion that s.46(2) of the Indian Income Tax Act read with section 48 of the Act offended article 14 of the Constitution.
He was of the opinion that section 48 of the Act offended article 21 of the Constitution to the extent that it afforded no opportunity to the arrested person to appear before the Collector by himself or through a legal practitioner of his choice and to urge before him any defence open to him and that it did not provide for the production of the arrested person within 24 hours before a magistrate as required by article 22(2).
Relying upon the decision of this Court in A. K. Gopalan vs The State Of Madras (1), he was of the opinion that the contention that the provisions of article 21 had been infringed did not require serious consideration because in so far as there was a law on the statute book on which the Collector had acted that would be sufficient to support the legality of the action taken by the Collector.
On behalf of the appellant, it was contended that neither section 48 of the Act nor section 46(2) of the Indian Income Tax Act was in violation of articles 14, 19, 21 and 22 of the Constitution.
Section 46(2) of the Indian Income Tax Act was a valid piece of legislation and under its provisions the Collector was authorized to recover the arrears of income tax as land revenue on receipt of a certificate from the Income Tax Officer.
On behalf of the respondent it was contended that these sections of the Act and the Indian Income Tax Act did offend articles 14, 19, 21 and 22 of the Constitution.
It was further contended that on a proper interpretation of section 46(2) of the Indian Income Tax Act the authority given to the Collector on receipt of the certificate from the Income Tax Officer was to recover the amount of arrears of Income tax, but there was no authority thereunder in the Collector to arrest (1) ; 975 the defaulting assessee.
Even if the said section could be interpreted to give the power of arrest, arrest could only be made under section 48 of the Act.
A proper reading of section 48 of the Act would indicate that the defaulter should be given an opportunity to be heard in his defence, previous to a warrant of arrest being issued against him, as the same could only issue if the Collector had reason to believe that the defaulter was wilfully withholding the arrears of tax or had been guilty of fraudulent conduct in order to evade payment.
Such a belief could not be entertained by the Collector without first giving the defaulter an opportunity to be heard.
The warrant of arrest issued against the respondent without hearing him in his defence wag invalid and the arrest of the respondent was illegal.
The learned Advocate for the respondent further drew our attention to the fact that in section 48 there was no provision for the release of the defaulter if he paid up the arrears of revenue.
What we have to consider in this appeal, at the outset, is, whether either section 48 of the Act or section 46(2) of the Indian Income Tax Act or both offend articles 14, 19, 21 and 22 of the Constitution.
The decisions of this Court in Gopalan 's case, in The State of Punjab vs
Ajaib Singh (1) and in Purshottam Govindji Halai vs
Shree B. B. Desai, Additional Collector of Bombay(2) are to be borne in mind in deciding this question.
It was held by the majority of the learned Judges in Gopalan 's case that the right "to move freely throughout the territory of India " referred to in article 19 (1) (d) of the Constitution was but one of the many attributes included in the concept of the right to " personal liberty " and when a person is lawfully deprived of his personal liberty without offending article 21, he cannot claim to exercise any of the right$ guaranteed by sub cls.
(a) to (e) and (g) of article 19 (1), for those rights can only be exercised by a freeman.
In that sense, therefore, article 19 (1) (d) has to be read as controlled by the provisions of article 21, and the view that article 19 guarantees the substantive right and article 21 prescribes a procedural protection is incorrect.
(1) ; (2) ; 976 The decision in Gopalan 's case has been followed in this Court in a series of cases and that decision must now be taken as having settled once for all that the personal rights guaranteed by sub cls.
(a) to (e) and (g) Of article 19 (1) are in a way dependent on the provisions of article 21 just as the right guaranteed by sub cl.
(f) of article 19 (1) is subject to article 31.
If the property itself is taken; lawfully under article 31, the right to hold or dispose of it perishes with it and article 19 (1) (f) cannot be invoked.
Likewise, if life or personal liberty is taken away lawfully under article 21 no question of the exercise of fundamental rights under article 19 (1) (a) to (e) and (g) can be raised.
Under article 21 " Procedure established by law " means procedure enacted by a law made by the State, that is to say, the Union Parliament or the Legislatures of the States.
In the appeal before us, the principal question, therefore, is whether the respondent was deprived of his personal liberty in accordance with a procedure established by law, i.e., a valid law.
If the law is valid then he has been lawfully deprived of his personal liberty and, in that situation, he cannot complain of the infraction of any of the fundamental rights mentioned in article 19(1) (a) to (e) or (g).
In Ajaib Singh 's case, a person was taken into custody by the police and sent to the Officer in charge of the nearest camp under section 4 of the Abducted Persons (Recovery and Restoration) Act (Act LXV of 1949) and it was submitted that the said Act contravened the provisions, inter alia, of article 22 of the Constitution.
None of these submissions were found to be valid.
It was held, so far as article 22 is concerned, that the taking into custody was not arrest and detention within the meaning of article 22.
Krishnaswami Nayudu J. in his judgment, attempted to distinguish the decision.
With respect to the learned Judge the principle emerging out of the decision in Ajaib Singh 's case appears to us to be clear enough.
The decision did not attempt to lay down in a precise and meticulous manner the scope and ambit of the fundamental rights or to enumerate exhaustively the cases that come within the protection of article 22.
What was 977 clearly laid down was that the physical restraint put upon an abducted person in the process of recovering and taking that person into custody without any allegation or accusation of any actual or suspected or apprehended commission by that person of any offence of a criminal or quasi criminal nature or of any act prejudicial to the State or the public interest, cannot be regarded as an arrest or detention within the meaning of article 22.
In the present case, the arrest was not in connection with any allegation or accusation of any actual or suspected or apprehended commission of any offence of a criminal or quasi criminal nature.
It was really an arrest for a civil debt in the process or the mode prescribed by law for recovery of arrears of land revenue.
In Purshottam Govindji Halai 's case, this Court held that there was no violation of article 21 of the Constitution where a person had been arrested under section 13 of the Bombay Land Revenue Act 1876 in pursuance of a warrant of arrest issued for recovery of the demand certified under section 46(2) of the Indian Income Tax Act, which did not offend article 14 of the Constitution, inasmuch as such arrest was under a procedure established by law, that is to say, section 13 of the said Act constituted a procedure established by law.
Mr. Pocker, however, attempted to distinguish the case, because this Court was dealing with section 13 of the Bombay Act.
The grounds stated in that case for declaring that section 46(2) of the Indian Income Tax Act was not ultra vires the Constitution, as it did not offend article 14, are equally applicable to the present case and we can find no true principle upon which we can distinguish that case from the present one.
In our opinion, having regard to the previous decisions of this Court referred to above, neither section 48 of the Act nor section 46(2) of the Indian Income Tax Act violates articles 14, 19, 21 and 22 of the Constitution.
We now proceed to consider the interpretation sought to be put by Mr. Pocker on section 46(2) of the Indian Income Tax Act and section 48 of the Act.
He contended that section 46(2) of the Indian Income Tax Act merely authorised the Collector to recover the amount 126 978 of arrears of Income Tax, but it did not give him any authority to arrest the respondent.
He submitted that the act of arrest was not a mode of recovery of the arrears of tax, but it was a punishment for failure to pay.
We are unable to accept this interpretation.
The authority given to the Collector by this section is to recover the arrears of tax as if it were an arrear of land revenue.
The preamble of the Act clearly states that the laws relating to the collection of the public revenue should be consolidated and simplified and section 5 provides for the manner in which the arrears of revenue may be recovered.
It reads, " Whenever revenue may be in arrear, it shall be lawful for the Collector, or other officer empowered by the Collector in that behalf, to proceed to recover the arrear, together with interest and costs of process, by the sale of the defaulter 's movable and immovable property, or by execution against the person of the defaulter in manner hereinafter provided." This section clearly sets out the mode of recovery of arrears of revenue, that is to say, either by the sale of the movable or immovable property of the defaulter, or by execution against his person in the manner provided by the Act.
Section 48 provides that when arrears of revenue cannot be liquidated by the sale of the property of the defaulter then the Collector, if he has reason to believe that the defaulter is wilfully withholding payment of the arrears or has been guilty of fraudulent conduct in order to evade payment of tax, can lawfully cause the arrest and imprisonment of the defaulter.
This section read with section 5, makes it abundantly clear that the arrest of the defaulter is one of the modes, by which the arrears of revenue can be recovered, to be resorted to if the said arrears cannot be liquidated by the sale of the defaulter 's property.
There is not a suggestion in the entire section that the arrest is by way of punishment for mere default.
Before the Collector can proceed to arrest the defaulter, not merely must the condition be satisfied that the arrears cannot be liquidated by the sale of the property of the defaulter but the Collector shall have reason to believe that the defaulter is wilfully withholding payment, or has been guilty of fraudulent conduct in order to evade 979 payment.
When dues in the shape of money are to be realised by the procees of law and not by voluntary payment, the element of coercion in varying degrees must necessarily be found at all stages in the mode of recovery of the money due.
The coercive element, perhaps in its severest form, is the act of arrest in order to make the defaulter pay his dues.
When the Collector has reason to believe that withholding of payment is wilful, or that the defaulter has been guilty of fraudulent conduct in order to evade payment, obviously, it is on the supposition that the defaulter can make the payment, but is wilfully withholding it, or is fraudulently evading payment.
In the Act there are several sections (e.g. sections 16, 18 and 21) which prescribe, in unambiguous language, punishment to be inflicted for certain acts done.
It is clear, therefore, that where the Act intends to impose a punishment or to create an offence, it employs a language entirely different to that to be found in section 48.
We are of the opinion, therefore, that where an arrest is made under section 48 after complying with its pro visions, the arrest is not for any offence committed or a punishment for defaulting in any payment.
The mode of arrest is no more than a mode for recovery of the amount due.
There is nothing in section 48 of the Act which requires the Collector to give the defaulter an opportunity to be heard before arresting him.
It is true that the Collector must have reason to believe that the defaulter is wilfully withholding payment or has been guilty of fraudulent conduct in order to evade payment.
The Collector, therefore, must have some material upon which he bases his belief a belief which must be rational belief and a court may look into that material in appropriate cases in order to find out if the conditions laid down in the section have been fulfilled or not.
From the affidavits filed in the High Court by the Collector and the Income Tax Officer it is quite clear that there was material upon which the Collector could base his belief that the respondent was wilfully withholding payment of the arrears of tax and had been guilty of fraudulent conduct in order to 980 evade payment.
The Collector was, therefore, justified in arresting the respondent.
As pointed out by Mr. Pocker, section 48 of the Act does not in terms provide for the release of the defaulter if he pays up the arrears, but it is to be remembered that in addition to the powers under section 48 of the Act, the Collector has, under the proviso to section 46(2) of the Indian Income Tax Act, similar powers to that which a Civil Court has for recovery of an amount due under a decree.
It was held in Purshottam Govindji Halai 's case that the proviso is not an alternative remedy open to the Collector but only confers additional powers on the Collector for the better and more effective application of the only mode of recovery authorized by sub see.
(2) of section 46 of the Indian Income Tax Act.
Under section 58 of the Civil Procedure Code a Civil Court must release the judgment debtor if the amount due is paid.
Accordingly, the Collector has the power to release the defaulter if the amount due is paid and there is no substance in the submission of the learned Advocate.
Moreover, one of the conditions precedent to action under section 48 is the existence of arrears of revenue.
On payment of the arrears, that condition no longer exists and the debtor must clearly be entitled to release and freedom from arrest.
It was urged that the respondent was a man of about 70 years at the time of his arrest and a 'Person suffering from serious ill health.
Indeed, it is said, he is suffering from paralysis and that he should not be sent back to jail custody.
We cannot in the present proceedings make such an order.
The respondent may, if he is taken into custody again, approach the Collector for his release who could do so, in the circumstances set out in section 59 of the Code of Civil Procedure, in the exercise of his powers under the proviso to section 46(2) of the Indian Income Tax Act.
The appeal is accordingly allowed with costs and the judgment of the High Court is set aside.
It will be open to the Income Tax Officer of Kozikhode and the Collector of Malabar to take such steps against the 'respondent according to law as they may be advised.
Appeal allowed.
| The Income Tax Officer forwarded a certificate under section 46(2) of the Indian Income Tax Act to the Collector for recovering the arrears of Income Tax from the assesses as if they were arrears of land revenue.
The Collector proceeded under section 48, Madras Revenue 971 Recovery Act, and had the assessee arrested and confined in jail.
Upon a petition for a writ of habeas corpus the High Court ordered the release of the assessee holding that section 48 of the Madras Revenue Recovery Act and section 46(2) Of the Indian Income Tax Act were ultra vires.
The Collector appealed.
Held, that section 48 Of the Madras Revenue Recovery Act, and section 46(2) of the Indian Income Tax Act were not ultra vires and neither of them violated articles 14,19, 21 and 22 of the Constitution.
Where the personal liberty of a person is lawfully taken away under article 21, i.e., in accordance with a procedure established by a valid law, no question of the exercise of fundamental rights under article 19(1)(a) to (e) and (g) can be raised.
A.K. Gopalan vs The State of Madras, ; , followed.
An arrest for a civil debt in the process of or in the mode prescribed by law for recovery of arrears of land revenue does not come within the protection of article 22.
State of Punjab vs Ajaib Singh ; , followed.
Section 46(2) of the Indian Income Tax Act does not offend article 14 and there is no violation of article 21 where a person is arrested under section 48, Madras Revenue Recovery Act, in pursuance of a warrant of arrest issued for the recovery of the demand certified under section 46(2) of the Indian Income Tax Act.
Purshottam Govindji Halai vs Shri B. M. Desai, Additional Collector of Bombay, ; , followed.
Section 46(2) of the Indian Income Tax Act gives authority to the Collector to recover arrears of tax as if it were an arrear of land revenue.
Section 48 of the Madras Revenue Recovery Act read with section 5 make it clear that the arrest of the defaulter is one of the modes by which the arrears of land revenue can be recovered, to be resorted to if the said arrears cannot be liquidated by the sale of the defaulter 's property.
Such an arrest is not for any offence committed or a punishment for defaulting in any payment.
Section 48 of the Madras Revenue Recovery Act does not require the Collector to give the defaulter an opportunity to be heard before arresting him.
But the Collector must have reason to believe that the defaulter is wilfully withholding payment or has been guilty of fraudulent conduct in order to evade payment.
Such belief must be based upon some material, which a Court may look into in appropriate cases, to find out if the conditions laid down in the section have been fulfilled.
The Collector has also the power to release the defaulter if the amount due is paid.
|
Summarize this legal judgement text concisely | ivil Appeal No. 134 of 1956.
Appeal under articles 132 (1) and 133 (I) (c) of the Constitution of India from the Judgment and Order dated January 12, 1955, of the Bombay High Court in Appeal No. 72 of 1954 arising out of the Judgment and Order dated April 22, 1954, of the Bombay High Court in its Original Civil Jurisdiction in Miscellaneous Application No. 365 of 1952.
C. K. Daphtary, Solicitor General of India, H. M. Seervai, Porus A. Mehta and R. H. Dhebar, for the appellant.
877 M. C. Setalvad, Attorney General for India, Sir N. P. Engineer, N. A. Palkhivala, R. A. Gagrat, section V. Subramanian, and G. Gopal Krishnan, for the respondents.
G. R. Ethirajulu Naidu, Advocate General, Mysore, Porus A. Mehta and T. M. Sen, for the intervener.
April 9.
The Judgment of the Court was delivered by DAS C.J.
This is an appeal by the State of Bombay from the judgment and order passed on January 12, 1955, by the Court of Appeal of.
the High Court of Judicature of Bombay confirming, though on somewhat different grounds, the judgment and order passed on April 22, 1954, by a single Judge of the said High Court allowing with costs the present respondents ' petition under article 226 of the Constitution of India.
The said petition was presented before the High Court of Judicature at Bombay on December 18, 1952.
In the said petition there were two petitioners who are now the two respondents to this appeal.
The first petitioner is an individual who claims to be a citizen of India and the founder and Managing Director of the second petitioner, which is a company incorporated in the State of Mysore and having its registered head office at 2, Residency Road, Bangalore in that State.
That petition was further supported by an affidavit sworn by the first petitioner on the same day.
The allegations appearing in the said petition and affidavit may now be shortly stated.
In July, 1946 the first petitioner applied for and obtained from the then Collector of Bombay a licence, being Licence No. 84 of 1946, for the period ending March 31, 1947, to conduct what was known as the Littlewood 's Football Pool Competitions in India.
That licence was granted to the first petitioner under the provisions of the Bombay Prize Competitions Tax Act, (Bom.
XI of 1939) (hereinafter referred to as the 1939 Act), which was then in force.
The said licence was renewed for a period of one year from April 1, 1947 to March 31, 1948.
During that period the first petitioner paid, by way of competition tax, to the Bombay Provincial 113 878 Government a sum of rupees one lakh per annum.
The Government of Bombay having declined to renew the first petitioner 's licence for a further period, the first petitioner filed a petition under section 45 of the Specific Relief Act in the High Court of Bombay, which was eventually, after various proceedings, dismissed by the court of appeal on or about March 28, 1949.
In the meantime, in view of the delay and difficulty in obtaining a renewal of the licence in Bombay, the first petitioner in or about August, 1948, shifted his activities from Bombay to the State of Mysore, where he promoted and on February 26,1949, got incorporated a company under the name of R.M.D.C. (Mysore) Limited, which was the second petitioner in the High Court and is the second respondent before us.
The first petitioner, who was the promoter of the second petitioner became the Managing Director of the second petitioner.
All the shareholders and Directors of the second petitioner are said to be nationals and citizens of India.
The second petitioner also owns and runs a weekly newspaper called " Sporting Star ", which was and is still printed and published at Bangalore in a Press also owned by the second petitioner.
It is through this newspaper that the second petitioner conducts and runs a Prize Competition called the R.M.D.C. Crosswords for which entries are received from various parts of India including the State of Bombay through agents and depots established in those places to collect entry forms and fees for being forwarded to the head office at Bangalore.
The 1939 Act was replaced by the Bombay Lotteries and Prize Competition Control and Tax Act (Bom.
LIV of 1948), (hereinafter referred to as the 1948 Act) which came into force on December 1, 1948.
The 1939 Act as well as the 1948 Act, as originally enacted, did not apply to prize competitions contained in a newspaper printed and published outside the Province of Bombay.
So the Prize Competition called the R.M.D.C. Crosswords was not affected by either of those two Acts.
On June 21, 1951, the State of Mysore, however, enacted the Mysore Lotteries and Prize Competition 879 Control and Tax Act, 195 1, which was based upon the lines of the said 1948 Act.
That Mysore Act having come into force on February 1, 1952, the second petitioner applied for and obtained a licence under that Act and paid the requisite licence fees and also paid and is still paying to the State of Mysore the tax at the rate of 15% (latterly reduced to 121%) of the gross receipts in respect of the R.M.D.C. Crosswords Prize Competition and continued and is still continuing the said Prize Competition through the said weekly newspaper "The Sporting Star" and to receive entry forms with fees from all parts of the territory of India including the State of Bombay.
It is said, on the strength of the audited books of account, that after distribution of prizes to the extent of about 33% of the receipts and after payment of taxes in Mysore amounting to about 15% and meeting the other expenses aggregating to about 47%, the net profit of the second petitioner works out to about 5% only.
On November 20, 1952, the State of Bombay passed The Bombay Lotteries and Prize Competitions Control and Tax (Amendment) Act (Bom.
XXX of 1952).
This Act amended the provisions of the 1948 Act in several particulars.
Thus, the words " but does not include a prize competition contained in a newspaper printed and published outside the Province of Bombay", which occurred in the definition of Prize Competition in section 2 (1) (d) of the 1948 Act, were deleted and the effect of this deletion was that the scope and the application of the 1948 Act so amended became enlarged and extended so as to cover prize competitions contained in newspapers printed and published outside the State of Bombay.
After cl.
(d) of section 2 (1) the Amending Act inserted a new cl.
(dd) which defined the word "Promoter ".
A new section was substituted for the old section 12 and another new section was inserted after section 12 and numbered as a. 12A.
By this new section 12A provision was made for the levy in respect of every prize competition contained in a newspaper or a publication printed outside the State of Bombay for which a licence was obtained under the Act of a tax at such rates as might be specified not exceeding the 880 rates specified in section 12 or in a lump sum having regard to the circulation or distribution of the newspaper or publication in the State of Bombay.
It is pointed out that the margin of net profit being only 5%, if tax has to be paid to the State of Bombay under the 1948 Act, as amended, (hereinafter referred to as the impugned Act) the second petitioner will be unable to carry on its prize competition except at a loss.
Reference is also made to the rules framed by the State of Bombay called the Bombay Lotteries and Prize Competition Control and Tax Rules, 1952 (herein ' after called the said Rules), which came into force on and from December 8, 1952.
The said Rules require the petitioner to apply for and obtain a licence in Form " H " which imposes certain onerous conditions.
The petitioners point out that it would be impossible for them, in a commercial sense and from a practical point of view, to run the prize competitions in the territory of India if they are required to comply not only with the restrictions and conditions imposed by the Mysore State where the newspaper is printed and published but also with the varying and different restrictions, conditions and taxes imposed by the State of Bombay and other States in the territory of India where the said newspaper containing the advertisements; of the said prize competitions are circulated.
The petitioners submit that the provisions of the impugned Act and the Rules, in so far as they apply to prize competitions contained in newspapers and other publications printed and published outside the State of Bombay, are ultra vires void and inoperative in law.
Upon the presentation of the petition a Rule was issued calling upon the State of Bombay to appear and show cause, if any it had, why the writ or orders prayed for should not be issued or made.
The State of Bombay filed an affidavit raising several technical legal objections to the maintainability of the petition and refuting the allegations and submissions contained therein and in the supporting affidavit.
It submitted that, as the second petitioner was a corporation , and the first petitioner, who was a Managing Director 881 thereof, had no rights independent of the second petitioner, neither of them could lay any claim to any fundamental right under article 19(1) (g) and no question could arise of any violation of the petitioner 's alleged fundamental rights.
It further submitted that, having.
Regard to the fact that lotteries and prize competitions were opposed to public policy, there could be no " business " in promoting a lottery or a prize competition and the question of the violation of the petitioners ' alleged rights under article 19(1) (g) of the Constitution did not arise.
It was also contended that if the provisions of the Act and the Rules operated as restrictions, then the same were reasonable and in the interest of the general public.
Likewise it was submitted that, having regard to the fact that lotteries and prize competitions are opposed to public policy, there could be no "business " in promoting a lottery or a prize competition and the question of the violation of the provisions of article 301 of the Constitution did not arise.
It was denied that sections 10 and 12 of the Act violated the equal protection clause of the Constitution.
An affidavit in reply was filed by the first petitioner traversing the allegations, submissions and contentions set forth in the affidavit in opposition filed on behalf of the State of Bombay.
The main contentions of the present respondents before the trial Judge were: (a)The impugned Act and particularly its taxing provisions were beyond the competence of the State Legislature and invalid inasmuch as they were not legislation with respect to betting and gambling under Entry 34 or with respect to entertainments and amusements under Entry 33 or with respect to taxation on entertainments and amusements, betting.
and gambling under Entry 62 of the State List.
The legislation was with respect to trade and commerce and the tax levied by the Impugned Act was a tax on the trade or calling of conducting prize competitions and fell within Entry 60 of the State List.
(b) The respondents ' prize competition was not a lottery and could not be regarded as gambling 882 inasmuch as it was a competition in which skill, knowledge and judgment had real and effective play.
(c) The impugned Act itself contained distinct provisions in respect of prize competitions and lotteries , thereby recognising that prize competitions were not lotteries.
(d) The said tax being in substance and fact a tax on the trade or business of carrying on prize competitions it offended against section 142A (2) of the Government of India Act, 1935 and article 276 (2) of the Constitution which respectively provide that such a tax shall not exceed fifty rupees and two hundred and fifty rupees per annum.
(e) The impugned Act was beyond the legislative competence of the Bombay Legislature and invalid as it was legislation with respect to trade and commerce not within but outside the State.
(f) The impugned Act operated extra territorially inasmuch as it affected the trade or business of conducting prize competitions ' outside the State and was, therefore, beyond the competence of the State Legislature and invalid.
(g) The impugned Act offended against article 301 of the Constitution inasmuch as it imposed restrictions on trade, commerce and intercourse between the States and was not saved by article 304 (b) of the Constitution.
(h) The restrictions imposed by the impugned Act on the trade or business of the petitioners were not reasonable restrictions in the interests of the general public and, therefore, contravened the fundamental right of the petitioners, who were citizens of India, to carry on their trade or business under article 19 (1) (g) of the Constitution.
(i) That sections 10, 12 and 12A of the said Act offended against article 14 of the Constitution inasmuch as they empowered discrimination between prize competitions contained in newspapers or publications printed and published within the State and those printed and published outside the State.
The State of Bombay, which is now the appellant before us, on the other hand, maintained that 883 (a) The prize competitions conducted by the petitioners were a lottery.
(b) The provisions of the impugned Act were valid and competent legislation under Entries 33, 34 and 62 of the State List.
(c)The impugned Act was not extra territorial in its operation.
(d)The prize competitions conducted by the petitioners were opposed to public policy and there could therefore be no trade or business of promoting such prize competitions.
(e)As the petitioners were not carrying on a trade or business, no question of offending their fundamental rights under article 19 (1) (g) or of a violation of article 301 of the Constitution could arise.
(f)The second petitioner being a Corporation was not a citizen and could not claim to be entitled to the fundamental right under article 19 (1) (g) of the Constitution.
(g)In any event the restrictions on the alleged trade or business of the petitioners imposed by the Act were reasonable restrictions in the public interest with in the meaning of article 19 (6) and article 304 (b) of the Constitution.
The trial Judge held: (a)The tax levied under sections 12 and 12A of the Act was not a tax on entertainment, amusement, betting or gambling but that it was a tax on the trade or calling of the respondents and fell under Entry 60 and not under Entry 62 of the State List.
(b)The prize competition conducted by the petitioners was not a lottery and it could not be said to be either betting or gambling inasmuch as it was a competition in which skill, knowledge and judgment on the part of the competitors were essential ingredients.
(c)The levy of the tax under the said sections was void as offending against article 276 (2) of the Constitution.
(d)The restrictions imposed by the impugned Act and the Rules thereunder offended against article 301 of the Constitution and were not saved by Art, 884 304(b) inasmuch as the restrictions imposed were neither reasonable nor in the public interest.
(e)The second petitioner, although it was a company, was a citizen of India and was entitled to the protection of article 19 of the Constitution.
(f)The restrictions imposed by the impugned Act and the Rules made thereunder were neither reasonable nor in the interests of the general public and were void as offending against article 19 (1) (g) of the Constitution.
In the result the rule nisi was made absolute and it was further ordered that the State of Bombay, its servants and agents, do forbear from enforcing or taking any steps in enforcement, implementation, furtherance or pursuance of any of the provisions of the impugned Act and the 1952 Rules made thereunder and particularly from enforcing any of the penal provisions against the petitioners, their Directors, officers, servants or agents and that the State of Bombay, its servants and agents, do allow the petitioners to carry on their trade and business of running the Prize Competition mentioned in the petition and do forbear from demanding, collecting or recovering from the petitioners any tax as provided in the impugned Act or the said Rules in respect of the said Prize Competition and that the State of Bombay do pay to the petitioners their costs of the said applications.
Being aggrieved by the decision of the trial Judge, the State of Bombay preferred an appeal on June 8, 1954.
The Court of Appeal dismissed the appeal and confirmed the order of the trial Judge, though on somewhat different grounds.
It differed from the learned trial Judge on the view that he had taken that there was no legislative competence in the Legislature to enact the legislation.
It held that the topic of legislation was I gambling ' and the Legislature was competent to enact it under Entry 34 of the State List.
It, however, agreed with the learned trial Judge that the tax levied under section 12A was not a tax on gambling but that it was a tax which fell under Entry 60.
It held that there was 885 legislative competence in the Legislature to impose that tax but that the tax was invalid because it did not comply with the restriction contained in article 276 (2) of the Constitution.
It also took the view that the tax, even assuming it was a tax on betting or gambling, could not be justified because it did not fall under article 304 (b).
It differed from the learned trial Judge when he found as a fact that the scheme underlying the prize competitions was not a lottery and came to the conclusion that the Act applied to the prize competitions of the respondents.
It held that the challenge of the petitioners to the impugned provisions succeeded because the restrictions contained in the impugned Act controlling the business of the petitioners could not be justified as the requirements of the provisions of article 304 (b) had not been complied with.
The High Court agreed with the learned trial Judge that the petitioners ' prize competitions were their "business " which was entitled to the protection guaranteed under the Constitution.
It took the view that although the activity of the petitioners was a lottery, it was not an activity which was against public interest and, therefore, the provisions of Part XIII of the Constitution applied to the respondents ' business.
Being aggrieved by the said judgment of the Court of Appeal, the appellant applied for and obtained under articles 132(1) and 133(1) of the Constitution a certificate of fitness for appeal to this Court and hence this appeal before us.
The principal question canvassed before us relates to the validity or otherwise of the impugned Act.
The Court of Appeal has rightly pointed out that when the validity of an Act is called in question, the first thing for the court to do is to examine whether the Act is a law with respect to a topic assigned to the particular Legislature which enacted it.
If it Is, then the court is next to consider whether, in the case of an Act passed by the Legislature of a Province (now a State), its operation extends beyond the boundaries of the Province or the State, for under the provisions conferring legislative powers on it such Legislature can only make a law for its territories or any part thereof 114 886 and its laws cannot, in the absence of a territorial nexus, have any extra territorial operation.
If the impugned law satisfies both these tests, then finally the court has to ascertain if there is anything in any other part of the Constitution which places any fetter on the legislative powers of such Legislature.
The impugned law has to pass all these three tests.
Taking the first test first, it will be recalled that the 1948 Act was enacted by the Provincial Legislature of Bombay when the Government of India Act, 1935, was in force.
Under sections 99 and 100 of that Act the Provincial Legislature of Bombay had power to make laws for the Province of Bombay or any part thereof with respect to any of the matters enumerated in List 11 in the Seventh Schedule to that Act.
It will also be remembered that the 1948 Act was amended by Bombay Act XXX of 1952 after the Constitution of India had come into operation.
Under articles 245 and 246, subject to the provisions of the Constitution, the Legislature of the State of Bombay has power to make laws for the whole or any part of the State of Bombay with respect to any of the matters enumerated in List II of the Seventh Schedule to the Constitution.
The State of Bombay, which is the appellant before us, claims that the impugned Act including section 12A is a law made with respect to topics covered by Entries 34 and 62 of List II in the Seventh Schedule to the Constitution which reproduce Entries 36 and 50 of List II in the Seventh Schedule to the Government of India Act, 1935.
On the other hand, the petitioners, who are respondents before us, maintain that the impugned Act is legislation under Entries 26 and 60 in List 11 of the Seventh Schedule to the Constitution corresponding to Entries 27 and 46 of List II in the Schedule to the Government of India Act, 1935, and that, in any event, section 12A of the impugned Act, in so far as it imposes a tax, comes under Entry 60 of List II in the Seventh Schedule to the Constitution corresponding to Entry 46 of List II in the Seventh Schedule to the Government of India Act, 1935, and not under Entry 62 of List 11 in the Seventh Schedule to the Constitution corresponding to Entry 50 of List 11 in the Seventh Schedule to the 887 Government of India Act, 1935, and that as the tax imposed exceeds Rs. 250/ it is void under article 276 (2) which reproduces section 142A of the Government of India Act, 1935.
Reference will hereafter be made only to the relevant Entries of List II in the Seventh Schedule r, to the Constitution, for they are substantially in the same terms as the corresponding Entries of List 11 in the Seventh Schedule to the Government of India Act, 1935.
For easy reference, the relevant Entries in List II in the Seventh Schedule to the Constitution are set out below: " 26.
Trade and commerce within the State subject to the provisions of Entry 33 of List III.
Betting and gambling.
Taxes on professions, trades, callings, and employments.
Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling.
" In order to correctly appreciate the rival contentions and to come to a decision as to the particular Entry or Entries under which the impugned Act including section 12A thereof has been enacted, it is necessary to examine and to ascertain the purpose and scope of the impugned legislation.
It may be mentioned that the 1939 Act was enacted to regulate and levy a tax on prize competitions in the Province of Bombay.
It did not deal with lotteries at all.
That Act was repealed by the 1948 Act which was enacted to control and to levy a tax not only on prize competitions but on lotteries also.
It is not unreasonable to conclude that the clubbing together of lotteries and prize competitions in the 1948 Act indicates that in the view of the Legislature the two topics were, in a way, allied to each other.
As already indicated, the 1948 Act was amended in 1952 by Bombay Act XXX of 1952 so as to extend its operation to prize competitions contained in newspapers printed and published outside the State of Bombay.
In section 2(1) (d) of the impugned Act will be found the definition of " prize competition " to which reference will be made hereafter in greater detail.
Clause (dd) was inserted in section 2(1) in 1952 defining "promoter".
Section 3 declares that subject to the 888 provisions of the Act, all lotteries and all prize com petitions are unlawful.
This is a clear indication that the legislature regarded lotteries and prize competitions as on the same footing and declared both of them to be unlawful, subject, of course, to the provisions of the Act.
Section 4 creates certain offences in connection with lotteries and competitions punishable, as therein mentioned.
We may skip over sections 5 and 6 which deal exclusively with lotteries and pass on to section 7.
Section 7 provides that a prize competition shall be deemed to be an unlawful prize competition unless a licence in respect of such competition has been obtained by the promoter thereof.
There are two provisos to the section which are not material for our present purpose.
Section 8 imposes certain a additional penalty for contravention of the provisions of section 7.
Section 9 regulates the granting of licences on such fees and conditions and in such form as may be prescribed, that is to say prescribed by rules.
Section 10 makes it lawful for the Government, by general or special order, to, inter alia, prohibit the grant of licences in respect of a lottery or prize competition or class of lotteries or prize competitions throughout the State or in any area.
Section II empowers the Collector to suspend or cancel a licence granted under this Act in certain circumstances therein specified.
Section 12 authorises the levy of a tax on lotteries and prize competitions at the rate of 25% of the total sum received Or due in respect of such lottery or prize competition.
This section directs that the tax shall be collected from the promoter of such lottery or prize competition as the case may be.
Sub section (2) of section 12 empowers the State Government by a Notification in the official Gazette, to enhance the rate of tax up to 50% of the total sum received or due in respect of such prize competition as may be specified in the Notification.
Section 12A, which is of great importance for the purpose of this appeal, runs as follows: " 12A.
Notwithstanding anything contained in section 12, there shall be levied in respect of every lottery or prize competition contained in a newspaper or publication printed and published outside the State, 889 for which a licence has been obtained under section 5, 6 or 7 , a tax at such rates as may be specified by the State Government in a notification in the Official Gazette not exceeding the rates specified in section 12 on the sums specified in the declaration made under section 15 by the promoter of the lottery or prize competition as having been received or due in respect of such lottery or prize competition or in a lump sum having regard to the circulation or distribution of the newspaper or publication in the State.
" Section 15 requires every person promoting a lottery or prize competition of any kind to keep and maintain accounts relating to such lottery or prize competition and to submit to the Collector statements in such form and at such period as may be prescribed.
It is not necessary for the purpose of this appeal to refer to the remaining sections which are designed to facilitate the main purpose of the Act and deal with procedural matters except to section 31 which confers power on the State Government to make rules for the purpose of carrying out the provisions of the Act.
In exercise of powers so conferred on it, the State Government has, by Notification in the Official Gazette, made certain rules called the Bombay Lotteries and Prize Competitions Control and Tax Rules, 1952, to which reference will be made hereafter.
The petitioners contend that the object of the impugned Act is to control and to tax lotteries and prize competitions.
It is not the purpose of the Act to prohibit either the lotteries or the prize competitions.
They urge that the impugned Act deals alike with prize competitions which may partake of the nature of gambling and also prize competitions which call for knowledge and skill for winning success and in support of this contention reliance is placed on the definition of "prize competition" in section 2(1)(d) of the impugned Act.
We are pressed to hold that the impugned Act in its entirety or at any rate in so far as it covers legitimate and innocent prize competition is a law with respect to trade and commerce under Entry 26 and not with respect to betting and gambling under Entry 34.
They also urge that in any event the taxing provisions, 890 namely sections 12 and 12A, are taxes on the trade of running prize competitions under Entry 60 and not taxes on betting and gambling under Entry 62.
We are unable to accept the correctness of the aforesaid contentions for reasons which we proceed immediately to state.
As it has already been mentioned, the impugned Act replaced the 1939 Act which dealt only with prize competitions.
Section 2(2) of the 1939 Act defined "prize competition" in the terms following: 2(2) "Prize Competition " includes (a) crossword prize competition, missing words competition, picture prize competition, number prize competition, or any other competition, for which the solution is prepared beforehand by the promoters of the competition or for which the solution is determined by lot; (b)any competition in which prizes are offered for forecasts of the results either of a future event or of a past event the result of which is not yet ascertained or not yet generally known; and (c) any other competition success in which does not depend to a substantial degree upon the exercise of skill, but does not include a prize competition contained in a newspaper or periodical printed and published outside the Province of Bombay.
" The 1948 Act section 2(1)(d), as originally enacted, sub stantially reproduced the definition of " prize competition " as given in section 2(2) of the 1939 Act.
Section 2(1)(d) of the 1948 Act, as originally enacted, ran as follows: 2(1)(d) "Prize Competition " includes (i) cross word prize competition, missing words prize competition, picture prize competition, number prize competition, or any other competition for which the solution is, prepared beforehand by the promoters of the competition or for which the solution is determined by lot; (ii)any competition in which prizes are offered for forecasts of the results either of a future event or of a past event the result of which is not yet ascertained or not yet generally known; And 891 (iii)any other competition success in which does not depend to a substantial degree upon the exercise of skill, but does not include a prize competition contained in a newspaper printed and published outside the Province of Bombay; " The collocation of words in the first category of the definitions in both the 1939 Act and the 1948 Act as originally enacted made it quite clear that the qualifying clause "for which the solution is prepared beforehand by the promoters of the competition or for which the solution is determined by lot " applied equally to each of the five kinds of prize competitions included in that category and set out one after another in a continuous sentence.
It should also be noted that the qualifying clause consisted of two parts separated from each other by the disjunctive word "or".
Both parts of the qualifying clause indicated that each of the five kinds of prize competitions which they qualified were of a gambling nature.
Thus a prize competition for which a solution was prepared beforehand was clearly a gambling prize competition, for the competitors were only invited to guess what the solution prepared beforehand by the promoters might be, or in other words, as Lord Hewart C. J. observed in Coles vs Odhams Press Ltd. (1), " the competitors are invited to pay certain number of pence to have the opportunity of taking blind shots at a hidden target." Prize competitions to which the second part of the qualifying clause applied, that is to say, the prize competitions for which the solution was determined by lot, was necessarily a gambling adventure.
On the language used in the definition section of the 1939 Act as well as in the 1948 Act, as originally enacted, there could be no doubt that each of the five kinds of prize competitions included in the first category to each of which the qualifying clause applied was of a gambling nature.
Nor has it been questioned that the third category, which comprised " any other competition success in which does not depend to a substantial degree upon the exercise of skill constituted a (1) L.R. (1936) 1 K.B. 416. 892 gambling competition.
At one time the notion was that in order to be branded as gambling the competition must be one success in which depended entirely on chance.
If even a scintilla of skill was required for success the competition could not be regarded as of a gambling nature.
The Court of Appeal in the judgment under appeal has shown how opinions have changed since the earlier decisions were given and it is not necessary for us to discuss the matter again.
It will suffice to say that we agree with the Court of Appeal that a competition in order to avoid the stigma of gambling must depend to a substantial degree upon the exercise of skill.
Therefore, a competition success wherein does not depend to a substantial degree upon the exercise of skill is now recognised to be of a gambling nature.
From the above discussion it follows that according to the definition of prize competition given in the 1939 Act as in the 1948 Act as originally enacted, the five kinds of prize competitions comprised in the first category and the competition in the third category were all of a gambling nature.
In between those two categories of gambling competitions were squeezed in, as the second category, "competitions in which prizes were offered for forecasts of the results either of a future event or of a past event the result of which is not yet ascertained or is not yet generally known." This juxtaposition is important and significant and will hereafter be discussed in greater detail.
As already stated the 1948 Act was amended in 1952 by Bombay Act XXX of 1952.
Section 2(1)(d) as amended runs as follows: Prize competition " includes (i) (1) cross word prize competition, (2) missing word prize competition, (3) picture prize competition, (4) number prize competition, or (5) any other prize competition, for which the solution is or is not prepared beforehand by the promoters or for which the solution is determined by lot or chance; (ii) any competition in which prizes are offered for forecasts of the results either of a future event or of 893 a past event the result of which is not yet ascertained or not yet generally known; and (iii) any other competition success in which does not depend to a substantial degree upon the exercise of skill; It will be noticed that the concluding sentence " but does not include a prize competition contained in a newspaper printed and published outside the Province of Bombay" has been deleted.
This deletion has very far reaching effect, for it has done away with the exclusion of prize competitions contained in a newspaper printed and published outside the State of Bombay from the scope of the definition.
In the next place, it should be noted that the definition of prize competition still comprises three categories as before.
The second and the third categories are couched in exactly the same language as were their counterparts in the earlier definitions.
It is only in the first category that certain changes are noticeable.
The five kinds of prize competitions that were included in the first category of the old definitions are still there but instead of their being set out one after another in a continuous sentence, they have been set out one below another with a separate number assigned to each of them.
The qualifying clause has been amended by inserting the words "or is not" after the word "is" and before the word "prepared" and by adding the words "or chain ce" after the word "lot".
The qualifying clause appears, as before, after the fifth item in the first category.
It will be noticed that there is a comma after each of the five items including the fifth item.
The mere assigning a separate number to the five items of prize competitions included in the first category does not, in our judgment, affect or alter the meaning, scope and effect of this part of the definition.
The numbering of the five items has not dissociated any of them from the qualifying clause.
If the qualifying clause were intended to apply only to the fifth item, then there would have been no comma after the fifth item.
In our opinion, therefore, the qualifying clause continues to apply to each of the five items as before the amendment.
There is grammatically no difficulty in reading 115 894 the qualifying clause as lending colour to each of those items.
Accepting that the qualifying clause applies to each of the five kinds of prize competitions included in the first category, it is urged that the qualifying clause as amended indicates that the Legislature intended to include innocent prize competitions within the definition so as to bring all prize competitions, legitimate or otherwise, within the operation of the regulatory provisions of the Act including the taxing sections.
The argument is thus formulated.
As a result of the amendment the qualifying clause has been broken up into three parts separated from each other by the disjunctive word " or ".
The, three parts are (1) for which the solution is prepared beforehand by the promoters, (2) for which the solution is not prepared beforehand by the promoters and (3) for which the solution is determined by lot or chance.
The first and the third parts of the qualifying clause, it is conceded, will, when applied to the preceding five kinds of prize cometitions, make each of them gambling a ventures; gut it is contended that prize competitions to which the second part of the qualifying clause may apply, that is to say prize competitions for which the solution is not prepared beforehand, need not be of a gambling nature at all and at any rate many of them may well be of an innocent type.
This argument hangs on the frail peg of unskilful draftsmanship.
It has been seen that in the old definitions all the five kinds of prize competitions included in the first categorv were of a gambling nature.
We find no cogent reason and none has been suggested why the Legislature_which treated lotteries and prize competitions on the same footing should suddenly enlarge the first category so as to include innocent prize competitions.
To hold that the first category of prize competitions include innocent prize competitions will go against the obvious tenor of the impugned Act.
The 1939 Act dealt with prize competitions only and the first category in the definition given there comprised only gambling competitions.
The 1948 Act clubbed together lotteries and prize competitions and the first category of the prize competitions 895 included in the definition 'as originally enacted was purely gambling as both parts of the qualifying clause clearly indicated.
Section 3 of the Act declared all lotteries and all prize competitions unlawful.
There could be no reason for declaring innocent prize competitions unlawful.
The regulatory provisions for licensing and taxing apply to all prize competitions.
If it were intended to include.
innocent prize competitions in the first category, one would have expected the Legislature to have made separate provisions for the legitimate prize competitions imposing less rigorous regulations than what had been imposed on illegitimate prize competitions.
It will become difficult to apply the same taxing sections to legitimate as well as to illegitimate competitions.
Tax on legitimate competitions may well be a tax under Entry 60 on the trader who carries on the trade of innocent and legitimate competition.
It may be and indeed it has been the subject of serious controversy whether an illegitimate competition can be regarded A a trade at all and in one view of the matter the tax may have to be justified as a tax on betting and gambling under Entry 62.
Considering the nature, scope and effect of the impugned Act we entertain no doubt whatever that the first category of prizecompetitions does not include any innocent prize competition.
Such is what we conceive to be the clear intention of the Legislature as expressed in the impugned Act read as a whole and to give effect to this obvious intention, as we are bound to do, we have perforce to read the word "or" appearing in the qualifying clause after the word "promoter" and before the word "for" as "and".
Well known canons of construction of Statutes permit us to do so.
(See Maxwell on the Interpretation of Statutes, 10th edition, page 238).
A similar argument was sought to be raised on a construction of cl.
(ii) of section 2(1) (d).
As already stated, in between the first and the third categories of prize competitions which, as already seen, are of a gambling nature the definition has included a second category of competitions in which prizes are offered for forecasts of the results either of a future event or of a past event 896 the result of which is not yet ascertained or not yet generally known.
It is said that forecasts of such events as are specified in the section need not necessarily depend on chance, for it may be accurately done by the exercise of knowledge and skill derived from a close study of the statistics of similar events of the past.
It may be that expert statisticians may form some idea of the result of an uncertain future event but it is difficult to treat the invitation to the general public to participate in these competitions as an invitation to a game of skill.
The ordinary common people who usually join in these competitions can hardly be credited with such abundance of statistical skill as will enable them, by the application of their skill, to attain success.
For most, if not all, of them the forecast is nothing better than a shot at a hidden target.
Apart from the unlikelihood that the Legislature in enacting a statute tarring both lotteries and prize competitions with the same brush as indicated by s ' 3 would squeeze in innocent prize competitions in between two categories of purely gambling varieties of them, all the considerations and difficulties we have adverted to in connection with the construction of the ,first category and the qualifying clause therein will apply mutatis mutandis to the interpretation of this second clause.
Reliance is placed on section 26 of the English Betting and Lotteries Act, 1934 (24 and 25 Geo.
V c. 58) in aid of the construction of the second category of prize competitions included in the definition given in the impugned Act.
The relevant portion of section 26 of the aforesaid Act runs thus: " 26.
(1) It shall be unlawful to conduct in or through any newspaper, or in connection with any trade or business or the sale of any article to the public (a) any competition in which prizes are offered for forecasts of the result either of a future event, or of a past event the result of which is not yet ascertained or not yet generally known; (b) any other competition success in which does not depend to a substantial degree upon the exercise of skill.
897 It will be noticed that this section is not a definition section at all but is a penal section which makes certain competitions mentioned in the two clauses unlawful.
Clause (a) of that section which corresponds to our second category is not sandwiched between two categories of gambling prize competitions.
In Elderton vs Totalisator Co. Ltd. (1) on which the petitioners rely the question was whether the football pool advertised in newspapers by the appellant company came within the wide language of cl.
(a) of that section which was in Part II of the Act.
Whether the appellant company 's football pool called for any skill on the part of the "investors" or whether it was of a gambling nature was not directly relevant to the discussion whether it fell within cl.
The penal provisions of the English Act and the decision of the Court of Appeal throw no light on the construction of our definition clause.
Seeing that prize competitions have been clubbed together with lotteries and dealt with in the same Act and seeing that the second category of the definition of " prize competition " is sandwiched in between the other two categories which are clearly of a gambling nature and in view of the other provisions of the impugned Act and in particular section 3 and the taxing sections, we are clearly of opinion that the definition of " prize competition " on a proper construction of the language of section 2(1) (d )in the light of the other provisions of the Act read as a whole comprises only prize competitions which are of the nature of a lottery in the wider sense, that is to say, of the nature of gambling.
The Court of Appeal took the view that although as a matter of construction the definition did include innocent prize competitions, yet by the application of another principle, namely, that a literal construction will make the law invalid because of its overstepping the limits of Entry 26, which comprises only trade and commerce within the State, the definition should be read as limited only to gambling prize competitions so as to make it a law with respect to betting and gambling under Entry 34.
It is not necessary for us in this case to consider whether the (1) 898 principle laid down by Sir Maurice Gwyer C. J. in the Hindu Women 's Right to Property Act case (1) can be called in aid to cut down the scope of a section by omitting one of two things when the section on a proper construction includes two things, for we are unable, with great respect, to agree with the Court of Appeal that on a proper construction the definition covers both gambling and innocent competitions.
In our view, the section, on a true construction, covers only gambling prize competitions and the Act is a law with respect to betting and gambling under Entry 34.
As, for the foregoing reasons, we have already arrived at the conclusion just stated, it is unnecessary for us to refer to the language used in the third category and to invoke the rule of construction which goes by the name of noscitur a sociis relied on by learned counsel for the appellant.
The next point urged is that, although the Act may come under Entry 34, the taxing provisions of section 12A cannot be said to impose a tax on betting and gambling under Entry 62 but imposes a tax on trade under Entry 60.
Once it is held that the impugned Act is on the topic of betting and gambling under Entry 34, the tax imposed 'by such a statute, one would think, would be a tax on betting and gambling under Entry 62.
The Appeal Court has expressed the view that section 12A does not fall within Entry 62, for it does not impose a tax on the gambler but imposes a tax on the peti tioners who do not themselves gamble but who only promote the prize competitions.
So far as the promoters are concerned, the tax levied from them can only be regarded as tax on the trade of prize competitions carried on by them.
This. ' with respect, is taking a very narrow view of the matter.
Entry 62 talks of taxes on betting and gambling and not of taxes on the men who bet or gamble.
It is necessary,, therefore, to bear in mind the real nature of the tax.
The tax imposed by section 12A is, in terms, a percentage of the sums specified in the declaration made under a. 15 by the promoter or a lump sum having regard to the circulation and distribution of the newspaper, or (1) 899 publication in the State.
Under section 15 the promoter of a prize competition carried on in a newspaper or publication printed and published outside the State is to make a declaration in such form and at such period as may be prescribed.
Form 'J ' prescribed by r. 11 (c) requires the promoter to declare, among other things, the total number of tickets/coupons received for the competition from the State of Bombay and the total receipts out of the sale of the tickets/coupons from the State of Bombay.
The percentage under a. 12A is to be calculated on the total sums specified in the declaration.
It is clear, therefore, that the tax sought to be imposed by the impugned Act is a percentage of the aggregate of the entry fees received from the State of Bombay.
On ultimate analysis it is a tax on each entry fee received from each individual competitor who remits it from the State of Bombay.
In gigantic prize competitions which the prize competitions run by the petitioners undoubtedly are, it is extremely difficult and indeed well nigh impossible for the State to get at each individual competitor and the provision for collecting the tax from the promoters after the entry fees come into their hands is nothing but a convenient method of collecting the tax.
In other words, the taxing authority finds it convenient in the course of administration to collect the duty in respect of the gambling activities represented by each of the entries when the same reaches the hands of the promoters.
The tax on gambling is a well recognised group of indirect taxes as stated by Findlay Shirras in his Science of Public Finance, vol.
II p. 680.
It is a kind of tax which, in the language of J. section Mill quoted by Lord Hobhouse in Bank of Toronto vs Lambe (1), is demanded from the promoter in the expectation and intention that he shall indemnify himself at the expense of the gamblers who sent entrance fees to him.
That, we think, is the general tendency of the tax according to the common understanding of men.
It is not difficult for the promoters to pass on the tax to the gamblers, for they may charge the proportionate percentage on the amount of (1) 900 each entry as the seller of goods charges the sales tax or he may increase the entrance fee from 4 annas to 5 annas 6 pies to cover the tax.
If in particular circumstances it is economically undesirable or practically impossible to pass on the tax to the gamblers, that circumstance is not a decisive or even a relevant consideration for ascertaining the true nature of the tax, for it does not affect the general tendency of the tax which remains.
If taxation on betting and gambling is to be regarded as a means of controlling betting and gambling activities, then the easiest and surest way of doing so is to get at the promoters who encourage and promote the unsocial activities and who hold the gamblers ' money in their hands.
To collect the tax from the promoters is not to tax the promoters but is a convenient way of imposing the tax on betting and gambling and indirectly taxing the gamblers themselves.
It is to be noted that the tax here is not on the profits made by the petitioners but it is a percentage of the total sum received by them from the State of Bombay as entrance fees without the deduction of any expense.
This circumstance also indicates that it is not a tax on a trade.
According to the general understanding of men, as stated by Lord Warrington of Clyffe in Rex vs Caledonian Collieries Ltd. (1), there are marked distinctions between a tax on gross collection and a tax on income which for taxation purposes means gains and profits.
Similar considerations may apply to tax on trade.
There is yet another cogent reason for holding that the tax imposed by section 12A is a tax on betting and gambling.
In enacting the statute the Legislature was undoubtedly making a law with respect to betting and gambling under Entry 34 as here in before mentioned.
By the amending Act XXX of 1952 the Legislature by deleting the concluding words of the definition of 'prize competition ', namely, " but does not include etc., etc., " extended the operation of the Act to prize competitions carried on in newspapers printed and published outside the State of Bombay.
They knew that under article 276 which reproduced section 142A of the Government of India Act, (1) 901 1935, they could not impose a tax exceeding the sum of Rs. 250 on any trade or calling under Entry 60.
If the tax can be referable either to Entry 60 or to Entry 62, then in view of the fact that section 12A will become at least partially, if not wholly, invalid as a tax on trade or calling under Entry 60 by reason of article 276(2), the court must, in order to uphold the section, follow the well established principle of construction laid down by the Federal Court of India and hold that the Legislature must have been contemplating to make a law with respect to betting and gambling under Entry 62, for there is no constitutional limit to the quantum of tax which can be imposed by a law made under that Entry.
For reasons stated above, we are satisfied that section 12A is supportable as a valid piece of legislation under Entry 62.
The next point urged by the petitioners is that under articles 245 and 246 the Legislature of a State can only make a law for the State or any part thereof and, consequently, the Legislature overstepped the limits of its legislative field when by the impugned Act it purported to affect men residing and carrying on business outside the State.
It is submitted that there is no sufficient territorial nexus between the State and the activities of the petitioners who are not in the State.
The doctrine of territorial nexus is well established and there is no dispute as to the principles.
As enunciated by learned counsel for the petitioners, if there is a territorial nexus between the person sought to be charged and the State seeking to tax him the taxing statute may be upheld.
Sufficiency of the territorial connection involves a consideration of two elements, namely (a) the connection must be real and not illusory and (b) the liability sought to be imposed must be pertinent to that connection.
It is conceded that it is of no importance on the question of validity that the liability imposed is or may be altogether disproportionate to the territorial connection.
In other words, if the connection is sufficient in the sense mentioned above, the extent of such connection affects merely the policy and not the validity of the legislation.
Keeping these principles in mind we have to ascertain if in the case before us there 116 902 was sufficient territorial nexus to entitle the Bombay.
Legislature to make the impugned law.
The question whether in a given case there is sufficient territorial nexus is essentially one of fact.
The trial court took the ' view that the territorial nexus was not sufficient to uphold the validity of the law under debate.
The Court of Appeal took a different view of the facts and upheld the law.
We find ourselves in agreement with the Court of Appeal.
The newspaper "Sporting Star" printed and published in Bangalore is widely circulated in the State of Bombay.
The petitioners have set up collection depots within the State to receive entry forms and the fees.
They have appointed local collectors.
Besides the circulation of the copies of the " Sporting Star ", the petitioners print over 40,000 extra coupons for distribution which no doubt are available from their local collectors.
The most important circumstance in these competitions is the alluring invitation to participate in the competition where very large prizes amounting to thousands of rupees and sometimes running into a lakh of rupees may be won at and for a paltry entrance fee of say 4 annas per entry.
These advertisements reach a large number of people resident within the Stat.
The gamblers, euphemistically called, the competitors, fill up the entry forms and either leave it along with the entry fees at the collection depots set up in the State of Bombay or send the same by poet from Bombay.
All the activities that the gambler is ordinarily expected to undertake take place, mostly if not entirely, in the State of Bombay and after sending the entry forms and the fees the gamblers hold their soul in patience in great expectations that fortune may smile on them.
In our judgment the standing invita tions, the filling up of the forms and the payment of money take place within the State which is seeking to tax only the amount received by the petitioners from the State of Bombay.
The tax is on gambling although it is collected from the promoters.
All these, we think, constitute sufficient territorial nexus which entitles the State of Bombay to impose a tax on the gambling that takes place within its boundaries and the law cannot be struck down on the ground of extra territoriality.
903 Assuming that the impugned Act is well within the legislative competence of the Bombay Legislature and that it is not invalid on the ground of extra territorial operation, we have next to examine and see if there is anything else in the Constitution which renders it invalid.
The petitioners contend that even if the prize competitions constitute gambling transactions, they are nevertheless trade or business activities and that that being so the impugned Act infringes the petitioners ' fundamental right under article 19(1)(g) 'of the Constitution to carry on their trade or business and that the restrictions imposed by the Act cannot possibly be supported as reasonable restrictions in the interests of the general public permissible under article 19(6).
The petitioners also point out that the trade or business carried on by them is not confined within the limits of the State of Mysore but extends across the State boundaries into other States within the territories of India and even into lands beyond the Union of India and they urge that in view of the inter State nature of their trade or business the restrictions imposed by the impugned Act offend against article 301 which declares that, subject to the other provisions of Part XIII of the Constitution, trade, commerce and intercourse throughout the territory of India shall be free and cannot be supported under article 304(b), for the restrictions cannot be said to be reasonable or required in the public interest and because the procedural requirements of the proviso thereto had not been complied with.
The State of Bombay repudiates these contentions and submits that as prize competitions are opposed to public policy there can be no "trade" or "business"" in promoting a prize competition and the question of infraction of the petitioner 's fundamental right to carry on trade or business guaranteed by article 19(1)(g) or of the violation of the freedom of trade, commerce or intercourse declared by article 301 does not arise at all and that in any event if article 19(1)(g) or article 301 applies at all, the restrictions imposed by the impugned Act are reasonable restrictions necessary in the interest of the general public and saved by article 19(6) and by article 304(b),of the Constitution.
It is 904 conceded that the bill which became Act XXX of 1952 and amended the 1948 Act in the manner here in before stated was introduced in the Legislature of the State without the previous sanction of the President and, consequently, the condition precedent to the validity of the resulting Act as laid down in the proviso had not been complied with but it is submitted, we think correctly, that the defect was cured, under article 255, by the assent given subsequently by the President to the impugned Act.
It is, however, admitted by learned counsel appearing for the appellant State that under article 255 the subsequent assent of the President will save the Act if the other condition embodied in article 304(b) as to the restrictions imposed by it being reasonable in the public interest is held to be satisfied but it will not save the rules framed under a. 31 of the impugned Act which had never been placed before the President or assented to or approved by him.
We now proceed to examine and deal with these rival, contentions.
The first branch of the argument on this part of the appeal raises a question of a very far reaching nature.
The question posed before us is: Can the promotion of prize competitions, which are opposed to public policy, be characterised as a " trade or business " within the meaning of article 19(1)(g) or "trade, commerce and intercourse" within article 301 ? The learned trial Judge has expressed the view that if he were able to hold that the prize competitions conducted by the petitioners were of a gambling nature, he would have had no difficulty in concluding that they were outside the protection of the Constitution.
The Court of Appeal, however, took a different view.
What weighed with the Court of Appeal was the fact that the legislature had not prohibited gambling outright but only made provisions for regulating the same and further that the State was making a profit out of these prize competitions by levying taxes thereon.
It is necessary to consider the arguments that have been adduced before us by learned counsel for the parties in support of their respective contentions.
905 It will be noted that article 19(1) (g) in very general terms guarantees to all citizens the right to carry on any occupation, trade or business and el.
(6) of article 19 protects legislation which may, in the interest of the general public, impose reasonable restrictions on the exercise of the right conferred by article 19(1) (g).
Likewise article 301 declares that trade, commerce and intercourse throughout the territory of India shall be free but makes such declaration subject to the other provisions of Part XIII of the Constitution.
articles 302305, which are in that Part, lay down certain restrictions subject to which the declaration contained in article 301 is to operate.
Article 302 empowers Parliament by law to impose restrictions on the freedom of trade, commerce or intercourse not only between one State and another but also within the State, provided in either case such restrictions are required in the public interest.
Article 304 (b) authorises the State Legislatures to impose reasonable restrictions on the freedom of trade, commerce or intercourse with or within the States as may be required in the public interest, provided the formalities of procedure are complied with articles 19(1) (g) and 301, it is pointed out are two facets of the same thing the freedom of trade article 19(1)(g) looks at the matter from the point of view of the individual citizens and protects their individual right to carry on their trade or business, article 301 looks at the matter from the point of view of the country 's trade and commerce as a whole, as distinct from the individual interests of the citizens and it relates to trade, commerce or intercourse both with and within the States.
The question which calls for our decision is as to the true meaning, import and scope of the freedom so guaranteed and declared by our Constitution.
We have been referred to a large number of decisions bearing on the Australian and American Constitutions in aid of the construction of the relevant articles of our Constitution.
In the Commonwealth of Australia Constitution Act (63 and 64 Vic. c. 12) there is section 92 from which our article 301 appears to have been taken.
The material part of a. 92 runs thus: 906 On the imposition of uniform duties of customs, trade, commerce and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free.
It has been held in James vs Commonwealth of Australia (1) that the word" ' absolutely " adds nothing but emphasis to the width of the section.
In the same case it has also been stated and decided that the section imposes a fetter on the legislative power not only of the Commonwealth Parliament but also of the Parliament of the States.
It has been equally authoritatively held that the words " whether by means of internal carriage or ocean navigation " occurring in the section do not restrict its operation to such things and persons as are carried by land or sea but that the section extends to all activities carried on by means of interState transactions (Commonwealth of Australia vs Bank of New South Wales (2) ).
The Privy Council in the last mentioned case has also said at p. 299 that it is no longer arguable that freedom from customs or other monetary charges alone is secured by the section.
The idea underlying the section was that the Federation in Australia should abolish the frontiers between the different States and create one Australia and that conception involved freedom from customs duties, import&, border prohibitions and restrictions of every kind, so that the people of Australia would be free to trade with each other and to pass to and fro from one State to another without any let or hindrance, or without any burden or restriction based merely on the fact that they were not members of the same State (James vs Commonwealth of Australia(1)).
One cannot but be struck by the sweeping generality of language used in the section.
Such a wide enunciation of the freedom of inter State trade, commerce and intercourse was bound to lead to difficulties.
The full import and true meaning of the general words had to be considered, as years went past, in relation to the vicissitudes of altering facts and circumstances which from time to time emerged.
The changing circumstances and the necessities compelled the court (1) , 627.
(2) , 302$ 303.
907 to reach the conclusion that the conception of freedom of trade, commerce and intercourse in a community regulated by law presupposed some degree of restriction on the individual.
Cases arose out of statutes enacted for restricting competition of privately owned motor vehicles with publicly owned railways, or to compel users of motor to contribute to the upkeep of the roads e.g. Willard vs Rawson (1); R. vs Vizzard(2) and O. Gilpin Ltd. vs Commissioner of Road Transport and Tramways(1).
In each of these three cases the State law was upheld as not offending against section 92.
Cases arose under statutes which were sought to be supported on the ground of health.
In Ex parte Nelson (No. 1) (4) a New South Wales statute prohibited entry of cattle from tick infected area until dipped.
Applying the principle of pith and substance, it was held that the restrictions looked at in their true light, were aids to and not restrictions upon the freedom of inter State trade, commerce and intercourse.
In Tasmania vs Victoria (5).
the absolute prohibition of imports of potatoes from Tasmania to Victoria could not on facts be supported as a health measure and consequently was struck down as a violation of section 92.
In James vs Commonwealth of Australia(6) came up for consideration the Dried Fruits Act 1928 35 which prohibited the carrying of any dried fruit from one State to another except under a licence and which provided for penalty for its contravention.
The regulations authorised the Minister to direct the licensee to export a certain percentage of dried fruits from Australia.
The Minister by an order determined that it would be a condition of the licence.
that the licensee should export a percentage of the dried fruits as therein mentioned.
The appellant having refused to apply for a licence, his consignments of dried fruits shipped from Aide for delivery at Sydney in performance of contracts for sale were seized.
The appellant brought an action for damages for what he alleged to be a wrongful seizure.
After holding that the section bound the Parliament of (1) (1933) 48 C.L.R.316.
(4) (1928) 42.C.L.R. 209.
(2) ; (5)(1935) ; (3) ; (6) , 627. 908 Commonwealth equally with those of the States the Judicial Committee proceeded to say that the freedom declared in section 92 must be somehow limited and the only limitation which emerged from the context and which could logically and realistically apply was freedom at what was the crucial point in inter State trade, namely at the State barrier (p. 631).
In the later case of Commonwealth of Australia vs Bank of New South Wales (1) it has been said that those words were to be read secundum subjectam materiam and could not be interpreted as a decision either that it was only the passage of goods which is protected by section 92 or that it is only at the frontier that the stipulated freedom might be impaired (p. 308).
Learned counsel for the State has strongly relied on two decisions of the Australian High Court in both of which the validity of a New South Wales Statute called the Lotteries and Art Unions Act 1901 1929 was called in question.
Section 21 of that Act provided: "Whoever sells or offers for sale or accepts any money in respect of the purchase of any ticket or share in a foreign lottery shall be liable to a penalty." In the first of those two cases The King vs Connare(2) the appellant offered for sale in Sydney a ticket in a lottery lawfully conducted in Tasmania and was convicted of an offence under section 21.
He challenged the validity of the law on the ground that it interfered with the freedom of trade, commerce and intercourse among the States and consequently violated the provisions of section 92.
It was held by Starke, Dixon, Evatt and McTiernan JJ.
(Latham C.J. and Rich J. dissenting) that the provisions of section 21 did not contravene section 92 and the appellant was properly convicted.
Starke J. discussed the question as to whether the sale in question was an 'inter State or intra state transaction but did not think it necessary to decide that question.
After referring to the observations of Lord Wright in James vs The Commonwealth (3) that the freedom declared by section 92 meant freedom at the frontier, the learned Judge observed that the question (1) , 302 303: (2) (1939) 51 C.L.R.596.
(3) ,627. 909 whether that freedom had been restricted or burdened depended upon the true character and effect of the Act.
He took the view (at p. 616) that the main purpose of the Act was to prevent or suppress lotteries and particularly, in sections 19, 20 and 21, foreign lotteries and that it was aimed at preventing what he graphically described as "illegitimate methods of trading", if sales of lottery tickets were regarded as trading.
The learned Judge took note of the fact that New South Wales law allowed State lotteries and concluded that the true character of the impugned Act was to suppress gambling in foreign lottery tickets and examined from the historical point of view, from, the character of the Act, its function and its effect upon the flow of commerce, the Act did not, in his view, restrict or hinder the freedom of any trade across the frontier of the States.
Dixon J., as he then was, gave two reasons for his opinion, namely that the transaction was not in itself a transaction of inter State trade ' commerce or intercourse but was a sale in New South Wales of a ticket then in New South Wales and that, apart from the State lottery and permitted charitable raffles, the Act suppressed uniformly the sale of all lottery tickets in New South Wales.
Adverting to the argument which, in substance, asked the Court to declare that section 92 had created an overriding constitutional right to traffic or invest in lotteries so long as the trafficker or investor could succeed in placing some boundary or other between himself and the conductor of the lottery Evatt J. said at pp.
619 20: it in my opinion such a proposition cannot be supported in principle or by reference to authority.
For it is obvious that the appellant 's argument also involves the assertion of the constitutional right of a citizen, so long as he can rely upon, or if necessary artificially create, some inter State connection in his business, to sell indecent and obscene publications, diseased cattle, impure foods, unbranded poisons, unstamped silver, ungraded fruit and so forth.
" The obvious inconvenience and undesirability of the effects to be produced if such extravagant arguments 117 910 were to prevail led the learned Judge to think (at p. 620) that in the interpretation of section 92 it was permissible to accept some postulates or axioms demanded alike by the dictates of common sense and by some knowledge of what was being attempted by the founders of the Australian Commonwealth.
Making these assumptions and concessions Evatt J. opined (at p. 621) that the guarantee contained in section 92 had nothing whatever,/ to say on the topic of inter State lotteries and could not be invoked to prevent either the suppression or the restriction in the public interest of the practice of gambling or investing in such lotteries.
The learned Judge did not think that lottery tickets could be regarded as goods or commodities which were entitled to the protection of section 92 and concluded thus at p. 628: " If they are goods or commodities they belong to a very special category, so special that in the interests of its citizens the State may legitimately exile them from the realm of trade, commerce or business.
The indiscriminate sale of such tickets may be regarded as causing business disturbance and loss which, on general grounds of policy, the State is entitled to prevent or at least minimize." McTiernan J. was even more forthright in placing gambling outside the pale of trade, commerce and intercourse.
At p. 631 he said: " Some trades are more adventurous or speculative than others, but trade or commerce as a branch of human activity belongs to an order entirely different from gaming or gambling.
Whether a particular activity falls within the one or the other order is a matter of social opinion rather than jurisprudence. . . . .
It is gambling, to buy a ticket or shard in a lottery.
Such a transaction does not belong to the commercial business of the country.
The purchaser stakes money in a scheme for distributing prizes by chance.
He is a gamester.
" A little further down the learned Judge observed: "It is not a commercial arrangement to sell a lottery ticket; for it is merely the acceptance of money 911 or the promise of money for a chance.
In this case the purchase of a lottery ticket merely founds a hope that something will happen in Tasmania to benefit the purchaser.
" Naturally enough learned counsel for the appellant State seeks to fasten upon the observations quoted or referred to above in support of his thesis that gambling is not trade, commerce or intercourse within the meaning alike of section 92 of the Australian Constitution and our article 19(1)(g) and article 301.
In the second case The King vs Martin (1) the same question came up for reconsideration.
The only difference in fact was that there was no actual sale by delivery of a lottery ticket in New South Wales but money was received by the agent of the Tasmania promoter in New South Wales and transmitted to Tasmania from where the lottery ticket was to be sent.
The State law was again upheld.
Latham C.J., Rich, Starke, Evatt and Mctiernan JJ.
adhered to their respective opinions expressed in the earlier case of The King vs Connare (2 ).
Dixon J., as he then was, gave a new reason for his opinion that notwithstanding the inter State character of the transaction section 21 of the impugned Act was valid.
Said the learned Judge at pp.
461 462: " The reason for my opinion is that the application of the law does not depend upon any characteristics of lotteries or lottery transactions in virtue of which they are trade or commerce or intercourse nor upon any inter State element in their nature.
The only criterion of its operation is the aleatory description of the acts which it forbids.
There is no prohibition or restraint placed upon any act in connection with a lottery because either the act or the lottery is or involves commerce or trade or intercourse or movement into or out of New South Wales or communication between that State and another State. . . . . .
To say that inter State trade, commerce and intercourse shall be free, means,, I think, that no restraint or burden shall be placed upon an act falling under that description because it is trade or commerce or (1) ; (2) ; 912 intercourse or involves inter State movement or communication.
" In this view of the matter Dixon J. now upheld section 21 of the impugned Act on the ground that the criterion of its application was the specific gambling nature of the transactions which it penalised and not anything which brought the transactions under the description of trade, commerce or intercourse or made them interState in their nature.
Then came the case of Commonwealth of Australia vs Bank of New South Wales(1) commonly called the Bank case where it was held that section 46 of the Banking Act, 1947, was invalid as offending against section 92 of the Australian Constitution.
Sub section (1) of section 46 provided that a private bank should not, after the commencement of the Act, carry on banking business in Australia except as required by the section.
Subsection (2) laid down that each private bank should carry on banking business in Australia and should not, except on appropriate grounds, cease to provide any facility or service provided by it in the course of its banking business on the fifteenth day of August one thousand nine hundred and forty seven.
Sub section (4) authorised that the Treasurer might, by notice published in the gazette and given in writing to a private bank, require that private bank to cease, upon a date specified in the notice, carrying on business in Australia.
Sub section (8) provided that upon and after the date specified in a notice under sub section
(4) the private bank to which that notice was given should not carry on banking business in Australia.
It also provided a penalty of pound 10,000 for each day on which the contra vention occurred.
The question was: Whether this section interfered with the freedom of trade, commerce or intercourse among the States declared by section 92 of the Australian Constitution ? It was held that the business of banking which consisted of the creation and transfer of credit, the making of loans, the purchase and disposal of investments and other kindred transactions was included among those activities described as trade, commerce and intercourse in section 92 (1) 913 and, accordingly, the impugned section 46 which while leaving untouched the Commonwealth and State Banks,, prohibited the carrying on in Australia of the business of banking by private banks, was invalid as contravening section 92.
Lord Porter delivering the judgment of the Judicial Committee pointed out that it was no longer arguable that freedom from customs or other monetary charges alone was secured by the section.
Then after reviewing and explaining at some length the two cases of James V. Cowan (1) and James vs The Common wealth(2), his Lordships proceeded to make certain observations on the distinction between restrictions which are regulatory and do not offend against section 92 and those which are something more than regulatory and do so offend.
His Lordship deduced two general propositions from the decided cases, namely (1) that regulation of trade, commerce and intercourse among the States was compatible with absolute freedom and (2) that section 92 was violated only when a legislative or executive act operated to restrict trade, commerce and intercourse directly and immediately as distinct from creating some indirect or consequential impediment which might fairly be regarded as remote.
The problem whether an enactment was regulatory or something more or whether a restriction was direct or only remote or only incidental involved, his Lordship pointed out, not so much legal as political, social or economic considerations.
Referring to the case of Australian National Airways Proprietory Ltd. vs The Commonwealth (3) his Lordship expressed his agreement with the view that simple prohibition was not regulation.
A little further down, however, his Lordship made a reservation that he did not intend to lay down that in no circumstances could the exclusion of competition so as to create a monopoly, either in a State or Commonwealth agency, or in some body, be justified and that every case must be judged on its own facts and in its own setting of time and circumstances, and that it might be that in regard to some economic activities and at some stage of social development it might be (1) (3) ; (2)L.R. , 627. 914 maintained that prohibition with a view to State monopoly was the only practical and reasonable manner of regulation, and that inter State trade, commerce and intercourse thus prohibited and thus monopolised remained absolutely free.
His Lordship further added that, regulation of trade might clearly take the form of denying certain activities to persons by age or circumstances unfit to perform them or of excluding from passage across the frontier of a State creatures or things calculated to injure its citizens.
Referring to the doctrine of "pith and substance" his Lordship observed that it, no doubt, raised in convenient form an appropriate question in cases where the real issue was one of subject matter as when the point was whether a particular piece of legislation was a law in respect of some subject within the permitted field, but it might also serve a useful purpose in the process of deciding whether an enactment which worked some interference with trade, commerce and intercourse among the States was, nevertheless, untouched by section 92 as being essentially regulatory in character.
The last Australian case on the point cited before us is Mansell vs Beck(1).
In this case also the provisions of the Lotteries and Art Unions Act of New South Wales came up for consideration and the decisions in the King vs Connare (11) and the King vs Martin(1).
were considered and approved.
Dixon C.J. and Webb J. observed that the true content of the State law must be ascertained to see whether the law that resulted from the whole impaired the freedom which section 92 protected.
Their Lordships pointed out that lotteries not conducted under the authority of Government were suppressed as pernicious.
The impugned legislation was, in their Lordships ' view, of a traditional kind directed against lotteries as such independently altogether of trade, commerce and intercourse between States.
McTiernan J. reiterated the views he had expressed in the case of the King vs Connare (2) in the following words: (1) (Australian Law journal, Vol.
No. (2) ; (3) ; 915 It is important to observe the distinction that gambling is not trade, commerce and intercourse within the meaning of section 92 otherwise the control of gambling in Australia would be attended with constitutional difficulties.
" Williams J. did not consider it necessary to express any final opinion on the question whether there could be inter State commerce in respect of lottery tickets.
He took the view that sections 20 and 21 of the New South Wales Act were on their face concerned and concerned only with intra State transactions and that their provisions did not directly hinder, burden or delay any inter State trade, commerce or intercourse.
His Lordship observed that there was nothing in the reasoning in the judgment in the Bank case or in subsequent decisions to indicate that the King vs Connare(1) and ' King vs Martin(2) were not rightly decided.
He quoted, with approval, the observations of Dixon J. in Martin 's case.
Fullagar J. also took the view that the previous decisions of the High Court in Connare 's case (1) and Martin 's case(2) were rightly decided for the reasons given by Dixon J. Kitto J. dissented from the majority view.
Taylor J. who was also in favour of the validity of the impugned law, observed: " No simple legislative expedient purporting to transmute trade and commerce into something else will remove it from the ambit of section 92.
But whilst asserting the width of the field in which section 92 may operate it is necessary to observe that not every transaction which employs the forms of trade and commerce will, as trade and commerce, invoke its protection.
The sale of stolen goods, when the transaction is juristically analysed, is no different from the sale of any other goods but can it be doubted that the Parliament of any State may prohibit the sale of stolen goods without infringing section 92 of the Constitution ? The only feature which distinguishes such a transaction from trade and commerce as generally understood is to be found in the subject of the transaction; there is no difference in the means adopted for carrying it out.
Yet it may be said that in essence such a transaction (1) (193) ; (2) ; 916 constitutes no part of trade and commerce as that expression is generally understood.
Numerous examples of other transactions may be given, such as the sale of a forged passport, or, the sale of counterfeit money, which provoke the same comment and, although legislation prohibiting such transactions may, possibly, be thought to be legally justifiable pursuant to what has, on occasions, been referred to as a "Police power", I prefer to think that the subjects of such transactions are not, on any view, the subjects of trade and commerce as that expression is used in section 92 and that the protection afforded by that section has nothing to do with such transactions even though they may require, for their consummation, the employment of instru ments, whereby inter State trade and commerce is commonly carried on.
" After referring to the history of lotteries in England the learned Judge concluded: " The foregoing observations give some indication of the attitude of the law for over two and a half centuries towards the carrying on of lotteries.
But they show also that, in this country, lotteries were, from the moment of its first settlement, common and public nuisances and that, in general, it was impossible to conduct them except in violation of the law.
Indeed it was impracticable for any person to conduct a lottery without achieving the status of a rogue and a vagabond.
" In the Constitution of the United States of America there is no counterpart to article 301 of our Constitution or section 92 of the Australian Constitution.
The problem of gambling came up before the courts in America in quite different setting.
Article 1, section 8, sub section
(3) of the Constitution of the United States compendiously called the commerce clause gives power to the Congress to regulate commerce with foreign nations and among the several States and with the Indian tribes.
Congress having made law regulating gambling activities which extended across the State borders, the question arose whether the making of the law was within the legislative competence of the Congress, that is to say whether it could be brought within the commerce 917 clause.
The question depended for its answer on the further question whether the gambling activities could be said to be commerce amongst the States.
If it could, then it was open to Congress to make the law in exercise of its legislative powers under the commerce clause.
More often than not gambling activities extend from State to State and, in view of the commerce clause, no State Legislature can make a law for regulating inter State activities in the nature of trade.
If betting and gambling does not fall within the ambit of the commerce clause, then neither the Congress nor the State Legislature can in any way control the same.
In such circumstances, the Supreme Court of America thought it right to give a wide meaning to the word "commerce" so as to include gambling within the commerce clause and thereby enable the Congress to regulate and control the same.
Thus in Champion vs Ames(1) the carriage of lottery tickets from 'one State to another by an express company was held to be inter State commerce and the court upheld the law made by Congress which made such carriage an offence.
In Hipolite Egg Co. vs United States(2) the Pure Food Act which prohibited the importation of adulterated food was upheld as an exercise of the power of the Congress to regulate commerce.
The prohibition of transportation of women for immoral purposes from one State to another or to a foreign, land has also been held to be within the commerce clause (see Hoke vs United States (3) ).
SO has the prohibition of obscene literature and articles for immoral use.
Reference has also been made to the cases of United States vs Kahriger(4) and Lewis V. United States(5) to support the contention of the appellant State that the Supreme Court of the United States looked with great disfavour on gambling activities.
In the last mentioned case it was roundly stated at p. 480 that "there is no constitutional right to gamble ".
(1) ; ; (2) ; ; (3) ; ; (4) ; ; (5) ; ; 918 In construing the provisions of our Constitution the decisions of the American Supreme Court on the commerce clause and the decisions of the Australian High Court and of the Privy Council on section 92 of the Australian Constitution should, for reasons pointed out by this Court in State of Travancore Cochin 1.
The Bombay Co. Ltd. (1), be used with caution and circumspection.
Our Constitution differs from both American and Australian Constitutions.
There is nothing in the American Constitution corresponding to our article 19(1) (g) or article 301.
In the United States the problem was that if gambling did not come within the commerce clause, then neither the Congress nor any State Legislature could interfere with or regulate inter State gambling.
Our Constitution, however, has provided adequate safeguards in cl.
(6) of article 19 and in articles 302 305.
The scheme of the Australian Constitution also is different from that of ours, for in the Australian Constitution there is no such provision as we have in article 19(6) or articles 302 304 of our Constitution.
The provision of section 92 of the Australian Constitution being in terms unlimited and unqualified the judicial authorities interpreting the same had to import certain restrictions and limitations dictated by common sense and the exigencies of modern society.
This they did, in some cases, by holding that certain activities did not amount to trade, commerce or intercourse and, in other cases, by applying the doctrine of pith and substance and holding that the impugned law was not a law with respect to trade, commerce or intercourse.
The difficulty which faced the judicial authorities interpreting section 92 of the Australian Constitution cannot arise under our Constitution, for our Constitution did not stop at declaring by article 19(1) (g) a fundamental right to carry on trade or business or at declaring by article 301 the freedom of trade, commerce and inter.
course but proceeded to make provision by article 19(6) and articles 302 305 for imposing in the interest of the general public reasonable restrictions on the exercise of the rights guaranteed and declared by article 19 (1) (g) and article 301.
As one of us said in P. P. Kutti Keya (1) ; at p. 1121 919 vs The State of Madras(1) the framers of our Constitution, being aware of the problems with which the Australian Government had been confronted by reason of section 92, sought to solve them by enacting limitations in Part XIII itself on the freedom guaranteed in article 301.
Our task, therefore, will be to interpret our Constitution and ascertain whether the prize competitions falling within the definition of the impugned Act, all of which are of a gambling nature, can be said to be a "trade or business" within the meaning of article 19(1) (g) or "trade, commerce and intercourse " within the meaning of article 301 of our Constitution.
The scheme of our Constitution, as already indicated, is to protect the freedom of each individual citizen to carry on his trade or business.
This it does by article 19(1)(g).
This guaranteed right is, however, subject to article 19(6) which protects a law which imposes, in the interest of the general public, reasonable restrictions on the exercise of the fundamental right guaranteed by article 19(1) (g).
Our Constitution also proclaims by article 301 the freedom of trade, commerce and intercourse throughout the territory of India ' subject to the provisions of articles 302 305 which permit the imposition of reasonable restriction by Parliament and the State Legislatures.
The 'underlying idea in making trade, commerce and intercourse with, as well as within, the States free undoubtedly was to emphasise the unity of India and to ensure that no barriers might be set up to break up the national unity.
One important point to note is that the language used in article 19(1) (g) and article 301 is quite general and that the provisions for restricting the exercise of the fundamental right and the declared freedom of the country 's trade, commerce and intercourse are made separately, e.g., by article 19(6) and articles 302 305.
This circumstance is fastened upon by learned counsel for the petitioners for contending that the right guaranteed by article 19(1)(g) and the freedom declared by article 301 should, in the first instance and to start with, be widely and liberally construed and then reasonable restrictions may be superimposed on that right under article 19(6) or articles 302 305 in the interest of the general public.
According (1) A.I.R. (1954) mad.
920 to him the words "trade" or "business" or "commerce" should be read in their widest amplitude as meaning any activity which is undertaken or carried on with a view to earning profit.
There is nothing in those two articles 19(1)(g) and 301, which, he says, may qualify or cut down the meaning of the critical words.
He contends that there is no justification for excluding from the meaning of those words activities which may be looked upon with disfavour by the State or the Court as injurious to public morality or public interest.
The argument is that if the trade or business is of the last mentioned character, then the appropriate Legislature may impose restrictions which will be justiciable by the courts and this restriction may, in appropriate cases, even extend to total prohibition.
Our attention has been drawn to article 25 where the limiting words " subject to public order, morality and health " are used and it is pointed out that no such limiting words are to be found in article 19(1)(g) or article 301.
In short the argument is that article 19(1) (g) and article 301 guarantee and declare the freedom of all activities undertaken and carried on with a view to earning profit and the safeguard is provided in article 19(6) and articles 302 305.
The proper approach to the task of construction of these provisions of our Constitution*, it is urged, is to start with absolute freedom and then to permit the State to cut it down, if necessary, by restrictions which may even extend to total prohibition.
On this argument it will follow that criminal activities undertaken and carried on with a view to earning profit will be protected as fundamental rights until they are restricted by law.
Thus there will be a guaranteed right to carry on a business of hiring out goondas to commit assault or even murder, of housebreaking, of selling obscene pictures, of trafficking in women and so on until the law curbs or stops such activities.
This appears to us to be completely unrealistic and incongruous.
We have no doubt that there are certainactivities which can under no circumstance be regarded as trade or business or commerce although the usual forms and instruments are employed therein.
To exclude those activities from the meaning of those words is not to cut down their meaning at all 921 but to say only that they are not within the true meaning of those words.
Learned counsel has to concede that there can be no "trade" or "business" in crime but submits that this principle should not be extended and that in any event there is no reason to hold that gambling does not fall within the words "trade" or "business" or "commerce" as used in the Articles under consideration.
The question arises whether our Constitution makers ever intended that gambling should be a fundamental right within the meaning of article 19(1)(g) or within the protected freedom declared by article 301.
The avowed purpose of our Constitution is to create a welfare State.
The directive principles of State policy set forth in Part IV of our Constitution enjoin upon the State the duty to strive to promote the welfare of the people by securing and protecting, as effectively as it may, a social order in which justice, social, economic and political, shall inform all the institutions of the national life.
It is the duty of the State to secure to every citizen, men and women, the right to an adequate means of livelihood and to see that the health and strength of workers, men and women, and the tender age of children are not abused, to protect children and youths against exploitation and against moral and material abandonment.
It is to be the endeavour of the State to secure a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities, to protect the weaker sections of the people from social injustice and all forms of exploitation, to raise the standard of living of its people and the improvement of public health.
The question canvassed before us is whether the Constitution makers who set up such an ideal of a welfare State could possibly have intended to elevate betting and gambling on the level of country 's trade or business or commerce and to guarantee to its citizens, the right to carry on the same.
There can be only one answer to the question.
From ancient times seers and law givers of India looked upon gambling as a sinful and pernicious vice and deprecated its practice.
Hymn XXXIV of the 922 Rigveda proclaims the demerit of gambling.
Verses 7, 10 and 13 say: " 7 Dice verily are armed with goads and driving hooks, deceiving and tormenting, causing grievous woe.
They give frail gifts and then destroy the man who wins, thickly anointed with the player 's fairest good.
10 The gambler 's wife is left forlorn and wretched: the mother mourns the son who wanders homeless.
In constant fear, in debt, and seeking riches, he goes by night unto the home of others.
11 Play not with dice: no, cultivate thy corn land.
Enjoy the gain, and deem that wealth sufficient.
There are thy cattle, there thy wife, O gambler.
So this good Savitar himself hath told me.
" The Mahabharata deprecates gambling by depicting the woeful conditions of the Pandavas who had gambled away their kingdom.
Manu forbade gambling altogether.
Verse 221 advises the king to exclude from his realm gambling and betting, for those two vices cause the destruction of the kingdom of princes.
Verse 224 enjoins upon the king the duty to corporally punish all those persons who either gamble or bet or provide an opportunity for it.
Verse 225 calls upon the king to instantly banish all gamblers from his town.
In verse 226 the gamblers are described as secret thieves who constantly harass the good subjects by their forbidden practices.
Verse 227 calls gambling a vice causing great enmity and advises wise men not to practise it even for amusement.
The concluding verse 228 provides that on every man who addicts himself to that vice either secretly or openly the king may inflict punishment according to his discretion.
While Manu condemned gambling outright, Yajnavalkya sought to bring it under State control but he too in verse 202(2) provided that persons gambling with false dice or other instruments should be branded and punished by the king.
Kautilya also advocated State control of gambling and, as a practical person that he was, was 923 not averse to the State earning some revenue therefrom.
Vrihaspati dealing with gambling in chapter XXVI, verse 199, recognises that gambling had been totally prohibited by Manu because it destroyed truth, honesty and wealth, while other law givers permitted it when conducted under the control of the State so as to allow the king a share of every stake.
Such was the notion of Hindu law givers regarding the vice of gambling.
Hamilton in his Hedaya, vol.
IV, book XLIV, includes gambling as a kiraheeat or abomination.
He says: "It is an abomination to play at chess, dice or any other game; for if anything is staked it is gambling, which is expressly prohibited in the Koran; or if, on the other band, nothing be hazarded it is useless and vain." The wagering con.
tracts of the type which formed the subject matter of the case of Ramloll vs Soojumnull (1) and was upheld by the Privy Council as not repugnant to the English Common Law were subsequently prohibited by Act XXI of 1948 which was enacted on the suggestion of Lord Campbell made in that case and introduced in India provisions similar to those of the English Gaming Act (8 & 9 Vict. c. 109).
Bengal Gambling Act (Ben.
II of 1867) provided for the punishment of public gambling and the keeping of common gaming house in the territories subject to the Lieutenant Governor of Bengal.
Lottery has been, since 1870, made an offence, under section 294A of the Indian Penal Code.
Gambling agreements have been declared to be void under the (section 30).
This in short is how gambling is viewed in India.
Before the Legislature intervened, gambling and wagering were not prohibited by the English Common Law although the English courts looked upon it with disfavour and discouraged it on grounds of public policy by denying procedural facilities which were granted to other litigants.
The Scottish courts, however, have always refused to recognise the validity of wagering contracts and have held that sponsiones ludicroe, as they style such contracts, are void by the Common Law of Scotland.
Gambling and Betting Act, (1) (1848) 4 M.I.A. 339.
924 , c. 7) was directed against fraudulent and excessive gambling and betting at games or sports.
This was followed by the Gaming Act of 1710 (9 Anne.c.
The Marine Insurance Act 1745 (19 Geo.
11 C. 37) for the first time prohibited wagering policies on risks connected with British shipping.
This was supplemented by the Marine Insurance Act 1788 (28 Geo.
III c. 56).
The Life Insurance Act, 1774 (14 Geo.
III c. 48) though not intended to prohibit wagering in general, prohibited wagering under the cloak of a mercantile document which purported to be a contract of insurance.
Then came the Gaming Act of 1845 (8 and 9 Vict.
c. 109) which for the first time declared all contracts made by way of gaming or wagering void irrespective of their form or subject matter.
The provisions of this Act were adopted by our Act XXI of 1948 as here in before mentioned.
The Gaming Act of 1892 (55 and 56 Viet.
c. 9) further tightened up the law.
As far back as 1850 the Supreme Court of America in Phalen vs Virginia(1) observed: " Experience has shown that the common forms of gambling are comparatively innocuous when placed in contrast with widespread pestilence of lotteries.
The former are confined to a few persons and places, but the latter infests the whole community; it enters every dwelling; it reaches every class; it preys upon the hard earnings of the poor; it plunders the ignorant and the simple.
The observations were quoted, with approval, in Douglas vs Kentucky (2 ).
After quoting the passage from Phalen vs Virginia (1) the judgment proceeded: "Is the state forbidden by the supreme law 'of the land from protecting its people at all times from practices which it conceives to be attended by such ruinous results? Can the Legislature of a State contract away its power to establish such regulations as are reasonably necessary from time to time to protect the public morals against the, evils of lotteries ?" (1) ; [1850] 49 U.S. 163; ,1033.
(2) ; ; , 555. 925 It will be abundantly clear from the foregoing observations that the activities which have been condemned in this country from ancient times appear to have been equally discouraged and looked upon with disfavour in England, Scotland, the United States of America and in Australia in the cases referred to above.
We find it difficult to accept the contention that those activities which encourage a spirit of reckless propensity for making easy gain by lot or chance, which lead to the loss of the hard earned money of the undiscerning and improvident common man and thereby lower his standard of living and drive him into a chronic state of indebtedness and eventually disrupt the peace and happiness of his humble home could possibly have been intended by our Constitution makers to be raised to the status of trade, commerce or intercourse and to be made the subject matter of ' a fundamental right guaranteed by article 19(1) (g).
We find it difficult to persuade ourselves that gambling was ever intended to form any part of this ancient country 's trade, commerce or intercourse to be declared as free under article 301.
It is not our purpose nor is it neces sary for us in deciding this case to attempt an exhaustive definition of the word "trade", "business", or "intercourse".
We are, however, clearly of opinion that whatever else may or may not be regarded as falling within the meaning of these words, gambling cannot certainly be taken as one of them.
We are convinced and satisfied that the real purpose of articles 19(1) (g) and 301 could not possibly have been to guarantee or declare the freedom of gambling.
Gambling activities from their very nature and in essence are extra commercium although the external forms, formalities and instruments of trade may be employed and they are not protected either by article 19 (1) (g) or article 301 of our Constitution.
The Court of Appeal; we have already said, took the view that it was not open to the State, which had not thought fit to prohibit these prize competitions but had sought to make a profit out of them by levying a tax, to contend at the same time that it was illegal or was not a "trade" at all.
But as pointed out in United 119 926 States vs Kahrigar (1), the fact of issuing a licence or imposing a tax means nothing except that the licensee shall be subject to no penalties under the law if he pays it.
Lewis vs United States of America (2) also recognises that the Federal Government may tax what it also forbids and that nobody has a constitutional right to gamble but that if he elects to do, so, though it be unlawful, he must pay the tax.
In this connection reference may be made to the observation of Rowlatt J. in Mann vs Nash (3) : " The revenue authorities, representing the State, are merely looking at an accomplished fact.
It is not condoning it or taking part in it.
Further down he said: " It is merely taxing the individual with reference to certain facts.
It is not a partner or a sharer in the illegality.
" That crime is not a business is also recognised in F. A. Lindsay, A. E. Woodward and W. Hiscox vs The Commissioners of Inland Revenue (4)(per Lord President Clyde and per Lord Sands) and in Southern (H. M. Inspector of Taxes) vs A. B.
The fact that regulatory provisions have been enacted to control gambling by issuing licences and by imposing taxes does not in any way alter the nature of gambling which is inherently vicious and pernicious.
We also arrive at the same result by applying the doctrine of 'pith and substance '.
As Lord Porter pointed out: " The phrase raised in a convenient form an appropriate question in cases where the real issue is one of subject matter and it may also serve a useful purpose in the process of deciding whether a particular enactment is a law with respect to trade, commerce or intercourse as such or whether it is a law with respect to some other subject which incidentally trenches upon trade, commerce and intercourse.
" Reference has already been made to the observations (1) ; ; (2) ; 99 L. Ed 475.
(3) L. R.(1932) 1 K.B.D. 752 at P. 757.
(4) (5) ; 927 of Dixon J., as he then was, in King vs Martin (1).
Adapt ing his language, we may say that when article 19(1)(g) guarantees or article 301 declares the freedom of trade they describe human activities in a specific aspect.
They single out attributes which the act or transaction may wear and make the freedom, which they confer, depend upon those attributes.
The freedom secured by the two Articles, we think, implies that no unreasonable restraint or burden shall be placed upon an act falling under that description because it is trade or commerce or intercourse.
We have analysed the provisions of the impugned Act and it is quite clear that the Act does not purport directly to interfere with trade, commerce or intercourse as such, for the criterion of its application is the specific gambling nature of the transaction which it restricts.
The purpose of the Act is not to restrict anything which brings the transactions under the description of trade, commerce or intercourse.
In other words, the Act is in pith and substance an Act with respect to betting and gambling.
To control and restrict betting and gambling is not to interfere with trade, commerce or intercourse as such but to keep the flow of trade, commerce and intercourse free and unpolluted and to save it from anti social activities.
In our opinion, therefore, the impugned Act deals with gambling which is not trade, commerce or business and, therefore, the validity of the Act has not to be decided by the yardstick of reasonableness and public interest laid down in articles 19(6) and 304.
The appeal against the stringency and harshness, if any, of the law does not lie to a court of law.
In the view we have taken, it is not necessary for us to consider or express any opinion on this occasion as to the vexed question whether restriction, as con.
templated in articles 19(6) and 304(b), may extend to total prohibition and this is so because we cannot persuade ourselves to hold that article 19(1)(g) or article 301 comprises all activities undertaken with a view to profit as "trade" within the meaning of those Articles.
Nor is it necessary for us on this occasion to consider (1) ; 928 whether a company is a citizen within the meaning of Art ' 19 and indeed the point has not been argued before us.
The last point urged by the petitioners is that assuming that the impugned Act deals only with gambling and that gambling is not "trade" or "business" or "commerce" and is, therefore, not entitled to the protection of our Constitution, the prize competitions run by them are in fact not of a gambling nature.
The trial court accepted this contention while the Court of Appeal rejected it.
We have examined the scheme and the rules and the official solutions and the explanations in support thereof and we have come to the conclusion that the competition at present run by the petitioners under the name of R.M.D.C. Crosswords are of a gambling nature.
Our view so closely accords with that of the Court of Appeal that we find it unnecessary to go into the details of the scheme.
To start with, we find that the Board of Adjudicators pick up nine of the clues and select only those competitors whose answers correspond with 'the official solution of those nine clues.
Those nine clues may be from the top, may be from the bottom or may be selected at random.
It is said that they are like nine compulsory questions in a school examination but then in a school examination, the students are told which are the nine compulsory questions and they can take particular care with regard to those; but in this scheme there is no knowing which nine will be selected and those competitors whose answers do not accord with the official solution are debarred from being considered for the first prize.
A competitor may have given correct answers to eight of the nine selected clues and may have given correct answers to the remaining eight so that he has sent in sixteen correct answers but he will, nevertheless, not be considered for the first prize because his answers to the nine selected questions did not agree with the official solutions of those nine clues.
This is a chance element to start with.
We have then seen that the competing words out of which one is to be selected are in some cases equally apt.
We are not satisfied that the word selected by the Board is the 929 more apt word in many.
cases.
The reasons given by them appear to us to be laboured and artificial and even arbitrary in some cases.
On the whole, we have come to the conclusion that the Court of Appeal was right in its conclusion that in point of fact the prize competitions run by the petitioners partake of a gambling nature and, therefore, fall within the definition and are to be governed by the regulatory and taxing provisions of the Act.
For the reasons stated above, we have come to the conclusion that the impugned law is a law with respect to betting and gambling under Entry 34 and the impugned taxing section is a law with respect to tax on betting and gambling under Entry 62 and that it was within the legislative competence of the State Legislature to have enacted it.
There is sufficient territorial nexus to entitle the State Legislature to collect the tax from the petitioners who carry on the prize competitions through the medium of a newspaper printed and published outside the State of Bombay.
The prize competitions being of a gambling nature, they cannot be regarded as trade or commerce and as such the petitioners cannot claim any fundamental right under article 19(1)(g) in respect of such competitions, nor are they entitled to the protection of article 301.
The result, therefore, is that this appeal must be allowed and the order of the lower court set aside and the petition dismissed and we do so with costs throughout.
Appeal allowed.
| The first respondent was the founder and Managing Director of a company, the second respondent in the appeal, which was incorporated in the State of Mysore and conducted a Prize Competition called the R. M. D. C. Cross words through a weekly newspaper printed and published at Bangalore.
This paper had a wide circulation in the State of Bombay, where the respondents set up collection depots to receive entry forms and fees, appointed local collectors and invited the people by advertisements in the paper to participate in the competitions.
On November 20, 1952, the Bombay Legislature passed the Bombay Lotteries and Prize Competitions Control and Tax (Amendment) Act of 1952, and widened the scope of the definition of 'prize competition ' contained in section 2(1) (d) of the Bombay Lotteries and Prize Competition Control and Tax Act of 1948, so as to include prize competitions carried on through newspapers printed and published outside the State and inserted a new section, section 12A, levying a tax on the promoters of such competitions for sums collected from the State.
Thereupon, on December 18, 1952, the respondents moved the High Court of Bombay under article 226 of the Constitution and contended that the Act as amended and the Rules framed thereunder in so far as they applied to such prize competitions were ultra vires the State Legislature and violated their fundamental rights under article 19(1) (g) and freedom of inter State trade under article 301 of the Constitution.
The Single Judge who heard the matter in the first instance as also the court of appeal found in favour of the respondents, though on somewhat different grounds, and the State of Bombay preferred the appeal.
The principal question canvassed in this Court related to the validity.
or otherwise of the impugned Act.
It was contended on behalf of the appellant that the impugned Act was a law relating to betting and gambling and as such was covered 875 by Entries 34 and 62 of List II in the Seventh Schedule to the Constitution, whereas the contention of the respondents was that the Act was with respect to trade and commerce and came under Entries 26 and 60 of that List.
Held, that in testing the validity of an Act it was necessary, in the first place, to decide whether it was with respect to a topic assigned to the legislature and, secondly, where it was so and the legislature was a State Legislature and the Act purported to operate beyond the State, whether there was sufficient territorial nexus to validate such operation and, lastly, whether the powers of the legislature were in any other way fettered by the Constitution.
So judged, the impugned Act was a perfectly valid legislation and its constitutionality was beyond question.
Regard being had to the purpose and scope of the Act read as a whole there could be no doubt that all the categories of prize competitions included in the definition contained in section 2(1) (d) of the Act were of a gambling nature.
The qualifying ' clause appearing at the end of cl.
(1) must apply to each of the five kinds enumerated therein, and the word 'or ' appearing after the word I promoters ' and before the word 'for ' in the clause must be read as 'and '.
Similarly, cl.
(ii), properly construed, could not include any prize competitions other than those of a gambling nature.
Elderton vs Totalisator Co. Ltd., , held inapplicable.
The impugned Act was, therefore, a legislation with respect to betting and gambling and fell under Entry 34 of List II of the Seventh Schedule to the Constitution and was within the competence of the State Legislature.
Taxes on gambling are a well recognised group of indirect taxes and section 12A of the Act in seeking to tax the gross collections in the hands of the promoters, and not their profits, was only following an easy and convenient way of getting at the gambler 's money in their hands and this made no difference in the character of the tax, essentially one on betting and gambling and not on any trade, and, consequently, the section fell within Entry 62 and not Entry 6o of List II of the Seventh Schedule to the Constitution.
A prize competition that did not to a substantial degree depend upon the exercise of skill for its solution would be of a gambling nature and a scrutiny of the prize competitions offered by the respondents clearly showed that there was an element of chance to start with, and, consequently, they must be of a gambling nature and fell within the mischief of the Act.
The doctrine of territorial nexus was a well established doctrine and could apply only when (1) the territorial connection between the persons sought to be taxed and the legislating State was real and not illusory and (2) the liability sought to be imposed was pertinent to that connection.
The existence of sufficient 876 territorial nexus in a particular case was essentially a question of fact.
There could hardly be any doubt in the instant case that the impugned Act satisfied all these tests and, consequently, it was unassailable on the ground of extra territoriality.
Gambling activities were in their very nature and essence extra commercium although they might appear in the trappings of trade.
They were considered to be a sinful and pernicious vice by the ancient seers and law givers of India and have been deprecated by the laws of England, Scotland, United States of America and Australia.
The Constitution makers of India, out to create a welfare State, could never have intended to raise betting and gambling to the status of trade, business, commerce or intercourse.
The petitioners, therefore, had no fundamental right under article 19(1) (g) or freedom under article 301 Of the Constitution in respect of their prize competitions that could be violated and the validity of the impugned Act, in pith and substance an Act relating to gambling, did not fall to be tested by articles 19(6) and 304 Of the Constitution.
judicial decisions on article 1, section 8, sub section
(3) Of the Constitution of the United States and section 92 of the Australian Constitution should be used with caution and circumspection in construing articles 19(1) (g) and 301 of the Indian Constitution.
State of Travancore Cochin vs The Bombay Co. Ltd. ; and P. P. Kutti Keya vs The State of Madras, A.I.R. (1954) Mad. 621, referred to.
The King vs Connare, ; , The King vs Martin; , , Commonwealth of Australia vs Bank of New South Wales, L.R. (195o) A.C. 235, Mansell vs Beck, Australian Law journal Vol.
3o, NO. , Champion vs Ames, ; , Hipolite Egg Co. vs United States, ; , Hoke vs United States, ; , United States vs Kahriger, ; and Lewis vs United States, 99 L.Ed.475, discussed.
|
Summarize this legal judgement text concisely | l Appeals Nos.
162 of 1955, 38, 39, 40, 41, 42, 43 and 44 of 1956.
Appeal from the judgment and order dated January 5, 1953, of the Calcutta High Court (Original Side) in Income Tax Reference Appeal No. 12 of 1942 and appeals from the judgment and order dated July 2, 1952, of the Assam High Court at Gauhati in Agricultural Income Tax References Nos. 1, 2, 3, 7, 9, 6 and 8 of 1949 respectively.
Veda Vyasa and Naunit Lal, for the appellants in C.A. No. 162 of 1955 and respondents in C. As.
38 to 44 of 1956.
B. Baksi, section N. Mukerjea and R. B. Biswas, for the respondents in C. A. No. 162 of 1955 and appellants in C. As.
38 to 41, 43 and 44 of 1956.
Appellant in C. A. No. 42 of 1956 not represented.
1957 April 24.
The Judgment of the Court was delivered by KAPUR J.
In all these appeals the question for decision is the character and purport of the payment termed 'Salami ' and whether it falls within the meaning of " agricultural income " as defined in the Assam Agricultural Income Tax Act (Ass. IX of 1939) hereinafter called the " Act ".
C. A. No. 162 of 1955 is directed against the judgment of the Calcutta High Court dated January 15, 1953.
C. A. Nos.
38 to 44 of 1956 have been brought against the judgment of Assam High.
Court dated April 2, 1952.
These matters were all heard together in the Assam High Court and were disposed of by one judgment C. A. No. 162 of 1955 relates to the assessment year 1941 42.
The assessee in that case was a /8/9 annas 1021 co sharer in a zamindari estate known as " Parbatjoar estate " in Assam.
The original assessee was Jyotindra Narayan Chowdhury who died on January 25, 1953, and on his death his widow, Shrimati Sindhurani Chowdhurani and others were substituted.
The gross in, agricultural income of the assessee was Rs. 89,633 and income from salami was Rs. 9,331 9 4 which was received from settlement of 414 different holdings out of which 278 were holdings of virgin lands and 136 were those of what are described as auction purchase lands.
Out of the gross income from salami 15 per cent. has been allowed as collection charges and the amount in dispute in this appeal therefore is Rs. 7,934.
The Agricultural Income Tax Officer held this sum to be "agricultural income " by his order dated November 10, 1941, which was affirmed on appeal to the Assistant Commissioner of Agricultural Income Tax.
The revision taken to the Commissioner under section 27 of the Act was dismissed but at the instance of the assessee the following two questions were referred for the opinion of the High Court.
(1)Whether the single non recurring premia or salamis paid to the landlord assessee once only as consideration for the settlement of agricultural land at the time of granting a lease can be held to be income within the meaning of the Act ? (2)Whether single non recurring premia or salamis paid to the landlord assessee as consideration for the settlement of agricultural land once only at the time of granting lease when such premia or salamis are not dependent on the rate of rent charged, can be held to be income within the meaning of the Act ? The Calcutta High Court by its judgment dated April 12, 1945, held these receipts to be " agricultural income.
" Against this judgment an appeal was taken to the Privy Council but on the abolition of the jurisdiction of the Privy Council the appeal was transferred to the Federal Court and was heard by that court as C. A. No. 30 of 1949.
That court set aside the judgment of the High Court and remitted the case to the High Court " to be dealt with again after ascertaining and considering the following additional factors likely 1022 to show the true nature of the receipts described as It salami in the present case.
The number of settlement of waste lands and abandoned holdings during the accounting year and, the maximum and the minimum extents settled and salami received.
Does the salami vary with the quality of the land, the facilities for irrigation and such other favourable factors ? 3.
How many tenants ejected under section 69 during the accounting year and how long they had been in occupation before such eviction? 4.
Is salami received when lands are relet after eviction? 5.
Is salami that is paid in the zamindary of the assessee in the nature of a I present ' given by the tenant to the landlord for the permission to occupy the land or whether it is in substance a premium payable by lessee at the inception of the tenancy? After the remand the case was again stated by the Member of Assam Board of Agricultural Income Tax, Dr. Goswami, and answers to these questions were : 1.
Total number of settlements were 414, maximum extent being 59 bighas 2 Cottahs and 10 Dhurs, and salami Rs. 161 8 61 and minimum extent was 15 Cottahs and salami received therefrom Rs. 2 11 9. 2.
Rate of salami varies with the quality of the lands, two fixed rates being Rs. 7 per bigha for jungle lands and Rs. 10 per bigha for non jungle lands.
There was no eviction of tenants under section 69 of the Goalpara Tenancy Act, but action was taken in a large number of cases under section 68 of that Act.
Salami is realized when lands are relet after eviction.
Salami is not in the nature of a present.
It is a compulsory payment by the tenant to the landlord at the inception of the tenancy.
In the Statement of the Case the Board said that the zamindar 's business or vocation was letting out holdings 1023 against payment.
The area of land held by him was a large one "which he lets out piecemeal to various tenants on conditions among others that the would be tenant will first pay a fee which he prefers to call salami ' and that he will pay an annual rent.
" It held that this payment was not "a windfall", that the " isalami ' arose from the landlord 's business of letting out his lands, and. . is an income", that because of the " regularity or periodicity " attached to the receipt of salami, " it satisfies the test of I income ' " and therefore the amounts received as salami were agricultural income " within section 2(a)(1) of the Act.
On a consideration of the facts found by the Board in this case and after reference to the reported judgments of the various courts, the Calcutta High Court held that the amounts received by the assessee as salami were not " agricultural income " and the Board has brought this appeal (C.A. No. 162 of 1955) against that judgment.
In the Assam Appeals also the areas of land held by the assessees were large and total income in the case of " Parbatjoar estate " was Rs. 1,15,510 and in the case of Mechpara estate it was Rs. 2,82,106 which was divisible amongst the various co sharers.
Salami rates in Parbatjoar estate varied from Rs. 7 per.bigha for forest land to Rs. 10 per bigha for other lands depending upon the quality of the land.
In Mechpara estate the rates in hilly tracts were Re. 1 to Rs. 2 for good sail land and Re. 1 to Rs. 6 for other class of land and in the plains they varied from Rs. 2 to Rs. 3 for good sail land, and Re. 1 to Rs. 6 for other lands and As. 8 to Re. 1 for newly formed Char lands.
In Bijni Raj estate the minimum salami was Re. 1 per bigha irrespective of the area of the land.
In Gauripur estate the holdings were settled by auction and the amount of salami was determined by the demand, depending upon the quality of land and facilities for irrigation.
Similarly ;in the Chapter Trust estate holdings were settled by auction.
The finding of the High Court was: " It is abundantly clear from the above statement of facts that the rates of salami vary with the quality 1024 land in each estate.
They have no relation to rent which is admittedly fixed and invariable.
Lands are settled generally in small plots.
The highest figure received as salami in a single transaction in the years with which we are concerned was in Parbatjoar.
A sum of Rs. 621 was received on a settlement of an area measuring 88 B., 14 K., 15 D.
In Mechpara an area measuring 165 B., 16 K., 12 D., was settled for Rs. 318.
The minimum extent of area settled in one transaction was also in Mechpara.
Lands measuring only 2 K. was settled.
Salami received was Rs. 3 5 0.
Between these two extremes the extent of areas settled varies.
" There were no evictions under section 69 of the Assam Tenancy Act of non occupancy tenants but ejectments did take place and action was taken under section 68 of the Act.
After the re statement of the case on the lines suggested by the Federal Court, the Assam High Court held that " salami " is not rent but revenue derived from land and is therefore income. . .
The question for decision is whether the amounts received as salami are rent or revenue within the definition of " agricultural income " and therefore liable to agricultural income tax.
The basis of the first Calcutta judgment dated May 12, 1945, in C.A. No. 162 of 1955 was that salamis were a normal and regular feature of these estates and there was periodicity.
When the matter came up in appeal to the Federal Court the learned Chief Justice was of the opinion that the receipt termed salami if nothing more is stated in respect of it cannot be treated as a capital receipt and therefore exempt from taxation nor could it merely as such be treated as income and therefore assessable to income tax.
Mahajan J. (as he then was) said: " It may be a recurring or a periodical payment if it is a fee or a fine levied annually on the holder of rent free tenures as a quit rent; on the other hand, it may not be a periodical payment or a recurring payment if it is in the form of gratuity or offering on receiving a lease or settling for the revenue or on receiving any favour real or implied." He was of the opinion that in the former case it would be agricultural 102 income but in the latter case it would be a capita receipt being the price for that small " modicum of ownership which the landlord transfers to the tenant. ' In the Assam cases Ram Labhaya J. said that by settling the lands and accepting salami the landlord parts with the right of immediate occupation.
The characteristics and incidence of salami disclosed from the " statements of the cases " are that it is a lump sum non recurring receipt of money by a landlord from a tenant before making a settlement of the holding which in C.A. No. 162 of 1955 varied from Rs. 7 to Rs. 10 per bigha and was less in other cases.
He is also entitled to charge a fixed periodical amount of 11 annas per bigha per annum.
Salami is charged when.
ever a fresh settlement is made whether it is of a piece of virgin land or of an auction purchase holding.
Thus salami is a payment by a tenant to the landlord antecedent to the constitution of the relationship of landlord and tenant.
It is really a payment by the tenant to the landlord for being allowed to take possession of the land for cultivation under the lease.
In all those cases under appeal the leases were oral and the duration and conditions thereof were regulated by Statute The Assam Tenancy Act.
Salami is not a recurring or periodical payment or a fee or fine levied at fixed intervals from the tenant for the same holding.
In these cases it has not been contended or even suggested nor was it contended before the Federal Court that salami is capitalised rent.
As a matter of fact the Federal Court found that it was not rent.
In ' consideration of the payment of salami an estate in land is transferred by the landlord to the tenant although the estate taken by the tenant in the first instance is a non occupancy tenancy which grows into an occupancy tenancy by the efflux of time.
But in no case in any of the appeals was action taken under section 69 of the Assam Tenancy Act which regulates the rights and liabilities of non occupancy tenants and no tenant was ejected from his non occupancy tenancy.
On the other hand whenever action had to be taken for non payment of rent and ejectment it was taken 132 1026 under section 68 of the Goalpara Tenancy Act.
This section s as follows: A permanent tenure holder, a raiyat at fixed rates, or an occupancy tenant, shall not be liable to ejectment for arrears of rent, but his tenure or holding shall be liable to sale in execution of a decree for the rent thereof, and the rent shall be a first charge thereon.
In execution of decrees for arrears of rent the estates of the occupancy tenants were sold, the purchaser in all cases being the landlord himself and thus for recovering the arrears of rent the landlord had to bring to sale the right, title and interest of his tenant and after purchase of this right he relet the land, on receiving the salami from the new tenant.
This process again shows that the landlord did part with some interest in land, which cannot be said to be precarious, when he made the settlement of land on receipt of salami, which was a single nonrecurring payment by the lessee for the acquisition of his rights under the lease. " Agricultural income" which, it is claimed by the Board comprises salami, has been defined in section 2(a)(i) of the Act.
The relevant portion of this section is: S.2(a)(i).
Any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land revenue in Assam or subject to a local rate assessed and collected by officers of the Government as such.
Salami is not rent and, therefore, unless it is revenue it will not fall within this definition.
" Income" was described by Sir George Lowndes in Commissioner of Income Tax vs Shaw Wallace & Co. (1) as "a periodical monetary return coming in with some sort of regularity, or expected regularity, from definite sources." In Captain Maharaj Kumar Gopal Saran Narain Singh vs The Commissioner of Income Tax, Bihar & Orissa (2), Lord Russell of Killowen after referring to the definition given by Sir George Lowndes held that life annuity paid out of an estate is income.
(1) (1932) L.R. 59 I.A. 2o6, 212.
(2) (1935) L.R. 62 I.A. 207.
1027 Salami was described by Lord Wright in Kamakshya Narain Singh vs The COMMissioner of Income Tax (1), a case of a grant of a mining lease for a period of 999 years, in the following words: " The salami has been, rightly, in their Lordships 'opinion, treated as a capital receipt.
It is a single payment made for the acquisition of the right of lessees to enjoy the benefits granted to them by the lease.
That general right may properly be regarded as a capital asset, and the money paid to purchase it may properly be held to be a payment on capital account.
" The importance lies in the use of the words "the money paid to purchase it ", i.e., the right of the lessee to enjoy the benefits granted under the lease.
In Raja Shiv Prasad Singh vs The Crown(2) where also the lease was a mining lease for a period of 999 years, salami was described as a sum which is payable at the inception of the lease and as a nonrecurring payment in the nature of a premium for granting a lease.
In Commissioner of Income Tax vs Maharajadhiraj Kumar Visheshwar Singh (3) an area measuring 41 bighas of land was settled for an indefinite (bemead) period on a yearly rent and in the event of default of two consecutive instalments the lessee could be dispossessed and was also liable to other penalties.
This land was settled with the lessee to enable him to build a " gola house" and a platform for the rice mill.
The lease was taken to be in the nature of a permanent lease and it was held that salami represented the price for parting with the land and was not merely an advance rent and as it was not a recurring payment, it did not fall within the definition of the word 'income ' as given in Commissioner of Income Tax vs Shaw Wallace & Co. (4).
Manoharlal J. who gave a concurrent judgment, at page 824 described salami as the amount of money which a landlord "insists on receiving as a condition precedent for parting with the land in favour of the lessee." lie also held that salami (1) (1943) L.R. 70 I.A. 180, 190.
(2) Patna 73.
(3) Patna 805.
(4) (1932) L.R. 59 I.A. 206, 212.
1028 could not be treated as a revenue receipt and that it was received by the landlord "not because of the use of the land but before the land was put into use by the assessee.
" The same court in Province of Bihar vs Maharaja Protap Udai Nath Sahi Deo (1) followed the definition of the word 'salami ' as given in Kumar Visheshwar Singh 's case.
Harries C.J. there held that where salami cannot be regarded as payment of rent in advance, it will not be income and would, therefore, not be taxable.
He said "prima facie, salami is not income, and it is impossible upon the facts as stated to say that salamis received. . . constitute part of his income." Rankin C.J. in Re Gooptu Estate Limited (2) held payment of one lakh of rupees as salami not to be income.
In that case it was demanded and paid in respect of resettlement of a lease which had still to run for 48 years but had been forfeited for the non payment of rent.
In certain cases, however, payment by way of salami has been held to be 'agricultural income '.
In Birendra Kishore Manikya vs Secretary of State for India (3) it was held that the consideration for the grant of a lease is the capitalised value of the sum periodically payable along with the premium so that "the larger the one element the smaller the other.
" On this basis the premium paid for the settlement of waste lands or abandoned holdings was regarded as rent or revenue ' derived from land and therefore within the definition of agricultural income in section 2(1)(a) of the Indian Income Tax Act.
This was a case which was decided under the Indian Income Tax Act and the question whether it was a capital receipt or revenue receipt and therefore exempt or not from taxation did not arise because the Bengal Agricultural Income Tax Act was passed in 1944 and the Assam Act in 1939.
It was not necessary for the purpose of that case to decide whether it was a capital receipt or revenue because what was to be decided was whether salami was (1) Patna 699, 722.
(2) (3) Cal, 766.
1029 exempt from income tax under section 2(a)(i) of the Indian Income Tax Act.
As a matter of fact the assessee argued in that case that these sums constituted " agricultural income".
Moreover the dictum the smaller the salami the higher the rent and vice versa did not receive acceptance by the Federal Court when the present matter was heard in that court before remand (C.A. No. 30 of 1949).
In Meher Bano Khanum vs Secretary of State for India(1) 'salami ' was defined to be an amount received by the landlord for the recognition of the transfer of a non transferable holding which was paid to the landlord because of his ownership of the land.
It was held to be "agricultural income" as it was "rent or revenue" within the meaning of that expression.
The Standing Counsel who appeared for the Secretary of State in that case conceded that it was not revenue but his argument was that it was not revenue derived from land but that it was an incident of the transfer and not of tenancy and therefore did not flow from the land.
In neither of these cases was it argued whether salami was a revenue receipt or capital receipt.
In a Full Bench of the Patna High Court in Raja Rajendra Narayan Bhanja Deo vs Commissioner of Income Tax (2 ) mutation fees were held to be agricultural income but that was a case of payment after the relationship of landlord and tenant had come into existence.
Similarly in the Commissioner of Income Tax vs K. C. Manavikraman Rajah (3) monies paid for the renewal of leases were held to be agricultural income within the meaning of section 2(1)(a) of the Indian Income Tax Act.
Here again the monies were paid not for the constitution of the relationship of landlord and tenant but after that relationship had come into existence and for its continuance.
In H. H. Maharaja Sir Bir Bikram Kishore Manikya Bahadur vs The Province of Assam (1), a case under the Act, Harries C.J. referred to Kamakshya Narain Singh 's case (5) and held that it had to be decided on (1)(1925) I.L.R. (2) Patna 1.
(3) I.L.R. (4) (5) (1943) L.R. 70 I.A. 18o, 190. 1030 the facts of each case whether salami was agricultural income or not because it was not known in respect of what transaction the amount was received.
The Orissa High Court in section M. Bose vs Secretary, 'Board of Revenue (1) has held that salami is not a payment of rent in advance nor is it income but is a payment by way of capital receipt.
It was contended before us that the Privy Council in Kamakshya Narain Singh 's case (2 ) based its decision on the wasting nature of the assets under the lease.
But the definition given by Lord Wright is in general terms and just describes what the characteristics of a payment by way of salami are without any reference as to the nature of assets under a lease.
In all these appeals before us the assessees derived considerably large amounts of income from agricultural holdings.
It is not shown as to what the number of the holdings were but they must have been considerably large.
On the other hand the number of settlements was comparatively small a few hundreds and consisted of settlements of virgin lands as well as of auction purchase lands and were not derived from the same holdings at regular intervals.
This and the findings of fact given above negative the finding as to "regularity and periodicity" of payment of salami and also that it "arose out of business of letting out his land.
" The payments by way of salami were made by the prospective lessees anterior to the constitution of the relationship of landlord and tenant as the price for the lessor agreeing to the parting of his rights in an agricultural holding in favour of the proposed lessee.
In Principles of Mohamadan Law by Macnaughton ,salami is defined as; "a free gift by way of compliment or in return of a favour." In Wilson 's Glossary the meaning given to it is: " a complimentary present, a douceur. . ; a present to a superior upon being introduced to him; a gratuity or offering on receiving a lease. . . (1) A.I.R. 1955 Orissa 288.
(2) (1943) L.R. 7o I.A. 180, 190.
1031 In the Arabic English Dictionary by Johnson it means: " a present on being introduced to a superior; earnest money; a free gift from a farmer to Government on taking lands. . ." In Vol.
I of Baden Powell 's "Land Systems of British India" it is stated at page 543; ". .the
Zamindar, to raise money, had sold so many taluqs or under farms for 'salami ' or fees paid down Thus all these definitions show that salami is a payment by the tenant as a present or as price for parting by the landlord with his rights under the lease of a holding.
It is a lump sum payment as consideration for what the landlord transfers to the tenant.
The manner in which the leases were dealt with and the fact that 'in no case was a non occupancy tenant evicted and his tenure was allowed to mature into an occupancy holding shows that the leases were in practice not so precarious as was suggested by the Board, but had an element of stability and permanency attached to them.
Therefore, when a tenant paid salami he did so in order to get in return an estate in the land owned by the zamindar.
Salami is thus not rent and both parties have proceeded on that basis and it could not be called revenue within the meaning of the word used in the definition of agricultural income under section 2(1)(a) of the Act because it was a payment to the landlord by the tenant as a consideration for the transfer of a right in zamindari lands owned by the landlord.
It has therefore all the characteristics of a capital payment and is not revenue.
In the result appeal No. 162 of 1955 brought by the State of Assam is dismissed with costs throughout and the appeals brought by the assessees in C.A. Nos. 38 to 44 of 1956 are allowed, the judgment of the High Court set aside and the referred questions answered in the negative.
The assessees will have their costs in this court in one set and the courts below except in appeal No. 42 of 1956 where the appellant was not present, 1032 but it appears that she could not be served and given notice of the hearing of the appeal and, therefore, although her appeal is allowed, as it is based on a point common to other appeals, the parties will bear their own costs in that appeal.
Appeal No. 162 of 1955 dismissed.
Appeals Nos.
38 to 44 of 1956 allowed.
| The true indicia of salami are (1) its single non recurring character and (2) payment prior to the creation of the tenancy.
It is the consideration paid by the tenant for being let into possession and can be neither rent nor revenue but is a capital receipt in the hands of the landlord.
Kamakshya Narain Singh vs The Commissioner of Income Tax (1943) L.R. 70 I.A. 180, relied on.
Case law reviewed.
Birendra Kishore Manikya vs Secretary of State for India, Cal.
766, Meher Bano Khanum vs Secretary of State for India, Cal.
34, Raja Rajendra Narayan Bhanja Deo vs Commissioner of Income Tax, Pat. 1 and Commissioner of Income Tax vs K. C. Manavikramato Rajah, I.L.R. , distinguished.
Consequently, where payments described as salamis and received by certain zamindar assessees as consideration for granting agricultural leases, by no means of a precarious nature, were (1) (2) 1020 all made prior to such grants and were of a non recurring character, but calculated at rates varying with the nature of the lands and chargeable on every subsequent eviction and re letting, they were properly so described and were neither rent nor revenue within the definition of 'agricultural income ' contained in section 2(a) (1) of the Assam Agricultural Income Tax Act and could not be assessed to tax under the Act.
|
Summarize this legal judgement text concisely | Civil Appeal No. 12 of 1955.
Appeal from the judgment and decree dated September 10, 1953, of the Calcutta High Court (Original Side) in I. T. Reference No. 8 of 1947.
C. K. Daphtary, Solicitor General for India, G. N. Joshi and B. H. Dhebar, for the appellant.
K. P. Khaitan, Rameshwar Nath, section N. Andley and J. B. Dadachanji, for the respondents.
April 24.
The Judgment of the Court was delivered by VENKATARAMA AIYAR J.
This appeal raises a question of importance as to whether amounts shown by an insurance company as reserves for unexpired risks on pending policies are liable to be deducted under r. 2 of Sch.
II to the Excess Profits Tax Act (XV of 1940) hereinafter referred to as the Act.
The respondent is a company carrying on life, fire, marine and general insurance business, and the present dispute relates to the assessment of excess profits tax on its income from business other than life insurance for the chargeable accounting periods ending December 31, 1940, and December 31, 1941.
To appreciate the contentions raised, it is necessary to state that the policies of insurance with which these proceedings are concerned, are, unlike life insurance policies, issued in general for short periods or ad hoc in relation to a specified voyage or event.
To take the most important of them, fire insurance policies, they are issued normally for one year, and the whole of the premium due thereon is received when the policies are actually issued.
In any given year, while the premiums due on the policies would have been received in full, the risks covered by them would have run only in part and a, part will be outstanding for the next year.
The companies have to prepare annual statements of profit and loss for the purpose of ascertaining their profits and distributing their dividends.
They have also to prepare revenue statements to be sent to the authorities under the provisions of the .
The method 1004 adopted by the respondent in preparing the above statements has been that while the premiums received are all of them included in the assets of the year, a certain proportion ' thereof, usually 40 per cent., is treated as the reserve for unexpired risks, and that is shown as a liability.
To take a concrete example, if in the year 1939 the respondent issued annual fire insurance policies and received a sum of Rs. 1,00,000 as premiums thereof, the whole of it would be shown as income in the statement for the year 1939, and a sum of Rs. 40,000 will be shown as a reserve for unexpired risks.
In the profit and loss statement, the former will be shown as part of the assets and the latter as liability, and it is only the balance that will be included in the net profits.
In 1940, the policies issued in 1939 would all of them have expired, and the sum of Rs. 40,000 shown as reserve in 1939 would be treated as part of the assets in 1940.
There will, of course, be fresh policies issued in 1940, and in the statement of that year, the premiums received on those policies would be shown as part of the income, and 40 per cent.
thereof would be set apart as reserve for unexpired risks.
This ' method of account keeping is what is 'usually adopted by insurance companies, and is in accordance with well recognised and approved practice of accountancy.
Now, the question is whether in the illustration given above, the sum of Rs. 40,000 which is set apart in 1939 as reserve for unexpired risks is liable to be deducted under r. 2 of Sch.
II to the Act from out of the capital employed in business for that year, which would, of course, include the whole of Rs. 1,00,000 received as premiums.
The contention of the appellant is that if all the premiums received are to be treated as capital under r. 1, Sch.
11, then the sums which represent the outstanding liability in respect of the unexpired period of the policies in the illustration given above, Rs. 40,000 should be deducted as a liability under r. 2 of Sch.
The respondent, while claiming that all the premiums received mu ,it be treated as capital, maintains that the provision for unexpired risks is a contingent liability, and that that 1005 is not within r. 2 of Sch.
The Tribunal decided the question against the respondent, but on reference under section 66(1) of the Indian Income tax Act read with section 21 of the Act, the High Court of Calcutta answered the question adversely to the appellant, but granted a certificate under section 66 A, and that is how the appeal comes before us.
The relevant statutory provisions may now be noticed.
Under section 4 of the Act, the charge is on the " amount by which the profits during any chargeable accounting period exceed the standard profits ".
I Standard profits ' are defined in section 6, sub section
(1), and the respondent having exercised his option under the second proviso thereto, they have to be calculated "by applying the statutory percentage to the average amount of capital employed in the business during such chargeable accounting period Schedule II enacts rules for the determination of the average capital employed.
Under r. 1(c), the capital employed will include the value of all assets "I when they became assets of the business ".
Rule 2(1) enacts that any borrowed money and debts shall be deducted from out of the value of the assets.
There is a further provision in r. 2(1), which is what is material for the purposes of the present appeal, and it runs as follows: " The debts to be deducted under this sub rule shall include any such sums in respect of accruing liabilities as are allowable as a deduction in computing profits for the purposes of excess profits tax ; and the said sums shall be deducted notwithstanding that they have not become payable.
" For this clause to apply, two conditions must be satis fied.
The sums to be deducted should be allowable as a deduction in computing the profits for the purposes of the Act, and further they should be in respect of accruing liabilities.
Rule 1 of Sch.
1 enacts that, " The profits of a business . . during any chargeable accounting period . . shall, subject to the provisions of this Schedule, be computed on the principles on which the profits of a business are computed for the purposes of income tax under section 10 of the Indian Income tax Act, 1922.
" 1006 Section 10(7) of the Indian Income tax Act provides that, " Notwithstanding anything to the contrary contained in sections 8, 9, 10, 12 or 18, the profits and gains of any business of insurance and the tax payable thereon shall be computed in accordance with the rules contained in the Schedule to this Act.
" Rule 6 of the Schedule provides: "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 Controller 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.
" It is common ground that the statements furnished to the Controller of Insurance by the respondent for the relevant periods did disclose 40 per cent.
of the premiums received as reserve for unexpired risks on the outstanding policies and that the same has been treated as a liability in its profits and loss statements and allowed in the assessment of income tax.
Thus, one of the conditions required by r. 2 has been satisfied.
The whole controversy between the parties relates to the other condition whether the reserve of 40 per cent.
can be regarded as a sum in respect of accruing liability.
The contention of the learned Solicitor General is that it must be so regarded, and his argument in support of it may thus be stated: A contract of insurance is complete as soon as the policy is issued.
From that time, the risk begins to attach to it, and there is a liability incurred.
Rule 2 does not require that the liability should have actually accrued; it is sufficient that it is accruing.
Liability under a policy must be held to be accruing so long as the policy is in force, because it can ripen into actual liability at any time during the life of the policy on the happening of the specified event.
When the assessee shows a certain amount as the value of that 1007 liability, it is a sum in respect of an accruing liability and must be deducted under r. 2.
In support of this contention, the decision in Sun Insurance Office vs Clark (1) was relied on.
The facts of that case were as follows: A fire insurance company which had been following the practice of entering in its annual statements 40 per cent.
of the total premium receipts as reserve for unexpired risks claimed a deduction therefor in the assessment of its annual profits.
The validity of the claim having been disputed, the question as to its admissibility was referred to the decision of the court.
Bray J., who heard the reference, held that the amounts reserved for unexpired risks should be deducted firstly on the ground that the premium which had been paid in respect of a risk for a whole year could not be said to have been wholly earned, when a portion of the period covered by the policy was still to run, and that the reserve therefore was not income earned, and secondly and in the alternative, on the ground that as the premium had been received burdened with a liability which had been only partially discharged in the year of account, the portion of the liability still outstanding should be valued on the analogy of unpaid price due in respect of property purchased and included in the trading assets.
This decision was taken in appeal, and was reversed by the Court of Appeal, the learned Judges holding that though the reasoning of Bray J. was sound, the question was concluded against the assessee by the decision of the House of Lords in The General Accident Fire and Life Assurance Corporation vs McGowan (2 ).
The case came on further appeal before the House of Lords which agreed with Bray J.that the deduction was admissible, and distinguished the decision in The General Accident Fire and Life Assurance Corporation vs McGowan (2 ) as one turning on the facts of that case and as not laying down that, as a matter of law, the deduction could not be made.
Lord Haldane stated the ground of his decision thus: ". . the case is analogous to one in which if goods are bought their value cannot be treated as (1) ; ; (2) 1008 profit without deducting the value of the liability to pay for them which the buyer has incurred." Lord Alverstone expressed the reasoning on which he based his conclusion as follows: "Premiums are not profits or gains, they are receipts which must be brought into account and out of which, after proper deduction for losses, profits will accrue." Lord Atkinson also rested his decision on the same ground, and observed: " That case (Gresham Life Assurance Society vs Styles) (1) clearly decided that the receipts of a business are not in themselves profit and gains within the meaning of the Income Tax Acts, but that it is what remains of those receipts after there has been deducted from them the cost of earning them which constitute the taxable profits and gains.
Now what is the service which a Fire Insurance Company renders to each insurer in consideration for the premium it receives ? It is only, by rendering this service in each case it earns these receipts.
The service consists in indemnifying the insurer against loss by fire during the continuance of his policy. .
Yet until that time has expired the service for which the Company has been paid has not been completely performed.
If the accounts of the Company are to be rendered before the date of expiry, then some division of the premium must be made, and the proportion to be appropriated to the service which is to be performed thereafter.
I think the description 'unearned premium ' which has been used to describe this latter portion is a very appropriate and accurate description.
" It is also material to note that one of the authorities relied on for the Crown was the decision in Scottish Union and National Insurance Company V. Smiles (2) wherein, discussing how the reserve for unexpired risk in fire policies is to be dealt with in computing the profits, the Lord President observed: " Seeing that fire insurance policies are contracts for one year only, the premiums received for the year (1) (2) 1009 of assessment, or on an average of three years, deducting losses by fire during the same period and ordinary expenses, may be fairly taken as profits and gains of the Company without taking into account or making any allowance for the balance of annual risks unexpired at the end of the financial year of the Company." Referring to this and to another decision, Lord Haldane observed that they " are not, when carefully examined in the light of what appears to be the true principle, reliable as authorities for the proposition which would run counter to the practice and good sense of the commercial community.
" On the strength of the observations quoted above, the argument has been advanced by the learned Solicitor General that the obligation which an insurance company contracts when it issues a policy is to be treated, in computing its profits for the purposes of taxation, as a liability in praesenti.
Mr. K. P. Khaitan, learned counsel for the respondent, disputes the correctness of this contention.
He argues that whatever the position under the English law, a contract of insurance is under the Indian Contract Act merely a contingent contract, that until the event specified in the policy happens, there is no enforceable liability, and that accordingly unexpired risks in pending policies cannot be treated as present liabilities.
He also urges a further contention based on the history of the enactment of r. 2 of Sch.
II to the Act.
That rule as originally passed mentioned only borrowed money and debts, and it was by section 10 of the Excess Profits Tax (Amendment) Act (XLII of 1940) that accruing liabilities were brought within that rule.
And when they were brought in, they did not come as something independent of and distinct from borrowed money and debts.
They came in under a provision, which enacted that the debts to be deducted under the rule included sums in respect of accruing liabilities.
Relying on this circumstance, counsel for the respondent contends that however liberally the expression " accruing liabilities " might be construed, it cannot be interpreted so as to take in liabilities which do not bear the character of debts, and that a liability under a contract of 130 1010 insurance where under risk had not materialised, cannot be held to be a debt, and is therefore not an accruing liability within the rule.
In support of this position, he relies on the decisions in Webb vs Stenton (1) and Israelson vs Dawson (Port of Manchester Insurance Co., Ltd., Garnishees) (2).
In Webb vs Stenton (1), the question was whether a sum which was payable to the judgment debtor under a trust deed but which had not become due could be attached in the hands of the trustees as a debt owing or accruing within 0. 45, R. 2 of the English Rules of Practice.
In holding that it could not be, Lindley L.J. observed: " I should say, apart from any authority, that a debt legal or equitable can be attached whether it be a debt owing or accruing; but it must be debt, and a debt is a sum of money which is now payable or will become payable in the future by reason of a present obligation, debitum in praesenti, solvendum in futuro.
An accruing debt, therefore, is a debt not yet actually payable, but a debt which is represented by an existing obligation.
" Israelson vs Dawson (Port of Manchester Insurance Co., Ltd., Garnishees) (2) was again a decision on 0. 45, R. 2, the Court holding that the amount which became payable under a policy as the result of the accident specified therein having occurred was, nevertheless, not a debt which could be attached under this rule, before the compensation had been determined by the arbitrator in accordance with the conditions of the policy.
The argument of the respondent based on the above decisions is that until the risk specified in the policy materialises and, consequent thereon, the compensation payable thereunder is ascertained, there is only a contingent liability and not a debt, and that such liability is not within r. 2 of Sch.
II to the Act.
In answer, the learned Solicitor General contends that the decisions quoted above are not in point, they having been given on a different statute, that the decision in (1) , 527.
(2) 1011 Sun Insurance Office vs Clark(1) which dealt with the question of assessment for purposes of taxation was directly applicable, and that according to that decision, the amounts reserved for unexpired risks would be sums in respect of accruing liabilities.
That a contract of insurance is a contingent contract does not admit of argument.
That is so under section 31 of the Indian Contract Act, and that is also the law in England where it is termed " conditional contract".
(Vide Pollock on Contracts, 13th Edn., p. 222).
This, however, is not material for the purpose of the present discussion which is how such contracts are to be dealt with in assessing, the taxable profits of an insurance company.
That is a matter which must be determined on the provisions of the taxing statutes and their application to the facts found with reference to the particular assessment.
And it is in this view that the decision in Sun Insurance Office vs Clark (1) becomes important.
Now, what is the ratio of this decision? The law is well settled that a liability which is purely contingent cannot be allowed as a deduction in computing the profits of a business.
And in holding that unexpired risks in respect of pending policies could be estimated and deducted out of the gross premium receipts, the House of Lords must be held to have decided that the obligation of an insurer under such risks was a liability in praesenti.
Reference might be made in this connection to the recent decision of the House of Lords in Southern Railway of Peru Ltd. vs Owen (2).
There, the appellant Company operated a railway in Peru under a statutory scheme under which its employees were entitled to receive from it a lump sum payment on retirement, death or other termination of service.
The Company claimed that it was entitled to value this liability in accordance with "accountancy practice" and to deduct the same from out of its annual profits.
And support for this contention was sought in the decision in Sun Insurance Office vs Clark (1).
In rejecting this claim it was observed by the House of Lords that the accountancy valuation was not necessarily the correct (1) ; ; (2) ; 1012 valuation for purposes of income tax, and that the real point for decision was whether the claim was to be regarded as an essential charge against the trade receipts during the year.
In distinguishing the decision in Sun Insurance Office vs Clark (1), Lord Oaksey made the following observations, which are pertinent to the present discussion: " Reliance was placed, during the argument, on Sun Insurance Office vs Clark (1), in which this House held that a percentage of the premium income of an insurance company might be deferred as a receipt to a future year because it was paid as consideration for future liability, but the principle of that decision is not, in my opinion, applicable to the present case.
The premium income was only deferred and would suffer tax in a future year, whereas, in the present case, if the appellant is permitted to deduct compensation, Which it has not paid and which it may never have to pay, that compensation will escape tax altogether.
There is, in my opinion, a fundamental distinction between a contingent liability and a payment dependent on a contingency.
When a debt is not paid at the time it is incurred its payment is, of course, contingent on the solvency of the debtor but the liability is not contingent.
Similarly, the liability in Sun Insurance Office vs Clark (1) was not, in my opinion, contingent but remained in force throughout the period of the insurance, though payment in pursuance of that liability might, or might not, have to be made.
" The decision in Sun Insurance Office vs Clark (1) and the observations in Southern Railway of Peru, Ltd. vs Owen(1) quoted above do support the contention of the appellant that in computing the profits of an insurance company for purposes of income tax, the unexpired risks are to be treated as a present liability.
But even so, on the footing that r. 6 in the Schedule to the Indian Income tax Act has adopted the law as laid down in Sun Insurance Office vs Clark (1), the question still, remains whether unexpired risk in an outstanding policy is an accruing liability within r. 2 of Sch.
II to the Act.
It is contended for the (1) ; (2) ; 1013 appellant that if that liability is a present liability for purposes of assessing the taxable profits for purposes of income tax, it must logically be the same for purposes of excess profits tax, and must therefore be deducted under r. 2 of Sch.
II to the Act.
That would be so, if the scheme and framework of the Excess Profits Tax Act were the same as those of the Income.
tax Act.
But the fact is that the Excess Profits Tax Act differs, in material respects from the Income tax Act, and the principles applicable in the assessment of profits under section 10 of the latter enactment cannot necessarily be held to be applicable in the ascertainment of the capital employed under rr.1 and 2 of Sch.
II to the former Act.
The object of the Excess Profits Tax Act is to tax profits of a business when they overflow a certain level.
That level is determined thus: A certain,period called the standard period is taken; the capital invested and the profits made in the business during that year are ascertained, and the standard profits are worked out in relation to those two factors.
Then, the capital actually employed in business during the chargeable accounting period is ascertained.
If the capital is the same as that employed in the standard period, then there is no further problem; but if it is more, then the standard profits are increased, and if it is less, they are reduced pro tanto.
Thus, the whole scheme of the Act is to tax profits above a certain level, and that level will move upwards or downwards as the capital employed may be more or less.
It is this that constitutes the distinguishing feature of the Excess Profits Tax Act, and it is the determination of the capital actually employed in business that forms one of the most important and arduous tasks in the ascertainment of taxable profits under the Act.
Rule 1 of Sch.
II to the Act enumerates three categories of properties, which are to be included in the computation of capital.
It is to be noted that this rule does not adopt any legalistic or conventional notion of what is technically termed 'capital '; but it proceeds on a factual basis to include whatever is utilised in business, :whether it be tangible property or intangible 1014 property.
The object of the provision is clearly to confer a benefit on the assessee by enabling him to retain at least in part the profits realised by him by investment of additional capital.
Then there is r. 2, which provides for certain deductions being made out of capital.
Omitting for the present "accruing liabilities", which form the subject of the present controversy, the other two items mentioned therein are borrowed money and debts, and the reasons for their exclusion from capital falling within r. 1 would appear to be this: Money borrowed and debts incurred for the purpose of the business must have been utilised in it, and would be included in the capital employed as defined in r. 1.
The policy of the law being to give some relief to an assessee who invests additional capital in his business, the reason of it requires that that should be limited to capital contributed by the assessee himself.
Otherwise, the benefit intended to be given to him might be abused, and the object of the legislation defeated by large scale employment of borrowed capital.
Borrowed money and debt are therefore to be deducted out of what is capital within r. 1.
We now come to the expression "accruing liabilities".
What does it precisely import ? To decide that, we must have regard to the scope and purpose of rr. 1 and 2 of Sch.
II to the Act and to the context and setting of the expression.
It has been already pointed out that the object of the Act is to tax profits which overflow a certain line indicated by what is termed " standard profits ", that the location of that line varies with the capital employed, that the scheme of r.
I is on a factual basis to treat as capital all assets tangible and intangible which are thrown into a business and contribute to the earning of profits and to exclude therefrom under r. 2 that part of it which came in as a result of borrowing.
Now, obviously.
a deduction under r. 2 can only relate to what is capital under r. 1, and that must be a really profit earning asset, whether tangible or not .
Borrowed money to be deducted under r. 2 is money borrowed for the purpose of the business, and which has gone to swell the capital under r. 1.
That is also the position as regards debts.
And 1015 accruing liabilities which are liable to be deducted under r. 2 must also be of the same character as borrowed money and debts with which they are associated on the principle of noscitur a sociis.
They must be such as can be said to have been utilised in the business and formed part of the really effective trading assets during the chargeable accounting period.
If that is the correct approach, as we conceive it is, the question to be considered is neither, on the one hand, whether the liability amounts in law to a debt for if it is capable of being utilised in business and is so utilised, it will fall under r. 2, even though it is not strictly speaking a debt; nor, on the other hand, whether it is a liability which has been treated as one for the purpose of assessing income tax.
In assessing income from business under section 10 of the Income tax Act, what is allowed as a deduction is any liability incurred solely and exclusively for the purpose of the business, and when that has not matured, its value is to be determined according to rules of accountancy and deducted.
But when a deduction is claimed under r. 2, what has to be seen is whether the obligation is such that it could be regarded as an asset used in the business, such as could conceivably contribute to its profits.
If that is not established, then it cannot be included as capital under r. 1, and cannot be deducted therefrom under r. 2 as an accruing liability.
It should not be overlooked that a deduction under section 10 of the Income tax Act and that under r. 2 of Sch.
11 to the Act proceed on totally different lines and have different objects in view.
Under section 10, the deduction is claimed by the assessee, and that has the effect, when allowed, of reducing the taxable profits.
Under r. 2, it is claimed by the department, and if allowed, it will enhance the liability of the assessee by reducing the capital under r. 1.
Incidentally, how inappropriate the principle laid down in Sun Insurance Office vs Clark (1) would be if it is applied for determining the question of capital employed in business for the purpose of Excess Profits Tax Act will be seen from (1) ; ; 1016 the fact that one of the grounds on which the decision therein was based was that 40 per cent.
of the premiums received and set apart as reserve for unexpired risks was unearned income, and could not therefore be regarded as profits for the purpose of the Act.
If that were the true position under the Excess Profits Tax Act, then the reserve could not be included in the capital of the business, and, indeed, that was one of the contentions urged by the learned Solicitor General.
But that was not the stand taken by the department before the Tribunal and that is directly opposed to the plain language of r. I of Sch.
II, under which all the premiums thrown into the business would be capital employed in the business.
That clearly shows how unsafe it will be to adopt the principles laid down for the purpose of assessing business profits under the Income tax Act to a determination of the question of the capital employed under the Excess Profits Tax Act.
In this view, is the reserve for unexpired risks an "accruing liability " within r. 2 ? The decision in.
Sun Insurance Office vs Clark(1) that it should be allowed as a deduction was based on two grounds.
One was that it should be regarded as " unearned income ", and for the reasons already stated, it cannot avail when the question is one of determining capital under the Act.
And the other was that the reserve represents a liability in the nature of unpaid price of property included in the trading assets.
But apart from the fact that we have to strain the analogy in applying it to the present situation, can that liability be held to be of the character contemplated by r. 2 ? Can it be said that the reserve for unexpired risk was, like borrowed money and debt, part of the real trading assets of the business ? The answer must clearly be in the negative.
The reserve liability could not factually be said to have contributed to the running of the business or the earning of profits.
It was some.
thing in the air, and could have had no effect in the working of the concern, during the chargeable accounting period.
It cannot therefore be held to be an is accruing liability " within r. 2 of Sch.
11 to the Act.
(1) ; ; 1017 A case very much in point is the decision in Northern Aluminium Co. Ltd. vs Inland Revenue Commissioners(1).
There, the question arose whether a conditional liability under a contract was an " accruing liability " within the corresponding provision in the English Excess Profits Tax Act.
The facts were that on December 16, 1939, an agreement was entered into between the Ministry of Aircraft Production and a company engaged in manufacturing aluminium products and supplying them to manufacturers of aircraft for the Government, wherein it was provided that the prices which the latter was then charging to its customers should be reduced for the period July 1, 1939, to June 30, 1940, and that the amount by which the prices paid to the company were in excess of the reduced prices should be paid by the company to the Ministry.
The agreement further provided that negotiations should be started not later than June 30, 1940, for determining the rates to be charged for the periods following June 30, 1940.
The agreement was, in fact, concluded only on October 12, 1942, whereby the prices to be charged by the company were fixed for the years 1941, 1942 and 1943.
In accordance with the agreement entered into on October 12, 1942, a sum of pound 2,743,469 was repaid by the company to the Ministry in 1943 being the difference between the price paid by the customers and that fixed in the agreement.
This amount was actually allowed as a deduction in the assessment of the business income for purposes of income tax, and the dispute related to the question whether it could be deducted in assessing the excess profits tax as an "accruing liability" of the company for the chargeable accounting period which was January 1 to December 31, 1941.
It was held by the Court of Appeal that there was, in fact, no agreement between the parties during the chargeable accounting period, and that therefore no liability was incurred.
In the alternative, it was held that even if the agreement dated December 16, 1939, could be construed as amounting to a conditional agreement for the period subsequent to June 30, 1940, the obligation created thereby could not be (1) , 554.
1018 regarded as an accruing liability within the rule in question.
Lord Greene M.R. stated the reason thus: " A purely conditional liability, which may or may not mature, is not one which falls within that language, for this reason: Quite apart from the actual words, it would be contrary to the whole conception underlying these capital provisions because a purely conditional liability, which may or may not eventuate, is not a thing which affects a company 's capital position, any more than a conditional receipt can affect its capital position.
A receipt which may or may not be received, according as some event does or does not happen, is not a thing with which you can earn profits.
It is the possibility of earning profits on your real capital that these capital provisions are concerned with.
Therefore, in my opinion, even if one could spell such a hypothetical and conditional contract out of these words, the result would not give rise to an accruing liability within the meaning of the section.
" This decision was taken in appeal to the House of Lords and was affirmed.
Vide Inland Revenue Commissioners vs Northern Aluminium Co. Ltd. (1).
This decision establishes that a conditional liability under a concluded contract it is on that footing that the second point arose for decision was not an accruing liability for the purposes of the Excess Profits Tax Act, as the same had no effect on the actual capital position of the company, and the fact that it was allowed for purposes of income tax did not affect the position under the Excess Profits Tax Act.
The learned Solicitor General sought to distinguish this decision on the ground that it did not relate to an insurance business, whereas it was contended that Sun Insurance Office vs Clark (2 ) directly dealt with the question now under consideration whether reserves for unexpired risks in pending policies were liabilities which could be deducted.
We do not see how it makes any difference in the construction of r. 2 of Sch.
II to the Act that the liability sought to be deducted arises under an insurance policy and not under some other contract.
(1) (2) ; ; , 1019 We are of opinion that the principles laid down in Northern Aluminium Co., Ltd. vs Inland Revenue Commissioners (1) and Inland Revenue Commissioners vs Northern Aluminium Co., Ltd. (2 ) are applicable to the decision of the present case, and that a contingent liability in respect of unexpired risk is not an "accruing liability" within r. 2 of Sch.
II to the Act.
The decision appealed from is correct, and this appeal must accordingly be dismissed with costs.
Appeal dismissed.
| The respondent was a company carrying on life, fire, marine and general insurance business, and the question for determination related to the assessment of excess profits tax on its income other than life insurance.
The method adopted by the company with respect to fire insurance policies was that while the premiums received were all of them included in the assets of the year, a portion thereof, 40 per cent., was treated as reserve for unexpired risks on the outstanding policies, and shown as a liability.
The appellant, the Commissioner for Excess Profits Tax, claimed that the sum set apart as reserve for unexpired risks was liable to be deducted under r. 2 of Sch.
II of the Excess Profits Tax Act, 1940, from out of the capital employed in business for that year.
The respondent, while maintaining that all the premiums received must be treated as capital under r. 1 of Sch.
II to the Act, contended that the provision for unexpired risks was only a contingent liability and that a liability under a contract of insurance where under risk had not materialised could not be held to be a debt and was therefore not an accruing liability within r. 2 of Sch.
II to the Act.
Held, that the reserve liability for unexpired risk, unlike borrowed money and debts, cannot be treated as part of the real trading assets of the business so as to have an effect on the running of the business or the earning of profits, and consequently, as it cannot be included as capital under r. i, it cannot be deducted as an accruing liability within r. 2 of Sch.
II of the Excess Profits Tax Act, 1940.
Sun Insurance 0Office vs Clark; , and Southern Railway of Peru Ltd. vs Owen, (1956) 2 All E.R. 728, distinguished.
Northern Aluminium Co., Ltd. vs Inland Revenue Commis sioners, and Inland Revenue Commissioners vs Northern Aluminium Co. Ltd. (1947) 1 All E. R. 608, relied on. 1003
|
Summarize this legal judgement text concisely | iminal Appeal No. 39 of 1955.
Appeal by special leave from the judgment and order dated January 28, 1954, of the Patna High Court in Criminal Revision No. 69 of 1954 arising out of the judgment and order dated November 23, 1953, of the Sessions Judge, Patna, in Criminal Appeal No. 288 of 1953 against the judgment and order dated August 27, 1953, of the Munsif Magistrate of Patna Sadar.
Murtaza Fazl Ali and R. C. Prasad, for the appellant.
section P. Varma, for respondent No. 1. 1957.
April 25.
The Judgment of the Court was delivered by IMAM J.
The appellant was removed from his position as mutawalli of Gholam Yahia Waqf Estate on September 1, 1951, by an order passed by the Majlis constituted under the Bihar Waqfs Act, 1947 (Bihar Act 8 of 1948) (hereinafter referred to as the Act).
He appealed to the District Judge of Monghyr, as he was entitled to do under the provisions of the Act, and the operation of the order of removal passed by the Majlis was stayed by the District Judge pending the hearing of his appeal.
A complaint against him was filed in the Court of the Sadar Sub Divisional Magistrate, Patna, on July 1, 1952, by Mahommad Sual, Nazir of the Majlis, on the order of its Sadar.
It was alleged in the complaint that it was the duty of the appellant ' to prepare a budget of the waqf estate of which he was a mutawalli, under section 58(1) of the Act, for the year 133 1034 1952 53 and to send a copy of it to the Majlis before January 15, 1952.
The appellant had deliberately failed to comply with the aforesaid provisions and therefore had committed an offence punishable under section 65(1) of the Act.
The office of the Majlis where the budget had to be filed was situated at Patna within the local jurisdiction of the Magistrate in whose Court the complaint was filed.
The appellant was subsequently tried at Patna by a Munsif Magistrate with First Class powers and convicted under section 65(1) of the Act and sentenced to pay a fine of Rs. 100, in default to undergo fifteen days simple imprisonment.
He appealed to the Sessions Judge of Patna who dismissed his appeal.
An application filed by the appellant in the Patna High Court in its criminal revisional jurisdiction was rejected.
The appellant obtained special leave to appeal against the order of the High Court.
It has been found as a fact that the appellant failed to prepare a budget of the estimated income and expenditure of the waqf estate and to send a copy of it to the Majlis before January 15, 1952.
The only question for consideration is whether the appellant 's failure to comply with the provisions of section 58(1) of the Act makes him liable to be punished under section 65(1).
At this stage, it is necessary to set out the provisions of a. 58 of the Act which are as follows: " 58 (1) The mutawalli of every waqf shall, before the fifteenth day of January in each year, prepare a budget of the estimated income and expenditure of such waqf for the next succeeding financial year and shall forthwith send a copy thereof to the Majlis.
(2)The Majlis may, within six weeks from the date on which it receives such copy, alter or modify the budget in such manner and to such extent as it thinks fit.
(3)If the Majlis alters or modifies any budget under sub section (2), it, shall forthwith send a copy of the budget as so altered or modified to the mutawalli of the waqf concerned, and the budget as so altered or modified shall be deemed to be the budget of the waqf.
(4)If within the period mentioned in subsection (2) and for two weeks thereafter the Majlis does 1035 not send to the mutawalli of the waqf concerned a copy of the budget altered or modified as aforesaid, the Majlis shall be deemed to have approved the budget without any alteration or modification.
(5)If the mutawalli fails to prepare and send a copy of the budget as required by sub section (1), the Majlis shall prepare a budget for the waqf concerned and such budget shall be deemed to be the budget of that waqf for the year in question.
(6)Nothing contained in this section shall be deemed to authorise the Majlis to alter or modify any budget in a manner or to an extent inconsistent with the wishes of the waqif, so far as such wishes can be ascertained, or the provisions of this Act.
" Section 65 provides that a mutawalli may be punished if he fails to comply with certain matters mentioned therein including his failure to comply with sub section
(1) of section 58.
Sub section (1) of section 65 reads as follows: " 65 (1) If a mutawalli fails without reasonable cause, the burden of proving which shall be upon him, to comply with any order or direction made or issued under clauses (i), (o) or (q) of sub section (2) of section 27 or under section 56, to comply with the provisions of sub section (1) of section 57, sub section (1) of section 58, section 59 or section 60, or to furnish any statement, annual account, estimate, explanation or other document or information relating to the waqf of which he is mutawalli, which he is required or called upon to furnish under any of the other provisions of this Act, he shall be punishable with fine which may extend, in the case of the first offence, to two hundred rupees and, in the case of second or any subsequent offence, to five hundred rupees.
" It is clear from the provisions of section 58(1) that before January 15, each year, the mutawalli of each waqf shall prepare a budget for the next succeeding financial year and shall forthwith send a copy thereof to the Majlis.
Under section 65 (1), if he fails to comply with the above, he is liable to be punished with fine.
It was contended by the learned Advocate for the appellant that section 58 of the Act was an invalid provision because it gave unrestricted power to the Majlis to alter 1036 or modify the budget prepared by the mutawalli without a right of appeal against the action of the Majlis altering or modifying the budget.
The provisions of section 58 imposed an unreasonable restriction on the mutawalli in carrying on his occupation as such.
Accordingly, the provisions of section 58 offended article 19(1) (g) of the Constitution.
The Act was enacted for the purpose of providing for the better administration of waqfs in the State of Bihar as its preamble states.
Section 5 provides for the establishment of two bodies corporate known as Majlis to discharge respectively the functions assigned to them by the Act with reference to Sunni waqfs and Shia waqfs.
Section 27 provides that the general superintendence of all waqfs in the State shall be vested in the Majlis, which will do all things reasonable and necessary to ensure that waqfs are properly supervised and administered and that the income thereof is duly appropriated and applied to the objects of such waqfs and in accordance with the purposes for which such waqfs were founded or for which they exist so far as such objects and purposes can be ascertained.
Sub section (2) of this section enumerates, inter alia,.
the various powers and duties of the Majlis including the removal of a mutawalli from his office under certain conditions.
The various powers set out in this subsection clearly indicate that the mutawalli is subordinate to and under the control of the Majlis.
The Majlis under section 47 may also make an application to the District Judge for an order, amongst other things, for the removal of the mutawalli.
Chapter X deals with mutawallis and their duties and under section 56 it is specifically enjoined that every mutawalli shall carry out all directions which may from time to time be issued to him by the Majlis under any of the provisions of the Act.
Previous to the passing of the Act, the Mussalman Wakf Act (Central Act XLII of 1923) was enacted to make provisions for the better management of waqf property and for ensuring the keeping and publication of proper accounts in respect of such properties.
It applied to all waqfs, except those to which section 3 of the Mussalman Wakf Validating Act, 1037 1913, applied.
Reference to some of the provisions of the Mussalman Wakf Act may now be made.
Section 3 provides for the furnishing of particulars relating to a waqf to the Court, that is to say, a District Judge or within the limits of ordinary original civil jurisdiction, to such Court subordinate to the High Court as the State Government may by notification in the Official Gazette designate.
Section 5 provides that within three months after the thirty first day of March next following the date on which the statement referred to in section 3 had been furnished, and thereafter within three months of the thirty first day of March in every year, the mutawalli shall prepare and furnish to the Court a full and true statement of accounts of all moneys received or expended by him on behalf of the waqf of which he was the mutawalli during the period of twelve months ending on such thirty first day of March.
Section 10 provides for punishment for failure to comply with the provisions of section 3 or section 4 by a mutawalli, who becomes liable to be fined a sum which may extend to five hundred rupees, or, in the case of a second or subsequent offence which may extend to two thousand rupees.
It is clear that the purpose of the Act and that of the Mussalman Wakf Act was to ensure that the waqfs were properly administered and that the income of the waqf was duly appropriated for the purposes for which the waqf had been founded.
Having regard to the fact that the mutawalli occupied the position of a manager or a custodian and that some kind of control or supervision over him by the Majlis with respect to due administration of the waqf property and due appropriation of funds was certainly necessary, we are of the opinion that the provisions of section 58 of the Act are reasonable restrictions on the exercise of his duties as a mutawalli and it cannot be said that the provisions of section 58 offend any of the provisions of the Constitution.
As was said in the case of The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt(1) a budget is indispensable in all public institutions and that it is not per se (1) ; , 1037.
1038 unreasonable to provide for the budget of a religious institution being prepared under the supervision of the Commissioner or the Area Committee.
Under section 58 of the Act, the mutawalli has to prepare a budget and send a copy of it to the Majlis within a specified time and the Majlis, which has the powers of supervision over him, is authorized to alter or modify the budget.
This power of alteration or modification is inherent in the power of supervision and such a provision in section 58 cannot be said to be unreasonable.
Reliance, however, was placed on a passage in the judgment of this Court in the case cited above to the effect that if an Area Committee under cl. 3 of section 70 of the Madras Hindu Religious and Charitable Endowments Act, 1951, makes any addition or alteration in the budget, an appeal against it lay to the Deputy Commissioner.
The passage upon which reliance is placed is no authority for the proposition that the provisions of section 58 of the Act become unreasonable because there is no provision for an appeal against the orders of the Majlis.
The powers of the Majlis to alter or modify the budget prepared by the mutawalli are not unrestricted.
Sub section (6) of section 58 expressly provides that nothing contained in the section shall be deemed to authorize the Majlis to alter or modify any budget in a manner or to an extent inconsistent with the wishes of the waqif, so far as such wishes can be ascertained, or the provisions of the Act.
In our opinion, nothing contained in sub sections
(2), (3) and (4) of section 58 amount to unreasonable restrictions on the exercise of the duties of the mutawalli as a person administering a waqf.
Even if it were to be assumed that the said provisions amounted to an unreasonable restriction, sub sections
(2), (3) and (4) are clearly severable from sub sections
(1), (5) and (6) of section 58.
Even if sub sections
(2), (3) and 4 were struck down, the mutawalli would still be under a legal obligation under sub section
(1) to prepare a budget and submit a copy thereof to the Majlis within a specified time and his failure to do so would make him liable to punishment under section 65(1).
It was urged that the Sessions Judge erred in placing the onus on the appellant under section 65(1) to prove that he had submitted the copy of the budget within time.
1039 This objection, however, does not require a detailed consideration because the Sessions Judge clearly stated in his judgment that apart from the onus, he was satisfied that the prosecution had fully established on the evidence that the appellant had failed to send a copy of the budget as required by law.
It was also pointed out that section 65 does not provide for any imprisonment in default of payment of fine, but the appellant was sentenced to 15 days simple imprisonment in default of payment of fine.
Section 33 of the Code of Criminal Procedure read with sections 40 and 67 of the Indian Penal Code appears to us to be a clear answer to this contention.
It was also pointed out that under section 65 of the Act a sentence of fine extending upto five hundred rupees could be imposed for a second or for a subsequent offence.
We need not, however, consider that matter in the present appeal as it was conceded on behalf of the appellant that the sentence of fine imposed upon him in the present case was for a first offence.
The appeal is accordingly dismissed.
Appeal dismissed.
| The appellant failed to prepare a budget of the Waqf Estate of which he was the mutawalli, for the year 1952 53 and send a copy of it to the Majlis before January 15, 1952, as he was bound to do under section 58(1) of the Bihar Waqfs Act, 1947, and was convicted by the 'Magistrate under section 65(1) of the Act and sentenced to pay a fine of Rs. 100, in default to undergo fifteen days simple imprisonment.
It was contended for him that the conviction and sentence were not valid because (1) section 58 of the Act contravened article 19(1) (g) of the Constitution of India, as it gave unrestricted power to the Majlis to alter or modify the budget prepared by the mutawalli without a right of appeal against the action of the Majlis and so imposed an unreasonable restriction on the mutawalli in carrying on his occupation as such, and (2) section 65 Of the Act did not provide for any imprisonment in default of payment of fine.
Held, that having regard to the fact that a mutawalli occupies the position of a manager or custodian and the supervision over him by the Majlis with respect to due administration of the waqf property is necessary and that the powers of the Majlis to alter or modify the budget prepared by the mutawalli are controlled by sub section
(6) Of section 58 of the Act, the restrictions imposed by section 58 Of the Act on the exercise of his powers 1033 by a mutawalli are reasonable.
Accordingly, the provisions Of section 58 'of the Act do not offend article 19 (i) (g) of the Constitution.
Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindya Thirtha Swamiar of Sri Shirur Mutt, ; , relied on.
The order of the Magistrate providing for imprisonment in default of payment of fine is not invalid in view Of section 33 of the Code of Criminal Procedure read with sections 4o and 67 of the Indian Penal Code.
|
Summarize this legal judgement text concisely | 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.
|
Summarize this legal judgement text concisely | Appeal No. 24 of 1954.
Appeal under Article 132 read with Article 147 and Article 133(1)(c) of the Constitution of India from the judgment and order dated July 17, 1952, of the Punjab High Court in First Appeal from Order No. 9 of 1949 against the judgment and decree of the Sub Judge 1st 104 Class, Ferozepur dated February 9, 1949, in Civil Sui No. 134 of 1949.
Porus A. Mehta, R. Gopalakrishnan and R.H. Dhebar, for the appellant.
Hardayal Hardy, for the respondents.
April 30.
The Judgment of the Court was, delivered by section K. DAS J.
This is an appeal on the strength of a certificate granted by the High Court of Punjab at Simla.
The appellant is the Union of India and the respondent Messrs. Chaman Lal Loona and Company military contractors at Muktsar in the district of Ferozepur, now in the Indian State of Punjab.
The relevant facts are these.
In the Court of the ' senior Subordinate Judge at Ferozepur, in August, 1948, the respondent Company made an application, purporting to be an application under section 8(2) and section 20 of the Arbitration Act, 10 of 1940, wherein the respondent alleged that in 1945 the respondent had entered into a contract for the supply of " bhoosa " (fodder) to the military department of the then undivided India through the Manager, Military Farms, Lahore Cantonment.
The contract, it was alleged, was signed by the Assistant Director, Military Farms, on behalf of the then Government of India.
The agreement between the parties was that the said Manager would also supply, on payment of price, wire coils in connection with the supply of bhoosa presumably for the purpose of tying the bundles of fodder, and on the supply being made and on return of the wire coils, the military department would give credit for the price of the coils already paid by the respondent.
In November, 1945, the respondent supplied fodder and returned 152 bundles of wire coils.
The Manager, Military Farms, Lahore, informed the respondent, however, that out of 152 bundles of wire coils, said to have been sent, 24 bundles had not been received, though no note of such non delivery was made at the time the consignment was received.
The respondent had also deposited Rs. 11,026 by way of security with the military department in connection with the contract.
The agreement contained an 134 1042 arbitration clause to the effect that if a dispute arose between the parties, it should be decided by the arbitrator named therein, viz., the District Commander concerned.
The respondent said that he had a claim against the appellant for Rs. 720, the price of 24 bundles of wire coils at Rs. 30 per bundle, and for refund of Rs. 11,026, and prayed in terms of section 20 of the Arbitration Act that the appellant be directed to 'ale the agreement and other relevant documents, and that the Court do refer the dispute to the arbitrator named for the purpose of filing an award.
As required by sub section
(2) of section 20 of the Arbitration Act, the application was registered as a suit, and a notice was issued to the appellant to show cause.
The appellant showed cause by a written statement filed on November 4, 1948, in which the two substantial pleas taken were (1) that by reason of the provisions of the Indian Independence (Rights, Property and Liabilities) Order, 1947, hereinafter referred to as the Independence Order, 1947, the Dominion of India, and later the Union of India, had no liability in respect of the contract in question, the purposes of which contract as from August 15, 1947, were purposes exclusively for the Dominion of Pakistan; and (2) the Court at Ferozepore had no jurisdiction to try the suit, as the cause of action did not arise within its territorial jurisdiction.
The two issues which were tried by the learned Subordinate Judge were the aforesaid issues of liability and jurisdiction.
On jurisdiction, he found in favour of the respondent, on the ground that the respondent was a displaced person ' living in Muktsar which is in Ferozepore and therefore the Court at Ferozepore had jurisdiction to try the suit.
The High Court affirmed this finding, and as nothing now turns upon this issue, we are not called upon to make any pronouncement thereon.
The issue as to the liability of the appellant on the basis of the contract in question is, however, very much a live issue.
The learned Subordinate Judge found in favour of the appellant on this issue, and dismissed the application.
The High Court reversed that finding, and allowed the appeal.
In reversing the finding of the learned Subordinate Judge, the High 1043 Court relied on the provisions of the Joint Defence Council Order, 1947, to be referred to hereinafter as the Defence Order, 1947.
The precise ground on which the High Court proceeded may best be put in the words of Khosla J. who gave the leading judgment.
Khosla J. said: " In the present case the Lahore Military farm is situated at Lahore and whether the fodder was supplied in 1945 or after the 15th of August 1947, the purpose will be deemed.
to be a purpose of the Dominion of Pakistan on account of the territorial situation of Lahore.
But in the present case, the fodder was to be supplied to a Military Farm and the fodder, therefore, constituted Military stores.
Military Stores were kept joint and under the exclusive control of the Joint Defence Council who had the power of allocating these stores among the two Dominions and for transferring them from one place to another.
Therefore, fodder lying in the Military Farm, Lahore, was not, on 15th August 1947, the exclusive property of the Dominion of Pakistan but was under the exclusive control of the Joint Defence Council.
This fodder could be transferred to a farm in India and thus could become the property of the Dominion of India.
In the circumstances, it cannot be said that the contract for supply of fodder to the Military Farm, Lahore, was a contract exclusively for the purposes of the Dominion of Pakistan if the contract were viewed on the 15th of August 1947, and, that being so, it must be held that the contract was not a contract exclusively for the purposes of the Dominion of Pakistan.
The decision of the learned trial Judge on this point must, therefore, be set aside.
" The principal question in this appeal is whether the High Court is right in its view as to the true scope and effect of the relevant provisions of the Independence Order, 1947, and the Defence Order, 1947.
Learned counsel for the appellant has challenged the correctness of that view, and has submitted (1) that on a true construction of article 8 of the Independence Order, 1947, the contract under consideration in this case was as from the appointed day (i.e., August 15, 1947), a contract exclusively for the purposes of the Dominion of 1044 Pakistan and shall be deemed to have been made on behalf of that Dominion, and all rights and liabilities which have accrued or may accrue under such contract shall be the rights and liabilities of the Dominion of Pakistan; (2) that the Defence Order, 1947, which set up a Joint Defence Council and provides for the exercise of certain powers of control by the said Council under article 8 of that Order did not in any way affect the rights and liabilities arising out of the contract, which rights and liabilities were governed by the relevant provisions of the Independence Order, 1947; and (3) that, in any view, the claim in the present case did not relate to military stores as the High Court wrongly assumed, and the Defence Order, 1947, had no application at all to the facts of this case.
On behalf of the respondent, the correctness of each of the above submissions has been seriously contested, and learned counsel for the respondent has strongly contended that the view of the High Court as to the relevant articles of the Independence Order, 1947, and the Defence Order, 1947, is correct.
Learned counsel also raised a preliminary point of objection to the effect that on an application under section 20, Arbitration Act, the only point for decision was if there was an arbitration agreement and the question of liability was one for the arbitrator and not for the Court to decide.
Ordinarily, that would be so.
When, however, we pointed out to learned counsel that the Union of India as such was admittedly not a party to the arbitration agreement and could not be dragged, therefore, to an arbitration proceeding on the strength of an agreement to which it was not a party unless by operation of law it was deemed to be a party to the agreement, learned counsel gave up his preliminary objection and conceded that the question of liability must be decided in this case with reference to the provisions of the Independence Order, 1947, and the Defence Order, 1947.
It is convenient at this stage to set out the relevant provisions of the two Orders.
The Defence Order, 1947, was made in exercise of the powers conferred by. sub section
(1) of section 9 and in pursuance of sub section
(1) of section II of the Indian Independence Act, 1947, and was published 1045 on August 11, 1947.
The Independence Order, 1947, was made in exercise of the powers conferred by section 9 of the Indian Independence Act, 1947, and was published on August 14, 1947.
Both came into force at once.
Article 3 of the Defence Order, 1947, states: " (1) As from the 15th day of August, 1947, there shall be set up a Council to be known as the Joint Defence Council for India and Pakistan.
(2)The said Council, hereinafter referred to as the Joint Defence Council, shall consist of (i)the Governor General of India, (ii) the Defence Minister of India, (iii) the Defence Minister of Pakistan, and (iv) the Supreme Commander of His Majesty 's forces in India and Pakistan (hereinafter referred to as the Supreme Commander).
" Article 8, so far as it is relevant, is in these terms: " The Joint Defence Council shall be in exclusive control of (a)the division of the Indian forces between the Dominions and their reconstitution as two separate Dominion forces (b)the allocation, transfer and movement of officers and men belonging to the Indian forces for the purposes of such re constitution; (c)the allocation, transfer and movement for the purposes of such reconstitution of plant, machinery equipment and stores held by the Governor General in Council immediately before the 15th day of August, 1947, for the purposes of the Indian forces etc." The Independence Order, 1947, states in article 2 that the 'appointed day ' means the fifteenth August, 1947.
Article 3 so far as it is relevant for our purpose, states: " (1) The provisions of this Order relate to the initial distribution of rights, property and liabilities consequential on the setting up of the Dominions of India and Pakistan, and shall have effect subject to any agreement between the two Dominions or the Provinces concerned and to any award that may be made by the Arbitral Tribunal.
(2)Nothing in this Order affects the powers of control over military plant, machinery, equipment 1046 and stores conferred on the Joint Defence Council by the Joint Defence Council Order, 1947.
Article 8(1), which is very important for our purpose, is in these terms: " (1) Any contract made on behalf of the Governor General in Council before the appointed day shall, as from that day, (a)if the contract is for purposes which as from that day are exclusively purposes of the Dominion of Pakistan, be deemed to have been made on behalf of the Dominion of Pakistan instead of the Governor General in Council; and (b)in any other case, be deemed to have been made on behalf of the Dominion of India instead of the Governor General in Council; and all rights and liabilities which have accrued or may accrue under any such contract shall, to the extent to which they would have been rights or liabilities of the Governor General in Council, be rights or liabilities of the Dominion of Pakistan or the Dominion of India, as the case may be. " The first question is, what is the true scope and effect of article 8(1) of the Independence Order, 1947? Does it apply to the contract in question, and, if so, does the contract fall within the purview of cl.
(a) or cl.
(b) ? At one stage of the argument, learned counsel for the respondent contended that article 8(1) did not apply to what is sometimes described as executed contracts; this point was also urged before Kapur J. of the Punjab High Court (as he then was) and one of the reasons given by him for a reference of the case to a larger bench was the difficulty he felt if the contract in question which has been performed and executed long before August 15, 1947, so far as the respondent was concerned, attracted the operation of cl.
(a) of article 8(1).
It is necessary to appreciate clearly the distinction between the two classes of contracts where the consideration is either executed or executory. " An executed consideration consists of an act for a promise.
It is the act which forms the consideration. .
No contract is formed unless and until the act 1047 is performed, e.g., the payment for a railway ticket, but the act stipulated for exhausts the consideration, so that any subsequent promise, without further consideration, is merely a nudum pactum In an executed consideration the liability is outstanding on one side only; it is a present as opposed to a future consideration.
In an executory consideration the liability is outstanding on both sides.
It is in fact a promise for a promise; one promise is bought by the other The contract is concluded as soon as the promises are exchanged.
In mercantile contracts this is by far the most common variety.
In other words, a contract becomes binding on the exchange of valid promises, one being the consideration for the other.
It is clear, therefore, that there is nothing to prevent one of the parties from carrying out his promise at once, i.e., performing his part of the contract; whereas the other party who provides the consideration for the act of or detriment to the first may not carry out his part of the bargain simultaneously with the first party. " (Chitty on Contracts, Vol.
I, 21st Edn.
43 44).
On a plain reading of article 8(1) of the Independence Order, 1947, it is clear that it applies to both classes of cases; it says, in its concluding part, that " all rights and liabilities which have accrued or may accrue under any such contract, shall be rights or liabilities of the Dominion of Pakistan or the Dominion of India, as the case may be." If the contract has been fully and completely performed on both sides, no question of any further rights and liabilities under the contract is likely to arise.
If, however, the contract is one in which the consideration is executed on one side, there will be a right on one side and an outstanding liability on the other.
If the consideration is executory on both sides, there will be outstanding rights and liabilities on both sides.
In talking of " all rights and liabilities which have accrued or may accrue" under the contract, the Article clearly contemplates both classes of cases.
On this question, we approve of the view taken in Elahi Bux vs Union of India (1) and Krishna Ranjan vs (1) A.I.R. 1952 Cal.
1048 Union of India (1) and disapprove of the view expressed by Roxburgh J. in Union of India vs Loke Nath (2).
It is further clear that the first part of article 8(1) creates a legal fiction.
The contract is actually made before August 15, 1947, (the appointed day); but as from that date, the contract shall be deemed to have been made on behalf of the Dominion of Pakistan, if the contract is for purposes which as from that day are exclusively purposes of the Dominion of Pakistan, and in any other case it shall be deemed to have been made on behalf of the Dominion of India.
What is the proper meaning of the expression " a contract for the exclusive purposes of the Dominion of Pakistan"? We assent to the view expressed by Chagla C.J. in Union of India vs Chinu Bhai Jeshingbhai (3).
Said the learned Chief Justice " It is clear from the language used in article 8 that the test to be applied with regard to this contract is not whether the contract was for the purposes of the Dominion of Pakistan at the date when it was made.
Ex hypothesi that test is clearly inapplicable.
All contracts contemplated by article 8 must be contracts which when made were made by undivided India by the Governor General in Council.
The test that must be applied is an artificial test and the test may be either if the contract had been entered into on August 15, 1947, whether it would have been a contract for the purposes of the Dominion of Pakistan, or if the Dominion of Pakistan had been in existence when the contract was entered into, whether it would have been a contract for the purposes of Pakistan.
" This, we think, is the correct test to apply for determining the true scope and effect of article 8(1) of the Independence Order, 1947, and applying this test, there is no doubt that the contract in question comes under cl.
(a) of the said Article.
The purpose of the contract was to supply fodder to the Manager, Military Farms, Lahore Cantonment, which farms were in Pakistan on the appointed day.
The contract was, therefore (1) A.T.R. (2) A.I.R. 1952 Cal. 140.
(3) I.L.R. , 130.
1049 exclusively for the purposes of the Dominion of Pakistan as from the appointed day.
The second question is do the provisions of the Defence Order, 1947, make any difference in the legal position ? The High Court thought, erroneously in our opinion, that they did.
It is true that cl.
(2) of article 3 of the Independence Order, 1947, says that nothing in that Order affects the powers of control over military plant, machinery, equipment and stores conferred on the Joint Defence Council by the Defence Order ' 1947.
Clause (3) of article 3 of the Independence Order, 1947, states that the powers of control over property conferred upon each Dominion by the Order shall include all powers of use, consumption, management etc.
This, however, is subject to such powers of control as are given to the Joint Defence Council.
Those powers of control are laid down in article 8 of the Defence Order, 1947, el.
(c) of which relates to "the allocation, transfer and movement for the purposes of such reconstitution of plant, machinery, equipment and stores held by the ' Governor General in Council immediately before the 15th day of August, 1947, for the purposes of the Indian forces.
" The point which is to be emphasised is that what is saved by cl.
(2) of article 3 of the Independence Order, 1947, is 'Powers of control ' of the Joint Defence Council with regard to certain essential military equipment etc.
includingstores.
There is no provision in the Defence Order, 1947, which affects the rights and liabilities of any of the two Dominions aris.
ing out of a contract, and those rights and liabilities are dealt with by the Independence Order, 1947.
The learned Judges of the High Court thought that the Defence Order, 1947, made a difference in the legal position in so far as the purpose of the contract was concerned.
They realised and said that ordinarily the purpose of supplying fodder to the Military Farms at Lahore was a purpose exclusively for the Dominion of Pakistan; but they thought that on the assumption that 'bhoosa ' was military store, the Joint Defence Council had powers of control over it and could send it wherever they wanted it to be sent; therefore, they 135 1050 said that the purpose of the contract was not a purpose exclusively for the Dominion of Pakistan.
We say this with great respect, but this line of reasoning appears to us to be due to a lack of proper appreciation of the distinction between the "purpose of the contract" and the "ultimate disposal of the goods" supplied under the contract.
The purpose of the contract is not determined nor modified by the ultimate disposal of the goods supplied under the contract, nor even by the powers of control exercised over the goods after the contract had been performed by the respondent.
Wherever the goods might be ultimately sent, the purpose of the contract remained what it was, that is, to supply fodder to the Manager, Military Farms, Lahore, which, on the test laid down by us, was clearly a purpose exclusively for the Dominion of Pakistan.
The Independence Order, 1947, determines the respective rights and liabilities under contracts.
If, under the Defence Order, 1947, some goods the liability for the price of which under the Independence Order, 1947, falls on, say, India, are allotted to Pakistan, then the value thereof will have to be adjusted in accounts.
Such allotment does not alter the rights or liabilities determined under the Independence Order, 1947.
We are, therefore, of the view that the High Court of Punjab was in error in inferring that on the strength of certain provisons of the Defence Order, 1947, the contract in question came within el.
(b) of article 8(1), and not cl.
We think that the learned Subordinate Judge correctly held that cl.
(a) applied and the Union of India had no liability under the contract.
Only a few words are necessary to dispose of the third contention urged before us.
The claim in the present case was a claim for a refund of the price paid for 24 bundles of wire coils and of the security deposit.
Such a claim did not relate to military stores, and the Defence Order, 1947, had no direct application to such a claim.
It was only for examining the purpose of the contract that the question of 'bhoosa ' being military store arose.
The High Court assumed that 'bhoosa ' was military store.
Without deciding whether 'bhoosa ' is military store or not, we have also proceeded on the 1051 same assumption; but even on that assumption, there is no difference in the legal position.
The purpose of the contract was still a purpose which, as from the appointed day, was a purpose exclusively for the Dominion of Pakistan.
It is worthy of note that el.
(c) of article 8 of the Defence Order, 1947, relates inter alia to stores held by the Governor General in Council immediately before August 15, 1947, for the purposes of the Indian forces.
There was nothing in the record to show that the 'bhoosa ' supplied by the respondent in 1945 was held by the Governor General in Council immediately before August 15, 1947, so as to vest the power of control in the Joint Defence Council and thereby affect the purpose of the contract, assuming, though we do not so decide, that such power of control can affect the purpose of the contract.
The original contract was not produced in this case, as it was not available in the appropriate office in India.
The respondent did not even produce a copy thereof, but gave oral evidence as to the purpose of the contract.
The Courts below proceeded on that oral evidence, and the appeal was argued before us on that footing.
We have determined the purpose of the contract as on August 15, 1947, on the basis of that evidence, without deciding the further question if oral evidence was admissible in this case as to the purpose of the contract.
For the reasons given above, we allow this appeal, set aside the judgment and decree of the High Court, and restore those of the learned Subordinate Judge.
The appellant will get costs throughout.
Appeal allowed.
| The correct test to determine whether a contract made before the partition of India on behalf of the Governor General in Council comes within the purview of cl.
(a) of article 8(1) of the Indian Independence (Rights, Property and Liabilities) Order, 1040 1947, so as to be deemed to have been made on behalf of the Dominion of Pakistan, is either (1) if the contract was made on August 15, 1947, it would have been a contract for the purposes of the Dominion of Pakistan ; or (2) if Pakistan had existed on the day the contract was made, it would be a contract for the purposes of Pakistan.
Union of India vs Chinu Bhai jeshing bhai, I.L.R. 1953 Bom. 117, approved.
The purpose of a contract is not to be confused with the ultimate disposal of the goods supplied thereunder since such disposal can in no way determine or modify it.
Nor do the powers of control over military stores vested in the joint Defence Council by article 8(c) of the joint Defence Council Order, 1947, and saved by article 3(2) of the Indian Independence (Rights, Property and Liabilities) Order, 1947, whereby the goods might be transferred anywhere in India, make any difference and the rights and liabilities accruing from such contracts fall entirely to be adjudged by the provisions of the Indian Independence Order and not by the joint Defence Council Order.
The concluding part of article 8(1) makes it quite clear that the Article makes no distinction between contracts where the consideration is either executed or executory in nature and applies equally to both.
Elahi Bux vs Union of India, A.I.R. 952 Cal.
471 and Krishna Ranjait vs Union of India, A.I.R. 1954 Cal.
623, approved.
Union of India vs Loke Nath, A.I.R. 1952 Cal.
140, disapproved.
Consequently, in a case where the Union of India was sought to be made liable an the basis of a contract entered into on behalf of the Governor General of India in Council for the supply of fodder to the Manager, Military Farms, Lahore Cantonment, which was in Pakistan on August 15, 1947, and the trial Court found for the Union of India but the High Court, taking the view that the fodder constituted military stores under the exclusive control of the joint Defence Council on August 15, 1947, liable to be transferred anywhere in 'India, reversed that finding, the contract, even assumig that view to be correct, must be held to be one exclusively for the purposes of Pakistan as from the at date and the Union of India could not be made liable thereunder.
|
Summarize this legal judgement text concisely | 63 and 64 of 1957.
Petitions under Article 71(1) of the Constitution of India for clarification of doubts in connection with the election of the President.
R. V. section Mani and I. R. V. Sastri, for the petitioner in Petition No. 63 of 1957.
R. Patnaik, for the petitioner in Petition No. 64 of 1957.
M. C. Setalvad Attorney General for India, G. N. Joshi, Porus A. Mehta and R. H. Dhebar, for the respondents (Caveators) in both the petitions.
May 3.
The Judgment of the Court was delivered by DAS C. J.
The petitioners in the above petitions have moved this Court to exercise the jurisdiction and power vested in it by and under article 71(1) of the Constitution of India and to inquire into and decide what has been described as a "grave doubt" in connection with the election of the President of India and to direct the Election Commission not to proceed with the polling in connection with the said election which has been fixed for May 6, 1957, but to hold the same after duly completing all the elections to the Lok Sabha and the Legislatures in all the States of the Indian Union including the Union territory.
The first main petition was presented on April 26, 1957, and the second on April 29, 1957.
Along with each of the said petitions has been filed a Civil Miscellaneous Petition asking for a stay of the polling for the Presidential election fixed 1083 for May 6, 1957.
In the first main petition the Returning Officer has not been made a party, but in the second petition he has been impleaded as a respondent.
The learned Attorney General has appeared on behalf of the Election Commission and has waived the service of notice.
We can, therefore, dispose of all the petitions before us.
There is no dispute as to the material facts which may shortly be stated as follows: After the general elections in all the States and Union territories of India, except in the Union territory of Himachal Pradesh, which is to return four members to the Lok Sabha and in two constituencies in the State of Punjab, the old Lok Sabha was dissolved on April 4, 1957 and the New Lok Sabha was constituted on April 5, 1957, under section 73 of the Representation of the People Act (XLIII of 1951).
As required by section 4 of the Presidential and Vice Presidential Election Act, 1952 (XXXI of 1952), the Election Commission issued a notification in the official Gazette appointing April 16, 1957, as the last date for making nominations, April 17, 1957, as the date for the scrutiny of the nominations, April 20, 1957, as the last date for the withdrawal of candidatures, May 6, 1957, as the polling date and May 10, 1957, as the date for the counting of the votes and the declaration of the result.
The term of office of the present President is due to expire on the mid night of May 12, 1957.
The reason for fixing the above time schedule obviously was that the Presidential election should be completed before the term of office of the present President expired.
After the notification constituting the new Lok Sabha was published in the Press on April 7, 1957, the petitioner in the first petition applied to the Election Commission for the supply of the nomination papers, which he eventually received at Nagpur in the afternoon of April 10, 1957.
This left a period of five days for the filing of the nomination paper before the Returning Officer at New Delhi.
The petitioner submits that the time was too short and he was prevented from filing his nomination paper due to want of time.
He 1084 has filed the petition as a citizen of India and as an "intending candidate" for the Presidential election.
The petitioner in the second petition is a member of the Hindu Mahasabha and is contenting the election to the Lok Sabha as an independent candidate from Kangra Parliamentary constituency in the State of Punjab.
He filed his nomination paper on January 28, 1957, as originally the polling was scheduled to commence in that constituency on February 24, 1957.
The polling, however, has since been postponed and fixed for June 2, 1957.
He has filed the petition as a citizen of India and as a prospective member of Lok Sabha and contends that if the Presidential election is held on May 6, 1957, he will be deprived of his right to vote for the election of the President of the Union.
He has also complained of discrimination offending against article 14 of the Constitution.
Under article 56 of the Constitution the President holds office for a term of five years from the date on which he enters upon his office.
The present incumbent of the high office entered upon his office on May 12, 1952, and, as already stated, his term is due to expire on the mid night of May 12, 1957.
Article 62(1) peremptorily requires that the election to fill the vacancy caused by the expiration of the term of office of the President shall be completed before the expiration of the term.
It is necessary to bear in mind this clear mandatory provision of the Constitution.
For ascertaining how such election of President is to be held, we have to go back to article 54, which runs thus: " 54.
The President shall be elected by the members of an electoral college consisting of (a) the elected members of both Houses of Parliament ; and (b) the elected members of the Legislative Assemblies of the States.
" On one side it is said that the electoral college is to consist of those members falling under clauses (a) and (b), who are elected at the crucial date, that is to say, the date when the election is to take place.
Suppose, it is said, that the term of the President 's office expires during the currency of the life of Parliament; as it 1085 may well do in cases contemplated by article 62(2) and suppose there are vacancies in Parliament or in the Legislature of one or more States, surely the election of the President required by article 62(1) to be held before the expiry of the term of the outgoing President cannot be held up until the vacancies are filled up. ' On the other hand it is contended that the electoral college must be constituted after the elections in all States and Union territories are completed and should consist of all the elected members falling within both the categories.
Inasmuch as elections have not taken place at all in Himachal Pradesh and in two constituencies of the State of Punjab, the electoral college cannot be constituted until after those members are also elected.
It is pointed out that though on the present occasion only four members of Himachal Pradesh and only two members in the State of Punjab have not been elected, nevertheless, if the objection of the petitioners is not now heeded any party in power may in future arrange for the election of its own nominee as President by postponing the elections in several States, where it may not expect to get a majority of seats.
It is said that on March 28, 1957 some members of the then Lok Sabha had raised a question as to the danger and impropriety of holding the election of the President before the completion of the elections throughout the territory of India.
Both the petitioners share the same view and contend that a " grave doubt " has arisen in connection with the election of the President and that such a doubt must, under article 71, be inquired into and decided by this Court.
The extreme contention put forward on behalf of the petitioners is that it does not matter whether the doubt is well founded or not or whether it is good, bad or indifferent; this Court is bound to inquire into and decide the same as soon as a doubt arises and a citizen brings it before this Court for resolution thereof.
For the purpose of this case it is not necessary for us to express any opinion on the merits of the respective contentions for these petitions may well be disposed of on a narrower preliminary ground.
1086 Article 71 (1) Undoubtedly confers jurisdiction and power on this Court to inquire into and decide " all doubts and disputes arising out of or in connection with the election of President or Vice President " and this Court will have to inquire into and decide the same.
But the question is whether there is anything in the Constitution indicating the time at which and the manner in which such doubts and disputes have to be inquired into and decided.
Under article 324 the superintendence, direction and control of the prepa ration of the electoral rolls for, and the conduct of, all election,% to Parliament and to the Legislature of every State and of elections to the office of President and Vice President held under this Constitution, including the appointment of election tribunals for the decision of doubts and disputes arising out of or in connection with elections to Parliament and the Legislatures of States shall be vested in the Election Commission.
It will be noticed that identical words are used, namely, " doubts and disputes arising out of or in connection with elections " which are also to be found in article 71 (1).
By article 327, Parliament was authorised to make provision with respect to all matters " relating to or in connection with elections " to Parliament or to the Legislatures of the States.
article 329 provides, amongst other things, that notwithstanding anything in this Constitution no election to either House of Parliament or either House of Legislature of a State shall be called in question except by an election Petition presented to such authority and in such manner as may be provided for by or under any law made by the proper legislature.
In exercise of powers thus conferred on it, Parliament enacted the Representation of the People Act, 1951, providing how elections are to be held and how and on what grounds such elections may be called in question.
It also set up a special forum called Election Tribunal for the decision of " doubts and disputes arising out of or in connection with such elections.
" In N.P. Ponnuswami vs Returning Officer, Namakkal Constituency (1) the Returning Officer for that constituency had rejected, the (1) ; 1087 nomination paper of the appellant.
Thereupon the appellant applied to the High Court of Madras under article 226 of the Constitution for a writ of certiorari to quash the order of the Returning Officer rejecting his nomination paper and to direct the Returning Officer to include his name in the list of valid nominations to be published.
The High Court of Madras dismissed the petition and the appellant brought an appeal to this Court.
The Full Court held that in view of the provisions of article 329 (b) of the Constitution and section 80 of the Representation of the People Act, 1951, the High Court had no jurisdiction to interfere with the order of the Returning Officer.
The main controversy in the appeal centered round the words "no election shall be called in question except by an election petition " occurring in article 329 (b).
The most important question for determination by this Court was the meaning to be given to the word " election " in article 329 (b).
This Court said at page 226: "That word has by long usage in connection with the process of selection of proper representatives in democratic institutions, acquired both a wide and a narrow meaning.
In the narrow sense, it is used to mean the final selection of a candidate which may embrace the result of the poll when there is polling or a particular candidate being returned unopposed when there is no poll.
In the wide sense, the word is used to connote the entire process culminating in a candidate being declared elected.
" After referring to the cases of Srinivasalu vs Kuppuswami (1) and Sat Narain vs Hanuman Prasad (2 ) and a passage in Halsbury 's Laws of England, 2nd edition, Volume 12, page 237, this Court took the view that the word "election " could be and had been properly used with respect to the entire process which consisted of several stages and embraced many steps some of which might have an important bearing on the result of the process and, therefore, held that in view of the provisions of article 329 (b) of the Constitution and section 80 of the Representation of the People Act, 1951, the High Court had no jurisdiction to interfere with the (1) A.I.R. (1928) Mad. 253, 255.
(2) A.I.R. (1945) Lah.
1088 order of the Returning Officer under article 226.
The only way such an order could be called in question was as laid down in article 329 (b) of the Constitution and section 80 of the Representation of the People Act, 1951, and this could be done only by an election petition presented before the Election Tribunal after the entire process of election culminating in a candidate being declared elected had been gone through.
On such election petition being filed the Election Tribunal would be properly bound to inquire into and decide "all doubts and disputes arising out of or in connection with the election " irrespective of the stage in the entire election process to which the " doubts and disputes relate".
We now approach the construction of article 71 in the light of the decision of this Court.
As already indicated article 71(1) confers jurisdiction and power on this Court to inquire into and decide id all doubts and disputes arising out of or in connection with the election of a President or Vice President".
The question is: Is there in this Article or in any other part of the Constitution or anywhere else any indication as to the time when such inquiry is to be held ? In the first place, article 71 postulates an " election of the President or Vice President " and provides for inquiry into doubts and disputes arising out of or in connection with such an election.
What is the meaning to be given to the word " election " as used in this Article? If we give to the word ,election" occurring in article 71(1) the same wide meaning as comprising the entire election process culminating in a candidate being declared elected, then clearly the inquiry is to be made after such completed election, i.e., after a candidate is declared to be elected as President or Vice President as the case may be.
We see no reason why this accepted meaning should not be given to the critical word.
In the second place, under cl. 3 of article 71, subject to the provisions of this Constitution, Parliament may by law regulate any matter " relating to or connected with the election " of a President or Vice President.
The words here also are similar to those used in article 327 and are equally wide enough to cover matters relating to or 1089 connected with any stage of the entire election process.
In exercise of powers conferred on it by article 71(3), Parliament has enacted the Presidential and Vice Presidential Election Act, 1952 (XXXI of 1952) to regulate certain matters relating to or connected with elections to the office of President and Vice President of India.
A glance through the provisions of this Act will indicate that in the view of Parliament the time for the exercise of jurisdiction by this Court to inquire into and decide doubts and disputes arising out of or in connection with the Presidential election is after the entire election process is completed.
Under section 14 of this Act, which corresponds to section 80 of the Representation of the People Act, 1951, no election, meaning the election of the President or Vice President, shall be called in question except by an election petition presented to this Court in accordance with the provisions of Part III of that Act and of the rules made by this Court under article 145.
Section 18, which lays down the grounds for declaring the election of a returned candidate to be void, runs as follows: 18.
Grounds for declaring the election of a returned candidate to be void: If the Supreme Court is of opinion (a) that the offence of bribery or undue influence at the election has been committed by the returned candidate or by any person with the connivance of the returned candidate; or (b) that the result of the election has been materially affected (i) by reason that the offence of bribery or undue influence at the election has been committed by any person who is neither the returned candidate nor a person acting with his connivance; or (ii)by the improper reception or refusal of a vote, or (iii)by the non compliance with the provisions of the Constitution or of this Act or of any rules or, orders made under this Act; or (c) that the nomination of any candidate has been wrongly rejected or the nomination of the successful candidate or of any other candidate who has 140 1090 not withdrawn his candidature has been wrongly accepted; the Supreme Court shall declare the election of the returned candidate to be void.
(2) For the purposes of this section, the offences of bribery and undue influence at an election have the same meaning as in Chapter IX A of the Indian Penal Code (Act XLV of 1860).
It is quite clear from the language of the section that any improper reception or refusal of a vote, or any non compliance with the provisions of the Constitution or of the Act or of any rules or orders made under the Act or the improper acceptance or rejection of a nomination paper may be made a ground for challenging the election.
This means that all doubts and disputes relating to any stage of the entire election process is to be canvassed by an election petition presented to this Court after the election in its wide sense is concluded.
The above stated interpretation appears to us to be in consonance with the other provisions of the Constitution and with good sense.
If doubt or dispute arising out of or in connection with the election of a President or Vice President can be brought before this Court before the whole election process is concluded then conceivably the entire election may be held up till after the expiry of the five years ' term which will involve a no compliance with the mandatory provisions of article 62.
The well recognised principle of election law, Indian and English, is that elections should not be held up and that the person aggrieved should not be permitted to ventilate his individual interest in derogation of the general interest of the people, which requires that elections should be gone through according to the time schedule.
It is, therefore, in consonance both with the provisions of article 62 and with good sense to hold that the word "election" used in article 71 means the entire process of election.
That is what Parliament understood to be the meaning of article,, 71 as is apparent from the Presidential and Vice Presidential Election Act, 1952.
Again this Court has framed rules under article 145 to regulate the 1091 procedure and a perusal of those rules will also indicate that " all doubts and disputes arising out of or in connection with the election of a President or Vice President " should be brought before the court after the result of the entire election is declared, that is to say, after a candidate is declared to be elected to the office of President or Vice President.
It is pointed out that if the petitioners are compelled to wait until after the entire election process is concluded and then to file election petitions, they will have to show that the result of the election has been materially affected as required by section 18 of the Presidential and Vice Presidential Election Act, 1952.
It is contended that there is no reason why this extra, burden or hardship, which is not in terms imposed by article 71, should be placed upon the petitioners.
It is not necessary for the purposes of disposing of these petitions to express any opinion as to the validity or otherwise of this requirement of section 18 and we do not do so.
But the plea of alleged hardship brought about by section 18 cannot alter the true meaning and import of article 71.
In our judgment article 71 postulates an election and the word "election " occurring in article 71 means the entire election process culminating in a candidate being declared elected and doubts and disputes arising out of or in connection with any of the stages of such completed election have to be inquired into and decided by this Court which, in point of time, must necessarily be after the completion of the entire process compendiously called the election.
Learned counsel appearing for the petitioner in the second petition raised an additional point that the Election Commission by fixing the election on May 6, 1957, has arbitrarily deprived the members representing territorial constituencies like Kangra and Himachal Pradesh of their right to exercise and enjoy other privileges of membership of Parliament.
This argument was raised half heartedly at the fag end of his argument in reply and was not seriously pressed.
In any event he did not advance any cogent argument showing how the petitioner had been deprived of the equal protection of the law.
Elections have to be held in numerous 1092 constituencies and different dates have to be fixed for holding the actual elections in different constituencies according to the various exigencies relating to the particular localities in which the constituencies are situate.
No good ground has been established for holding that there has been any discrimination such as is prohibited by article 14 of the Constitution.
In so far as the alleged discrimination, if any, in breach of the equal protection clause of the Constitution may be said to be calculated to raise any doubt in connection with the election of the President it will, at best, be a noncompliance with the provisions of the Constitution which may or may not, after the conclusion of the entire election, be made a ground, under section 18 of the Presidential and Vice Presidential Election Act, 1952, for calling the election in question as to which we need formulate no final opinion at this stage.
We express no opinion on the merits of any of the controversies between the parties, but, for the foregoing reasons, we hold that the present petitions are premature and cannot be entertained at this stage.
We, therefore, dismiss the petitions Nos. 63 and 64 of 1957.
Civil Miscellaneous Petitions Nos.
563 and 564 of 1957 will also stand dismissed.
Petitions dismissed.
| The petitioners entertained grave doubts as to the propriety of holding the Presidential election before the general elections had been completed throughout the entire territory of India and, by applications filed under article 71(1) of the Constitution as citizens of India, invoked the jurisdiction and power of the Supreme Court thereunder to inquire into such doubts and sought for an order restraining the Election Commission from taking the poll in connection with the election of the President, fixed for May 6, 1957, till the general elections in the Union territory of Himachal Pradesh and in two Lok Sabha Constituencies of the State of Punjab, which were still to be held, had been completed.
The expiry of the term of office of the then President which caused the Presidential election was to come about on the mid night of May 12, 1957.
One of the petitioners alleged that he was a candidate for the Presidential election and the time intervening between the date when he received his nomination paper and the date fixed for the filing of it was too short to enable him to file it within time and the case of the other was that he was a prospective candidate for election to the Lok Sabha from one of the Punjab Constituencies, where election was yet to be held, and would be prevented from exercising his right to vote for the election of the President.
Held, that the present petitions were premature and must be dismissed. ^ The jurisdiction and power conferred on the Supreme Court by article 71(1) of the Constitution to inquire into and decide doubts and disputes arising out of and in connection with the election of the President can be exercised only after a particular candidate has been declared elected and on an election petition filed under section 14 of the Presidential and Vice Presidential Election Act of 1952.
The word 'election ' in article 71 of the Constitution is used in the wider sense to denote the entire process of election culminating 139 1082 in a candidate being declared elected and doubts and disputes arising out of and in connection with such election must include all doubts and disputes relating to any particular stage of it.
N. P. Ponnuswamy vs Returning Officer, Namakkal Constituency, ; , referred to.
It is a well recognised principle of the law of election that an election cannot be held up to facilitate the ventilation of individual grievances in derogation of the interest of the people in general and article 62 Of the Constitution, which requires that the election of President must be completed within the time fixed by it and has been conceived in such interest, is mandatory in character,
|
Summarize this legal judgement text concisely | Appeal No. 179 of 1954.
Appeal from the judgment and order dated March 12, 1953, of the Bombay High Court in Income tax Reference No. 43 of 1952.
C. K. Daphtary, Solicitor General of India, G. N. Joshi and B. H. Dhebar, for the appellant.
N. A. Palkhivala, D. H. Dwarkadas, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the respondent.
May 15.
The Judgment of the Court was delivered by section K. DAS J.
This is an appeal on a certificate granted by the High Court of Judicature at Bombay under sub section
(2) of section 66A of the Indian Income tax Act (hereinafter referred to as the Act).
The appellant is the Commissioner of Income tax, Bombay, and the respondent is the Provident Investment Co., Ltd., Bombay, hereinafter referred to as the assesses company.
The short question which falls for consideration in this appeal is whether a particular transaction, details 1143 whereof we shall presently state, entered into by the assessee company in 1946 resulted in capital gains within the meaning of section 12B of the Act.
The question which was referred to the High Court under section 66(1) of the Act was this: " Whether the assessee company made a capital gain amounting to Rs. 81,81,900 within the meaning of section 12B of the Indian Income tax Act?" The High Court answered the question in the negative.
The appellant being dissatisfied with the judgment and order of the High Court asked for and obtained a certificate from the said High Court that the case is a fit one for appeal to the Supreme Court.
The material facts may be very shortly stated.
The assessee company is a private limited company, the shares of which were held by the then Maharaja Scindia of Gwalior and his nominees.
At the material time, the assessee company was the managing agent of Madhowji Dharamsi Manufacturing Co., Ltd., hereinafter briefly referred to as the Dharamsi Company, and Sir Shapurji Broacha Mills Ltd., briefly referred to as the Shapurji Broacha Company.
The assessee company held all the " conversion " shares of the Dharamsi Company and a substantial majority of the " conversion" shares of the Shapurji Broacha Company.
The Dalmia Investment Company Limited, which will hereinafter be briefly referred to as the Dalmia Company, wrote two letters to the assessee company on September 14, 1946.
In these two letters, the Dalmia Company offered to purchase 28,328 " conversion " shares of the Dharamsi Company at Rs. 500 per share together with the managing agency, and also 75,212 " conversion " shares of the Shapurji Broacha Company, together with the managing agency.
We are not concerned with the other details mentioned in the two letters, except this that the Dalmia Company made it clear that it would purchase both the mills or neither, and a time limit till September 23, 1946, 3 p. m. was imposed during which the offer would remain open.
This time limit was, however, extended later up to September 30, 1946.
The letter further stated 1144 " On your accepting the offer, we will pay to you Rs. 20 lakhs in the case of the Dharamsi Company, Rs. 30 lakhs in the case of the Shapurji Broacha Company as and by way.
of earnest money.
You shall have to arrange to get the transfer of the managing agency sanctioned by the general body of the shareholders within a period of 40 days from the date of acceptance.
As Boon as the transfer is sanctioned, we will pay the balance of the purchase price.
" On September 26, 1946, there was a meeting of the Board of Directors of the assessee company.
At that meeting, the Board considered the offers made by the Dalmia Company and resolved to accept the offers.
The Board further stated in its minutes that out of the total amount received from the sale of the shares, a sum of Rs. 1 crore should be paid to the assessee company as compensation for ' the loss of the managing agency of the two mills.
On September 30, 1946, the assessee company wrote to the Dalmia Company accepting the offers made, subject to a condition which is not material for our purpose.
On the same date, the Dalmia Company received the acceptance of the offers made by it and sent two drafts, one for Rs. 20 lakhs and the other for Rs. 30 lakhs.
On October 7, 1946, the Dalmia Company wrote a very important letter to the assessee company.
This letter said inter alia: " With reference to the interview our Solicitor Mr. Tanubhai had with your Mr. Wadia, we beg to record that it is now being agreed upon as follows in modification of the arrangement previously made between yourselves and ourselves: (1)In our letters of offer which have been accepted by you, it was arranged that the managing agency will be transferred either to us or to our nominees.
Now, instead of doing so by you, you as the present managing agents will give their (sic) resignation, so that at the time of delivery of the shares and payment of moneys, your managing agency will have come to an end.
In view of the above, it is not necessary to obtain any sanction of general meeting.
1145 (2) 1.
Mr. Shriyans Prasad Jain 2.
Mr. Jaidayal Dalmia 3.
Mr. Shanti Prasad Jain and 4.
Mr. Vishnu Hari Dalmia will be appointed Directors of both the Mills Companies and thereafter all the present directors will tender their resignation.
(3) Qualification shares in the names of the above proposed Directors will be transferred by you and the balance of the shares will be delivered to us along with the transfer deeds duly signed against payment.
(4) You may communicate by a circular to the shareholders that you have resigned the managing agency.
You may further mention in the circular that in accordance with the offer we are prepared to take up the deferred shares held by the shareholders which may be offered to us at the rate of Rs. 25 and Rs. 7 8 0 of Madhowji Dharamsi Manufacturing Co. Ltd. and Sir Shapurji Broacha Mills Ltd. Mills respectively within two months of the date of letter of offer which we would also send.
" The assessee company accepted the modified arrangement suggested by the Dalmia Company, and on October 19, 1946, the assessee company wrote to the Dharamsi Company and the Shapurji Broacha Company that it had decided to resign the office of the managing agency and accordingly tendered its resignation on that date.
The balance of the consideration money was then paid to the assessee company, and it was not disputed that the. value of the managing agency was computed at Rs. 1 crore, nor was there any dispute that the managing agency was a capital asset.
Out of the said sum of Rs. 1 crore, the Income tax Officer computed the capital gains at Rs. 81,81,900 and asked the assessee company to pay tax thereon.
The Appellate Assistant Commissioner held that the assessee company had sold the managing agency and therefore the profits or gains arising from that sale were capital gains within the meaning of section 12B of the Act.
The Income tax Appellate Tribunal, Bombay Bench 'A ', held, however, that there was no sale of the managing agency, because the original contract of 147 1146 purchase was varied by the new contract embodied in the letter of October 7, 1946.
The Tribunal, however, held as follows: " The assessee company was the owner of the shares and the managing agencies.
It sold the shares to the Dalmia Co. and handed back the managing agencies to the managed companies.
This handing back, in our opinion, constitutes a transfer of the managing agencies.
" On that footing the Tribunal held that section 12B of the Act applied.
On an application by the assessee company, the Tribunal on being satisfied that a question of law did arise out of its order, referred the question which we have already set out in an earlier paragraph of this judgment, to the High Court of Bombay.
The High Court answered the question in the negative on the ground that there was neither a sale nor a transfer of the managing agency within the meaning of section 12B of the Act.
The point for our consideration is whether the High Court has correctly answered the question.
We must first read sub section
(1) of section 12B of the Act as it stood at the material time.
The sub section, so far as it is relevant for our purpose, was in these terms: " The tax shall be payable by an assessee under the head 'Capital gains ' in respect of any profits or gains arising from the sale, exchange or transfer of a capital asset effected after the 31st day of March 1946; and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange or transfer took place.
" It is worthy of note that 'capital gains ' were charged for the first time by the Income tax and Excess Profits Tax (Amendment) Act, 1947, which inserted section 12B in the Act.
It taxed 'capital gains ' arising after March 31, 1946, and the levy was virtually abolished by the Indian Finance Act, 1949, which confined the operation of the section to 'capital gains ' arising before April 1, 1948.
The Finance (No. 77 of 1956) re introduced the section in wider terms so as to bring within 'capital gains ' any profits or gains arising from the sale, exchange, relinquishment or transfer of a 1147 capital asset effected after March 31, 1956, etc. ' We are not, however, concerned with the question whether the transaction under our consideration, which took place in 1946, resulted in capital gains within the meaning of section 12B as it stands after the enactment of the Finance (No. 77 of 1956).
The question before us is whether the transaction under consideration resulted in capital gains within the meaning of section 12B as it originally stood.
Two other points must be stated at the outset in order to clear the ground for a consideration of the relevant arguments advanced before us.
The first point is that there is no question here of the assessee company trying to circumvent the provisions of section 12B of the Act by deliberately modifying the original agreement (by its letter dated October 7, 1946) so as to put the transaction outside the scope of that section.
The agreement was modified in October, 1946, before even the insertion of section 12B in the Act.
Therefore, no question of deliberate or fraudulent evasion arises in this case.
The second point is that in construing fiscal statutes and in determining the liability of a subject to tax, one must have regard to the strict letter of the law and the true legal position arising out of the transaction in question.
The Bombay High Court has referred to a large number of English decisions on this point.
We consider it unnecessary to examine those decisions in the present case.
The point was considered very recently by this Court in A. V. Fernandez vs The State of Kerala (1), where the following observations made are very pertinent: " If the Revenue satisfies the Court that the case falls strictly within the provisions of the law, the subject can be taxed.
If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter.
We must of necessity, therefore, have regard to the actual provisions of the Act and the rules made thereunder before we can come (1) (1957] S.C.R. 837.
to the conclusion that the appellant was liable to assessment as contended by the Sales Tax authorities.
" Those observations were made in a case dealing with sales tax but are equally applicable to the case under our consideration.
Two conditions must be fulfilled before the transaction under our consideration can come within the purview of section 12B of the Act.
The first condition is that the profits or gains must arise from the sale, exchange or transfer of a capital asset; and the second condition is that the sale, exchange or transfer must be effected after March 31, 1946.
There is no doubt that the transaction before us was effected after March 31, 1946.
There is also no dispute that the managing agency of the two mills which the assessee company held was a capital asset.
Therefore, the question boils down to this did the profits or gains, namely, the sum of Rs. 1 crore which was computed as the value of the managing agency, arise from the sale or transfer of the managing agency ? The Income tax authorities held that there was a sale of the managing agency; but the Appellate Tribunal held that there was no sale in the strict sense but only a transfer of the managing agency to the managed companies, that is, the Dharamsi Company and the Shapurji Broacha Company.
The High Court held that there was neither a sale nor a transfer, because the letter of October 7, 1946, substituted a different contract for the original contract entered into by the parties, and the true legal position with regard to the substituted contract was that the assessee company resigned the managing agency, or, in other words, the managing agency was relinquished by the assessee company.
The learned Solicitor General, who has appeared for the appellant, has contested the correctness of the view of the Bombay High Court and has submitted a twofold argument before us.
His first argument is that there was a concluded contract of sale as a result of the letters, dated September 14, 1946, and September 30,1946, exchanged between the parties, and the sale having taken place, the letter of October 7, 1946, which merely changed the mode of performance of the 1149 contract, did not affect the true legal character of the ,transaction which was a sale of the managing agency.
We are unable to accept this argument.
The true legal effect of the letters dated September 14, 1946, and September 30, 1946, which contained an offer and an acceptance, was merely this: the Dalmia Company offered to purchase (1) certain shares in the two mills and (2) the managing agency, on payment of a certain consideration, and the assessee company accepted that offer.
In law, this was merely an agreement to sell and purchase the shares together with the managing agency on payment of the consideration, etc.
The two letters did not by themselves amount to a sale of the shares or the managing agency, in the sense of a transfer of the property in them.
Before any such sale could take place, the agreement was modified by the letter of October 7, 1946, and instead of " selling " the managing agency the assessee company agreed to resign or relinquish the managing agency.
We are unable to agree with the learned Solicitor General that the letter of October 7, 1946, merely changed the mode of performance, and did not constitute a now contract.
In our opinion, the Bombay High Court correctly held that whereas under the original contract the Dalmia Company wanted the managing agency to be transferred, which meant that it wanted the benefit of that contract to be vested in it and was also prepared to accept the burden of the obligations that went with that contract, under the substituted contract, the Dalmia Company did not want the managing agency to be assigned to it; on the contrary, it wanted the assessee company to relinquish its rights in the managing agency of the two mills by resigning.
On a true interpretation, the letter of October 7, 1946, substituted a new contract, a contract of relinquishment rather than a contract of sale, so far as the managing agency was concerned.
The second argument of the learned Solicitor General is that there was one indivisible consideration for the whole transaction, including the sale of the shares and of the managing agency.
So far as the shares were concerned, the sale did take place and the entire 1150 consideration was paid; there was therefore a sale within the meaning of section 12B of the Act, and the consideration being one and indivisible, the transaction did result in capital gains within the meaning of that section.
At the first blush, the argument has an apparent merit of plausibility, though it was not urged before the Bombay High Court in the manner in which it has been urged before us.
On a closer scrutiny, however, it appears to us that this argument is not really available to the learned Solicitor General.
The parties and the Income tax authorities, including the Appellate Tribunal, proceeded on the footing that part of the consideration, namely, the sum of Rs. 1 crore, was the consideration for the sale or relinquishment of the managing agency, the Department contending that the transaction was a sale or transfer and the assessee company contending that it was neither a sale nor a transfer but a mere relinquishment.
In the agreed statement of the case, it was stated : " The value of the managing agencies was computed by the assessee company at Rs. 1 crore and there is no dispute on this point.
The Income tax Officer thereupon computed capital gain at Rs. 81,81,900 and again there is no dispute on this point.
The question which the Tribunal had to determine was whether the transactions between the Dalmia Company and the assessee company resulted in a capital gain of Rs. 81,81,900.
It is obvious that the entire assessment proceedings proceeded on the basis that the sum of Rs. 1 crore was the consideration for the sale or relinquishment of the managing agencies, and the dispute between the parties was whether the transaction with regard to the managing agencies, in its true legal character, was a sale or transfer or relinquishment.
That being the position, it is not now open to the learned Solicitor General appearing for the Revenue to go behind the agreed statement of the case and to ask us to give an answer to the question of law raised in the case on different assumptions or in a different set of circum stances.
The answer must be given on the basis of 1151 the facts and circumstances as stated in the agreed statement of the case.
We are of opinion that the answer was correctly given by the High Court of Bombay.
The transaction in its true legal character was a relinquishment of the managing agency and was neither a sale nor a transfer thereof.
Therefore, the High Court correctly answered, the question in the negative.
In the result, the appeal fails and is dismissed with costs.
Appeal dismissed.
| The respondent company was the managing agent of two other companies holding certain shares therein.
D wrote two letters to the respondent on September 14, 1946, offering to purchase some of those shares together with the managing agency and agreeing to pay certain sums as earnest money on the acceptance of the offer and to pay the balance after the transfer of the managing agency was sanctioned by the general body of shareholders.
By a letter dated September 30, 1946, the respondent accepted the offer on condition of a sum of Rs. 1 crore being paid out of the consideration as compensation for the loss of the managing agency, and on receipt of the letter, D paid the earnest money.
Subsequently, D wrote a letter on October 7, 1946, whereby, in modification of the arrangement previously made, it was agreed that instead of the managing agency being transferred by the respondent, the latter would resign the office of managing agents and certain individuals would be appointed Directors of the two companies.
Accordingly, the respondent relinquished the managing agency and thereupon the balance of consideration money was paid to it.
The Income tax Officer considered that section 12B of the Indian Income tax Act, 1922, was applicable to the transaction and on the footing that the managing agency, which was valued at Rs. 1 crore, was a capital asset, he computed the capital gains at Rs. 81,81,900.
The Income tax Appellate Tribunal held that the respondent, as the owner of the shares and the managing agency, sold the shares to D and handed back the managing agency to the managed companies, and that this handing back constituted a transfer.
On a reference to the High Court by the Tribunal, the agreed statement of the case proceeded on the basis that the dispute between the parties was whether the transaction with regard to the managing agency resulted in capital gains and the High Court held that there was neither a sale nor a transfer of the managing agency within the meaning Of section 12B of the Act.
On appeal to the Supreme Court by the Commissioner of Income tax, it was contended for him (1) that there was a concluded contract 1142 of sale as a result of the letters of September 14, 1946, and September 30, 1946, and a sale having taken place, the letter of October 7, 1946, merely changed the mode of performance of the contract and did not affect the true legal character of the transaction which was a sale of the managing agency, and (2) that as there was one indivisible consideration for the whole transaction, including the sale of the shares and of the managing agency, the sale of the shares having taken place and the entire consideration having been paid, there was a sale within the meaning of section 12B of the Act and the transaction resulted in capital gains.
Held (1) that on a true construction of the letters there was originally only an agreement to sell the shares together with the managing agency and before the sale could take place the letter of October 7, 1946, substituted a new contract, a contract of relinquishment rather than a contract of sale, so far as the managing agency was concerned, and (2) that it was not open to the appellant to go behind the agreed statement of the case and raise a question of law based on different facts and circumstances.
Accordingly, the transaction in question was a relinquishment of the managing agency and was neither a sale nor a transfer within the meaning of section 12B of the Indian Income tax Act.
|
Summarize this legal judgement text concisely | 438 of 1955.
Petition under Article 32 of the Constitution of India for enforcement of Fundamental Rights.
H. J. Umrigar and N. H. Hingorani, for the petitioner.
Porus A. Mehta, B. Ganapati Iyer and R. H. Dhebar, for the respondents.
May 16.
The Judgment of the Court was delivered by SARKAR J.
By a notification dated March 16, 1953, the Government of India gave general permission to all persons to import into India from certain countries any goods of any of the descriptions specified in the schedule annexed to the notification.
Among the goods specified in the Schedule were the following: Iron and steel chains of all sorts assessable under item 63 (28) of the Indian Customs Tariff, excluding chains for automobiles and cycles whether cut to length or in rolls.
1153 The petitioner is an importer of goods.
He states that relying on the notification mentioned above he placed an order with a company in Japan sometime in August, 1953, for the supply of certain goods called in the trade, Zip Chains.
The goods arrived in the port of Calcutta in due course and the petitioner 's bank paid the price of the goods amounting to Rs. 11,051 4 0.
Before the goods could be cleared from the port of Calcutta, the petitioner received a communication from the Assistant Collector of Customs for Appraisement, Calcutta, dated November 19, 1953, in which it was stated that it had been found that the petitioner did not possess valid import licence for the goods and requiring him to show cause why the goods should not be confiscated and action taken against the petitioner under section 167, item 8, of the .
The communication also enquired if the petitioner wanted to be heard in person.
The petitioner submitted in answer a written explanation stating that the Zip Chains imported by him were chains of the kind free import of which had been permitted by the notification of March 16, 1953, and therefore no licence to import them was necessary.
He was thereafter again asked by the Customs authorities whether he wanted a personal hearing to which he replied that he did not.
Thereafter on December 25, 1953, the Collector of Customs made an order confiscating the goods and imposing a penalty of Rs. 1,000 on the petitioner.
This order bore an endorsement that it had been despatched to the petitioner on February 1, 1954.
It reached him on February 3, 1954.
The order stated that an appeal would lie against it to the Central Board of Revenue, New Delhi, within three months from the date of its despatch as noted on it.
The petitioner preferred an appeal and posted the memorandum of appeal on May 4, 1954.
The memorandum reached the Central Board of Revenue on May 6, 1954, and was dismissed on the ground that it had been preferred after the expiry of the time limited for the purpose.
The petitioner then made an application to the Government of India for revision of the order of the Central Board of Revenue but this application was 148 1154 rejected.
The petitioner thereafter applied to the High Court of Punjab under article 226 of the Constitution for an appropriate writ to quash the order confiscating his goods and imposing the fine on him but this application too was dismissed.
The petitioner has now applied to this Court under article 32 of the Constitution challenging the validity of the order made against him.
Learned counsel for the petitioner did not challenge the decision of the Customs authorities that the goods were not covered by the notification of March 16, 1953.
He conceded that he could not do so in this application.
Nor did he challenge the Customs authorities ' power to confiscate the goods.
Learned counsel however challenged the order of confiscation because it did not give the petitioner an option to pay a fine in lieu of confiscation.
This contention was based on section 183 of the which provides as follows: Whenever confiscation is authorised by this Act, the officer adjudging it shall give the owner of the goods an option to pay in lieu of confiscation such fine as the officer thinks fit.
This section undoubtedly requires an option to pay a fine in lieu of confiscation, to be given and this was not done.
A difficulty however is caused in the way of this argument by section 3 of the Imports and Exports (Control) Act, 1947.
The relevant portion of section 3 is set out below: 3.
(1) The Central Government may, by order published in the official Gazette, make provision for prohibiting, restricting 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, (a) the import, export, carriage coastwise or shipment as ships ' stores of goods of any specified description ; (b). . . . . . (2) All goods to which any order under subsection (1) applies shall be deemed to be goods of which the import or export has been prohibited or restricted under section 19 of the (VIII 1155 of 1878), and all the provisions of that Act &hall have effect accordingly, except that section 183 thereof shall have effect as if for the word "shall" therein the word "may" were substituted.
It is admitted that the Imports and Exports (Control) Act applies to the goods with which we are concerned and in this case the action that was taken was by virtue of this Act.
That being so, section 183 of the became applicable because of the Imports and Exports (Control) Act and it could hence be applied only as modified by the latter Act.
So applied the section did not make it obligatory on the Customsauthorities when ordering confiscation, 'to give an option to the owner to pay a fine in lieu of confiscation but gave them a discretion whether to do so or not.
The order of confiscation was not therefore bad even though it had not given the petitioner an option to pay a fine in lieu of confiscation.
Learned Counsel for the petitioner then contended that the portion of section 3(2) of the Act of 1947 which read "except that section 183 thereof shall have effect as if for the word " shall " therein the word " may " were, substituted ", left an uncontrolled discretion in the Customs authorities to give or not to give an option to pay a fine in lieu of compensation and consequently offended article 14 of the Constitution.
He therefore said that this portion of the section should be struck out of it.
He said that after the offending portion was deleted from section 3(2) of the Act of 1947 it would require section 183 of the to be applied without any modification at all and therefore it would be obligatory on the Customs authorities when making an order of confiscation to give an option to the petitioner to pay a fine in lieu of compensation even where the Act of 1947 applied.
Learned counsel said that as this had not been done, the order of confiscation made in this case was bad.
This argument is based on the contention that a portion of section 3(2) of the Act of 1947 offends article 14 and has therefore to be deleted.
This contention is wrong.
By its own force no part of section 3(2) purports to give any discretion to the Customs authorities at all.
There 1156 is nothing in it therefore to offend article 14.
The only effect of section 3(2) is to apply the to certain cases.
It is impossible to say that a statute which only makes another statute applicable to certain cases, offends article 14.
Such a statute has obviously nothing to do with article 14.
It is true that section 3(2) of the Act of 1947 makes section 183 of the applicable with a modification.
It was said that section 183 so modified offends article 14.
Assume that section 183 as modified infringes article 14.
What then? Clearly on this assumption section 183 as modified becomes ultra vires and illegal and it goes out of the statute book.
But that does not affect the question before us at all.
It does not make the order of confiscation without an option to pay a fine in lieu thereof bad.
The confiscation is not made under section 183.
It is made under another section of the , namely, section 167, item 8, which so far as is relevant is in these terms: 167.
The offences mentioned in the first column of the following schedule shall be punishable to the extent mentioned in the third column of the same with reference to such offences respectively: Sections of the Act to Penalties Offences Wich offence has reference 8, If any goods, thei 8 & 19 Such goods shall importation or expor be liable to con tatipn of which is for fication; and any the time being prohi such offence shall bited or restricted by be liable to a pe or under Chapter IV of nalty not exceed this Act, be imported ing theree times into or exported from the value of the Indiacontrary to such goods, or not exc prohibition or restric eeding one thousa tion.
nd rupees.
Chapter IV of the contains section 19.
It has to be remembered that section 3(2) of the Act of 1947 states that all goods to which any order under sub.s.
(1) applies shall be deemed to be goods of which the import has been prohibited under section 19 of the .
Admittedly sub section
(1) of section 3 of the Act of 1947 applies to the goods with which this case is concerned.
Under section 3(2) of the Act of 1947 the import 1157 of these goods is to be deemed to have been prohibited under section 19 of the .
It follows that action under section 167, item 8, of the can be taken in respect of these goods and they can be confiscated and the person concerned in the illegal import made liable to a penalty.
Resort to section 183 of the is not necessary to justify the order of confiscation made in this case at all.
Indeed section 183 does not authorise confiscation.
It assumes a confiscation authorised by other provisions of the and provides that on a confiscation being adjudged, an option to pay a fine in lieu of it shall be given.
It cannot therefore be said, even on the assump tion that learned counsel was right in his contention that section 183 as modified offends article 14 that the order of confiscation is bad.
As to whether the contention of learned counsel is right or not we decide nothing as it is not necessary to do so.
It was then contended that the effect of article 14 of the Constitution on section 183 of the , as modified by the Act of 1947, was not to make the entire section 183 illegal but to invalidate the amendment in it as it was this amendment alone which offended article 14, so that section 183 as it stands in the had to be applied to this case and therefore again it was obligatory on the Customs authorities to give an option to the petitioner to pay a fine in lieu of confiscation.
To accept this argument we would have to say that section 3(2) of the Act of 1947 itself offends article 14, and it cannot modify section 183 of the as it purports to do.
We are unable to say this.
In order to say that a statutory provision offends article 14, we have to examine that provision.
We have here two statutory provisions.
One is section 3(2) of the Act of 1947 and that does not offend article 14.
The reasons for this view we have stated earlier.
The other is section 183 of the as modified by the Act of 1947.
As so modified we have for the present purpose assumed that it offends article 14.
If it does it goes out as a whole.
It is not really a statutory provision in two parts with regard to which it might have been possible to say that one part offends article 14 1158 while the other part does not.
Section 183 with or without the modification really contains one statutory provision and therefore it must go out of the statute book as a whole or not at all.
This contention on behalf of the petitioner must therefore fail.
Learned counsel said that section 183 was bad also for the reason that it left it to the uncontrolled discretion of the Customs authorities to decide the quantum of the ' fine to be imposed in lieu of confiscation.
On the facts of this case, it is an academic argument.
Even if it was right the entire section 183 would have to be ignored but that would not have the effect of making the order of confiscation passed in, this case invalid.
All that the petitioner is concerned with is to show that the order of confiscation was bad.
The present argument does not touch that point and therefore it is not necessary to consider it at all.
Another similar argument was that section 167, item 8, of the itself offended article 14 in that it left to the uncontrolled discretion of the Customs authorities to decide the amount of the penalty to be imposed.
The section makes it clear that the maximum penalty that might be imposed under it is Rs. 1,000.
The discretion that the section gives must be exercised within the limit so fixed.
This is not an uncontrolled or unreasonable discretion.
Furthermore, the discretion is vested in high Customs officers and there are appeals from their order.
The imposition of the fine is really a quasijudicial act and the test of the quantum of it is in the gravity of the offence.
The object of the Act is to prevent unauthorised importation of goods and the discretion has to be exercised with that object in view.
Learned counsel then contended that the order of confiscation had been made mala fide.
It was said that it had been passed ex parte.
This is not correct for the petitioner had been asked before the order was made whether he wanted a personal hearing and he had stated in reply that he did not and had ample confidence in the authorities.
It is not therefore open to the petitioner to contend that he had no opportunity of being heard before the order against him was 1159 passed.
He had been given an opportunity and had not availed himself of it.
It was also stated that in deciding not to give the petitioner an option to pay a fine in lieu of confiscation the Customs authority had gone into certain other transactions without giving any notice to the petitioner that this would be done.
It was said that the petitioner was not given an opportunity of being heard in respect of these transactions.
The notice which the Customs authorities gave to the petitioner to show cause why the goods should not be confiscated also informed him necessarily that an order for confiscation might be made without an option to pay a fine in lieu of confiscation being given and therefore it was his fault if he did not appear at the hearing and showed cause why the order of confiscation should not be absolute but should give him an option to pay a fine.
It was also said that he had been deprived of the option because of the differences that existed between him and the Public Relations Officer of the Customs Department in Calcutta.
This point of view was sought to be supported by citing the cases of two other persons who had imported similar goods at or about the same time, and who had been given the option.
The facts of these other cases were however substantially different.
There was nothing to show in these that goods had been imported in deliberate violation of the order of the Government while in the case of the petitioner there are materials on which such a view could be formed.
It appears that the petitioner as the Manager of a firm called Federal Clearing Agency had received a communication from the Customs authorities on July 30, 1953, that Zip Chains were not covered by the notification of March 16, 1953, and within a fortnight of that communication he had placed the orders for identical goods which he now claims to be within the notification.
It was not unreasonable for the Customs authorities to think that the petitioner had deliberately imported the goods in breach of the order of the Government and without specific licence for that purpose, and on that ground to think it proper not to give him the option.
This would be so even if it was 1160 assumed that in the dispute with the Public Relations Officer the petitioner was in the right.
It was then stated that the petitioner had not been given personal hearing of the appeal that he preferred to the Central Board of Revenue and the application in revision to the Government.
But there is no rule of natural justice that at every stage a person is entitled to a personal hearing.
Furthermore, the appeal was out of time.
The memorandum of appeal to the Central Board of Revenue was posted on May 4, 1954.
The time to file the appeal, however, expired on May 1, 1954, so that even if the date of the posting is taken as the date of the appeal the petitioner was out of time.
The petitioner states that he received the order of confiscation on February 3, 1954.
Even so, on May 4, 1954, he would not be within time.
The memorandum of appeal however was received by the Central Board of Revenue on May 6, 1954.
That must be taken to be the date when the appeal was filed, and that being so the appeal must be taken to have been filed clearly out of time.
The petitioner stated that the Customs authorities wrongfully and maliciously procured his arrest on May 1, 1954, and he obtained his release on May 2, 1954.
It was suggested that this arrest was procured in order to prevent him from filing his appeal in time.
This contention is entirely idle.
Admittedly, the petitioner had time from February 3, 1954, till May 1, 1954, to file his appeal but he did not take advantage of this long period.
He waited till the end for filing the appeal.
There is nothing to show that the arrest was wrongful or that at the date of the arrest the Customs authorities had any knowledge that the petitioner had not filed his appeal.
The contentions that the order complained of was malafide or that the appeal had not been filed out of time are entirely untenable.
The result is that this application fails and it is dismissed with costs.
Petition dismissed.
| Section 167, item 8, of the , provides that if any goods the importation of which is for the time being prohibited or restricted by or under Ch.
IV of the Act, which Chapter includes section 19, be imported into India contrary to such prohibition or restriction, such goods shall be liable to confiscation and any person concerned in such importation shall be liable to a penalty not exceeding three times the value of the goods or not exceeding one thousand rupees.
By section 183 of this Act it is provided:" Whenever confiscation is authorised by this Act, the officer adjudging it shall give the owner of the goods an option to pay in lieu of confiscation such fine as the officer thinks fit.
" The Imports and Exports (Control) Act, 1947, by section 3(1) empowers the Central Government by an order to make provision for prohibiting, restricting, or otherwise controlling, the import, export, carriage coast wise or shipment as ships ' stores of goods of any specified description.
Sub section (2) of that section provides that all goods to which any order under sub section
(1) applies, shall be deemed to be goods of which the import or export has been prohibited or restricted under section 19 of the , and all the provisions of that Act shall have effect accordingly, 1152 except that section 183 thereof shall have effect as if for the word 'shall ' the word 'may ' are substituted.
The petitioner imported certain goods the import of which had been prohibited by the Central Government under section 3(1) Of the Imports and Exports (Control) Act.
By an order of the Collector of Customs, made under section 167, item 8, of the , these goods were confiscated and a penalty of Rs. 1,000, was imposed on the petitioner.
The petitioner challenged the validity of this order.
Held : (1) Section 3(2) of the Imports and Exports (Control) Act, 1947, does not offend article 14 of the Constitution.
It does not by its own force give any discretion to the Customs authorities at all, and its only effect is to apply the ,.
to certain cases.
(2) Section 183 Of the , does not authorise confiscation of goods.
It assumes that a power to confiscate under other provisions of the Act exists.
It is not a statutory provision in two parts with regard to which it may be said that one part offends article 14 while the other part does not.
The section contains only one statutory provision.
(3) Section 167, item 8, of the Sea Customs : 'Act, 1878, does not offend article 14 of the Constitution.
|
Summarize this legal judgement text concisely | Appeal No. 146 of 1956.
Appeal by special leave from the judgment and order dated December 3, 1954, of the Madras High Court in Referred Case No. 69 of 1954.
M. section K. Aiyanger, for the appellant.
1094 R. Ganapathy Iyer and T. M. Sen, for respondents Nos. 1 and 2. 1957.
May 6.
The Judgment of the Court was delivered by SINHA J.
This appeal by special leave and the summons under rule 30 of Order IV of the Supreme Court Rules, 1950, have been heard together and will be disposed of by this Judgment.
The appellant was an advocate of the Madras High Court of more than 25 years ' standing, and was enrolled as an advocate of the then Federal Court in the year 1939.
As will presently appear, he has had a chequered career at the Bar.
A Full Bench of the Madras High Court, presided over by the Chief Justice of that Court, by its judgment and order, dated December 3, 1954, has directed that the appellant 's name be removed from the roll of advocates of the Madras High Court, for "grave professional misconduct".
This Court, having been apprised of the result of the proceedings against the appellant in the High Court, issued notice to him to show cause why he should not be suspended from practice in view of the findings recorded by the High Court.
It appears that the appellant was engaged by one K. T. Appannah, ordinarily residing in Bangalore city, who will hereinafter be referred to as the Complainant, to complete a transaction of sale between the complainant and the owner of a house property in the city of Madras, whom we shall call, in the course of this judgment, as the vendor, after scrutinizing the title deeds in respect of the property which was the subject matter of the transaction of sale.
Before the appellant was engaged by the complainant, the bargain had been struck and the sale price of the property had been fixed at Rs. 15,000 out of which Rs. 1,300 had been paid to the vendor by way of earnest money.
A retired Government servant named Sundararajayya who was a relation of the complainant, and used to live near about the appellant 's residence, had also helped the complainant in acquiring the property, and in that connection, used to give instructions to the appellant 1095 on behalf of the complainant.
On May 11, 1951, the complainant sent, by way of a demand draft, the sum of Rs. 1,400, to the appellant, to meet the costs of stamp for the sale deed, and registration, and a fee of Rs. 150 to the appellant for his work in connection with the transaction.
In the course of the enquiry into the title to the property, it was discovered that there was a mortgage on the property, of Rs. 5,500, on the basis of a registered mortgage deed which had been filed in Court in connection with a litigation in respect of that very property, pending on the original side of the Madras High Court.
By negotiation, it was settled that Rs. 5,500, out of the sale price, shall be reserved for the discharge of the mortgage debt, and that the remaining amount of the consideration, will be paid to the vendor on completion of the sale transaction and delivery of vacant possession of the property.
The appellant wrote to the complainant that the latter should send him a demand draft for Rs. 5,600, in his name, for payment to the mortgagee, aforesaid, when the mortgage bond, properly discharged, would be handed over to the appellant, acting for the complainant.
In due course, on or about June 26, 1951, a demand draft in the name of the appellant, for Rs. 5,600, was sent by the complainant for the express purpose of discharging the mortgage debt, aforesaid.
On August 21, 1951, a cheque for Rs. 1,200, on September 26, 1951, a cheque for Rs. 500, and on October 19, 1951, a demand draft for Rs. 5,500, all in the name of the appellant, were sent by the complainant, in order to put him in funds for completing the transaction of sale and for payment of the consideration money to the vendor.
On July 9, 1951, the sale deed was executed by some of the executants, and on September 6, 1951, it was executed by the remaining executant, and registered.
Hence, it would appear that between May 11, 1951, and October 24, 1951, the complainant had paid to the appellant, the sum of Rs. 15,200, which was sufficient to pay the outstanding amount of the consideration for sale, namely, Rs. 13,700, including the mortgage amount, aforesaid, of Rs. 5,500, besides the costs of stamp and registration and the appellant 's fees.
But it appears 1096 that the vendor 's portion of the consideration money, was paid by the appellant on November 23, 1951, after some avoidable delay due to him, and vacant delivery of possession given to the appellant as stipulated between the parties.
It appears further that the complainant was in need of raising money on the security of the newly acquired property, and, therefore, was anxious to receive all the documents of title including the mortgage bond duly discharged.
But the appellant, for reasons of his own, went on postponing the payment of the mortgage money on some pretext or the other.
On being pressed for the mortgage deed, duly discharged, being handed over to the complainant, and as a result of a protracted correspondence, the appel lant sent, to the complainant, on June 26, 1952, a number of documents including "cancelled mortgage documents.
" It should be added here that the mortgage transaction of Rs. 5,500, had been entered into by the owner of the property in order to discharge previous mortgages on the same property.
All these documents had to be withdrawn from the High Court where they had been in the custody of the Court as already indicated.
Unfortunately, Sundararajayya died on June 28, 1952.
As a result of further correspondence, the complainant came to realise, to his cost, that the mortgage debt of Rs. 5,500 had not been paid to the mortgagee, as arranged between the appellant and the complainant who had put him in funds with the express purpose of obtaining a clear title to the property which he had agreed to purchase.
Thus, the complainant was reduced to the necessity of filing a regular petition of complaint in the High Court on November 14, 1952.
In that petition of complaint, the complainant made copious quotations from the letters addressed by the appellant to him and made reference to the fact that the mortgagee had already instituted a suit in court for recovery of the mortgage money, and had impleaded the complainant as party defendant to the suit.
The gravamen of the charge against the appellant was that he had not discharged the outstanding mortgage on the property purchased, for which he had been supplied with ample funds by the complainant 1097 and that he had not disclosed how and in what manner, the complainant 's money, meant for the purpose, had been utilized by the appellant.
In answer to the notice issued to him on February 16, 1953, the appellant submitted along statement by way of an explanation which runs into about 43 pages in print, which is more in the nature of an argument in justification of his conduct than a statement of facts.
The High Court referred the complaint, for inquiry and report, to the Bar Council.
Three members of the Council constituted the Tribunal which held a very elaborate inquiry.
After recording both oral and documentary evidence, the Bar Council made its report on May 5, 1954, holding that: ". . both the charges have been fully established and that the respondent has not only not used the moneys of the complainant for the purpose for which the money was sent, but that the respondent has not accounted at all for the sum of rupees 5,000, which was admittedly cashed by him and brought into his bank account though not in his professional account.
" In course of its report, the Tribunal found that the appellant had received all the amounts sent by the complainant, as set out above.
It also pointed out that an unfortunate feature of the case was that the mortgage bond in question which was one of the "cancelled mortgage documents", had not been produced before it.
The non production of the crucial document was explained to the Tribunal by counsel for the complainant.
It was stated that the mortgagedeed in question, along with other documents, had been left by the complainant with his counsel and that the whole bundle of papers including those documents had "disappeared from his office".
One can only surmise as to who may have been responsible for secreting those documents, or, for whose benefit, they had been stolen away, as alleged by counsel for the complainant.
Another ugly aspect of the proceedings was that a number of letters, admittedly written by the appellant to the complainant in connection with the transaction of sale, had been found by the High Court to have been 141 1098 tampered with or bodily substituted.
The Tribunal observed with particular reference to exhibit C 12, which was alleged to have been substituted for the original, that the learned counsel for the complainant had not persisted in the charge that it had been substituted; and that he did not press the charge that there had been certain alterations in some other letters which formed part of the voluminous correspondence that passed between the appellant and the complainant.
It may be observed here that no specific "charge" had been drawn up against the appellant in respect of those letters.
Hence, when the Tribunal stated that the ' charge ' had been withdrawn, it only meant to say that the learned counsel for the complainant did not persist in his allegations about those alterations or the wholesale substitution of exhibit C 12 about which we will have to say something more in the course of this judgment.
The Tribunal examined, in some detail, the particular defence of the appellant with reference to the specific charges made against him in respect of the sum of Rs. 5,600, admittedly sent by the complainant for the specific purpose of discharging the mortgage encumbrance on the purchased property.
It appears to have been the appellant 's case that the demand draft for Rs. 5,500, dated October 24, 1951, had been sent to him through Sundararajayya, and that the appellant, after getting the amount of the draft credited to his personal account, kept only Rs. 500 for payment to the vendor and made over to Sundararajayya the remaining 5,000 rupees in cash.
It was not his case that the complainant had instructed him to pay to Sundararajayya the 5,000 rupees, alleged by him to have been paid to Sundararajayya.
It was not even his case that he had taken any receipt for the said sum from Sundararajayya, though he alleged that he had given a receipt to Sundararajayya for the much smaller sum of Rs. 500 which he admitted to have kept in his hands on account of the complainant for payment to the vendee.
After reviewing the entire evidence and particularly the correspondence that passed between the appellant and the complainant, the 1099 Tribunal came to the conclusion that the appellant "dishonestly and fraudulently represented to the complainant that the mortgage had been cancelled and he picked out 3 out of the 36 documents received by him from the vendor, including the mortgage document( herein involved, and sent the same to the complainant describing them as 'cancelled documents '.
The only inference that one can draw is that the respondent having utilized the monies intended for the discharge of the mortgage for his own purpose put on the mortgage document the marks of cancellation and sent the same to the complainant at the pressure of the complainant 's demand for the discharged mortgage document".
The Tribunal also examined all the relevant evidence bearing on the payment back of Rs. 5,000, to Sundararajayya, out of the demand draft for Rs. 5,500, admittedly sent by the complainant and credited to the personal account of the appellant.
As already indicated, Sundararajayya had died before the commencement of the inquiry, and, therefore, his evidence could not be available to the Tribunal.
But in spite of the complete absence of the mortgage bond in question from the record, and of the possible explanation of Sundararajayya, the Tribunal had no difficulty in coming to the conclusion that the appellant "is clearly guilty not only of professional misconduct but also a clear breach of trust.
" This report of the Tribunal was closely examined by a Full Bench of the Madras High Court.
The learned Chief Justice who presided over the Bench, after carefully considering all that could have been said on behalf of the appellant, and the relevant evidence both oral and documentary, confirmed the findings of the Tribunal.
It went a little further and held that exhibit C 12 was not genuine and that the letters exhibits C 10 and C 11 contained interpolations at the instance of the appellant who was the respondent before the Court.
In this connection, the High Court made the following observations: " The learned Advocate General attacked the genuineness of this letter.
Whether there was another genuine letter of the same date or not, it is not 1100 necessary to decide.
No doubt, this letter is in the handwriting of the respondent.
After deep consideration of all the circumstances, we are clearly of opinion that this letter must have been introduced into the bundle is of documents with the complainant 's advocate at or about the same time, when the respondent made the interpolations in the letters dated 6 9 1951 and 6 10 1951, (exhibits C 10 and C 11).
" In the result, the High Court directed that the appellant 's name be removed from the roll of advocates of that Court.
Against this order, the appellant prayed for and obtained special leave to appeal to this Court.
It is convenient at this stage, to deal with the arguments advanced by the learned counsel for the appellant.
It has been suggested that the inquiry by the Bar Council Tribunal was "rambling and roving".
This objection is not altogether unfounded.
It appears from the order sheet maintained by the Tribunal that charges were framed on July 22, 1953, and the inquiry continued from date to date until the report was made on May 5, 1954.
The Tribunal handled the case on as many as 45 dates and the printed record of the inquiry runs into 296 pages in print.
This must have entailed a good deal of expenditure of time and money to the parties and one may particularly sympathize with the complainant who had to go through all this after having been deprived of at least Rs. 5,000, if not more, as found by the High Court and the Tribunal.
But if it is necessary to apportion blame, much of it may be laid at the door of the appellant himself, who appears to have spent a lot of ingenuity over trying to explain his dealings with his unfortunate client.
In answer to the charge framed by the Bar Council Tribunal, the appellant submitted a long "written answer" on September 27, 1953.
But before that, he had already submitted a 'written explanation ' on February 16, 1953, running into 43 pages in print, as already indicated.
There is no doubt that the appellant left no stone unturned to cloud the issues and to throw a veil over his mis deeds, as found by the Tribunal and the Madras High Court.
It is cleat, therefore, that it is 1101 not the appellant who should have made any grievance out of the so called rambling and roving inquiry.
It was next pointed out that the inquiry by the Tribunal into the alleged misconduct of the appellant was in the nature of a quasi criminal proceeding, and( as necessary corollaries to this proposition, it was contended (1) that the charge should have been more precise, that (2) it should have been proved beyond all reasonable doubt.
We have examined these contentions with reference to the record as prepared by the Tribunal and in our opinion, it has not been made out that the charge was so defective as to mislead the appellant or to cause any substantial prejudice to him or that there is any room for reasonable doubt as to the truth of the charges framed against the appellant.
The charges framed against the appellant were in these terms: " That you Mr. ' C ', in acting for the petitioner as his advocate in the matter of scrutinising the title deeds of No. 104 A, Lloyds Road, Gopalapuram, Madras, and putting through the sale of the said premises in petitioner 's favour, received from the petitioner Rs. 5,600 for the purpose of discharging a mortgage encumbrance on the property and that you have not applied the monies so entrusted to you then and there for the purposes of entrustment.
That you Mr. 'C ' have further not disclosed to the petitioner how and in what manner you have utilised the said monies and that you have not accounted for the same when demanded.
That you have for these reasons committed acts of professional misconduct liable to be dealt with under the Bar Councils Act.
" With reference to the charge in the first paragraph, it was contended that the charge, as it appears, has been completely answered by the appellant.
The argument runs as follows: The reference to the sum of Rs. 5,600, apparently is to the demand draft for the said amount dated January 26, 1951.
This amount, the appellant claimed, had been paid over to the vendee 1102 himself on November 23, 1951, when vacant possession of the premises purchased was delivered to the appellant.
This could have been a complete answer to the charge, if it had been found as a fact that out of the demand draft dated October 24, 1951, of Rs. 5,500, the appellant had paid back to Sundararajayya the sum of Rs. 5,000, as alleged by him.
But as found by the Court below confirming the conclusions of the Bar Council Tribunal, the appellant had failed to establish by reliable evidence that the sum of Rs. 5,000 had, as a matter of fact, been paid back to Sundararajayya, aforesaid.
Hence, on the findings, it is clear that the appellant had in his hands, more than ample funds to pay the entire consideration money including the mortgage encumbrance of Rs. 5,500, after deducting Rs. 1,300, which had already been paid to the vendor by way of earnest money, before the appellant came on the scene.
But it is sought to be pointed out on behalf of the appellant that the charge against him was not that he had not accounted for, or had embezzled any portion of the sum of RE. 5,500, sent to him last on October 24, 1951.
This argument assumes that the mortgage debt outstanding against the purchased property had to be discharged in specie, out of any particular item out of several instalments in which the complainant bad entrusted the total sum of Rs. 15,200, to the appellant, in connection with the transaction in question.
The appellant had to account for the due application of the said amount of Rs. 15,200, being the total sum placed in his hands by his client for the purpose of seeing through the transaction.
The appellant himself does not claim that he rendered account of the total sum thus entrusted to him by his client.
The appellant cannot be said to have duly accounted for all this sum unless it were held that he had paid Rs. 5,000 in cash to Sundararajayya.
On his own showing, if it is held, as it has been found by the High Court, in agreement with the Tribunal, that the sum of Rs. 5,000, had not been paid to Sundararajayya, the appellant has not accounted for the entire amount entrusted to him by his client.
This then is a clear 1103 case, shorn of all verbiage introduced by the appellant himself to cloud the issues, that the appellant was entrusted by his client with the sum of Rs. 15,200, out of which, he had to discharge the mortgage debt of Rs. 5,500, as settled with the mortgagee by the appellant himself, acting on behalf of the complainant.
The appellant has never pretended that he has paid this sum to the mortgagee.
This is made absolutely clear by the appellant 's statement in paragraph 58 of his written explanation ', to the following effect: " There is no question of 'my having discharged the mortgage.
I did not discharge the mortgage.
I never paid any money to the mortgagee or to anyone on his behalf.
I never told or wrote and I could not have told or written to any, at any time, that I had paid the mortgage claim.
The allegation or suggestion to that effect is untrue.
As already stated, I was not placed with the requisite funds on and after 21 11 1951.
" There is thus no escape from the conclusion that the appellant had not applied the sum of Rs. 5,500, in discharging the mortgage debt, aforesaid, out of the sum of Rs. 15,200, placed in his hands by the complainant for the specific purpose of acquiring a clear title to the property.
It would have been better if the Bar Council Tribunal had called upon the appellant to account for the entire amount of Rs. 15,200, which he admitted he had received from his client, instead of mentioning only the one item of Rs. 5,600.
That would have been a straight case to state against the appellant.
But there is no reason to hold that the appellant was in any way prejudiced in his defence by the omission in the charge to mention the entire sum of money entrusted to him.
It was repeatedly mentioned before us that the appellant might have been a fool in his dealings with the money placed at his disposal by his client the complainant.
There are clear indications in the record that the appellant, far from being a fool, is a knave, and that he knew fully what charge he had to meet.
There is no ambiguity in the charge and there is no doubt that the High Court was fully justified in wholeheartedly confirming the conclusions of the 1104 Tribunal.
It is equally clear to us that there is no room for any doubt whatsoever that the appellant had misappropriated his client 's money and that the High Court was fully justified in striking off his name from the roll of advocates of that Court.
It remains to consider the further points sought to be made on behalf of the appellant that the High Court was not justified in recording its findings in respect of exhibits C 10, C 11 and C 12, quoted above, specially when the learned counsel for the complainant had not pressed those allegations of interpolation and forgery, before the Tribunal.
This contention is well founded.
We have, therefore, left completely out of account, those allegations of material alterations in exhibits C 10 and C 11 and the alleged wholesale substitution of the original of exhibit C 12.
In considering the question whether the charges framed against the appellant have been substantiated, we have proceeded on the assumption that these letters, as they appear at present, are genuine.
They contain the statements of the appellant himself and constitute an attempt to explain away his acts of omission and commission in relation to the transaction of sale for which he had been engaged by the complainant.
Those statements are wholly out of tune with the rest of the record and particularly inconsistent with the rest of the correspondence which had admittedly passed between the appellant and the complainant.
We have not dealt, in detail, with the voluminous correspondence between the parties because this being an appeal by special leave, we have not found it necessary to examine very closely, the findings of fact recorded by the High Court in concurrence with the Tribunal.
The case against the appellant, as made out by the complainant, is fully supported by a large body of reliable oral and documentary evidence which is consistent only with the guilt of the appellant, and wholly inconsistent with his innocence, notwithstanding the fact that he made a belated but vain attempt to white wash his misconduct.
Turning to the summons issued by this Court to the appellant, the first question that arises is the 1105 procedure according to which this summons is to be disposed of Should this Court initiate independent proceedings in the sense of making fresh inquiry after recording evidence pro and con, and then come to its conclusions, or, should this Court proceed upon the, inquiry already made by the High Court through the Bar Council Tribunal, and record its orders after giving the Advocate concerned an opportunity of being heard against similar orders being passed by this Court, in view of the consideration that an advocate of this Court may be entitled to practice in any of the subordinate courts in India even though he may not be borne on the roll of advocates of any particular High Court ? In this connection, we have precedents of the time of the Federal Court and of this Court which are analogous to the case in hand.
In those cases, the Federal Court and, subsequently, this Court acted upon the report of the High Court containing its orders in respect of an advocate on its rolls and passed orders after giving an opportunity to the advocate concerned to show cause why disciplinary action should not be taken against him in view of the findings of the High Court.
In those cases, it was not considered necessary to have a fresh inquiry made and the Court being satisfied that the orders of the High Court were well founded in fact and law, passed similar orders.
Curiously enough, the first precedent of the Federal Court, In the matter of an Advocate (1), relates to the case of the appellant himself, at an earlier stage of his career as an advocate.
The Court consisting of Sir Maurice Gwyer, Chief Justice, Sir section Varadachariar and Sir Torick Ameer Ali JJ.
dealt with his case.
The appellant had been charged in respect of events which had happened in 1934 35, and was convicted in 1941, at the Madras Sessions, of only one out of 5 counts, of an attempt to cheat.
He served a sentence of 18 months ' rigorous imprisonment.
Then, the matter was dealt with by the High Court on a report made by the Tribunal of the Madras Bar Council, to the effect that the (1) Case No. XVI of 1942, decided on March 23, 1943.
142 1106 appellant 's conviction involved moral turpitude, and in 1942, the Madras High Court ordered him to be struck off the roll of advocates of that Court.
In the course of their short order, the ' Federal Court made the following observations: " Having regard to the decision of the High Court of Madras in a matter which may be regarded as analogous (In re an Advocate 1. L. R. 46 Mad.
p. 903) we have not dealt with that before us as if an order made against the respondent must follow automatically from the result of the proceedings in Madras, and we have heard the respondent at length in support of the written memorandum submitted.
As a result of such hearing however we are not satisfied that circumstances exist so exceptional or extraordinary as to make it either possible or proper for us to disregard the verdict or the subsequent order of the High Court against the respondent. . .
In these circumstances we have to hold that grounds have not been adduced sufficient to prevent an order removing the respondent from the rolls of this Court following upon the order made by the High Court of Madras, and such an order must now be made.
" The appellant ceased to be on the roll of advocates of the Madras High Court and of the Federal Court as a result of the Federal Court order passed, as quoted above, some time in 1943.
In 1948, the appellant moved the Federal Court for reinstatement as an advocate of that Court in view of the fact that he had been re instated by the Madras High Court by its order dated March 22, 1948.
That Court had passed its orders on affidavits and certificates of good character during the period the advocate stood struck off the roll of advocates.
A Judge of the Federal Court, during the long vacation, passed orders reinstating the appellant as an advocate of that Court, following the orders passed by the Madras High Court.
That is how the appellant was re introduced to the profession and within about two years of his reinstatement, the complainant fell a victim to the appellant 's dishonest and fraudulent conduct, as found above.
1107 In another case, In re: D. A. Shanmugasundaraswami(1), an Advocate, coming again from the Madras High Court, a similar proceeding followed.
One D. A. Shanmughasundaraswami, an advocate of the Madras High Court, had been dealt with by that Court for c professional misconduct on several counts.
After the necessary inquiry and report by the Tribunal of the Bar Council, the High Court directed his name to be, struck off the roll of advocates of that Court.
As that advocate was also borne on the roll of advocates of the Federal Court, summons under Order IV, rule 29, of the rules of that Court was issued, and the Federal Court consisting of Kania, Chief Justice, Fazl Ali, Patanjali Sastri, Mahajan and B. K. Mukherjee JJ.
by their order dated January 24, ordered that his name should be similarly removed from the roll of advocates of the Federal Court.
Their Lordships, relying upon the precedent referred to in the last paragraph, passed their order in these terms: " Having regard to a precedent of this Court, we did ,lot consider that on the footing of the order made by the Madras High Court an order of removal of his name from the Rolls of this Court should automatically follow.
He accordingly argued his case before us in detail.
After hearing the respondent at great length, we see no reason to differ from the conclusion of the Madras High Court.
We are not satisfied that circumstances exist which make either possible or proper for us to disregard the verdict or the subsequent order of the Madras High Court against the respondent.
Under the circumstances we hold that no sufficient grounds have been adduced to prevent an order removing the respondent from the Rolls of this Court, following upon the order made by the Madras High Court, and such an order is therefore made.
" This Court dealt with the case of an advocate of the Bombay High Court, who was also enrolled as a senior advocate of this Court.
That case is In the matter of Mr. 'G ', a Senior Advocate of the Supreme Court(2 ).
After (1) Misc.
Case No. X of 1948, decided on January 24, 1949.
(2) (1955] 1 S.C.R. 490. 1108 the advocate had been suspended from practice by the Bombay High Court for six months, and that order was brought to the notice of this Court, this Court dealt with the matter under Order IV, rule 30, and passed orders similar to that passed by the Bombay High Court.
Another case from the Bombay High Court, dealt with by this Court is In the matter of ' D ', an Advocate of the Supreme Court(1).
When the matter was dealt with by this Court, under Order IV, rule 30 of the Rules, the advocate, after having been suspended from practice for a period of one year, by the Bombay High Court, prayed that a fresh inquiry might be held into the matter.
This Court rejected that prayer of the advocate, and proceeded upon the record as made by the High Court through the Bar Council.
This Court agreed with the view taken by the Bombay High Court about his misconduct in connection with a criminal trial, and suspended the advocate from practice for a period co terminus with the period of suspension fixed by the High Court.
On a review of the aforesaid precedents, it may be taken that the following principles have been laid down by the Federal Court and by this Court when dealing with a summons under rule 30 of Order IV of Supreme Court Rules, or, its equivalent rule of the Federal Court: (1) Any order by a High Court, by way of disciplinary action against an advocate borne on the roll of advocates both of a High Court and of this Court, is not automatically followed by a similar order by this Court; (2) this Court need not start a fresh inquiry by way of recording evidence over again against the advocate concerned, for professional misconduct; (3) it is enough that this Court should generally examine the record prepared by the Bar Council of a High Court, under the directions of that Court, on the basis of which the High Court has passed its orders; and take into account the findings of the High Court; (1) ; 1109 (4) of course, this Court has to grant a reasonable opportunity to the advocate concerned, of being heard against the action proposed to be taken against him under its disciplinary jurisdiction; (5) it is open to this Court, in an appropriate, case to permit the advocate to adduce such additional evidences it thinks fit; (6) this Court, after hearing the advocate or his legal adviser and, if necessary, the Attorney General, or such other advocate as may be appointed to place the view point of the legal profession generally, or of the complainant or the aggrieved party if he desires to be heard in the matter, may pass such order as it may deem fit and proper, in its judicial discretion.
It may be noted that in the instant case, at the final hearing, we did not find it necessary to adjourn the hearing to issue notice to the Attorney General, nor was any request made in that behalf.
In view of these precedents, as also in view of the fact that ordinarily it is necessary that a person, in order to be entitled to be enrolled as an advocate of the Supreme Court, should be borne on the roll of advocates of a High Court, proceedings in this Court, under rule 30 of Order IV, of the Rules, should normally be treated as a natural sequel to the proceedings in the High Court under the Bar Councils Act.
If one is not a fit and proper person to continue on the roll of advocates of a High Court, a fortiori he cannot be permitted to continue on the roll of advocates of this Court.
It is a great privilege to be borne on the roll of advocates of the Supreme Court, and only such persons as show a high degree of integrity of character should be so enrolled.
Any person, who has been found by the High Court to have fallen from that high standard of integrity of character required of an advocate of a court, must suffer the consequences of his name being removed from the roll of advocates of this Court.
As already indicated, it was rather unfortunate that the appellant, after being once struck off the roll of advocates of the Madras High Court and of the Federal Court, should have been reinstated, and thus been ennobled to deal 1110 with clients who have to trust their legal advisers with moneys in the course of their fiduciary relationship.
These protracted proceedings against the appellant leading up to the summons under rule 30 of Order IV of the Supreme Court Rules have ended in the removal of the appellant 's name from the roll of advocates of the High Court and of this Court, but only after the complainant has lost his good money.
It is clear, therefore, that the continuance of the appellant in the legal profession is a serious menace to the profession itself, which requires a high degree of integrity of character and sense of responsibility in which the appellant has been found singularly lacking.
In view of these considerations, the appeal must be dismissed and the rule made absolute with the result that the appellant 's name shall stand removed from the roll of advocates of this Court.
Appeal dismissed.
| The appellant, an Advocate whose name was borne on the rolls of the Madras High Court and of the Supreme Court, was found guilty of gross professional misconduct by the Madras High Court on the report of the Bar Council Tribunal and debarred from 1093 practising in that Court.
The charge against him was that he did not utilise a particular sum of money entrusted to him by his client to clear a mortgage in order to secure a clear title for him in completion of a transaction of sale, for that purpose nor account for it.
The appellant preferred an appeal by special leave and this Court, being apprised of the order passed by the ' Madras High Court, issued a Rule under r. 30, 0.
IV of the Supreme Court Rules.
It was found by this Court that the charge against the appellant was fully supported by a large volume of evidence on record, both oral and documentary.
Held, that the appeal must be dismissed and the Rule made absolute and the appellant 's name removed from the roll of Advocates of this Court.
It is a great privilege to be an Advocate of this Court and only such persons as can satisfy a very high standard of integrity of character can be enrolled as such.
An Advocate who is found to have fallen from that standard and is debarred by the High Court cannot be considered fit to practise in this Court.
Proceedings under r. 30, 0.
IV Of the Supreme Court Rules should be treated as a natural sequel to proceedings in the High Court under the Bar Councils Act and although an order made by the High Court under that Act is not to be automatically followed by this Court, it is not necessary that this Court should start a fresh inquiry on evidence.
It would be enough for it to generally examine the record prepared by the Bar Council Tribunal and take into account the findings of the High Court based on such report.
Reasonable opportunity must, however, be afforded to the Advocate of being heard against the action proposed to be taken against him and adducing such additional evidence as this Court may think proper.
The Attorney General or any other Advocate representing the Legal Profession generally or the complainant or the aggrieved party may also be heard before the final decision is arrived at.
In the matter of an Advocate, Case No. XVI of 1942, decided on March 23, 1943, In Ye: D. A. Shammugasundaraswami, an Advocate Misc.
Case No. X of 1948, decided on January 24, 1949, In the matter of Mr. 'G ', a Senior Advocate of the Supreme Court, and In the matter of 'D ', an Advocate of the Supreme Court; , , referred to.
|
Summarize this legal judgement text concisely | 54 of 1955.
Petition under Article 32 of the Constitution of India for the enforcement of fundamental rights.
Purshottam Tricumdas, section N. Andley, Rameshwar Nath, J. B. Dadachanji and P. L. Vohra, for the petitioner. , C. K. Daphtary, Solicitor General of India, Porus A .
Mehta and R. H. Dhebar, for the respondent.
M. L. Misra, Advocate General, U.P., and C.P. Lal, for the Intervener.
May 1.
The Judgment of section R. Das C. J., Jafer Imam, section K. Das and Govinda Menon JJ.
was delivered by section K. Das J. Sarkar J. delivered a separate judgment.
section K. DAS J.On November 8, 1955, the Ministry of Commerce and Industry, Government of India, published a notified order, in exercise of the powers conferred on that Government by section 18A of the Industries (Development and Regulation) Act, 1951, hereinafter referred to as the Act, authorising one Shri Kedar Nath Khetan of Padrauna, called the 1054 authorised Controller, to take over the management of the Ishwari Khetan Sugar Mills Ltd., Lakshmiganj, Deoria, subject to certain conditions.
The order as originally passed and published was to have effect for a period of one year only, commencing on the date of its publication in the official gazette.
On November 7, 1956, there was an amendment of that order.
The amendment was published in notification No. 338 A of even date and stated in effect that in stead and place of the words 'one year ' occurring in the order, the words 1 two years ' shall be substituted.
Petitioner No. 1 before us is one Kamlaprasad.
Khetan, who states that lie is a Director and shareholder of the second petitioner, which is the Ishwari Khetan Sugar Mills Ltd. The Union of India was and is the only respondent.
By an order dated October 1, 1956, this Court permitted the said authorised Controller to intervene, with the result that both the Union of India and the authorised Controller have been heard in opposition to the petition.
The substantial case of the petitioners is that the order referred to above dated November 8, 1955, and the amending order dated November 7, 1956, are invalid in law and bad on certain other grounds to be stated presently, and it is not open to the Central Government to interfere with the fundamental right of the petitioners to hold and manage their property on the strength of the said invalid orders; the petitioners therefore pray for the issue of appropriate writs or directions to quash those orders.
Short and simple as the case of the petitioners appears to be at first sight, it is necessary to refer to a background of certain antecedent facts for a proper understanding and appreciation of the issues involved in the present dispute between the parties.
The Ishwari Khetan Sugar Mills Ltd., is a public limited Company, in which four branches of a family known as the Khetan family held a large number of shares and only about one fourth of the shares were held by outsiders.
The Company was managed by a firm of Managing Agents, subject to supervision by the Directors.
Four members of the Khetan family 1055 constituted the Managing Agency firm, of which Kedar Nath Khetan (later appointed as the authorised Controller) was one and Onkarmal Khetan (now deceased), father of petitioner Kamlaprasad Khetan, was another.
The Managing Agents managed two Mills, known as the Ishwari Khetan Sugar Mills Ltd., Lakshmiganj, and the Maheshwari Khetan Sugar Mills Ltd., Ramkola, District Deoria.
We are concerned in the present case with the Ishwari Khetan Sugar Mills Ltd. The Managing Agents were also partners in the firm of managing agents of certain other companies, namely, Morarji Gokul Das Spinning and Weaving Mills, Bombay, and Laxmidevi Sugar Mills Ltd., Deoria.
In the affidavit in opposition filed on behalf of the authorised Controller, it is stated that the Khetan family was in the beginning a mere trading family, but " due to the initiative, business acumen and imagination of Rai Bahadur Kedar Nath Khetan, various manufacturing concerns including several sugar factories grew up " ; and it was under his direction that the other members of the family, including Onkarmal Khetan, were put in charge of the day today routine administration of one business or the other.
There was a provision in the Managing Agency agreement under which every member of the firm of Managing Agents was authorised to exercise all the powers of the Managing Agents.
According to the case of the authorised Controller, trouble arose between the members of the different branches of the family of Managing Agents sometime in 1950 51 when it came to light that Onkarmal Khetan had surreptitiously withdrawn large sums of money from the accounts of the various businesses in which the members of the Khetan family were interested as Managing Agents, and this led to certain suits being instituted against Onkarmal Khetan.
The latter, in his turn, retaliated by bringing suits for the appointment of a Receiver, or for restraining the holding of a general meeting of one of the mills, and instituting certain other preceedings stated to be of an obstructive nature and calculated to create an impasse in the working of the mills, 1056 The petitioners on the contrary alleged that when the balance sheet of the Ishwari Khetan Sugar Mills Ltd., for the financial year 1950 51 was published in June 1952, it was discovered that some of the Directors including the authorised Controller had utilised the funds of the Company for their personal gain and had committed breaches of certain provisions of the Indian Companies Act.
This led to Suit No. 4 of 1952 brought by the petitioners against some of the Directors, including the authorised Controller, for an order of permanent injunction restraining the said Directors from exercising any powers as Directors of petitioner No. 2 and also for a declaration that a notice calling the twenty fourth ordinary general meeting of the Company to be held on July 9, 1952, was illegal and invalid.
In that suit, an ex parte order of injunction was made against the Directors concerned on July 8, 1952.
That order was, however, subsequently vacated as being without jurisdiction and a fresh order was made on June 3, 1953.
In the affidavit filed on behalf of the authorised Controller, it has been stated that on legal advice obtained by the defendants of that suit to the effect that the ex parte order of injunction dated July 8, 1952, was without jurisdiction, the twenty fourth ordinary general meeting of the Company was held on July 9, 1952, and the shareholders unanimously passed a resolution in that meeting approving and adopting the Directors ' report and the audited balance sheet of the Company as on October 9, 1951.
The fresh temporary order of injunction which was passed by the Civil Judge, Deoria, on June 3, 1953, was confirmed by the High Court of Allahabad by its order dated September 14, 1953.
Feeling that the order of stay would completely dislocate the affairs of the Company, the shareholders themselves called an extraordinary general meeting which was held on November 9, 1953, and at that meeting the authorised Controller and certain other persons were re elected as Directors of the Company, subject to the condition that if the Court decided in Suit No. 4 of 1952 that the said Directors had not ceased to be Directors, the resolution would be ineffectual to that extent.
There 1057 were several proceedings in the High Court of Allahabad In connection with Suit No. 4 of 1952, and in one of them the High Court was moved for an expeditious hearing of the suit, and such a direction was made by the High Court.
Unfortunately, however, for reasons which need not be stated here, Suit No. 4 of 1952 is still awaiting trial and on July 31, 1956, petitioner No. 1 obtained an ex parte order from the said High Court adjourning the hearing of the suit.
The case of the anthorised Controller is that petitioner No. 1 having realised that he is not supported by the majority of shareholders and cannot, therefore, legally represent the Company, is delaying the hearing of Suit No. 4 of 1952 on one ground or another.
While all this legal tussle, with allegations and counter allegations made by the parties, was going on in the arena of the Courts of law, certain other events happened to which a reference must now be made.
The petitioners allege that the authorised Controller, finding that the majority of the shareholders and Directors were not in favour of his managing the Ishwari Khetan ,Sugar Mills Ltd. moved the Ministry of Food, through his grandson Durga Prasad Khetan and another gentle man.
related to him, for passing orders under sections 15 and 17 of the Act.
On November 8, 1952, a communication was received from the Ministry of Food and Agriculture, Government of India, wherein was stated: "The Government of India consider that if on account of the failure of the parties concerned to compose their differences and inability to take timely and proper steps to arrange for normal working of the mills, the mills are not able to start work in time during the 1952 53 season, or are unable to work at all, it will result in a substantial fall in the production of sugar without due justification.
Such a result will lead to the conclusion that the mills are being managed in a manner likely to damage the interests of a substantial body of consumers besides cane growers and mill workers.
" The communication concluded with the statement that, in the circumstances stated above, the Government of India would be constrained to order an investigation 136 1058 into the matter and, if necessary, to undertake the management of the said mills.
It may be stated hers that the communication was in respect of both the Ishwari Khetain Sugar Mills Ltd. and the Maheshwari Khetan Sugar Mills Ltd.
On December 18, 1952, the Central Government did actually pass an order under sub section
(4) of section 3 of the Essential Supplies (Temporary Powers) Act, 1946, under which the authorised Controller was empowered to exercise certain functions of control in respect of the Ishwari Khetan Sugar Mills Ltd., the functions of control being stated in detail in notification No. S.R.O. 2073 of even date.
On December 23, 1952, Onkarmal filed a writ petition to this Court against the aforesaid order of the Central Government and asked for an interim direction staying the operation of the order.
This Court gave a direction expediting the hearing of the petition, and further directed that the accounts of the petitioner Company be audited periodically by a Government or private auditor at the instance of Onkarmal.
The writ petition itself could not, however, be heard in time and was later dismissed on May 14, 1954, as having become infructuous in the meantime.
On July 30, 1953, the Central Government passed an order under section 15 of the Act in respect of several mills, including the Ishwari Khetan Sugar Mills Ltd.
Under that order the Central Government appointed three independent persons for making a full and complete investigation into the circumstances of each of the industrial undertakings referred to therein.
Then, on November 14, 1953, the Central Government made an order under section 18A of the Act, by which the authorised Controller was appointed to take over the management of the Ishwari Khetan Sugar Mills Ltd.
It may be stated here that the Act was amended in 1953 by Act 26 of 1953.
By that amendment, section 17 was omitted and a new chapter, viz., Chapter IIIA, was inserted.
This new chapter contained section 18A under which the Central Government passed its order dated November 14, 1953.
The order stated that it shall have effect for a period of one year.
In December 1953 came the decision of this Court in Dwarkadas Shrinivas of 1059 Bombay vs The Sholapur Spinning & Weaving Co. Ltd. That decision pronounced oil article 31(2) of the Constitution with reference to the validity of the Sholapur Spinning and Weaving Company (Emergency Provisions) Ordinance 11 of 1950 and Act XXVIII of 1950.
As a result, presumably, of that decision, on May 21, 1954, the Central Government cancelled all appointments of authorised Controllers under the provisions of the Act, and on such cancellation the management of the industrial undertaking vested again in the owner of the undertaking.
The case of the petitioners is that in spite of the cancellation the authorised Controller continued to remain in possession of the undertaking in, question.
On July 16, 1954, the Central Government again passed an order under sub section
(4) of section 3 of the Essential Supplies (Temporary Powers) Act, 1946, thereby again giving the authorised Controller certain functions of control in respect of the Ishwari Khetan Sugar Mills Ltd. On September 19, 1954, there was another investigation under section 15 of the Act by a panel of officers and it is stated that they recommended that the Central Government should take over the management of the Mills for a period of three years.
On January 31, 1955, the present petitioners filed a writ petition in this Court in respect of the order passed by the Central Government on July 16, 1954.
This is the writ petition which, after necessary amendments, is now under consideration before us, the amendments having been necessitated by reason of certain subsequent notifications made by the Central Government.
These subsequent notifications are (1) the notifications made on November 8, 1955, by which the earlier order made on July 16, 1954, was cancelled and a fresh order made under section 18A of the Act; and (2) the amending order dated November 7, 1956 to both of which a reference has been made in the first paragraph of this judgment.
By reason of these subsequent notifications, the order dated July 16, 1954, no longer exists, and the writ petition which was originally directed against that order stands in need of amendment.
(1) ; 1060 The petitioners have prayed for an amendment of the original writ petition and also for permission to urge fresh grounds to challenge the validity of the two notified orders, one dated November 8, 1955, and the other dated November 7, 1956.
By an order of the Judge in Chambers dated February 18, 1957, the petition for amendment and for urging additional grounds was directed to be heard along with the main petition under article 32.
But before that date, i.e., on November 5,1956, when the stay application of the petitioners was heard, the following direction was given by this Court " The hearing of the main petition under article 32 to be expedited. . . . . . . it will be open to the petitioners to challenge that the appointment of R. B. Kedar Nath Khetan, if again made, is also bad.
" In view of the aforesaid directions, we have treated the main petition under article 32 as a petition against the latest orders passed by the Central Government appointing the authorised Controller to take over the management of the undertaking, and we have also permitted the petitioners to urge fresh grounds in support of their petition.
Having indicated in the preceding paragraphs the necessary background against which the dispute between the parties has to be considered, we proceed now to a consideration of the grounds on which the petitioners challenge the validity of the orders dated November 8, 1955, and November 7, 1956.
It is necessary to clear the ground by stating at the very outset that learned counsel for the petitioners has not challenged the validity of section 18A of the Act under which the impugned orders were made.
We have already stated that Chapter IIIA of the Act was inserted by the Amending Act 26 of 1953.
Article 31B of the Constitution was enacted by the Constitution (First Amendment Act, 1951, which states, inter alia, that none of the Acts and Regulations specified in the Ninth Schedule nor any of the provisions thereof shall be deemed to be void, or ever to have become void, on the ground that such Act, Regulation or provision is 1061 inconsistent with, or takes away or abridges any of the rights conferred by, any provisions of this Part (meaning Part III) of the Constitution.
The Ninth Schedule was added to by the Constitution (Fourth Amendment) Act, 1955.
Item No. 19 of the Ninth Schedule is now Chapter IIIA of the Act as inserted by the Industries (Development and Regulation) Amendment Act, 1953.
Learned Counsel for the petitioners has frankly conceded that in view of these amending provisions, he is not now in a position to challenge the validity of section 18A of the Act.
Therefore, the principal question for our consideration is the validity of the impugned orders made under that section.
Learned counsel for the petitioners has attacked the two orders on the following grounds: (1)the order of November 8, 1955, is not a lawful order, as it does not fulfill one of the essential requirements of section 18A of the Act under which it purports to have been made; (2)even assuming that the order was a good order when it was made, section 18A of the Act does not authorise an extension of the period during which the order is to remain in force, in the manner in which the extension was made on November 7, 1956, and such extension did not comply with one of the essential requirements of section 21 of the General Clauses Act, (No. X of 1897); and (3)in any event, the order is not a bonafide order in that the Central Government appointed the very person who was mismanaging the undertaking, who was one of the parties to a pending dispute, and against whom an order of injunction had been passed by a Court of competent jurisdiction.
These three grounds we now propose to examine in the order in which we have set them out.
(1)We must first read section 18A of the Act so far as it is relevant for our purpose.
The section states If the Central Government is of opinion that (a). . . . (b)an industrial undertaking in respect of which an investigation has been made under section 15 (whether or not any directions have been issued to the 1062 undertaking in pursuance of section 16, is being managed in a manner highly detrimental to, the scheduled industry concerned or to public interest, the Central Government may, by notified order, authorise any person or body of persons to take over the management of the whole or any part of the undertaking or to exercise in respect of the whole or any part of the undertaking such functions of control as may be specified in the order.
(2)Any notified order issued under sub section (1) shall have effect for such period not exceeding five years as may be specified in the order.
Provided that the Central Government, if it is of opinion that it is expedient in public interest so to do, may direct that any such notified order shall continue to have effect after the expiry of the period of five years aforesaid for such further period as may be specified in the direction and where any such direction is issued, a copy thereof shall be laid, as soon as may be, before both Houses of Parliament.
" The argument before us is that for the application of cl.
(b) of sub section
(1) of section 18A, the two essential requirements are (1) an investigation under section 15 of the Act and (ii) the opinion of the Central Government that the industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or lo public interest.
Learned counsel for the petitioners has conceded that before the order dated November 8, 1955, was made, there was an investigation under section 15 of the Act in respect of the industrial undertaking in question, and the first requirement was thus fulfilled.
Learned counsel has, however, very strongly submitted that the second requirement was not fulfilled in the present case, because the authorised Controller himself was in charge of the undertaking from December 18, 1952, till November 8, 1955 (when the impugned order was made) with a small break of less than two months only between the two dates, May 21, 1954, when all appointments under the Act were cancelled and July 16, 1954, when a fresh order under the Essential Supplies (Temporary Powers) Act, 1946 was made, and 1063 even during this short period the case of the petitioners is that the authorised Controller continued in possession.
Founding himself on these circumstances learned counsel for the petitioners contends that it was rationally and logically impossible for the Central Government to be of opinion that the industrial undertaking was being managed in a manner highly detrimental to the public interest, before the impugned order was made.
We are unable to accept this argument as correct.
We have already referred to the legal tussle which was going on between the parties with regard to the management of the industrial undertaking in question.
The Central Government very rightly pointed out in their letter dated November 8, 1952, that the result of the differences between the parties was likely to be a stoppage of the mill and a fall in the production of sugar with consequential detriment to the interests of the industry concernedand the interests of a substantial body of consumers, cane growers and mill workers.
In view of the litigation which was pending between the parties, the likelihood of the dangers at which the Central Government hinted in 1952 must have continued to exist, as long as the management was not fully and completely taken over by the authorised Controller.
In December 1952, the order passed under the Essential Supplies (Temporary Powers) Act, 1946 merely gave some functions of control to the authorised Controller; it did not vest the management in him.
This distinction between exercising certain functions of control, however, drastic the functions may be, on an order made under sub section
(4) of section 3 of the Essential Supplies (Temporary Powers) Act and the taking over of the management of the whole of an undertaking on an order under section 18A of the Act is a real distinction which must be borne in mind, as it has a bearing on the argument advanced before us.
Sub section (4) of section 3 of the Essential Supplies (Temporary Powers) Act, 1946, authorises the Controller to exercise, with respect to the whole or any part of the undertaking, such functions of control as may be provided by the order; section 18A of the Act is in wider terms and empowers the 1064 Central Government to authorise any person or body of persons to take over the management of the whole or any part of the undertaking or to exercise in respect of the whole or any part of the undertaking such functions of control as may be specified in the order.
Section 18B of the Act states the effect of a notified order under section 18A; in sub section
(1), cls.
(a) to (e), is stated the effect of taking over the management, and in sub.
section (3) is stated the effect of merely giving functions of control a distinction which is clearly drawn in the section itself.
It is not difficult to conceive that in a particular industrial undertaking the mere giving of some functions of control may not be enough to meet the situation which has arisen and it may be necessary for the Central Government to pass an order taking over the management of the whole of the undertaking.
In the case under our consideration, in December, 1952, certain functions of control were vested in the authorised Controller, but the management of the whole undertaking was,not taken over.
This continued till an investigation was ordered under section 15 of the Acton July 30, 1953.
Then, on November 14, 1953, the authorised Controller was directed to take over the management of the whole of the industrial undertaking.
This order was however cancelled on May 21, 1954, and under section 18F of the Act, the effect of the cancellation was to vest the management of the undertaking again in its owner the expression I owner ' meaning, under section 3 (f) of the Act, the person who, or the authority which, has the ultimate control over the affairs of the undertaking and, where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent.
Therefore, the legal effect of the cancellation on May 21, 1954, was to vest the management of the Ishwari Khetan Sugar Mills Ltd., in the Directors and Managing Agents who were quarreling amongst themselves.
On behalf of the petitioners, it has been pointed out that Kedar Nath Khetan, the erstwhile authorised Controller, continued to remain in possession in spite of the cancellation order.
In an affidavit filed on behalf of the Central Government, it 1065 is stated that after the cancellation order, Kedar Nath Khetan, the erstwhile authorised Controller, informed the Government of India that he was continuing in management in a capacity other than that of authorised Controller.
The affidavit filed on behalf of the authorised Controller states, however, that between the time the Central Government directed him to hand over possession to the Directors and the time when he was again appointed on July 16, 1954, the management of the Company remained in the hands of the Directors who were in possession of the under taking.
It is not necessary for us to pronounce on these disputed facts.
It is abundantly clear from the affidavits filed that peace amongst the Directors or in the family of the Managing Agents had not been restored by the time the cancellation order was made on May 21, 1954.
Suit No. 4 of 1952 was still pending, and the tussle between the parties was going on.
This was the position when another order was made under the Essential Supplies (Temporary Powers) Act, 1946.
, on July 16, 1954.
This was followed by a second investigation under section 15 of the Act in September, 1954.
Petitioner No. I was still pursuing what he conceived to be his legal remedy by filing a writ application in respect of the order dated July 16, 1954, in this Court and also in other proceedings arising out of Suit No. 4 of 1952, in the High Court of Allahabad.
In these circumstances, the Central Government made the impugned order dated November 8, 1955.
Having regard to the circumstances just stated, it is, we think, idle to contend that the Central Government had no materials before it for arriving at the opinion that the industrial undertaking was being managed in a manner highly detrimental to public interest.
The Central Government might reasonably have felt that the order dated July 16, 1954, which vested certain functions of control only, was not enough to meet the situation and a more drastic step was necessary.
It is worthy of note that in the affidavit filed on behalf of the Central Government it is stated that the affairs of the industrial undertaking were investigated a second 137 1066 time under section 15 of the Act in September 1954, and the panel of officers who held that investigation recommended that Government should take over the management of the industrial undertaking for a period a of three years.
It is on that recommendation that the Central Government passed the impugned order on November 8, 1955.
We are unable to accept the argument of learned counsel for the petitioners that one of the essential requirements of cl.
(b) of sub section
(1) of section 18A of the Act was not fulfilled before the order dated November 8, 1955, was made.
Learned counsel for the petitioners has drawn our attention to those statements in the affidavit filed on behalf of the Central Government which referred to the improvement in management, after the undertaking was taken over by the authorised Controller.
In that affidavit, it is stated : " I say that by virtue of the order issued by the Government of India under section 3(4) of the Essential Supplies (Temporary Powers) Act, 1946, the Government of India had taken over only the supervisory control and the said Kedar Nath Khetan had only powers to issue directions to the management.
The management was with the old management and the Government of India or the authorised Controller had no effective functioning in the management as the authorised Controller could not manage the undertaking.
I say that in view of the continued litigation referred to in detail in the affidavit of the intervener dated 25th October, 1956, it was apparent that the mill was being managed in a manner highly detri mental to the interests of the undertaking and that it was necessary to pass the order under section 18A of the Industries (Development and Regulation) Act, 1951.
1 say that after the management was taken over by Shri Kedar Nath Khetan, the Government has reason to believe that the management has improved and has saved further deterioration.
" In another part of the same affidavit, it is stated that the mill earned a profit during 1953 54 and in 1954 55 also the mill was likely to make a net profit of 1067 Rs. 84,321.
We see nothing in these statements from which it can be inferred that the recorded opinion of the Central Government in the order dated November 8, 1955, that the industrial undertaking was being managed in a manner highly detrimental to public interest contained a palpably false statement.
The crux of the matter was the dispute inter se amongst the Directors and the Managing Agents, leading to protracted and harassing litigation, some of which was still pending; that was the real cause of the trouble, and we think that the Central Government had enough materials for its opinion that the industrial undertaking in question was being managed in a manner highly detrimental to public interest.
(2)We now turn to the amending order of November 7, 1956.
The amending order is in these terms : " In the said order in sub clause (ii) of clause I and clause 2 for the words 'one year ', the words two years ' shall be substituted.
" Section 21 of the General Clauses Act states: " Where, by any Central Act or Regulation, a power to issue notifications, orders, rules, or bye laws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions (if any), to add to, amend, vary or rescind any notifications, orders, rules or bye laws so issued." The argument of learned counsel for the petitioners is that neither section 18A of the Act nor section 21 of the General Clauses Act save the amending order of November 7, 1956.
There has been some argument before us with regard to the proviso to sub section
(2) of section 18A of the Act, which we have quoted in extensor in an earlier part of this judgment.
That proviso, it is contended by learned counsel for the petitioners, refers only to an order which is initially made for a period of five years, or, alternatively, which comes to an end on the expiry of a period of five years.
According to him, the proviso empowers the Central Government to continue the order after the expiry of a period of 1068 five years for such further period as may be specified in the direction given by the Central Government, and the only safeguard is that a copy of the direction is to be laid before both Houses of Parliament.
The argument of learned Counsel for the petitioners proceeds to state that the proviso has no application in the present case where the original order was made for a period of one year only and the amending order merely continued it for another year.
In the view which we have taken of the substantive provisions of sub section
(1) of section 18A of the Act and section 21 of the General Clauses Act, we do not think it necessary to make any pronouncement with regard to the true scope and effect of the aforesaid proviso.
In our opinion, the amending order is protected under section 21 of the General Clauses Act read with sub sec.
(1) of section 18A of the Act.
Section 21 of the General Clauses Act says, inter alia, that the power to issue an order under any Central Act includes a power to amend the order; but this power is subject to a very important qualification and the qualification is contained in the words 'exercisable in the like manner and subject to the like sanction and conditions (if any) '.
There is no dispute before us that the amending order was made in the same manner as the original order, that is, by means of a notified order.
As no sanction is necessary for an order under section 18A, the only question before us is whether the amending order complied with the like conditions under which the original order was made.
We have already stated what are the two essential requirements of an order under cl.
(b) of sub s (1) of section 18A of the Act.
The argument of learned counsel for the petitioners is that those two essential conditions must be fulfilled again before any amendment of the order can be made; this, he ureas, is the true scope and effect of the expression 'subject to the like conditions (if any) ' occurring in section 21 of the General Clauses Act.
We agree with learned counsel for the petitioners that the power to amend, which is included in the power 1069 to make the order, is exercisable in the like manner and subject to the like sanction and conditions (if any) as govern the making of the original order; this is stated by the section itself.
It becomes necessary however, to understand clearly the true nature of the conditions '; which have to be fulfilled before an order under el.
(b) of sub section
(1) of section 18A of the Act can be made.
Once the true nature of those conditions is appreciated, there is in our opinion little difficulty left in the application of section 21 of the General Clauses Act.
Now, the first condition in cl.
(b) of sub section
(1) of section 18A of the Act is that the industrial undertaking must be one in respect of which an investigation has been made under section 15 of the Act.
Section 15 is in these terms: Where the Central Government is of the opinion that (a) in respect of any scheduled industry or industrial undertaking or undertakings (i) there has been, or is likely to be, a substantial fall in the volume of production in respect of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be, for which, having regard to the economic conditions prevailing, there is no justification; or (ii) there has been, or is likely to be, a marked deterioration in the quality of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be, which could have been or can be avoided; or (iii) there has been or is likely to be a rise in the price of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be, for which there is no justification; or (iv) it is necessary to take any such action as is provided in this Chapter for the purpose of conserving any resources of national importance which are utilised in the industry or the industrial undertaking or under.
takings, as the case may be; or 1070 (b) any industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest; the Central Government may make or cause to be made a full and complete investigation into the circumstances of the case by such person or body of persons as it may appoint for the purpose.
" The order for investigation in this case was made under cl.
(b) of section 15, and that clause again uses the expression that the 'industrial undertaking is being managed in a manner highly detrimental to the industry concerned or to public interest 'the same expression which occurs in cl.
(b) of sub section
(1) of section 18A of the Act.
Section 16 of the Act states, inter alia, that if, after making or causing to be made any investigation under section 15, the Central Government is satisfied that action under the section is desirable, it may then issue certain directions which are stated in the section.
It may, however, be that in a given case the management is so detrimental to the industry concerned or to public interest that mere directions under section 16 are not enough; in that event, the Central Government may take over the management by an order passed under cl.
(b) of sub section
(1) of section 18A of the Act.
There may even be a case where in spite of the directions, no sufficient improvement has taken place and an order under sub section
(1) of section 18A of the Act becomes necessary.
That is why in cl.
(b) of sub section
(1) occurs the expression whether or not any directions have been issued to the undertaking in pursuance of section 16. ' The reason why the same expression is being managed in a manner highly detrimental etc. ' occurs both in cl.
(b) of section 15 and cl.
(b) of sub section
(1) of section 18A of the Act is this: an investigation is ordered when the conditions mentioned in section 15 are fulfilled, one of the conditions being that the industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest.
On such an investigation being made, the Central Government may issue directions under section 16; those directions may or may not improve the situation.
If they do not improve the 1071 situation, or if the mere giving of directions under section 16 is not considered sufficient to meet the situation, the Central Government may pass an order under section 18A; but one of the requisite conditions is that the Central Government must he of opinion that the industrial undertaking is still being managed in a. manner highly detrimental to the scheduled industry concerned or to public interest.
If these sections 15, 16 and 18A, are read together, as they must be read, then it becomes at once clear that the condition as to the management of the industrial undertaking in a manner highly detrimental to the scheduled industry concerned or to public interest relates in its true scope and effect to a period when the management of the industrial undertaking is in the hands of its owner; that is, to a period before the management of the whole or any part of the undertaking is taken over.
Similarly, with regard to the exercise of functions of control, which also is contemplated by section 18A of the Act, the condition again relates to a period before the functions of control are taken over.
It would, in our opinion, be illogical and against the terms of sections 15, 16 and 18A of the Act to hold that the condition as to mismanagement (using the word 'mismanagement ' for the purpose of brevity and convenience, for the correct expression, namely, 'management in a manner highly detrimental to the scheduled industry concerned or to public interest ') can apply after the management has been taken over and during the period of its management by the authorised Controller.
The contention of learned counsel for the petitioners is that whenever an amendment is made, the test of mismanagement must again be fulfilled.
Let us examine the full implications of this argument.
If, after the management is taken over, the authorised Controller becomes seriously ill or dies in a few days when the period of the order has not expired, the Central Government may find it necessary to appoint another person and for that purpose make an amendment.
If the argument of learned counsel for the petitioners is correct, then no amendment can be made unless the test of mismanagement is again 1072 fulfilled; but how can such a test be fulfilled when the management was in the hands of the authorised Controller till he died, the authorised Controller being more or less in the position of an agent of the Central Government ? The argument of learned counsel for the petitioners, pushed to its logical extreme, will thus result in an absurdity and no amendment will ever be possible.
Learned counsel for the authorised Controller has on the contrary contended that the two conditions laid down in el.
(b) of sub section
(1) of section 18A of the Act are not static in nature and once they are fulfilled, they continue to have effect thereafter whatever may have happened in the meantime.
The argument proceed to state that if an investigation under section 15 of the Act had once been made and if at some previous stage the industrial undertaking was mismanaged, the two conditions continue to operate irrespective of whether the undertaking vests in the owner again for a time, and an amendment may be made at any time and even a fresh order can be made without the necessity of a fresh investigation and a fresh mismanagement.
We consider that both these are extreme views.
On a proper construction of sections 15, 16 and 18A of the Act, the correct view appears to be what we have stated earlier, namely the two conditions, one as to an investigation under section 15 and the other as to mismanagement, relate to a period when the management of the industrial undertaking is legally vested in its owner, and section 18A must be read, with reference to the two conditions stated in el.
(b) of sub section
(1), as though the words 'while the undertaking is vested in its owner ' are present in the clause.
If, as in this case, the management is once taken over by an order under section 18A but the order is later cancelled and the management again vests in the owner, the two conditions must be fulfilled again before an order under el.
(b) of sub section
(1) of section 18A of the Act can be made.
That is what happened in the present case.
The management was taken over on November 14, 1953, but the order was cancelled on May 21, 1954, and the management vested in the owner.
An 1073 investigation under section 15 of the Act was again made in September, 1954, and the Central Government, being satisfied that the industrial undertaking was being mismanaged in spite of the order under the Essential Supplies (Temporary Powers) Act made on July 16, 1954, passed the impugned order on November 8, 1955.
So far as the amending order of November 7, 1956, was concerned, the like conditions still continued to exist and there was no necessity for a fresh investigation etc., because the management had not since November 8, 1955, vested in the owner, and by their very nature the conditions continued to exist till the management went into the hands of the owner again.
Having regard to the true nature of the conditions laid down in section 18A of the Act, there was no violation of section 21 of the General Clauses Act when the amendment was made on November 7, 1956, and, in our opinion, the requirements of section 21 had been substantially complied with.
The power to amend which is included in the power to make the order was exercised subject to like conditions within the meaning of section 21 of the General Clauses Act, the conditions being an investiga tion under section 15 of the Act and management in a manner highly detrimental to public interest, both of which necessarily related to the period when the management of the industrial undertaking was legally vested in its owner; and both had been fulfilled and continued to be so fulfilled when the amendment was made.
It is to be remembered that section 21 of the General Clauses Act embodies a rule of construction, and that rule must have reference to the context and subject matter of the particular statute to which it is being applied; for example, section 18A of the Act does not prescribe any conditions for the cancellation of an order made under that section, but section 18F does and the power of cancellation referred to in section 21 of the General Clauses Act must have reference to section 18F.
Similarly, an order of amendment made becomes an order under section 18A and is subject to all the conditions mentioned therein, including the condition mentioned in sub section
A reference was made in this connection to a decision of this Court in Strawboard Manufacturing Co. vs Gutta 138 1074 Mill Workers ' Union (1).
In that case, the State Government of Uttar Pradesh had referred an industrial dispute to the Labour Commissioner on February 18, 1950, and directed that the award should be submitted not later than April 5, 1950.
The award, however, was made on April 13, and on April 26 the Governor issued a notification extending the time for making the award up to April 30, 1950.
It was held by this Court that the State Government had no authority whatever to extend the time and the adjudicator became functus officio on the expiry of the time fixed in the original order of reference and the award was, therefore, one made without jurisdiction and a nullity.
It was further held that section 14 of the U. P. General Clauses Act did not in terms or by necessary implication give any such power of extension of time to the State Government.
It was argued on behalf of the State Government in that case that the order of April 26, 1950, could be supported with reference to section 21 of the U. P. General Clauses Act.
But this Court rejected the argument and held that the power of amendment and modification conferred by section 21 of the U. P. General Clauses Act could not be exercised so as to have retrospective operation.
We do not think that the principle of that decision has any application in the present case.
But as already stated by us, the provision in section 21 of, the General Clauses Act embodies a rule of construction, and the implied power of amendment therein embodied must be determined with reference to the context and subject matter of the provisions of the principal statute.
In the present case, that rule of construction applies, but it does so with reference to the context and subject matter of sections 15, 16 and 18A of the Act.
(3) We now turn to the third and last question which has been agitated before us.
Learned counsel for the petitioners has contended that the impugned orders are not bona fide orders.
He has submitted that the authorised Controller was one of the parties to the dispute which led to so much protracted litigation.
(1) ; 1075 He has pointed out that there was an order of injunction against him.
He has also referred to certain other circumstances arising out of other activities of the authorised Controller and relating to income tax demands against him.
He has submitted that the authorised Controller ceased to be a Director by reason of breaches of certain provisions of the Indian Companies Act committed by him.
These submissions have been very seriously contested in the affidavit filed on behalf of the authorised Controller.
On the materials before us, it is neither possible nor desirable that we should make any pronouncement with regard to these disputed questions of fact.
It is sufficient to state that the selection of a suitable person to be the authorised Controller rests with the Central Government and it may be presumed that the Central Government knows best the needs of the particular industry and of its own subjects and the suitability of the person to be appointed as authorised Controller.
Having regard to the facts and circumstances to which we have already made a reference, it cannot be said that the appointment of Kedar Nath Khetan as the authorised Controller in this particular case was made for some ulterior purpose, that is, a purpose other than the purpose of achieving the objects for which the impugned order was passed.
The primary concern of the Central Government was to see that the mills were managed in a manner which was not detrimental to public interest, and having regard to the experience of Kedar Nath Khetan in the industry in question, it was open to the Central Government to select him as the most suitable person to be appointed as the authorised Controller, notwithstanding that he was a party to the dispute.
The test to be applied in cases of this nature, where lack of good faith in the Central Government is pleaded, is not whether a better or more independent man was or might be available; nor is it the duty of the Court to subject the selection made by the Central Government to another and independent test of propriety and suitability, for the Court has really no materials for such a test.
The test to be applied is whether the 1076 appointment was made for some ulterior purpose, some purpose other than the object for which the law, under which the impugned order is made, was enacted.
In our view, the petitioners have completely failed to satisfy that test in the present case.
For the reasons given above, we hold that the order made on November 8, 1955, and the amending order dated November 7, 1956, are both valid in law, and the petitioners have not made out any case of a violation of their fundamental right.
In conclusion, it may be stated that on behalf of the authorised Controller a preliminary objection was also taken that petitioner No. 1 was not legally competent to represent petitioner No. 2.
Having regard to our decision on merits, it is unnecessary to say anything more about this preliminary objection.
It was stated at the Bar that this preliminary objection has also been taken in Suit No. 4 of 1952.
As that suit is still pending, we have thought it fit to refrain from expressing any opinion on the preliminary objection.
The result is that there is no merit in the petition which is dismissed with costs in favour of the respondent, the Union of India.
The authorised Controller, who intervened at his own risk, must bear his own costs.
SARKAR J.
I have had the privilege of reading the judgment just delivered by my brother section K. Das.
I regret that on one of the questions that arise in this matter I have come to entertain a different opinion.
In this judgment I will say a few words on that question only.
With the rest of the judgment of S.K. Das J. I am in entire agreement.
He has dealt with the facts very fully and therefore I do not propose to state them myself The Central Government had by an order published in the Official Gazette of November 8, 1955, and made in exercise of the power conferred by section 18A of the Industries (Development & Regulation) Act, 1951 (LXV of 1951), authorised Kedar Nath Khetan who has been allowed to intervene in these proceedings to take 1077 over the management of Ishwari Khetan Sugar Mills Limited, an industrial concern then in the management of its directors.
The order provided that it was to have effect for a period of one year commencing on the date of its publication in the Official Gazette.
By another 2 order made on November 7, 1956, the Central Government directed that in the order of November 8, 1955, for the words ,one year" the words I two years ' should be substituted.
The effect of this latter order was that Kedar Nath Khetain was to be in management of the Mills up to November 7, 1957.
The question is whether the order of November 7, 1956 was a valid order.
The latter order is only an amendment of the earlier order.
Had the Central Government then any power so to amend? Section 18A does not expressly confer any power to amend an order once it is made under it.
Section 21 of the General Clauses Act, however, provides that a power of amendment shall exist in certain circumstances.
The only question therefore is whether section 21 of the General Clauses Act justifies the amendment made in this case.
Section 21 is in these terms: "Where, by any (Central Act) or Regulation, a power to (issue notifications), orders, rules or bye laws is conferred then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions (if any), to add to, amend, vary or rescind any (notifications) orders, rules or bye laws so (issued).
" Under this section a Notification or an Order once issued can be amended only "in the like manner and subject to the like sanction and conditions (if any) ".
This means that the power of amendment can be exercised only in the same manner and subject to the same sanction and conditions, if any were imposed, in which the power to make the order could be exercised under the main Act.
Was the order of November 7, 1956, then made in the same manner and subject to the same sanction and conditions under which an order under section 18A of the main Act could be made ? Under section 18A the power to authorise a person to take over the management of an undertaking can be 1078 exercised only by a notified order, that is to say an order notified in the Official Gazette.
This is the manner of the exercise of the power.
The amending Order had been made in the same manner.
This requirement of section 21 of the General Clauses Act, therefore, was fulfilled in this case.
Section 18A does not provide for any sanction being obtained before the exercise of the power conferred by it.
The amending Order, therefore, did not need any sanction, and no question of satisfying any requirement as to any sanction arises.
The difficulty has arisen as to the last requirement specified in section 21, namely, that indicated by the words 'subject to like conditions '.
Section 18A of the main Act so far as relevant for the present purpose is in these terms: " If the Central Government is of opinion that. . (a). . . . . . (b) an industrial undertaking in respect of which an investigation has been made under section 15 is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest, the Central Government may, by a notified order, authorise any person or to take over the management of the undertaking Learned counsel for the petitioner formulated his argument in this way.
He said that the right to exercise the power conferred by section 18A arises only on two conditions being fulfilled, namely, (a) the existence of an industrial undertaking in respect of which an investigation had been made under section 15, and (b) the Central Government being of opinion that such an undertaking is being managed in a manner highly detrimental to the industry or to public interest.
It was said that in this case the second condition was not present when the order for amendment of the earlier order was made and therefore it is invalid.
I agree that the second condition was not present when the amending order was made.
The reason is this.
Section 18A contemplates the taking over of management of an undertaking by a person authorised by the Government.
It, therefore, contemplates a state of 1079 affairs in which the management is not in such a person.
It follows that it contemplates management in a manner highly detrimental to the industry or public interest by a person other than that appointed by the Government under the Act.
In this case at the 2 date of the amendment the management was in the person appointed by the Government by its earlier order of November 7, 1955, and, therefore, the Government could not at the date of the amending order have been of opinion that the management was by a person other than that appointed by it and such management was in a manner highly detrimental to the industry or to public interest.
In my view, however, when section 21 of the General Clauses Act makes the power to amend exercisable subject to the like conditions as in the main Act, it does not contemplate those conditions upon the fulfillment of which the right to issue the order arises under the main Act.
If this were so, the power of amendment conferred by section 21 would have been wholly redundant and unnecessary.
If the conditions upon the fulfillment of which the right to exercise the power arose under the main Act existed, then the Government could have instead of amending the order made a fresh order under section 14 of the General Clauses Act, if necessary, rescinding the earlier order.
Therefore, it seems to me that the provision in section 21 of the General Clauses Act that the power of amendment shall be exercisable subject to like conditions does not refer to conditions upon the existence of Which the right to exercise the power arises under the main Act.
In my view the conditions referred to in section 21 are the conditions to which the order issued under the main Act must be made subject.
Thus, in this case sub section 2 of section 18A provides that "any notified order issued under sub section (1) shall have effect for such period not exceeding five years as may be specified in the order".
The effect of this sub section is that the order made under section 18A must be subject to the condition that it cannot have effect for a longer period than 5 years.
When, therefore, an order once made under section 18A is sought to be amended with the 1080 aid derived from section 21 of the General Clauses Act, the amendment must observe the condition laid down in sub section
(2) of section 18A. Such amendment is subject to the conditions in the main Act.
The amendment cannot, therefore, extend the operation of the order beyond the period of five years mentioned in the main Act.
In the present case the amending order of November 7, 1956, complied with this condition and, therefore, it was properly made in compliance with the provisions of section 21 of the General Clauses Act.
For this reason, in my view the argument of the learned Counsel for the petitioner that the amending order was invalid must fail.
I, therefore, agree with the order proposed by section K. Das J. Petition dismissed.
| By a notified order dated November s, 1955, the Government of India took over the management of certain Sugar Mills under section 18A(i)(b) of the Industries (Development and Regulation) Act, 1951, for one year and vested it in a Controller.
This was preceded by an investigation under section 15 of the Act and the Central Government had materials before it to be of the opinion that the management was being conducted in a manner highly detrimental to the undertaking and to public interest.
On November 7, 1956, this order was amended extending the Controller 's management for a further period of two years.
It was contended on behalf of the petitioners that the requirement of section 18A(i)(b) of the Act not having been satisfied before the amending order was made, the amendment was invalid and that, in any event, the appointment of the same person as the authorised Controller was not bona fide.
Held, per section R. Das C.J., jafer Imam, section K. Das and Govinda Menon JJ.that section 18A of the Industries (Development and Regulation) Act, 1951, read with sections 15 and 16 of the Act and properly construed, leaves no doubt that the two conditions mentioned in cl.
(b) of sub section
(i) of section 18A, relating to investigation and mismanagement, must relate to a period when the management of the undertaking was legally vested in its owner and once they are found to exist and the management is taken over by the Government, the conditions continue to exist by their very nature till the management goes back to the owner; therefore, the amending order also fulfilled the same conditions subject to which the original order was made.
When a notified order under the section is sought to be amended by the application Of section 21 of the General Clauses Act, 'like conditions ' mentioned in the latter section, to which such order of amendment must be subject, are the two conditions relating to investigation and mismanagement mentioned ins.
18A(i)(b) of the Industries (Development and Regulation) Act.
1053 Strawboard Manufacturing Co. vs Gutta Mill Workers ' Union ; , held inapplicable.
The appointment of a suitable person as the Controller rests entirely with the Central Government and unless an appointment can be shown to have been made for any ulterior purpose contrary to what the Statute has in view, its bona fides is not open to question.
Consequently, in the instant case, both the original notification and its amendment were valid in law.
Per Sarkar J. 'Like conditions ' mentioned in section 21 of the General Clauses Act, when applied to section 18A of the Industries (Development and Regulation) Act, cannot mean the two conditions mentioned in cl.
(b) of sub section
(1) of that section on the fulfillment of which the Central Government has the right to issue a notification, but must mean the condition mentioned in sub section
(2) of that section, subject to which alone the right to issue a notification can be exercised, namely, that a notified order cannot have effect for more than five years and, consequently, the amending order in question which satisfied that condition must be valid in law.
|
Summarize this legal judgement text concisely | Appeal No. 118 of 1955.
Appeal from the judgment and order dated May 26, 1954, of the P.E.P.S.U. High Court in Misc.
Case No. 31 of 1953.
G. N. Joshi and R. H. Dhebar, for the appellant.
The respondent did not appear.
May 17.
The Judgment of the Court was delivered by 149 1162 KAPUR J.
This is an appeal under certificate of the Pepsu High Court and the question for decision relates to the applicability of the Indian Incometax Act, 1922, to the erstwhile Pepsu area in the years of assessment 1948 49 and 1949 50.
The assessee company (the respondent before us), was incorporated in the Patiala State and had its registered office at Surajpur in Pepsu.
For the year of assessment 1948 49 the company failed to deduct from out of the remuneration paid to its managing agents, who were non residents, the income tax and the supertax which, it, under the law, was required to do.
It also paid to its auditors auditing fees and from out of this sum also it did not deduct the income tax and super tax under the provisions of the Patiala Incometax Act.
The two sums in dispute were Rs. 59,787 1 0 and Rs. 581, 40 respectively.
For the assessment year 1949 50 also the assessee company failed to make the deduction from the remuneration paid to its managing agents and the income tax deductible was Rs. 52,484 14 0 and super tax Rs. 21,611 6 0.
The Income tax Officer took action against the assessee company under sections 18(3A) and 18(7) of the Patiala Income tax Act and consequently issued two demand notices for the amounts above mentioned.
Against this order of the Income tax Officer the assessee company took an appeal to the Appellate Assistant Commissioner who reduced the amount demanded but did not decide the question whether the assessee company was bound to make the deductions or not.
The assessee company then appealed to the Income tax Appellate Tribunal and it held that under section 18(7) of the Patiala Incometax Act no order was required to be passed by the Income tax Officer and that no appeal lay to the Appellate Assistant Commissioner against the order under section 18(3A) as there was no provision for it under the Patiala Income tax Act.
Before the Tribunal it was contended that at the time when the appeals were decided by the Appellate Assistant Commissioner, the Patiala Income tax Act had ceased to be in force and therefore the appeals were sustainable under the provisions of the Indian Income tax Act which had been 1163 extended to all Part B States by section 13 of the Indian Finance Act of 1950 (XXV of 1950) but this contention was repelled and the Tribunal held that the only remedy for the assessee company was to take a revision under section 33 of the Patiala Income tax Act to the Commissioner.
The Tribunal at the request of the assessee company referred the following three questions for the opinion of the High Court: (1)Whether the appeals before the Appellate Assistant Commissioner fell to be decided in accordance with the provisions of the Patiala Income tax Act or the Indian Income tax Act ? (2)Whether the appeals before the Appellate Tribunal fell to be decided in accordance with the provisions of the Patiala Income tax Act or the Indian ]Income tax Act ? (3)Whether, on the assumption that the assessee company was not bound to deduct tax, its appeals before the Appellate Assistant Commissioner were competent in law ? The High Court decided that in regard to the assessment year 1948 49, the law applicable was the Patiala Income tax Act and therefore no appeal Jay to the Appellate Assistant Commissioner but in regard to the assessment year 1949 50 the Indian law became applicable and therefore the order of the Income tax Officer was appealable.
The Revenue have come up in appeal under a certificate of the High Court and the submission is that to the assessment year 1949 50 also the Patiala Income tax Act applied and not the Indian Income tax Act and therefore the order of the Incometax Officer was not appealable.
In order to resolve the controversy, reference may be made to certain provisions of the Indian Income tax Act, 1922, and the Finance Act of 1950.
Section 13 of the Finance Act provides: section 13 " If immediately before the Ist day of April, 1950, there is in force in any Part B State other than Jammu and Kashmir or in Manipura, Tripura or Vindya Pradesh or in the merged territory of Cooch Behar any law relating to income tax or super tax or tax on profits of business, that law shall cease to have effect except 1164 for the purpose of the levy, assessment and collection of income tax and super tax in respect of any period not included in the previous year for the purpose of assessment under the Indian Income tax Act, 1922, for the year ending on the 31st day of March, 1951, or.
for any subsequent year or, as the case maybe, the levy, assessment and collection of tax on profits of business for any chargeable accounting period ending on or before the 31st day of March, 1949 ; " Section 13 of the Finance Act of 1950 shows that the Indian Income tax Act became applicable to the assessees residing, in any Part B State as from the assessment years 1950 51 or the accounting year 1949 50.
The provisions of section 2(14A) of the Indian Income tax Act, 1922, show that the Act became applicable to Part B States as from April 1, 1950.
The relevant provisions of this section are: S.2(14A) " taxable territories " means (d) as respects any period after the 31st day of March, 1950, and before the 13th day of April, 1950, the territory of India excluding the State of Jammu and Kashmir and the Patiala and East Punjab States Union.
Provided that the " taxable territories " shall be deemed to include (b) the whole of the territory of India excluding the State of Jammu and Kashmir (i). . . . . . . (ii) as respects any period after the 31st day of March, 1950,for any of the purposes of this Act and (iii) as respects any period included in the previous year for the purpose of making any assessment of the year ending on the 31st day of March, 1951, or for any subsequent year; It will be noticed that the language used in section 2(14A) proviso (b) (iii) is the same as the language under section 13 of the Finance Act of 1950.
The effect of the Finance.
Act of 1950 is that as regards assessment for the year ending March 31, 1951, the Indian Income tax Act 1165 would be applicable accounting year being the year ending March 31, 1950, and for any assessment year previous to that the Patiala Income tax Act would be applicable.
The effect of section 2(14A) proviso (b) (ii) & (iii) is that taxable territories would comprise the whole of India excluding the State of Jammu and Kashmir as respects any period included in the previous year for the purpose of making an assessment for the year ending March 31, 1951, i.e., for the assessment year 1950 51 or the accounting year 1949 50.
The application of the Indian Income tax Act as a result of section 13 of the Finance Act of 1950 was decided in The Union of India V. Madan Gopal Kabra (1) which was a case from Rajasthan where there was no income tax in the previous year but the assessee was sought to be assessed for the year 1950 51 under the Indian Income tax Act.
It was held 'that under sub cl.
(1) of cl.
(b) of the proviso to section 2(14A) the whole of the territory of India including Rajasthan would be deemed " taxable territory " for the purpose of section 4A of the Indian Income tax Act " as respects any period " meaning any period before or after March 31, 1950, and the assessee was therefore ' liable to income tax.
Patanjali Sastri, C.J., who delivered the judgment of the court said: " A close reading of that provision will show that it saves the operation of the State law only in respect of 1948 49 or any earlier period which is the period not included in the previous year (1949 50) for the purposes of assessment for the year 1950 51.
In other words, there remained no State law of income tax in operation, in any Part B State in the year 1949 50." This passage from the judgment supports the contention of the appellant that as regards income of the accounting year 1949 50 or the year of assessment 1950 51 no State law of income tax was operative in any Part B State.
It appears that the error which has crept in the judgment of the High Court has been due to misreading the year 1949 50 as being assessment year and not accounting year.
In another case D. B. Madhavakri shnaiah vs The Income Tax Officer (1) (1) ; , 552.
(2) ; 150 1166 section 13 of the Finance Act of 1950 was similarly interpreted.
Therefore both for the assessment years 1948 49 and 1949 50 the law applicable would be the Patiala Income tax law and not the Indian Income tax Act and consequently no appeal against the order of the ' Income tax Officer was competent.
The answers to the questions would be as follows:Questions Nos. 1 & 2: The Patiala Income tax Act was in operation and no appeals lay.
Question No. 3 In the negative.
The appeal is, therefore, allowed but as the respondent I company has not appeared and contested the appeal, there will be no order as to costs, in this court.
Appeal allowed.
APPENDIX Reference to the memory of Shri N. Chandrasekhara Aiyar, Ex Judge of the Supreme Court of India, by the Judges and members of the Bar of the Supreme Court of India, assembled at a meeting on April 1, 1957.
Shri section R. DAS, Chief Justice of India.
Solicitor General, it is with a heavy heart that I mention to you and the members of the Bar the passing away of Nagapudi Chandrasekhara Aiyar, who was an esteemed colleague and a very dear friend.
The melancholy news reached me yesterday evening.
Nagapudi Chandrasekhara Aiyar was born on January 25, 1888.
He was educated at Conjeevaram, Tirupati and Madras and was a student of the Christian College and the Madras Law College.
During his college days he was a keen sportsman, interested chiefly in Cricket.
This interest in sport he kept up even after he became a District Judge.
After a brilliant academic career, he was enrolled as a vakil of the Madras High Court in 1910.
He worked in the chambers of Dr. C. P. Ramaswami Aiyar whom he used to refer to as his master and for whom he had very high regard.
He picked up an extensive practice on the Original Side of the Madras High Court.
In July 1927 he became the City Civil Judge and in December of the same year he was appointed as a District and Sessions Judge.
He was raised to the Madras High Court Bench in July 1941 and worked there as a Judge until January 25, 1948.
The State utilised his mature experience in different spheres.
He was appointed as a member of the All India Industrial Tribunal (Bank Disputes).
He was later appointed as a member of the Indo Pakistan Boundary Disputes Tribunal.
Shortly thereafter he was appointed a Judge of this Court and was sworn in on September 23, 1950.
Immediately after his retirement from this Court on January 24, 1953, he was chosen as the Chairman of the Delimitation Commission.
Towards the end of his term in this Court he fell ill very 151 1168 seriously.
He responded to medical treatment and the devoted nursing of his good wife brought him round.
That illness, however, had undermined his otherwise robust health and had left him weak.
But undaunted by his physical ailments and in a true spirit of service he moved about from place to place all over India and successfully completed the work of the Commission.
Just at that time Chief Justice Mukherjea fell ill and on his advice Nagapudi Chandrasekhara Aiyar was called upon by the President to assist this Court as an ad hoe Judge.
This burden he cheerfully accepted and efficiently discharged to the satisfaction of all concerned.
Even after this he had to undertake, as Chairman, further work of delimitation consequent upon the re organisation of the States.
Nagapudi Chandrasekhara Aiyar was well grounded in legal principles.
To his legal acumen he added his deep insight into human nature and psychology and a robust common sense.
On all intricate legal problems presented before the Court he brought to bear a mental freshness, which often contributed to their solution.
The judgments written and delivered by him, which will be found reported in the Law Reports, will bear testimony to his legal learning and human sympathies.
In his behaviour towards the members of the Bar he was always kind and considerate.
Towards his colleagues he was systematically courteous.
Nagapudi Chandrasekhara Aiyar 's interest in life was not confined to law or within the cloistered compound of a court of law.
While he was a sound lawyer and a learned Judge, he was also a man of great erudition in Sanskrit and English literature.
He was, on the one hand, the editor of the latest edition of Mayne 's Hindu Law, he was, on the other hand, the author of " Anjaneya " which he had dedicated to his master and of Valmiki Ramayana.
For those of us, who came into close contact with him, his ready quotations from our ancient scriptures and literary works of our classical poets were indeed a matter of joy.
The Convocation addresses delivered by him were thoughtful and incisive, 1169 Nagapudi Chandrasekhara Aiyar above all was a warm hearted man, a man of genial temperament and a very friendly person.
His bubbling cheerfulness and refreshing sense of humor inevitably dispelled dullness and he had the kindly knack of putting everybody at ease.
He was a lively conversationalist, full of sparkling humor, and cheerful bon homie.
Those of us, who had the privilege of coming close to him, will always miss the glow and the warmth of his kind friendliness.
The passing away of an erstwhile esteemed colleague and a friend certainly brings to one 's mind a sense of loss and sadness.
We remember with gratitude the consideration, courtesy and kindness that we always received from him.
We request you to convey to his companion in life our sense of admiration for the constant care and devoted attention which she daily bestowed on him and our heartfelt sympathy for her in her dark and dismal day of sorrow.
We pray with her for the peace of his soul.
Shri C. K. DAPHTARY, Solicitor General of India.
My Lord, the news of the passing away of Shri Chandra.
sekhara Aiyar has come to most of us as an unexpected shock.
After his miraculous and seemingly complete recovery from illness a few years ago, it was hoped that he would be spared for many years to come, to continue his distinguished services to the State.
When he came to the Supreme Court Bench, he had behind him a record of work in the High Court and in other fields of public life and had won that admiration which is the just due of one who reaches the highest rung of the judicial hierarchy.
When he left he had won also respect and confidence by his forthright and robust dealing with problems uncluttered by oversubtlety.
He won too, affection by his hearty good fellowship and kindliness which embraced all alike, senior, junior and beginner.
By his death, the law has lost a notable personality and the state a citizen of outstanding quality, who laboured in its service, and had death not snatched him away would have continued to render valuable service.
1170 One behalf of the Bar and myself, I associate myself with the expression of regret and the tribute to Shri Chandrasekhara Aiyar 's memory which your Lordship the Chief Justice has so feelingly expressed.
Reference to the memory of late Justice ' Shri P. Govinda Menon, Judge of the Supreme Court of India by the Judges and members of the Bar of the Supreme Court of India, assembled at a meeting on October 17, 1957.
Shri section R. DAS, Chief Justice of India.
Additional Solicitor General and Mr. Vice President of the Supreme Court Bar Association, we have met here again under the shadow of death.
All of you must have read in the papers of the sudden demise of Mr. Justice P. Govinda Menon.
When I was with him yesterday afternoon, I never thought that his end was so near.
P. Govinda Menon was born in September 1896.
He received his early education in Ganpat High School, then in the Zamorin 's College, Kozhikode, and then in the Presidency College and the Law College in Madras.
He was enrolled as an Advocate in September 1920 and joined the Madras Bar and practised before the High Court.
In December 1940 he was appointed Crown Prosecutor.
He proceeded to Japan in April 1946 as the Indian representative before the International Military Tribunal for the Far East at Tokyo.
He acted as the Chief Indian Prosecutor from April to September 1946.
He ' was elevated to the Bench of the Madras High Court in 1947 and was there just over nine years before he was elevated to this Court in August 1956.
As a practitioner at the Bar, as Crown Prosecutor and as a Judge P. Govinda Menon acquitted himself with remarkable success.
His suavity of manners and his sweet and amiable disposition endeared him to the members of the Bar and to the Judges.
He had a wide circle of friends both at the Bar and outside the Bar.
As a Judge of the Madras High Court he presided over almost all the divisions of the Court and had to deal with various typos of cases, civil and 1171 criminal.
His work as Crown Prosecutor brought him valuable experience and insight into human nature and helped him to acquire a firm grasp of the principles of criminal law and jurisprudence.
While upholding the dignity and the majesty of the law, he had the capacity and courage of tempering justice with mercy.
He did not permit mere technicalities or senseless formalities to stand in the way of dispensing justice.
He also heard and disposed of heavy civil appeals and revisions.
He had a deep knowledge of Hindu Law and in particular, the Marumakattayam and Aliyasantana branches of it.
Indeed, the chapters on those subjects in the latest edition of Mayne 's Hindu Law were written by him.
He was generally helpful to the members of the Bar and in particular, to the junior section of it, who always would appear before him and make their submissions without fear or nervousness.
He was a man of studious habits and took interest in literary and cultural subjects.
When he came to this Court, he brought with him his mature judicial experience and learning and his sense of justice and fairplay.
My colleagues and I, who sat with him in Court, had his assistance and advice in dealing with matters coming up for decision before us. 'He was uniformly courteous lo the members of the Bar as well as to his colleagues on the Bench.
He was a conscientious worker, which is exemplified by the fact that although he felt definitely out of sorts for about a week before his death, he did not take rest lest the work in Court should be dis located and his colleagues and the members of the Bar engaged in the part heard cases should be inconvenienced.
Although I assured him that all arrangements had been made for carrying on the Court work, he kept on worrying for he did not feel at ease in his mind.
It was certainly a strain which, I am afraid, told upon his health.
My colleagues and 1, therefore, mourn the passing away of a sound lawyer, a good Judge, a loyal friend and a conscientious worker ' We shall be grateful if you will convey through his son, who fortunately was at his bedside at the time of his 1172 death, our sincerest condolences to the members of the bereaved family.
Shri H. N. SANYAL, Additional Solicitor General of India.
My Lords, the Indian Bar most respectfully associates itself with what has fallen from Your Lordship.
It expresses profound sympathy for the members of the family of Mr. Justice Menon.
It expresses its deepest sorrow and grief at the sudden death of Mr. Justice Menon.
In 1920, he became an Advocate of the Bar at Madras and within a short time he became one of its leading members.
In 1940, he was appointed Crown Prosecutor in Madras.
His name is remembered and will always be remembered that he acted with utmost fairness in conducting cases.
In 1946, he went to Tokyo on behalf of India.
There he discharged his duties with great ability.
He became a Judge in 1947 and within a short time he made himself very popular and won the respect and admiration of the profession.
Thereafter he came here as a Judge of the Supreme Court.
He had been here only for a short time but in this short time he had made a tremendous impression on the members of the Indian Bar by his unfailing courtesy and his keen desire of doing justice.
My Lords, Mr. Justice Menon was equipped with all the qualities which are essential for the discharge of the great judicial duties of the highest Tribunal in India.
In these days, when criticisms are so often made I feel it is my duty to point out that here was a Judge who died in harness and never spared himself in spite of illness for one day and up to the last moment when it was physically impossible for him to discharge the heavy duties of his office, he attended the Court and gave his very best for the sacred cause, that is to say, the administration of justice.
On behalf of the Indian Bar, I am offering our condolence and heart felt sym pathy to the members of his family, to his friends and to everyone near and dear to him.
Shri N. C. CHATTERJEE, Vice President, Supreme Court Bar Association.
My Lords, on behalf of the members of the Supreme Court Bar Association, it is my duty to voice the sentiments and feelings of the 1173 members of the Supreme Court Bar on this solemn occasion.
The unexpected and sudden demise of a great and good Judge is a great loss to this Court.
It ' is also a great loss to the State and to the Nation.
The Country has been deprived by the cruel hand of death of the services of an eminent and upright Judge, who maintained a very high reputation as a Judge of one of the most important High Courts of India and also a Judge of this august Tribunal.
As members of the legal profession we look upon an independent Judiciary as a symbol of sovereignty.
If there is one bulwark that guards the freedom of the average citizen, it is the Courts of Justice.
We are pledged to a strict adherence of the Rule of Law and in these days, when the work of the Judiciary is not properly appreciated, it gives us some comfort to remember that there are men like Mr. Justice Govinda Menon in India who sacrificed his health and life and fell a victim to the sacred cause of Law and Justice.
Those of us who had the privilege of enjoying his friendship should remember with gratitude that he was much greater as a man.
Unostentatious, gentle and kind hearted he won the affection of all who came into contact with him.
I am happy to bear testimony to his kindness, sympathy and consideration for myself and for many of my colleagues of the Bar.
A few years back when I had the privilege of associating myself with an important Bar function in South India, I discovered that Mr. Justice Menon 's courtesy, sweet temper and amiable disposition had endeared himself not only to his colleagues on the Bench but also to the members of the Bar.
I am happy to say that he maintained the same reputation as a Judge.
of this Court.
The Law Reports of Madras bear eloquent testimony to his erudition, his clear mind and his keen sense of justice.
Those of us, who had the privilege to appear in his Court, would bear testimony to his grasp of principles and the quiet and courteous attention he has bestowed on the cases argued before him.
His 1174 judgments were not mere collections of precedents but he dealt with principles with clarity and precision.
The highest tribute that I would like to pay to his memory to day is that the juniormost member of the Bar never felt uneasy for a single moment before him.
On behalf of the Supreme Court Bar we offer our sincere condolences to the members of the bereaved family.
We mourn his death and we pay our homage and tribute of appreciation and affection to the memory of this great Judge and this great gentleman.
May his soul rest in peace.
| The respondent was a company incorporated in the former Patiala State with its registered office in the territory of Pepsu, a Part B State.
For the assessment years 1948 49 and 1949 50 in respect of the amounts of income tax and super tax which it failed to deduct from out of the remuneration paid to its managing agents, the Income tax Officer took action under the provisions of section 18 of the Patiala Income tax Act.
The Act did not provide for an appeal against the orders of the Income tax Officer under that section and the question for determination was whether an appeal lay under the provisions of the Indian Income tax Act, 1922, which was extended to all Part B States with effect from April 1, 1950, by section 13 of the Finance Act, 1950, and section 2(14A) of the Indian Income tax Act, 1922: Held, that the result of the extension of the Indian Income tax Act, 1922, to Part B States was that that Act was applicable to the assessment years 1950 51 and subsequent years and that for the assessment years 1948 49 and 1949 50 the law applicable was the Patiala Income tax Act.
Accordingly, an appeal against the order of the Income tax Officer in question was not competent.
The Union of India vs Madan Gopal Kabra, ; and D. R. Madhavakyishnaiah vs The Income Tax Officer, ; , followed.
|
Summarize this legal judgement text concisely | Appeal No. 153 of 1954.
Appeal by special leave from the judgment and order dated January 15, 1952, of the Bombay High Court in Income Tax Application No. 54 of 1951.
R. J. Kolah, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellant.
C. K. Daphtary, Solicitor General of India, G. N. Joshi and R. H. Dhebar, for the respondent.
May 22.
The Judgment of the Court was delivered by KAPUR J.
This is an appeal by the assessee by special leave and the question for decision is whether questions of law, if any, arise out of the order of the Appellate Tribunal.
The facts giving rise to the appeal are that the petitioner company was incorporated on July 29,1924, as an investment company, the objects of which are set out in el.
III of the memorandum of association and more particularly in sub cls.
1, 2, 15 and 16 of that clause.
The assessment years under review.
are 1943 44 to 1948 49, excepting the year 1947 48.
According to its petition made in the High Court of Bombay, the petitioner company dealt with its assets as follows: "The Petitioner Company purchased during the period 1st July 1925 to 30th June 1928 shares of the value of Rs. 1,86,47,789/ major portion of which was comprised of shares in the Sassoon Group of Mills.
During the year ended 30th June 1929 the Petitioner Company promoted two companies known as Loyal Mills Ltd. and Hamilton Studios Ltd. and took over all their shares of the value of Rs. 10 1/2 lacs.
In the year 1930, the Petitioner Company purchased shares of Rs. 1,33,930.
During the period of 9 years from 1st July 1930 to 30th July 1939 no purchases were made with the exception of a few shares of Loyal Mills Ltd., 51 taken over from the staff of E. D. Sassoon & Co. Ltd., who retired from service.
In the year ended 30th June 1940 reconstruction scheme of the Appollo Mills Ltd., took place under which debentures held by the Petitioner Company in the Appollo Mills Ltd., were redeemed and the proceeds were reinvested in the new issue of shares made by the Appollo Mills Ltd. Out of the purchases of the value of Rs. 2,794 made by the Petitioner Company during the year ended 30th June 1941 Rs. 2,000/ was the value of shares of the Loyal Mills Ltd., taken over from the retiring staff.
In the year ended 30th June 1943 the Petitioner Company took over from the David Mills Co. Ltd., shares of The Associated Building Co., of the value of Rs. 56,700/ .
After this there were no purchases at all to this date excepting purchases of the value of Rs. 34,954 during the year ended 30th June, 1946.
" The sales are contained in para 3 (b) which may be quoted: " In relation to the purchases made by the Petitioner Company as stated above no appreciable sales of shares were made during the period 29th July 1924 to 30th June 1942, the sales made in the year ended 30th June 1929 of the value of Rs. 1,29,333 included shares of the value of 'Rs. 45,000 in the Loyal Mills Ltd., sold to the members of the staff and shares of the value of Rs. 83,833 representing sterling investments handed over to the creditors of the Petitioner Company in part repayment of the loan taken from them in the year ended 30th June 1931, shares of the value of Rs. 7,48,356 were handed over to the creditors in payment of the loan granted by them.
From the year ended 30th June 1943 E. D. Sassoon & Co. Ltd., started relinquishing the managing agencies of the various Mills under their agency and the shares held by the Petitioner Company in the Sassoon Group of Mills were handed over to the respective purchasers of the Mills agencies.
" This gives the history of the acquisition and disposal of shares and also how the various transactions were entered into and why.
Prior to 1940 the assessee company made a claim every year for being treated as 52 a dealer in investments and properties but this contention was consistently repelled and upto the assessment year 1939 40 the assessee company was assessed on the basis of being an investor but it appears that for the assessment year 1940 41 and the two following years 1941 42 and 1942 43 the Department accepting the plea of the assessee company treated it as a dealer in shares, securities and immovable properties and assessed it on that basis.
For these years and for the assessment year 1943 44 the company made its Return on that basis.
But after the Return had been filed for the year 1943 44 the assessee company withdrew its Return and filed a revised Return on March 7, 1944, contending that it was not a dealer but merely an investor.
Along with the Return it filed a letter dated March 6, 1944, in which inter alia it stated: "The Return of Total Income which was submitted with the Company 's letter of 25th May 1943 was prepared in conformity with the ruling of the Income.
tax Officer in the 1940 41 assessment that the company was to be assessed as a dealer in investments.
Since that Return was submitted the Central Board of Revenue has decided that the Company is an Invest ment Holding Company and accordingly an amended Return of Total Income under Section 22 (1) of the Indian Income tax Act is submitted herewith on which the assessment for 1943 44 may be based, as on this particular question the company obviously cannot have one status for Excess Profits Tax and another for Income tax.
" It was also contended that it never carried on any business in the purchase or sale of shares, securities or properties and therefore prayed that in view of the order of the Central Board of Revenue made on its application under section 26(1) of the Excess Profits Tax Act it should be assessed for income tax purpose as an investor and not as a dealer.
The Income tax Officer rejected this plea and " held the investments as the stock in trade of its business therein which it carried on during the 'previous year ' also ".
The company took an appeal to the Appellate Assistant Commissioner which was dismissed and the 53 order of the Income tax Officer upheld.
It then appealed to the Income tax Appellate Tribunal, Bombay, where the same contentions were raised but were, repelled.
The Tribunal said: " The company having itself raised the point in all the prior years that it was a dealer in investments and properties, it would appear to be difficult to understand why the company now seeks to get the position changed and desires the Income tax Officer to treat it as if it was not dealing in shares, securities and immoveable properties." The Tribunal after holding that the company was under no misapprehension when it claimed to be a dealer in investments in the earlier years because it was then always incurring losses and that the present contention was raised because it made "substantial profits" said: "but we have no doubt that, according to the company 's memorandum of association and its own assertions made all along in the past, the assessee company is a 'dealer in investments and properties and the income arising to it on the sale thereof has been rightly held by the Income tax Officer to be business profits liable to tax under the ordinary provisions of the Income tax Act." Thus the grounds on which the case was decided against the assessee were (1) that the assessee claimed to be a dealer or an investor according as it incurred losses or made profits and (2) that because of the objects contained in the memorandum of association and because of its assertion made in the past as being a dealer the assessee could not be held to be an investor.
The company then applied to the Appellate Tribunal under section 66(1) of the Indian Income tax Act for a reference of the following questions for the opinion of the High Court: "(1) Whether on the facts and in the circumstances of the case the assessee company can rightly be treated as a dealer in investments and properties; and 54 (2)Whether the profits and losses arising from the sale of shares, securities and immoveable properties of the assessee company can be taxed as business profits.
" This prayer was rejected because in the opinion of the Tribunal no question of law arose out of its order.
It said : " The Tribunal did not decide this point merely because the company 's memorandum of association gave power to the company to deal in investments and properties, but it was actually found that the company had dealt in investments and properties throughout and had also all along in the past asserted that it was a dealer in investments and properties.
" This was more than it had said in its appellate order.
The assessee company then made an application under section 66(2) of the Indian Income tax Act for requiring the Appellate Tribunal to state the case and refer it to the High Court but this application was dismissed, and then the company obtained special leave to appeal to this Court.
Counsel for the assessee company contends that the questions of law arise out of the order of the Tribunal because the Tribunal has ignored the documentary evidence produced before it, has based it decision on irrelevant matters, has failed to consider crucial facts and has misdirected itself by assuming that the petitioner was a dealer from the very beginning which was contrary to the documents produced before it.
Section 66 (1) of the Income tax Act (hereinafter termed the Act) provides that any assessee may require the Appellate Tribunal to refer to the High Court any question of law arising out of its appellate order and it is the statutory duty of the Appellate Tribunal to draft the statement of the case and refer the question of law arising out of such order to the High Court but the primary requirement is that there must be a question of law arising out of the order.
Should the Tribunal refuse to state the case as required under section 66(1) of the Act on the ground that no question of law arises, the assessee has the right to apply to the High 55 Court requiring the Appellate Tribunal to state a case and refer it to the High Court but again the essential consideration is the existence of a question of law.
arising out of the order.
To draw a line between what is a question of law and what is a question of fact is not always easy.
It is difficult to define this distinction which has given rise to a number of decisions, which it will be useful to discuss at this stage.
In Stanley vs Gramophone and Typewriter, Limited(1) the Master of the Rolls discussed this question as follows : " It is undoubtedly true that, if the Commissioners find a fact, it is not open to this court to question that finding unless there is no evidence to support it.
If, however, the Commissioners state the evidence which was before them, and add that upon such evidence they hold that certain results follow, I think it is open, and was intended by the Commissioners that it should be open, to the court to say whether the evidence justified what the Commissioners held.
" These observations were explained by Hamilton J. in The American Thread Co. vs Joyce (2) as implying that by giving the material on which their finding was based the Commissioners were inviting the court to determine whether on that material they could reason.
ably arrive at the conclusion on which they did arrive.
The House of Lords on appeal categorically confirmed that the Courts had no jurisdiction over conclusions of fact except to see whether there was evidence to justify them and that proper legal principles had been applied.
Lord Clerk in Californian Copper Syndicate vs Harris (3) has laid down the test in the following words: " the question to be determined being Is the sum of gain that has been made a mere enhancement of value by realising a security, or is it a gain made in an (1) , 374.
(2) (3) , 166.
56 operation of business in carrying out a scheme for profit making.
" In that case the objects set out in the memorandum of association pointed distinctly to a highly speculative business and the mode of actual procedure of the company was also directed in the same direction.
Taking into consideration the course of dealing of the shares by the company and also that the turning of investment to account was not merely incidental but was an essential feature of the business, speculation being among the appointed means of the company 's business the court came to the conclusion that the company was carrying on a business.
The Lord President in a Scottish case Cayzer, Irvine & Co., Ltd. vs Commissioners of Inland Revenue (1) stated the grounds on which the court can interfere with the finding of the Commissioner as follows: " I think we have jurisdiction to entertain the question at law, which is whether the majority of the Commissioners were warranted on the evidence in determining as they did.
At the narrowest it is always open to this Court in a Stated Case to review a finding in fact on the ground that there is no evidence to support it." Lord Parker in Farmer vs Trustees of the Late William Cotton (2) after referring to the difficulty of distinguishing between a question of fact and a question of law observed: " Where all the material facts are fully found, and the only question is whether the facts are such as to bring the case within the provisions properly construed of some statutory enactment, the question is one of law only.
" But this statement of the law was considerably modified in Inland Revenue Commissioners vs Lysaght (3) where it was held that if the issue before the court could be described as a "question of degree" the conclusion must be a question of fact.
(1) , 501.
(2) [19I5] A.C. 922,932.
(3) 57 The Commissioners of Inland Revenue vs The Korean Syndicate, Ltd. (1) was a case where a syndicate was registered for the purpose of acquiring and working concessions and turning them to account, and of investing and dealing with monies not immediately required.
The syndicate acquired part of a right to a concession in Korea and then under an agreement described as a "lease", in consideration of receiving sums of money termed "royalties" but which were really percentages of profits made by assignee company, assigned the lease to a development company.
Some moneys which were received from sale of certain shares obtained by the syndicate in exchange for shares originally acquired in the mining company were deposited in a bank.
The activities of the company were during the relevant period confined to receiving the bank interest and royalties, distributing the amount amongst its shareholders as dividend.
The question for decision was whether the syndicate was carrying on a business and was therefore liable to excess profits duty.
From these facts it was concluded that they were carrying on a business.
Atkinson L.J. pointed out at p. 204 that merely because a company is incorporated it does not necessarily follow that it is carrying on business.
Its memorandum only shows that the company was incorporated for a particular purpose but taking into consideration the surrounding circumstances and facts of the case it was concluded that the company was carrying on a business.
In Great Western Railway Company vs Bater (2) the question for decision was whether a clerk held a public office to fall within Sch.
It was held that the determination by the Commissioners of questions of pure fact are not to be disturbed unless it should appear that there was no evidence before them upon which they, as reasonable men, could arrive at the conclusion which they came to.
Lord Atkinson said: " What I have many times in this House protested against is the attempt to secure for a finding on a mixed question of law and fact the unassailability (1) (2) , 244. 8 58 which belongs only to a finding on questions of pure fact.
This is sought to be affected by styling the finding on a mixed question of law and fact a finding of fact.
" According to the dictum of Lord Wrenbury the question for the Court was whether on the facts found and stated by the Commissioners the clerk held the office within the meaning of the Act which was a question of law.
In Lysaght vs The Commissioners of Inland Revenue (1) the question for decision was whether the assessee was a resident and ordinarily resident in United Kingdom in the year of assessment.
Lord Buckmaster said:. " The distinction between questions of fact and questions of law is difficult to It is, of course, true that if the circumstances found by the Commissioners in the Special Case are incapable of constituting residence their conclusion cannot be protected by saying that it is a conclusion of fact since there are no materials upon which that conclusion could depend.
But if the incidents relating to visits in this country are of such a nature that they might constitute residence, and their prolonged or repeated repetition would certainly produce that result, then the matter must be a matter of degree; and the determination of whether or not the degree extends so far as to make a man resident or ordinarily resident here is for the Commissioners and it is not for the Courts to say whether they would have reached the same conclusion.
" Jones vs Leeming(2) was a case where the respondent with three other persons obtained an option to purchase a rubber estate in the Malay Peninsula.
That estate along with another was sold at a profit.
The Commissioners found that the respondent had acquired the property with the sole object of turning it over again at a profit and at no time had he the intention of holding it.
This transaction was held not to be in the nature of trade nor the profits arising therefrom in the nature of income but they were accretions to (1) , 533, 534.
(2) 59 capital and therefore not subject to tax under Case VI of Sch.
In Cameron vs Prendergast (1) the following test was laid down by Viscount Maugham: " Inferences from facts stated by the Commissioners are matters of law, and can be questioned on appeal.
The same remark is true as to the construction of documents.
If the Commissioners state the evidence. . . . . . . . it is open to the court to differ from such holding.
" In Bomford vs Osborne (2) a farm was working as a mixed farm but as a single unit.
The question for decision was whether the assessment could be apportioned one part being assessed as a farm and the other as a nursery.
Viscount Simon laid down the test in the following words: " No doubt there are many cases in which Commissioners, having had proved or admitted before them a series of facts, may deduce therefrom further conclusions which are themselves conclusions of pure fact.
In such cases, however, the determination in point of law is that the facts proved or admitted provide evidence to support the Commissioner 's conclusions.
" It was also held that this question was a mixed question of law and fact.
Du Parcq J. in J. H. Bean vs Doncaster Amalgamated Collieries Ltd.(3) held the following to be the test for determining whether the question is one of fact or law: " Unless the Commissioners, having found the relevant facts and put to themselves the proper question, have proceeded to give the right answer, they may be said, on this view, to have erred in point of law.
If an inference from facts does not logically accord with and follow from them, then one must say that there is no evidence to support it.
To come to a conclusion which there is no evidence to support is to make an error in law." (1) , 40. (3) , 284.
(2) , 430.
60 In Edward vs Bairstow (1) the respondent embarked upon a joint venture to purchase a spinning plant with the object of holding it for quick resale and at a profit.
The General Commissioners found that there was no venture in the nature of trade but the court held that the facts found led inevitably to the conclusion that the transaction was a venture in the nature of trade and that the Commissioners ' inference to the contrary was erroneous.
Lord Simonds observed at p. 54 that: " To say that a transaction is, or is not, an adventure in the nature of trade is to say that it has, or has not, the characteristics which distinguish such an adventure.
But it is a question of law, not of fact, what are those characteristics. .
At p. 55 Lord Radcliffe pointed out: " I think that it is a question of law what meaning is to be given to the words of the Income Tax Act "trade, manufacture, adventure or concern in the nature of trade" and for that matter what constitutes "profits or gains" arising from it.
Here we have a statutory phrase involving a charge of tax, and it is for the courts to interpret its meaning, having regard to the context in which it occurs, and to the principles which they bring to bear on the meaning of income.
" and then at p. 57 laid down the test in the following words: " When the case comes before the court, it is its duty to examine the determination having regard to its knowledge of the relevant law.
If the case contains anything ex facie which is bad law and which bears on the determination, it is, obviously, erroneous in point of law.
But, without any such misconception appearing ex facie, it may be that the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal.
" The dicta of Warrington L.J. in Cooper vs Stubbs (2) that intervention by a court is proper only: (1) ; (2) , 768, 772.
61 missioners have come to their conclusion without evidence which should support it, that is to say, have come to a conclusion which on the evidence no reason ' able person could arrive at, or have misdirected themselves in point of law." and of Atkin L.J. that: to one conclusion of law. " were quoted with approval by Lord Radcliffe at pp.
56 and 57.
A review of these authorities shows that though the English decisions began with a broad definition of what are questions of law, ultimately the House of Lords decided that a "matter of degree" is a question of fact and it has also been decided that a finding by the Commissioners of a fact under a misapprehension of law or want of evidence to support a finding are both questions of law.
The Privy Council in Commissioner of Income tax vs Laxminarain Badridas (1) said: " No question of law was involved; nor is it possible to turn a mere question of fact into a question of law by asking whether as a matter of law the officer came to a correct conclusion upon a matter of fact. " Bose J. in Seth Suwallal Chhogalal vs Commissioner of Income tax(2) stated the test as follows: " A fact is a fact irrespective of the evidence by which it is proved.
The only time a question of law can arise in such a case is when it is alleged that there is no material on which the conclusion can be based or no sufficient material.
" Sufficiency of evidence was explained to mean whether the Income tax authority considered its existence so probable that a prudent man ought under the circumstances of the case to act upon the supposition that it exists.
The question for decision in Dhirajlal Girdharilal vs Commissioner of Income tax, Bombay(3) was whether a Hindu undivided family was carrying on business in (1) , 179.
(3) (2) , 277.
62 shares and it was held that this was a question of fact but if the Appellate Tribunal decided the question by taking into consideration materials which are irrelevant to the enquiry or partly relevant and partly irrelevant or based its decision partly on conjectures then in such a situation an issue of law arises, which would be subject to review by the court and the finding given by the Tribunal would be vitiated.
The result of the authorities is that inference from facts would be a question of fact or of law according as the point for determination is one of pure fact or a mixed question of law and fact and that a finding of fact without evidence to support it or if based on relevant and irrelevant matters is not unassailable.
The limits of the boundary dividing questions of fact and questions of law were laid down by this court in Meenakshi Mills, Madurai vs Commissioner of Income tax, Madras (1) where the question for decision was whether certain profits made and shown in the name of certain intermediaries were in fact profits actually earned by the assessee or the intermediaries.
Taking the course of dealings and the extent of the transaction and the position of the intermediaries and all the evidence into consideration the Tribunal came to the conclusion that the intermediaries were dummies brought into existence by the appellant for concealing the true amount of profits and that the sales in their name were sham and fictitious and profits were actually earned by the assessee.
The test laid down by this Court is to be found in the various passages in that judgment.
At p. 701 Venkatarama Ayyar J. pointed out that questions of fact are not open to review by the court unless they are unsupported by any evidence or are perverse.
At p. 706 it was observed : " In between the domains occupied respectively by questions of fact and of law, there is a large area in which both these questions run into each other, forming so to say, enclaves within each other.
The questions that arise for determination in that area are known as mixed questions of law and fact.
These questions involve first the ascertainment of facts on the evidence adduced and then a determination of the (1) ; 63 rights of the parties on an application of the appropriate principles of law to the facts ascertained.
The law was thus summed up at p. 720: (1) When the point for determination is a pure question of law such as construction of a statute or document of title, the decision of the Tribunal is open to reference to the court under section 66 (1).
(2) When the point for determination is a mixed question of law and fact, while the finding of the Tribunal on the facts found is final its decision as to the legal effect of that finding is a question of law which can be reviewed by the court.
(3) A finding on a question of fact is open to attack under section 66 (1) as erroneous in law if there is no evidence to support it or if it is perverse.
(4) When the finding is one of fact, the fact that it is itself an inference from other basic facts will not alter its character as one of fact.
In the instant case the Appellate Tribunal in its appellate order has set out the amount of profits made by the assessee company in the years of assessment 1943 44 to 1948 49.
It has also mentioned the inconsistent positions taken up by the assessee in first claiming to be a dealer and then to be an investor which according to the Tribunal was due to the fact that it was incurring losses in the earlier years and had begun making profits when the claim of being an investor was put forward.
But the two basic facts on which the Tribunal has based its findings are: (1) the objects set out in the memorandum of association of the assessee company; (2) the previous assertion by the assessee company that it was a dealer in investments and not merely an investor.
Counsel for the assessee relies on the decision of Kishan Prasad & Co., Ltd. vs Commissioner of Incometax, Punjab (1) where this Court held that the circumstance whether a transaction is or is not within the powers of the company has no bearing on the nature of the transaction or on the question whether the profits arising therefrom are capital or revenue income and, therefore, it is contended that the Tribunal has (1) 64 relied upon an irrelevant circumstance.
Counsel for Revenue on the other hand refer to the judgment in Lakshminarayan Ram Gopal vs Government of Hyderabad (1) where the objects of an incorporated company were held not to be conclusive but relevant for the purpose of determining the nature and scope of its activities.
Merely because the company has within its objects the dealing in investment in shares does not give to it the characteristics of a dealer in shares.
But if other circumstances are proved it may be a relevant consideration for the purpose of determining the nature of activities of an assessee.
Whether in the instant case it will have any relevance because of other materials on which the assessee company was relying in support of its case that it was merely an investor and not a dealer will have to be considered when the suggested questions of law are answered.
As to what are the characteristics of the business of dealing in shares or that of an investor is a mixed question of fact and law.
What is the legal effect of the facts found by the Tribunal and whether as a result the assessee can be termed a dealer or an investor is itself a question of law.
The questions of law that arise out of the order of the Tribunal are: (1)Whether there are any materials on the record to support the finding of the Income tax Officer that the assessee company was a dealer in shares, securities and immoveable property during the assessment year in question ? (2)Whether the profits and losses arising from the sale of shares, securities and immoveable properties of the assessee company can be taxed as business profits ? We would therefore allow this appeal, set aside the order of the High Court and remit the case to the High Court for directing the Tribunal to state a case on the aforesaid two questions.
The appellant will have its costs in this Court and in the High Court for the proceedings so far taken.
Further costs will be in the discretion of the High Court.
Appeal allowed.
Case remitted.
| The appellant company was incorporated as an investment company which by its memorandum of association enabled it, inter alia, to deal in investments and properties.
For the purposes of assessment to income tax the appellant claimed, for the assessment year in question, to be treated as an investor and not as a ,dealer on the ground that it did not carry on any business in the purchase or sale of shares, securities or properties.
The Incometax Appellate Tribunal held that according to the company 's memorandum of association and its own assertions made all along in the past, it should be treated as a dealer in investments and properties and that its income arising from the sales of shares and properties should be taxed as business profits.
The appellant 's applications for a reference to the High Court were rejected on the ground that no question of law arose out of the order of the Tribunal.
Held, that the question whether the appellant 's business amounted to dealing in shares and properties or to investment, is a mixed question of law and fact and that the legal effect of the facts found by the Tribunal as a result of which the appellant could be treated as a dealer or an investor, is a question of law.
Accordingly, the order of the High Court was set aside and the case remitted to the High Court for directing the Tribunal to state a case.
(1) 50 Meenakshi Mills, Madurai vs Commissioner of Income Tax, Madras, ; , applied.
Case law reviewed.
|
Summarize this legal judgement text concisely | Appeal No. 185 of 1952.
Appeal from the judgment and order dated December 15, 1948, of the Madras High Court in Appeal No. 155 of 1946 arising out of the decree dated October 27, 1945, in Original Suit No. 132 of 1944.
Alladi Kuppuswami and M. section K. Sastri, for the appellants.
T. V. R. Tatachari and T. M. Sen, for respondent No. 4. 1957.
May 10.
The Judgment of the Court was delivered by GAJFNDRAGADKAR J.
This is an appeal by defendants 47 and 48 and the principal question which is raised for our decision in the appeal is whether the properties in suit are the subject matter of public charitable trust or are merely burdened or charged with the obligation in favour of the specified charities.
The suit from which this appeal arises was filed with the sanction of the Collector under section 92 of the Cc de of Civil Procedure and the plaintiffs alleged that the properties in suit were the subject matter of a public charitable trust and that a scheme may be framed for the ad ministration of the said trust.
The present, appellants who are in possession of a substantial portion of the properties in suit as alienees have resisted this claim.
They conceded that the properties in their hands were subject to the charge in favour of the charities but they denied that the said properties were the subject matter of a charitable trust.
Several other pleas were made by the parties but the principal question in dispute between them was in regard to the character of the properties in suit.
Both the learned 1125 trial judge and the High Court of Madras have upheld the plaintiffs ' plea.
It has been declared that the properties in question are trust properties and a direction has been issued that a scheme of management should be framed in respect of the trust with a view to carry out the charitable intentions of the settlor.
It is this decree which is challenged before us by Mr. Alladi Kuppuswami on behalf of defendants 47 and 48 and his argument is that the view taken by the Courts below about the character of the properties is based upon a misconstruction of the decree in question.
In the plaint, it was alleged that one Purushottam had been earning and purchasing large properties and endowing and dedicating them for public charitable purpose since 1896.
In about 1919 Purushottam who had then become old wanted to place the charities which he had been till then personally administering on a permanent and enduring basis.
That is why he executed and registered a deed of trust on March 17, 1919.
By this document, a trust in respect of his properties was created and three trustees were appointed to administer the trust.
Purushottam himself was one of these trustees and two Advocates, Mr. Reballa Subbarayudu and Mr. C. Viswanadha Rao, were his co trustees.
It would appear that Purushottam 's son Ramakrishnayya did not approve of this arrangement and he began to obstruct the administration of the trust.
As a result of this obstructive attitude adopted by Ramakrishnayya, two suits had to be filed by the trustees against Ramakrishnayya and his associates who interfered with the management of the trust.
These two suits were O.S. No. 599 of 1919 and O.S. No. 68 of 1920 on the files of the District Munsiff 's Court, Kavali, and the District Court, Nellore, respectively.
They were subsequently transferred to the Sub Court, Nellore, and numbered as O.S. No. 39 of 1921 and O.S. No. 67 of 1921 in the said Court.
Pending the hearing of these suits, the two advocates trustees withdrew from the suits leaving the conduct of the suits solely in charge of Purushottam.
Ultimately the two suits ended in a compromise.
According to the plaint in the present suit out of the which this 1126 appeal has arisen, this compromise decree was fraudulent and collusive the object of the parties being to efface the character of the trust properties completely and to create individual rights in Purushottam, his son Ramakrishnayya and the other defendants who claimed to be alienees from Ramakrishnayya.
The plaint even alleged that, in persuading the Court to pass the said compromise decree, the parties effectively played fraud on the Court and the trust.
Since the compromise was thus null and void, it cannot affect the original trust created by Purushottam in 1919.
That is why the plaint alleged that the properties mentioned in sch.
A which were covered by the original deed of trust of 1919 were trust properties and asked in substance for the framing of a scheme for the administration of the said trust.
At the date of this suit both Purushottam and his son Ramakrishnayya were dead.
Ramakrishnayya 's son Ramalingeswara Rao was therefore impleaded as defendant No. 1.
A large number of defendants had to be impleaded to the suit because the properties had been alienated both by Ramakrishnayya and Ramalingeswara Rao to several purchasers.
Defendants 47 and 48 were two of such purchasers.
On June 7, 1942, an agreement of sale by defendant No. 1 in favour of defendants 47 and 48 was executed and a decree for specific performance was ultimately passed in their favour.
It was then that defendants 47 and 48 were impleaded to this suit on January 3, 1944.
These defendants substantially adopted the defence raised by the other contesting defendants who were already on the record.
The principal contention raised on their behalf was that the compromise decree was not fraudulent or collusive, that it represented a fair and bona fide family settlement between Purushottam and his son Ramakrishnayya and as such the decree was binding against Purushottam and the trust alleged to have been created by him in 1919.
On the pleadings of the parties, the learned trial judge framed ten issues.
He found that the suit was competent, that the compromise decree was not shown to be collusive or fraudulent and it was binding on the 1127 trust.
Even so, the said compromise decree itself created a trust in favour of public charities and in respect of the properties which had been allotted by" the compromise decree to the share of Purushottam.
It would be noticed that according to the plaint the trust for the administration of which a scheme was claimed by the plaintiffs was the trust created by Purushottam in 1919.
Since the learned trial judge held that this trust deed had been effectively substituted by the arrangement evidenced in the compromise decree, he proceeded to consider the effect of this compromise decree and since he thought that this compromise decree itself created a trust in substitution of the original trust of 1919 he proceeded to pass a decree in favour of the plaintiffs in respect of the substituted trust.
This decree was passed on October 27, 1945.
The matter was taken to the High Court of Madras by defendants 47 and 48.
On December 15, 1948, the appeal preferred by defendants 47 and 48 was dismissed and the decree passed by the trial Court was confirmed.
The learned Judges of the High Court of Madras dealt substantially with the question of the construction of the compromise decree and, since they came to the conclusion that the said decree constituted a public charitable trust in respect of the properties assigned to the share of Purushottam, they saw no reason to interfere with the decree under appeal.
Two other points were raised before the High Court.
They were, whether the obligation arising out of the trust is annexed to the property that fell to the share of Purushottam under the compromise decree and whether the said decree was collusive and not binding on the trust.
The High Court took the view that, since the.
compromise decree itself created a trust and it was possible to give relief to the plaintiffs on that view, it was not necessary to consider the said two points.
Defendants 47 and 48 then preferred the present appeal to this Court.
By our interlocutory judgment on March 30, 1955, we sent the case back to the High Court of Andhra with the direction that they should record their findings on the two additional points which were urged before them but on which they thought it 1128 unnecessary to make findings.
In pursuance of this interlocutory judgment, the High Court of Andhra to whom the proceedings were transferred owing to the creation of the new State of Andhra have now recorded their findings on the two issues in question.
They have held that the obligation in question is annexed to the property that fell to the share of Purushottam under the compromise decree and they have found that the said compromise decree was not collusive and was binding on the trust.
That is how the principal question which we have to consider in the present appeal is the construction of the compromise decree in question.
The principles of Hindu Law applicable to the consideration of questions of dedication of property to charity are well settled.
Dedication to charity need not necessarily be by instrument or grant.
It can be established by cogent and satisfactory evidence of conduct of the parties and user of the property which show the extinction of the, private secular character of the property and its complete dedication to charity.
On the other hand, in many cases Courts have to deal with grants or gifts showing dedication of property to charity.
Now it is clear that dedication of a property to religious or charitable purposes may be either complete or partial.
If the dedication is complete, a trust in favour of public religious charity is created.
If the dedication is partial, a trust in favour of the charity is not created but a charge in favour of the charity is attached to, and follows, the property which retains its original private and secular character.
Whether or not dedication is complete would naturally be a question of fact to be determined in each case in the light of the material terms used in the document.
In such cases it is always a matter of ascertaining the true intention of the parties; it is obvious that such intention must be gathered on a fair and reasonable construction of the document considered as a whole.
The use of the word "trust" or "trustee" is no doubt of some help in determining such intention; but the mere use of such words cannot be treated as decisive of the matter.
Is the private title over the property intended 1129 to be completely extinguished ? Is the title in regard to the property intended to be completely transferred to the charity ? The answer to these questions can be found not by concentrating on the significance of the use of the word "trustee" or "trust" alone but by gathering the true intent of the document considered as a whole.
In some cases where documents purport to dedicate property in favour of public charity, provision is made for the maintenance of the worshipper who may be a member of the family of the original owner of the property himself and in such cases the question often arises whether the provision for the maintenance of the manager or the worshipper from the income of the property indicates an intention that the property should retain its original character and should merely be burdened with an obligation in favour of the charity.
If the income of the property is substantially intended to be used for the purpose of the charity and only an insignificant and minor portion of it is allowed to be used for the maintenance of the worshipper or the manager, it may be possible to take the view that dedication is complete.
If, on the other hand, for the maintenance of public charity a minor portion of the income is expected or required to be used and a substantial surplus is left in the hands of the manager or worshipper for his own private purposes, it would be difficult to accept the theory of complete dedication.
It is naturally difficult to lay down a general rule for the solution of the problem.
Each case must be considered on its facts and the intention of the parties must be determined on reading the document as a whole.
In Maharani Hemanta Kumari Debi vs Gauri Shankar Tewari and Others (1), Sir George Rankin, who delivered the judgment of the Board has observed, "In the usual case of complete dedication made to an idol, for example, the property ceases altogether to belong to the donor, and becomes vested in the idol as a juristic person.
Complete relinquishment by the owner of his proprietary right is, however, by no means the only form of dedication known to Hindu law, and is (1) (1940) L.R. 68 I.A. 53, 63.
145 1130 very different from anything that could ordinarily be inferred from the public user of a highway.
From the standpoint of the Hindu law 'it is not essential to a valid dedication that the legal title should pass from the owner, nor is it inconsistent with an effectual dedication that the owner should continue to make any and all uses of the land which do not interfere with the uses for which it is dedicated ' per Mookerjee J. in Chairman of the Howrah Municipality vs Khetra Krishna Mitra (1).
" The learned Judge has further added that when the dedication is only partial the property in some parts of India might none the less in Common parlance be described as debotter, but whether it be charged with a sum of Money for the worship of an idol or be subjected to a right of limited user on the part of the public,it would descend and be alienable in the ordinary way.
The only difference, as Mr. Mayne observes, is that it passes with it a charge upon it.
In Jadu Nath Singh vs Thakur Sita Ramji (2) the Privy Council was dealing with a deed of dedication which provided that after the death of the grantor certain female members of his family should succeed him as managers, that half the income should be enjoyed by the managers without power of alienation, that upon the death of the named managers the Government should become manager and the whole net income should then be applied to the expenses of the temple.
The Privy Council held that the deed was a valid endowment of the whole property to the temple and that the donor had no rights in it against either the idol or the managers.
Dealing with the argument that in the hands of the female members of the grantor 's family liberty was given to the said members to enjoy half the income, Lord Haldane observed that " If the income of the property had been large, a ques tion might have been raised, in the.
circumstances, as throwing some doubt upon the integrity of the settler 's intention, but, as the entire income is only 800 rupees, it is obvious that the payment to these ladies is of the most trifling kind, and certainly not an amount which one would expect in a case of that kind." Lord (1) , 348.
(2) (1917) L.R. 44 I.A. 187, 190.
1131 Haldane then emphasized the clear expression of the initial intention of the donor to apply the whole estate of the donor to the benefit of the temple and he added that the rest is only a gift to the idol sub modo by a direction that of the whole which had already been given part is to be applied for the upkeep of the idol itself and the repair of the temple and the other is to go for the upkeep of the managers.
That is how in the end it was held that the document showed complete dedication in favour of the idol.
In Pande, Har Narayan vs Surja Kunwari (1), the Privy Council has observed that in determining whether the will of a Hindu gives the testator 's estate to an idol subject to the charge in favour of the heirs of the testator or makes the gift to the idol a charge upon the estate, there is no fixed rule depending upon the use of particular terms in the will.
The question depends upon the construction of the will as a whole.
In this particular case, though the will had provided that the property of the testator shall be considered to be property of a certain idol, there were further provisions which showed that the residue after defraying the expenses of, the temple shall be used by the testator 's legal heirs to meet their own expenses and it appeared that only a small proportion of the total income could be utilised for the idol whereas a large balance was available to the heirs.
On these facts, it was held by the Privy Council that the intention disclosed by the document was that the heirs should take the property subject to the charge for the performance of the religious purposes named in the will.
Lord Shaw, who delivered the judgment of the Board, cited with approval the earlier observations of Turner L. J. in Sonatun Bysack vs Sreemutti Juggutsoondree Dossee (2 ).
Turner L. J. had stated: " although the will purports to begin with an absolute gift in favour of the idol, it is plain that the testator contemplated that there was to be some distribution of the property according as events might turn out; and that he did not intend to give this property absolutely to the idol seems to their Lordships to be clear from the directions (1) (1921) L.R. I.A. 143.
(2) 8 Moo.
I. A. 66. 1132 which are contained in the various clauses of the will.
" Similarly, in Gopal Lal Sett vs Purna Chandra Basak(1), the Privy Council held that the will of the Hindu testatrix with which they were concerned in this case conferred the properties specified on the grandson charged with the maintenance of the worship but that no shebaitship was created.
The will in question had provided that out of the income of the specified property, her grandson should perform the worship of certain family idols and that he should be in charge of the worship.
The will contained no gift, express or implied, to the idols, and there was no provision for the worship after the death of the grandson.
It is in the light of these decisions that we will have to construe the compromise decree in the present case.
Before considering the terms of the compromise decree, however, it would be relevant to mention some more facts.
After Purushottam had executed a deed of trust in 1919, troubles arose in his own family.
His son apparently began to assert his share in the property which was the subject matter of the said trust and he actually started to alienate his alleged undivided share in the said property.
That indeed was the genesis of the two suits initially filed by the three trustees in 1919 1920.
In O.S. No. 30 of 1921 itself, an alternative claim appears to have been made by Purushottam when he was left in sole charge of the suit after the withdrawal from the suit by his co trustees.
He claimed a declaration that he was entitled to recover the possession of the property as mentioned in sch.
A and A 1 of the claim, or, in the alternative, that he should be declared to be entitled to the title of the property jointly with his son Ramakrishnayya and the partition in the two shares of the same may be directed and he may be put in possession of such property as would fall to his share.
In other words, the first claim was based on the validity of the original trust deed created by Purushottam and the second )#as based on the assumption that the trust was not valid, that the property, the subject matter of the said trust was liable to be divided between (1) (1921) L.R. 49 I.A. 100.
1133 Purushottam and his son and a prayer was made that Purushottam should be allotted his share by a partition of all the property by metes and bounds.
As a result of the compromise decree passed in this suit, the property over which Purushottam had created a trust in 1919 was divided between himself and his son Ramakrishnayya and some of the property which was not included in the trust deed of 1919 but which was also the subject matter of the suit itself was allotted to the share of Purushottam.
The property thus allotted to the share of Purushottam formed part of sch.
1 and it is in respect of this property that a public charitable trust has been created according to the findings of the Courts below.
For the appellants, it is urged before us that this view is erroneous.
We will now consider the relevant terms of the compromise decree.
Clause (1) of the decree provides that the property described in sch. 1 attached to the decree should go to the share of the third plaintiff, viz., Purushottam.
It appears that four items included in sch.
1 had been sold by defendant I to defendants 13 and 14.
These alienees, however, agreed to give up their claim in respect of these properties.
Clause (1) then reads as follows: "that as regards the aforesaid schedule property, the third plaintiff should be the ' sole trustee ' till his lifetime for the purpose of conducting the charities described in the trust deed, dated 17th March, 1919, and he should utilise the income derived therefrom, for the charities according to the necessity and should enjoy the said property till his lifetime without rights to gift, sale etc.
, therein; that after his death, the said entire property should pass on to his grandson Ramalingeswara Rao subject to the (performance of) the aforesaid kainkaryams (charities); that if the third plaintiff should die before the expiry of the minority of the aforesaid Ramalingeswara Rao arrangement should be made to have a guardian appointed through Court for the property made to pass to the said Ramalingeswara Rao the ,said guardian should take possession of the property 1134 and conduct the aforesaid charities and deliver possession of the same to the said Ramalingeswara Rao as soon as the minor attains majority; that, thereafter the said Ramalingeswara Rao should conduct the above mentioned charities and enjoy the properties;" Then cls.
(2) and (3) deal with the claims of defendant 1 and defendants 10, 11 and 12.
Clause (4) directs that the properties allotted to the share of the third plaintiff should be immediately delivered to him by the defendants; and el.
(5) provides that the third plaintiff should give up all other claims in respect of the suit and the parties should bear their own respective costs.
At this stage it may be relevant to refer to the particulars of charities for whose benefit admittedly the decretal provision in el.
(1) has been made.
These particulars are mentioned in para.
6 of the original deed of trust and it is not disputed that the burden imposed by cl.
(1) of the decree is in favour of the same charities.
These charities are nine in number and they are thus enumerated in the deed of trust: "(1) In the choultry constructed in the land in Survey No. 81, all persons who pass to and fro in Doranala Road, should be given drinks to quench thirst, everyday two brahmin travellers should be given food at noon.
(2) For the purpose of Mahanaivaidyam (food offering) taking place every night to Sree Malleswaraswami Varu enshrined in the aforesaid Damaramadugu village, 12 tooms of paddy and Rs. 6 in cash should be given to the trustee of the said Devasthanam.
(3) During the time of Brahmotsavam of Sri Malleswaraswami and Sri Kamakshi Thayi Garu, in Jonnavada which is taking place every year, Rs. 10 (rupees ten) should be paid every year in respect of the Ravana Seva Ubbayam that is being conducted by the Damaramadugu villagers.
(4) During the Brahmotsavam time of Sri Jonnavada Kamakshi Thayi that takes place every year, 1135 Rs. 40 (rupees forty) should be spent for 'Ekanthaseva ' and the trustees should be present and see that the said Ubbayam is properly conducted.
(5) Rs. 12 should be paid every year towards Deeparadhana expenses during nights to Sri Veeranjaneyaswami Varu enshrined in Pata Santhapeta, Nellore, to the trustee of the said Devasthanam.
(6) From out of the said fund, Rs. 42 per year should be paid to poor Brahmin boys reading in classes commencing from fourth form and upward in the High School, towards the school fees.
Now, this amount shall be paid to Amperayani Venkatakrishnayya who is reading in the Kurnool School, till he stops his study; and after he stops his study, the then trustees are hereby empowered to give the money to poor Brahmin boy whom they consider as the suitable recipient.
(7) If there should be difference of opinion, on any matter relating to the management of the aforesaid charities, the opinion of the majority trustees shall prevail and it will be given effect to.
(8) The trustees shall exercise all powers in the matter of the management of these charities, viz., to appoint the necessary staff; to remove them; to suspend them; to impose fine; and to make all arrangements for the staff to discharge their duties efficiently.
(9) The trustees are fully empowered to now and then grant cowles in respect of the schedule mentioned property to individuals and to have muchilikas executed and in the event of any disputes arising at any time through any person, in respect of the said property, to institute and conduct suitable proceedings in proper Courts, to get over such disputes; and also to incur the necessary expenditure from out of the income from the aforesaid endowments.
" It would be clear that el.
(1) of the compromise decree is the foundation of the theory, that a public trust had been created in respect of the properties allotted to the share of Purushottam.
In dealing with this clause, the High Court of Madras appears to have attached considerable importance to the fact that 1136 Purushottam had already, in unequivocal terms, expressed his intention to create a trust of his own properties in 1919.
There is no doubt that the document of 1919 creates a public charitable trust.
In construing cl.
(1) of the compromise decree, the learned Judges of the High Court of Madras appear to have assumed that this clause was really intended to confirm the earlier creation of the trust though in respect of different properties.
With respect, in making this assumption, the learned Judges appear to have over looked the sharp distinction between the words used in the trust deed of 1919 and in cl.
(1) of the compromise decree.
The trust deed had appointed three trustees and by cl.
(12) had specifically provided that the amounts described in the schedule and the income that will increase and accrue in future shall be utilised for the above charities only and it shall not be used for private purposes.
In other words, el.
(12) emphatically prohibits the use of the income from the property for any private purpose and in terms dedicates entirely the whole of the property and its income for public charitable purposes.
Clause (3) of the trust deed had appointed three trustees, had provided for the management of the trust and the keeping of the accounts.
Under this clause, all the trustees should join together and hold a meeting once a month in the choultry and examine the accounts and consider the other details of management.
The deed has further provided for the appointment of other trustees in case of vacancy occurring either by death or resignation.
Now let us look at cl.
(1) in the compromise decree.
It is true that the third plaintiff is described in this clause as the sole trustee till his lifetime.
It is also true that, as the sole trustee, he is allowed to enjoy the said property till his lifetime " without rights to gift, sale etc., in the same.
" The use of the word "sole trustee" is no doubt relevant and its full effect must be taken into account but its significance cannot be exaggerated.
It is really difficult to understand how a sole trustee could enjoy the property.
The enjoyment of the property inevitably suggests the right to enjoy the property in one 's right and this notion is not easily 1137 reconcilable with the theory of complete dedication of the property in favour of charity.
Even so, we will assume that the use of the word " sole trustee " is a factor in favour of the plaintiffs.
In the same clause, there is, however, another indication which is inconsistent with this theory of complete dedication.
The income of the property has to be utilised for charities according to the necessity.
The contrast between this provision and the provision in cl.
(12) of the earlier deed of trust is obvious.
Whereas, under the earlier deed the whole of the income had to be utilised only for the purpose of charity, under el.
(1) of the decree a part of the income is to be utilised according to the need of the charity.
Then, after the death of Puru shottam, the clause provides that the property should pass on to his grandson Ramalingeswara Rao subject to the purpose of the aforesaid charities.
The notion that the property has to pass from Purushottam to Ramalingeswara Rao is consistent with Purushottam 's title to the property and is inconsistent with the title of the idol in the said property.
This clause about the devolution of the title in favour of the grandson clearly and unequivocally suggests that all that Purushottam wanted to achieve by this clause was to leave his private title unimpaired except with the burden or charge in favour of charity.
This clause can be contrasted with cl.
(4) of the trust deed which provides for the subsequent appointment of trustees.
Then the provision about the appointment of the guardian of Ramalingeswara Rao during his minority is also inconsistent with the theory of complete dedication.
It is difficult to appreciate how a guardian of a minor trustee can be appointed in this way in respect of properties which do not belong to the minor but are trust properties.
It is, however, urged that Purushottam as the sole trustee is positively prohibited from making the gift of the property or selling the property by the first part of el.
(1) and that Prima facie indicates that Purushottam was not an absolute owner of the property; but in judging the effect of this prohibition, we cannot lose sight of the fact that a similar prohibition is not included in the decree when the decree deals 146 1138 with the rights of the grandson of Purushottam.
Reading the clause as a whole, it seems to us fairly clear that Purushottam wanted the property to devolve on his grandson and treated the property as his private property in that behalf.
Since that was the intention of Purushottam no restraint has been imposed on the absolute title of Ramalingeswara Rao and he has been apparently given full liberty to deal with the property as he likes except that he was under an obligation to the charity in question.
The last portion of the clause authorises Ramalingeswara Rao to conduct the above mentioned charities and to enjoy the property.
This clause again is wholly inconsistent with the theory of complete dedication and merely suggests that in the hands of Ramalingeswara Rao as well as in the hands of his successors or transferees the property would stand burdened with the obligation to perform the charities in question.
We have carefully considered the terms of cl.
(1) of this decree and we are satisfied that it is difficult to hold on these terms that the property allotted to the share of Purushottam under the decree was intended to be completely dedicated in favour of charities.
In our opinion, the learned Judges of the High Court of Madras were in error in construing this clause as evidencing the creation of a public charitable trust.
We are satisfied that the properties continue to be the properties of Purushottam until his death and on his death they devolved upon his grandson Ramalingeswara Rao subject always to the burden of performing the charities mentioned in the earlier deed of trust.
For the Advocate General of Andhra who has been allowed to represent charities in the present case after the death of the original plaintiffs, Mr. Tatachari has urged that even though the compromise decree may not indicate the creation of a public trust that would not necessarily defeat the plaintiffs ' claim.
He contends that the trust of 1919 which had been validly created by Purushottam cannot be effectively effaced by the subsequent compromise decree between Purushottam and his son and the alienees from his son.
Mr. Tata chari has referred us to the material allegations in the 1139 plaint where it has been suggested that in agreeing to the compromise decree Purushottam was in substance guilty of breach of trust.
We do not propose to consider the merits of this interesting argument because, in our opinion, it is too late for the plaintiffs to raise such a point.
We have already mentioned that one of the issues specifically raised between the parties in the present litigation was in regard to the nature and effect of the compromise decree.
In fact we have already indicated that, when we found that the learned Judges of the High Court of Madras had not considered this issue, by our interlocutory judgment we invited the High Court to consider this issue along with another.
The position now is that both the Courts below have found that the compromise decree was not collusive or fraudulent 'and it binds the trust.
The respondent has not filed any objection to the finding submitted by the High Court of Andhra in pursuance to our interlocutory judgment.
Indeed, if the plaintiffs had adhered to their original case they should have insisted upon obtaining a decree for a scheme of the original trust of 1919.
It is true that a decree for a scheme was passed in favour of the plaintiffs but this decree was passed on the assumption that a subsequent compromise decree had created a public trust.
It is clear from the plaint that the plaintiffs had not alternatively asked for a scheme of the subsequent trust.
That being so, it was really necessary for the plaintiffs to have preferred an appeal against the trial Court 's decree and urged that the original trust deed had not been effaced and that it was still subsisting not with standing the compromise decree and that a scheme should be framed in respect of the said original trust.
It appears that the plaintiffs were content to acquiesce in the finding that the subsequent compromise decree bound the original trust deed and, as matters then stood, it did not make any practical difference to the plaintiffs ' case because they got a scheme for the administration of the trust though new properties were substituted for the old to constitute the subject matter of the trust; but in law the conduct of the plaintiffs amounted to an admission that the compromise decree 1140 offaced the original trust in that the properties of the trust were changed in the manner indicated in the decree.
Before the High Court of Madras, the only point which the plaintiffs urged was that the compromise decree created a trust.
It is true that this compromise decree was intended for the benefit of the charities covered by the earlier deed of trust and the argument was that the properties which were allotted to the share of Purushottam by the compromise decree should be deemed to have been substituted for the original properties of the trust.
Having adopted this attitude it is now not open to the plaintiffs to contend that the terms of the compromise decree do not bind the trust, that the decree per se constituted a breach of trust and that the original trust is wholly unaffected by whatever Purushottam did in the subsequent litigation.
In our opinion, therefore, it is unnecessary to consider the merits of the contention which Mr. Tatachari attempted to raise before us.
Since we hold that the compromise decree had not created a public trust, it is unnecessary to consider any other point.
We wish to make it clear that Mr. Alladi Kuppuswami expressly told us that his clients have always agreed that the properties in their hands are burdened with the obligation to discharge the charities mentioned in the deed of trust executed by Purushottam in 1919.
We accordingly declare that the properties in the hands of the appellants are subject to the charge in favour of the said charities.
However since the plaintiffs ' case for a scheme has failed the appeal must be allowed and the plaintiffs ' suit dis missed.
As the Advocate General has appeared before us to support the case of the charities, we direct that the parties should bear their costs throughout.
Appeal allowed.
| A Hindu father executed a registered deed of trust giving away his properties to public charities and appointed himself and two others as trustees.
The son in assertion by his right to a moiety share therein started to alienate them.
There was litigation between the trustees and the son which ultimately ended in a compromise decree for partition between the father and the son, the two other trustees having retired pending litigation.
After the death of both the father and the son a suit was brought under 1123 section 92 of the Code of Civil Procedure for the framing of a scheme for the administration of the trust.
The trial court held that the trust deed had been substituted by the compromise decree which itself created a trust and decreed the suit on that basis.
On appeal by two of the defendants who were transferees in possession of some of the properties in suit, the High Court affirmed the decision of the trial court holding that the compromise decree created a trust for public charities in respect of the properties allotted to the third plaintiff, meaning the father.
The said defendants appealed to this Court.
The principal question for decision was one of construction of the compromise decree, whether it created a trust or a charge.
The relevant terms of the compromise decree were as follows: " that as regards the aforesaid schedule property, the third plaintiff should be the 'sole trustee ' till his lifetime for the purpose of conducting the charities described in the trust deed, dated 17th March, 1919, and he should utilise the income derived therefrom for the charities according to the necessity and should enjoy the said property till his lifetime without rights to gift, sale etc.
, therein ; that after his death, the said entire property should pass on to his grandson Ramalingeswara Rao subject to the (performance of) the aforesaid kainkaryams (charities) ; that if the third plaintiff should die before the expiry of the minority of the aforesaid Ramalingeswara Rao arrangement should be made to have a guardian appointed through Court for the property made to pass to the said Rainalingeswara Rao, the said guardian should take possession of the property and conduct the aforesaid charities and deliver possession of the same to the said Ramalingeswara Rao as soon as the minor attains majority ; that, thereafter the said Ramalingeswara Rao should conduct the above mentioned charities and enjoy the properties :" Hald, that the courts below were in error in construing the compromise decree in the way they did and the appeal must succeed.
There can be no doubt from the terms of the compromise decree read as a whole that what was intended to be created was a charge and not a trust in respect of the properties allotted to the father which retained their private character.
The principles of Hindu Law applicable to questions relating to charitable trust are well settled.
Whether or not a dedication to charity is complete must depend on the intention of the donor which has to be gathered from the terms of the document in any particular case read as a whole.
If the dedication is complete, a trust is created, if not, a charge follows.
The mere use of the word 'trust ' or 'trustee ' cannot by itself be conclusive as to the intention of the donor and the real test is whether private title 1124 over the property is sought to be extinguished by a complete transfer of it to the charity.
Maharani Hemanta Kumati Debi vs Gauri Shankar Tewari, (1940) L. R. 68 I.A. 53, Jadu Nath Singh vs Thakur Sita Ramji, (1917) L.R. 44 I.A. 187, Pande Har Narayan vs Surja Kunwari, (1921) L.R. 48 I.A. 143, Sonatun Bysack vs Sreemutti juggul soondyee Dossee, 8 Moo.
I.A. 66 and Gopal Lal Sett vs Purna Chandya Basak, (1921) L.R. 49 I.A. 100, applied.
|
Summarize this legal judgement text concisely | ION: Criminal Appeals Nos. 20 and 21 of 1957.
Appeals by special leave from the judgment and order dated September 14, 1955, of the Allahabad High Court (Lucknow Bench) at Lucknow in Criminal Appeals Nos. 374 and 376 of 1956, arising out of the judgment and order dated the April 24, 1954, of the Sessions Judge, Lucknow, in Sessions Trial No. 106 of 1951.
R. L. Anand and section N. Anand, for the appellant in Cr. A. No. 20 of 1957.
N. C. Chatterjee and D. N. Mukherjee, for the appellant in Cr. A. No. 21 of 1957.
H. R. Khanna and R. H. Dhebar, for the respondent.
May 14.
The Judgment of the Court was delivered by GAJENDRAGADKAR J.
Are the appellants section Gangoli and P.R. Chaudhri (hereafter called appellants I and 2 respectively) public servants under section 2 of the Prevention of Corruption Act, 1947 (Act II of 1947) (hereafter called the Act) ? That is the short question which arises for our decision in the present appeal.
That question arises in this way.
Chaudhri had been posted as Assistant Permanent Way Inspector, Sultanpur, East Indian Railway, in March, 1948, in the Lucknow E.I.R. Division.
Gangoli was posted as Assistant Pay Clerk in the Lucknow E.I.R. Division during the same period.
The case against the appellants was that they had committed an offence under section 120B of the Indian Penal Code and section 5(2) read with sections 5(1)(c) and 5(1)(d) of the Act.
It 292 appears that in accordance with the Pay Commission 's Report a sum of Rs. 16,685 was entrusted to appellant No. 2 by the railway department to be disbursed among Class IV staff working under appellant No. 1.
This payment had to be made in the presence of, and was to be attested by, appellant No. 1.
According to the prosecution both the appellants had entered into a criminal conspiracy to misappropriate a part of the said government amount entrusted to appellant No. 2 by paying to the respective members of Class IV staff lesser amounts than those to which they were entitled and by making entries in the pay sheets which purported to show that the due amounts had been paid to them.
In accordance with this conspiracy payment was made on March 11, 1948, in a running train between Faizabad and Chilbila and the entries in the pay sheets show that the whole of the amount of Rs. 16,591 had been paid to 216 employees.
The entries also show that the payment had been made by appellant No. 2 and the same had been attested by appellant No. 1.
In fact the whole amount had not been disbursed to the employees who in all were paid Rs. 1,555 less.
In this manner the two appellants had misappropriated the sum of about Rs. 1,555 and had falsified the paysheets in pursuance of their conspiracy.
Within a few days of the said payment the employees became suspicious because they learnt that persons recruited on the same day had been paid larger amounts as arrears.
Thereupon they approached the higher officers and made a complaint to them.
They were advised to present their grievance in writing and as a result some of the employees did present applications in writing complaining that they had not received the due payment of their arrears.
These representations led to an enquiry and Mr. Dalip Singh in fact recorded some of the statements OD April 6 and 7, 1948.
The prosecution alleges that this development alarmed appellant No. 1 and he tried to hush up the matter by calling all the men together and paying them the amounts which had been previously wrongfully deducted from their arrears.
It is the prosecution case that on this day three documents were 293 executed, Exs. 5, 10 and 11, which would clearly show that the appellants had committed the offences charged against them.
Both the appellants denied the charges.
They pleaded that they had not entered into any conspiracy and it was their suggestion that they had been falsely implicated in the present case.
Appellant No. 1 pleaded that the case against him had been started, and false evidence had been secured by H.N. Das with the aid of Shambu because relations between him and Das were not friendly.
Appellant No. 2 pleaded that he had been falsely implicated because, contrary to the suggestion of the police, he had refused to implicate appellant No. 1.
According to them the evidence adduced by the prosecution was interested and false, and the documents produced by it were either fabricated or irrelevant.
In support of its case the prosecution examined 44 witnesses, relied upon the three documents Exs.
5, 10 and 11 and urged that the charges framed against the appellants were clearly established by the said evidence.
The learned Sessions Judge at Lucknow who tried the case against the appellants agreed with the unanimous opinion of the assessors and held that the charges framed against the appellants had been proved beyond a reasonable doubt file accordingly convicted them of the said offences and sentenced appellant No. 1 to suffer rigorous imprisonment 'for three years and appellant No. 2 to suffer rigorous imprisonment for two years.
This order of conviction and sentence was challenged by the appellants by preferring appeals in the High Court of Judicature at Allahabad.
These appeals, however, failed and the High Court substantially agreed with the conclusions of the learned trial judge.
Mr. Justice Kidwai who beard these appeals no doubt partly accepted the defence plea and held that Das was not a reliable witness and that he might have been responsible for the fabrication of exhibit 10.
The learned judge also found that Shambu was likewise an unreliable witness.
Even so it was held that the evidence of gangmen was on the whole satisfactory and that the 204 documents Exs.
5 and I 1 corroborated the oral evidence adduced by the prosecution.
In the result the order of conviction and sentence passed against the appellants by the trial judge was confirmed.
It is against this order passed by the High Court that the appellants have preferred the present appeals by special leave; and the only point which they have raised before us is that their conviction and sentence are illegal because they are not public servants under section 2 of the Act.
Section 2 of the Act provides that for the purposes of this Act public servant means a public servant as defined in section 21 of the Indian Penal Code.
It is not disputed that under section 21 the appellants are public servants.
The East Indian Railway which has employed the appellants was at the material time owned by the Government of India and managed and run by it, and so if the status of the appellants had to be judged at the material date solely by reference to section 21 of the Code there would be no difficulty in holding that they are public servants as defined by the said section.
It is, however, urged that, for determining the status of a railway servant, it is necessary to consider section 137 of.
the Indian Railways Act, 1890 (Act 9 of 1890).
It may be recalled that when this Act was passed almost all the railways in India were owned and managed by public limited companies and as such railway servants as defined by section 3(7) of the Railways Act could not be treated as public servants under section 21 of the Code.
After the railways were nationalised and taken over by the Government of India, this position has materially altered.
But prior to the nationalisation of railways, the position was that railway servants as such did not fall under section 21 of the Code.
That is why section 137(1) and (4) purported to bring them within the definition of public servants contained in the said section.
Sub section
(1) of section 137 provides that every railway servant shall be deemed to be a public servant for the purposes of ch.
IX of the Indian Penal Code.
The effect of this sub section is to treat railway servants as public servants under section 21 for the purpose of offences relating to public servants which are dealt with by sections 161 to 171 is ch.
IX of the Code.
It is thus clear that the 295 result of this provision was to treat railway servants as public servants even though they did not satisfy the requirements of the definition of section 21.
Having provided for the extension of the said definition to railway servants for the purposes of ch.
IX of the Code, subs.
(4) prescribed that notwithstanding anything contained in section 21 of the Indian Penal Code a railway servant shall not be deemed to be a public servant for any of the purposes of that Code except these mentioned in sub section
It is on this sub section that the appellants ' argument is based.
It is urged by Mr. B. L. Anand that this sub section clearly provides that railway servants shall not be deemed to be public servants except for the purposes of ch.
IX; and since the appellants had not been charged with any of the offences in ch.
IX of the Code they cannot be treated as public servants for the offences under sections 5(1) and 5(2) of the Act.
It is true that these two sub sections have been amended by Act 17 of 1955.
Sub section
(4) has been deleted and sub section
(1) now provides that every railway servant being a public servant as defined in section 21 of the Indian Penal Code shall be deemed to be a public servant for the purposes of ch.
1X and section 409 of that Code.
In other words, under the amended provision of section 137(1) railway servants would be deemed to be public servants under section 21 of the Indian Penal Code only for the purpose of eh.
IX and section 409 of that Code.
We are, however, concerned with the provisions of section 137 prior to its amendment in 1955.
Now section 137, sub section
(4) opens with the non obstante clause and expressly states that a railway servant shall not be deemed to be a public servant for any of the purposes of that Code subject of course to the exception mentioned in sub section
The argument is that the non obstante clause has the effect of excluding the application of section 21 of the Code in all cases except those falling under ch.
IX of the Code; and it is urged that since the offences charged against the appellants are outside ch.
IX of the Code, sub section (4) creates a bar against treating them as public servants for the purpose of the said offences.
This argument, however, ignores the relevant words " for any 296 of the purposes of that Code" used in sub section
These words indicate that the bar created by sub section
(4) applies, and is confined, to the purposes of that Code and cannot be extended beyond the said purposes.
What subs.
(4) really provides is that if a railway servant is charged for an offence under the Indian Penal Code and the said offence is outside ch.
IX of the Code he cannot be treated as a public servant.
This sub section does not purport, or intend to make any provision in respect of offences which are outside the Penal Code, In respect of such offences neither sub section
(1) nor sub section
(4) of the Railways Act would apply, and the question as to whether railway servants fall within the mischief of the Act must be decided in the light of the provisions of the said Act itself.
That takes us to the question whether the appellants can be said to be public servants under section 2 of the Act.
section 2, as we have indicated, in substance incorporates in itself the definition of a public servant contained in section 21 of the Indian Penal Code.
There can be no doubt that the effect of section 2 of the Act is that the status of accused persons has to be determined by the application of section 21 of the Indian Penal Code as if the said section had been included in the Act.
If that be so the appellants cannot resist the conclusion that they are public servants under section 2 of the Act.
The contention that because section 2 of the Act refers to section 21 of the Indian Penal Code the bar created by section 137(4) of the Railways Act would inevitably come into operation is unsound.
The said bar can be invoked only if the status of the accused person is being determined for any purposes of the Code other than those of ch.
In the present case the main offences charged are under the Act and not under the Code, and so section 137.(4) in inapplicable.
With regard to the construction of section 137(4) there is another consideration which may be indicated.
section 137(1) brings within the definition of section 21 of the Code railway servants who but for it would not have satisfied the tests laid down in section 21.
The deeming provision of sub section
(1) would be clearly inappropriate 297 and unnecessary if the railway servants concerned could be treated as public servants under section 21 itself.
In other words, railway servants employed by the railway administration owned and conducted by the Government of India would be public servants under section 21 as such without recourse to the statutory fiction introduced by section 137(1).
Having provided for this statutory fiction by sub s.(1), sub section
(4) purports to cover the same ambit and to deal with the same class of railway servants and it provides that this class of persons shall not be deemed to be public servants except as mentioned in sub section
This negative statutory fiction is only intended to emphasise the fact that persons who are treated as public servants by virtue of sub section
(1) can be dealt with only under the provisions of ch.
II of the Code and no other.
Could it have been intended by the Legislature that sub section
(4) should exclude the application of the provisions of the Code other than those contained in ch.
IX to railway servants who would be public servants under section 21 without the aid of sub section
(1) of section 137 ? Prima facie such an intention cannot be attributed to the Legis lature.
It is true that the non obstante clause lends some assistance to the argument of the appellants that with the exception of the provisions of ch.
1X, section 21 of the Code would be inapplicable to railway servants; but the said non obstacle clause cannot prima facie be wider in its scope than sub section
(1) of the card section.
The said non obstante clause has apparently been inserted ex abundanti cautela (1) to clarify the effect of section 137(1).
The two subsections introduce a positive and a negative fiction respectively and thereby achieve the same result.
However, since we are concerned with the provisions of the Act and not with any provisions of the Code other than ch.
11 it is unnecessary to pursue this point any further and to express a definite opinion on this aspect of the matter.
We must now refer to the decisions to which our attention was invited.
The first case on which Mr. Anand relied is the decision of the Punjab High (1) ; Rai Bahadur Kanwar Raj Nath & Ors.
vs Pramod C. Bhatt, Custodian of Evacuee Property.
38 298 Court in Devi Ram Deep Chand vs The State (1).
In that case the accused were goods clerks employed by the railway and they were being prosecuted in the court of a First Class Magistrate on charges under section 408 of the Penal Code.
It was urged on their behalf that the offences alleged against them were in substance offences under section 5 of the Act, and that they could be tried by a special judge alone.
That is why the High Court was moved for a transfer of the case against them from the court where it was pending to the court of the special judge.
From the judgment of the High Court it clearly appears that the learned Assistant Advocate General intimated to the Court that the prosecution did not propose to frame or prove a charge against the appellants under section 5 of the Act.
Therefore section 2 of the Act did not really fall to be construed by the court; and so the observations made by Dulat, J., that if the petitioners are not public servants within the meaning of section 21 of the Penal Code they cannot be called public servants for the purposes of Act 2 of 1947, is clearly orbiter.
If, however, this observation was intended to be a decision on the point, it must, with respect, be held to be based on a misconstruction of section 137(4).
Mr. Anand has also fairly invited our attention to two decisions of this Court Ram Krishan vs The State of Delhi (2) and C. A. Montorio vs The State of Ajmer( ') which are prima facie against his contention.
In the first of these two decisions the appellants had been charged under section 120B of the Indian Penal Code for criminal conspiracy to cause offence of criminal misconduct punishable under section 5(2) of the Act to be committed by Madan Lal as also under that section read with section 116 of the Code.
They had been convicted by the special judge on both the counts and their conviction had been upheld by the High Court.
In their appeal before this Court one of the points raised by the appellants was that Madan Lal was not a public servant within the meaning of the Act.
It appears that the offence in question had been committed on (1) A. I. R. 1954 Punj 189.
(2) ; (3) ; 299 December 29, 1951, and the argument was that under section 137(1) and (4) Madan Lal who was a railway servant could not be held to be a public servant under section 2 of the Act.
Chandrasekhara Aiyar, J., who delivered the judgment of the Court, cited section 137(1) and added that sub section
(4) had been omitted by the amendment of 1955.
Then the learned judge referred to section 2.
of the Act and concluded thus: " The result is that before the amendment railway servants were treated as public servants only for the purpose of ch.
IX of the Indian Penal Code but now as the result of the amendment all railway servants have become public servants not only for the limited purpose but generally under the Prevention of Corruption Act.
" With respect, it may be pointed out, that this observation seems to give to the amended provisions of section 137 of the Railways Act retrospective effect.
The question of the construction of the relevant sections does not appear to have been fully argued before this Court and it has not been considered.
It is nevertheless true that in respect of an offence committed in 1951 Madan Lal was hold to be a public servant under section 2 of the Act.
In the case of Montorio (1) the main point raised before this Court was whether the accused was a public servant under section 21 of the Code and that was considered by this Court; in dealing with that question this Court construed section 21 and held that the appellant was an officer within the meaning of section 21(9) and therefore a public servant within the meaning of section 21.
Incidentally reference has been made to the earlier decision of this Court in the case of Ram Krishan (2) and it has been observed that the said decision " lays down that before the amendment of section 137 of the Rail ways Act, by Act 17 of 1955, railway servants were treated as public servants only for the purposes of ch.
IX of the Indian Penal Code but in any event they were public servants under the Prevention of Corruption Act.
" With respect, this latter statement does not appear to be borne out by the judgment in the case of Ram Krishan (2).
(1) ; (2) ; 300 Going back to section 2 of the Act once more we must hold that in defining a public servant it enacts the same definitions as section 21 of the Indian Penal Code and under this interpretation of the section, the appellants undoubtedly are public servants.
The result is the courts below were right in holding that the appellants could be properly charged and tried for offences under section 5(2) read with section 5(1)(c) and section 5(1)(d) of the Act.
The validity of the charge under section 120B has not been and cannot be challenged.
Mr. Anand for appellant No. 1 and Mr. Chatterjee for appellant No. 2 appealed to us to reduce the sentence passed against their clients.
It was urged in support of this plea that though the charge against them was in respect of a large amount of Rs. 1,555 evidence had been adduced to prove misappropriation of Rs. 218 which is a much smaller amount.
We do not think that in the circumstances of this case the actual amount shown to have been misappropriated has a decisive or even a material bearing on the question of sentence.
The positions respectively occupied by the appellants, the relations between them and the Class IV servants, the method adopted by the appellants in committing the offence and the other circumstances have all been considered by the courts below in passing concurrently the respective orders of sentence against the appellants.
In our opinion there is no justification for interfering with the said orders.
The appeals accordingly fail and are dismissed.
The appellants to surrender to their bail bonds.
Appeals dismissed.
| The two appellants, who were railway servants under the Government, were put up on trial under section 120B of the Indian Penal Code and section 5(2) read with section 5(1)(c) and 5(1)(d) of the Prevention of Corruption Act, 1947.
The Sessions judge who tried the case found, in agreement with the unanimous opinion of the assessors, the appellants guilty and sentenced appellant No. i to rigorous imprisonment for three years and appellant No. 2 to rigorous imprisonment for two years.
The High Court on appeal affirmed the order of conviction and sentences passed on the appellants.
It was contended on behalf of the appellants in this court that the order of conviction and the sentences passed on them were illegal as they were not public servants under section 2 Of the Prevention of Corruption Act, 1947.
Held, that it was apparent from the words " for any of the purposes of that Code " used by section 137(4) Of the Indian Railways Act, 1890, as it stood prior to its amendment in 1955, that the bar created by that sub section applied, and was confined, to the purposes of the Indian Penal Code and could not be extended beyond its provisions.
In respect of offences other than those under the Code, therefore, neither sub section
(1) Of section 137, which applied only to offences under ' Ch.
IX of the Code, nor sub section
(4) of that section could apply and the question whether a railway servant charged with offences under the Prevention of Corruption Act, 1947, was a public servant or not must be, decided under section of that Act.
29i Section 2 of the Prevention of Corruption Act adopts, the definition of a public servant contained in section 21 Of the Indian Penal Code, and since the main offences charged against the appellants were under that Act, and not under the Code, section 2 Of the Act would apply and they would be public servants within the meaning thereof.
Devi Ram Deep Chand vs The State, A.I.R. 1954 Punj.
189 disapproved.
Ram Krishan vs The State of Delhi, ; and C. A. Montorio vs The State of Ajmer, ; , considered.
|
Summarize this legal judgement text concisely | 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.
| Notwithstanding the provision in section 105 of the Representation of the People Act (Act XLIII) of 1951 that every order of an Election Tribunal made under the Act shall be final and conclusive, the High Court and the Supreme Court have unfettered jurisdiction to examine whether the tribunal, in the exercise of its undoubted jurisdiction, has acted legally or otherwise, This jurisdiction cannot be taken away by a legislative device that purports to confer power on a tribunal to act illegally.
The legality of an act or conclusion is something that exists outside and apart from the decision of an inferior tribunal.
It is a part of the law of the land which cannot be finally determined 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 of the Constitution.
The jurisdiction of the High Courts under Article 226, with that of the Supreme Court above them, re main it , fullest extent despite section 105 of the Representation 2 of the People Act.
Limitations on the exercise of, such jurisdiction can only be imposed by the Constitution.
The powers of the High Courts under Article 226 of the Constitution are discretionary and, though no limits can be placed upon that discretion, it must be exercised along recognised lines and not arbitrarily.
In the exercise of their jurisdiction under Article 226, the High Courts should not act as Courts of Appeal or revision to correct mere errors of law which do not occasion injustice in a broad and general sense.
It is a sound exercise of discretion to bear in mind the policy of the legislature to have disputes about special rights, as in election cases, decided as speedily as may be.
The High Courts should not therefore entertain petitions for prerogative writs lightly in this class of case.
The appellant filed an election petition under section 100 of the Representation of the People Act.
He appeared on the first and 'Subsequent hearing at Kotah.
The proceedings were then adjourned for certain hearings at Udaipur.
The appellant did not appear on the first three hearings at that place so the tribunal proceeded ex parte.
His counsel appeared on the fourth hearing but was not allowed to take any further part in the proceedings because no good cause was shown for the earlier non appearance and so the tribunal refused to set aside its "ex parte order".
Held, (1) Under section 90(2) of the Representation of the People Act the procedure for the trial of election petitions is to be, as near as may be, the same as in the trial of suits under the Civil Procedure Code; (2) under the Civil Procedure Code there is no such thing as an ex parte order for non appearance" which precludes further appearance at an adjourned hearing until the Order is set aside.
If a party appears at an adjourned hearing the court has a discretion (which must be exercised judicially) either to allow him to appear oil such terms as it thinks fit, or to disallow further appearance; but (3) if he is allowed to appear then, unless good cause is shown under Order 9, rule 7 for the earlier non appearance the proceedings must continue from the stage at which the later appearance is entered and the party so appearing cannot be relegated to the position he would have occupied if he had appeared at the earlier hearing or hearings; also, (4) in exercising its discretion the court must see that justice is done to all concerned, including the witnesses Rule 6 (1) (a) of Order 9 of the Civil Procedure Code is confined to the first hearing of the suit and does not apply, per se to subsequent hearings.
0. 9, r. 7 gives a party a right to be relegated to the position he would have occupied if he had appeared at the earlier hearing or hearings if he shows good cause.
It does not per se prevent further appearance when no good cause is shown.
O. 17, r. 2 applies at the adjourned hearing and there, the Court is given a wide discretion to make such order as it thinks fit.
3 A code of procedure is a body of law designed to facilitate justice and further its ends, and should not be treated as an enactment providing for punishments and penalties.
The laws of procedure are grounded on the 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.
Subject to clearly defined exceptions the laws of procedure should be construed wherever reasonably possible, in the light of that principle.
The court is invested with the widest possible discretion to see that justice is done to all concerned.
No hard and fast rule can be laid down; and the court in the exercise of its judicial discretion will have, in a given case, to determine what consequences are to follow from non appearance.
An order awarding costs, or an adjournment, or the consideration of the written statement and the framing of the issues on the spot, can in some cases meet the ends of justice.
In other cases, more drastic action may be called for.
By "ends of justice" is meant not only justice to the parties but also to witnesses and others who may be inconvenienced.
The convenience of the witnesses, which deserves the greatest consideration, is ordinarily lost sight of in this class of case.
Justice strongly.
demands that this unfortunate section of the general public com pelled 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 particular case to refuse an adjournment and permit the plaintiff to examine the witnesses present and not allow the defendant to cross examine them.
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 the parties a real opportunity of fighting out their cases fairly squarely.
The Court must in every case exercise the discretion given to it.
Its hands are not tied by a so called "ex parts order", and, if it thinks they are tied by rule 7 of Order 9 of the Code, then it is not exercising the discretion which the law says it should, and in a given case interference may be called for.
Held, that the Election Tribunal did not exercise the discretion given to it by law because of a misapprehension that it had none.
It was directed to do so now and to proceed with the further hearing of the case in accordance with law.
Hari Vishnu vs Ahmed Ishaque ([1955] 1 S.C.R. 1104), Darga Shankar Mehta vs Thakur Raghuraj Singh ([1955] 1 S.C.R. 267), and Raj Krushna Bose vs Binod Kanungo ([1954] S.C.R. 913, 918), applied.
Hariram vs Pribhdas (A.I.R. 1945 Sind 98, 102), distinguished.
Sewaram vs Misrimal (A.I.R. , 14), overruled.
Venkatasubbiah vs Lakshminarasimham (A.I.R. , approved Balakrishna Udayar vs Vasudeva Ayyar (I.L.R. , 4 T. M. Barret vs African Products Ltd. (A.I.R. 1928 P.C. 261, 262) and Sahibzada Zeinitlabdin Khan vs Sahibzada Ahmed Baza Khan (5 I.A. 233, 236), applied.
Case remitted to, the Tribunal:
|
Summarize this legal judgement text concisely | Appeal No. 161 of 1954.
Appeal from the judgment and order dated, May 18, 1953, of the Calcutta High Court in Income tax Reference No. 72 of 1951.
N. A. Palkhivala, P. D. Himatsingka, J. B. Dadachanji, section N. Andley Rameshwar Nath and P. L. Vohra, for the appellant.
G. N. Joshi and R. H. Dhebar, for the respondent.
May 23.
The Judgment of the Court was delivered by KAPUR J.
This appeal brought on a certificate of the High Court raises a point of far reaching consequence as to the interpretation of sections 8, 10 and 24(2) of the Indian Income tax Act (hereinafter termed the Act).
The assessee (who is the appellant before us) claims that in the computation of its profits for the assessment year under review (1945 46), it is entitled to set off the carried over loss of the previous year against the profits of the year of assessment under section 24(2) of the Act.
The assessee is a Bank carrying on banking business.
For the assessment year its assessable income was computed by the Income Tax Officer at Rs. 14,95,826 "by splitting up" its income into 2 heads . . . . "interest on securities" and . . . . business income ".
" Interest on securities" in the year of assessment was Rs. 23,62,815 and under the head " business income " there was a 81 loss of Rs. 8,86,972.
After making the necessary adjust ments and deducting the business loss from " Interest on securities ", the net income was determined at Rs. 14,95,826.
In the previous year there was a loss of Rs. 3,21,929 which was computed by setting off the business loss against "interest on securities ".
Before the Income tax Officer the assessee made its claim on the basis that it was a part of " the business of the Bank to deal in securities. . . . . . and " that no distinction should be made between income from securities and income from business for the purpose of set off under section 24 ".
It also claimed that it carried on only one business, namely banking as defined by section 277F of the Indian Companies Act in the ' course of which the " Bank has to receive money on deposits and invest such deposits in securities, loans and advances " and therefore holdings of securities by it could not be treated as its separate business.
The Income tax Officer was of the opinion that, as there was a loss under the head " business " its claim could; not be sustained and hence it could not be set off under section 24(2) of the Act.
On appeal to the Assistant Commissioner of Income tax it was again contended that the assessee was a dealer in securities and that the two heads of income, " Interest on securities " and " profits and gains " in banking business could not be treated separately and were part of the same business of the assessee and therefore it could claim a set off under section 24(2) of the Act.
But this contention was repelled.
The matter was then taken to the Income tax Appellate Tribunal where again the contention was repeated that the business of the assessee could not be split up into two heads under " interest on securities " and banking business".
The Tribunal, however, held: " Reading sections 6, 8 and 10 it appears to us that the legislature wanted to keep the income from the two sources as separate.
We are therefore of the opinion that the Income tax Officer was right in splitting up the income of the appellant into two heads and in refusing the set off of the business loss brought forward 11 82 from last year against income from Govt.
securities earned this year.
" It therefore did not allow the loss of the previous year to be set off against the computed profits of the assessment year.
The assessee thereupon asked for a case to be stated to the High Court and inter alia raised two questions; (1) Whether interest on securities was a part of Bank 's income from business carried on by it.
(2) Whether the assessee was entitled to set off the carried over loss of the previous year against income during the assessment year.
The assessee contended that it was carrying on banking business in various towns in India, that " in the usual course of its business it invests moneys in Securities and receives interest thereon " and therefore it claimed that the loss of Rs. 3,21,929, carried forward from the previous year could be set off under section 24(2) of the Act.
The Tribunal stated the case and sought the opinion of the High Court on the following three questions; (1) " Whether on the facts and in the circumstances of this case, the assessee was entitled to set off the business loss of Rs. 3,21,929 brought forward from the preceding year against this year 's income from interest on securities held by the assessee.
(2) Whether on the facts and in the circumstances of this case the assessee was entitled under section 8 to deduct any part of the administrative expenses out of the income from interest on securities.
(3) Whether in the circumstances of this case, the assessee was entitled under the first proviso to section 8 of the Income tax Act to deduct any interest on money borrowed and utilised for investment in tax free securities.
" The High Court answered all the questions in the negative.
The learned Chief Justice during the course of his judgment said: 83 " It appears to me, therefore, that because the several heads under section 6 in the Indian Act are mutually exclusive and because under any Income tax Law, an item coming under an exclusive head cannot in any circumstances be charged under another head and also because the interest on securities in the hands of a banker cannot be treated as business income on the principles explained by Mr. Justice Rowlatt, I must hold that the contention of the asesssee. . . . . . must be rejected.
" We had the benefit of a full and able argument from counsel on both sides.
Counsel for the appellant has raised three points: (1)That sections 8 and 10 of the Act should be so read that "interest on securities", in cases where the true nature and character of the securities in the hands of an assessee is one of trading assets, would be excluded from the scope of section 8 and would fall under the head "business" within section 10 of the Act and alternatively even if sections 8 and 10 are read as specific heads then section 10, being more appropriate, should be applied to the facts of the present case ; (2)If sections 8 and 10 are equally applicable the assessee has the option to be taxed under that head which imposes a lighter burden on him; and (3)Lastly he contended that even if the heads of income were to be taken as mutually exclusive so that the "interest on securities" falls under section 8 and "business" under section 10 of the Act, the assessee would be entitled to a set off under section 24 (2) because "interest on securities" and "profits and gains" from business result from different operations of the same business, the two being different forms of the same business of the assessee.
We may now turn to the scheme of the Act.
Section 2(15) defines "total income" to mean "total amount of income, profits and gains. . . .computed in the manner laid down in the Act.
" Chapter I of the Act deals with "Charge of income tax".
It consists of two sections 3 & 4.
Section 3 provides that "income tax shall be charged for any year at any rate or rates in 84 accordance with and subject to the provisions of this Act.
" Section 4 provides ' that "the total income of any previous year of any person includes all income, profits and gains from whatever sources derived".
Chapter 3 deals with "Taxable income".
Section 6 enumerates the heads of income chargeable to incometax.
It says as under : section 6 "Save as otherwise provided by this Act, the following heads of income, profits and gains, shall be chargeable to income tax in the manner hereinafter appearing namely (i) Salaries.
(ii) Interest on securities.
(iii) Income from property.
(iv) Profits and gains of business, profession or vocation.
(v) Income from other sources.
(vi) Capital gains.
" The two relevant heads for the purpose of this appeal are (ii) & (iv), i.e., " interest on securities " and " profits and gains of business" which are dealt with under sections 8 and 10 of the Act respectively.
Section 8 provides that " the tax shall be payable by an assessee under the head " interest on securities " in respect of interest receivable by him on any security of the Central Government. . . . and in the provisos to this section are given the allowable deductions.
The amendment made in the proviso by the Act of 1955 is very relevant for the purpose of this appeal and we &hall advert to it at a later stage.
Section 10 provides: " The tax shall be payable by an assessee under the head " profits and gains of business, profession or vocation" in respect of the profits or gains of any business, profession or vocation carried on by him ".
The assessee contends that securities are a part of its trading assets and this position has throughout been accepted by the Department, and any income which accrues in respect of these assets in the form of interest 85 has the same characteristics as profits or gains of " business " and therefore must be treated as income falling under the head " business " under section 10 of the Act.
In other words the income of the assessee from its banking business which includes dealing insecurities is,really income from the same source and whatever accrues in the form of interest whether from securities or from any other source of investment would fall under section 10 and not section 8 because all the interest accrues from the business carried on by the assessee and this business is only one business.
The argument thus is that sections 8 & 10 have to be so construed as to harmonise with each other and the only way they can be harmonised is that income accruing in the form of "interest on securities" should be taken to be accruing from the business of the assessee because securities form part of its trading assets and thus fall within section 10 and not section 8, which must be restricted to capital investments only.
It is further contended that if the object of the legislature was to give a separate and exclusive identity to the income from " interest on securities", it would have made the language of section 8 of the Act as specific as it has made in the case of income from dividends from shares, which income by the addition of sub section
(I A) to section 12 has come to have a specific place under the head "other sources" and is no longer within the head "business" under section 10 of the Act and thus by statute its nature and character have undergone a change.
Reference is in this connection made to Commissioner of Income tax vs Ahmuty & co. Ltd. (1) where it was held by the High Court of Bombay that dividend income received by a dealer in shares is chargeable under section 10 and not under section 12 of the Act.
It is thus contended that in order to preserve the unity and oneness of the business of the assessee and to maintain the unity of its business income the applicability of section 8 should be circumscribed to "interest on securities" when they are not trading assets of the assessee.
According to the scheme of the Act discussed above income tax has to be charged in respect of the "total (1) (1955] 86 income" of the previous year of every assessee and "total income" is defined under section 2(15) to comprise all income, profits and gains from whatever source derived subject to certain exemptions.
Chapter 3 which is entitled "Taxable income" comprises sections 6 to 17 (both sections inclusive ).
Section 6 enumerates the various heads of income, profits and gains which are chargeable to income tax.
Each of these heads of income, profits and gains is dealt with under a separate section and these sections also give the details of allowances and exemptions in regard to each different head.
The argument raised by counsel for the Revenue is that according to the decision of the Privy Council in Probhat Chandra Barua vs The King Emperor (1) section 6 is the charging section and that the words of sections 7 to 12 show that the various heads of income are mutually exclusive and items which specifically fall under these various heads have to be charged under only that head and would fall under one of these several but appropriately specific sections.
It is true that the Privy Council in Probhat Chandra Barua vs The King Emperor (supra) did point out that section 6 was a charging section, but this was because sections 3 and 4 were then differently worded as pointed out by Kania, J., in B.M. Kamdar, In re (2 ) at p. 43 and by Chagla, J., in the, same case at p. 57.
The Federal Court in Chatturam and others vs Commissioner of Income tax, Bihar(3) said: The liability to pay the tax is founded on sections 3 and 4 of the Income tax Act which are the charging sections".
The judgment of the Privy Council in Wallace Brothers & Co. Ltd. vs Commissioner of Income tax (4) also shows section 3 to be the charging section.
It is then argued that section 6 of the Act being mandatory all items of income, from whatever source they arise, would fall only under one of the heads enumerated under section 6 and therefore one of the sections 7 to 12 would specifically apply and section 8 which relates to " interest on securities" must be held to apply to income from that source.
It is also contended by counsel for the (1) (1930) L.R. 57 I.A. 228, 238.
(2) (3) , 308.
(4) 87 Revenue that even if there is any overlapping between sections 8 and 10 "interest on securities" whether accruing from securities held as a capital asset or trading assets falls under section 8 alone and section 10 should be so read as to altogether exclude the income from " interest on securities".
Counsel for the Revenue has referred us to the form of the Return, prescribed under section 22(1) of the Act at the relevant time of the assessment under review.
The heads there shown are (1) Salary, (2) Interest on securities, (3) Property, (4) Business, profession or vocation, (5) other sources, and income from each source is to be shown in a separate column, in each one of which reference is made to a particular note relevant to that head of income.
In the column under the head "interest on securities" reference is made to note 9 which is in the following words: "Interest on securities" means interest on promissory notes or bonds issued by the Government of India or any other State Government or the interest on debentures or other securities issued by or on behalf of a local authority or company.
The gross amount before deduction of income tax should be entered.
Entries under this head should be accompanied by persons paying the interest under section 18(9) of the Act.
Deductions are allowable in respect of (a) Commission charged by a banker for collecting the interest.
(b) Interest payable on money borrowed for the purpose of investment in the securities except certain interest payable to persons abroad from which tax has not been deducted (see section 8 of the Act for details).
Full particulars (in a separate statement if necessary) should be given of any deduction claimed.
" This is a statutory form and it gives what is meant by " interest on securities ", what documents are to accompany the Return in order to entitle an assessee to claim refund and what deductions are to be made.
" The mandatory character of section 6 is indicated by the language employed in that section and the phraseology of all the sections following, i.e., 7 to 12, employing the words " the tax shall be payable under 88 the head. . . . in respect of " the different and distinct heads of income, profits and gains, salaries " Interest on securities ", and "property ", business etc.
is indicative of the intention of the legislature making the various heads of income, profits and gains mutually exclusive.
So every item of income, whatever its source, would fall under one particular head and for the purpose of computing the income for charging of income tax the particular section dealing with that head will have to be looked at.
The various sources of income, profits and gains have been so classified that the items falling under those heads become chargeable under sections 7 to 12 according as they are income of which the source is "salaries ') " interest on securities property business, profession or vocation ", " other sources or " capital gains ".
Looked at thus the contention of counsel for the Revenue that under the scheme of the Act and on a true construction of these relevant sections" interest on securities " by whomsoever and for whatever purpose held has to be taxed under section 8 and under no other section is well founded and must be sustained.
It being a specific head of chargeability of tax, income from " interest on securities " whether held as a trading asset or capital asset would have to be taxed under section 8 and not under section 10 of the Act.
The amendment made in the proviso to section 8 in the year 1955 allowing a deduction in respect of any remuneration paid to any person other than the banker for realising interest on behalf of the assessee, supports this interpretation.
Thus this proviso now provides that reasonable amount can be deducted by an assessee for commission paid to a Bank or remuneration paid to anybody else for realising interest on its behalf which clearly indicates the intention of the legislature that interest on securities specifically falls under section 8 and under no other section.
This amendment shows that even a Bank, if it buys securities as a part of its trading assets, is entitled to make a deduction for remuneration paid by it to any person for realising interest which postulates that "interest on securities" would fall under s, 8 of the Act, 89 This interpretation receives further support from the language of section 18 which deals with payment after deduction at source.
Section 18(3) requires a person responsible for paying " interest on securities " to deduct income tax on the amount of the interest payable at the maximum rate and the person so responsible is required, after deduction of the income tax, to pay to the account of the Central Government within 7 days of the deduction, the sum so deducted and under section 18(5) the maximum rate is to be charged for the year in which the the amount is paid and not at the rate of the assessment year.
A combined reading of sections 3,4,6, 8,10,18 and refund section, section 48, shows that income tax is to be charged at the rate or rates prescribed in the Finance Act on the total income of the assessee as defined in section 2(15) of the Act and computed in the manner given in as. 7 to 12 which are not charging sections but are provisions for the computation of " total income ".
In the words of Viscount Dunedin in Salisbury House Estate vs Fry(1): " Now, the cardinal consideration in my judgment is that the income tax is only one tax, a tax on the income of the person whom it is sought to assess, and that the different schedules are modes in which the Statute directs this to be levied ".
As has been pointed out in that judgment there are no separate taxes under the various schedules but only one tax.
But in order to arrive at the total income on which tax is to be charged " you have to consider the nature, the constituent parts, of his (assessee 's) income to see which schedule you are to apply.
" If these words may be used with reference to the language of the Indian Act, we have to look at the source of " income, profits and gains" and then see under what head it appropriately and specifically falls and if it falls under one particular head then computation is to be made under the section which covers that particular head of income.
We cannot treat any one of the sections from sections 7 to 10 to be general or specific for the purpose of any one particular source of income.
The (1) (1930)15 T.C.266,306.
90 language shows that they are all specific and deal with the various heads in which the item of income, profits and gains in the case of an assessee falls.
Sir George Rankin in Commissioner of Income Tax vs Chunilal B. Mehta(l) said: " The effect of section 6 is to classify profits and gains, under different heads for the purpose of providing for each appropriate rules for computing the amount; its language is " shall be chargeable in the manner hereinafter appearing.
" One of the heads is " business ", which as a head of income stands alongside salaries, interest on securities, professional earnings and other sources.
True, the classification of income is according to the character of the source But the list of " heads in section 6 is a list of sources not in the sense of attributing the income to one property rather than another, one business rather than another, but only in the sense of attributing it to property as distinct from employment, or business as distinct from investment. .
What is to be learnt from an examination of the language of sub section
(1) of section 4 income, profits and gains, described or comprised in section 6 from whatever source derived is that section 6 is intended as describing different kinds of profits In that case the question for decision was whether a resident carrying on business in India and controlling transactions abroad in the course of such business was liable to income tax on such transactions, it was held that the profits arising under such transactions do not arise or accrue in India merely because of control by the assessee in India.
The judgment of the Privy Council shows what section 6 of the Act means each head refers to income, profits and gains attributable to the source salary, interest on securities, property, business, profession etc.
This supports the contention of each head being separate, exclusive and specific.
Decided cases all support the contention of counsel for the Revenue that the various heads of income enumerated in section 6 of the Act and more particularly (1) , 529. 91 dealt with in sections 7 to 12 are exclusive heads and if an item of income falls under one of these heads then it has to be treated for the purpose of income tax under that head and no other.
In Salisbury House Estate Ltd. vs Fry (1) the assessee was a limited company which was formed for the express purpose of acquiring Salisbury House and utilising it.
In this building there were 800 rooms which were let to tenants.
The company also maintained a staff of servants to render various kinds of services to the occupants of the rooms.
The company was assessed to income tax under Sch.
A upon gross valuation of the premises and as the actual rent received was higher, the Revenue wanted to assess income again under Sch.
The company contended that so far as the proceeds of the property were concerned they had already been taxed under Sch.
A and could not again be brought "in computo" under Sch.
D. Viscount Dunedin at p. 306 observed: " Now, if the income of the assessee consists in part of real property you are, under the Statute, bound to apply Sch.
Lord Atkin at p. 319 said: " the dominance of each Sch.
A, B, C & E over its 'own subject matter is confirmed by reference to the Sections and Rules which respectively regulate them in the Act of 1842.
They afford a complete code for each class of income, dealing with allowances and exemptions, with the mode of assessment, and with the officials whose duty it is to make the assessments.
. . . . . . I find no ground for assessing the taxpayer under Sch.
D for any property or gains which are the subject matter of the other specific Schedules.
" At p. 320, he pointed out that Sch.
D is a residuary Schedule and all Schedules are mutually exclusive.
Referring to investments in securities he said: Income derived by a trading company from investments of its funds, whether temporary or permanent, in government securities must be taxed under (1) ; 92 Sch.
C, and cannot for the purposes of assessment under Sch.
D be brought into account.
" This shows that even though Sch.
D is residual all Schedules are mutually exclusive and if income falls under one Schedule, it must be assessed under that Schedule because the Schedules are a complete code for each class of income, dealing with, allowances and exemptions and with the mode of assessment.
A significant passage in the judgment of Lord Atkin (at p. 321) is: " I find it difficult to say that companies which acquire and let houses for the purposes of their trade, such as breweries in respect of their tied tenants, and collieries and other large employers of labour in respect of their employees, do not let the premises as part of their operation of trading.
Personally I prefer to say that even if they do trade in letting houses their income so far as it is derived from that part of their trading must be taxed under Sch.
A and not Sch. D." Thus even though the assessee was a company carrying on business or trade, income from the head " property " was taxed under Sch.
A and not Sch.
This case supports the contention that different Schedules being distinctly applicable to each individual head of income would exclude the applicability of any other head.
In Butler vs The Mortgage Company of Egypt Ltd. (1), a British company controlled in Egypt was carrying on business of lending money on mortgage of land in Egypt or on the security of debentures by mortgage of land.
In case of default the bank could take action in the Egyptian Courts either to sell the property or to take possession with a view to future sale.
The General Commissioners held that the acceptance of ,securities for money lent was only an incident of the company 's business and that income was not assessable under Case 4 of Sch.
D. The company claimed that the assessment should be under Case 5 of Sch.
D and not Case 4.
It was held that the Crown had the right to tax under Case 4 but even if the assessee satisfies (1) , 809, 810. 93 that Case 5 is also applicable it was still for the Crown to decide and tax under Case 4 provided both cases applied equally.
Rowlatt J. said: "A banker could never ask to be repaid the tax which had been deducted from the Government securities which he held, because he held them as a banker, the point being that when you have once got a security (we will say) the interest on which is taxed by the Act, you cannot get out of it because you say that you look a little further and see this is only embedded in a business." It means in terms of the Indian Statute that in the case of interest on securities if chargeable under a specific section, the assessee even though he is a banker cannot claim that they be treated as "business income." in Thompson vs The Trust and Loan Company of Canada (1), the respondent company carried on business as a loan and finance company.
During the material years the company bought treasury bonds cum coupons and on the same day sold bonds of the same nominal value retaining the coupons and received on encashment a half year 's interest under deduction of income tax.
The Crown contended that in computing the Company 's profits for assessment to income tax under Case I of Sch.
D there, should be included, as receipts, the amounts realised by the sale of bonds ex coupons and the net proceeds of the coupons and, as disbursements, the amounts paid by the company for the bonds cum coupons.
But it was held that the interest received by the company was income of the company taxed by deduction under Sch.
C and that no part of the proceeds of the coupons should be included in the computation of the company 's liability under Sch.
D. Rowlatt J. at p. 400 said: " The Crown cannot treat a transaction which has its own character for income tax purposes as if it were something of a different character. " and Lord Hanworth M.R. at p. 406 put the matter thus: (1) 94 Now in the present case it is plain that this subject matter of tax, government bonds and coupons payable out of the government funds, have got to be taxed under Sch.
C; they cannot be taxed anywhere else.
" In Volume I of Simon 's Income Tax (1948 Ed.) p. 54 the law is thus stated: " These Schedules are prima facie mutually exclusive and consequently if a particular kind of income is charged under one Schedule the Crown cannot elect to charge it under another.
" This is in accord with the decisions discussed above.
The Commercial Properties Ltd. vs Commissioner of Income tax, Bengal(1) was a case of a registered company whose sole object was to acquire lands,, build houses and let them to tenants, the sole business of the company being the management and collection of rents from the properties.
The assessment was made under section 9 of the Act but the company claimed that they were carrying on a business assessable under section 10 and not under section 9.
The Court held that the company was rightly assessed under section 9, its income being derived from its ownership of buildings.
Rankin C. J. said at p. 26: " In my judgment the words of section 6 and section 9 and section 10 must be read so as to give some effect to the contrast that is there made between income, profits and gains from " property " and from " business " and I entirely refuse my assent to the proposition that because it happens that the owner of a property is a company which has been.
incorporated for the purpose of owning such property, therefore the income derived from " property must be regarded as income derived from business ".
In my judgment, income derived from " property is a more specific category applicable to the present case".
The decision in this case shows that the ownership of the house property was not considered as "business" and that income derived from such source would more specifically and appropriately fall within the head "property".
(1) 95 The applicability of section 8 directly arose and was discussed in H. C. Kothari v, Commissioner of Income tax, Madras(1).
The assessees in that case had several sources of income, one of which was interest on securities.
The business of the assessees showed a loss but the assessees claimed earned income relief in respect of interest on securities on the ground that securities, which they had purchased and sold as part of their business, formed their stock in trade and the interest therefrom should be treated as "business" profits.
But section 8 of the Act was held applicable to the facts of that case.
Satyanarayana Rao, J. said " of the Act which deals with interest on securities is a separate and distinct head, and if an income is chargeable under that head, it is not open either to the assessee or to the department to change the head and claim to tax it under a different head.
It was also pointed out in this judgment following Commissioner of Income_tax vs Bosotto Bros. (2) that if income falls under more than one head the assessee has the option to choose the head which makes the burden on his shoulders lighter.
The following two cases were relied upon by the assessee: (1) Mangalagiri Sri Umamaheshwara Gin and Rice Factory Ltd. vs Guntur Merchants Gin and Rice Factory Ltd. (3) where a limited company incorporated for the purpose of milling rice leased out the buildings, plant, machinery etc., to another company for a fixed annual rent.
The lessees were to do the necessary repairs to keep the mill in good working condition and the lessors were to bear the loss of depreciation.
The assessee company claimed the allowances for depreciation under section 10(2) (vi) of the Act.
It was held that the company was carrying on the business of letting a rice mill and as such was entitled to a deduction for depreciation.
The judgment of Krishnan, J., shows that it was clear from the facts of the case that the company was carrying on business (1) , 587.
(3) (2) 96 of letting the mill for the purpose of being worked by lessees and it was under these circumstances that section 10 was held applicable.
The other case is Sadhucharan Roy Chowdhry, In re (1) the facts of which were similar to the facts of Mangalagiri Sri Umamaheshwara Gin and Rice Factory Ltd. vs Guntur Merchants Gin and Rice Factory Ltd. (supra).
It was held that letting of a Jute Press at rent was as much a business as the letting of a ship to freight or letting of motor car or any other kind of machines or machinery for hire, and therefore allowances for depreciation were allowed like in Mangalagiri 's case (supra).
Neither of these cases throws any light on the question now before us.
The appellant 's contention that looking at the real nature and character of the source of income arising from "interest on securities" in the case of the present assessee, the Bank, section 10 of the Act would apply and not section 8 can receive no support from the decision in Davies vs Braithwaite (2).
That was a case where an actress earned her living by accepting and fulfilling professional engagements, her activities being acting in stage plays in England and America, performing for the films and on the wireless and performing for gramophone companies.
These were held to fall under Sch.
D and not E as whatever contracts she made were nothing but incidents in the conduct of her professional career.
The use of the following words by Sir George Rankin in Commissioner of Income tax vs Chunilal B. Metha (3): But the list of "heads" in section 6 is a list of sources not in the sense of attributing the income to . . . one business rather than another but only in the sense of attributing it to business as distinct from investment.
" is no surer foundation for saying that " interest on securities " is severable into income from securities held as a capital investment and income from those held as trading assets.
The language of sections 6, 8 and 10 is destructive of any such contention.
(1) (2) (3) [1938] 6I.T.R. 521, 529.
97 Thus on a true construction of the various sections of the Act the income of an assessee is one and the various sections 7 to 12 are modes in which the Statute directs that income tax is to be levied and these sections are mutually exclusive.
The head of income of which the source is " interest on securities " has its ' characteristics for income tax purposes and falls under the specific head covered by section 8 of the Act, and where an item falls specifically under one head it has to be charged under that head and no other.
This interpretation follows from the words used in sections 6, 8 and 10 which must be read so as to give effect to the contrast between " income, profits and gains " chargeable under the head " interest on securities " and income, profits and gains " chargeable under the head business ".
Thus on this construction the various heads of " income, profits and gains " must be held to be mutually exclusive, each head being specific to cover the item arising from a particular source.
It cannot, therefore, be said that qua the assessee in the present case and for the purpose of securities held by it, section 8 is more specific and section 10 general or vice versa, and therefore no question of the applicability of the principle " generalia specialibus non derogant " arises.
This finds support from the decided cases which have been discussed above.
Thus both on precedent and on a proper construction, the source of income " interest on securities " would fall under section 8 and not under section 10 as it is specifically made chargeable under the distinct head " interest on securities " falling under section 8 of the Act and cannot be brought under a different head even though the securities are held as a trading asset in the course of its business by a banker.
In this view of the matter no question of exercise of option by the assessee or the Revenue arises.
Consequently Lord Shaw 's observation in The Liverpool and Land Globe Insurance vs Bennett (1): " It appears to me that this selection is not only justified in law but is founded upon the soundest and most elementary principles of business," (1) , 376.
98 will be inapplicable to the facts of the present case, and so also the rule as to choosing the head which imposes on the assessee 's shoulders burden which is highter as given in Commissioner of Income tax vs Bosotto Bros., (supra) and reiterated in H. C. Kothari vs Commissioner of Income tax, Madras (supra).
To the third point raised by counsel for the assessee that even if interest on securities falls under section 8 of the Act and not under section 10 the assessee is entitled to 'Yet a set off under section 24(2) of the Act, counsel for the Revenue has taken the objection that this plea is not available to the appellant because it was not placed before the Income Tax Appellate Tribunal for being referred to the High Court nor was it raised before the High Court.
How the question was specifically raised before the Income Tax Officer and the Appellate Assist.
ant Commissioner and also before the Income Tax Appellate Tribunal has already been mentioned.
In its application to the Tribunal for stating the case to the High Court the assessee specifically raised in two suggested questions its right to set off the business loss of Rs. 3,21,929 brought forward from the previous year against the income of the assessee in the assessment year.
It does not appear from the judgment of the High Court that the question was argued in the manner it has been debated in this court.
The appellant seems to have rested his case on the applicability of section 10 to the profits under the head "interest on securities" because of the securities being trading assets but this contention was repelled and the same question has been raised before us but the assessee now supports his case on an alternative argument that even if the securities fall under section 8 still the profits from that source are from an item of the assessee 's business and therefore the loss of the previous year from the banking business of the assessee can be set off against the profits of the assessment year whatever be the source of that profit.
The case is similar to the one in Commissioner of Income tax vs Messrs. Ogale Glass Works Ltd. (1).
The question framed by the Tribunal is a general one and what is to be determined is whether (1) , 196, 198.
99 the loss of the previous year can be set off against the income of the assessment year within the provisions of section 24(2) of the Act.
The question is wide enough to cover the point raised before us.
In the circumstances of this case the third point, raised by counsel for the assessee, is open to be canvassed before us.
Counsel for the Revenue contends that the words used in section 24(2) were " the same business " and therefore this set off would be allowable only against any profits or gains of the game business and no other business.
He further contends that the scheme of section 24(1) and (2) shows that profits and gains must be arising under section 10 and not under any other section because the expression used is profits or gains which goes with " business " under section 10 and cannot have reference to income, profits and gains arising from interest on securities " which are under section 8 of the Act.
Counsel for the assessee on the other hand submits that the use of the word " same " signifies the identity of the business in which the loss has occurred and has no reference to the head under which the profits are chargeable.
In other words interest does not cease to be profits and gains of the same business merely because for the purpose of chargeability it falls under a different head, i.e., under section 8 and not under section 10.
Section 24 of the Act deals with the set off of loss in computing the aggregate income.
He also contends that the business which the assessee was carrying on was the business of dealing in money and credit and that banking and dealing in securities constitute one and the same business.
He refers to section 277 F of the Indian Companies Act and relies on the Privy Council decision in Punjab Co operative Bank Ltd. vs The, Commissioner of Income tax, Punjab(1) in which it was pointed out that in the ordinary case 'of a bank the business consists in its essence of dealing with money and credit.
The banker has always to keep enough cash or easily realisable securities to meet any probable demand by depositors, and if some of the securities are realised to meet (1) 100 withdrawals by depositors, this is clearly a normal step in carrying on the banking business.
It is an act done in what is truly carrying on of the banking business.
In view of the order we propose to make, we do not find it necessary to express any opinion on the respective contentions raised by counsel for the parties.
In Punjab Co operative Bank 's case (supra) a finding had been given that the purchase and sale of securities was as much the assessee 's business as receiving deposits from clients and withdrawals by them.
In the case before us no such finding has been given and in the absence of such finding no opinion can be given as to whether the holding of securities out of which interest was derived formed part of the same business within section 24(2) or not.
The appeal would therefore, be allowed and the case remitted to the High Court for a fresh decision of the reference after getting from the Tribunal a fuller statement of facts about this part of the case, whether the securities in question were a part of the trading assets held by the assessee in the course of its business as a banker.
The costs of this appeal will be costs in the reference before the High Court.
Appeal allowed.
Case remitted.
| For the assessment year (1945 46) the assessable income of the appellant bank was computed by the Income tax Officer by splitting up its income into two heads " interest on securities " and " business income ", and deducting the business loss from interest on securities.
In the previous year the assessment showed a loss which was computed by setting off the " business loss against " interest on securities The appellant claimed that in the computation of its profits for the assessment year in question it was entitled to set off the carried over loss of the previous year under section 24(2) Of the Indian Income tax Act, 1922.
The Income tax Officer rejected the claim on the ground that the loss was under the head " business " and so could not be set off against income from securities under section 24(2) of the Act.
Both the Income tax Appellate Tribunal and the High Court, on reference, held that in view of sections 6, 8 and 10 of the Act " interest on securities " could not be treated as business income and therefore the appellant could not claim a set off under section 24(2).
On appeal to the Supreme Court it was contended for the appellant that (1) sections 8 and 10 should be so read that where the securities in the hands of an assessee are trading assets, section 8 would be excluded, being restricted to capital investments only, and the matter would fall under the head " business " within section 10, and (2) in any case, even if the income from securities fell under section 8, the appellant would be entitled to a set off under section
24(2) because it carried on only one business, namely banking, and the holding of securities by it was part of the said business.
Held, that the scheme of the Indian Income tax Act, 1922, is that the various heads of income, profits and gains enumerated in section 6 are mutually exclusive, each head being specific to cover the item arising from a particular source and, consequently, " interest on securities " which is specifically made chargeable to tax under section 8 as a distinct head, falls under that section and cannot be brought under section 10, whether the securities are held as trading assets or capital asset," 80 Commissioner of Income Tax vs Chunnilal B. Mehta, Salisbury House Estate Ltd. vs Fry, (1930) 15 T. C. 266, Commercial Properties Ltd. vs Commissioner of Income Tax, Bengal, and H. C. Kothari vs Commissioner of Income Tax, Madras, , relied on.
The question whether the holding of securities by the appellant formed part of the same business within section 24(2), could not be decided in the absence of a finding that the securities in question were a part of the trading assets held by the appellant in the course of its business as a banker, and the case was remitted to the High Court for a fresh decision on the reference after getting from the Tribunal a fuller statement of facts.
|
Summarize this legal judgement text concisely | minal Appeals Nos.
53 to 56 of 1957.
Appeals by special leave from the judgment and order dated November 21, 1956, of the Bombay High Court in Criminal Appeals Nos.
861 864 of 1956 arising out of the judgment and order dated June 1, 1956, of the Court of the Additional Sessions Judge for Greater Bombay at Bombay in Sessions Case No. 27/111 Sessions 1955.
A. section R. Chari and M. section K. Sastri, for the appellants.
K.J. Khandalawala, Porus A. Mehta and R. H. Dhebar, for the respondent.
May 23.
The Judgment of the Court was delivered by JAGANNADHADAS J.
These are appeals by special leave by four persons, who along with one Ramniklal Keshavlal Jhaveri (since acquitted) were committed for trial in the Court of the Sessions Judge of Greater Bombay, on charges of conspiracy to commit criminal breach of trust of the funds of the Jupiter General Insurance Co. Ltd. (hereinafter referred to as the Jupiter) and in pursuance of the said conspiracy of having committed criminal breach of trust, some of them being directors and agents of the said company.
They were alternatively charged for commission of the offence of criminal breach of trust by some of them as directors and the others for abetting the commission of the criminal breach of trust committed by the directors.
The trial before the Sessions Judge was with the aid of a jury.
All of them except Jhaveri were found guilty, appellants in Criminal Appeals Nos. 53 and 54, Sardul Singh Caveeshar and Parmeshwar Nath Kaul, by a majority verdict and appellants in Criminal Appeals 163 Nos.
55 and 56, Vallabhdas Pulchand Mehta and Charucharan Guha, by an unanimous verdict.
The verdicts of the jury were accepted by the Sessions Judge who sentenced the appellants as follows: Appellant Sardul Singh Caveeshar to rigorous imprisonment for three years and a fine of Rs. 2,500.
Appellant Parmeshwar Nath Kaul to rigorous imprisonment for five years and a fine of Rs. 5,000.
Appellant Vallabhdas Phulchand Mehta to rigorous imprisonment for five years and a fine of Rs. 5,000.
Appellant Charucharan Guha to rigorous imprisonment for three years and a fine of Rs. 2,500.
The charge of conspiracy related to the period from December 1, 1948, to January 31, 1949, and comprised 'in all eight persons of whom two Lala Shankarlal Hiralal Bansal (hereinafter referred to as Lala Shankarlal) and Saubhagyachand Umedchand Doshi (hereinafter referred to as Doshi) died before commencement of the trial.
One Lala Ram Sharandas alias Ramsharan Lala Haricharan Mahajan (herein after referred to as Mahajan) was also a party to the conspiracy.
But for some reason or other, the trial against him was separated.
The persons who were on trial in the present case are the following.
1.Parmeshwar Nath Kaul, accused No. 1 and appellant in Criminal Appeal No. 54 of 1957 (hereinafter referred to as Kaul).
2.Vallabhdas Phulchand Mehta, accused No. 2 and appellant in Criminal Appeal No. 55 of 1957 (hereinafter referred to as Mehta).
3.Ramniklal Keshvlal Jhaveri, accused No. 3 and since acquitted by the Sessions Judge (hereinafter referred to as Jhaveri).
4.Charucharan Guha, accused No. 4 and appellant in Criminal Appeal No. 56 of 1957 (hereinafter referred to as Guha).
5.Sardul Singh Caveeshar, accused No. 5 and appellant in Criminal Appeal No. 53 of 1957 (hereinafter referred to as Caveeshar).
Lala Shankarlal, who was residing at No. 16, Bara Khamba Road, New Delhi, was the managing director 164 of the Tropical Insurance Co. Ltd., New Delhi (hereinafter referred to as the Tropical).
He was also a director of the Punjab Central Bank.
He had also floated and was controlling a company called the Delhi Swadesi Co operative Stores (hereinafter referred to as the Delhi Stores).
He was also a leader of the Forward Bloc in the year 1948.
Accused No. 1, Kaul, is a barrister and was in Lahore till the partition of the country.
In December, 1948, he was in Delhi.
Accused No. 2 Mehta, at all material times was the manager of the Bombay Office (General) of the Tropical.
Mahajan, at all material times was the secretary of the Tropical.
He was also a director in charge of the Delhi Stores.
Accused No. 3, Jhaveri, was a Bombay solicitor and at all material times was carrying on his profession as a solicitor in Bombay.
Doshi was till his death, a solicitor in Bombay and was carrying on his profession as such.
Accused No. 4, Guha, was in December, 1948, an accountant of the Tropical.
Accused No. 5, Caveeshar, was the managing director of the Peoples Insurance Co. He was also the managing director of the New Hindustan Bank.
He was for some time a member of the All India Congress Committee.
He was also a leading member of the Forward Bloc.
The case for the prosecution is that Lala Shankarlal who was the brain behind the conspiracy and who at the time was the managing director and had the control of the Tropical, which by then was financially in a tottering condition, planned along with his confederates to obtain the control of the Jupiter, which at the time was in a sound financial position, by acquiring the controlling block of shares of the Jupiter and utilising the funds of the Jupiter itself for the acquisition of such shares.
By the date of the conspiracy the Jupiter had investments of the face value of Rs. two crores.
It had 165 issued 1,24,966 ordinary shares of Rs. 100 each of which Rs. 15 per share was called up.
It had also issued cumulative preference shares.
Rai Bahadur Girdharilal Bajaj (hereinafter referred to as Bajaj) and Tulsiprasad Khaitan (hereinafter referred to as Khaitan) were at the time, i.e., in 1948, in control of the Jupiter.
These persons owned through the New Prahlad Mills Ltd. the controlling block of shares of the Jupiter i.e., about 63,000 shares of the Jupiter, between themselves and their nominees.
After negotiations, conducted first through certain persons called Mayadas and Chopra and then, through one Naurangrai, a bargain was settled with Khaitan for the purchase of this controlling block of shares at Rs. 53 per share for a sum of Rs. 33,39,000.
Out of this amount a sum of Rs. 5,39,000 was to be paid over to Bajaj and Khaitan directly in cash and only Rs. 28,00,000 would be shown as the price for the purchase of the shares.
The arrangement was that on receipt of the cash of Rs. 5,39,000 the management of the Jupiter was to be handed over to Lala Shankarlal and his group and that the balance of the money due of Rs. 28 lakhs was to be paid over to Khaitan on or before January 20, 1949.
In default of such payment within the prescribed time, Lala Shankarlal, representing the Tropical, should pay to Khaitan a sum of Rs. 5 lakhs as damages for breach.
In pursuance of this agreement Rs. 4,85,000 were paid over to Bajaj on or about December 29, 1948, and a formal agreement dated December 29, 1948, was entered into, incorporating the above terms.
On that very day Bajaj and other directors of Khaitan group held a meeting and allotted 1,250 shares straightaway to Lala Shankarlal and four of his nominees viz., Kaul, Mehta, Jhaveri and Doshi, each 250 shares, as qualifying shares for each.
They confirmed the transfer of these shares by a resolution and co opted Lala Shankarlal, Kaul, Mehta, Jhaveri and Doshi as directors and themselves resigned their respective offices as directors.
Thereafter Khaitan resignned his position as managing director of the Jupiter and at the same meeting, Lala Shankarlal was appointed in his place as the managing director of the Jupiter.
166 The. transfer of 61,750 shares for the sum of Rs. 28,15,000 to be paid to Bajaj and Khaitan before January 20, 1949, was brought about in the following way.
At the meeting of some of the new directors of the Jupiter dated January 11, 1949, it was decided to sell the Jupiter 's securities of the face value of Rs. 15 lakhs at the market rate and to obtain an overdraft accommodation for Rs. 14 lakhs with the Punjab National Bank on the pledge of the Government securities of the Jupiter.
At the same meeting a loan of Rs. 25,15,000 purported to have been granted to Caveeshar by way of an equitable mortgage on an alleged application by him dated January 4, 1949, relating to his properties at Delhi so Light to be given as security on the basis of an alleged valuation report of a firm of surveyors.
There was another alleged resolution authorising the director for purchase of plots of Delhi Stores for Rs. 2,60,000.
It may be mentioned that this Delhi Stores was under the control of Lala Shankarlal and, according to the prosecution, was a defunct Organisation at the time.
The plan envisaged by these resolutions was that cash was to be taken out from the Jupiter partly by sale of securities and partly by pledge of securities and that money was to be shown as having been a loan to Caveeshar on the security of his Delhi properties and a further amount as having been invested for the purchase of plots of the Delhi Stores.
Lala Shankarlal was to receive these amounts on behalf of Caveeshar and the Delhi Stores, and pay over the cash that would thus come into his hands to Bajaj and Khaitan as per the agreement.
This appears accordina to the prosecution case to have been actually done in the following way.
The safe custody account of the entire holdings of the securities of the Jupiter with the Bank of India was closed by a resolution of the new directors of the Jupiter dated January 11, 1949, and these securities were taken over into the personal custody of Mehta.
Thereafter securities of the value of Rs. 30 lakhs were offered for sale through a broker who ultimately could sell only shares of the value of Rs. 15 lakhs.
For the remaining Rs. 15 lakhs an.
overdraft was raised with the Punjab 167 National Bank on the application of Lala Shankarlal and on the pledge of some of the Government securities of the Jupiter.
The sale of securities realised Rs. 13,99,768 and on the pledge of securities a sum of Its.
14,21,812 was obtained, making up a total of Rs. 28,21,580.
Rs. 28,15,000 out of it was shown as having been received by the Bank of India and credited in the cash credit account of the New Prahlad Mills Ltd. It is thus that Khaitan received the balance of the money due under the agreement of December 29, 1948.
To prove this case a considerable body of prosecution evidence was given consisting of quite a large number of details.
It is necessary to set out the salient features thereof in broad outline as alleged and sought to be proved by the prosecution.
This may be dealt with conveniently with reference to three periods, the first comprising the period of conspiracy as mentioned in the charge i.e., December 1, 1948, to January 31, 1949, the second, relating to the period from February 1, 1949, to the end of December, 1949, and the third, the period covering the year 1950.
First period : December 1, 1948 to January 31, 1949.
The negotiations for the purchase of the controlling block of shares of the Jupiter were carried on from about December 10, 1948.
From 10th to 20th the negotiations were through one Mayadas, introduced to Lala Shankarlal by one Chopra.
Mayadas was given.
a letter of authority on December 15, 1948, by Lala Shankarlal, as the managing director of the Tropical, authorising him to buy for the Tropical the controlling block of shares of the Jupiter at the maximum rate of Rs. 49 per share with the promise of brokerage of Rs. 40,000 on completion of the transaction.
Chopra also was acting with Mayadas as broker.
These persons were dropped and the further negotiations from the 20th onwards were carried on through one Naurangrai known to Lala Shankarlal for about 40 years.
Through him the purchase of the controlling block.
of shares numbering 63,000 was agreed to be purchased at Rs. 53 per share.
The total purchase value was Rs. 33,39,000.
Khaitra asked for advance payment of Rs. 5,39,000 in 168 cash and intimated that agreement would be made mentioning only Rs.28 lakhs as the purchase price.
Naurangrai was placed in possession of funds of Rs. 5,39,000 on his executing a pro note dated December 23, 1948, (exhibit Z 4) for the said amount in favour of the Tropical by two cheques signed by Lala Shankarlal, one for Rs. one lakh on December 22, 1948 (exhibit Z 1) and another for Rs. 4,39,000, dated December 23, 1948, (exhibit Z 3).
These amounts were deposited by Naurangrai in his bank account with the Bikanir Bank at Delhi.
On December 26, Lala Shankarlal and Naurangrai and Khaitan met at Bombay and further details were discussed on the 26th and 27th.
Khaitan insisted on previous payment of Rs. 5,39,000.
Lala Shankarlal asked for the list of securities and shares, the valuation report and the balance sheet of the Jupiter.
Naurangrai returned back to Delhi, drew Rs. 5 lakhs by way of cash from his bank account and paid therefrom a sum of Rs. 4,85,000 to Bajaj at Ghaziabad.
He came back to Bombay and informed Khaitan of the same.
Thereupon the agreement, exhibit Z 171, was executed on December 29, 1948.
The agreement was to the following effect.
The Tropical was to pay the balance of Rs. 28,54,000 on or before January 20, 1949, and on such payment the Jupiter 's shares numbering 63,000 were to be delivered over.
The shareholder directors belonging to the Khaitan group should resign and nominees of the Tropical should be appointed as directors in their place.
If the Tropical failed to pay within the stipulated time, a sum of Rs. 5 lakhs by way of damages was to be paid to Khaitan group and if the Khaitan group failed to carry out their obligations damages of Rs. 2 lakhs were to be paid.
Subsequent to this agreement it was ascertained that Khaitan had agreed to pay Naurangrai a commission of Rs. 39,000.
Lala Shankarlal undertook to pay the same and to that extent the amount payable by January 20, was understood to be reduced.
There fore, the sum payable under the agreement with the above adjustment was Rs. 28,15,000.
The agreement was signed both by Khaitan on behalf of the New prahlad Mills Ltd., which owned the controlling block 169 of shares of the Jupiter and Lala Shankarlal on behalf of the Tropical.
On the very same date a meeting of the then Board of directors of the Jupiter was called.
At this meeting 1,250 shares were transferred in the names of Lala Shankarlal, Kaul, Mehta, Jhaveri and Doshi, 250 shares for each, in order to qualify them for becoming directors.
Transfer of these shares was confirmed by resolution.
It is the prosecution case that for these transfers no money was paid by the transferees concerned.
At that meeting the various persons who constituted the previous directors tendered their resignations in successive stages.
At each stage the resignations were accepted by thE rest of the pre existing directors and new directors of Lala Shankarlal 's group were co opted.
In the net result the entire Khaitan group of directors made way for the new Lala Shankarlal group of directors and Lala Shankarlal became the managing director.
Thereafter there was the first meeting of the new directorate of the Jupiter on January 4, 1949.
On that date Kaul was appointed director in charge.
A new Life sub committee consisting of Mehta, Jhaveri and Doshi was appointed as also a new finance sub committee consisting of Lala Shankarlal, Kaul and Mehta, to review the investment position of the company and to invest the company 's moneys upon such securities, shares and stocks, in such manner as the committee thought fit.
A power of attorney was granted to Lala Shankarlal as the managing director.
Kaul and Mehta were authorised individually to operate upon %%II the banking accounts in the name of the company with all the banks.
Three policyholder directors as also the general manager, Joel, resigned and their resignations were accepted.
This was followed by another meeting of the new directorate on January 11.
At that meeting the Board passed a number of resolutions about some of which there is considerable controversy and with reference to which there is the evidence of one Subramaniam for the prosecution.
One of the undisputed resolutions of that meeting was to withdraw a letter written by the previous general manager, Joel, dated January 3, 1949.
By that letter (exhibit Z 30), Joel had written to the Bank 22 170 of India, Safe Custody Department, instructing the bank that till further advice, they should not transfer any of the securities held by the bank on behalf of the company.
On January ll, 1949, a copy of this resolution was sent to the bank under the signature of Mehta for their information.
By another letter of the same date sent by the sub manager, one Baxi, (exhibit Z 32) the bank was instructed to close the safe custody account and to hand over the entire holdings of the securities of the Jupiter to Mehta.
Accordingly all the securities were brought into the office of the Jupiter and kept in a steel cupboard.
Two of the disputed resolutions of January II, were resolutions Nos. 7 and 8, one for sale of securities of the Jupiter of the face value of Rs. 15 lakhs at the market rate, and the other for an overdraft account of Rs. 14 lakhs with the Punjab National Bank on pledge of the Government securities of the Jupiter.
After the entire shares and securities were withdrawn from the safe custody of the bank, Kaul contacted one Jagirdar, a sub broker working in the firm of Messrs. Harkisondas Laxmidas, share brokers, and authorised them by letter (exhibit Z 36) dated January 13, 1949, to sell three per cent.
conversion loan 1946 of the face value of Rs. 30 lakhs at the best market rate.
The brokers sold on the 13th and 14th securities of the face value of Rs. 15 lakhs and told Kaul that the market was dropping and that further sale of those securities was not feasible.
The sale of securities of the face value of Rs. 15 lakhs realised a sum of Rs. 13,99,788.
Kaul, on behalf of the Jupiter, opened a current account on January 13, in the Punjab National Bank, Bombay.
On the 15th, Kaul, on behalf of the Jupiter, sent two letters, one to the Punjab National Bank and another to the Bank of India, stating that they were forwarding per bearer Government securities of the face value of Rs. 14 lakhs and Rs. I lakh respectively and instructed those banks to deliver them to Messrs. Harkisondas Laxmidas against payment and the proceeds to be credited to the account of the company.
The above sale proceeds were accordingly paid into the respective banks and the securities were delivered over to the respective parties on January 17, 171 It is the prosecution case that meanwhile Lala Shankarlal approached the Punjab National Bank, Kashmere Gate Branch, Delhi, on January 17, 1949, for the purpose of raising a loan on Government promissory notes.
He opened a cash credit account on the pledge of securities of the face value of Rs. 15 lakhs and passed a promissory note in favour of the bank for the said amount.
A loan of Rs. 14 lakhs was then granted and a demand draft dated January 17, for that amount in favour of the Jupiter on the Punjab National Bank, Currimjee House Branch, Bombay, was issued.
A list of securities pledged with the bank for the purpose has been put in evidence.
The demand draft was brought to Bombay and credited into the account of the Jupiter in the Currimjee House Branch of the Punjab National Bank at Bombay on January 18.
Thus by the sale and the pledge of the Jupiter 's own securities, a sum of Rs. 27,99,768 was raised and kept available for use.
On January 19, Mehta wrote to the Punjab National Bank, Currimjee House Branch, Bombay, to pay a sum of Rs. 28,15,000 to the Bank of India where the New Prahlad Mills Ltd. (Khaitan) had got 61,394 Jupiter 's shares lying in cash.
credit account and to take delivery of those shares on behalf of the Tropical and to debit Rs. 28,15,000 from the Tropical account with them.
On the same date, Mehta, wrote also to the Bank of India, requesting it to deliver 61,394 shares of the Jupiter to the Punjab National Bank, Currimjee House Branch, Bombay, with relevant transfer deed against payment of Rs. 28,15,000 with reference to Khaitan 's earlier instructions to the Bank by his letter dated January 3, 1949 (exhibit Z 44).
On the 19th, Mehta issued a cheque for Rs. 75,000 on the Indian Bank, Tropical account and deposited the same in the Punjab National Bank, Currimjee House Branch, Bombay, Jupiter account.
This cheque was credited into that account on the 20th.
On the same day, i.e., 19th, Mehta wrote a letter to the Punjab National Bank, Illaco House Branch, Bombay, in which the Jupiter had its account to transfer the account into the Punjab National Bank., Currimjee House Branch, where, on the 13th, Kaul 172 opened a current account for the Jupiter.
Now with this deposit the money to the credit of the Jupiter in the Punjab National Bank, Currimjee House Branch, was Rs. 28,74,768.
According to the prosecution it was in reality out of this amount that Khaitan was ultimately paid on January 20, by a cheque for Rs. 28,15,000 as against the transfer of the stipulated number of shares.
It is the prosecution case that this payment was camouflaged by certain apparent inter mediate transactions.
The prosecution case relating to this may now be stated.
From January 18 to 20, 1949, five cheques were issued on the Jupiter account in the Punjab National Bank which were all deposited into the account of the Tropical in the Punjab National Bank as follows: 1.A cheque for Rs. 2,55,050, dated January 18, 1949, signed by Kaul on behalf of the Jupiter in favour of the Delhi Stores and endorsed in favour of the Tropical by Guha, purporting to be the director of the Delhi Stores, which according to the prosecution, he was not.
This was again endorsed by Mehta on behalf of the Tropical in order to put it into the Tropical account.
2.Two cheques dated January 19, 1949, for Rs. 14,36,000 and Rs. 1,42,450, on the Jupiter account of the Punjab National Bank in favour of the Tropical or order.
These cheques are alleged to be written by Guha and signed by Kaul on behalf of the Jupiter, and endorsed on the reverse by Mehta on behalf of the Tropical for deposit in the Tropical account of the Punjab National Bank.
3.Two cheques dated January 20, 1949, for Rs. 8,96,000 and Rs. 36,000, on the Jupiter account of the Punjab National Bank in favour of the Tropical or bearer.
Both the cheques were written by Guha and signed by Kaul on behalf of the Jupiter.
All these five cheques were deposited into the Tropical account of the Punjab National Bank by a pay in slip dated January 20, 1949, alleged to be in the handwriting of Guha and signed by him on the 19th.
The total of these cheques comes to Rs. 27,65,700.
As a result of 173 the previous instructions given on January 19, by Mehta, to the Punjab National Bank, the Bank paid on January, 20, a sum of Rs. 28,15,000, from the Tropical account to the Bank of India and took delivery of 61,394 shares of the Jupiter from the Bank of India and the Punjab National Bank then held those shares for the Tropical in the Tropical account and Khaitan was paid on the last date stipulated.
It would appear that including the 1,250 qualifying shares previously transferred, the shares transferred by Khaitan fell short of the 63,000 shares, by 356 shares, but the deficit appears to have been made up very shortly thereafter.
Now, according to the prosecution, this payment of the Jupiter 's money for the purchase of the Jupiter 's shares was by means of ex facie payment from funds of the Tropical in the Punjab National Bank which were brought up to the requisite level by the deposit of five cheques as specified above in relation to a scheme of camouflaged payment to be gathered from certain resolutions of the new directorate of the Jupiter as they now appear from its resolutions of January 11 and 20, 1949 and later confirmed on January 22.
By resolution No. 5, as it now appears, a loan of Rs. 25,15,000 was granted to Caveeshar on his application dated January 4, and the valuation report of N. C. Kothari of Messrs. Master Sathe and Bhuta, surveyors.
This loan was on the equitable mortgage of Caveeshar 's properties in Delhi, the conditions being, a marketable title, period of loan three years, and other usual clauses in mortgage deeds.
The resolution authorised Kaul to advance the above loan on the said terms and get all necessary documents executed and registered at Delhi during the course of next eleven months.
Resolution No. 6 authorised the purchase of certain plots in Delhi said to belong to Delhi Stores for a sum of Rs. 2,60,000.
On January 20, there was another meeting of the new directorate of the Jupiter at which the minutes of the meeting of January 11, were read and adopted.
Resolution No. 10 thereof confirmed the payment of Rs. 25,10,650 to Caveeshar on equitable 174 mortgage of his properties as per the previous resolution No. 5 of January 11.
Resolution No. 11 thereof confirmed the purchase of plots from the Delhi Stores and the payment of Rs. 2,55,050 therefor.
Resolution No. 9 confirmed the sale of the Jupiter 's securities of the face value of Rs. 15 lakhs ' and resolution No. 12 confirmed the pledge of the Jupiter 's securities of the face value of Rs. 15 lakhs for cash credit account with the Punjab National Bank for Rs. 14 lakhs.
Now, on January 22, 1949, there purported to be, according to the prosecution case, a meeting of the Board of directors of the Tropical including Lala Shankarlal.
Resolution No. 11 thereof confirmed the purchase of 63,000 shares of the Jupiter on behalf of the Tropical for Rs. 28,15,000.
Resolution No. 12 thereof confirmed the transfer of 48,399 shares out of the above 63,000 shares to the Delhi Stores as agreed to by then.
By resolution No. 13, sale of the head office building of the Tropical and certain plots of land belonging to the Tropical to Caveeshar at Rs. 23,50,000 and Rs. 6,50,000 respectively as per agreement with Caveeshar by the managing director, Lala Shankarlal, on December 23, 1948, was confirmed.
By resolution No. 14, plots of land and building in Chandni Chowk, Delhi, sold by the managing director, Lala Shankarlal, at a cost of Rs. 2,60,000 to the Delhi Stores, was approved and confirmed.
It is alleged that the resolutions of the Jupiter at the meetings dated 11th and 20th above noticed and of the Tropical dated the 22nd disclosed the scheme of camouflaging which has been resorted to screen the fact that the payment for the purchase of the Jupiter 's shares was directly out of the Jupiter 's amount.
This, according to the prosecution, indicates in its broad outline the manipulations resorted to for the above purposes.
There is also evidence let in on behalf of the prosecution of a number of relevant details such as the presence or absence of the requisite entries and papers in the various books of account and other records of the concerned organisations, the Jupiter, the Tropical and the Delhi Stores.
Evidence has also been given to show which of the accused was directly a 175 party to which of the various steps.
Direct evidence of some of the ex employees of the Jupiter, in particular of one Subramaniam and of another Rege, has, according to the prosecution, considerable bearing on the events that happened during this period, which would, if accepted, go to indicate the devious and dishonest basis of the above alleged manipulations.
In addition to the above it would appear that some of the shareholders who came to know about these transactions sent notices through solicitors to the new directorate of the Jupiter and to some of the accused persons, in particular Lala Shankarlal and Kaul, individually warning them against the illegal and improper dealings with the funds of the company.
It is also in evidence that two of the solicitors, Sethia and Joshi, filed a suit against the new directors on January 19, 1949, for an injunction restraining the directors from disposing of the Jupiter 's securities so as to enable the Tropical to have the finances for the purchase of the controlling block of the Jupiter 's shares.
It is the suggestion of the defence that these notices were followed up by institution of a suit at the instance of Khaitan himself, and that ultimately after the money was paid on the 20th within the time, they were dropped.
Evidence has also been given for the prosecution about the financial condition and property holdings of the Tropical, of the Delhi Stores, as also of Caveeshar to show that none of them were in any such position as to justify the various transactions put through in their names.
In particular, evidence has been given that Caveeshar had no such property as could possibly justify a loan of about Rs. 25 lakhs on his security and that the alleged valuation report was non existent or bogus.
Evidence was also given that the Delhi Stores was a defunct company whose only assets were (1) 39,750 shares of the Tropical of the book value of Rs. 10 per share which had no market quotation, (2) other shares of book value of Rs. 16,879, and (3) cash in the bank of Rs. 133 14 6, and (4) book debts of Rs. 93,40,414.
As against these debts it is said that the Delhi Stores had liability to sundry creditors to the extent of Rs. 1,40,259 3 8.
The above, 176 in broad outline, is the nature of the evidence relating to the first period.
Secondperiod : February 1, 1949, to the end of December, 1949.
Now, we may take up the evidence relating to the second period commencing from February, 1949, to the end of December, 1949.
The background relating to this period, according to the prosecution is, that Lala Shankarlal and his other co conspirators were fully aware of the necessity of showing the transactions of January, 1949, as no longer outstanding as early as possible, so as to escape direct scrutiny thereinto by the end of the calendar year and it is said that therefore they made some further manipulations with a view to show the moneys advanced to Caveeshar and the Delhi Stores as having been returned before the end of the year.
The events which led up to this may now be noticed.
On May 25, 1949, there was a meeting of the new directorate of the Jupiter at which Lala Shankarlal informed the directors that Caveeshar was repaying his loan of Rs. 25 lakhs and odd and out of that amount a sum of Rs. 14 lakhs might be invested in purchasing 40,000 shares of the Tropical and Rs. II lakhs on the equitable mortgage of the Tropical 's headoffice building.
Ultimately, however, this contemplated loan of Rs. 11 lakhs to the Tropical on the equitable mortgage of its head office building did not materialise for one reason or other.
Thereafter, according to the prosecution, there were brought into existence, five transactions, from May 25 to December 31, 1949, which have been referred to in the evidence as follows: Rs. 1.Raghavji loan (5 11 1949) which resulted in repayment of 4,00,000 2.Fresh Caveeshar loan (5 11 1949) which resulted in repayment of 5,30,000 3.Misri Devi loan (20 12 1949) which resulted in repayment of 1,00,000 4.
Purchase of 54,000 Tropical shares (25 5 1949 to 20 12 1949) which resulted in repayment of 14,00,000 177 5.Transfer of Caveeshar from the Tropical to Jupiter account of balance (31 12 1949) which resulted in repayment of 80,650 Total. 25,10,650 In order to appreciate these transactions, it is necessary to set out a few more details.
Raghavji 's son, Chandrakant, was a member of the Forward Bloc, of which Lala Shankarlal was one of the leaders.
Chandrakant had close political associations with Lala Shankarlal.
Raghavji was a gentleman about 80 years old and a resident of Cutch and had a few properties at that place.
According to the prosecution, Chandrakant was persuaded to permit his father 's name to be used for the purpose of advancing some moneys on the footing of an equitable mortgage by deposit of title deeds of his father 's property in Cutch.
At a meeting of the Jupiter 's directorate dated November 5, 1949, a loan for Rs. 5 lakhs on the equitable mortgage of Raghavji 's properties was sanctioned subject to valuation report and certain terms and conditions specified therein.
Notwithstanding that the loan was to be advanced on proper valuation report and other terms, it is the prosecution case and evidence, that this sum of Rs. 5 lakhs was disbursed as follows: Rs. 3 lakhs in cash from the Jupiter 's funds and Rs. 2 lakhs as having been received back from Caveeshar and paid over in cash to Raghavji.
The payment of these Rs. 2 lakhs was really by book adjustment showing Rs. 2 lakhs as having been paid by the Tropical to Caveeshar out of the moneys of Caveeshar with the Tropical and this amount as having been paid into the Jupiter 's account by Caveeshar and paid again out of it to Raghavji.
Out of the other Rs. 3 lakhs taken in cash from the Jupiter, Rs. 2 lakhs it is said was not paid to Chandrakant but was shown as having been paid by Caveeshar into the Jupiter 's account in reduction of the debt owing from him to the Jupiter.
The net result of these adjustments was that Rs. 4 lakhs out of the Caveeshar loan with the Jupiter was shown as reduced.
What 23 178 became of the other Rs. one lakh is not quite clear.
The next transaction is Caveeshar 's fresh loan.
At the same meeting of the Board of directors of the Jupiter dated November 5, 1949, whereat Raghavji 's loan for Rs. 5 lakhs was sanctioned, a further loan of Rs. 5,30,000 was authorised to be advanced to Caveeshar against pledge of shares of the People 's Insurance Co., the period of repayment being mentioned as two years.
This transaction merely meant a book adjustment reducing the loan outstanding against Caveeshar and a fresh loan to that extent on a different security.
This transaction further reduced the original indebtedness of Caveeshar to the Jupiter by this amount.
The third item is the Misri Devi loan.
At a meeting of the Board of directors of the Jupiter dated December 20, 1949, an application for loan of Rs. 5 lakhs from Misri Devi shown as the daughter of Lala Dwaraka Das (though she was also the wife of Lala Shankarlal) was said to have been considered and a loan in her favour for Rs. 5 lakhs on the security of her property in New Delhi was sanctioned subject to marketable title, period of three years, and other usual clauses.
In anticipation of having to advance this loan a sum of Rs. 2 lakhs appears to have been sent on November 2 2, 1949, by Kaul, from the Jupiter 's account in the Punjab National Bank, Bombay, to its account at Delhi.
Again on December 27, 1949, Kaul appears to have sent a further sum of Rs. 2 lakhs from the Jupiter 's account in the Punjab National Bank, Bombay, to its account at Delhi, by telegraphic transfer.
Towards this loan a cheque on the Jupiter 's account with the Punjab National Bank at Delhi for Rs. 4 lakhs payable to self or bearer was given and a sum of Rs. one lakh was shown as having been received by the Jupiter from Caveeshar through his Tropical account and shown as paid to Misri Devi.
This reduced the Caveeshar loan due to the Jupiter by another Rs. one lakh.
At the same meeting of December 20, a resolution was placed on record showing that at the instance of Lala Shankarlal, a bargain was arranged on behalf of the Jupiter for purchase of 54,000 shares of the Tropical instead of 40,000 shares as previously contemplated in the resolution of the 179 directors dated May 25, 1949, for the sum of Rs. 14 lakhs and purchase on this footing was confirmed.
The payment of Rs. 14 lakhs by the Jupiter to the Tropical was adjusted by showing the Tropical as having paid Rs. 14 lakhs to Caveeshar and Caveeshar as having paid back to the Jupiter a sum of Rs. 14 lakhs out of the original loan of Rs. 25 lakhs and odd.
,,,, Thus in all, by these four transactions the original ' Caveeshar 's loan on the security of the alleged properties of Caveeshar was reduced by Rs. 24,30,000 leaving a balance of Rs. 80,650.
This amount was adjusted by book entries on December 31, showing a transfer of the said amount from his Tropical account towards credit of the Jupiter account.
Thus, by December 31, 1949, the entire amount of Rs. 25 lakhs and odd advanced to Caveeshar in January, 1949, on the security of his properties in Delhi was shown as having been wiped out leaving a fresh loan against him on November 5, 1949, for a sum of Rs. 5,30,000 on the security of the shares of the Peoples Insurance Co. It may be recalled here that for the payment of Rs. 28,15,000 to Khaitan on January 20, 1949, the original source of cash, according to the prosecution case, was the sum of Rs. 25,15,000 granted by way of loan to Caveeshar and Rs. 2,60,000 paid to the Delhi Stores for purchase of plots of the Delhi Stores.
Out of this the original Caveeshar loan was, by the end of 1949, shown as having been completely wiped out as above stated.
So far as the purchase of plots of the Delhi Stores is concerned, it would appear that though in fact the Delhi Stores had no such plots to sell, this transaction was shown as put through in the following way.
The resolution of the Board of directors of the Tropical dated January 22, 1949, showed certain plots of land and the building 'in Chandni Chowk, Delhi, belonging to the Tropical, as having been sold to the Delhi Stores for the price of Rs. 2,60,000.
Putting these two resolutions together, it would appear that the drawing ' out of Rs. 2,60,000 from the Jupiter 's funds by virtue of the relevant resolution dated January 11, 1949, was substantially the payment 180 of Rs. 2,60,000 by the Jupiter for the alleged purchase of plots of land and building in Chandni Chowk which belonged to the Tropical.
It does not appear that in its ultimate effect this transaction invited serious scrutiny and comment and there is nothing on the record to show that any further attempt was made to camouflage this transaction by fresh transactions.
Now in addition to these transactions during this second period there is the evidence given by the prosecution of a number of other details during this period.
Of these the most important is that which relates to a notice sent on May 13, 1949, by an ex employee of the Jupiter, Rege, through solicitors to Lala Shankarlal and Kaul, alleging fraud in respect of purchase of 63,000 Jupiter 's shares from Khaitan.
This was followed up by him by a misfeasance petition dated August 10, 1949, in the High Court of Bombay against all the directors of the Jupiter, and this in its turn led, according to the prosecution, to certain intimidating actions against Rege said to have been taken by Lala Shankarlal, Kaul and Mehta, as a result of which Rege, it is said, was coerced into withdrawing his petition followed by the ultimate dismissal of that petition by, order dated September 15, 1949.
During this period there were also acute differences between the directors on one side and the brokers, Chopra and Mayadas, on the other for the brokerage of Rs. 40,000 to which, according to them, they were entitled for the original negotiations carried out through them with the Khaitan group for purchase of the controlling block of the Jupiter 's shares.
It is also said that during this period various ante dated entries, vouchers and other documents were brought into existence in order to show an appearance of regularity with reference to the transactions during the period of conspiracy in December, 1948, and January, 1949.
There are also certain letters of this period found or seized from the office of the Tropical of the dates of August 10, December 21 and 22, 1949, purporting to have been written, the first by Kaul to Lala Shankarlal and the second and third by Guha to Lala Shankarlal.
These letters, if true, 181 are revealing, but are of course evidence only against themselves.
It is of some importance for the prosecution case against Caveeshar to notice that there are also two letters of this period alleged to be from Caveeshar to Chopra dated March 17 and 30,1949, the first authorising Chopra to arrange for negotiations to purchase the controlling block of shares of the Empire of India Life Assurance Co. Ltd. and the second offering to bring about a settlement in connection with the claim by Chopra and Mayadas for commission relating to the purchase of the Jupiter 's shares.
Third period: During the year 1950.
The events of the third period as alleged by the prosecution and in respect of which the prosecution has given evidence may now be stated.
The main argument on behalf of the appellants before us relates to the admissibility of the evidence relating to this period.
The background for the events of this period was according to the prosecution the situation that arose from the strong attitude taken by the auditors in the course of their audit of the affairs of the Jupiter for the year 1949, which was taken up at the com mencement of 1950.
The transactions of the Jupiter during the year 1949 which came under their scrutiny are said to have aroused their concern and this led them to probe into the circumstances relating to the original Caveeshar loan in January, 1949, to the tune of Rs. 25,10,650.
On January 6, 1950, the auditors sent a letter to the Jupiter demanding inspection of the documents relating to the said loan of Caveeshar.
This was followed up by a further letter dated February 6, from the auditors requesting for production of the copy of the mortgage deed, valuation report and all other documents and papers relating to this Caveeshar loan as also for the inspection of papers and documents relating to (1) Raghavji loan, (2) Fresh Caveeshar loan, (3) Misri Devi loan, and (4) purchase of 54,000 Tropical shares for Rs. 14 lakhs.
In that letter of February 6, the auditors stated as follows: 182 "We consider the above transactions mostly unconscionable and we fail to understand how any responsible management could sell Government securities and invest the proceeds in a huge lot of shares in Tropical Insurance Co. Ltd. and large advances on shares of Peoples Insurance Co. Ltd., loans on properties in Cutch etc.
We do not see the basis on which nearly Rs. 26 per share of Rs. 10 was paid for purchase of Tropical Insurance Company 's shares.
We consider the position extremely serious and shall therefore thank you to immediately send a copy of this report to the Superintendent of Insurance and also appraise the shareholders of the contents of this report forthwith." No reply thereto having been received, the auditors sent a copy of their letter of February 6, to each of the directors of the Jupiter individually with a forwarding letter on February 14, 1950.
The next five months were taken up according to the prosecution in the attempt of the directors of the Jupiter to put off or to evade the auditors by involving them in a good deal of correspondence, oral explanation, personal meetings, and so forth but without the production of the various documents called for excepting only a few.
This resulted in a letter from the auditors to the Jupiter dated July 24, 1950, enclosing their draft report to the shareholders setting out their criticisms of the transactions of the directors for the year 1949, and stating that only a cancelled pronote of Caveeshar and a receipt by him were shown to them in respect of the mortgage loan of Rs. 25,10,650 to Caveeshar.
This, according to the prosecution, was followed up by feverish activities of the directors to bring about the screening by repayment, of the transactions from May to December, 1949, viz., (1) Caveeshar fresh loan, (2) Raghavji loan, (3) Misri Devi loan and (4) purchase of the Tropical shares.
Repayment of Caveeshar fresh loan of Rs. 5,30,000 to the Jupiter, was done by raising money by sale of the Tropical securities and paying that money to the Jupiter in discharge of Caveeshar 's fresh loan.
It appears that the Tropical securities of the face value of 183 Rs. 6 lakhs were pledged with the Grindlays Bank, New Delhi, for an overdraft account of the Tropical.
It is said that these Tropical securities were got released from the Grindlays Bank by substituting for them the Jupiter 's securities of the face value of Rs. 5,30,000.
The prosecution case is that Kaul, lifted these Jupiter 's securities and gave them to Mehta and that Mehta flew to Delhi, handed over these securities to the Grindlays Bank (presumably as belonging to the Tropical) and got released the previously pledged Tropical securities.
The Tropical securities so released appear to have been sold on September 12, 1950, and to have realised Rs. 5,01,592 1 2.
That amount is said to have been deposited in the Tropical 's account with the Indian Bank.
On September 14, Mehta is said to have drawn a cheque for Rs. 5,30,000 on the Indian Bank in favour of the Jupiter and sent it with a covering letter to the Jupiter stating that it was repayment by Caveeshar of his loan of Rs. 5,30,000 which had been given to him by the Jupiter as per the Jupiter 's resolution dated November 5, 1949.
The necessary book entries are said to have been made, and a receipt for Rs. 5,30,000 is said to have been sent to Caveeshar.
On October 27, 1950, Mehta is said to have brought a sum of Rs. 17,158 12 0 in cash to the room of Kaul in the Jupiter 's office and to have paid in cash to the accountant of the Jupiter in the presence of Kaul and Guha.
This amount was credited on that date in the Jupiter 's account as payment of interest due on the two loans to the Jupiter by Caveeshar.
Thus the further Caveeshar 's loan was shown to have been completely repaid with interest by entries in the Jupiter 's books dated September 14 and October 27, 1950.
This was followed up by the inclusion of narration in the report of the Jupiter for the year 1949 that the loans advanced to Caveeshar with interest thereon were fully paid back to the Jupiter and that all documents pertaining to the said loans were returned to Caveeshar.
The further adjustments for repayment of Raghavji loan and Misri Devi loan and in respect of the purchase of 54,000 Tropical shares by the Jupiter in December, 1949, are said to be connected with the attempts 184 of the accused to acquire the controlling block of shares of the Empire of India Life Assurance Co. Ltd. (hereinafter referred to as the Empire of India) in order to utilise the funds thereof for these adjustments.
The details of how the controlling block of shares of that Company were negotiated for and acquired are not necessary to be gone into in detail for the purposes of this case and the same may be mentioned in broad outline.
It is part of the prosecution case that anticipating the trouble that was likely to arise from the transactions of 1948 and 1949 with the auditors, Lala Shankarlal and other directors conceived an idea as early as in March and May, 1949, to purchase the controlling block of shares of the Empire of India from one Ramratan Gupta.
There appear to have been some unfruitful negotiations in this behalf for nearly a year.
But finally by October 5, 1950, an agreement was executed under which a sum of Rs. 10 lakhs was to be paid in advance to Ramratan Gupta and another sum of Rs. 33 lakhs and odd within thirty days thereafter and the controlling block of shares of the Empire of India of 2,618 were to be handed over to one Damodar Swarup Seth, a nominee of Lala Shankarlal.
This amount of Rs. 43 lakhs and odd is said to have been paid up by means of a number of cheques as follows: Rs. 1.On October 5, 1950 (i) Cheque by Damodar Swarup Seth (exhibit Z 10) for. 8,00,000 (ii) Cheque by Bhudev Sanghi in favour of Damodar Swarup Seth (exhibit Z 11) for. 2,00,000 Total of I 10,00,000 11.
On October 16,1950, six chequesby Damodar Swarup Seth in favour of Rs. (i) Reyer Mills Ltd. for. 10,55,844 (ii) Laxmi Ratan Cotton Mills for. 8,06,895 185 (iii) Premkumar Gupta for. 6,71,787 (iv) Stores India Ltd. for. 36,799 (v) Gulabchand Jain for. 97,500 (vi) Biharilal Ramcharan for5,04,072 III.
On October 27, 1950 (i) Cheque by Damodar Swarup Seth (exhibit Z 13) for 2,08,650 Total of II & III 33,81,547 The total of the first two cheques is Rs. 10 lakhs which was paid as advance.
Tee total of the remaining seven cheques comes to Rs. 33,81,547 which was shown as consideration for the purchase of 2,618 shares of the Empire of India.
Thus, on the payment of Rs. 31,72,897 on October 16, 1950, by means of the six cheques above mentioned, the controlling block of 2,618 shares of the Empire of India was handed over to Damodar Swarup Seth.
It is the case of the prosecution that Damodar Swarup Seth was able to draw these various cheques of the total value of over Rs. 43 1/2 lakhs because certain securities of the Jupiter set out in exhibit Z 47 of the face value of Rs. 48,75,000 were withdrawn from the Jupiter in pursuance of letters written by Kaul and Guha and lifted away and handed over without due authority to Damodar Swarup Seth who opened a cash credit account with the Punjab National Bank on the strength of those securities.
Having thus secured the controlling block of shares of the Empire of India in October, 1950, it is the prosecution case, that hurried steps were taken to show, that the Raghavji loan and Misri Devi loan advanced by the Jupiter towards the end of 1949 were paid back with interest to the Jupiter in cash, and that the Tropical shares Which were shown as having been purchased by the Jupiter in 1949 were sold away and realised the cash for which they were purchased.
On October 17, 1950, the day next after the purchase of the controlling block of shares of the Empire of India, one Roshanlal Kohli, a broker, is said to have offered to the Empire of India to sell from the 24 186 Jupiter its securities of the face value of Rs. 20 lakhs.
On October 19, 1950, Roshanlal Kohli, purporting to act for the Jupiter wrote to the Empire of India that for the purchase an advance payment of Rs. 20 lakhs is to be made.
This was followed by a reply from the Empire of India agreeing to the same and an actual payment of the amount by two bearer cheques issued by the Empire of India, one for Rs. 15 lakhs dated October 26, 1950, and the other for Rs. 5 lakhs dated October 27, 1950.
No entry is said to have been made in the Jupiter 's records as to the receipt of this amount though an entry of such payment was made in the records of the Empire of India.
But it is said that this amount of Rs. 20 lakhs was utilised for adjusting the Raghavji loan as well as the purchase of the Tropical shares by the Jupiter.
It is the prosecution evidence that Rs. 14 lakhs out, of Rs. 15 lakhs obtained on the bearer cheque of October 26 was paid in cash into the Jupiter account with the Punjab National Bank, Bombay, on October 26 itself showing the same as the sale proceeds of 54,000 Tropical shares which the auditors had objected to as being an uncon scionable investment.
The actual payment was made into the Jupiter account of the Punjab National Bank, Bombay, by one Bhagwan Swarup and another Bhudev Sanghi.
A letter was obtained, signed by Bhudev Sanghi (a nephew of Lala Shankarlal) (exhibit Z 152) that 54,000 Tropical shares belonging to the Jupiter were sold by him as a broker, and that the sale proceeds thereof were credited that day into the account of the Jupiter in the Punjab National Bank at Bombay and the corresponding entries were made in the investment register of the Jupiter.
It is said that notwithstanding this transaction the Tropical shares remained in the safe custody account of the Jupiter in the Bank of India right up to January 2, 1951, when on receipt of a letter dated January 2,1951 (exhibit Z 293) by Kaul to the Bank of India, they delivered all his shares.
These Tropical shares appear to have been delivered over to a clerk of the Jupiter and handed over by him to Guha.
It is said that these shares are now no longer traceable.
The other 187 bearer cheque for Rs. 5 lakhs drawn from the funds of the Empire of India, it is said, came into the Jupiter account as follows and purported to be repayment of Raghavji loan.
A sum of Rs. 5,18,388 14 3 was put in cash on October 27, 1950, into the Comilla Bank purporting to show it as sent by Raghavji in repayment of the mortgage loan taken by him from the Jupiter with interest thereon.
There is a receipt issued by Kaul to Chandrakant, son of Raghavji, showing that Rs. 5,18,388 14 3 was received in full repayment of the mortgage loan.
An entry was also made in the Jupiter 's cash book that interest was paid up to date.
With regard to the repayment of Misri Devi loan in the books of the Jupiter there is an entry dated October 7, 1950, showing a sum of Rs. 1,25,000 as withdrawn from the Imperial Bank.
On the same date there is another entry showing a sum of Rs. 4,25,000 as withdrawn from the Bank of India, Bombay.
On that very day, i.e., October 7, two cheques totalling Rs. 5,50,000 were deposited with the Punjab National Bank, Bombay.
Kaul purported to send a letter to Lala Shankarlal informing him that the amount of Rs. 5,50,000 was being sent for the purchase of land and building belonging to Sir Sobha Singh.
The Punjab National Bank, Bombay, was instructed to transfer the above mentioned sum to their branch at Tropical Building at Delhi to the credit of the account of the Jupiter.
All this was done between October 7 and 10.
On October 10, a memo was received from the Punjab National Bank, Tropical Building, Delhi, informing that the sum of Rs. 5,50,000 had been received by them.
The next day, i.e., on October 11, a cheque for Rs. 5,50,000 was drawn on that Bank by Lala Shankarlal in his capacity as the managing , director of the Jupiter.
On the reverse of this cheque an endorsement was made by Lala Shankarlal.
It is the suggestion of the prosecution that cash was obtained on it and that a demand draft for the said amount was obtained from the Grindlays Bank in favour of the Jupiter on behalf of Misri Devi (wife of Lala Shankarlal) on October 12.
This draft was signed on the reverse by Kaul.
It was 188 received in Bombay and was deposited in the Jupiter 's account in the Bank of India.
Misri Devi loan was for Rs. 5 lakhs and a sum of Rs. 18,062 8 0 was by then due as interest thereupon.
On October 16, entries were made in the cash book of the Jupiter showing that the loan of Misri Devi for Rs. 5 lakhs with interest was recovered.
The excess payment of Rs. 31,937 8 0 was shown in the first instance as credited to suspense account and thereafter as having been refunded to Misri Devi on October 18.
Thus the Misri Devi loan was shown in the books as having been also completely repaid.
Thus by these various adjustments and manipulations, the four transactions, viz., (1) Caveeshar fresh loan on the security of the Peoples Insurance Company 's securities, (2) Raghavji 's loan on the security of his properties in Cutch, (3) Misri Devi 's loan on the security of her building in New Delhi, and (4) purchase of 54,000 Tropical shares by the Jupiter, which were all strongly objected to along with the original Caveeshar loan of Rs. 25 lakhs and odd, were shown as realised back in actual cash by October 27, 1950.
A letter was then written by the solicitors of the Jupiter under instructions of Kaul to the auditors to attend on October 28, 1950, at the office of the Jupiter and to verify the accounts and moneys received from the repayments of the loans and from the sale of the Tropical shares.
On October 29, the auditors went to the office of the Jupiter and verified the same and were satisfied that the moneys were received.
The repayment of these various loans and the sale of the Tropical shares shown as having been realised in actual cash would of course also clear up the objections which the auditors raised as regards the original Caveeshar loan on account of the requisite papers relating thereto not being forthcoming.
The auditors, having thus been satisfied, signed the audit certificate and the report of the Jupiter for the year ending 1949, and appended a note that they had objected to certain loans and purchases and that these loans had been recovered and that the shares had been sold and the moneys received.
189 On October 23, 1950, a. general body meeting of the shareholders of the Jupiter was held at which Lala Shankarlal, Kaul, Mehta, Guha and Caveeshar, were present and the final report of the auditors and the reply of the directors to the original objections of the auditors were read.
The directors asserted at the meeting that imaginary mistakes and nervous suspicion was all that the auditors had found in respect of their management for the year and that the events of the last 12 months were a complete refutation of the fear, suspicion and bias of the auditors.
It is now necessary to trace the distribution of the lot of 63,000 shares of the Jupiter which were purchased by Lala Shankarlal and his group from Khaitan.
It may be recalled that on January 20, 1949, only 61,061 shares which stood in the name of the New Prahlad Mills were handed over.
The remaining 1,939 shares which stood in the names of others (presumably also belonging to the group of Khaitan) were transferred partly before and partly after, making up 63,000 shares.
Out of these, 250 shares each were transferred at the outset as qualifying shares, in the names of Lala Shankarlal, Kaul, Mehta, Jhaveri and Doshi, totalling 1,250.
These transfers were confirmed by the resolution of the directors of the Jupiter dated December 29, 1948.
Another 250 shares were transferred in the name of Sarat Chandra Bose on January 20, 1949, but it would appear that he did not accept the same then and intimated his non acceptance some time much later.
On August 31, 1949, 37,949 shares were transferred to the name of Delhi Stores and 14,601 shares were transferred in the name of the Tropical and two further lots of 4,475 each were transferred in the names of Lala Shankarlal and Caveeshar.
On September 13, 1950, out of the lot of 37,949 shares standing in the name of the Delhi Stores, 4,000 shares were kept standing in the name of the Delhi Stores and the balance of 33,949 were distributed as follows: 3025 shares in the name of Lala Shankarlal 3025 shares in the name of Caveeshar 50 shares in the name of Kaul 7075 shares in the name of Mehta 190 7500 shares in the name of Chandulal Ratanchand Shah, an employee of the Tropical 7500 shares in the name of Himatlal F. Parikh, an employee of the Tropical 5774 shares in the name of Himatlal Harilal Shah.
Out of the lot of 14,601 shares kept in the name of the Tropical 7,500 shares were transferred to the name of one Baburam and 7,101 shares were transferred to the name of Kaul.
Out of another lot of 409 shares which were purchased, 339 shares were transferred to the name of Kaul.
Thus the position of the distribution of the purchased Jupiter 's shares as on September 13, 1950, was as follows: 7750 shares in the name of Lala Shankarlal 7740 shares in the name of Kaul 7325 shares in the name of Mehta 7500 shares in the name of Caveeshar 4000 shares in the name of the Delhi Stores 7500 shares in the name of Chandulal Ratanchand 7500 shares in the name of Himatlal F. Parikh 5774 shares in the name of Himatlal Harilal Shah 7500 shares in the name of Baburam 250 shares in the name of Jhaveri 250 shares in the name of Doshi 250 shares in the name of Sarat Chandra Bose 70 shares in the name of the Tropical.
63,409 Total.
This makes a total of 63,409 shares comprising 63,000 shares of the controlling block which were originally purchased from Khaitan group and 409 shares subsequently purchased which has nothing to do with the present case.
It may be noticed that no shares were transferred in the name of Guha and that very substantial number of shares were transferred in the names of the various other accused.
It may also be noticed that three persons who are not accused in the case, viz., Chandulal Ratanchand, Himatlal F. Parikh, Himatlal Harilal Shah, had also very substantial number of shares transferred to them.
191 The case of the prosecution is that for the transfer of all these shares in the names of the various accused no money was paid by them and that it was the distribution amongst themselves of the major portion of the original acquisition of 63,000 shares which, according to the prosecution case, were in fact purchased by utilising the very funds of the Jupiter over which they obtained the control.
This, according to the pro.
secution, completes the chain of misappropriation by the various accused.
Since the appeals before the High Court and before us are against the convictions and sentences based on the acceptance of the verdict of the jury against each of the accused, scope for interference on appeal either by the High Court or by this Court is very limited.
Hence Mr. Chari for the appellant has pressed before us only some legal contentions.
His main argument relates to the admissibility of certain portions of the evidence given for the prosecution.
Mr. Chari has taken strong exception to the prosecution having led evidence relating to the acquisition of the controlling block of shares of the Empire of India followed up by the various steps said to have been taken by the several alleged conspirators or by Lala Shankarlal in 1950 to screen the transactions of the later part of 1949.
Mr. Chari contends that on the substantive charge of conspiracy all these steps or actings are not admissible in law.
Now the conspiracy as charged is in substance a conspiracy to commit criminal breach of trust in respect of the funds of the Jupiter by utilising the same to purchase the controlling block of shares of the Jupiter itself for :the benefit of the Tropical (or for the benefit of the conspirators).
This conspiracy is alleged to have been entered into between the dates December 1, 1948, and January 31, 1949.
Mr. Chari says that primarily it is only the events of that period comprising the acts, writings and statements of the various conspirators of that period which would be admissible as against each other under section 10 of the (I of 1872).
According to the prosecution case the modus operandi was to screen 192 the utilisation of these funds by showing them as having been advanced for legitimate purposes and invested on proper security, but in fact utilising the same for payment to the owners of the controlling block of shares of the Jupiter.
Mr. Chari says that strictly speaking, though for this purpose, only the acts, writings and statements of the conspirators during the period December, 1948, to January, 1949, would be admissible, he conceded that the evidence relating to the steps taken and the acts, writings and statements of the conspirators beyond January 31, 1949, and during the year 1949, i.e., towards the later part thereof, by way of creating further transactions (viz., Raghavji loan, Caveeshar fresh loan, Misri Devi loan and purchase of shares from the Tropical) in order to screen the transactions of January, 1949, may be admissible, as being directly connected, and that he does not object to the same.
But his point is that the transactions of the year 1950 and the steps taken then are only for the purpose of screening the second set of transactions of the later part of 1949 and not the first set of transactions of January, 1949.
He contends that evidence relating thereto, which falls wholly outside the conspiracy period, is not admissible under section 10 of the Evidence Act being too remote and having no direct bearing on the original transactions which are the subject matter of the conspiracy.
He points out that the alleged criminal breach of trust was committed on January 20, 1949, when the Jupiter 's moneys were paid to Khaitan, and that the object of the conspiracy must be taken to have been achieved when the camouflage through the first Caveeshar loan and the advance said to have been made to the Delhi Stores for purchase of plots was effectuated.
He points out that this is a case with numerous details even as regards the events, statements and actings from December 1, 1948, to end of December, 1949.
He urges that the events of the year 1950 are equally, if not more, voluminous and have overburdened the legitimate material in the case.
This, he urges, has operated to create confusion and prejudice in the minds of the jury.
We have been told that on account 193 of this large volume of, what is contended to be, inadmissible evidence the trial has got unduly prolonged extending over a year.
It is pointed out that the very narration of the outline of the prosecution case and of the evidence let in on behalf of the prosecution has taken about 100 pages of typed matter in the charge to the jury by the learned trial Judge and in the judgment of the High Court on appeal.
There can be no doubt that in a case of this kind, having regard to the nature thereof and to the ramifications of the various transactions on which the prosecution relies to make out its case, and having regard to the, fact that this was a jury trial, every attempt should have been made to exclude material which is strictly not admissible in law.
Otherwise it would have the effect of confusing the jury and prejudicing its mind.
But if the evidence is clearly admissible in law, the Court would not be justified in declining to receive it.
All that can be said is that it would have to take every care in charging the jury to place fairly before it the effect and implications of such items of evidence in an adequate measure.
The limits of the admissibility of evidence in conspiracy cases under section 10 of the Evidence Act have been authoritatively laid down by the Privy Council in Mirza Akbar vs The King Emperor (1).
In that case their Lordships of the Privy Council held that section 10 of the Evidence Act must be construed in accordance with the principle that the thing done, written, or spoken, was something done in carrying out the conspiracy and was receivable as a step in the proof of the conspiracy.
They notice that evidence receivable under section 10 of the Evidence Act of "anything said, done, or written, by any one of such persons" (i.e. conspirators) must be "in reference to their common intention.
" But their Lordships held that in the context (notwithstanding the amplitude of the above phrase) the words therein are not capable of being widely construed having regard to the well known principle above enunciated.
It would seem to follow that where, as in this case, the charge specifies the period (1) (1940) L.R. 67 I.A. 336.
25 194 of conspiracy, evidence of acts of co conspirators outside the period is not receivable in evidence.
Indeed, this position is fairly conceded by Mr. Khandalawala, for the prosecution.
But his contention is that the evidence objected to, viz., the acts and events of the year 1950, would be relevant under the other sections of the Evidence Act such as sections 6, 8, 9, 11 and 14.
This would no doubt be so.
But it has to be remembered that some of these sections are widely worded and must receive a somewhat limited construction as pointed out by West J. in his judgment reported in Reg.
vs Prabhudas (1) when considering the scope of section 1 1 of the Evidence Act.
Now, there can be no doubt that one of the main relevant issues in the case is whether the loan of Rs. 25 lakhs and odd advanced on January 20, 1949, to Caveeshar, as also the moneys said to have been paid to the Delhi Stores by way of advance for purchase of certain plots said to belong to it, were genuine transactions or bogus and make believe.
If they were genuine transactions, by virtue of which money did pass to them on the basis of good security, showing these amounts to be genuine business investments, then it would be difficult to make out that there was any criminal breach of trust.
Hence all evidence which would go to show that these transactions are bogus, is certainly admissible.
That would be so notwithstanding that such evidence may necessitate reference to and narration of the acts of the conspirators beyond the period of conspiracy but within reasonable limits.
While it may be true that the manipulations by way of the four fresh transactions from May to December, 1949 (apart from other features of these transactions of which evidence has been given) would be cogent evidence to show that the original transactions were bogus, the evidence relating to the further transactions to screen these transactions of the second half of 1949 by utilising the money of the Empire of India after obtaining the control thereof, and by wrongfully utilising the Jupiter 's securities, would also be relevant to make out and emphasise the bogus character of the (1)(I 874) 1 195 original debts.
It cannot be said to be too remote because it is to be remembered, as has been pointed out by Mr. Khandalawala, that the urgent necessity for acquiring the control of the Empire of India in 1950, and for utilising it for showing the alleged investments of the second half of 1949 as having been realised back in cash in 1950, arose on account of the firm attitude of the auditors who suspected the bona ' fides of the original Caveeshar loan and of the connected transactions of the second half of 1949 when they scrutinised in 1950 the affairs of the Jupiter for the year 1949.
The 1950 transactions appear clearly to have been brought about not merely to screen the transactions of the second half of 1949, but equally, if not mainly, to dispel any suspicion, and to obviate the scrutiny, in respect of the earlier transactions of January, 1949, which related to the period of conspiracy.
Thus in relation to the main purpose of the prosecution, viz., proof of the bogus character of these transactions of January, 1949, the transactions of the second half of 1949 and of 1950 must, in the circumstances of this case and having regard to the ramifications, be taken to be integrally connected and relevant to make out their bogus character.
We are, therefore, unable to agree with the general objection put forward that the entire evidence relating to the 1950 transactions was inadmissible in evidence.
It is also reasonably clear that the conduct in general of each individual co conspirator including his acts, writings and statements is evidence against himself.
There can be no doubt that such conduct irrespective of the time to which it relates can be relied on by the prosecution to show the criminality of the intention of the individual accused with reference to his proved participation in the alleged conspiracy, that is, to rebut a probable defence which may normally arise in such a case, viz., that the participation, though proved, was innocent.
It has been pointed out to us that in this case each one of the accused has put forward in his defence that he was an unconscious tool in the hands of a towering personality and a master mind like Lala Shankarlal about whose criminal intentions he was 196 not aware.
It was, therefore, quite legitimate for the prosecution to anticipate such defence and to give rebutting evidence.
Such evidence would come under section 14 of the Evidence Act.
It is well settled that the evidence in rebuttal of a very likely and probable defence on the question of intention can be led by the prosecution as part of its case.
This is laid down by the Privy Council in Makin vs The Attorney General for New South Wales(1).
To anticipate a likely defence in such a case and to give evidence in rebuttal of such defence is in substance nothing more than the letting in of evidence by the prosecution of the requisite criminal intention beyond reasonable doubt.
Now Mr. Khandalawala for the prosecution urges that the entire evidence for the prosecution relating to the year 1950 falls within these two categories of admissible evidence, viz., (1) evidence to make out the bogus character of the original transactions of January, 1949, which is an essential issue in the case relating to all the conspirators, and (2) evidence of the criminal intention of each of the accused which is admissible as against himself Mr. Chari for the appellants contests this assumption and urges that the evidence that has been admitted of the year 1950 is much wider than what is covered by the above two and that it was in fact and in substance evidence of the acts, writings and statements of individual conspirators of a period outside the period of conspiracy, and treated as admissible against other co conspirators, on the central issues in the case, viz., whether a conspiracy has been made out and whether the individual accused were participants in that conspiracy.
Mr. Chari very strenuously contends that such evidence was inadmissible and that its admission has seriously prejudiced the case of the appellants and has rendered any fair and rational consideration of the case by the jury extremely difficult, if not impossible.
In particular his strong objection was to the evidence relating to the acts, writings and statements of Lala Shankarlal of the year 1950, more particularly because he died before the trial and was 'not before the Court on (1) ; ,65. 197 trial as a conspirator.
His contention raises for consideration two questions, viz., (1)whether such evidence is admissible in proof of the conspiracy and in proof of the participation of individual accused in the conspiracy, and (2)whether in fact at the trial, such evidence was admitted and made use of on these issues.
Now it would be convenient to take up the latter question for consideration in the first instance.
To substantiate his contention that the evidence of conduct of individual conspirators of the year 1950 has been admitted and used against the other coconspirators in proof of the two main issues, Mr. Chari, in his argument before the High Court relied on the following paragraphs of the learned trial Judge 's charge to the jury, viz., paras II, 55, 65, 73, 74, 75, 94, 101, 102, 136, 146, 388, 453, 541, 557, 588, 602, 657, 676, 678 and 689.
We have carefully gone through these paragraphs.
It appears to us reasonably clear that what have been referred to by the learned trial Judge in these paragraphs are various items of evidence in the prosecution, case whose primary object is to make out the bogus character of the transactions in question though they necessarily bring in either the deceased Lala Shankarlal or some other co conspirator as being a party to these various acts.
Such evidence, as already stated, is obviously admissible for that purpose as being links in the chain of evidence relating to the bogus character of the original transactions and not as being in themselves relevant to prove the conspiracy.
That the learned trial Judge was alive to this distinction and would not have admitted such evidence in proof of the issue of conspiracy is quite clear from his ruling (interlocutory judgment No. 6) dated August 22, 1955, relating to the admissibility of the document which was marked as exhibit Z 71 in the committal court.
The learned Judge in that order has categorically ruled out the admissibility of that document with the following conclusion after a good deal of discussion of the legal point: " I come to the conclusion that the statements and actions of any one of the persons mentioned in the 198 charge are not admissible beyond the period of conspiracy unless they are authorised by any of the accused persons; in that event they are really the actions and statements of that accused person himself who has authorised the same.
I, therefore, do not admit the document (exhibit Z 71) in evidence.
" We have not got before us the document (exhibit Z 71) itself to enable us to see for ourselves what it relates to, since it was exhibited only in the committal court and ruled out at the trial.
But there is no difficulty in appreciating what the learned trial Judge actually held.
That the learned trial Judge acted on this view is reasonably clear also from the fact that in quite a number of places in his charge to the jury he has repeatedly emphasised that subsequent conduct of a conspirator would not be admissible against anybody else but himself.
(See paras 453, 541, 557, 588, 602, 657, 676, 685 and 689 of the learned trial Judge 's charge to the jury).
No doubt in some of the paragraphs previously noticed as having been objected to by Mr. Chari, the very reference to acts and conduct of Lala Shankarlal during the year 1950 which is beyond the period of conspiracy, may conceivably be capable of being wrongly relied on by the jury in respect of issues on which they are not admissible and might be capable of producing some prejudice.
But this is a possibility inherent in such cases as has been pointed out by the Privy Council in Walli Muhammad vs King (1).
Therein their Lordships pointed out the difficulty in all cases where two persons are accused of a crime and where the evidence against one is inadmissible against the other.
Their Lordships recognised that however carefully assessors or a jury are directed and however firmly a Judge may steel his mind against being influenced against one by the evidence admissible only against the other, nevertheless the mind may inadvertently be affected by the disclosures made by one of the accused to the detriment of the other.
Undoubtedly this weighty caution has to be always kept in mind when Judges and juries.
have to deal with such complicated cases.
But that by itself without showing that serious (1) , 321.
199 prejudice would, in all likelihood, have occurred in the particular case, would not be enough to vitiate the convictions.
In this case that there has in fact been any such prejudice has not been shown to our satisfaction.
Indeed the fact that accused No. 3, Jhaveri, has been acquitted by the unanimous verdict of the jury appears to indicate that the jury has shown itself capable of observing the caution given to them and making careful discrimination.
In this view probably the larger question raised by counsel on both sides as to the admissibility of the conduct of a co conspirator outside the period of conspiracy and especially of deceased co conspirators like Lala Shankarlal and Doshi and a living conspirator like Mahajan who is not on trial before the Court, in proof of the two main issues in such a case (viz., the existence of the conspiracy and the participation of the individual accused in that conspiracy) may not require to be dealt with.
But as will appear presently the learned Judges of the High Court have held such evidence admissible and have over ruled, on that ground also, the contention of Mr. Chari as to the prejudice likely to have been caused because of their view as to its admissibility.
Hence it is only fair that the question should be considered and a conclusion arrived at.
Besides, counsel on both sides have argued the matter very elaborately and have pressed us to express our opinion thereupon.
It is to be noticed that the learned trial Judge and the High Court appear to have taken differing views on this matter.
The learned Judges of the High Court after elaborate discussion have definitely held that such evidence is admissible, as shown by their conclusion on this part of the case in the following terms: " In this manner, all the observations which the learned Judge made in paragraphs 11, 73, 74, 75, 94, 101 and 388, to which Mr. Chari has objected on the ground of inadmissibility, would be relevant to show that there was a conspiracy in this case and that Lala Shankarlal was a party to it." That the learned trial Judge appears to have taken the opposite view is reasonably clear from his ruling 200 (interlocutory judgment No. 6) dated August 22, 1955, already referred to, relating to the admissibility of the document, exhibit Z 71, in the committal court.
In that order he sets out the arguments of both sides as follows: " It is common ground that the action of any of the accused person subsequent to the period of conspiracy is admissible in evidence against that particular accused person only.
Mr. Khandalawala, therefore, argues that the actions of Lala Shankarlal, of Doshi and of Mahajan subsequent to the period of conspiracy are admissible in evidence to prove that they were party to the conspiracy alleged in the case and to prove their guilt individually along with the accused persons He further submits that section 10 of the is permissive and not an exception as contended by Mr. Chari He says that he does not want to lead any evidence of the statements and actions of Lala Shankarlal against these accused persons, but he wants them in order that he may prove before the jury that Lala Shankarlal was also one of the conspirators with the accused persons Chari 's submission is that no evidence in this case could be admitted which is not admissible against the accused persons He submits that the question whether Shankarlal (or Doshi or Mahajan) was guilty of the offence of conspiracy or not cannot arise in this trial.
Proof of conspiracy, apart from the accused persons, is irrelevant.
He submits that what ever Shankarlal did during the period of conspiracy is binding on these accused persons and the Court has to determine (with reference to that evidence) whether anyone of these accused persons was a conspirator with Shankarlal or with Mahajan or with Doshi.
All the evidence that could be led in a trial must be against accused persons and no one else.
He, therefore, submits that the evidence that is sought to be led by the prosecution is inadmissible in evidence." Having thus set out the arguments of both sides, the learned trial Judge stated his conclusion as follows: "I think that the evidence in a criminal trial that could be led must be admissible against the accused (1) , 321, 201 persons only and, therefore, the evidence of actions and statements of another person, apart from the question of it being of the agent of the accused, is not admissible.
Section 10 (of the Evidence Act) as explained by the Privy Council in Mirza Akbar vs The King Emperor (1), clearly lays down that the statements and actions of the co conspirator would only be evidence against the accused persons, provided they are within the period of conspiracy. . . .
I do not think, therefore, that Lala Shankarlal or Mahajan or Doshi are accused persons before me and, therefore, the subsequent conduct of these persons beyond the period of conspiracy unconnected by any authority from the accused persons is not admissible.
" It is necessary, therefore, to appreciate clearly what exactly the Privy Council in Mirza Akbar 's case (1) has decided and whether the learned trial Judge was right in coming to the conclusion he did on the authority of that decision.
In the said case their Lordships of the Privy Council elucidated the principle of admissibility of evidence in cases of conspiracy by reference to the English leading case of The Queen vs Blake (2 ).
That was a case in which two persons, T. and B., were charged for conspiracy to cause certain imported goods to be carried away from the port of London and delivered to the owners without payment of the full customs duty payable thereon.
T. did not appear and defend.
B. pleaded not guilty.
At the trial it was proved that T. was agent for the importer of the goods, B. was a landing waiter at the Custom House.
It was T. 's duty to make an entry describing the quantity etc.
of goods.
A copy of such entry was delivered to B. who was to compare this copy with the goods, and, if they corresponded, to write 'correct ' on T. 's entry, whereupon T. would receive the goods on payment of the duty according to his entry.
It was proved that T. 's entry was marked 'correct ' by B. and corresponded with B. 's copy and that payment was made according to the quantity there described, and that the goods were delivered to T. Evidence was then offered of an (1) (1940)L.R.671.A.336.
(2) ; ; 115 E.R. 49.
26 202 entry by T. in his day book, of the charge made by him on the importer, showing that T. charged as for duty paid on a larger quantity than appeared by the entry and copy before mentioned.
It was held that all this evidence was admissible against B.
But the question arose as to the admissibility of a further item of evidence.
It was proved that B. received the proceeds of a cheque drawn by T. after the goods were passed.
The counterfoil of this cheque was offered in evidence, on which an account was written by T. showing, as was suggested, that the cheque was drawn for half the aggregate proceeds of several transactions, one of which corresponded in amount with the difference between the duty paid and the duty really due on the above goods.
It was ruled that item was not evidence against B. Referring to this case their Lordships of the Privy Council stated as follows in Mirza Akbar 's case (1) : "The English rule on this matter (i.e., as to the admissibility of evidence relating to a charge of cons piracy) is, in general, well settled.
It is a common law rule not based on, or limited by, express statutory words.
The leading case of R. vs Blake (2) illustrates the two aspects of it, because that authority shows both what is admissible and what is inadmissible.
What, in that case, was held to be admissible against the conspirator was the evidence of entries made by his fellow conspirator contained in various documents actually used for carrying out the fraud.
But a document not created in the course of carrying out the transaction, but made by one of the conspirators after the fraud was completed, was held to be inadmissible against the other. .
It had nothing to do with carrying the conspiracy into effect.
" Their Lordships in that case also referred with approval to two cases of the Indian High Courts, viz., Emperor vs Abani Bhushan Chuckerbutty (3) and Emperor vs G. V. Vaishampayana(4).
In the case in Emperor vs Abani Bhushan Chuckerbutty (3), one of the documents sought to be put in evidence is a statement (1) (1940) L. R. 67 I.A. 336.
(2) ; ; (3) Cal. 169.
(4) Bom.
203 of one of the co conspirators, Abani, before a Magistrate after he was arrested.
In that statement he implicated himself and a large number of persons in the conspiracy.
The question that arose was how far it could be used as evidence of the conspiracy and of the fact that the others were co conspirators.
Their Lordships held as follows: "We have come to the conclusion that the statement of Abani cannot properly be treated as evidence under section 10 of the Evidence Act.
That section, in our view, is intended to make evidence communications between different conspirators, while the conspiracy is going on, with reference to the carrying out of the conspiracy.
" It may be added that this statement was merely treated as a confessional statement failing within the scope of section 30 of the Evidence Act and usable only as such against the co accused.
The case in Emperor vs G. V. Vaishampayana (1) was also a case of conspiracy in which an approver as co conspirator gave evidence.
He gave evidence of statements, made to him by another co conspirator by name Swamirao who was not an accused before the Court, which had reference to the alleged attack on the Lamington Road police station which was the object of the conspiracy.
These statements were alleged to have been made after the return of the attacking party to the approver at his residence.
Objection was taken to the admissibility of such statements made after the completion of the attack as evidence under section 10 of the Evidence Act.
This objection was upheld on the ground that such statements made after the completion of the attack could not be said to have been made "in reference to their common intention ".
It was pointed out that the word 'intention ' implies that the act intended is in the future.
It is noteworthy that in this case the statements under consideration were made by a coconspirator who was not an accused at the trial and it was not suggested that his evidence would be admissible on the ground that such statement would be admissible against himself to show that he was a (1) Bom.
204 co conspirator with the accused on trial and that it would become relevant on that basis, an argument of the kind which appears to have found favour with the learned Judges of the High Court in this case, as will be presently seen.
In Mirza Akbar 's case(1) itself the question at issue was about the admissibility on the charge of conspiracy of a statement made by one of the co conspirators before a Magistrate after arrest.
That was held to be not admissible.
The point to be noticed in all these cases is that the statements which have been ruled out as inadmissible under section 10 of the Evidence Act were not sought to be made admissible under some other section of the Evidence Act.
It is further to be noticed that in the leading case of The Queen vs Blake (2), the question of admissibility was dealt with as being one under the general law and yet the only criterion of admissibility was that which was special to the cases of conspiracy.
There was no suggestion that such evidence could be brought in under any other category of admissibility of evidence.
It was ruled in that case that the statement in question was totally inadmissible to prove conspiracy.
It appears, therefore, that Mirza Akbar 's case (1) is a clear authority for the position that in criminal trials, on a charge of conspiracy evidence not admissible under section 10 of the Evidence Act as proof of the two issues to which it relates, viz., of the existence of conspiracy and of the fact of any particular person being a party to that conspiracy, is not admissible at all.
But it is necessary to appreciate clearly that what is sought to be admitted in such a case is, something said, or done, or written by any one of the co conspirators behind the backs of the others as being in law attributable to the others and what is sought to be proved by such evidence taken by itself is the existence of the conspiracy as between the alleged conspirators and the fact that a particular person was a party to the conspiracy.
It is such evidence that is inadmissible otherwise than under section 10 of the Evidence Act.
Quite clearly, in the normal class of cases, such evidence is admissible as against himself and not against others, (1) (1940) L.R. 67 I.A. 336.
(2) ; ; , 205 excepting where there is relationship of agency or representative character or joint interest.
(See section 18 of the Evidence Act).
In civil cases it is well settled that a principal is bound by the acts of his agent if the latter has an express or implied authority from the former and the acts are within the scope of his authority.
Therefore acts of an agent are admissible in evidence as against the principal.
An analogous principle is recognised in criminal matters in so far as it can be brought in under section 10 of the Evidence Act.
It is recognised on well established authority that the principle underlying the reception of evidence under section 10 of the Evidence Act of the statements, acts and writings of one co conspirator as against the other is oil the theory of agency.
This is recognised in Emperor vs Shafi Ahmed (1) and also in Emperor vs G. V. Vai shampayana (2), the case already mentioned above and referred to with approval by the Privy Council in Mirza Akbar 's case (3).
In Roscoe 's Criminal Evidence (16th Edition), at p. 482 bottom, when dealing with the evidence relating to criminal conspiracy, it is stated as follows: " An overt act committed by any one of the conspi rators is sufficient, on the general principles of agency, to make it the act of all.
" Now both the English rule as recognised in The Queen vs Blake (4) as well as the rule in section 10 of the Evidence Act, confine that principle of agency in criminal matters to the acts of the co conspirator within the period during which it can be said that the acts were "in reference to their common intention " that is to say, as held by the Privy Council in Mirza Akbar 's case (3) "things said, done or written, while the conspiracy was on foot " and " in carrying out the conspiracy.
" The Privy Council has explained the basic principle in the following terms: " Where the evidence is admissible it is, in their Lordships ' judgment, on the principle that the thing done, written or spoken, was something done in (1) , 519.
(2) Bom.
(3) (1940) L.R. 67 I.A. 336.
(4) ; ; 206 carrying out the conspiracy, and was receivable as a step in the proof of the conspiracy.
" It appears, therefore, that the learned trial Judge was right in his view that the admissibility of evidence of the kind which is now under consideration is ruled out on the authority of Mirza Akbar 's case(1).
The argument that such evidence even if it is of the conduct of a deceased conspirator, is admissible under section 8 of the Evidence Act as being evidence of conduct on a relevant issue, would appear to be untenable on the very terms of section 8, apart from the authority of Mirza Akbar 's case (1).
Section 8 in terms says as follows: " The conduct of any person, an offence against whom is the subject of any proceeding, is relevant, if such conduct influences or is influenced by any fact in issue or relevant fact.
" This appears clearly to rule out the conduct of Lala Shankarlal, Doshi, and Mahajan behind the backs of others, as inadmissible.
Such conduct would be admissible only to the extent that it is permissible under section 10 of the Evidence Act, if it is the conduct of a co conspirator whether he is alive or dead and whether on trial before the court or not.
Mr. Khandalawala in his arguments against this view has suggested some hypothetical cases to show the difficulties that may arise on such a view.
But a close consideration of these suggested hypothetical cases does not show that they raise any serious difficulties.
It is unnecessary to notice them at any length.
The learned Judges of the High Court (in reliance on certain English decisions which, with respect, do not appear to have any direct bearing on the question at issue) were of the opinion that since a person 's conduct is admissible against himself without the limitations of section 10 of the Evidence Act, the conduct of Lala Shankarlal would be admissible to show that there was a conspiracy and that he was a conspirator in it.
it appears, with great respect, that this reasoning is fallacious.
The admission of such evidence, in proof of conspiracy or of the fact that he was a co conspirator, is, in its essence, (1) (1940) L.R. 67 I.A. 336.
207 admission not as against himself but as against the others who are on trial.
To the extent that such an issue, i.e., of there being a conspiracy and of his being a co conspirator, is relevant at the trial, it must be proved only by evidence under section 10 of the Evidence Act, which is an exceptional section limited in its application to conspiracies to commit an offence or to commit an actionable wrong.
The learned Judges have also failed to notice that the evidence of conduct admissible under section 8 of the Evidence Act is of conduct of a person who is a party to the action.
It is thus reasonably clear that evidence of acts, statements or writings of a co conspirator either under trial or not on trial but outside the period of conspiracy, would not be admissible in proof of the specific issue of the existence of the conspiracy.
It is necessary to add that my learned brothers prefer to reserve their opinion on this legal question on the ground that it does not call for decision in this case.
In any case and as already explained above, in the earlier portion of this judgment, it may happen with reference to the facts of a particular case, that evidence would be admissible of various facts outside the period of conspiracy, if they are relevant on any substantial issue in the case, as for instance (in this case) the bogus character of the loans and the criminal intention of each individual accused.
In respect of such issues, the statement, act and writing of an individual co conspirator outside the period of conspiracy may be nothing more than a link in the chain of evidence relating to such matters or prefatory or explanatory matter within reasonable limits.
It would then be admissible in that context but not as affecting the other co conspirators by its being treated as their act or statement on the theory of agency (though behind their back).
It has also been seen above that in the present case evidence, if any, of the acts, statements and writings of Lala Shankarlal and other co conspirators was admitted by the learned trial Judge only on that footing.
Therefore the contention of Mr. Chari for the appellants that a good deal of inadmissible evidence has been let in, cannot be sustained.
208 The next point that is urged is that a number of documents put in evidence which are said to be in the handwriting of one or other of the accused were sent to a handwriting expert for his opinion and that the expert was not called as a witness on the prosecution side, nor was his report exhibited, but the jury was asked to compare the handwritings in the disputed documents with the admitted handwritings and to form their own conclusions.
It is urged that this was not fair and that the prosecution was bound to examine the handwriting expert and exhibit his report.
It is well settled, however, that the Court cannot normally compel the prosecution to examine a witness which it does not chose to and that the duty of a fair prosecutor extends only to examine such of the witnesses who are necessary for the purpose of unfolding the prosecution story in its essentials.
(See Habeeb Mohamed vs The State of Hyderabad (1) ).
Mr. Khandalawala appearing for the prosecution states that the examination of the handwriting expert was not in any sense necessary in this case for unfolding the prosecution case and we are inclined to agree with him.
Even if a different view is to be taken as to the duty of the Prosecution, to examine such a witness, all that can be said normally in such a case is that the defence is entitled to comment upon it and to ask the jury to draw an adverse inference in respect of that portion of the case to which the evidence of the handwriting expert relates.
Mr. Khandalawala for the prosecution points out that in fact this has been done by Mr. Chari when addressing the jury for the defence.
He states also that he himself in his address told the jury that it was open to them to do so.
Mr. Chari 's grievance however is that the Court has not in terms, directed the jury to this effect in its charge to the jury.
That no doubt appears to be so.
But in a case like this dealing with so many details , we see no reason to think that this omission of the learned trial Judge, was likely in this case, to have caused any serious prejudice in the circumstances above stated.
(1) ; , 489, 490.
209 There is next a similar point sought to be made out in respect of the non examination of three persons, viz., Chandulal Ratanchand Shah, Himatlal F. Parikh, and Himatlal Harilal Shah.
It is pointed out that shares were distributed to these three persons also along with the distribution of shares to the various conspirators.
It is suggested that if they were examined as witnesses they would have been able to show the circumstances in which the distribution of the shares had been made and this would have enabled the accused to show that such distribution was inno cent and not by way of dishonest gain.
The same considerations as with reference to the non examination of the handwriting expert apply also to the non examination of these three persons.
It has also been pointed out to us that these transfers of shares to these three persons took place before the amendment of section 6A of the (IV of 1938), and that consequently their non examination would not have resulted in any serious prejudice.
However that may be, we are unable to find any adequate reason to think that the trial is in any way vitiated by the non examination of these witnesses or of the handwriting expert.
The next argument advanced by Mr. Chari for the appellants is that the prosecution was enabled to ask the jury to convict the accused on a consideration of prosecution evidence tending to prove alternative sets of facts in relation to one of the important questions in the case and that this is not permissible in law.
This argument has a bearing both on the general case against all the accused and also on the case against appellant Caveeshar.
It has reference to the following portion of the prosecution case.
It is to be recalled that the original loan of Rs. 25 lakhs and odd from the funds of the Jupiter to Caveeshar on the alleged security of his supposed properties in Delhi was, according to the prosecution case, sought to be supported by the conspirators by certain appearances, viz., an application for such a loan, a valuation statement of the alleged properties and other necessary papers and also by certain resolutions Nos. 5, 6, 7 and 8 of the 27 210 directorate of the Jupiter at its meeting dated January 11, 1949, sanctioning such loan on the basis of such papers.
The prosecution case appears to be that as a fact these papers were non existent and the resolutions Nos. 5, 6, 7 and 8 were not in fact passed, on the date when, according to the present appearances in the minutes book, the matter was taken up for consideration by the Board of directors at its meeting of January 11, 1949.
For this purpose they rely amongst other things on the evidence of one Subramaniam, the secretary of the directorate, whose duty generally was to attend all meetings and to keep a note of the minutes of the business done at each meeting.
The prosecution evidence appears also to be that the necessary papers and resolutions were brought into existence on a later date and ante dated and interpolated.
With reference to this case of the pro secution the learned trial Judge in para.
545 of his charge to the jury stated as follows: " The question whether the resolutions Nos. 5, 6, 7 and 8 were passed or not (on January 11, 1949) is an important question to consider so far as the criminal intention alleged on the part of the accused Nos. 1, 2, 3 and 4 are concerned.
In this case what you have to consider is whether you are prepared to believe the evidence of Subramaniam or not that no such resolutions were passed at the said meeting.
If you disbelieve his evidence on this point, then consider whether apart from his evidence, there is sufficient evidence on record to lead you to the conclusion that no such resolutions were passed.
If you come to the conclusion that there is no other convincing evidence to show that the resolutions were not passed, then you will come to the conclusion that they were passed in the said meeting as it was in the minutes.
In that case the resolutions having been passed, you have to consider whether the accused bona fide believed that they were authorized to deal with the funds of the company and pay the amount of Tropical Insurance Co. on behalf of Caveeshar.
" We do not see anything in this portion of the charge to the jury to justify the contention that the prosecution 211 was permitted to rely on alternative sets of facts.
It was certainly open to the prosecution to rely in a matter of this kind, both on direct evidence and on circumstantial evidence and to maintain that even if the direct evidence of Subramaniam is not acceptable, the circumstantial evidence is enough for the proof of its version.
The alternatives which the learned trial Judge in his charge to the jury as extracted above referred to were, in the first instance, alternatives which arose on the reliance of the prosecution both on the direct and on the circumstantial evidence, and then the alternatives which arose for consideration in favour of the accused if both the direct and circumstantial evidence of the prosecution in this behalf are not acceptable.
The alternatives presented for the prosecution are not in any sense the presentation of any inconsistent cases.
Doubtless tile prosecution cannot be permitted to lead evidence relating to inconsistent cases.
But so far as we have been able to apprehend that is not what has been done in this case.
We are, therefore, unable to see any substance in this contention.
It may be noticed in this context that none of the documents connected with this Caveeshar transaction are now available.
Indeed that was the position also even by the time when the auditors wanted to see those documents in the year 1950 the explanation of the directors at the time being that since that loan to Caveeshar was discharged by him by complete payment all the relevant documents had been returned to him.
Of course, the case of Caveeshar himself is that he was not a party to the alleged loan and that he was not aware of any such documents and that the manipulations, if any, were behind his back.
Mr. Chari next complains about what he says is a serious mis direction to the jury inasmuch as the learned Judge asked the jury to ignore the fact that by the time the complaint was filed in 1951, the money allegedly taken out of the Jupiter by means of the two impugned transactions of January 20, 1949, had been put back in cash and that the auditors themselves were ultimately satisfied about it and that the shareholders at their general meeting in 1950 also accepted 212 Lala Shankarlal 's explanation in respect thereof.
But we do not think that, in view of the evidence given for the prosecution in the case to the effect that this situation was hurriedly brought about in the month of October, 1950, by utilizing the securities of the Jupiter itself for purchasing the controlling block of shares of the Empire of India and by getting money out of the Empire of India, it would have been fair to the prosecution to direct the jury to take the apparent return back of the moneys of the Jupiter shown as given on the various investments, as a true indication of the alleged misappropriation having been proved to be merely an unwarranted suspicion.
In the circumstances, the learned Judge appears to have been right in directing the jury to ignore that portion of the case either for or against the accused.
The next argument which requires notice is about what are said to be certain irrational features of the prosecution case.
It would appear that in the arguments addressed by the defence counsel to the jury in the trial court a number of circumstances relating to the various alleged manipulations have been pointed out which, on the assumption that the accused were parties to the conspiracy as charged, could only be characterised as irrational conduct of the various accused concerned and which circumstances, it was urged, must therefore be taken to be prima facie in their favour as supporting their defence, viz., that they had no knowledge of the criminality of the transactions which might have actuated the mind of Lala Shankarlal, but that so far as they were concerned they acted in perfect good faith.
The complaint of Mr. Chari for the defence, both in the High Court and here is that the learned trial Judge has not adequately dealt with them in his charge to the jury and that the appellants have been prejudiced thereby.
The learned trial Judge has dealt with this aspect of the case in para 556 of his charge to the jury and the learned Judges of the High Court have somewhat more elaborately dealt with this at pp.
159 to 162 of the typed paper book containing the judgment of the High Court.
Mr. Khandalawala appearing for the prosecution points out to us that these 213 alleged irrational features have been dealt with by the learned trial Judge in his charge to the jury then and there with reference to each particular item of evidence when it had to be referred to in the context of the general narrative or the narrative as against each individual accused.
All that can be said is that the learned trial Judge has not once again repeated the same when drawing the attention of the jury to this specific argument of Mr. Chari, who appears to have stressed them in a general sweep by clubbing these together as being thirty irrational features.
We agree with the High Court that there is no reason to think that the somewhat summary way in which the learned trial Judge dealt with this in para 556 of his charge to the jury can be taken exception to in the circumstances of the case as being any material non direction.
A special argument has been advanced on behalf of the appellant Caveeshar that he was not a director of the Jupiter and was not present at any of the meetings of the conspirators as directors of the Jupiter and that the evidence against him was more or less on the same footing as that against Jhaveri, accused 3, who has been acquitted, at least in so far as it relates to the period of conspiracy and that his case has been affected by the prejudice which may have been engendered in the minds of the jury by the evidence relating to the acts of Lala Shankarlal beyond the period of conspiracy.
On behalf of the prosecution we have been shown by Mr. Khandalawala enough admissible evidence against him which, if the jury choose to accept, could reasonably be the basis for conviction.
Having given our best consideration to all the arguments addressed on both the sides, we have come to the conclusion that there is no sufficient reason for interference in special leave with the convictions, based on the acceptance by the trial Judge of the verdict of the jury.
All the appeals are accordingly dismissed.
Appeals dismissed.
| A conspiracy to commit criminal breach of trust in respect of the funds of a company by utilising the same to purchase the controlling block of shares of the company itself for the benefit of the appellants was alleged to have been entered into between December 1, 1948, and January 31, 1949.
It was the prosecution case that the modus operandi was to screen the utilisation of these funds by showing them as having been advanced for legitimate purposes and invested on proper security but in fact utilising the same for payment to the appellants.
One of the main issues was whether the loans by way of advance of the funds of the company on January 20, I949, were genuine transactions or bogus or makebelieve, and the question was whether the evidence relating to the further transactions entered into outside the period of the conspiracy in 1949 and I950 with a view to the screening of the original transactions, was admissible in law.
Held: (1) In relation to the main purpose of the prosecution viz., proof of the bogus character of the transactions of January, I949, the transactions of I949 and I95o entered into outside the period of conspiracy must, having regard to the ramifications, be taken to be integrally connected and relevant to make out their bogus character, though such evidence may necessitate reference to and narration of the acts of the conspirators beyond the period of conspiracy.
(2) The conduct of each individual co conspirator including his acts, writings and statements irrespective of the time to which it relates can be relied on by the prosecution to show the criminality of the intention of the individual accused with reference to his proved participation in the alleged conspiracy to rebut a probable defence that the participation, though proved, was innocent.
Such evidence is admissible under section 14 Of the Indian Evidence Act.
Makin vs The Attorney General for New South Wales, L. R. ; , relied on.
162 Per Jagannadhadas J.
Under section 10 of the Indian Evidence Act the evidence of acts, statements or writings of a co conspirator either under trial or not on trial but outside the period of conspiracy would not be admissible against the other conspirators in proof of the specific issue of the existence of the conspiracy on the authority of Mirza Akbar vs The King Emperor, (1940) L.R. 67 I.A. 336.
|
Summarize this legal judgement text concisely | ION: Criminal Appeal No. 96 of 1957.
Appeal by special leave from the judgments and orders dated September 24, 1956, of the Circuit Bench of the Punjab High Court at Delhi and dated September 26, 1956, of the Punjab High Court at Chandigarh in Criminal Writ No. 128 D of 1956.
Appellant in person.
C. K. Daphtary, Solicitor General of India, and R. H. Dhebar, for the respondent.
May 24.
BY THE COURT.
We dismiss the appeal by a majority of 4 to 1 (A. K. Sarkar J. dissenting) for reasons to be recorded later.
463 1957.
September 17.
The Judgment of Bhagwati, Jafer Imam, section K. Das and J. L. Kapur JJ. was delivered by section K. Das J. Sarkar J. delivered a separate judgment.
section K. DAS J.
This is an appeal by special leave, and the appellant is Puran Lal Lakhanpal. '6n July 21, 1956, the Government of India in the Ministry of Rome Affairs passed an order of preventive detention against the appellant in which it was stated, inter alia, that with a view to pre venting the appellant from acting in a manner prejudicial to the security of India and the relations of India with for eign powers, it was necessary to make an order against the appellant.
The order then concluded " Now, therefore, in exercise of the powers vested in the Central Government by cl.
(a) (i) of sub section
(1) of section 3 of the Preventive Deten tion Act, 1950 (Act No. IV of 1950), as amended, the Central Government hereby orders that the said Shri Puran Lal Lak hanpal, son of Shri Diwan Chand Sharma, be detained.
" The appellant was arrested and taken in custody on the same date On July 24, 1956, the grounds of detention were commu nicated to the appellant under section 7 of the Preventive Deten tion Act, No. IV of 1950, hereinafter referred to as the Act.
The case of the appellant was then sent to an Advisory Board constituted under section 8 of the Act, and the Advisory Board having reported that there was, in its opinion, suffi cient Gause for detention of the appellant, the Central Government confirmed the order of detention on August 20, 1956, and stated further that the appellant ",shall continue in detention for a period of twelve months from the date of his detention".
This order was passed under sub section
(1) of section 11 of the Act.
Before that date, however, the appellant moved the Punjab High Court as also this Court challenging the legality of his detention and asked for the :issue of a writ in the nature of a writ of habeas corpus.
The petition to this Court was dismissed and as nothing turns upon that petition, no further reference need be 464 made to it.
In the petition to the Punjab High Court under article 226 of the Constitution, the appellant was permitted to urge an additional ground to the effect that sub section
(1) of section 11 of the Act was unconstitutional inasmuch as it offend ed against article 22(4)(a) of the Constitution.
This consti tutional point was referred to and decided by a Division Bench of the Punjab High Court by an order dated September 24, 1956.
The High Court held that sub section
(1) of section 11 of the Act was neither repugnant to nor inconsistent with the provisions of article 22(4) of the Constitution.
A single Judge of the High Court then dealt with the petition of the appellant on merits and dismissed it by an order dated September 26, 1956.
The appellant then moved the Punjab High Court unsuccessfully for leave to appeal to this Court.
He then moved this Court, and obtained special leave to appeal from the aforesaid orders of the Punjab High Court dated September 24, and September 26, 1956, respectively.
We heard the appellant, who argued his case ill person, on May 22, 23 and 24, 1957.
At the conclusion of the arguments on the last day of the term before the commencement of the vacation, we intimated to the appellant the majority deci sion of the Court that his appeal was dismissed, but stated that reasons for the decision would be given later.
These reasons we now propose to give in the paragraphs that fol low.
The first and foremost point which the appellant has urged in support of his appeal is the constitutional point, that is, the validity of sub section
(1) of section 11 of the Act.
The argument of the appellant is that sub section
(1) of section 11 of the Act does not conform to the constitutional mandate given by sub cl.
(a) of cl.
(4) of article 22 of the Constitution.
Therefore, our primary duty is " to lay the Article of the Constitution which is invoked beside the statute which is challenged and to decide whether the latter squares with the former ".
Article 22 of the Constitution, in so far as it is relevant for our purposes, is in these terms: "22.
(1). . . . . . . . . (2). . . . . . . . . 465 (3) Nothing in clauses (1) and (2) shall apply (a) to any person who for the time being is an enemy alien ; or (b) to any person who is arrested or detained under any law providing for preventive detention.
(4) No law providing for preventive detention shall autho rise the detention of a person for a longer period than three months unless (a) an Advisory Board consisting of persons who are, or have been, or are qualified to be appointed as, Judges of a High Court has reported before the expiration of the said period of three months that there is in its opinion suffi cient cause for such detention: Provided that nothing in this sub clause shall authorise the detention of any person beyond the maximum period prescribed by any law made by Parliament under sub clause (b) of clause (7); or (b) such person is detained in accordance with the provi sions of any law made by Parliament under sub clauses (a) and (b) of clause (7).
(5) When any person is detained in pursuance of an order made under any law providing for preventive detention, the authority making the order shall, as soon as may be, commu nicate to such person the grounds on which the order has been made and shall afford him the earliest opportunity of making a representation against the order.
(6) Nothing in clause (5) shall require the authority making any such order as is referred to in that clause to disclose facts which such authority considers to be against the public interest to disclose.
(7) Parliament may by law prescribe (a) the circumstances under which, and the class or classes of cases in which, a person may be detained for a period longer than three months under any law providing for preven tive detention without obtaining the opinion of an Advisory Board in accordance with the provisions of sub clause (a) of clause (4); (b) the maximum period for which any person may in any class or classes of cases be detained under any law provid ing for preventive detention; and 466 (c) the procedure to be followed by an Advisory Board in an inquiry under sub clause (a) of clause (4).
" Section 11 of the Act, which is challenged as unconstitu tional states : " 11.
(1) In any case where the Advisory Board has reported that there is in its opinion sufficient cause for the deten tion of a person, the appropriate Government may confirm the detention order and continue the detention of the person concerned for such period as it thinks fit.
(2) In any case where the Advisory Board has reported that there is in its opinion no sufficient cause for the deten tion of the person concerned, the appropriate Government shall revoke the detention order and cause the person to be released forthwith.
" Now, the point taken by the appellant is this.
According to him, the expression such detention ' occurring in sub cl.
(a) of cl.
(4) of article 22 refers not merely to the original order of preventive detention but to the detention of a person for a period longer than three months; therefore, the Advisory Board when it makes .
its report is required under the Sub clause to record its opinion that there is suffi cient cause not merely for the original order of detention but also for detention of that person for a period longer then three months.
It is contended that such an opinion was not recorded by the Advisory Board in the present case, and Sub section
(2) of section 10 of the Act merely required the report of the Advisory Board to specify its opinion as to whether or not there was sufficient cause for the detention of the appellant.
The appellant 's contention is that sub section
(1) of section 11 of the Act, in so far as it permits the appropriate Government to continue the detention of the person concerned beyond a period of three months without a specific report from the Advisory Board that there is sufficient cause for his detention for more than three months, is ultra vires; because it does not conform to sub cl.
(a) of cl.
(4) of article 22, nor does it give effect to the true meaning of the expression 'such detention ' occurring in the ;aid sub clause.
467 On behalf of the respondent, the argument is that the ex pression 'such detention ' occurring in sub cl.
(a,) of cl.
(4) of article 22 refers back to 'preventive detention ' occur ring in the first line of el.
(4), and under the said sub clause the Advisory Board is to give its opinion as to whether there is sufficient cause for the detention of the person concerned; there is no duty cast on the Advisory Board to determine the period of detention, and the failure of the Advisory Board to state in its report that there is sufficient cause for the detention of the person concerned for more than three months is no violation of the constitu tional mandate contained in the said sub clause.
We have to determine the correctness or otherwise of these rival contentions.
No decision directly deciding the point at issue has been brought to our notice.
There are, howev er, certain observations made in A. K. Gopalan vs The State of Madras (1), with regard to the meaning and effect of sub cl.
(a) of cl.
(4) of article 22, to which a reference must now be made.
At page 117 of the report, Kania C. J. said: " Article 22(4) opens with a double negative.
Put in a positive form it will mean that a law which provides for preventive detention for a period longer than three months shall contain a provision establishing an advisory board, (consisting of persons with the qualifications mentioned in sub clause (a)), and which has to report before the expira tion of three months if in its opinion there was sufficient cause for such detention.
This clause if it stood by itself and without the remaining provisions of Article 22, will apply both to the Parliament and the State Legislatures.
The proviso to this clause further enjoins that even though the advisory board may be of the opinion that there was sufficient cause for such detention, i.e., detention beyond the period of three months, still the detention is not to be permitted beyond the maximum period, if any, prescribed by Parliament under Article 22(7)(b).
Again the whole of this sub clause is made inoperative by article 22(4)(b) in respect of an Act of preventive detention passed by Parliament under clauses (7)(a) and (b) Inasmuch as the impugned Act is an Act of the (1) ; , 117.
60 468 Parliament purported to be so made, clause 22(4) has no operation and may for the present discussion be kept aside." His Lordship was considering the Act of 1950 previous to the amendments subsequently made therein from 1951 onward, and the observations appear to establish the following three points: first, clause (4) of article 22, put in affirmative form, has reference to a law which provides for preventive detention and authorises detention for a period longer than three months; second, the expression 'such detention ' has again reference to such a law providing for detention beyond a period of three months; and lastly, el.
(4) of article 22 had no application to the Act of 1950 as it then stood.
We shall presently show that the first and the second points do not really support the appellant 's contention, and the last had particular reference to sections 9 and 12 of the Act of 1950, as it then stood.
The appellant has, however, pointed out that under the Act as it now stands, every order of deten tion has to be placed before the Advisory Board (a. 9 of the Act) and the Advisory Board has to report about every order of detention (section 10 of the Act).
Though under section II A of the Act the maximum period for which any person may be detained in pursuance of a detention order which has been confirmed under section 11, is twelve months from the date of detention, the Act now contains no provisions as to the circumstances under which, or the class or classes of cases in which, a person may be detained for a period longer than three months without obtaining the opinion of the Advisory Board; therefore, the argument of the appellant is that the last point made by the observations of Kania C.J. is no longer valid in view of the amendments made in the Act of 1950.
We have proceeded in this case on the footing that sub cl.
(a) of el.
(4) of article 22 applies to the Act as it stands after the amendments, and even on that footing there is, in our opinion, no inconsistency between that sub clause and the impugned provisions of the Act, as we shall present ly explain.
In his dissentient judgment in Gopalan 's case (supra), Fazl Ali J., made the following observations with 469 regard to cl.
(4) of article 22.
Said his Lordship at pages 170 and 171 of the report : " In connection with the first point, the question arises as to the exact meaning of the words I such detention ' occur ring in the end of clause (4)(a).
Two alternative interpre tations were put forward: (1) 'such detention ' means preven tive detention; (2) 'such detention ' means detention for a period longer than three months.
If the first interpreta tion is correct, then the function of the advisory board would be to go into the merits of the case of each person and simply report whether there was sufficient cause for his detention.
According to the other interpretation, the function of the advisory board will be to report to the Government whether there is sufficient cause for the person being detained for more than three months.
On the whole, I am inclined to agree with the second interpretation.
Prima facie, it is a serious matter to detain a person for a long period ( more than three months) without any enquiry or trial.
But article 22(4) (a) provides that such detention may be ordered on the report of the advisory board.
Since the report must be directly connected with the object for which it is required, the safeguard provided by the article, viz., calling for a report from the advisory board, loses its value, if the advisory board is not to apply its mind to the vital question before the Government, namely, whether prolonged detention (detention for more than three months) is justified or not.
Under article 22 (4) (a), the advisory board has to submit its report before the expiry of three months and may therefore do so on the eighty ninth day.
It would be somewhat farcical to provide, that after a man has been detained for eighty nine days, an advisory board is to say whether his initial detention was justified.
On the other hand '.
the determination of the question whether prolonged detention (detention for more than three months) is justified must necessarily involve the determination of the question whether the detention was justified at all, and such an interpretation only can give real meaning and effec tiveness to the provision.
The provision being in the nature of a 470 protection or safeguard, I must naturally lean towards the interpretation which is favourable to the subject and which is also in accord with the object in view.
" These observa tions, it is urged, support the appellant 's contention.
Patanjali Sastri J. (as he then was) took a view different from that of Fazl Ali J. in Gopalan 's case (supra), and made the following observations at pages 209 and 210 of the report: " It was argued that the words I sufficient cause for such detention ' in sub clause (a) of clause (4) had reference to the detention beyond three months mentioned in clause (4) and that this view was supported by the language of sub clause (a) of clause (7) whereby Parliament is authorised to prescribe the circumstances under which and the class or classes of cases in which a person may be detained for a period longer than three months without the opinion of an advisory board.
In other words, learned counsel submitted, the combined effect of clauses (4) and (7) was that no person could be detained for a period over three months without obtaining the opinion of an advisory board that there was sufficient cause for detention for the longer period, except in cases where Parliament passed a law autho rising detention for such period even without the opinion of an advisory board.
Thus, these two clauses were concerned solely with the duration of the preventive detention, and so was the advisory board which those clauses provided for that purpose.
I am unable to accept this view.
I am inclined to think that the words 'such detention ' in sub clause (a) refer back to the preventive detention mentioned in clause (4) and not to detention for a longer period than three months.
An advisory board, composed as it has to be of Judges or lawyers, would hardly be in a position to judge how long a person under preventive detention, say, for reasons connected with defence, should be detained.
That must be a matter for the executive authorities, the Depart ment of Defence, to determine, as they alone are responsible for the defence of the country and have the necessary data for taking a decision on the point.
All that an 471 advisory board can reasonably be asked to do, as a safeguard against the misuse of the power, is to judge whether the detention is justified and not arbitrary or mala fide.
The fact that the advisory board is required to make its report before the expiry of three months and so could submit it only a day or two earlier cannot legitimately lead to an inference that the board was solely concerned with the issue whether or not the detention should continue beyond that period.
Before any such tribunal could send in its report a reasonable time must elapse, as the grounds have to be communicated to the person detained, he has to make his representation to the detaining authority which has got to be placed before the board through the appropriate depart mental channel.
Each of these steps may, in the course of official routine, take sometime, and three months ' period might well have been thought a reasonable period to allow before the board could be required to submit its report.
" These observations are undoubtedly against the contention of the appellant.
It is necessary to consider the whole scheme of article 22 in order to appreciate the true scope.
and effect of cl.
Article 22 provides for protection against arrest and deten tion in certain cases.
Clauses (1) and (2) refer to arrest and detention in certain circumstances and provide for certain safeguards.
Clause (3) then states, inter alia, that nothing in cls.
(1) and (2) shall apply to any person who is arrested or detained under any law providing for " preventive detention"; in other words, a law relating to " preventive detention" is put in a special category and is dealt with in clauses (4) to (7).
The power to legislate laws of preventive detention is given to Parliament and the State Legislatures by the Constitution.
This power, howev er, is not absolute, but is controlled by the provisions of cls.
(4), (5), (6) and (7) of article 22.
The maximum period of detention is not prescribed by the Constitution, but Parliament may by law prescribe such a period.
The Consti tution contemplates that any law which authorises detention for more than three months should be subject to certain safeguards, 472 as provided in cl.
(4) of article 22 which directs that the case of a detained person under any law authorising deten tion for more than three months must be the subject of a report by an Advisory Board.
The Advisory Board is to report whether there is sufficient cause for such detention.
If the Advisory Board reports that the detention is justi fied, then only the detaining authority determines the period of detention.
On the other hand, if the Advisory Board reports that the detention is not justified, the detained person must be released.
Clause (4) of article 22 does not state that the Advisory Board has to determine whether the person detained should be detained for more than three months.
What it has to determine is whether the detention is at all justified.
The setting up of an Adviso ry Board to determine whether such detention is justified is considered as a sufficient safeguard against arbitrary detention under any law of preventive detention which autho rises detention for more than three months.
The matter before the Advisory Board is the subject of detention of the person concerned and not for how long he should be detained.
Clause (7) of article 22 is an exception to cl.
(4) of that Article.
It authorises Parliament alone to pass a law of preventive detention authorising detention of a person for more than three months without obtaining the opinion of an Advisory Board so long as the circumstances under which and the class or classes of cases in which a person may be detained for a longer period than for three months are set out in the enacted law.
The Constitution evidently does not contemplate detention of the person for a period of three months or less as sufficiently serious to have the safeguard of a report by an Advisory Board to the effect that there is sufficient cause for detention.
Under the Constitution an Advisory Board is to be set up for all cases of detention under a law authorising detention for more than three months.
When the case of a detained person is placed before the Advisory Board under such law it must be assumed that the Advisory Board knows that if it reports that the detention is justified, the detenu may be detained for more than three 473 months and up to the maximum period provided by the law.
The expression " such detention" in article 22 (4) (a) refers to preventive detention and not to how long the person is to be detained.
Moreover, it is clear that clause (4) lays down prohibition against any law providing for detention for more than three months without a provision foran Advisory Board, and cl. ' (5) provides for furnishing the grounds of detention and affording an opportunity of making a representation against the order of detention.
But these safeguards are subject to cls.
(6) and (7).
Under the former, facts, the disclosure of which the detaining authority considers against the public interest, are not required to be furnished.
Under the latter, Parliament may prescribe the circumstances under and the class or classes of cases in which a person may be detained for a period longer than three months without obtaining the opinion of an Advisory Board.
The Constitu tion has therefore in one case given discretion to the Executive not to furnish facts in certain circumstances and in the other case left it to Parliament to prescribe cases or classes of cases in which reference to the Board need not be made.
Therefore, both the furnishing of grounds and the report of the Board are, in a sense, limited safeguards.
Considering the circumstance that the detention is of a preventive nature, the Executive has necessarily to consider whether a person should be detained and the period for which he should be detained.
It could not have been the intention to give the power of determining the necessity of detention of a particular person to the Executive, and leave to anoth er authority the Board in this case to say whether the detention should be for three months or more.
In the very nature of things the decision as to the period of detention must be of the detaining authority, because it is the au thority upon which responsibility for detention has been placed.
The reference to the Board is only a safeguard against Executive vagaries and high handed action and is a machinery devised by the Constitution to review the decision of the Executive 474 on the basis of a representation made by the detenu, the grounds of detention, and where the order is by an officer, the report of such officer.
It is not a limitation on the Executive 's discretion as to the discharge of its duties connected with preventive detention.
; it is a safeguard against misuse of power.
What then is the scheme of the Act under our consideration ? An order of detention is made under section 3 of the Act.
If the order is made by any officer under sub section
(2) of section 3, a report has to be submitted to the State Government to which the officer is subordinate and the order does not remain in force for more than twelve days unless in the meantime it has been approved by the State Government.
Under section 7 of the Act, the grounds of detention have to be communicated to the detenu, as soon as may be but not later than five days from the date of detention.
Section 8 relates to the con stitution of an Advisory Board.
Under section 9 in every case where a detention order has been made under the Act, the appropriate Government shall, within thirty days from the date of detention under the order, place before the Advisory Board the grounds on which the order has been made and the representation, if any, made by the detenu.
Section 10 prescribes the procedure of the Advisory Board and lays down that the Advisory Board must submit its report to the appro priate Government within ten weeks from the date of deten tion.
Sub section
(2) of section 10 states that the report of the Advisory Board shall specify in a separate part thereof the opinion of the Advisory Board as to whether or not there is sufficient cause for the detention of the person concerned.
Then comes section I I which we have already quoted in extensor The scheme of the Act has been explained in several deci sions of this Court.
In Makhan Singh Tarsikka vs State of Punjab (1), it was stated that whatever might be the posi tion under the of 1950, before it was amended in 1951, under the Act as amended in 1951, the Government must determine what the period of detention should be only after the Advisory Board to which the case (1)) , 370.
475 is referred reports that the detention is justified.
Patan jali Sastri C. J. observed: " It is, therefore, plain that it is only after the Advisory Board, to which the case has been referred, reports that the detention is justified, the Government should determine what the period of detention should be and not before.
The fixing of the period of detention in the initial order itself in the present case was, therefore, contrary to the scheme of the Act and cannot be supported." In Dattatreya Moreshwar Pangarkar vs State of Bombay(1) Mukherjea J. (as he then was) said: " It is now settled by a pronouncement of this Court that not only it is not necessary for the detaining authority to mention the period of detention when passing the original order under section 3(1) of the , but that the order would be bad and illegal if any period is specified, as it might prejudice the case of the detenu when it goes up for consideration before the Advisory Board.
The Advisory Board again has got to express its opinion only on the point as to whether there is sufficient cause for deten tion of the person concerned.
It is neither called upon nor is it competent to say anything regarding the period for which such person should be detained.
Once the Advisory Board expresses its view that there is sufficient cause for detention at the date when it makes its report, what action is to be taken subsequently is left entirely to the appro priate Government and it can under section 11 (1) of the Act i confirm the detention order and continue the detention of the person concerned for such period as it thinks fit '.
In my opinion, the words 'for such period as it thinks fit ' presuppose and imply that after receipt of the report of the Advisory Board the detaining authority has to make up its mind as to whether the original order of detention should be confirmed and if so, for what further period the detention is to continue.
Obviously, that is the proper stage for making an order or decision of this description as the (1) [I952] S.C.R. 612, 626, 61 476 investigation with regard to a particular detenu such as is contemplated by the is then at an end and the appropriate Government is in full possession of all the materials regarding him.
" At page 637 of the report, the learned Judge further said: " Under the Constitution, the detention of a ,person under any law providing for preventive detention cannot be for a period of more than three months unless the Advisory Board is of the opinion that there is sufficient cause for the detention of the person concerned.
The Constitution itself has specified the maximum limit of the initial detention and detention for a period longer than three months can only be made on the basis of the report of the Advisory Board.
" In view of these observations, it is quite clear what the scheme of the Act is.
The Act authorises a possible deten tion of more than three months; the order of detention is therefore referred to the Advisory Board, and it is only when the Advisory Board makes its report that the appropri ate Government fixes the period of detention under sub section
(1) of section 11 of the Act.
For all these reasons, we hold that Sub section
(1) of section 11 of the Act does not contravene any of the provisions of article 22 and is accordingly valid.
We now proceed to give our reasons with regard to those points on merits which have been urged before us by the appellant.
The appellant has contended that the grounds of detention communicated to him are all vague, except ground No. 2, and that the grounds so communicated did not give him an opportunity of making an effective representation, a right guaranteed to him under el.
(5) of article 22.
The grounds except ground No. 2 were these: "1.
That since the last two yars you are in constant touch with foreign correspondents in India and representatives of foreign countries to whom you have been spreading reports and information about conditions in the State of Jammu and Kashmir which are false and calculated to prejudice the relations of 477 India with foreign powers and also to prejudice the security of the State.
That you are in constant touch with certain persons in Pakistan and Pakistani occupied part of Jammu and Kashmir who are hostile to India and you are assisting these persons in their activities which are prejudicial to the security of India.
4.That you are receiving financial assistance from persons in Pakistan and Pakistani occupied part of Jammu and Kashmir for supporting and furthering your aforesaid prejudicial activities.
5.That you are in regular connection with persons in India who are engaged in promoting false propaganda against India in relation to Kashmir and have been attending their secret meetings for planning action and propaganda in relation to Kashmir prejudicial to the security of India.
The Central Government is satisfied that you are likely to act in a manner prejudicial to the security of India and in a manner prejudicial to the relations of India with foreign powers and with a view to prevent you from so acting has passed the order for your detention.
" The same document which communicated the grounds of deten tion to the appellant also contained the following statement in paragraph 7: " The Central Government is satisfied that it is against the public interest to disclose to you any facts or particulars as to dates, persons and places and the nature of your activities and the assistance received or otherwise than those which have been already mentioned.
" The argument of the appellant is that by refusing to dis close any facts or particulars as to dates, persons and places, the detaining authority has really deprived the appellant of the valuable right guaranteed to him under cl.
This contention of the appellant is concluded by the recent decision of this Court in Lawrence Joachim Joseph D 'Souza vs The State of Bombay (1).
It (1) ; 478 was held therein that the right of the detenu to be fur nished with facts or particulars was subject to the limita tion mentioned in cl.
(6) and even if the grounds communi cated were not as precise and specific as might have been desired, the appropriate authority had the right to withhold such facts or particulars, the disclosure of which it con sidered to be against the public interest.
Such a privilege having been exercised in the present case, the appellant cannot be heard to say, apart from the question of mala fides, that the grounds did not disclose the necessary facts or particulars, or that in the absence of such facts or particulars, he was not in a position to make an effective representation.
In The State of Bombay vs Atma Ram Sridhar Vaidya(1) this Court has unanimously held that under section 3 of the Act, it is the satisfaction of the appropriate authority which is necessary for an order of detention, and if the grounds, on which the appropriate authority has said that it is so satisfied, have a rational connection with the objects which are to be prevented from being attained, the question of satisfaction cannot be challenged in a court of law except on the ground of malafides.
It has been further held by the majority that cl.
(5) of article 22 confers two rights on the detenu, namely, first, a right to be informed of the grounds on which the order of detention has been made, and secondly, to be afforded the earliest opportunity to make a representation against the order.
If grounds which have a rational connection with the objects mentioned in section 3 are supplied, the first condition is complied with.
But the right to make a representation implies that the detenu should have such information as will enable him to make a representation and if the grounds supplied are not suffi cient to enable the detenu to make a representation, he can rely on the second right.
The second right, however, is again subject to the right of privilege given by cl.
(6) and as has been pointed out in Lawrence D 'Souza 's case, (supra), the obligation to furnish grounds and the duty to consider whether the disclosure of any facts involved therein is against public interest, are both (i) ; 479 vested in the detaining authority and not in any other.
As in Lawrence D 'Souza 's case (supra), it is unnecessary in the present case to consider the theoretical contention as to whether or not article 22(6) of the Constitution overrides the constitutional right to be furnished grounds under article 22(5) to the extent of denying all the particulars and leaving the grounds absolutely vague.
We are of the opinion that in the present case the grounds furnished to the appel lant, though not as precise and definite as might be de sired, gave him a sufficient opportunity of exercising his right under cl.
(5) of article 22 of the Constitution.
With regard to ground No. 2, the appellant, has urged the following points.
Ground No. 2 communicated to the appel lant is in these terms: " 2.
That you addressed a Press Conference at New Delhi on the 18th day of February, 1956, which was attended by a large body of Press Correspondents of foreign countries and that you made a speech (copy of contents of which is hereto annexed) containing various false statements about the conditions of the people of Kashmir.
The combined effect of these statements is prejudicial to the security of India and to the relations of India with foreign powers.
Extracts of such statements are given below: (then follow the extracts).
" It is argued (1) that detention on this ground is more punitive than preventive; (2) that it is not relevant to the objects for which the appellant has been detained, namely, the security of India and her relations with foreign powers; and (3) that there are verbal inaccuracies in reciting the ground, with particular reference to what happened at the Press Conference on February 18, 1956.
We have considered each one of these arguments and are of the view that not one of them has any substance.
Firstly, the ground no doubt relates to what happened on February 18, 1956; that does not, however, mean that the detention of the appellant is punitive in character.
What the appellant is likely to do in future must, to a large extent, 480 be inferred from his past conduct.
Secondly, we think that the ground has a rational connection with the objects which the appellant has to be prevented from attaining.
The objects of the appellant 's detention are to prevent him from acting in a manner prejudicial to (1) the security of India and (2) her relations with foreign powers.
Both these object,%, we think, come within the ground in question.
Thirdly, the verbal inaccuracies relied on by the appellant are all so inconsequential in nature that we do not think it necessary to state them in detail.
By way of an example, it may be stated that in the extract enclosed with the ground, there is a statement to this effect: "it would be no exag geration to state that were a plebiscite to be held there today, over 90% of Kashmiris would vote against India etc.
" In his actual statement, however, the appellant said: "It would not be an exaggeration to state that were a plebiscite to be held there today, over 90% of Kashmirs would vote against India etc." The only difference between the two is that instead of the word 'not ', the word 'no ' has been used in the extract; otherwise, there is no difference between the two statements.
Such verbal differences are not inaccu racies at all, and we are unable to accept the contention of the appellant that the detaining authority did not apply its mind to the grounds communicated to him.
Lastly, the appellant has raised the question of mala fides.
This question has been considered at great length by the learned Judge of the Punjab High Court who dealt with the petition of appellant.
The appellant referred in his affi davit to some of his activities from 1954 onwards and to certain events which happened between 1954 and 1956.
He also referred to certain statements alleged to have been made by the Prime Minister and the Home Minister, and he averred that both of them were annoyed with him for his activities and therefore the order of detention was not bona fide.
We are unable to accept this contention.
We agree with the learned Judge of the High Court that the activities of the appellant and the events of 1954 to 1956 referred to by the appellant, do not in any way 481 show that the order of detention made against the appellant was made for any ulterior purpose or for purposes other than those mentioned in the detention order.
On the question of mala fldes, it is not a relevant consideration whether the activities of the appellant were liked or disliked by the authorities concerned.
The only relevant consideration is if the order of detention was made for ulterior purposes or purposes other than those mentioned in the detention order.
On the materials placed before us, we unhesitatingly hold that no mala fides have been established.
These are our reasons for the order which we passed on May 24, 1957, dismissing the appeal.
SARKAR J.
This appeal arises out of an application for the issue of a writ of habeas corpus.
In my view the appeal can be disposed of on one ground, and in this judgment I propose to deal with that ground alone.
On July 21, 1956, the appellant was taken into custody under an order of detention passed against him by the Government of India under the (Act, IV of 1950).
On July 24, 1956, the appellant was served with the grounds on which the order of detention had been passed as required by the Act.
The appellant thereafter made a representation against the order which was con sidered by the Advisory Board, constituted under the Act.
On August 22, the appellant was served with another order made by the Government of India wherein it was stated that the Advisory Board bad reported that there was in its opinion, sufficient cause for the detention of the appellant.
This order fur ther stated that in view of the report of the Advisory Board the Government of India confirmed the detention order earli er made against the appellant and that the appellant should continue in detention for a period of 12 months from the date of his detention.
The appellant challenged the legali ty of these orders of detention and moved the High Court of Punjab for the issue 482 of an appropriate writ for his release.
The petition was dismissed by the High Court.
Hence this appeal.
The petitioner challenges the validity of the orders of detention on the ground that the provision of the , under which they were made is ultra vires the Constitution.
I have come to the conclusion that this objection to the Act is sound and that is why I do not find it necessary to discuss the other contentions raised by the appellant.
The contention of the petitioner is based on article 22(4)(a) of the Constitution.
The relevant portion of the article is set out below: (4) No law providing for preventive detention shall autho rise the detention of a person for a longer period than three months unless (a) an Advisory Board consisting of persons who are, or have been, or are qualified to be appointed as, Judges of a High Court has reported before the expiration of the said period of three months that there is in its opinion suffi cient cause for such detention : Provided that nothing in this sub clause shall authorise the detention of any person beyond the maximum period prescribed by any law made by Parliament under sub clause (b) of clause (7); or (b) such person is detained in accordance with the provisions of any law made by Parliament under sub clauses (a) and (b) of clause (7).
. . . . . . . . . . (7) Parliament may by law prescribe (a) the circumstances under which, and the class or classes of cases in which, a person may.
be detained for a period longer than three months under any law providing for preven tive detention without obtaining the opinion of an ' Advisory Board in accordance with the provisions of sub clause (a) of clause (4); (b) the maximum period for which any person may in any class or classes of cases be detained under any law provid ing for preventive detention; . . . . . 483 The position, therefore, is that unless Parliament by law otherwise prescribes, the provisions of cl.
(4)(a) of article 22 have to be complied with by any law providing for preven tive detention.
Parliament has passed no law prescribing otherwise.
The , has, there fore, in order to be constitutional to satisfy article 22(4)(a).
The appellant 's contention is that it does not do this.
Though the words used are somewhat obscure, it is fairly clear, as was accepted at the Bar, that the required provision for the report of the Advisory Board has to be made in the law authorising preventive detention and it is not by the force of article 22(4)(a) itself that that report has to be obtained.
The present Act authorises a maximum period of detention of 12 months from the date of detention.
It is therefore a law providing for preventive detention and it authorises the detention of a person for a longer period than three months.
It must hence contain provisions satisfying sub cl.
(a) of el.
(4) of article 22 if it is intended to detain a person under it for a period longer than three months.
It has to provide that if under it detention for a period longer than three months is to be ordered then an Advisory Board, con stituted as specified, must report that there is in its opinion sufficient cause for such detention.
So much is not in dispute.
The difficulty is caused by the words " such detention ".
The appellant contends that they mean detention for a period longer than three months and therefore an Act authorising preventive detention for more than three months has to provide that the Advisory Board must report that there is sufficient cause for detention for a period longer than three months.
The Act in this case does make provi sions for the constitution of the Advisory Board and for submitting all cases of detention irrespective of their periods of detention to it for its opinion as to whether or not there is sufficient cause for detention, but it does not provide that where it is intended to detain a person for a period longer than three months then the Advisory Board must report that there was sufficient 62 484 cause for detention for a period longer than three months.
The provision for the opinion of the Advisory Board is contained in section 10(2) of the Act which is in the following terms: section 10(2).
The report of the Advisory Board shall specify in a separate part thereof the opinion of the Advisory Board as to whether or not there is sufficient cause for the detention of the person concerned.
If therefore the appellant is right in his contention that the words " such detention " mean detention for a longer period than three months then the provisions of the Act authorising detention for more than three months must be held to be ultra vires.
The question is, what do these words mean? As a matter of pure construction of the language used in sub cl. (a) it seems tome that the words " such detention " must mean detention for a longer period than three months.
The word "such" means, of the kind or degree already de scribed.
Of the meanings of the word" such" given in the Oxford Dictionary this I find to be the only one appropriate in the present context.
Learned counsel for the respondent did not suggest any other meaning.
Now what is the kind or degree of detention that is earlier described in the clause ? The only kind that 1 find is detention for a longer period than three months.
That being so, I feel compelled to accept the appellant 's contention.
The learned Solicitor General opposing the appeal contended that the words "such detention " were capable of two mean ings, namely, detention simpliciter and detention for a period longer than three months.
He advanced certain rea sons why of the two possible constructions the first one should be accepted.
I will come to the reasons later.
Before doing so I wish to state that I am unable to agree that the words " such detention " are capable of two mean ings.
Clause (4) contemplates a law of preventive detention but does not authorise such law.
Such a law is within the legislative competence of the Parliament and the State legislatures : See article 246 of the Constitution, item 9 of list I and item 3 of list III in the Seventh Schedule 485 to the Constitution.
Having contemplated such a law, what cl.
4 proceeds to do is to lay down that, that law shall not authorise the detention of a person for a longer period than three months unless the Advisory Board has reported that there is in its opinion sufficient cause for such detention.
It only imposes a limitation on the power to pass laws authorising preventive detention.
This is what Das J. said in A. K. Gopalan vs The State of Madras (1).
He there said (p. 324), it articles 21 and 22 have put a limit on the power of the State given under article 246 read with the legis lative lists".
Therefore the only object that cl.
(4) purports to deal with is detention for a period longer than three months under a law of preventive detention the exist ence of which it assumes.
Hence the words " such detention " must necessarily refer to detention for a period longer than three months.
There is nothing else to which it can refer.
Preventive detention without reference to the period of it is not in contemplation of cl.
(4) at all.
A law for preventive detention is mentioned.
The words " such deten tion " cannot possibly refer to that law.
That law may, no doubt, provide for detention for a shorter period but such shorter detention is not mentioned in the clause nor really in its contemplation at all.
So no question of the words " such detention " referring to the shorter detention arises.
But suppose the learned Solicitor General was right in his contention that the words, in the context they are used, are capable of referring both to preventive detention simplicit er and to preventive detention for a period longer than three months, are there reasons for preferring the first of the two alternative constructions ? I am unable to find any.
The learned Solicitor General said that if the words were referable only to a detention for a period longer than three months then people detained for a shorter period would be deprived of the safeguard of the opinion of the Advisory Board and lose the chance of being set free if it expressed the view that there was no sufficient cause for detention.
That no doubt would be so.
But I find (i) ; 486 nothing in the language of cl.
(4) to show that such a safeguard was intended.
If the language does not support such an intention, then of course this argument must fail, however much the court may like the safeguard to be provided in all cases of detention.
If it was the intention of the Constitution to provide such a safeguard it would not have required that the report of the Advisory Board should be made before the expiry of the three months.
That is what Fazl Ali, J., said in Gopalan 's case (1) at page 171 : " Under article 22 (4) (a), the Advisory Board has to submit its report before the expiry of three months and may there fore do so on the eighty ninth day.
It would be somewhat farcical to provide, that after a man has been detained for eighty nine days, an advisory board is to say whether his intial detention was justified.
" As the Constitution could not have contemplated the situa tion mentioned by Fazl Ali, J., it could not have intended that all cases of detention irrespective of their periods must also be placed before the Advisory Board.
It follows that it did not mean to provide the safeguard referred to by the learned Solicitor General.
In fact, all the other learned Judges who heard Gopalan 's case (1), excepting Patanjali Sastri, J., expressed the same view.
I set out below what they said: Kania, C.J., (page 118 of the Report): "Reading article 22 clauses (4) and (7) together it appears to be implied that preventive detention for less than three months, without an advisory board, is permitted under the Chapter on Fundamental Rights, provided such legislation is within the legislative competence of the Parliament or the State Legislature, as the case may be.
" Mahajan, J., (p. 228): " If the intention of the Constitution was that a, law made on the subject of preventive detention had to be tested on the touchstone of reasonableness, then it would not have troubled itself by expressly making provision in article 22 about the precise scope of the limitation subject to which such a law could be made (1) ; 487 and by mentioning the procedure that the law dealing with that subject had to provide.
Some of the provisions of article 22 would then have been redundant, for instance, the provision that no detention can last longer that three months without the necessity of such detention being exam ined by an advisory board.
Again at p. 237: " Clause (4) of article 22 enjoins. . . that no law can provide for preventive detention for a longer period than three months without reference to an advisory board.
" Mukherjea, J., (p. 281): " Preventive detention can be provided for by law for rea sons connected with six different matters specified in the relevant items in the legislative lists, and whatever the reasons might be, there is a provision contained in article 22 (4) (a) which lays down that detention for more than three months could not be permitted except with the sanction of the advisory board.
" Das, J., (p. 326): "In short, clause (4) of article 22 provides a limi tation on the legislative power as to the period of prevent ive detention.
Apart from imposing a limitation on the legislative power, clause (4) also prescribes a procedure of detention for a period longer than three months by providing for an advisory board.
" The learned Solicitor General then contended that article 22 dealt both with preventive detention and other kinds of detention.
Thus clauses (1) & (2) dealt with other kinds of detention while clause (4) and the remaining clauses of the article dealt with preventive detention.
Clause (3) said that nothing in clauses (1) and (2) shall apply to a person detained under any law providing for preventive detention.
The learned Solicitor General contended that the words " such detention " in clause (4) were intended to refer to preventive detention without reference to its duration as distinguished from the other kinds of detention referred to in clauses (1) and (2).
He sought to reinforce his argument by contending that preventive detention 488 for a period longer than three months was not a separate kind of preventive detention and therefore the words " such detention " referred to the only kind of preventive deten tion mentioned in the article, namely, preventive detention simpliciter and without any reference to the period of detention.
I am again unable to agree.
It is true that the detention contemplated in the words " such detention " is preventive detention.
Clauses (4) to (7) of the article deal with preventive detention alone and with no other kind of detention.
Therefore, in these clauses there was no necessity of distinguishing preventive detention as such from other kinds of detention and of using the word "such for marking this distinction.
So read the words such deten tion " really mean such preventive detention.
The question then arises, which preventive detention? The answer must be, one variety of preventive detention as distinguished from other varieties.
It is also true that preventive detention for a period longer than three months is none the less preventive deten tion and is not another kind of detention.
At the same time preventive detention for a period longer than three months is not the same thing as preventive detention for a shorter period.
It is quite conceivable that with regard to differ ent periods of detention permissible under a law relating to preventive detention different provisions may be made.
Preventive detention certainly interferes with a person 's liberty.
It is an inroad on his freedom.
It may be that the makers of the Constitution having given the legislatures power to enact laws providing for preventive detention interfering with a person 's liberty did not think it fit to provide any limitation on such power when such detention, was to be for a relatively shorter period but thought it fit to restrict the power in the case of detention for what they conceived to be a long period.
If such was the intention, then the makers of the ' Constitution would obviously make a distinction between preventive detention for a shorter period and preventive detention for a longer period.
To say that there is no distinction between these kinds of preven tive detention is to assume that the makers of the Constitu tion, never 490 its opinion sufficient cause existed for a detention for a longer period or not, the report, when made, must necessari ly be taken to have expressed such an opinion and the arti cle therefore must be deemed have been complied with.
This argument, of course.
, assumes that the words " such deten tion " mean detention for a period longer than three months.
It assumes that the article requires that where the law of preventive detention authorises a detention for a longer period it is necessary to obtain the opinion of the Advisory Board that there is sufficient cause for detention for such period.
Now there is nothing in the article to prevent an Act authorising preventive detention providing for the opinion of the Advisory Board being obtained as to there being sufficient cause for the detention in any case of detention.
Such a provision in a law of preventive deten tion would be perfectly legal.
The present Act in fact contains such a provision.
Therefore, it cannot be said that whenever a law provides for an opinion of the Advisory Board being obtained as to the sufficiency of the cause for detention, the opinion in view of article 22(4)(a) necessarily is as to the sufficiency of the cause of detention for a period longer than three months.
Besides, if, as the present argument assumes, it is obligatory in a law autho rising preventive detention for a period longer than three months to provide for a, report of the Advisory Board statin expressly its opinion as to the sufficiency of the cause for the detention for the period mentioned, I am unable to appreciate that such an obligation is satisfied by not making the required provision but by showing that by neces sary implication the required opinion is deemed to have been given, even though in fact it may not have been given.
The question is not what the report is to be seemed to have stated nor even what it has in fact stated, but what the statute should provide.
If the statute has not made the obligatory provision it must be held to be bad.
It would be a strange argument to say that it must be good because though it did not contain the required provision it must in view of the Constitution be deemed to contain it, 489 intended to make the distinction.
For such an assumption I find no justification.
Indeed, what I have read from the judgment of this Court in Gopalan 's case, would show that the distinction between preventive detention simpliciter and preventive detention for a period longer than three months was in the mind of the makers of the Constitution, for it is there said that no reference to the Advisory Board is con templated by the Constitution excepting in a case of deten tion for a period longer than three months.
The present argument of the learned Solicitor General is on the basis that one of the possible constructions of the words " such detention " is detention for a period longer than three months.
That being so, and the word " such " meaning in the ordinary English language, of the kind al ready described, even if two kinds of detention, namely, preventive detention simpliciter and detention for other reasons, have been earlier mentioned, the kind mentioned nearest to the word "such" must be the kind intended by it.
Therefore again the words " such detention " must be taken as referring to detention for a period longer than three months.
Indeed cl.
(4) and the other clauses have nothing to do with other kinds of detention than preventive deten tion.
The word " such " cannot therefore seek to make a distinction from a thing occurring in a wholly separate provision of the article, namely, clauses (1) and (2).
That being so, I am unable to agree that the words " such deten tion " refer to preventive detention simpliciter.
I now turn to another question that arose.
It was said that article 22 (4) (a) applies only to a law which authorises detention for more than three months; that it is such a law alone which must provide for the opinion of the Advisory Board being obtained.
It was contended that, therefore, whenever a law authorising preventive detention provides for a reference to the Advisory Board, it necessarily provides for a report as to whether there is sufficient cause for a detention for a period longer than three months, and that being so, no matter whether any provision had been made that the Advisory Board must state whether in 491 It was then said that as it is not for the Advisory Board to decide the period of detention to be ordered there can be no point in providing that its opinion, whether there were sufficient cause for detention for a period longer than three months or not, should be obtained.
It seems to me that whether there is any point in obtaining such opinion or not it is wholly irrelevant to enquire.
If the language of the Constitution requires such opinion to be obtained, it has to be obtained.
I have stated that the language indubi tably requires such opinion to be obtained.
The language cannot have a different meaning because, otherwise, the provision would be without any point at all.
Furthermore, I am unable to see why if the Government fixes the period of detention, it is unnecessary where the period is to exceed three months to provide for the opinion of an independent body being obtained as to whether there is sufficient cause for detention for that period.
In my view it is eminently reasonable to make such a provision.
When a person 's liber ty is to be curtailed for a longer period, a safeguard may be considered necessary which it may not be when the cur tailment contemplated is for a comparatively shorter period.
I will repeat that the reasonableness of such a provision is implicit in what I have read from the judgment in Gopalan 's case (1).
It is said there that it is only in the case of detention for a period longer than three months that the Constitution requires a provision that the Advisory Board 's opinion should be obtained.
This view is clearly brought out by Fazl Ali, J., when he said in that case at page 171: "Prima facie, it is a serious matter to detain a person for a long period (more than three months) without any enquiry or trial.
But article 22(4)(a) provides that such detention may be ordered on the report of the advisory board.
Since the report must be directly connected with the object for which it is required, the safeguard provided by the article, viz., calling for a report from the advisory board, loses its value, if the advisory board is not to apply its mind (1) ; 63 492 to the vital question before the Government, namely, whether prolonged detention (detention for more than three months) is justified or not.
" I have so long discussed the question whether the words " such detention " mean preventive detention simpliciter or preventive detention for a period longer than three months as a question of construction with.
out reference to the authorities.
In fact, there is no conclusive authority on the point, but some have been referred to.
These I now proceed to consider.
The first case referred to is Gopalan 's case (1).
That was also a case concerned with the issue of a writ of habeas corpus, and it turned on the very Act that is before the Court now, as it stood in 1950.
At the date the order for detention in that case was made the Act provided that in certain class of cases a person might be detained for a period longer than three months without obtaining the opin ion of the Advisory Board in accordance with the provisions of article 22(4)(a).
Such a provision is sanctioned by el.
(7)(a) of that article.
The order for detention made in that case was of a kind where reference to the Advisory Board was not obligatory.
That being so, it was not neces sary for the court in that case to decide the precise mean ing of the words " such detention ".
None the less, how.
ever, three of the learned judges indicated their views on the question and the other three do not seem to have dealt with it.
Kania, C. J., expressed the opinion that the words "such detention" meant detention beyond the period of three months.
Referring to the proviso to sub cl.
(4)(a), he stated (p. 117): " The proviso to this clause further enjoins that even though the advisory board may be of the opinion that there was sufficient cause for such detention, i.e., detention beyond the period of three months, still the detention is not to be permitted beyond the maximum period, if any, prescribed by Parliament under article 22(7)(b)." The learned Chief Justice therefore was of the view that under article 22(4)(a) the Advisory Board had to be (1) ; 493 of the opinion that there was sufficient cause for detention beyond the period of three months.
Mr. Justice Fazl Ali expressed himself more clearly on the subject and said (pp. 170 171): " In connection with the first point, the question arises as to the exact meaning of the words " such detention " occur ring in the end of clause (4)(a).
Two alternative interpre tations were put forward: (1) it such detention " mans preventive detention; (2) ".such detention" means deten tion for a period longer than three months.
If the first interpretation is correct then the function of the advisory board would be to go into the merits of the case of each person and simply report whether there was sufficient cause for his detention.
According to the other interpretation, the function of the advisory board will to be report to the Government whether there is sufficient cause for the person being detained for more than three months.
On the whole, I am inclined to agree with the second interpretation.
Prima, ' facie, it is a serious matter to detain a person for a longer period (more than three months) without any enquiry or trial.
But article 22(4)(a) provides that such detention may be ordered on the report of the advisory board.
Since the report must be directly connected with the object for which it is required, the safeguard provided by the article, viz., calling for a report from the advisory board, loses its value, if the advisory board is not to apply its mind to the vital question before the government, namely whether prolonged detention (detention for more than three months) is justified or not.
Under article 22(4)(a), the advisory board has to submit its report before the expiry of three months and may therefore do so on the eighty ninth day.
It would be somewhat farcical to provide, that after a man has been detained for eighty nine days, an advisory board is to say whether his initial detention was justified.
On the other hand, the determination of the question whether pro longed detention (detention for more than three months) is justified must necessarily involve the determination of the question whether the detention was justified at all, an such an interpretation only 494 can give real meaning and effectiveness to the provision.
The provision being in the nature of a protection or safe guard, I must naturally lean towards the interpretation which is favourable to the subject and which is also in accord with the object in view." Patanjali Sastri, J., preferred the other view but he rea lised that the view taken by Fazl Ali, J., was also a possi ble view.
He expressed himself in these words on the sub ject (at page 210): "I am inclined to think that the words "such detention" in sub clause (a) refer back to the preventive detention men tioned in clause (4) and not to detention for a longer period than three months.
An advisory board, composed as it has to be of Judges or lawyers , would hardly be in a posi tion to judge how long a person under preventive detention, say, for reasons connected with defence, should be detained.
That must be a matter for the executive authorities, the Department of Defence, to determine, as they alone are responsible for the defence of the country and have the necessary data for taking a decision on the point.
All that an advisory board can reasonably be asked to do, as a safe guard against the misuse of the power, is to judge whether the detention is justified and not arbitrary or mala fide.
The fact that the advisory board is required to make its report before the expiry of three months and so could submit it only a day or two earlier cannot legitimately lead to an inference that the board was solely concerned with the issue whether or not the detention should continue beyond that period.
Before any such tribunal could send in its report a reasonable time must elapse, as the grounds have to be communicated to the persons detained, he has to make his representation to the detaining authority which has got to be placed before the board through the appropriate depart mental channel.
Each of these steps may, in the course of official routine, take some time, and three months ' period might well have been thought a reasonable period to allow before the board could be required to submit its report, 495 Assuming, however, that the words "such detention" had reference to the period of detention, there is no apparent reason for confining the enquiry by the advisory board to the sole issue of duration beyond three months without reference to the question as to whether the detention was justified or not.
Indeed, it is difficult to conceive how a tribunal could fairly judge whether a person should be detained for more than three months without at the same time considering whether there was sufficient cause for the detention at all.
I am of opinion that the advisory board referred to in clause (4) is the machinery devised by the Constitution for reviewing orders for preventive detention in certain cases on a consideration of the representations made by the persons detained.
This is the view on which Parliament has proceeded in enacting the impugned Act as will be seen from sections 9 and 10 thereof, and I think it is the correct view.
It follows that the petitioner cannot claim to have his case judged by any other impartial tribu nal by virtue of article 21 or otherwise.
" For the reasons earlier stated I prefer to accept the view expressed by Mr. Justice Fazl Ali.
The next case referred to is Makhan Singh Tarsikka vs The State of Punjab (1).
This was also a case for the issue of a writ of habeas corpus for the release of a person detained under the same Act as it stood in July 1951.
In this case the first order for detention, that is to say the order made before the reference to the Advisory Board itself fixed the period of detention.
It was held that that was illegal because the Act made it plain that it is only after the Advisory Board to which the case has been referred reports that the detention is justified, the Government should determine what the period of detention should be and not before.
The fixing of the period of detention in the ini tial order in, the present case was, therefore, contrary to the scheme of the Act and cannot be supported.
On this ground the petition for the issue of a writ was allowed.
This case was obviously not (1) ; 496 concerned with article 22(4)(a) and does not in any manner decide the question before me.
I am, therefore, unable to find any assistance from it.
Lastly, reference was made to Dattatreya Moreshwar Pangarkar vs The State of Bombay(1).
That again was concerned with an application for the issue of a writ of habeas corpus and also turned on the present .
There, after the initial order for detention which did not mention any period, the case had been referred to the Advisory Board which reported that there was sufficient cause for detention and then the Government issued an order stating that it confirmed the detention order issued against the detenu.
The question was whether this confirmatory order was in terms of section II (1)(a) of the same Act as in this case as it stood in 1952.
That section provided that where the adviso ry board had reported that there was sufficient cause for detention, the Government might continue the detention for such period as it .thought fit.
It was contended that the section required the period of detention to be mentioned in the confirmatory order and as the confirmatory order did not specify the period it was bad and did not justify the deten tion.
It was held that such omission did not invalidate the order.
Again it will be seen that this case was not con cerned with article 22(4)(a).
We were referred to certain observations of Mr. Justice Mukherjea in this case in sup port of the proposition that the words " such detention " in article 22(4)(a) meant detention simpliciter.
These observa tions are set out below (pp.
626 27): " It is now settled by a pronouncement of this court that not only it is not necessary for the detaining authority to mention the period of detention when passing the original order under section 3(1) of the , but that the ' order would be bad and illegal if any period is specified, as it might prejudice the case of the detenu when it goes up for consideration before the Advisory Board.
The Advisory Board again has got to express its opinion (1) (1952] S.C.R. 612.
497 only on the point as to whether there is sufficient cause for detention of the person concerned.
It is neither called upon nor is it competent to say anything regarding the period for which such person should be detained.
Once the Advisory Board expresses its view that there is sufficient cause for detention at the date when it makes its report, what action is to be taken subsequently is left entirely to the appropriate Government and it can under section 11(1) of the Act confirm the detention order and continue the deten tion of the person concerned for such period as it thinks fit.
" It was sought to be argued that Mukherjea, J., intended to say that all that the Advisory Board was required to do was to express its opinion on the question of justification of the detention simpliciter.
This may be so, but Mr. Justice Mukherjea was construing the which admittedly made that provision.
He was not saying that article 22(4)(a) also said the same thing.
Indeed what I have read earlier from his judgment in Gopalan 's case (1) would show that his view about article 22(4)(a) was otherwise.
Again the learned Judge was not concerned with the question whether the relevant provision of the was ultra vires the Constitution.
Furthermore, for the reasons earlier stated, the fact that the Government decides the term of detention does not indicate that it is not intended that when detention for a period longer than three months is contemplated, it is not necessary to obtain the opinion of the Advisory Board as to whether there was sufficient cause for detention for the period.
Reference was also made to the following portion of the judgment of Mahajan, J. (2), occurring at p. 637 of the report: "Under the Constitution, the detention of a person under any law providing for preventive detention cannot be for a period of more than three months unless the Advisory Board is of the opinion that there is sufficient cause for the detention of the person concerned." (1) ; , (2) ; 498 It was suggested that the learned Judge indicated that all that was necessary was for the law to provide for an opinion of the Advisory Board as to the justification of the deten tion itself irrespective of whether it was to be for a period longer than three months.
It is clear that here Mahajan, J., was not considering the meaning of the words " such detention".
He was not concerned with deciding whether these words meant detention simpliciter or detention for a period longer than three months.
His observations in Gopalan 's case(1) that I have earlier set out, would in my view indicate that the Advisory Board is required to give an opinion as to whether detention for a longer period than three months is justified or not.
It cannot therefore be said that Mahajan, J., held the view that the words " such detention " in article 22(4)(a) mean simply preventive deten tion.
I therefore come to the conclusion that there is nothing either in Makhan Singh 's case (2) or Dattatreya Moreshwar Paugarkar 's case (3) which takes a view contrary to that which I have taken.
, In the result I would allow the appeal.
(1) [195o] S.C.R. 88.
| The appellant was arrested under section 3 Of the (lV Of 1950) as amended by the amending Act Of 1951.
The grounds of his detention were communicated to him as required by section 7 Of the Act and his case was thereafter put up before the Advisory Board constituted under section 8 of the Act.
The Board reported that there was sufficient reason for his detention and thereupon the Cen tral Government acting under s.11 (1) of the Act confirmed the order of detention and directed that such detention should continue for a period of twelve months from the date of detention.
The appellant challenged the validity of this order by an application to the Punjab High Court under article 226 of the Constitution for a writ of habeas corpus and contended that sub section
(1) of section 11 of the Act was constitu tionally invalid as it contravened the provision of article 22(4)(a) of the Constitution.
The High Court found against him.
The same point was canvassed in appeal to this Court and it was contended that the expression 'such detention ' occurring in sub cl.
(a) of cl.
(4) of article 22 referred to detention for a period longer than three months mentioned in cl.
(4) Of the Article and section 11(1) of the Act, in so far as it permitted detention for more than three months without a specific report from the Advisory Board that there was sufficient cause for detention for more than three months, was ultra vires.
It was contended on behalf of the Union of India that the expression ,such detention ' referred to 'preventive detention ' occurring in the first line of cl.
(4) of article 22 and what an Advisory Board contemplated by sub cl.
(a) of that clause was intended to do was only to give its opinion as to whether there was sufficient cause for the detention itself and not as to the period of deten tion.
Held (per Bhagwati, jafer Imam, section K. Das and J. L. Kapur Jj.
Sarkar J. dissenting).
The contention advanced on behalf of the respondent was correct and the appeal must fail.
The expression 'such detention ' in article 22(4)(a) of the Constitution refers to preventive detention and not to any period for which such detention should continue and section 11(1) of the does not contravene the provision of article 22(4)(a) of the Constitution, 461 The true scope and effect of cl.
(4) of article 22 must be judged in the light of the entire scheme envisaged by article 22 and so understood, it becomes clear that the Constitution could not have intended that while the determination of the necessity of preventive detention should be left to the Executive, the determination of the period for which such detention should continue should be left to the Advisory Board.
In the very nature of things any decision as to the period of such detention can be taken only by the detaining authority upon which has been placed the responsibility for the detention.
The reference to the Advisory Board is intended to be a safeguard against any possible misuse of its power by the Executive and affords a machinery for the review of its decision on the basis of the representation made by the detenu, the grounds of detention or the report of any Officer who may have passed the order.
It is not a limitation on the Executive 's discretion as to the discharge of its duties connected with preventive detention.
A. K. Gopalan vs The State of Madyas, ; , referred to.
An examination of the scheme of the Act shows that its provisions are in conformity with the relevant provisions of the Constitution.
While the Act authorises detention for more than three months, it does provide for a reference of the order of detention to the Advisory Board and it is only after the Advisory Board has made its report that the Gov ernment can fix the period of detention under section 11(1) of the Act.
Makhan Singh Tarsikka vs State of Punjab, ; and Dattatreya Moreshway Pangaykar vs State of Bombay, ; , referred to.
Held further, that where the appropriate authority refuses to disclose any facts or particulars as to dates, persons and place, on the ground that such disclosure would be against public interest, under cl.
(6) of article 22, the person in detention cannot be heard to say, apart from the question of mala fides, that the grounds did not disclose the necessary facts or particulars or that in the absence of such facts or particulars he was not in a position to make an effective representation.
In the present case the grounds gave him a sufficient opportunity to make an effec tive representation.
Lawrence Joachim Joseph D 'Souza vs The State of Bombay, ; and State of Bombay vs Atma Ram Sridhay Vaidya, ; , relied on.
The test of the mala fides of the Executive in passing an order of preventive detention is whether the Executive in making such order was actuated by any ulterior purposes other than those mentioned In the order of detention.
462 Per Sarkar, J.
The expression 'such detention in article 22(4)(a) of the Constitution means detention for a period longer than three months and cannot mean detention simplic iter.
The object of article 22(4) is to impose a limitation on the power which the Parliament and the State Legislatures have, under article 246 of the Constitution, to enact laws for preventive detention by making such detention, where it is to be extended beyond three months, dependent on the opinion of an Advisory Board.
There is nothing in the language of article 22(4) to show that the safeguard the Constitution intended to provide by the opinion of the Advisory Board is available in other cases of detention.
A. K. Gopalan vs The State of Madras, ; referred to.
It cannot be said that since the Act provides for the ob taining of the opinion of the Advisory Board as to the sufficiency of the cause for detention, that opinion, in view of article 22(4)(a), necessarily is as to the sufficiency of the cause for detention for more than three months.
Where the statute does not contain the provision that the Advisory Board must report that in its opinion there is a sufficient cause for detention for more than three months, as required by article 22(4)(a) of the Constitution, the lacuna cannot be deemed to be cured by implication.
A statute which authorises detention for a period longer than three months without making a provision that the opinion of the Advisory Board must be obtained that there is sufficient cause for detention for a period longer than three months is to that extent invalid.
Makhan Singh Tarsikka vs The State of Punjab, (1952) S.C.R. 368 and Dattalreya Moreshwar Pangarkay vs
The State of Bom bay; , , considered.
|
Summarize this legal judgement text concisely | 351 of 1954.
Petition under Article 32 of the Constitution for the enforcement of fundamental rights.
803 N. section Bindra, Udhai Bhan Choudhury and Gopal ,Singh, for the petitioners.
section L. Pandhi and K. L. Mehta, for the Intervener.
March 29.
The Judgment of the Court was delivered by JAGANNADHADAS J.
This is an application under article 32 of the Constitution by the petitioners, Amar Singh and four others, in the following circumstances.
All these five are displaced persons who owned land in the non suburban village of Chak.
No. 159 RB, Tahsil Jaranwala, District Lyallpur in Pakistan.
They were also co sharers in a joint khata owned by some evacuees in village Sultanwind, a suburb of Amritsar in East Punjab.
On their displacement, they were in the first instance temporarily allotted agricultural land in Sultanwind.
Having regard to their original position in the village, they were.
allotted in the year 1949 a, total area of 38 standard acres and 13 units of agricultural land.
therein.
This allotment had to be disturbed under the following circumstances.
The Director General of Relief and Rehabilitation (Additional Custodian) directed by an order dated January 7, 1950, that out of the 1,263 standard acres and 1 3/4 units of suburban land of Amritsar, 142 standard acres and 5 units were to be allotted to allottees of Provincial Gardens.
This necessitated readjustment of allotments of the suburban land of Sultanwind amongst the various groups who had quasi permanent allotment therein.
As a result of this readjustment which had to be carried out according to certain rules and instructions, the allotment of these five petitioners (as also of some others) was proposed for cancellation by the order of the Deputy Custodian, Amritsar, dated July 31, 1951.
This proposal was approved by the Custodian (Financial Commissioner, Relief and Rehabilitation) on February 6, 1952, and the allotment was cancelled.
The proposal and the order of cancellation are said to have been passed without notice to the petitioners.
Being aggrieved thereby they moved the Custodian General of Evacuee Property for revision thereof under section 27 of the Administration of Evacuee 804 Property Act, 1950 (XXXI of 1950).
This was dealt with by the Deputy Custodian General who dismissed the same by a fairly elaborate order dated May 1, 1954, after hearing the parties.
The petitioners have come up to this Court by this application under article 32 of the Constitution.
The case of the petitioners is that the allotment to them was on quasi permanent basis and that, therefore, they have acquired certain rights in the lands which constitute 'property '.
They urge that the order of the Custodian cancelling the allotment and that of the Deputy Custodian General affirming the same are in violation of their fundamental rights to property under articles 19 (1) (f), 31 (1) and 31 (2) of the Constitution.
They accordingly contend that they are entitled to have these orders quashed and their rights to property declared and protected.
That the petitioners are allottees of agricultural land on the basis of what has come to be known as quasi permanent allotment is not disputed.
It is also not disputed that cancellation thereof was under the purported exercise of powers vested in the Custodian under certain provisions of the (XXXI of 1950) and the rules framed thereunder taken with some executive instructions.
It may be mentioned that the term "quasi permanent allotment" appears to be a term which has come into vogue in later statutory rules and has at no time been specifically defined, though it appears to be now fairly well understood.
The two substantial questions that arise, therefore, for consideration are (1) whether the rights of a quasi permanent allottee constitute property within the meaning of the articles above referred to, and (2) whether the orders of the Custodian and Deputy Custodian General cancelling the quasi permanent allotment amount to violation of fundamental rights contemplated by the above articles.
Both these questions require a review of the Evacuee Property Law in so far as it relates to the allotment of agricultural lands of the evacuees to displaced land holders and an appreciation of 'the background of the circumstances that necessitated it.
805 The Declaration of Independence and the partition of India into Pakistan and India on August 15, 1947, was accompanied by mass migrations of Non Muslims from West Punjab to East Punjab and of Muslims from, East Punjab to West Punjab.
These mass migrations were on a stupendous scale.
About five million persons are said to have moved from each side to the other.
This was done in a state of panic generated by communal riots.
Migrants from West Punjab reached East Punjab almost destitute.
This unprecedented situation brought in its train gigantic problems of administration relating to rehabilitation resettlement of these persons.
One of such problems was that relating to agricultural, immovable proerty, left on either side by the migrants.
For purposes of convenience persons who crossed over from East Punjab to West Punjab are referred to as evacuees and persons who came over from West Punjab to East Punjab are referred to as displaced persons.
The displaced persons are said to have left in Pakistan lands of the extent of about 67 lakh acres.
The evacuees seem to have left in East Punjab and Pepsu, lands of the extent of about 47 lakh acres.
This meant a deficit of over 20 lakh acres for resettlement.
It would appear that in the earlier stages there were attempts to settle the question by way of mutual exchanges either individually or at the governmental level and by means of inter dominion conferences between India and Pakistan.
But for one reason or other, these attempts appear to have failed.
The various steps and administrative measures taken to settle, the displaced agricultural population who came over from West Punjab, on the hurriedly abandoned lands of the evacuees from East Punjab, are to be found described in the Land Resettlement Manual by Shri Tarlok Singh who was the Director General of Relief and Rehabilitation (hereinafter referred to as the Resettlement Manual).
In Dunichand Hakim vs Deputy COMMISSIONER (Deputy Custodian, Evacuee Property), Karnal (1), this book has been referred to by this Court as having the stamp of authority.
It can be usefully referred to not (1) ; 806 necessarily as an authority for every statement of fact or law contained therein but as a guide to appreciate the background of the problems which the administration had to face in that unprecedented situation, how the administration attempted to solve the same, what were the rules and practice which the administration normally followed and considered binding on itself, and what ideas inspired the course of legislation in this behalf.
It appears therefrom that within about a month after the partition of India, the Government had to take an emergency decision to allot evacuee lands to groups of displaced persons on temporary basis.
But this was found not to satisfy the displaced landholders.
There was ' insistent pressure from them for such allotment as would enable them to settle on the lands of the evacuees on a permanent basis.
This led to the abandonment of the policy of temporary allotments and the introduction of a system of allotment which came to be known as quasi permanent allotment.
This policy was announced by the Government of East Punjab in its Press Communique dated February 7, 1948, which is reproduced at pages 28 and 29 of the Resettlement Manual.
The following extract therefrom is instructive: " The East Punjab Government propose to replace the present system of temporary allotments of evacuee lands by a new system of allotments which will take account of the holdings of evacuees in West Punjab.
The new allotments will not confer rights of ownership or permanent occupancy, but the possession of allottees will be maintained.
Claims of allottees will be dealt with in accordance with decisions reached eventually regarding the treatment of evacuee property.
In the new scheme of allotments, land will be allotted only to those who, in West Punjab, were owners, occupancy tenants under the Punjab Tenancy Act, and tenants under the Colonization of Government Lands Act and to certain other classes of grantees and holders of land in West Punjab to be specified by Government.
It is proposed to give to small holders allotments of equivalent areas, while in the case of larger holders there will be graded cuts.
The definition 807 of the " Small Holders " and the details of the graded cuts will be determined when detailed information regarding the available areas in East Punjab and the East Punjab States, the areas held by the population to be settled in East Punjab and the East Punjab States, and other relevant information becomes available.
It is intended to complete the new system of allotments in East Punjab and the East Punjab States, not later than the 31st May, 1948.
Government are, however, anxious to introduce the new scheme as early as may be feasible and steps to this end will be taken at once.
Arrangements for collecting complete information regarding the land available for allotment in East Punjab and the East Punjab States and the land abandoned by individual evacuees will be taken in hand without delay and it is hoped also to make arrangements on a reciprocal basis to secure infor mation from records of rights in West Punjab.
To ensure accurate information an Ordinance will shortly be promulgated prescribing punishment for false information regarding claims to land and action by way of forfeiture and otherwise in respect of allotments taken on false information.
Claims to land will be invited on a form to be prescribed by Government.
Until the new system of allotments can be introduced, the, present system of allotments will continue and allotments made to the present holders will be maintained subject to a complete scrutiny of existing allotments, cancellation of unauthorised and excessive allotments, dispossession from illicit occupation and such other adjustments as may be necessary including adjustments in the unit of allotment decided upon by Government." To facilitate the process of resettling the displaced persons on evacuated land on this new basis of allotment various steps became necessary.
They are roughly the following.
Registration and verification of land claims.
Assessment and valuation of such claims, 808 3.
Classification of the villages and of lands of evacuees available for allotment.
Allocation of the claims to various areas with reference to such classification.
Allotment of lands to individuals with reference to the valuation of their claims, guided by various considerations, priorities and preferences and so forth administratively determined.
The basic idea which inspired and regulated these measures was that the displaced landholder is to be allotted (subject to graded cuts) such lands out of the evacuee agricultural land which, in its extent, quality and other relevant features, bear some reasonable relation and correspondence to the lands left by him in West Punjab.
All these steps involved very elaborate administrative measures as indicated above.
We are concerned in this context to trace the legislation which brought about these steps and to examine whether and to what extent such legislation recognised property rights in the displaced land holders.
But before tracing the legislative measures which brought about the quasi permanent allotments of evacuee lands in favour of displaced land holders from West Punjab, it will be convenient to have a brief survey of the present law in its application to administration of evacuee property of* all kinds in general with the history of such of the provisions therein as are relevant for our purpose and then to consider the relevant legislative measures taken specifically with reference to agricultural land.
The earliest legislative measure in this behalf is the East Punjab Evacuees ' (Administration of Property) Ordinance, 1947, (E.P. Ordinance IV of 1947) dated September 14, 1947, which was a simple measure defining the terms I evacuee ', I evacuee property ', and I Custodian of evacuee property ' and other terms, and authorising the appointment of a Custodian.
It gave the Custodian power to take possession of evacuee property and to take all measures necessary and expedient for preserving such property.
It vested in him extensive powers of management thereof.
This was an emergency measure which appears to have 809 been meant to get possession of the properties as a care taker.
This was superseded and followed by a series of legislative measures which underwent modifications from time to time.
These legislative measures were in the first instance Provincial, viz., East Punjab Evacuees ' (Administration of Property) Act, 1947 (E.P. XIV of 1947); East Punjab Evacuees ' (Administration of Property) (Second Amendment) Ordinance, 1948 (E.P. Ordinance XVI of 1948); East Punjab Evacuees '(Administration of Property) Second Amendment) Act, 1948 (E.P. XLIX of 1948); and East Punjab Evacuee Property (Administration) Ordinance, 1949 (E.P. Ordinance IX of 1949).
These Provincial measures were repealed and superseded by Central legislation, viz., Administration of Evacuee Property Ordinance, 1949 (Ordinance XXVII of 1949) amended by the Administration of Evacuee Property (Amendment) Ordinance, 1950 (Ordinance IV of 1950).
These were repealed and superseded by the (XXXI of 1950).
The main provisions of Central Act XXXI of 1950, which, with some modifications, is at present in force, may now be noticed so far as they are relevant.
Under sections 5 and 6 of the Act an administrative machinery consisting of Custodians, Additional, Deputy and Assistant Custodians of Evacuee Property, is set up for each State by the State Government thereof.
They are under the general superintendence and control of a Custodian General appointed by the Central Government who has, for his assistance, Deputy and Assistant Custodian Generals, who are also appointed by the Central Government.
The terms 1 evacuee ' and " evacuee property ' are defined in section 2 (d) and (f) and the Custodian is given power to determine and notify evacuee property under section 7.
All property declared as 'evacuee property ' becomes vested in the Custodian under section 8.
The Custodian has under section 9 the power to take possession of all the 'evacuee property ' so vested in him.
Section 10 enumerates the powers and 104 810 duties of the Custodian generally and declares that he may take such measures as he considers necessary or expedient for the purposes of securing, administering, preserving and managing any evacuee property and generally for the purposes of enabling him satisfactorily to discharge any of the duties imposed on him by or under the Act, and may, for any such purpose as afore said, do all acts and incur all expenses necessary or incidental thereto.
One of the duties laid on the Custodian is the maintenance of accounts under section 15.
Section 15 (1) says that the Custodian shall maintain a separate account of the property of such evacuee, possession whereof has been taken by him, and shall cause to be made therein entries of all receipts and expenditure in respect thereof.
Section 16 provides for restoration of property to the evacuee on his application and enjoins the Custodian to furnish the evacuee on demand with a statement containing an abstract of the account of the income received and expenditure incurred in respect of the property.
The general powers of management vested in the Custodian under section 10 enable him to grant leases and make allotments out of evacuee property in favour of displaced landholders.
This is subject to the power vested in him under section 12 (1) to vary or cancel leases or allotments of evacuee property.
There are a number of other substantive and incidental provinsions which it is unnecessary to refer to for the purposes of this petition.
Thus, the 'broad features of the administration of evacuee property law, as indicated from the provisions above noticed, are the following : 1.
All evacuee property is vested in the Custodian.
He has the duty of managing the property and maintaining accounts for such management and has large administrative powers.
As incidental to such management he can grant leases and make allotments.
He has the power to vary or cancel leases and allotments.
811 5.
The evacuee can come forward and apply for return of the evacuee property and such property is liable to be restored to him.
The Custodian, presumably on such restoration, has to furnish to the evacuee on demand, a statement containing an abstract of the account of the income received and expenditure incurred in respect of the property.
In addition to large administrative functions for the purposes of the Act, the Custodian has also the function of deciding various matters of a quasi judicial nature, such as (1) whether a person is an evacuee or whether certain property is evacuee property; (2) whether a transfer of evacuee property is or is not to be confirmed; (3) whether a lease or an allotment is or is not to be cancelled or varied; and (4) whether property is to be restored to the d so forth.
The actions of the Custodian and his subordinates in exercise of their administrative as well as of ' quasi judicial functions are subject to appeal and revision by the higher authorities under the Act as provided under sections 24 to 27.
Section 28 provides that orders made under the above sections shall be final and shall not be called in question in any original suit, application or execution proceeding.
Section 46 bars the jurisdiction of the civil or revenue courts in respect of any matter which the Custodian General or the Custodian is empowered by or under the Act to determine.
The history of some of the above statutory provisions as traceable from the corresponding provisions ,of the earlier legislation is significant.
The provision vesting evacuee property in the Custodian was not enacted in the earlier East Punjab Ordinance IV of 1947.
But it was enacted by the next legislative measure, East Punjab Act XIV of 1947, which declared the vesting of evacuee property, and provided that the property " shall continue to be so vested until the Provincial Government by notification otherwise directs.
" This last clause was substituted in 1948 by an Amending Act, by the clause " until it is returned to the owner in accordance with the provisions of 812 section 12 This clause as to the duration of such vesting was omitted in the later Central legislation and was substituted by the phrase " shall continue to so vest. " (See Central Ordinance XXVII of 1949 and Central Act XXXI of 1950).
The earliest provision for return of evacuee property to the evacuee is in East Punjab Ordinance IV of 1947.
Section 12 thereof provided that the owner of any property in the possession or control of the Custodian shall be entitled to restoration thereof upon application to the Custodian and on payment of excess, if any, of expenditure over receipts from the management of such property by the Custodian.
In East Punjab Act XIV of 1947 which superseded this Ordinance, this right of restoration to the evacuee was qualified by virtue of section 12 (1) thereof which is as follows: On being satisfied that evacuees have returned or are returning to the Province, the Provincial Government may by notification in the Official Gazette authorise return of their immovable property to the owners in accordance with this section.
" Sub section (2) of section 12 provided that any person claiming to be entitled to any such property may apply in writing to the Custodian who, after giving public notice and holding an enquiry, will make a formal order declaring the person to whom possession of the property may be delivered.
In Central Ordinance XXVII of 1949 and in Central Act XXXI of 1950, the provision for restoration of property to the evacuee in section 16 thereof is that the Custodian may, on application by the evacuee or his heir, restore to him the property subject to such terms and conditions as he may think fit to impose provided that the applicant produces a certificate from the Central Government that the property may be so restored if he is otherwise entitled to it.
Thus it will be seen that while the earliest East Punjab Ordinance of 1947 recognised almost an unrestricted right in the evacuee to obtain restoration of property this was changed shortly thereafter by the East Punjab Act of 1947 which required that such return by the Custodian can only follow a 813 notification by the Provincial Government as to its being 'satisfied that evacuees have returned or are returning and authorising the return of the property.
The Central legislation of 1949 and of 1950 however lessened the rigour of it by requiring only a preliminary certificate from the Central Government by the individual applicant concerned.
Next, it may be noticed that neither East Punjab Ordinance IV of 1947 nor East Punjab Act XIV of 1947 which replaced it refer to or define either the word ,lease ' or 'allotment '.
These two words were for the first time defined only by the amending East Punjab Ordinance XVI of 1948 and it was made clear therein that an allotment was different from a lease.
From the historical background it would appear likely that the word allotment ' was used for the grant of property to displaced landholders while 'lease ' was intended to denote a temporary grant to other displaced persons.
But even so the temporary character of the right ' involved in the word 'allotment ' was specified by defining allotment ' as meaning the grant by the Custodian of a temporary right of use and occupation of evacuee property to any person otherwise than by way of lease.
This temporary character of the right was reiterated also in East Punjab Ordinance IX of 1949 and in Central Ordinance XXVII of 1949.
It is only in Central Act XXXI of 1950 that by section 2 (a) thereof the word 'temporary ' in the definition of the word allotment ' was dropped and allotment ' is defined as meaning the grant by a person duly authorised of a right of use or occupation of an immovable evacuee property to any other person but does not include a grant by way of a lease.
Thus the legislation of 1950 for the first time contemplated that allotment may be otherwise than temporary.
This Act as well as the previous Central ordinance completely omitted the definition of the word 'lease '.
These changes were apparently necessitated by the fact that, in between, Punjab Government notification dated July 8, 1949, came into operation providing for what has become subsequently known as quasi permanent allotment.
814 The provisions of that notification and the legal effect thereof will be noticed in due course.
We may next trace the provisions in the various Acts relating to the power of cancellation of allotments in so far as they appear from the body of the main Ordinances and Acts themselves, leaving aside for the time being the rules framed thereunder.
If may be mentioned that in the rest of the judgment in noticing the statutory provisions which deal with leases and allotments together, all reference to leases are omitted for the sake of simplification.
The earliest provision in this behalf is section 9 A of East Punjab Act XIV of 1947 which was inserted into it by East Punjab Ordinance XVI of 1948 replaced by East Punjab Act XLIX of 1948.
Sub section (2) of a. 9 A provides that notwithstanding anything contained in any enactment for the time being in force, 'the Custodian may cancel any allotment or amend the terms of any agreement on which any evacuee property is held or occupied by any person, whether such agreement was entered into before or after the coming into force of East Punjab Ordinance XVI of 1948.
It is further provided by sub sections
(3) and (4) thereof, that if a person is in unauthorised possession of any evacuee property the Custodian may treat such person either as a tenant or as a trespasser and that a person treated as a trespasser, on cancellation of allotment, shall, on demand, surrender possession to the Custodian.
The subsequent East Punjab Ordinance IX of 1949, Central Ordinance XXVII of 1949 and Central Act XXXI of 1950 contain substantially the same provisions relating to cancellation of allotments.
It may be mentioned that all these legislative measures had a section relating to rule making power right from the time.
of East Punjab Act XIV of 1947 and also a provision that the provisions of the Act and the rules made thereunder shall have effect notwithstanding anything inconsistent therewith in any enactment other than that Act.
(See sections 22 and 18 B of East Punjab Act XIV of 1947 and sections 55, 56 and 4 of ' Central Act XXI of 1950).
By virtue of this 815 rule making power, the Provincial Government and the Central Government made rules from time to time, which will be noticed presently.
From the above history of alterations at short intervals In some of the main relevant provisions, it is clear that the legislation was being adjusted from time to time with reference to the exigencies and difficulties of the different problems which had to be grappled with, both in the matter of internal administration as also on account of inter dominion conferences between Pakistan and India.
It may be mentioned that during the two year period between the first Provincial legislation in 1947 and the first Central legislation in 1949 there were as many as six inter dominion conferences, i.e., in January 1948, April 1948, July 1948, December 1948, April 1949 and June 1949.
Stopping here it will be seen that the position, in its general aspect, is that all evacuee property is vested in the Custodian.
But the evacuee has not lost his ownership in it.
The law recognised his ultimate ownership subject to certain limitations.
the evacuee may come back and obtain return of his property, as also an account of the management thereof, by the Custodian.
Such return which was originally contemplated without any restriction, is subsequently dependent on 'a notification or a certificate of the Central Government.
Until such return the Custodian may manage the property by granting allotments in favour of displaced persons.
The nature of an allotment is clear from its definition that it is grant of the right of use and occupation.
This in the first instance was contemplated as being only temporary.
By a later definition, it was made wider so as not to be restricted to a temporary use and occupation.
But the allotment is clearly, subject to the power of cancellation thereof vested in the Custodian, which will entitle him to obtain its possession.
Such rules were undergoing alterations from time to time.
In such a situation it would prima facie be difficult to 816 recognise the allottee of any evacuee property, in so far as his position is governed by the main provisions of the Evacuee Property Administration Acts (unaffected by any specific rules applicable to any particular class of property or any specific arrangement or contract), as a person having some kind of property or having a recognised interest therein which by itself constitutes 'property '.
It is more in the nature of a licence which is liable to be cancelled by the grantor.
It may be mentioned that there appear to be certain rules made by the East Punjab Government dated August 6, 1948, under East Punjab Act XIV of 1947 as amended in 1948 relating to cancellation of allotments.
But the text of these rules was not available to us.
However this may be, it is urged that certain other legislative measures and statutory rules made in exercise of the statutory powers, have made a difference in the position arising in respect of allotments of agricultural lands granted in favour of displaced persons in East Punjab who left landed property in West Punjab.
It is, therefore, necessary to review the same.
The first measure for the resettlement of the displaced land holders of West Punjab on evacuee lands was, the East Punjab Refugees (Registration of Land Claims) Ordinance, 1948 (E. P. Ordinance VII of 1948) which was replaced by East Punjab Refugees (Registration of Land Claims) Act, 1948 (E. P. XII of 1948).
It is in pursuance of the rules framed under this Act that what is known as the Parcha claim and the form therefor were standardised calling for accurate information as regards quite, a large number of details which had to be taken into consideration in determining the land to be allotted to a displaced land holder.
This was followed by the East Punjab Displaced Persons (.Land Resettlement) Ordinance, 1949 (E. P. Ordinance XIV of 1949) which was replaced by the East Punjab Displaced Persons (Land Resettlement) Act, 1949 (E. P. XXXVI of 1949).
This Act was meant " to provide for the allotment of evacuee lands, in East Punjab.
" The right of an allottee to possession of the 817 land allotted subject to payment of rent, etc., to the Custodian or his right to a share in the rent from the present holder thereof (that is, the cultivating occupant), if any, and other incidents arising from such possession were specified in this Act.
In between these two Acts, notification No. 4892/s dated July 8, 1949, was issued by the Punjab Government in exercise of the rule making power vested in it under cls.
(f) and (ff) of sub section
(2) of section 22 of East Punjab Act XIV of 1947 as amended in 1948.
This notification sets out the statement of conditions on which the Custodian could grant allotments of land vested in him.
This notification is virtually the charter of the rights of allottees.
It is the basis of what has come to be known as the quasi permanent allotment.
In the rules set out in this notification a I displaced person ' is defined as I a land holder in West Punjab etc. ' and it is specified that " an allotment shall be made in favour of a displaced person and for a period for which the land remains vested in the Custodian.
" The word 'allottee ' is defined as including " heirs, legal representatives and lessees of the allottee.
" It may be mentioned in this context that East Punjab Displaced Persons (Land Resettlement) Act, 1949, mentioned above, which was passed shortly after these rules were notified also defines the word I allottee ' and says that allottee means " a displaced person to whom land is allotted by the Custodian under the conditions published with East Punjab Government notification No. 4892/S dated July 8, 1949 and includes his heirs, legal representatives and sub lessees." Thus the definitions of the word I allottee ' in the rules of July 8, 1949 and under the Act passed shortly thereafter recognise not only that an allotment is to be in favour of a displaced land holder for the period the land is vested in the Custodian but that it enures for the benefit of his heirs and legal representatives.
Therefore, the first incident of allotment implicit in this is the heritability of the rights of the allottee which constitute quasi permanent allotment under the above mentioned notification of July 8, 1949.
Various other rights are specified in 105 318 cls.
3, 4, 5, 7 and 8 of the said notification.
These will be summarised later.
But it is to be noticed that the allotment itself is subject to resumption under el.
(6) thereof.
Before considering the nature of the interest which these various clauses of the notification confer on the quasi permanent allottee, it is necessary to see how far this notification of July 8, 1949, is affected by subsequent legislation and the rules framed thereunder.
Now the East Punjab Evacuee Property Administration Acts were repealed and replaced by Central Ordinance XXVII of 1949 and Central Act XXXI of 1950.
Both the Central Ordinance and Central Act had each a section, section 53 and section 55 respectively, under which the Central Government may delegate its rule making power to the State Government.
In exercise of such delegated power the State Government issued a notification No. 1554 Cust.
dated February 6, 1950, the relevant portion of which is as follows: " The Provincial Government is pleased to notify that Statement of Conditions issued by the Custodian and published under the notification No. 4891/S and 4892/S dated the 8th July, 1949, shall be deemed to be and shall continue to remain in force as rules framed by the Provincial Government under sub section (2) of section 53 of the Central Ordinance No. XXVII of 1949 under delegation from the Central Government under Notification No. 3094 A/Cus/49 dated 2nd December, 1949, subject to the following modifications and amendments: (i)The rules as stated in the Statement of Conditions under notification Nos. 4891/S and 4892/S dated the 8th July, 1949, shall be called the Administration of Evacuee Property (Rural) Rules, 1949.
(ii)Definition.
(a) The word 'ACT ' defined in the said Statement of Conditions shall mean the Administration of Evacuee Property Ordinance, 1949 (Ordinance No. XXVII of 1949). . . . . . . . . ." The above rules of July 8, 1949, have, therefore, continued to be operative as rules made under the 819 Central Ordinance.
On the repeal of the Central Ordinance by Central Act XXXI of 1950 and by virtue of section 58 thereof, these rules continue to be in force as though they are rules made under the Central Act of 1950.
Further, the Central Government framed rules on September 28, 1950, entitled Administration of Evacuee Property (Central) Rules, 1950, which will be noticed presently.
Later, in exercise of the delegated rule making power vested in the Provincial Govern ment under section 55 of the Central Act, the Punjab Government framed rules dated August 29, 1951, entitled " Instructions for review and revision of land allotment.
" These two sets of subsequent rules would affect the rules of July 8, 1949, to the extent that any of them are inconsistent with the earlier rules.
A comparison of the subsequent rules with the earlier rules of July 8, 1949, shows that the later rules do not concern any of the matters provided by the earlier rules of 1949 (and 1950) excepting as regards the provisions relating to resumption which virtually is cancellation of allotments.
Hence the rules of July 8, 1949, continue to be in force except to that extent, if any.
The portion which has undergone, if any, variation by subsequent rules may now be noticed.
The provision for resumption in the rules published, by the Punjab Government in its notification of July 8, 1949, is as follows: " 6.
The Custodian, or as the case may be, the Rehabilitation Authority shall be competent to resume, amend, withdraw, or cancel the allotment on any of the following grounds: (a)It is contrary to the orders of the East Punjab Government, or the instructions of the Financial Com missioner, Rehabilitation, or the Custodian, Evacuee Property, East Punjab ; (b)The allottee has infringed or appears to be, preparing to infringe any of the terms of allotment; (c)The allotment was obtained by false declaration or insufficient information or is contrary to the purpose of rehabilitating the displaced persons; 820 (d) The area allotted or occupied by the allottee is more than he was authorised to take on allotment or occupy under the instructions issued by the East Punjab Government or the Financial Commissioner, Rehabilitation, or the Custodian, Evacuee Property, East Punjab; (e) Where the claims of other parties with respect.
to the land have been established or accepted by the Custodian or the Rehabilitation Authority; (f) When the allottee has been convicted of an offence under the Act; or (g) If the allottee fails to take possession of the and within the time as may be allowed by the Custodian or the Rehabilitation Authority, or after having taken possession, fails to cultivate the land or a part hereof " The next set of rules are those made under Central Act XXXI of 1950.
Rule 14 of Central Rules, 1950, is the following: " 14.
(1) . . . . . . . " (2) In case of an allotment granted by the Custodian himself, the Custodian may evict a person on any ground justifying eviction of a tenant under any law elating to the Control of Rents for the time being in force in the State concerned, or for any violation of the conditions of the allotment.
(3) The Custodian may evict a person who has secured an allotment by misrepresentation or fraud or if he is found to be in possession of more than one evacuee property or in occupation of accommodation in excess of his requirements.
(4) . . . . . . ." It will be seen that the above provisions are not in themselves powers of cancellation or modification of allotment but are supplementary thereto authorising eviction of an allottee under the circumstances indicated therein.
The next set of rules in this connection are rules dated August 29, 1951, enacted by the Punjab Government in exercise of powers delegated to it by the Central Government under section 55 (1) of Central Act 821 XXXI of 1950.
In so far as these rules relate to allot ments, cls.
(a) to (g) of r. (1) thereof are virtually the same as those relating to resumption in the notification of July 8, 1949.
The additions thereto in the 1951 rules are the following: " (1) The Custodian shall be competent to cancel or terminate any allotment or vary the terms of any allotment or agreement and evict the allottee in any one of the following circumstances: (a) to (g) . . . . . . . (h) that it is necessary or expedient to cancel or vary the terms of an allotment for the implementation of resettlement schemes and/or rules framed by the State Government; or for such distribution amongst displaced persons as appears to the Custodian to be equitable and proper; or (1) that it is necessary or expedient to cancel or vary the terms of an allotment for the preservation, or the proper administration, or the management of such property or in the interests of proper rehabilitation of displaced persons.
(2) Anything done or any action taken in exercise of any power conferred by the previous rules shall be deemed to have been done or taken under these rules, as if they were in force on the day on which such thing was done or action was taken.
" A close scrutiny will show that as regards resumption or cancellation of (quasi permanent) allotments made under the notification of July 8, 1949, the Central Rules of 1950 do not make any alteration by r. 14 thereof but give only supplementary powers of eviction in certain contingencies.
The rules of August 29, 1951, made by the Punjab Government under delegated authority will be found on comparison to be substantially the same as those enumerated in cl.
(6) of July 8, 1949, notification under the heading I Resumption ' with the addition of cls.
(h) and (i) and wit an additional clause giving retrospective operation to the new rules.
Rule 14 of the Central Rules, 1950, has been subsequently modified by notification No. S.R.O. 1722 dated 822 October 29, 1951, by adding sub r.
(6) which is as follows: Where any State Government has, in exercise of the powers delegated to it, made any rules under clause (1) of sub section (2) of section 56 of the Act which are inconsistent with this rule, such rules shall prevail over this rule.
" This obviously is intended to indicate that if there is any inconsistency as regards the power of cancellation between the Central Rules and the later delegated State Rules, the State Rules are to override the Central Rules.
Now, all these rules relating to the power of cancellation which derive their authority from the rule making power given by the Provincial and Central Acts must, according to the ordinary rules of construction, be read so as to harmonise with the powers of cancellation under the Act itself.
It follows that r. (6) relating to resumption of allotments under the notification of July 8, 1949, as it originally stood until February 6, 1950, must be read with section 9 A of East Punjab Act XIV of 1947 as amended in 1948, in so far as it relates to allotment.
Similarly Central Rules of 1950, and the delegated State Rules of 1950 and 1951 must be read to harmonise with section 12 of Central Act XXXI of 1950, in so far as they relate to allotments made under the notification of July 8, 1949.
Reading these powers of cancellation under the Act and the Rules together, it will be found that the power of cancellation of such allotments is wide and varied and depends to a substantial extent on ad ministrative orders and considerations.
Rule 14 of Central Rules, 1950, underwent alterations in July, 1952, and February, 1953.
These are subsequent to the date of cancellation of the allotment in the present case and have no direct bearing on the present case.
Pausing here and summarising the position as it obtained till July 22, 1952 (when further relevant rules were framed) as regards the rights under the (quasi permanent) allotment scheme introduced by notification of July 8, 1949, may be stated thus.
(References given as against each are to the relevant provisions of the notification of July 8, 1949).
823 1.
The allottee is entitled to right of use and occupation of the property until such time as the property remains vested in the Custodian.
(Clause 3 (1).) 2.The benefit of such right will enure to his heirs and successors.
(Definition of 'allottee '.) 3.His enjoyment of the property is on the basis of paying land revenue thereupon and cesses for the time being.
Additional rent may be fixed thereupon by the Custodian.
If and when he does so, the allottee is bound to pay the same.
(Clause 3 (3).) 4.
He is entitled to quiet and undisturbed enjoyment of the property during that period.
(Clause 8.) 5.
He is entitled to make improvements on the land with the assent of the Custodian and is entitled to compensation in the manner provided in the Punjab Tenancy Act.
(Clause 7.) 6.
He is entitled to exchange the whole or any part of the land for other evacuee land with the consent of the Custodian.
(Clause 5.) 7.
He is entitled to lease the land for a period not exceeding three years without the permission of the Custodian and for longer period with his consent.
But he is not entitled to transfer his rights by way of sale, gift, will, mortgage or other private contract.
(Clause 4 (c).) 8.
His rights ' in the allotment are subject to the fairly extensive powers of cancellation under the Act and rules as then in force prior to July 22, 1952, on varied administrative considerations and actions such as the following (Clause 6 and subsequent rules of 1951.): (a)That the allotment is contrary to the orders of the Punjab Government 'or the instructions of the Financial Commissioner, Relief and Rehabilitation, or of the Custodian, Evacuee Property, Punjab; (b)That the claims of other parties with respect to the land have been established or accepted by the Custodian or the Rehabilitation Authority; 824 (c) That it is necessary or expedient to cancel or vary the terms of an allotment for the implementation of resettlement schemes and/or rules framed by ,the State Government; or for such distribution amongst displaced persons as appears to the Custodian to be equitable and proper; (d) That it is necessary or expedient to cancel or vary the terms of an allotment for the preservation, or the proper administration, or the management of such property or in the interests of proper rehabilitation of displaced persons.
It is noteworthy that the powers of cancellation include the liability of the allotment to be cancelled, if it is secured by false declaration or insufficient information, and also if the allottee is convicted under the provisions of the Evacuee Property Administration Acts.
(Clause 6 (c) and (f).).
Taking all the above incidents together as to the position of a displaced land holder to whom evacuee agricultural land has been allotted Under the notification of July 8, 1949, there can be no doubt that he is in a definitely better legal position than the allottee of other kinds of property under Central Act XXXI of 1950 and the Central Rules of 1950, who, as already shown, is more or less in the position of a licensee.
But even so, it is still far short of what can be considered as being in itself I property ' either in the widest sense or in a limited sense.
It is very strenuously urged that though this might appear to be so if one has regard only to the legislation and to the statutory rules up to July 22, 1952, the position of such an allottee emerges more definitely and clearly in the light of further legislation and subsequently amended rules.
It is urged that this later legislation was in implementation of the, original Press Communique dated February 7, 1948 which was understood to hold out the assurance of allotment its conferring permanent property.
On this contention the later legislation has also been brought to our notice.
In view of the insistence with which this contention has been urged 825 and the importance of the question, it is desirable to notice the same and to consider the effect thereof without deciding whether the later legislation and the Press Communique are relevant for the decision of the matters involved in this case.
The earliest change in the pre existing situation, as above noticed, was brought about by two notifications, section R. 0.
1290 dated July 22, 1952, and section R. 0.
351 dated February 13, 1953, as a result of which sub r.
(6) of r. 14 of the Central Rules of 1950 stood amended by the substitution of a new sub rule which is as follows : " (6) Notwithstanding anything contained in this rule, the Custodian of Evacuee Property in each of the States of Punjab and Patiala and East Punjab States Union shall not exercise the power of cancelling any allotment of rural evacuee property on a quasi permanent basis, or varying the terms of any such allotment, except in the following circumstances: (i)where the allotment was made although the allottee owned no agricultural land in Pakistan; (ii)where the allottee has obtained land in excess of the area to which he was entitled under the scheme of allotment of land prevailing at the time of allotment; (iii)where the allotment is to be cancelled or varied (a)in accordance with an order made by a competentauthority under section 8 of the East Punjab Refugees (Registration of Land.
Claims) Act, 1948 ; (b)on account of the failure of the allottee to take possession of the allotted evacuee property within six months of the date of allotment; (c)in consequence of a voluntary surrender of the allotted evacuee property, or a voluntary exchange with other available rural evacuee property, or a mutual exchange with such other available property; (d) in accordance with any general or special order of the Central Government; 106 826 Provided that where an allotment is cancelled or varied under clause (ii), the allottee shall be entitled to retain such portion of the land to which of the would ,have been entitled under the scheme of quasi permanent allotment of land: Provided further that nothing in this sub rule shall apply to any application for revision, made under section 26 or section 27 of the Act, within the prescribed time, against an order passed by a lower authority on or before 22nd July, 1952.
" This amendment has undoubtedly the effect of modifying the power of resumption or cancellation vested in the Custodian authorities in respect of quasi permanent allottees by virtue of the pre existing rules and to confine such power within narrow limits as specified therein.
But whether the restrictions on this power of cancellation can be harmonised with the power to vary or cancel allotments vested in the Custodian under section 12 of Central Act XXXI of 1950 is a matter not without some difficulty.
It may, however, be assumed that, if possible, the latest amendment of r. 14 of Central Rules, 1950, by the insertion of the amended sub r, (6) therein will have to be harmonised with.
the main section by a process of construction so as not to nullify the beneficient provisions specifically enacted in mandatory lanuage.
It is noteworthy that the language of the new sub r. (6) of r. 14 operates only as a restraint on the exercise of the power of cancellation vested in the Custodian and not as a negation of the power itself and it may, therefore, well be that there is no inconsistency.
The choice of the language appears to be intentional.
On the other hand it may be noticed also in this context that there have been some amendments in 1953, 1954 and 1956 of section 16 of Central Act XXXI of 1950 relating to return of the evacuee property to the evacuee which continue to recognise his right to return of the property and have made some alterations in the details of the procedure applicable thereto.
The continuance of the right of return may well imply the continued existence of the power to cancel the allotment.
827 The next important legislative measure is the (XLIV of 1954).
By section 12 of this Act it is provided as follows: " If the Central Government is of opinion that it is necessary to acquire any evacuee property for a public purpose, being a, purpose connected with the relief and rehabilitation of displaced persons, including payment of compensation to such persons, the Central Government may at any time acquire such evacuee property by publishing in the Official Gazette a notification to the effect that the Central Government has decided to acquire such evacuee property in pursuance of this section.
(2)On the publication of a notification under subsection (1), the right, title and interest of any evacuee in the evacuee property specified in the notification shall, on and from the beginning of the date on which the notification is so published, be extinguished and the evacuee property shall vest absolutely in the Central Government free from all encumbrances.
(3). . . . . . . . . " It may be noticed that by virtue of Central Government notification No. S.R.O. 697 dated March 24,1955, under sub section (1).
of this section, all evacuee property allotted under the Punjab Government notification dated July 8, 1949, has been acquired by the Central Government excepting certain specified categories in respect of which proceedings were pending.
It does not appear that the propertie 's which are the subject matter of the present application have been acquired under this notification, probably because the dispute about them is still pending.
Section 3 of the Act provides as follows: " There shall be paid to an evacuee compensation in respect of his property acquired under section 12 in accordance with such principles and in.
such manner as may be agreed upon between the Governments of India and Pakistan.
" Section 14 makes provision for constituting a compensation pool for the purpose of payment of compensation and rehabilitation grants to displaced persons.
The 828 evacuee property acquired under section 12 forms part of this.
compensation pool.
Section 10 is important and provides inter alia that where any immovable property has been allotted to a displaced person by the Custodian under conditions published by the notification of the Government of Punjab No. 4892 8 dated July 8, 1949, and such property is acquired under the provisions of the Act and forms part of the compensation pool, the displaced person shall, so long as the property remains vested in the Central Government, continue in Possession of such property on the same conditions on which he held the property immediately before the date of the acquisition.
It is further provided that the Central Government may for the purpose of payment of compensation, transfer to him such property on such terms and conditions as may be prescribed.
Section 40 provides for the rule making power.
Sub section 1 (a) thereof_ enables the Central Government to make rules providing for the form and manner in which and the time within which, an application for payment of compensation may be made and the particulars which it should contain.
It may be noticed that "compensation " referred to in section 10, in so far as it relates to a displaced person, obviously refers to the compensation for loss of his property in Pakistan and is not the recognition of a right to compensation for deprivation of his interest, if any, in the allotted property by cancellation.
Rules have been made by the Central Government called the Displaced Persons Compensation and Rehabilitation Rules, 1955, published by notification dated May 21, 1955.
Rules 71 and 73 relate to verified claims which do not seem to refer to agricultural lands.
"Verified claims" relate to urban immovable property as the definition there of in the Displaced Persons (Claims) Act, 1950 (XLIV of 1950) shows.
Rule 72 (1) relates to an allottee of agricultural land having no verified claim and is relevant.
Rule 72 (2) provides that if the Settlement Officer is satisfied that the allotment is in accordance with the quasi permanent scheme, he may pass an order transferring the land allotted to the allottee in 829 permanent ownership as compensation and, shall also, issue to him a sanad in the form specified in the, Appendix XVII or XVIII, as the case may be, granting him such rights.
A scrutiny of the sanad which is, printed at page 70, Appendix VII, of the Displaced, Persons Compensation and Rehabilitation Rules, 1955, issued by the Government of India, Ministry of Rehabilitation, shows that it is only under this sanad that an allottee obtains permanent property in the land.
, which originally belonged to the evacuee and which was allotted to him under the quasi permanent allot ment scheme.
This sanad is the culmination of the hope& and expectations of allottees held out under the Press Communique dated :February 7, 1948, and confirms, if any, the view that until such stage has been reached the allottee has no such interest in the evacuee lands which can by itself constitute "property" within the meaning of the protected fundamental rights.
It is admitted by the learned counsel for the petitioners that the petitioners in this case have not yet been able to obtain any sanad under these rules for the lands originally allotted to them and cancelled by the impugned orders of the Custodian and the Deputy Custodian General.
He urges, however, that having regard to the whole scheme and on the assumption that the orders of cancellation, which he challenges, are erroneous, they Would in the ordinary course have obtained the sanad for the lands and that the right to relief under article 32 must be determined on that footing.
Great; stress is laid on the fact that under the scheme of Central Act XLIV of 1954, even if evacuee property is acquired under section 12 thereof, the quasi permanent allottee is entitled to continue in possession of the property under s.10 on the same conditions as before so long as the property remains vested in the Central Government.
Stress is also laid on the fact that he can apply for transfer of the property to himself under r. 72 (2) 'of the rules made under the Act in payment of compensation payable to him in lieu.
of his property left .
in West Punjab and that such application for transfer ' is normally to be granted and a sanad issued 330 to him.
In this context, learned counsel for the petiioners relies on the well known principle, viz.,, where a discretionary power is vested in a statutory authority, to act in certain circumstances for the benefit of certain person or class of persons (as in section 10 of Central Act XLIV of 1954 and r. 72 (2) of the rules thereunder) the exercise of such power in favour of such a person, where the requisite conditions exist, is obligatory and not optional, as laid down in the case in Julius vs Lord Bishop of Oxford (1).
This principle, however, has no application in the present case.
While it is true that tinder section 10 an allottee under the quasi permanent allotment scheme has the benefit of continuing in possession thereof and may obtain transfer on application, such benefits are subject to the powers exercisable under section 19 of the same Act and r. 102 of the rules framed thereunder.
It may be noticed that in respect of the evacuee property which has been acquired under section 12 and which forms part of the compensation pool under section 14, the Central Government may appoint under section 16 of the Act, for the management thereof, Managing Officers or Managing Corporations.
Section 19 of the Act further provides as follows: " 19.
Powers to 'vary or cancel allotment of any property acquired under this Act.
Notwithstanding anything contained, in any contract or any other law for the time being in force but subject to any rules that may be, made under this Act, the managing officer or managing corporation may cancel any allotment or amend the terms of any allotment under which any evacuee property acquired under this Act is held or occupied by a person, whether such allotment was granted before or after the commencement of this Act.
. . . . " Rule 102 of the rules framed under the Act is as follows "102.
cancellation allotments A managing officer managing corporation may in respect of (i) 831 the property in the compensation pool entrusted to him or, to it, cancel an allotment or vary the terms of any such allotment if the allottee (a) has sublet or parted with the possession of.
the whole or any part of the property allotted to him without the permission of a competent authority, or (b) has used or is using such property for a purpose other than that for which it was allotted to him without the permission of a competent authority, or (c) has committed any act which is destructive of or permanently injurious to the property, or (d) for any other sufficient reason to be recorded in writing.
Provided that no action shall be taken under this rule unless the allottee has been given a reasonable opportunity of being,heard.
" These are in terms wide enough to include quasi permanent allotments.
This shows that notwithstand.
ing the privilege of the quasi permanent allottee to continue in possession under section 10 and the scope he has for obtaining, a transfer under the same section and r. 72 (2) of the rules made thereunder, his allotment itself is liable to be cancelled under section 19 and r. 102.
Hence he has no such right to obtain a transfer which can be given effect to within the principale of Bishop of Oxford 's case (1).
He does not, therefore, appear to have an indefeasible right to obtain transfer of the very land of which he is the quasi permanent allottee, if such land is acquired under section 12 of the Act.
Thus the position of quasi permanent allottee, whether before July 22, 1952, or after that date, is that his rights, such as they are, either under the notification of July 8, 1949, or under section 10 of Central Act XLIV of 1954, are subject to powers of cancellation exercisable by the appropriate authorities.
, in accordance with the changing requirements of the evacuasede property law and its administration.
Hence the quality of the interest of the displaced,allottee in (1) 3 App.
832 evacuee agricultural land allotted to him appears to be substantially the same for the present purpose and the real question is whether such interest constitutes " property " within the meaning of articles 19, 31 (1) and 31 (2) of the Constitution.
The above detailed consideration of the various incidents of a quasi permanent allotment show clearly that the sum total thereof does not in any sense constitute even qualified ownership of the land allotted.
At beat it is analogous to what is called jus in re aliena according to the concept of Roman Law and may be some kind of interest in land.
The basic features of that interest are that the ultimate ownership of the land is still recognised to be that of the evacuee and the allotment itself is liable to resumption or cancellation with reference to the exigencies of the administration of evacuee law.
The interest so recognised, is in its essential concept, provisional, though with a view to stabilisation.
and ultimate permanence.
The provisional characteristic of this interest emerges from the fact that there have had I to be a series of interDominion conferences to settle on governmental level the problems &rising out of evacuee property in either country.
The, stabilisation had to await the results of such conferences.
Thus both with reference to the internal necessities of the administrative problems inherent in the process of settling the displaced persons on the evacuee lands with reference to various considerations and policies and the external problem of arriving at understandings between the two governments, these rights had to be so regulated from time to time and had an element of unstability, though they were being progressively invested with the characteristics of stability.
An interest in land owned by another in such a situation cannot be fitted into any, concept of 'property ' in itself.
The concept of a bundle of rights in agricultural land constituting by itself 'property ' is the outcome of a stable and settled state of affairs relating to such bundle of 'rights.
Historical jurisprudence shows that even the concept of individual.
property in agricultural land was the 833 outcome of stable and settled conditions Of Society.
It is also relevant to observe that the incidents of quasi permanent allotment are entirely statutory.
Subjection to the power of cancellation by the Custodian in whom the property is vested is one of such incidents and determines the quality thereof.
Therefore, having given our best consideration, we are unable to hold that the interest of a quasi permanent allottee is ' property ' within the concept of that word so as to attract the protection of fundamental rights.
Property, to fall within the scope of article 19 (1) (f), must be capable.
of being the subject matter of " acquisition and disposal ".
The interest of the quasipermanent allottee arises by statutory grant to a specified class of persons and is not capable of acquisition by the ordinary citizen in any of the normal modes ' Nor is it capable of disposal by the allottee himself in the normal modes by way of sale, mortgage, gift or will.
Neither is the interest of the quasi permanent allottee such as can be brought within the scope of article 31 (2).
Article 31 (2) as recently amended, taken with article 31 (2A) contemplates acquisition or requisitioning (and taking possessions as a result of transfer of the ownership or of the right to possession.
It is true that the recent amendment came into operation on April 27, 1955, and the impugned orders of the Custodian and Deputy Custodian General are on February 6, 1952, and May 1, 1954.
But in view of the word " deemed " in the amended article 31 (2A) it appears likely that the amendment was intended to be retrospective.
Even assuming that it is not so, the words " taking possession " or " acquisition " in article 31 (2) prior to.
the amendment are wholly inapt and inapplicable to the bundle of rights of the nature detailed above which constitute quasi permanent tenure and it is difficult to apply to it the protection under Art 31 (2) either as it stood before the amendment or after the amendment.
Learned counsel for the petitioners has urged that even if articles 19 (1) (f) and 31 (2) are not applicable, the 107 334 petitioners can invoke the protection of article 31 (1) which says that no person shall be deprived of his property save by authority of law.
He relies on the judgment of one of us reported in the State of West Bengal vs Subodh Gopal Bose (1), where it was stated as follows: " The word 'property ' as used in Article 31 (1) may have been intended to be understood in a wider sense and deprivation of any individual right out of a bundle of rights constituting concrete property may be deprivation of 'property ' which would require the authority of law.
" This is a view which was not shared by the other members of the Court in that decision.
In any case it is clear that in order that article 31 (1) may apply, it is not enough that there is 'deprivation ' but it must also be deprivation without the authority of law.
What has happened, however, in this case is not deprivation of the property without the authority of law even assuming that the bundle of rights constituting such an interest in land is I property '.
It is the working out of the right of resumption or cancellation which was one of the incidents of the property.
The cancellation by the Custodian authorities was under the very law which created those rights.
Even if the exercise of that authority can be made out to be wrong, it is still not open to question having regard to sections 28 and 46 of Central Act XX XI of 1950.
It is not an illegal usurpation of jurisdiction by the authorities concerned so as to constitute negation of the authority of law.
In the present case what has happened is that the quasi permanent allotment of the petitioners has been cancelled in order to work out readjustments consequent upon the order of the higher authority.
Learned counsel for the petitioners has strenuously urged that under the quasi permanent allotment scheme the allottee is entitled to a right to possession within the limits of the relevant notification and that such right to possession is itself 'property '.
That may be so in a sense.
But it does not affect the (1) ; ,673. 835 question whether it is property so as to attract the protection of fundamental rights under the Constitution.
If the totality of, the bundle of rights of the quasi permanent allottee in the evacuee land constituting an interest in such land, is not property entitled to protection of fundamental rights, mere possession of the land by virtue of such interest is not on any higher footing.
Learned counsel has also drawn our attention to a number of Acts and notifications of the Punjab Government to show that a quasi permanent allottee has been treated as being in the same position as an owner of land itself for various purposes.
Thus in r. 5 of the Land Revenue Rules under the Punjab Land Revenue Act, 1887 (Punjab Act XVII of 1887), a quasi permanent allottee is classed with other land owners as being eligible for appointment as zaildars.
Similarly by virtue of rules framed under the East Punjab Holdings (Consolidation and Prevention of Fragmentation) Act, 1948 (East Punjab Act L of 1948), a quasi permanent allottee is liable to pay the cost of consolidation if such consolidation comprises lands in his occupation.
These and other such provisions, however, have no bearing on the question at issue before us.
After the close of the arguments before us a recent decision of the Punjab High Court reported in Suraj Parkash Kapur vs The State of Punjab(1) has been brought to our notice and we have given our careful consideration to the same.
That decision may be right on its merits, a matter about which we express no opinion.
But, with respect, we are unable to agree with the view expressed therein that a quasi permanent allottee has such an interest in the land allotted to him as to constitute " property ", if it is meant to convey thereby that it is property which attracts the protection of fundamental rights under the Constitution.
For all the above reasons we are unable to hold that any fundamental right of the petitioners has been (1) (1957) LIX P.L.R. 103.
836 infringed This petition is accordingly dismissed but, in the circumstances, without costs.
In holding that quasi permanent allotment does not carry with it a fundamental right to property under the Constitution we are not to be supposed as denying or weakening the scope of the rights of the allottee.
These rights as recognised in the statutory rules are important and constitute the essential basis of a satisfactory by rehabilitation and settlement of displaced land holders.
Until such time as these land holders obtain sanads to the lands, these rights are entitled to zealous protection of the constituted authorities according to administrative rules and instructions binding on them, and of the courts by appropriate proceedings where there is usurpation of jurisdiction or abuse of exercise of statutory powers.
Petition dismissed.
| The petitioners, who were displaced persons from Pakistan owning land therein, were also co sharers in a joint khata owned by some evacuees in a suburban village in East Punjab.
On their displacement they were in the first instance temporarily allotted agricultural land in that village.
Subsequently, as a result of the readjustment of allotments of the suburban land amongst the various groups who had quasi permanent allotments therein, which had to be carried out according to certain rules and instructions, the allotments of the petitioners were cancelled.
The case of the petitioners was that the allotment to them was on a quasi.
permanent basis and that, therefore, they had acquired certain rights in the land which constituted property, and they contended that the order cancelling the allotment was in violation of their fundamental rights to property under articles 19(1)(f), 31(1) and 31(2) of the Constitution of India.
Though the petitioners were allottees of agricultural land on the basis of a quasi permanent allotment it was admitted that they were not able to get a sanad under the rules for the lands originally allotted to them, when only they could obtain permanent property in the land.
It was not disputed that the cancellation of the allotment was under the purported exercise of powers under the provisions of the , and the rules framed thereunder taken with some executive instructions.
Held, that the interest of a quasi permanent allottee does not constitute 'property ' within the meaning of articles 19(1)(f), 31(1) or 31(2) of the Constitution of India, and accordingly the orders cancelling the allotments could not amount to violation of fundamental rights under those Articles.
The basic features of the interest of a quasi permanent allottee are that the ultimate ownership of the land is still recognised to be that of the evacuee and the allotment itself is liable to resumption or cancellation with reference to the exigencies of the administration of evacuee law.
The interest so recognised is, in its essential concept, provisional though with a view to stabilisation and ultimate permanence.
An interest in land owned by another in such a situation cannot be fitted into any concept of property in itself, 103 802 Julius vs Lord Bishop of Oxford, , distin guished.
Property in order that it may fall within the scope of article 9(1)(f) must be capable of being the subject matter of "acquisition and disposal".
But the interest of a quasi permanent allottee arises by statutory grant to a person of a specified class and is not capable of being acquired by an ordinary citizen in any of the normal modes.
Nor is it capable of being disposed of by the allottee himself by way of sale, mortgage, gift or will.
Consequently, article 19(1)(f) cannot apply to the case.
In order that article 31(1) may apply it is not enough that there is deprivation, but such deprivation must be without the authority of law.
In the present case the quasi permanent allotments of the petitioners were cancelled in enforcement of a right of resumption or cancellation which is an incident of such property, and hence the Article has not been infringed.
The interest of a quasi permanent allottee cannot be brought within the scope of article 3i(2) as it stood prior to the amendment.
The words "taking possession" or "acquisition" there are inappropriate in respect of the rights which constitute quasi permanent tenure.
In view of the word "deemed" occurring in article 31(2A) it appears likely that the amendment to article 31(2) was intended to be retrospective, but even then the amended Article taken with article 31(2A) is equally inapplicable as it contemplates acquisition or requisitioning (and taking possession) as a result of transfer of the ownership or of the right to possession.
Suraj Parkash Kapur vs The State of Punjab, (1957) LIX P.L.R. 103, in so far as it purported to decide that the interest in the land allotted to a quasi permanent allottee constitutes "property" which attracts the protection of fundamental rights under the Constitution, is disapproved.
Though a quasi permanant allotment does not carry with it a fundamental right to property under the Constitution, the rights of the allottee as recognised in the statutory rules are important and constitute the essential basis of a satisfactory rehabilitation and settlement of displaced land holders.
Until such time as the land holders obtain sanads to the lands, these rights are entitled to zealous protection of the constituted authorities according to administrative rules and instructions binding on them and of the courts by appropriate proceedings where there is usurpation of jurisdiction or abuse of exercise of statutory powers.
|
Subsets and Splits