instruction
stringclasses 1
value | input
stringlengths 593
808k
| output
stringlengths 0
158k
|
|---|---|---|
Summarize this legal judgement text concisely | Appeal No.389 of 1956.
297 Appeal by special leave from the judgment and order dated April 19, 1955, of the Allahabad High Court in Agricultural Income tax Miscellaneous Case No. 202 of 1952.
G. section Pathak and G. C. Mathur, for the appellants.
K. L. Misra, Advocate General of Uttar Pradesh, and C. P. Lal, for the respondent.
September 4.
The Judgment of the Court was delivered by BHAGWATI, J.
This appeal with special leave against the judgment of the High Court of Judicature at Allahabad raises a question of the interpretation of section 11(1) of the U.P. Agricultural Income tax Act, 1948, Act III of 1949 (hereinafter referred to as "the Act").
The appellants are the trustees of the estate settled on trust under the last will and testament dated May 17,1917, of one J. J. Holdsworth which, inter alia, comprised of a certain zamindari estate known as the Lehra Estate situate in the District of Gorakhpur, Uttar Pradesh.
The clauses of the will so far as they are relevant for the purpose of this appeal provided that the trustees were to take possession of all real property in the United Provinces of Agra and Oudh and elsewhere in British India (including the houses at Lehra and Gorakhpur and the grounds thereof) and all live and dead stock in or about his estate in British India or any buildings thereon and the contents of any houses or stabling in British India belonging to him (which was called his estate) and manage the same in all respects and in such manner as they shall deem most advan.
tageous and with all the powers of absolute owners.
The trustees were to stand possessed of the net rents and profits of the settled estate after payment of the Government land revenue tax, and of all management expenses, upon trust to pay thereout certain annuities to 12 annuitants therein mentioned.
If the net rents and profits of the said estate were less than seventy thousand rupees in any year or if the said estate or any portion thereof shall be sold at less than twenty years purchase of the net rent of seventy thousand rupees or 298 an equivalent proportion thereof in respect of the proportion so sold, the annuities bequeathed as above and for the time being payable except annuities Nos.
(1), (2) and (3) were to abate proportionately and no such annuitant was entitled to have the deficiency of his or her annuity made good out of the rents and profits of the said estate in respect of any subsequent year.
If there was no survivor alive then it was to go William Orlando Holdsworth, the son of the testator.
Seven of the said annuitants died and at the relevant period the following annuities werepayable: (i) Mrs.
J. C. Holdsworthpound 2,500/ (ii) Mr. W. 0.
Holdsworthpound 1,000/ (iii) Miss Lucy Marion Holdsworthpound 50/ (iv) Lt. Col. L. R. J. C. Wilkinsonpound 500/ (v) Mr. Horace Claud Holdsworthpound 400/ The trustees entered upon the trust and managed the trust properties in accordance with the terms of the said will.
The Act came into force in 1949 and a notice of assessment of agricultural income tax was issued to the trustees for the year 1357 Fasli (1949 50).
The Additional Collector, Gorakhpur, the assessing authority for the area in question, by his order dated December 14, 1950, assessed the ' trustees to agricultural income tax upon the total agricultural income received by them, overruling their contention that the tax should be computed in accordance with the method of computation laid down in section 11(1) of the Act and that they should be called upon to pay the aggregate of the sums payable as agricultural income tax by each of the five annuitants.
The trustees preferred an appeal before the Agricultural Income tax Commissioner, Lucknow, who by an order dated November 22, 1951, upheld the order of the Additional Collector.
He observed that the beneficiaries were neither jointly interested in the land held by the trustees nor in the agricultural income derived therefrom, and that the agricultural income of the Lehra Estate accrued to the trustees and not to the beneficiaries directly as it left the hands of the various tenants who paid rent or from self cultivation that was done by the trustees themselves.
, 299 The trustees then moved an application under a. 24 (2) of the Act before the Agricultural Income tax Board, U.P., for reference of certain questions of law to the High Court for its decision.
The said Board however decided to act, under the third proviso to section 24(2) of the Act and to considerthe questions of law itself instead of referring them to the High Court for its decision.
In the exercise of this power the Board held inter alia that the entire property vested in the trustees and that the latter could not claim the benefit of section 11 of the Act and refused to make a reference.
The trustees moved an application under section 24(4) of the Act before the High Court of Judicature at Allahabad praying that the High Court may be pleased to require the Agricultural Income tax Board, U.P., Lucknow, to state a case and to refer to the High Court certain questions of law arising in the case.
The application was allowed by the High Court on February 5, 1953, and an order was passed directing the said Board to refer the relevant question of law to the High Court.
Accordingly a statement of case was drawn up by the Agricultural Income tax Board and submitted to the High Court and the following question of law was referred for its decision: " Whether on the facts and in the circumstances of the case the trustees can be said to be holding land on behalf of beneficiaries and can the beneficiaries be said to be jointly interested in the land or in the agricultural income derived therefrom within the meaning of Section 11 (1) of the U.P. Agricultural Income tax Act, 1948 ?" The said reference was heard by the High Court and by its judgment dated April 19, 1955, the High Court held that the trustees could be said to be holding land on behalf of beneficiaries but the beneficiaries could not be said to be jointly interested in the land or in the agricultural income derived therefrom within the meaning of section 1 1 (1) of the Act and accordingly answered the first part of the question in the affirmative and the latter half in the negative.
300 Thereupon the trustees filed an application before the High Court under article 133(1) of the Constitution for leave to appeal to this Court which was rejected with the result that the trustees applied for and obtained on April 16, 1956, special leave to appeal against the judgment of the High Court.
Section 11(1) of the Act which falls to be considered by us runs as under: " Where any person holds land, from which agricultural income is derived, as a common manager appointed under any law for the time being in force or under any agreement or as receiver, administrator or the like on behalf of persons jointly interested in such land or in the agricultural income derived therefrom, the aggregate of the sums payable as agricultural income tax by each person on the agricultural income derived from such land and, received by him, shall be assessed on such common manager, receiver, administrator or the like, and he shall be deemed to be the assessee in respect of the agricultural income tax so payable by each such person and shall be liable to pay the same.
" This section concerns itself with the mode of computation of agricultural income tax in certain cases.
The charging section is however section 3 of the Act which talks of agricultural income tax and super tax at the rate or rates specified in the schedule to be charged for each year in accordance with, and subject to the provisions of the Act. and rules framed under cls.
(a), (b) and (c) of sub section
(2) of section 44, on the total agricultural income of the previous year of every person.
"1 Person " is defined in section 2(11) to mean an individual or association of individuals, owning or holding property for himself or for any other, or partly for his own benefit and partly for that of another, either as owner, trustee, receiver, manager, administrator, or executor or in any capacity recognized by law, and includes an undivided Hindu family, firm or company but not to include a local authority.
According to the above definition the trustees before us would be included in the definition of " person " and would as such be liable to agricultural income tax under the 301 charging section.
That liability to pay income tax would however be on the trustees as a "person" without anything more.
Where however section 11(1) comes into operation the agricultural income tax would be assessed not on the ordinary computation but on the computation specified therein which has the effect of reducing the incidence of the tax by reason of the person being liable to pay only the aggregate of the sums payable as agricultural income tax by each of the persons jointly interested in such land or in the agricultural income derived therefrom.
Two conditions are requisite before section 11 (1) can come into operation: (1) that the person holds land from which agricultural income is derived, as a common manager appointed under any law for the time being in force or under any agreement or as receiver, administrator or the like on behalf of other persons and (2) such persons should be jointly interested in such land or in the agricultural income derived therefrom.
If both these conditions are satisfied the person holding such land is liable to be assessed in the manner specified in section 11(1) of the Act and the aggregate of the sums payable as agricultural income tax by each of these persons jointly interested on his share of the agricultural income derived from such land and actually received by him is to be assessed on such common manager, receiver, administrator or the like, and the latter is to be deemed the assessee in respect of the agricultural income tax so payable by each such person and is liable to pay the same.
It is to be noted that the primary liability for the payment of agricultural income tax is on the person who is interested in the land or in the agricultural income derived therefrom.
The incidence of the tax is on that person and the amount of tax is determined with reference to the aggregate income derived by him.
Inasmuch as however such land is held by some other person who@ is a common manager, receiver, administrator or the like on behalf of such person and others jointly interested in such land or in the agricultural income derived therefrom, the agricultural income tax is assessed on such common manager, 302 receiver, administrator or the like instead of the assessment being made on each of such persons who is jointly interested in such land or, in the agricultural income derived therefrom.
Section 11.(1) prescribes a mode of assessing such common manager, receiver, administrator or the like and he is deemed to be the assessee in respect of agricultural income tax so payable by each such person and is liable to pay the same.
Such common manager, receiver, administrator or the like would certainly be covered by the definition of person contained in section 2(11) of the Act because he would be holding property for others as receiver, manager, administrator or the like and would be liable to pay the agricultural income tax on the agricultural income derived by him from the land which he thus held.
If there was nothing more, the incidence of the tax would be on the total income which has come to his hands.
But, in so far as he holds the land from which agricultural income is derived as such common manager, receiver, administrator or the like on behalf of the persons jointly interested in such land or in the agricultural income derived therefrom, the agricultural income tax is levied not on the computation of the whole agricultural income which has come to his hands but if; limited to the aggregate of the sums payable as agricultural income tax by each of the persons jointly interested in such land or in the agricultural income derived therefrom and received by him.
The agricultural income tax in such cases is determined with reference to each of the persons jointly interested in such land or in the agricultural income derived therefrom, and the agricultural income tax payable by each of such persons is computed on the actual amount of the agricultural income derived from such land and received by him and the aggregate of the sums payable as agricultural income tax by each of such persons is assessed on such common manager, receiver, administrator or the like with the result that he pays agricultural income tax which would be substantially lower than what he would have otherwise had to pay if the computation of such tax was on the total agricultural income 303 derived from such land and come to his hands.
Such common manager, receiver, administrator or the like would in the course of management or administration of such land debit to the account of each such person an aliquot share of the whole of the agricultural income tax paid by him.
If such common manager, receiver, administrator or the like were assessed on the total income derived from the land which comes to his hands, the amount thus debited to each of such persons would be larger than the amount which the latter would have to pay by way of agricultural income tax, if agricultural income tax was levied on the actual amount of agricultural income derived from such land and received by him as falling to his share.
This provision therefore is designed to lower the incidence of the agricultural income tax upon each such person and such common manager, receiver, administrator or the like by virtue of these provisions is deemed to be the assessee in respect of agricultural income tax so payable by each such person and is made liable to pay the same.
This position however is not available unless and until such common manager, receiver, administrator or the like holds, the land from which agricultural income is derived on behalf of persons jointly interested in such land or in the agricultural income derived therefrom.
Such common manager, receiver, administrator or the like should hold the land on behalf of these persons and not on his own behalf.
The very words " on behalf of " predicate that the land is held by such common manager, receiver, administrator or the like not as the owner but as the agent or representative of these persons and he manages or administers the same either in accordance with law or the terms of the agreement arrived at between the parties.
There is no vestige of ownership in him and all that he is entitled to do is to manage or administer the land on behalf of persons who are jointly interested in the agricultural income derived therefrom.
This could be predicated of receivers managers, administrators or the like but cannot be predicated of owners or 304 trustees who are equally with the manager, receiver, administrator or the like included within the definition of " person " contained in section 2(11) of the Act.
The case of the owner does not require any elaboration.
He holds the land on his own behalf and also for his own benefit.
Ho certainly cannot come within the scope of section 1 1 (1) of the Act.
The position of a trustee is also similar to that of the owner.
A trust is thus defined in English Law: " A trust in the modern and confined sense of the word, is a confidence reposed in a person with respect to property of which he has possession or over which he can exercise a power to the intent that he may hold the property or exercise the power for the benefit of some other person or object." (Vide Halsbury 's Laws of England, Hailsham Ed., Vol.
33, p. 87, para. 140).
" The property affected by the confidence is called the trust property or trust estate.
It is usually in the legal ownership or under the legal control of the trustee.
The cestui que trust is said to have a beneficial or equitable interest in it." (Ibid p. 89 para.
A trustee is thus usually the legal owner of the trust property or the trust estate and holds it for the benefit of the certui que trust.
Reliance was however placed upon an observation of Sir John Romilly, M. R., in Lister vs Pickford (1) " A trustee, who is in possession of land is so on behalf of his cestuis que trust, and his making a mistake as to the persons who are really his cestuis que trust cannot affect the question.
" What the Court was considering there was the question of limitation and adverse possession and these observations were made in that context.
It is significant however to note the further observations of the Master of the Rolls in that very context at p. 583: " Suppose that they had imagined bona fide that they themselves were personally entitled to the property, and that they were not trustees of it for anyone, it would, nevertheless, have been certain that they would (1) (1865)34 Beav.
576, 582; ; 305 have been trustees for the cestuis que trust, and no time would run while they were in such possession.
The legal estate was vested in them, no other person could have maintained an ejectment against them; they are bound to know the law, they ought to have taken possession as soon as they saw who were the real beneficiary devisees, and, being in possession, they ought to have applied the proper proportion of the rents for the benefit of such residuary devisees.
" The passage quoted above makes it abundantly clear that the legal estate is vested in the trustees and they hold it for the benefit of the beneficiaries.
Whatever be the position in English Law, the (II of 1882) is clear and categoric on this point.
Section 3 of that Act defines a Trust as an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner: the person who accepts the confidence is called the "trustee": the person for whose benefit the confidence is accepted is called the "beneficiary": "the beneficial interest" or "interest" of the beneficiary is his right against the trustee as owner of the trust property; the subject matter of the trust is called "trust property" or "trust money.
" These definitions emphasize that the trustee is the owner of the trust property and the beneficiary only has a right against the trustee as owner of the trust property.
The trustee is thus the legal owner of the trust property and the property vests in him as such.
He no doubt holds the trust property for the benefit of the beneficiaries but he does not hold it on their behalf.
The expressions " for the benefit of " and " on behalf of " are not synonymous with each other.
They convey different meanings.
The former connotes a benefit which is enjoyed by another thus bringing in a relationship as between a trustee and a beneficiary or cestui que trust, the latter connotes an agency which brings about a relationship as between principal and agent between the parties, one of whom is acting on behalf of another.
Section 11(1) therefore can only 39 306 come into operation where the land from which agricultural income is derived is held by such common manager, receiver, administrator or the like on behalf of, in other words, as agent or representative of, persons jointly interested in such land or in the agricultural income derived therefrom.
Even though such persons were the beneficiaries cestui que trust under a deed of trust, they would not be comprised within the category of persons on whose behalf such land is held by the trustees and the trustees would not be included in the description of common manager, receiver, administrator or the like so as to attract the operation of section 11(1).
Trustees do not hold the land from which agricultural income is derived on behalf of the benefi ciaries but they hold it in their own right though for the benefit of the beneficiaries.
The beneficiaries are also not necessarily persons who are jointly interested in such land or in the agricultural income derived therefrom.
The term "jointly interested" is well known in law and predicates an undivided interest in the land or in the agricultural income derived therefrom as distinguished from a separate or an individual interest therein.
If on a true reading of the provisions of the deed of trust the interest which is created in the beneficiaries is a separate or individual interest of each of the beneficiaries in the land or in the agricultural income derived therefrom, merely because they have a common interest therein, that cannot make that interest a joint interest in the land or in the agricultural income derived therefrom.
The words "jointly interested" have got to be understood in their legal sense and having been used in a statute are not capable of being understood in a popular sense as meaning a common interest or an interest enjoyed by one person in common with another or others.
If regard be bad to the above construction put upon the terms of section 11 (1) of the Act, it follows that the appellants who were trustees of the deed of trust in the present case did not hold the land from which agricultural income is derived as common manager, receiver, administrator or the like on behalf of the annuitants 307 and the annuitants were not jointly interested in the land or in the agricultural income derived therefrom with the result that section 11(1) of the Act did not come into operation at all.
The appellants were the legal owners of the trust estate and did not hold the land from which agricultural income was derived "on behalf of" the annuitants.
Each of the annuitants, moreover, was separately or individually interested in the agricultural income derived from the land comprised in the trust estate to the extent of the annuity payable to him under the deed of trust and the interest of one annuitant was not affected by whatever happened to the interest of the other.
There was thus no fulfilment of either of the two conditions pre requisite before section 11(1) of the Act could come into operation at all.
The learned judges of the High Court were therefore in error in answering the first part of the question referred to them in the affirmative, though their answer to the latter part in the negative was correct.
We are of opinion that both the parts of the question should have been answered by them in the negative.
The ultimate result however is the same and this appeal of the appellants is therefore bound to fail.
The appeal will accordingly stand dismissed with costs.
Appeal dismissed.
| Section 11( 1) of the U. P. Agricultural Income tax Act, 1948, provided: "Where any person holds land, from which agricultural income is derived, as a common manager appointed under any law for the time being in force or under any agreement or as receiver, administrator or the like on behalf of persons jointly interested in such land or in the agricultural income derived therefrom, the aggregate of the sums payable as agricultural income tax by each person on the agricultural income derived from such land and received by him, shall be assessed on such common manager, receiver, administrator or the like, and he shall be deemed to be the assessee in respect of the agricultural income tax so payable by each such person and shall be liable to pay the same.
" The appellants were the trustees of an estate settled on trust under a will which inter alia provided that the trustees were to take possession of the trust properties and to manage the same with all the powers of absolute owners and to pay the annuities to certain persons.
The assessing authority assessed the appellants to agricultural income tax upon the total agricultural income received by them, overruling their contention that the tax should be computed in accordance with the method of computation laid down in section 11(1) of the Act and that they should be called upon to pay the aggregate of the sums payable as agricultural income tax by each of the annuitants.
Held: (1) that the trustees who were the legal owners of the trust property did not hold the land from which agricultural income was derived, on behalf of the annuitants and that each of the annuitants was separately or individually interested in the agricultural income derived from the land comprised in the trust estate to the extent of the annuity payable to him.
(2) that section 11(1) of the Act was not applicable to the case and that the appellants were liable to pay agricultural income tax upon the total agricultural income received by them
|
Summarize this legal judgement text concisely | iminal Appeal No. 97 of 1957.
Appeal by special leave from the judgment and order dated November 20,1956, of the Andhra Pradesh High Court at Hyderabad in Criminal Confirmation Case No. 18 of 1956 and Criminal Appeal No. 240 of 1956 arising out of the judgment and order dated April 25, 1956, of the Court of the Sessions Judge at Karimnagar in Criminal Case No. 9/8 of 1956.
R. C. Prasad, for the appellant.
R. H. Dhebar and T. M. Sen, for the respondent.
July 15.
The Judgment of the Court was delivered by SINHA J.
The main question for determination in this appeal by special leave is whether and, if so, how far non compliance with the provisions of sections 173(4) and 207A(3) of the Code of Criminal Procedure, has affected the legality of the proceedings and the trial resulting in the conviction of the appellant.
The appellant was tried by the learned Sessions Judge of Karimnagar in what used to be the State of Hyderabad (now part of the State of Andhra Pradesh), under section 302 of the Indian Penal Code, for the murder of his brother Baga Rao, and sentenced to death.
The conviction and the sentence were affirmed by the High Court of Judicature of Andhra Pradesh, at Hyderabad, on appeal and on a reference by the learned Sessions Judge.
Along with the appellant, three other persons, named Lingarao, the appellant 's brother, Narsingrao, the nephew of the appellant and son of Lingarao 285 aforesaid, and Mahboob Ali, said to be a close friend of the other accused, were also tried under section 302, read with sections 34 and 109 of the Indian Penal Code, and convicted and sentenced to imprisonment for life.
Their appeals also were heard along with the appeal preferred by the appellant and by a common judgment, the High Court dismissed all the appeals and confirmed the convictions and sentences passed against all the four accused persons.
This appeal concerns only Narayan Rao who has been sentenced to death by the courts below.
The facts of the case are short and simple.
The murdered man Baga Rao, who was an excise contractor, had separated from his other brothers aforesaid, and had partitioned the family lands.
There were differences amongst the brothers which had led to arbitration proceedings a few months earlier, which did not satisfy Baga Rao.
On the Saturday previous to the Monday, December 26, 1955, which was the day of the occurrence, there was a quarrel between Baga Rao on one side and Lingarao and Narsingrao on the other in the field said to belong to Baga Rao.
The parties reside in village Kollamaddi taluk Sircilla, district Karimnagar.
At about 7 a.m. "on the morning of December 26, 1955, Baga Rao had been proceeding from his village towards Nirmal side.
The accused, who appears to have been lying in wait for Baga Rao, came running from behind and the appellant fell upon Baga Rao with his knife.
The other accused persons caught hold of Baga Rao and the appellant inflicted several injuries on his person with his knife (M.O. 13).
At first, Baga Rao got himself released from the grip of Narsingrao but the latter chased him and overtook him.
All the accused overpowered him by catching hold of the different parts of his body, and the appellant stabbed him in the regions of the neck, abdomen, thigh and other parts of his body, the fatal injuries being in the neck and the abdomen.
At the time of the occurrence, P.W. 1, father 's brother of the appellant, who also was proceeding towards Nirmal, saw most of the occurrence and then, out of fear, hid himself in a hut nearby.
P.W. 2 a boy of about 12 286 years a student of 4th standard in a Government school, was also proceeding in that direction that morning, and saw the whole occurrence from beginning to end from a short distance of a few yards.
This young boy claimed the murdered Baga Rao as his maternal uncle, stating that his mother is the sister of Baga Rao.
But the wife of the murdered man, P.W. 6, stated in cross examination that P.W. 2 Ramchander Rao is distantly related to her husband and that he is not the son of her husband 's sister.
The father of the murdered man, Chatriah, aged about 85 years, who has been examined as defence witness No. 1, disclaimed all relationship with the said P.W. 2, but stated that he is related to Dharmiah, P.W. 1, who is no other than his full brother.
Chatriah, the father, had been examined to support the defence suggestion that it was P.W. 1, Dharmiah Rao and his son who got Baga Rao murdered and falsely implicated the accused persons.
That evidence has naturally not been accepted by the courts below because such a case was never sought to be made out at any previous stage of the proceedings until his examination in court.
D.W. 2 who claims to be the son in law of P.W. 1, was examined only to prove that there had been a rivalry between P.W. I and the accused persons for the purchase of some land.
His evidence was rejected as vague and of no relevance.
The case against the appellant, as also against other accused persons not before this Court, rested mainly on the evidence of Dharmiah P.W. I and Ramchander Rao, P.W. 2, who figure as the eye witnesses.
Besides their testimony, there is the evidence of the recovery of the blood stained garments from the houses of the accused persons and the blood stained knife found near the dead body, and identified in court as belonging to the appellant, which were all found by the chemical examiner, to have stains of human blood.
The courts below have relied upon the evidence of the eye witnesses, corroborated by the incriminating circumstances aforesaid, and have agreed in convicting and sentencing the accused as stated above.
287 We have been taken through the evidence in this case and after having heard counsel for the appellant, we do not see any reasons to differ from the courts below in their estimate of the evidence adduced by the prosecution in support of the case against the appellant.
Hence, in our opinion, there is no ground for interference with the conclusions of the courts below on the merits of the case.
It now remains to consider the question of law which has been seriously pressed upon us.
It has been argued, as was admitted by the learned Government Advocate before the High Court, that the provisions of sections 173(4) and 207A(3) of the Code of Criminal Procedure, have not been complied with, and that, as a necessary consequence of those omissions, the entire proceedings and the trial are vitiated.
It is convenient at this stage to set out the course, in some respects rather unusual, of the proceedings before the police and the committing magistrate as also at the trial before the learned Sessions Judge.
When P. W. 1 aforesaid informed Gopal Rao (P. W. 8) Police Patel about the occurrence, he drew up the first information report at about 11 a.m., on December 26.
All the four accused were named as the culprits in the first information report.
He issued that report to the station house, Gambhiraopet, about 5 miles from the place of occurrence.
The Sub Inspector of police, P.W. 11, proceeded to the spot and prepared the inquest report.
He found the throat of the deceased cut, besides other injuries on the left side of the stomach and right thigh and three wounds on the left hand.
Two panchas, Lachmayya and Ramayya (P.W. 10), were called by the police officer and in their presence and under their signatures, he entered a long note as to what the panchas saw on the spot, and then follows the substance of the statements of the eye witnesses, P.Ws. 1 and 2, aforesaid.
This record of the statements of the two eye witnesses, aforesaid, made the same day when the occurrence took place, has been made to serve the double purpose of what the police officer and the panchas aforesaid saw and heard at the spot, as also the record of the substance of the 288 two main witnesses for the prosecution before the investigating police officer.
The post mortem report, made the next day, December 27, corroborated the nature of the injuries stated above, and added that the incised wound across the lower part of the neck, had cut the vital organs like trachea, oesophagus and the jugular vein.
The prosecution also proved, as exhibit P 5, the panchnama prepared the same day and signed not only by the panchas but purporting to have been signed also by the accused persons.
This document is a record which is a complete confession of the crime from the beginning to the end by all the accused persons.
This was highly irregular, but fortunately, it was not a jury trial and has not, therefore, done much harm to the accused persons, but certainly the provisions of the Evidence Act and of the Code of Criminal Procedure have not been observed.
On January 10 and 11, 1956, the learned Munsiff Magistrate recorded the full length statements of Ramchander Rao as P.W. 1, and of Dharmiah Rao, P.W. 2, under section 164 of the Code of Criminal Procedure.
Apparently, the police, apprehending that those two persons were related to three out of the four accused, took the precaution of having their statement so recorded.
The police report under section 173 of Criminal Procedure Code was made by the investigating police officer on January 11, 1956, and was placed before the Munsiff Magistrate on January 12.
It gives a very complete statement of the prosecution case and the names and full description 'of the witnesses to be examined in support of the prosecution case.
The learned Munsiff Magistrate appears to have examined the investigating police officer as P.W. 1, and the two eye witnesses, Dharmiah and Ramchander Rao, as P.Ws. 2 and 3, and the medical officer as P.W. 4, on or about February 15, 1956.
The record of the statement of the medical officer appears in the paper book, but the evidence of the other three witnesses does not appear in the paper book.
On February 16,1956, the learned Munsiff Magistrate put very detailed questions to each one of the accused persons and placed the evidence of all the witnesses examined by him in detail, to the 289 accused persons who have denied their complicity in the crime and who alleged enmity with the two eyewitnesses aforesaid.
The committal order, if any, is not before us.
The learned Munsiff Magistrate framed a charge for murder under section 302, against the appellant, and ' for participation in the crime, against the other three accused, under section 302, read with sections 34 and 109 of Indian Penal Code.
He again put a number of questions to each one of the accused persons as to what they had to say against the charges framed and as to what they had to say in their defence.
It does not appear that before the learned Munsiff Magistrate who was holding his inquiries under section 207A(3) and (4), any grievance was made that the provisions of section 173(4) had not been complied with by the police officer in charge of the investigation.
Nor does it appear that any request was made, to call upon the police officer concerned, to furnish to the accused, copies referred to in sub section
(4) of section 173 of the Code.
There is no indication in the record that even when the accused persons were placed on their trial before the learned Sessions Judge, any such grievance or any such request was made to that court.
The cross examination of the eye witnesses aforesaid has been done at some length, and there are also references to the record made by the police officer during the investigation.
It was only after the conviction and sentences of the accused persons by the learned Sessions Judge, when the appeals were preferred to the High Court, that the ground is raised, for the first time, in the memoranda of appeal in these terms: "The lower court has lost sight of the fact that the mandatory provisions of sections 173, 207A and other sections of the Code of Criminal Procedure have not been complied with, and this fact has caused a complete failure of justice." The High Court, while dealing with this ground of appeal, has observed that the learned Government Advocate, while conceding that the committing court had not complied with the provisions of those sections, had urged that the omission was not sufficient to 37 290 vitiate the trial unless the accused succeeded in showing that they had been prejudiced in their defence.
They further observed that when the accused got the copies in the Sessions Court before the recording of the statement of the witnesses, it could not be said that the accused had been so prejudiced.
The High Court finds, as a fact, that the accused got the necessary copies of the depositions of the witnesses in the Sessions Court before the statements of the prosecution witnesses were recorded by that court.
The High Court also remarked that it was not denied that the copies were supplied a day earlier, but that there was nothing to show that the accused made any grievance that the time at their disposal was too short to enable them to cross examine the prosecution witnesses, or that they prayed for an adjournment of the case in order to enable them to effectively cross examine those witnesses.
In view of these considerations, the High Court held that the accused had failed to show any prejudice.
Before us, no attempt was made to show that the non compliance with the provisions of sections 173(4) and 207A(3) had caused any prejudice to the accused.
The learned counsel for the appellant sought to argue that the omission had the effect of vitiating the entire proceedings ending in the trial of the accused, and that, therefore, ipso facto, a fresh trial became necessary irrespective of whether or not the accused had shown any prejudice.
In other words, he contended that these illegalities rendered the proceedings null and void and that the Court need not stop to consider the question of prejudice.
Section 173, sub section
(4), of the Code of Criminal Procedure was amended by the Code of Criminal Procedure Amendment Act, 26 of 1955, by adding the following: "(4) After forwarding a report under this section, the officer in charge of the police station shall, before the commencement of the inquiry or trial, furnish or cause to be furnished to the accused, free of cost, a copy of the report forwarded under sub section (1) and of the first information report recorded under section 154 and of all other documents or relevant extracts 291 thereof, on which the prosecution proposes to rely, including the statements and confessions, if any, recorded under section 164 and the statements recorded under sub section (3) of section 161 of all the persons whom the prosecution proposes to examine as its witnesses.
(5)Notwithstanding anything contained in subsection (4), if the police officer is of opinion that any part of any statement recorded under sub section (3) of section 161 is not relevant to the subject matter of the inquiry or trial or that its disclosure to the accused is not essential in the interests of justice and is inexpedient in the public interests, he shall exclude such part from the copy of the statement furnished to the accused and, in such a, case, he shall make a report to the Magistrate starting his reasons for excluding such part : Provided that at the commencement of the inquiry or trial, the Magistrate shall, after perusing the part so excluded and considering the report of the police, officer, pass such orders as he thinks fit and if he so directs, a copy of the part so excluded or such portion thereof, as he thinks proper, shall be furnished to the accused.
" In order to simplify commitment proceedings preceding the trial of accused persons by a court of Session,s. 207A was added by way of amendment of the Code at the same time.
In the added section 207A, sub sections 3 and 4, which are material portions of that section, are in these terms : " (3) At the commencement of the inquiry, the Magistrate shall, when the accused appears or is brought before him, satisfy himself that the documents referred to in section 173 have been furnished to the accused and if he finds that the accused has not been furnished with such documents or any of them, he shall cause the same to be so furnished.
(4)The Magistrate shall then proceed to take the evidence of such persons, if any, as may be produced by the prosecution as witnesses to the actual commission of the offence alleged; and if the Magistrate is of opinion that it is necessary in the interests of justice 292 to take the evidence of any one or more of the other witnesses for the prosecution, he may take such evidence also.
" It will thus appear that in cases exclusively triable by a court of Session, it is the duty of the magistrate, while holding a preliminary inquiry, to satisfy himself that the documents referred in s.173 have been furnished to the accused and if he found that the police officer concerned had not carried out his duty in that behalf, the magistrate should see to it that is done.
After the accused have been furnished with the necessary documents, it is now required to record evidence of only such witnesses for the prosecution as had witnessed the actual commission of the offence charged against the accused and of such other witnesses as he may consider necessary in the interests of justice.
From what has been said above, it is clear that the Munsiff Magistrate did record the evidence as required by sub section
(4) of section 207A.
But it has been found by the High Court, on the admission of the Government Advocate, that the provisions of sub section 3 of section 207A had not been complied with.
It is not clear as to whether all the documents contemplated by section 173(4), quoted above, had not been furnished to the accused or documents other than the statements of witnesses had not been so supplied.
The judgment of the High Court would appear to indicate the latter, but we shall proceed on the assumption that there was, an entire omission to carry out the provisions of subs.
(4) of section 173, read with sub section
3 of section 207A.
Does such an omission necessarily render the entire proceedings and the trial null and void; or is it only an irregularity curable with reference of the provisions of section 537 (a) of the Code ? In other words, are the provisions of section 173(4), read with section 207A(3) mandatory or only directory ? There is no doubt that those provisions have been introduced by the amending Act of 1955, in order to simplify the procedure in respect of inquiries leading upto a Sessions trial, and at the same time to safeguard the interests of accused persons by enjoining upon police officers concerned and magistrates, before whom such proceedings are brought, to 293 see that all the documents, necessary to give the accused persons all the information for the proper conduct of their defence, are furnished.
It has rightly been contended on behalf of the appellant that it was the duty of the magistrate to see that the provisions aforesaid of the Code have been fully complied with.
Magistrates, therefore, have to be circumspect, while conducting such proceedings, to see to it that accused persons are not handicapped in their defence by any omission on the part of police officers concerned, to supply the necessary copies.
But we are not prepared to hold that non compliance with those provisions has, necessarily, the result of vitiating those proceedings and subsequent trial.
The word "shall" occurring both in sub section
(4) of section 173 and sub section
(3) of section 207A is not mandatory but only directory, because an omission by a police officer, to fully comply with the provisions of section 173, should not be allowed to have such a far reaching effect as to render the proceedings including the trial before the court of Session wholly ineffective.
Instead of simplifying the procedure, as was intended by the amending Act, as indicated above, the result contended for on behalf of the appellant, will, necessarily, result in re opening the proceedings and trials which may have been concluded long ago.
Such a result will be neither conducive to expeditious justice nor in the interest of accused persons themselves.
Certainly, if it is shown, in a particular case, on behalf of the accused persons that the omission on the part of police officers concerned or of the magistrate before whom the committal proceedings had fended, has caused prejudice to the accused, in the interest of justice, the court may reopen the proceedings by insisting upon full compliance with the provisions of the Code.
In our opinion, the omission complained of in the instant case should not have a more farreaching effect than the omission to carry out the provisions of section 162 or section 360 of the Code.
Courts in India, before such matters were taken to their Lord.
ships of the Judicial Committee of the Privy Council, had taken conflicting views on the scope of section 537 of the Code in curing such omissions as aforesaid.
In the 294 case of Abdul Rahman vs The King Emperor(1), their Lordships of the Judicial Committee had to consider the effect of non compliance with the provisions of section 360 of the Code.
After considering the relevant provisions of the Code, their Lordships came to the conclusion that it was a mere irregularity which could be cured by the provisions of section 537.
In the case of Pulukuri Kotayya and others vs King Emperor (2), the Judicial Committee had to consider the effect of breach of the statutory provisions of section 162 of the Code.
The following observations of their Lordships, at pages 75 76, are a complete answer to the arguments advanced on behalf of the appellant before us, and we respectfully adopt them: " When a trial is conducted in a, manner different from that prescribed by the Code (as in N. A. Subramania Iyer 's case (3)), the trial is bad, and no question of curing an irregularity arises; but if the trial is conducted substantially in the manner prescribed by the Code, but some irregularity occurs in the course of such conduct, the irregularity can be cured under section 537, and none the less so because the irregularity involves, as must nearly always be the case, a breach of one or more of the very comprehensive provisions of the Code.
The distinction drawn in many of the cases in India between an illegality and an irregularity is one of degree rather than of kind.
This view finds support in the decision of their Lordships ' Board in Abdul Rahman vs The King Emperor (1), where failure to comply with section 360 of the Code of Criminal Procedure was held to be cured by sections 535 and 537.
The present case falls under section 537, and their Lordships hold the trial valid notwithstand ing the breach of section 162.
" In the instant case, the facts as stated above are extremely simple.
It was a case of a day light murder by four persons acting in concert and way laying the deceased when lie was out on business that morning.
Two persons, more or less related to three of the accused (1)(1929) L.R. 55 I.A. 96.
(2)(1947) L.R. 74 I.A. 65, 75 76.
(3) (1901) L.R. 28 I.A. 257.
295 persons, gave evidence as eye witnesses to the occurrence.
Their statements were recorded by the police in some detail in the inquest report itself on the very day of the occurrence.
There was not much scope for variations in their statements during police investigation and those before the court.
It was a simple case of either believing or disbelieving those two eye witnesses.
As already indicated, all the four accused persons including the appellant were named at the earliest opportunity in the first information report which was lodged without any avoidable delay within a few hours after the occurrence.
Both the courts below have preferred to rely upon the testimony of the two eye witnesses, corroborated by the circumstantial evidence referred to above.
They have rejected the defence suggestions supported as they are by the two defence witnesses, one of whom is a common ancestor of three of the four accused persons.
It has not been argued, and there is no scope for the argument, that the accused persons have been prejudiced in any way in their defence.
They had to meet a straightforward case which they failed to do.
After carefully considering the arguments advanced on behalf of the appellant, we have come to the conclusion that the proceedings and the trial have not been vitiated by the admitted non compliance with the provisions aforesaid of the Code, and that the irregularity is curable by reference to section 537 of the Code, as no case of prejudice has been made out.
This Court, in the case of Gurbachan Singh vs The State of Punjab (1), was inclined to take a similar view of the provisions aforesaid of the Code, though it ultimately held that those provisions did not apply to the case then before them.
The appeal is accordingly dismissed.
Appeal dismissed.
(1) Criminal Appeal No. 48 of 1957, decided on April 24, 1957.
| The word 'shall ' occurring in sub section
(4) Of section 173 and sub section (3) Of section 207A of the Code of Criminal Procedure is not mandatory but directory and a non compliance with the provisions of those subsections, unless it can be shown to have prejudiced the accused person in his defence, cannot invalidate the commitment proceedings or the subsequent trial.
Magistrates holding inquiries under section 207A(3) Of the Code of Criminal Procedure must, however, be circumspect and see that an accused person is not handicapped in his defence by any omission on the part of the Police Officer to furnish him with necessary copies.
Where such non compliance is found to cause any prejudice to the accused, the Court should in the interest of justice reopen the proceedings and insist on a full compliance with the provisions.
When it causes no prejudice, it is a mere irregularity curable under section 537 Of the Code.
Abdul Rahman vs The King Emperor, (1929) L.R. 55 I.A. 96, Pulukuri Kolayya vs King Emperor, (1947) L.R. 74 I.A. 65 and Gurbachan Singh vs The State of Punjab, Cr.
A. NO.
48 of 1957 applied.
284 Consequently, in a case where an accused person was com mitted to the Court of Session on a charge under section 302 of the Indian Penal Code and found guilty thereunder by the Sessions judge and awarded the capital sentence and the order of conviction and sentence was unassailable on merits, but the Police Officer had omitted to furnish him copies as required by section 173(4) and the inquiring Magistrate to cause such copies to be furnished to him under section 207A(3) of the Code of Criminal Procedure and such omission could not be shown to have in any way prejudiced the accused person in his defence, it was a mere irregularity that did not vitiate either the commitment proceedings or the trial and was cured by section 537 Of the Code.
|
Summarize this legal judgement text concisely | Appeals Nos. 104 of 1954 and 169 of 1956.
Appeal by special leave from the judgment and decree dated November 13, 1950, of the Madras High Court in A. section No. 484 of 1947 arising out of the judgment and decree dated December 21, 1946, of the Court of the Subordinate Judge, Devakottai in Original Suit No. 156 of 1944 and Appeal from the judgment and decree dated September 17, 1952 and October 24, 1952, of the Madras High Court in A.S. No. 243 of 1947 arising out of the judgment and decree dated December 21, in Original Suit No. 164 of the Subordinate Judge, Devakottai in Original Suit No. 164.
A.V. Vishwanatha Sastri and M. section K. Aiyangar, for the appellants in C.A. No. 104 of 1954.
216 A.V. Vishwanatha Sastri and U. section K. Sastri, for the appellants in C.A. No. 169 of 1956.
K.S. Krishnaswamy Iyengar and R. Ganapathy Iyer, for respondent No. 1 (in both the appeals).
May 24.
The judgment of Jagannadhadas and B. P. Sinha JJ. was delivered by Jagannadhadas J. Govinda Menon J. delivered a separate judgment.
JAGANNADHADAS J.
These two are appeals against two separate decrees of the High Court of Madras arising, out of two suits as between the same contesting parties with reference to a connected set of facts.
Civil Appeal No. 104 of 1954 is before us by virtue of special leave granted by this Court under article 136(1) of the Constitution.
Civil Appeal No. 169 of 1956 has come up by reason of certificate granted by the High Court under article 133(1)(a) of the Constitution.
The parties to the litigation are Nattukottai Chetties, a wealthy banking community in South India who, at the time, were having large banking transactions in Burma and other places in South East Asia.
One AL.
Periakaruppan Chettiar (hereinafter referred to as Periakaruppa) owned and possessed considerable properties.
He adopted one AL.
Alaska Chettiar (hereinafter, referred to as Alaska) in or about the year 1914. 'there arose acute differences between them from about the year 1924 owing to the alleged wasteful habits of Alagappa who ran into debts.
This led to criminal complaints between them, each against the other, in 1926.
(See Exs.
P 5 and D 12).
One of Alagappa 's creditors obtained a decree against him and attached Alagappa 's half share in the family residential house including the site on which it was situated.
This resulted in a regular suit in which the question at issue was whether the site was ancestral site and whether the super structure was constructed out of the ancestral funds.
It was found that the site was ancestral Periakaruppa maintained that the super structure which was substantial in value compared with the site was built out of his self acquired funds and was not joint family property, while Alagappa and the attaching 217 creditor contended to the contrary.
The litigation went up to the High Court and the High Court accepted the contention of Periakaruppa and made a declaration that the site was ancestral and that the super structure was the self acquisition of Periakaruppa.
The judgment of the High Court was dated November 19, 1926, and is reported in Periakarappan vs Arunachalam (1).
During the pendency of this litigation in the High Court the adopted son Alagappa filed a suit on September 9, 1926, on behalf of himself and his minor son by name AL.
Periakaruppan Chettiar (hereinafter, for distinction, referred to as junior Periakaruppa) represented by his mother and next friend by name Mutbayi Act.
It has to be mentioned that in or about June 27, 1926, Periakaruppa purported to make a second adoption of a 'young boy by name AL.
Ranganathan Chettiar (hereinafter referred to as Ranganatha) on the footing that such an adoption was permitted by special custom in Nattukottai Chetti families.
The suit O.S. No. 114 of 1926 filed by Alagappa and his minor son, junior Periakaruppa, was therefore filed as against Periakaruppa and his second adopted son Ranganatha, who at the time was also a minor.
It was for delivery of a half share of the properties of the family on the footing that all the properties were joint family properties and for a declaration that the second adoption was invalid.
The first defendant therein, Periakaruppa, filed a written statement contesting both these matters and claiming that all the suit properties in their entirety were his self acquisition and that the plaintiffs had absolutely no rights therein and also asserting that the second adoption was valid.
Before the suit proceeded to the stage of issues and trial, the dispute between the parties was compromised by a Rajinama brought about by four Panchayatdars, who were all respectable members of the Nattukottai Chetti community.
Some of the questions that arise in the present appeals centre round the proper construction of some of the terms of this.
Rajinama, which will be noticed later.
It is sufficient to state at this stage that by that Rajinama the two plaintiffs, Alagappa and his (1) Mad.
582, 28 218 minor son, junior Periakaruppa, obtained Rs. 75,000 each and Alagappa 's wife Muthayi Achi, the mother of the minor son and his next friend in the suit, was to get a sum of Rs. 14,000 as her Stridhan, These amounts were paid by means of four hundis, Rs. 25,000 and Rs. 50,000 for Alagappa, Rs. 75,000 for junior Periakaruppa and Rs. 14,000 for the mother, Muthayi Achi, on Nattukottai Chetti bankers of Periakaruppa in Burma.
It was one of the express terms of the Rajinama that all the properties mentioned in the plaint in that suit and other properties belonging to the first defendant, Periakaruppa, were admitted to be his self acquisitions and that the plaintiffs therein had.
no right and connection whatsoever in any of them or in the charities founded by Periakaruppa and in the properties belonging thereto or their management, either in the lifetime of Periakaruppa or subsequent thereto.
It was also one of the specific terms of the Rajinama that the plaintiffs should remove themselves from the family house with all their belongings and that the possession of the aforesaid house be delivered to Periakaruppa.
It was also expressly stipulated that the petition then pending for leave to appeal to the Privy Council against the judgment reported in Periakaruppan vs Arunachalam (1) was to be withdrawn.
This compromise was certified to be for the benefit of the minor plaintiff concerned, as also of the minor defendant Ranganatha and was accepted by the Subordinate Judge before whom the compromise petition was filed.
As a result, the compromise was accepted by the court on August 15, 1927, and the suit was dismissed in terms thereof on the same date.
About a year and a half later Periakaruppa executed a will on April 4, 1929.
The genuineness and due execution thereof are not in question.
But the effect of that will is also one of the main points in dispute.
Periakaruppa died about three months later i.e. on July 14, 1929, and his wife Lakshmi Achi died within a year thereof on March 11, 1930.
By the will, broadly speaking, Periakaruppa made arrangements for certain religious gifts and (1) Mad.
219 charities and made arrangements for the management thereof and gave the residue of the property to his wife Lakshmi Achi for her life and thereafter to his second adopted son Ranganatha.
Ranganatha, who, some time in or about the date of Lakshmi Achi 's death in 1930, appears to have attained majority, has been in undisputed possession and enjoyment of Periakaruppa 's properties ever since till late in 1944.
Alagappa 's son junior Periakaruppa attained majority in December, 1943, and filed two suits on November 11, 1944, in the Subordinate Judge 's Court of Devakottai, one numbered as O.S. 156 of 1944 and the other as O.S. 160 of 1944.
O.S. No. 156 of 1944 was on the footing that Rs. 75,000 which was given to him under the above mentioned Rajinama of the year 1927, was, under the terms thereof constituted a trust for his benefit during his minority under the trusteeship of Periakaruppa himself and another person A. P. section Chockalingam Chettiar of Athangudi, (hereinafter referred to as Chockalingam) the junior paternal uncle of the minor 's mother, Muthayi Achi, and that the money was wrongly appropriated by Chockalingam owing to his straightened circumstances.
His case was that Periakaruppa as a co trustee with Chockalingam was equally responsible for breach of the trust and that therefore he was entitled to have the moneys found due on account, paid out of the estate of Periakaruppa in the hands of Ranganatha as well as from the estate of Chockalingam in the hands of his son.
The second suit O.S. No. 164 of 1944 was a suit to recover the entire properties of Periakaruppa in the possession of Ranganatha for himself and his father Alagappa who was made the first defendant in the suit, on the ground that Ranganatha 's adoption was invalid, that the will of Periakaruppa was ineffective and that the properties devolved on himself and his father Alagappa.
It may be noticed that so far as the father Alagappa is concerned the suit would prima facie be time barred since it has been filed about 15 years after the death of Periakaruppa.
The plaintiff junior Periakaruppa however filed the suit on the footing that in view of his minority for all this period until December, 1943, 220 the suit was not barred.
Hereinafter, for convenience, the first suit O.S. No. 156 of 1944 will be referred to as the trust suit, and the second suit O.S. No. 164 of 1944 will be referred to as the succession suit, In the succession suit the main questions that arose for decision were: (1) whether the adoption of Ranganatha as a second adopted son was valid; (2) if not, whether the will was effective to convey the property of Periakaruppa to Ranganatha after the death of his wife Lakshmi Achi, notwithstanding the invalidity of his adoption; (3) whether, in case the will was ineffective the properties of Periakaruppa devolved on both Alagappa and his son junior Periakaruppa together or on Alagappa alone to the exclusion of junior Periakaruppa ; (4) if the devolution was on both together, whether the rights of junior Periakaruppa were barred by reason of section 7 of the Indian Limitation Act, 1908 (Act IX of 1908).
This involved the further questions: (a) whether by and under the Rajinama Alagappa and his son became divided in status inter se so as to make section 7 inapplicable.
(b) whether in case the devolution was on both together as members of a joint family, section 7 had application to the factual situation in the family.
So far as the adoption of Ranganatha was concerned both the courts below, while holding that the adoption as a fact was proved, have found against existence of the custom pleaded as to its validity and hence concurrently found the adoption to be invalid.
That conclusion is no longer in dispute in this Court.
As regards the will both the courts held that the will was ineffective to vest any title in Ranganatha though on slightly different grounds.
As regards question No. 4 relating to limitation, the two courts came to different conclusions with the result that the trial court dismissed the suit as barred by limitation, while the High Court reversed it and granted a decree for the half share of 221 Periakaruppa 's properties in favour of junior Periakaruppa holding that in respect of the other half share the rights of Alagappa were barred and that Ranganatha acquired the same by his adverse possession.
As regards question No. (3) and the subordinate questions (a) and (b) of question No. (4), there appears to have been no serious question raised in the trial court by the defendant as to the exclusion of junior Periakaruppa by Alagappa in the matter of succession to Periakaruppa 's properties, or any serious questions raised by the plaintiff as to the Rajinama bringing about a partition inter se between the father Alagappa and his minor son junior Periakarpppa and of Alagappa not being the de facto manager of the family.
It was accordingly found by the trial court that both of them succeeded as members of the joint family and that therefore the minor, junior Periakaruppa, was barred by virtue of section 7 of the Limitation Act.
When the matter came up on appeal to the High Court, a question was raised that section 7 would not be applicable in this case unless it was further made out that the father Alagappa was the de facto manager of the family consisting of himself and his minor son of which it is alleged there was no proof or finding.
Both the Judges allowed this point to be raised and called upon the trial court to take evidence and submit a finding in respect of that contention.
The trial court accordingly took evidence in regard thereto and returned a finding that on the evidence, both the father and the minor son were living as members of a joint family and that the father was in fact the de facto guardian.
When the matter was rehear by the same Bench of the High Court on the return of the finding, the Bench did not go into the correctness or otherwise of this finding, on the view that this finding was of no consequence, if it is found that by virtue of the Rajinama both the father and the minor son became divided inter se.
The learned Judges while realising that the finding was called for on the undisputed assumption that the father and the son were undivided in status, were of the opinion that there was nothing to prevent them from reopening 222 the same and held on a construction of the Rajinama that it brought about divided status inter se between the father Alagappa and his minor son junior Periakaruppa.
In that view they found section 7 of the limitation Act had no application to the case and same to the conclusion that the succession suit by junior Periakaruppa was not barred by limitation in so far as it related to his own share though barred in respect of Alagappa 's share.
Hence the succession suit ended in favour of junior Periakaruppa in respect of a half share of the properties left by Periakaruppa.
As regards the trust suit the contentions raised were : (1)that under the Rajinama both Periakaruppa and Chockalingam became trustees in respect of the sum of Rs. 75,000 to be invested in Chetti firms as provided in the Rajinama; (2)that as a fact the amount was invested with Chockalingam, one of the trustees themselves, contrary to the law; (3)that such investment itself constituted breach of trust for which Periakaruppa was also responsible.
It appeared on the evidence that out of the trust amount, a sum of Rs. 30,000/ was invested in the purchase of a house at Athangudi in South India (the place of Chocklingam) and that Alagappa and his minor son, the junior Periakaruppa, and his family have been since that purchase on July 23,1928, living in that house.
At the trial, therefore, credit was given to this amount as being proper investment of the trust funds in the matter of account taking by concession of the lawyer for junior Periakaruppa.
The defendant Ranganatha in addition to contending that no trust was created, also contended that as a result of subsequent transactions junior Periakaruppa got the benefit not only of the purchase of the house above referred to but also of a mortgage executed in favour of himself and another by Chockalingam in 1930 for a lakh of rupees of which Rs. 70,000 was his, of which he obtained the benefit, and that therefore the alleged breach of trust must be taken to have been waived and that in any case he was entitled to have 223 the mortgage document as much as the purchase of the house to be taken into consideration for reducing his liability in respect of the alleged breach of trust.
These contentions were negatived by both the courts with the result that there was a decree against Ranganatha and his minor son in respect of half the loss occasioned by the breach of trust, payable out of the half share of Periakaruppa 's properties in their hands.
The result of the two judgments of the High Court in both the suits was against Ranganatha and hence the two present appeals before us by him.
It will now be convenient to take up first the con sideration of the succession appeal.
The points arising therein have already been set out in the preliminary narration and need no repetition.
The main points argued before us on this appeal are (1)The conclusion of the High Court that the will of Periakaruppa was ineffective is erroneous and Ranganatha took under the will as persona designata.
(2) In case the will is held to be ineffective and in the view taken by the High Court that Alagappa and junior Periakaruppa became divided in status under the Rajinama the property of Periakaruppa devolved on Alagappa to the exclusion of junior Periakaruppa and hence the plaintiff has no right to sue.
(3)The conclusion of the High Court that the Rajinama brought about divided status inter se between the father Alagappa and the minor son junior Periakaruppa is erroneous and hence the suit is barred by virtue of section 7 of the Limitation Act.
A few other minor points have been raised on both sides which, after consideration, appeared to be unsubstantial and we intimated our view at the hearing and it is not necessary to refer to and deal with them any further.
We have heard elaborate arguments on the above three points and have given our careful consideration to them.
It is obvious that having regard to the course of events in this family narrated earlier the primary question for consideration is whether or not the will left by Periakaruppa has brought about an effective disposition of his properties 224 in favour of Ranganatha.
It is only if that has become ineffective that the other questions argued before us on this appeal as set out above arise for consideration.
In view of the fact that the genuineness of the will is not disputed and no question arises as to the disposing capacity of Periakaruppa, the plaintiff in this case, junior Periakaruppa, can succeed only if he displaces the will.
He has accordingly raised three contentions.
1.That there is no effective dispositive clause in the will.
2.That the disposition, if any, in favour of Ranganatha under the will was an attempt to create an estate in tail male and hence invalid.
3.The disposition in favour of Ranganatha was by reason of and on account of, his having been considered by the testator as his duly adopted son, i.e., the validity of the adoption was the basis and the condition for the disposition.
Since that has now been found to be invalid, the disposition fails.
Of these three questions the first two though upheld by the trial court have been rejected by the High Court.
We agree with the reasoning of the High Court on these two points and they do not call for any further consideration.
We are satisfied that there is no substance in these contentions.
The real question that arises on a consideration of the will is whether the disposition of the residue in favour of Ranganatha contained therein was to him as a _persona designata or is dependent on his being a duly and validly adopted son.
For a proper appreciation of this contention on both sides, it is necessary to set out the relevant clauses in the will. "(1) I am now 68 years of age, taking into consideration the fact that I have been in indifferent health for sometime past I have decided to make an arrangement after my lifetime in regard to my properties and in regard to the charities established by me and accordingly I have executed this will wholeheartedly.
(2)All the immovable and movable properties entirely, which belong to me as my own and which are 225 in my possession are my self acquired properties.
Excepting myself no other person has any interest or right whatever in the said properties.
(3). . . . . . . . . . . (4)Sometime back I took as my foster (son), Alagappan, son of Nachandupatti Chidambaram Chettiar, and brought him up in my house and also got him married.
But the aforesaid Alagappan conducted himself in immoral ways and had evil intentions and further fell into bad company and after being duped brought into existence several documents falsely and colourfully by making it appear that he had borrowed debts to the tune of about one lakh of rupees and also caused decrees to be passed in respect of some of the abovementioned debts and estranged my feelings and became inimical towards me, and left my family and was living separately for the past about 10 years and he was also living in.
his father in law 's house.
(5)Thereafter while the aforesaid person had instituted a suit O.S. No. 114 of 1926 against me in the Sub Court of Devakotta for his share in the properties which were in my possession, some of our community people acted as the panchayatdars and gave an award in the above suit and a razinama was filed in the Court, and all the amounts which were payable by me according to the said razinama were already paid by me entirely.
Neither the aforesaid Alagappa Chetti nor his heirs shall have any manner of right or interest whatever in the properties which are now in my possession and in the properties which might be acquired hereafter.
(6)Subsequently I took in adoption Nachandupatti Ramanathan Chettiar 's son, namely, Ranganathan, aged about 17 1/2 years, and he is living with me.
(7)to (12). . . . . . . . (13)My adopted son Ranganathan and his male heirs shall after the lifetime of my wife Lakshmi Achi properly conduct the aforesaid charities.
In order to supervise and see whether Ranganathan conducts the charities properly without any defect whatever, I have 29 226 appointed the following persons as the executors, namely, (1) my son in law Arunachalam Chettiar, son of Alagapuri Alagappa Chettiar who is interested in both myself and Ranganathan, the two sons of Kanadukathan AL.
K. Chandra Mouli Chettiar, namely, (2) Karuppan Chetty, (3) Peria Karuppan Chetty, and (4) Murugappan, son of Konapattu Subra manian Chettiar.
The said persons shall accordingly supervise (the performance of the charities) in a proper manner.
(14) I am entertaining a desire that I should spend my lifetime and die at Tiruvarur alone.
My body shall not be cremated according to our caste custom, and a samadhi (tomb) shall be erected for me, and a lamp shall be lit therein daily and a person shall be appointed to perform Neivedhiyam (by preparing food) with 1/4 measure of rice by the big measure daily.
Guru pooja shall be performed once a year in the Star in which I die, by distributing food to the mendicants, and by spending an amount to the extent of Rs. 250 (Rupees two hundred and fifty) every year by inviting my relations.
A sum of Rs. 15,000 (rupees fifteen thousand) shall be sent for and obtained from the Saigon firm from out of my own funds for the aforesaid Tirupani (service) in the temple and my wife shall conduct the aforesaid Tirupani.
The daily expenses of the Samadhi aforesaid and Guru pooja etc.
, shall be met from the Patasala charity funds and conducted.
(15) Apart from the properties which have been set apart for the abovementioned charities and the properties which have to be newly purchased hereafter for the same, as my adopted son Ranganathan and his male heirs have to take all the immovable and movable properties belonging to me and as the aforesaid adopted son namely Ranganathan is now a minor the said Ranganathan shall after he attains majority and if he is of good behaviour (take in his possession) the aforesaid properties after my lifetime and after the lifetime of my wife Lakshmi Achi and enjoy them.
(16) In case the aforesaid Ranganathan does not conduct himself properly or if my wife Lakshmi Achi 227 does not like, the following two persons, namely, (1) K. AS.
P. Rm.
Ramaswami Chettiar, son of Athangudi Palaniappa Chettiar, and (2) PL.
T. Rm.
Ramasami Chettiar, son of Karaikudi Thenappa Chettiar shall manage my properties after the lifetime of my wife Lakshmi Achi till Ranganathan comes of good behaviour.
The amount which may be found just for family expenses shall be paid till such time when the aforesaid Ranganathan begins to conduct himself properly and when the properties are delivered in his possession.
(17). . . . . . . . . . . (18) For the expenses of the maintenance right, etc., of my wife Lakshmi Achi and for the necessary expenses of pilgrimage to sacred places a sum of Rs. 15,000 (fifteen thousand) dollars has been credited in her name in the Saigon firm, and she shall send for and obtain the amount of interest alone got for the said amount every year and spend it according to her pleasure.
My adopted son Ranganathan and his male heirs shall take the principal amount.
(19). . . . . . . . . . . (20)As regards the substantial tiled building which belongs to me and which is in my own place and which I am residing, and one bungalow building built by me in the Therodam veedhi (street in which the chariot is drawn) in the said place, my wife shall enjoy them after my lifetime and after her my adopted son Ranganathan and his male heirs shall permanently and for ever enjoy the said buildings.
Apart from enjoying the abovementioned two buildings, none of them shall have any right to alienate them in any manner.
(21)If apart from the matters specified by me herein, it is necessary that any documents should be brought into existence after my lifetime during the lifetime of my wife regarding the properties belonging to me and regarding the charity properties and regarding the family maintenance from time to time I have hereby given authority to my wife Lakshmi Achi mentioned above to execute such documents regarding 228 the same.
My adopted son Ranganathan shall perform the funeral obsequies for myself and for my wife.
(22 and 23). . . . . . (Sd.) A.L. P.R. Periakaruppan Chetty.
" In order to understand the background of this will, it is necessary to recapitulate the previous family history which has already been adverted to at the commencement of this judgment.
That is as follows.
Periakaruppa adopted Alagappa in or about 1914.
He apparently was a spendthrift in his habits and incurred many debts.
There developed ill feeling between them which led to mutual criminal complaints against each other in 1926.
One of his creditors obtained a decree and attached the family house.
This led to litigation in which Periakaruppa asserted and succeeded in establishing that the super structure of the family house, which was a costly one, was his own self acquisition.
During the pendency of this litigation Periakaruppa adopted for the second time, Ranganatha, claiming to do so by way of custom in the Nattukottai Chetti community.
This led to a suit for partition by Alagappa claiming all the properties to be joint properties and for a declaration that the second adoption was in valid.
This suit was at a very early stage compromised on the terms that Alagappa and his son were to take away as between themselves a sum of Rs. 1,50,000 in cash and would have no claim of any kind to any of the properties in the possession of Periakaruppa and no claim to interfere in any manner with the various charities and religious endowments which Periakaruppa made The properties were all admitted to be the self acquisitions of Periakaruppa and his right to alienate the property by will was specifically recognised.
Alagappa with his wife and son was to clear out of the family house with all their belongings.
Alagappa got his share of the cash under the Rajinama by means of two hundis one for Rs. 25,000 and another for Rs. 50,000.
They were specifically delivered over, as recited in one of the terms of, the Rajinama, to one Chockalingam who was made responsible to discharge all the encumbered debts so far incurred by Alagappa, from out of the moneys 229 of those two hundis so as to make sure that no liability would arise out of the debts previously incurred by Alagappa which might affect Periakaruppa.
It is in evidence that after this compromise Alagappa and his family consisting of his wife and son cleared out of the original family house built by Periakaruppa and that they were living separate from Periakaruppa.
Periakaruppa and his second adopted son Ranganatha were presumably living together in that original family house as stated in the will.
This Rajinama was on August 15, 1927, and the will was executed on April 4, 1929, i.e., a year and eight months thereafter.
It may be noticed at this stage that the Rajinama while it admits one of the points in controversy in suit, viz., that the property is self acquired property of Periakaruppan, is silent about the other question at issue, viz., as to the validity of the second adoption and in fact the suit was terminated by a formal dismissal thereof presumably leaving this disputed question at large.
The will starts with an assertion that all the movable and immovable properties in his possession are his self acquired properties and that excepting himself no other person has any interest or right therein.
It asserts that Alagappa conducted himself in immoral ways, fell into bad company, brought into existence several false and colourable documents and borrowed debts to the tune of about a lakh of rupees and caused decrees to be passed in some of them and became inimical towards him.
It asserts that Alagappa left his family and was living separately for the past about ten years.
Notwithstanding that he was an undisputed adopted son, he referred to him in the will as 'Abhimanaputra ' (foster son).
In contrast with this he states that Ramganatha was taken in adoption by him, that Ranganatha was at the time of the will about 17 1/2 years old and that he was liviny with him.
Clauses 7 to 14 of the will refer to various religious and charitable endowments which he had made and the properties which he gave to them.
It also enumerates the arrangements for their management.
By cl. 8 he makes provision for the construction and maintenance of 230 Brahmana Veda Patasala attached to the temple of Sri Sri Theagarajaswami in Thiruvarur.
Clauses 8 and 9 set apart certain properties for the due maintenance of the said Patasala.
Clause 10 relates to the establishment of three charities in addition to the above Patasala charity, to be conducted and maintained out of the income of the same properties as have been set apart for the Patasala charity.
In cl. 11 he states that no person shall have any right to alienate or encumber the properties set apart for the charities.
By cl. 12 he appoints his wife Lakshmi Achi as the manager to conduct the above charities after his lifetime.
By el. 13 he directs that his adopted son ' Ranganatha and his male heirs shall after the lifetime of his wife Lakshmi Achi properly conduct the above said charities.
He appoints three persons as executors to supervise the management by 'Ranganatha '.
By cl. 14 he expresses a desire to spend the rest of his lifetime at Thiruvarur and die there.
He says that his body shall not be cremated according to custom but that a samadhi (tomb) should be erected for him and that a lamp is to be lit there daily and that a person should be appointed to perform Neivedhiyam daily, of a specified quantity of rice.
By the same clause he also enjoins that Guru pooja should be performed once ail year in the star in which he dies by distributing food to the mendicants by spending Rs. 250 every year.
He does not specifically indicate who is to perform the Guru pooja.
The context may well be taken to indicate that the paid employee was to do it.
He indicates that a sum of Rs. 15,000 was set apart for the above purpose in a Saigon firm and that it should be sent for and utilised by his wife for the aforesaid Tirupani.
This, in the context, seems to refer to the construction of the Samadhi.
He also says that the daily expenses of the samadhi and the Guru pooja expenses should be met from the Patasala charity funds.
Thereafter come the various provisions relating to the disposition of the residue of his property.
The effect of these provisions in cls.
15 and 16 is that after his lifetime his wife, Lakshmi Achi should enjoy the residue and that thereafter the "adopted son Ranganatha" is to take them 231 into his possession and enjoy them (after the death of himself and his wife) on his attaining majority and if he is of good behaviour.
It is specifically provided that if " the aforesaid Ranganatha " does not conduct himself properly or if his wife Lakshmi Achi does not like (him) two specified persons, K.AS.P.Rm.
Ramaswamy Chettiar and PL.
T. Rm.
Ramasami Chettiar should manage the properties after the lifetime of Lakshmi Achi till "Ranganatha" comes of good behaviour and that he should be paid by them just enough for his family expenses till such time when 'the aforesaid Ranganatha ' begins to conduct himself properly and that the properties are to be delivered into his possession then.
Under el.
18 the 'adopted son Ranganatha ' should take the principal amount of Rs. 15,000 set apart for his wife Lakshmi Achi after her death.
There is also el. 20 which provides that the substantial tiled building belonging to him which is in his own place and in which he was residing and one bungalow built by him in the Therodum Veedhi (Car Street) shall be enjoyed by his wife after his own lifetime and that after her lifetime "his adopted son Ranganatha" and his male heirs shall permanently and for ever enjoy the said buildings.
There area few other specific legacies in cls.
17 and 18 which require no notice.
The scheme of the will is clear, viz., that Periakaruppa wanted his own wife to enjoy the properties and to manage the charities so long as she was alive and that the adopted son Ranganatha should do the same after her death, that in respect of the charities he set up a committee of supervision over his management (but not in respect of his wife 's management) while as respects enjoyment of the properties he specifically provided that the adopted son Ranganatha should enjoy his properties after be attains majority only if he is of good behaviour and that so long as he was not of good behaviour or his wife ' did not like him, he was to get only some maintenance out of the properties.
These provisions are reminiscent of his past experience with the first adopted son Alagappa and are obviously inspired by the experience of bad conduct and wasteful 232 ways which he thought the first adopted son was guilty of.
In the will he refers to "adopted son Ranganatha" in quite a number of places and to "aforesaid Ranganatha " or to " Ranganatha " in some places.
There is no doubt that in what may be taken to be the dispositive clause, el. 15, he refers to him as "my adopted son Ranganatha" though in the next connected clause, cl. 16, he refers to him as ,aforesaid Ranganatha " or as " Ranganatha ".
The question for consideration is whether the validity of adoption was the condition for the effectiveness of these dispositions.
The question as to whether a disposition in such terms is to the person intended therein as a persona designata or by reason of his filling a particular legal status which turns out to be invalid is one of some difficulty and has been considered by the courts in quite a large number of cases, some of which have been cited before us.
An elaborate consideration of these various cases cannot finally determine the question that arises in individual cases, which must ultimately depend on its own facts and the terms of the particular document containing the disposition.
It is enough to refer to two cases of the Privy Council cited before us, viz., Nidhoomoni Debya vs Saroda Pershad Mookerjee (1) and Fanindra Deb Raikat vs Rajeshwar Das (2 ).
As pointed out in the first case the question in all such cases is whether the gift of the property by the testator to a person who is referred to as having been adopted is one which is dependent on whether all the requisites of a valid adoption have been complied with or whether it is to a designated person notwithstanding that it was desired and expected that the requisites for a valid adoption were complied with.
As pointed out by their Lordships in the second case "the distinction between what is description only and what is the reason or motive of a gift or bequest may often be very fine, but it is a distinction which must be drawn from a consideration of the language and the surrounding circumstances".
In that case their Lordships gave an illustration which is very apt for the present case.
It is as follows: (1) (1876) L.R. 3 I.A. 253.
(2) (1884) L.R. 12 I.A. 72, 89. 233 " If a man makes a bequest to his "wife A.B.", believing the person named to be his lawful wife, and he has not been imposed upon by her, and falsely led to believe that he could lawfully marry her, and it afterwards appears that the marriage was not lawful, it may be that the legality of the marriage is not essential to the validity of the gift.
Whether the marriage was lawful or not may be considered to make no difference in the intention of the testator." Now in the present case learned counsel for the res pondent very strongly relies on the repeated reference to Ranganatha in the will in the dispositive clauses as the adopted son and says that the disposition was made in his favour by reason of the fact that he was adopted and that he was believed to be duly and validly adopted.
He points out that Periakaruppa was apparently a religious man as seen from the various charitable and religious endowments he had made in the will itself.
He also placed stress on the fact that by virtue of cl. 21 of the will, he directs that his adopted son shall perform the Putra krutyangal (ceremonies to be performed by a son) for himself and his wife (after their respective deaths).
It is said that the performance of the various ceremonies after death by a person who was not a son in the eye of sastras would be abhorrent to any devout Hindu which Periakaruppa clearly appears to be.
This contention is not without force.
But taking an overall picture of the provisions in the will and the background of the previous history, it is not possible to say in this case that the validity of the adoption was contemplated by Periakaruppa as the condition on which the validity of disposition should depend.
As has been previously pointed out the will has been clearly in spired by his previous experience with his first adopted son Alagappa.
When Alagappa did in fact challenge the validity of the second adoption in the suit which he filed and asked for a specific declaration in respect thereof by his plaint, that suit was allowed to be merely dismissed and there was no reference to the validity or otherwise of the second adoption in the Rajinama.
Apparently it left the question at large.
The will having been executed only within about one 30 234 year and eight months after the Rajinama in the suit, the testator Periakaruppa must have been conscious of the fact that the second adoption was open to serious challenge.
In this context the reference to Ranganatha as the adopted son in the will as against the reference to Alagappa as a mere Abhimanaputra may indicate no more than that testator is anxious to make it quite clear that he would acknowledge Ranganatha as his adopted son in preference to Alagappa and is indicative of his clear intention that he desires him to get his properties to the exclusion of Alagappa and his minor son.
That her is desirous of excluding by his will Alagappa and his son is apparent from his very categorical statement in cl. 5 of the will that neither the aforesaid Alagappa nor his heirs shall have any manner of right or interest whatever in the properties which were then in his possession and any properties which may be acquired thereafter.
The will itself is, therefore, obviously intended to exclude them from succeeding to his property.
Being aware of the likelihood of the challenge as to the validity of adoption of Ranganatha he could not have intended the ' disposition to fail in the contingency of the second adoption being held invalid thereby letting in the very persons whom he wanted to exclude.
The provisions in the will which give the property to Ranganatha, only if he is of good behaviour seem rather to indicate that he attached greater importance to the character of the boy rather than to his legal status as an adopted son.
It is true that he contemplated ceremonies to himself and his wife after their death being performed by the adopted son Ranganatha.
But it is noteworthy that he chose the course of having his body enshrined in a tomb after his death and making arrangements for worship being conducted every day and Guru pooja on the day of his own annual sradh day.
This may well have been felt by him to be a substitute for the regular annual sradh by an undisputedly valid adopted son whom he did not like.
It is also noteworthy that there is no indication that he contemplated the Guru pooja as having to be done by Ranganatha, after the death of his wife.
How exactly the testator viewed the second adoption of 235 Ranganatha and the alleged custom enabling him there unto may well be gathered from para.
8 of his written statement in O. section 114 of 1926 which is as follows: "The allegations in paragraph 11 of the plaint are false.
This defendant has really taken in adoption the 2nd defendant.
The aforesaid adoption is valid in accordance with the custom of Nattukottai Chettiars.
There are many differences in the matter of adoption between Nattukottai Chettiars and other caste people as stated below.
Their custom alone can prevail in the matter of the adoption taken by them and neither the law nor the Sastras can bind them.
As adoption is made among Nattukottai Chettiars only with the intention that the adopted son should render them help and assistance (1) those who make adoption pay money to the parents Vagaira as price for the adopted boy.
(2) Neither Dattaka Chandrika or Dattaka Mimamsa can bind them.
(3) If one person has two wives, the two wives adopt two sons.
(4) If the son of a person dies leaving his widow, the father takes a boy in adoption for himself, and the widowed daughter inlaw takes another boy in adoption.
(5) If a grandson by son is born to one person and the son dies, the aforesaid person takes a boy in adoption even when the aforesaid grand son is living.
The customs with regard to adoption among Nattukottai Chettiars are in existence as stated above.
(6) As the aforesaid Chettiars are traders, a person can take in adoption another boy, if the adopted son acts against the will of the adoptive father without improving the property.
" This seems to indicate that in his view such a customary adoption was made for temporal rather than for spiritual reasons.
Taking an overall picture of the various provisions in the will, it appears to be reasonably clear that Ranganatha notwithstanding his description as adopted son in the will in several places, was intended by the testator to take the property as persona designata and that the will was therefore effective to convey title to him to residue of properties left by Periakaruppa after his death, 236 No question has been raised that the condition in the will that Ranganatha is to take the property only if he is of good conduct and behaviour, has operated to prevent the title vesting in him and it may be doubtful whether if a clear intention of the testator can be gathered from the will, to bequeath the residue to Ranganatha as persona designata the condition of good conduct and behaviour would be valid to prevent the vesting of the title.
We have, therefore, come to a clear conclusion that Ranganatha obtained title to the properties of Periakaruppa under the will.
This is in accord with the conduct of Alagappa for over 14 years after the death of Periakaruppa and his wife, in keeping silent and allowing Ranganatha to enjoy the. properties without laying any claim to the property on the ground of the invalidity of the will and the invalidity of the adoption, thereby indicating how he understood the will.
In this view the other questions raised in this appeal do not call for consideration.
This appeal, i.e., Civil Appeal No. 169 of 1956, is accordingly allowed with costs throughout and the plaintiff 's suit dismissed.
The questions that arise for decision in the trust appeal may now be taken up for consideration.
The plaintiff in the trust suit also is junior Periakaruppa.
There were five defendants in the suit.
First and second defendants are Ranganatha and his minor son.
The third defendant is the son of Chockalingam.
The fourth and fifth defendants are the father, Alagappa and Muthayi Achi, mother of junior Periakaruppa.
The plaintiff 's case as set out in the plaint is that by the terms of the compromise in O.S. No. 114 of 1926 on the file of the Subordinate Judge of Devakottai " Periakaruppa and Chockalingam were constituted joint trustees for himself who was then a minor and that they were enjoined the duty of having the amount invested from time to time in Cheyenne firms, that the above terms were accepted by all the parties concerned including Periakaruppa and that consequently both Periakaruppa and Chockalingam accepted the position of joint trustees for the plaintiff for duly safeguarding and improving 237 his moneys." He alleges that the "said trustees were, therefore, bound to see to the proper investment of the said moneys in reliable and sound Chetti firms and for their accumulation with accrued interest during the plaintiff 's minority and to pay the *accumulation to the plaintiff on his demand on his attaining majority." He says further in the plaint that he learned after attaining majority that the entire amount was appropriated by Chockalingam for discharging his own personal debts and that he made it appear as if he had credited the trust amount in his own firm, that eventually when his firm became involved (financially) he (Chockalingam) appears to have executed of his own accord a simple mortgage dated May 3, 1930, (i.e., during the minority of junior Periakaruppa) of his house at Athangudi (in South India) together with a small item of property in Burma in favour of the plaintiff and another creditor for a sum of Rs. 1,00,000 of which Rs. 70,000 was intended to be the plaintiff 's money and the other Rs. 30,000 of the other creditor.
The plaintiff further says in his plaint that the house which was the main item of security in the mortgage had no marketable value, that the mortgage was a one sided affair and that he repudiates the same.
He claims accordingly that both the trustees Periakaruppa and Chockalingam were bound to render to him an account of the trust amount and if they had not properly invested it they were bound to repay it to the plaintiff with interest.
He alleges that the trustees were bound to invest the amount in securities authorised by law and that they were bound to invest the moneys in sound third party Chetti firms.
He also alleges that Periakaruppa knew at the time the involved circumstances of his co trustee and either colluded with him or failed in his duty to protect the plaintiff 's interests.
He accordingly claims that Peria karuppa jointly with Chockalingam were liable for the gross breach of trust in respect of the said amount.
He further alleged that on the, death of Periakaruppa on July 14,1929, and of Chookalingam in September/ October, 1934, he the plaintiff was entitled to recover the amount due to him from the estate of Periakaruppa 238 in the hands of defendant No. I and of Chockalingam in the hands of defendant No. 3.
The first defendant filed, along with his minor son the second defendant, an elaborate written statement the substance, of which was that Periakaruppa was not constituted a trustee nor did he accept or assume the position of or acted as a trustee for the plaintiff in respect of the sums mentioned in the plaint.
He states that, on the other hand, the only persons who were competent to act on behalf of the plaintiff were his guardians or his parents and the Rajinama conferred no right on Periakaruppa to override any acts done by play Dtiff 's legal guardians on behalf of the plaintiff 's moneys.
It is further stated that there was nothing improper on the part of Chockalingam along with the plaintiff 's father and mother in realising the ,same under the hundi (for Rs. 75,000 due to junior Periakaruppa) and handing it over to Rangoon A.P.S. Firm (Chockalingam 's firm) for being invested.
He further states that the said firm was in a flourishing and solvent condition then and during all the time Periakaruppa was alive, and that there was absolutely no negligence or improper motive on the part of any body in entrusting to the said firm for investment or in investing in the said firm, the money realised for the said hundi drawn by Periakaruppa.
It was further stated that the first defendant therein understood that out of the said moneys with Chockalingam 's firm a sum of Rs. 30,000 was withdrawn by the parents and guardians of the plaintiff and invested the same bona fide in the purchase of a house for the benefit of the plaintiff on July 23,1928, which was proved to be in the possession of the plaintiff and continued to be so and that the plaintiff must be taken to have ratified the said purchase.
The written statement also states that in or about the year 1930 after the death of Periakaruppa there were some disturbances in Burma and that the parents and guardians of the plaintiff, with a view to safeguard the interests ,of the plaintiff completely and effectively, wanted from the said Chockalingam security of landed property and thus obtained the mortgage referred to in the plaint of his residential 239 house and bungalow at Athangudi and of the business premises of Chockalingam at Bogale in Burma.
The written statement proceeds to say that the plaintiff is bound by the acts of his parents and guardians in entering into such an arrangement made in his interest and for his benefit.
It is also further stated that on February 17, 1936, the house and bungalow of Cbockalingam at Athangudi which was the subject matter of the mortgage above mentioned, were purchased in court auction by Alagappa the father of junior Periakaruppa for a small sum of Rs. 1,000 subject to the mortgage and that this course was adopted as a means of realising the amount due to the plaintiff on the mortgage deed without the necessity to incur any costs of a suit.
It is thus claimed that the mortgage as well as the subsequent purchase of equity of redemption were all transactions by Alagappa for the benefit of his minor son and acting for him and that the plaintiff is not entitled to repudiate these transactions.
The third defendant, son of Chockalingam, also filed a written statement denying that there was any trusteeship or acceptance thereof by his father, that the relations between the minor represented by his mother and father on one side, and Chockalingam on the other side, with whom the moneys were kept was solely one of creditor and debtor and that the minor 's money was properly invested with Chockalingam and that by then he was in a flourishing condition, that the hypothecation of May 3, 1930, was more than sufficient to cover the debt due and that the Properties covered by the mortgage were brought to sale in court auction subject to the mortgage and were purchased by the plaintiff 's father acting in his interest, that one of the properties so purchased has been resold and the sale proceeds realised by the plaintiff, that the other property is still in possession and enjoyment of the plaintiff and that therefore there was no loan outstanding.
He further says that the remedy, if any, of the plaintiff was against his father and mother and not against himself.
The suit was decreed in the trial court by ordering defendants 1 to 3 to pay a sum of Rs. 1,39,672 13 6 with interest from out of the assets of Periakaruppa 240 and Chockalingam in their hands.
Now, it does not appear that the third defendant appealed against this decree either to the High Court or to this Court.
His liability under that decree is not, therefore, in any way affected by the subsequent proceedings on appeal to the High Court and this Court and it is unnecessary to refer to him or his liability in what follows.
The contention of the plaintiff 's counsel that Periakaruppa and Chockalingam constituted joint trustees for the sum of Rs. 75,000 payable to him under the compromise dated August 15, 1927, is one that is founded on the terms of the compromise.
It is necessary therefore to set out the relevant terms thereof. "1.As settled by the four Panchayatdars, viz (1)N. AR.
Arunachalam Chettiar of A. Muthupattanam, (2) SP.
section Chidambaram Chettiar of Athangudi, (3) M.T.A.M.
Muthiah Chettiar of Kottaiyur, and (4) RM.
Alagappa Chettiar of A. Muthupattanam directing the first defendant to pay to the plaintiffs separately in respect of the right claimed by the plaintiffs in the suit filed by the plaintiffs herein for partition on the ground that they are also entitled to a share in the properties mentioned in the plaint in this suit, the first defendant has executed 3 hundis mentioned hereunder and issued on the 29th Ani, Prabhava (13th July 1927) in the names of the plaintiffs for Rs. 1,50,000, i.e., Rs. 75,000 to the first plaintiff and 75,000 to the second plaintiff with instructions to separately pay to the aforesaid plaintiffs and accordingly the plaintiffs have, at any time hereafter, no right and future connection whatever either in the properties mentioned in the plaint in this suit, or in any other property in the possession of the first defendant, or in any property that the first defendant shall hereafter acquire.
The first defendant alone shall, as he pleases, enjoy as usual the aforesaid entire properties, as hisself acquired properties with all Swatantrani and right and powers of alienation such as gift, exchange, sale, etc.
The first defendant has the right also to alienate the aforesaid entire properties either by a will or otherwise.
241 2.
The first defendant shall for the hundis Nos. 1 and 2 out of the 3 hundis for Rs. 1,50,000 mentioned in paragraph I herein, pay the principal of Rs. 75,000 and interest within Purattasi of this Prabhava year (16th October 1927).
The principal of Rs. 75,000 under the remaining hundi No. 3 shall be paid within the 30th Panguni of the year Prabhava (11th April 1928).
The Sridhanam amount of Rs. 14,000 of Muthayi Achi., mother of the second plaintiff, and the second plaintiff 's amount of Rs. 75,000 out of the aforesaid amount of Rs. 1,50,000 under the hundis, shall be invested in Chetti houses in the name of the second plaintiff to the order of Periakaruppan Chettiar, the first defendant, and to the order of A.P.S. Chockalingam Chettiar of Athangudi, the junior paternal uncle of the aforesaid Muthayi Achi, and the aforesaid two persons shall be in management.
The signature letters and accounts pertaining to the aforesaid amounts shall be with the aforesaid Chockalingam Chettiar.
4 to 9. . . . . 10.
As A.P.S. Chockalingam Chettiar is liable for the discharge of the encumbrances that have been created by the first plaintiff as mentioned in paragraph 4 herein, the first plaintiff Alagappa Chettiar has endorsed on the undermentioned first and second hundis that they are payable to the order of the aforesaid Chockalingam Chettiar and they have been delivered to the aforesaid Chockalingam Chettiar.
It is therefore prayed that the Court may be pleased to record the razinamah in the suit and to dismiss this suit.
Details of the hundis.
The hundi for Rs. 50,000 issued on the 29th Ani of the year Prabhava (13th July, 1927) directing Rangoon Thamappan PL.
T. RM.
Karuppan Chettiar to pay money with Rangoon nadappu interest.
The hundi for Rs. 25,000 issued on the 29th Ani of the year Prabhava (13th July, 1927) directing Rangoon M. A. M. section Meiyappa Chettiar to pay money with Rangoon nadappu interest, 242 3.
Hundi for Rs. 75,000 issued on the 29th Ani of the year Prabhava (13th July, 1927) directing Rangoon RM.
P. A. Muthiah Chettiar to pay money with Rangoon nadappu interest.
" The whole argument for the plaintiff is based on the provision contained in para 3 that the Sridhanam amount of Rs. 14,000 of Muthayi Achi, mother of the second plaintiff (which, it is said, has been given up by the plaintiff 's mother in his favour) and the second plaintiff 's amount of Rs. 75,000 out of Rs. 1,50,000 under the hundis, shall be invested in Chetti houses in the name of the second plaintiff to the order of Periakaruppa Chettiar and to the order of A. P. section Chockalingam Chettiar of Athangudi.
This provision it is contended, shows that the money under the hundi meant for the minor was to be invested, by Peria karuppa and Chockalingam in Chetti houses in the name of the plaintiff but to their order.
It is said that the amount so invested was, therefore, payable to themselves or to their order and that they were charged with the duty of seeing that the money was properly invested by operating on the minor 's deposit in their joint names and changing the investments when found necessary.
It is urged that, therefore, both of them were constituted thereby as the legal owners of the amount, the beneficial ownership remaining with the minor and that to this legal ownership was attached the obligation of seeing to the proper investment of the money and the augmentation of fund by the addition of substantial interest obtainable from reliable Chetti firms.
In order to determine whether this contention is correct, it is necessary to notice the terms of the relevant hundi of the same date as the Rajinama.
This and other hundis issued by reason of the Rajinama must be taken to be part of the Rajinama inasmuch as they were referred to therein by description under the heading "Details of the hundis".
Learned counsel for the respondent, junior Periakaruppa, urges that for this purpose it is the Rajinama alone that has to be looked into but not the terms of the hundi.
We are unable to agree with this contention.
We have no doubt that the Rajinama and the hundis are integrally 243 one and must be read together.
The hundi dated August 15, 1927, for Rs. 75,000 issued by Periakaruppa for the benefit of junior Periakaruppa as part of the Rajinama is as follows: "Credit to minor Periakaruppa Chetti, son of AL.
Alagappa Chetti of A. Muthupattanam Debit to AL.
Periakaruppan Chettiar.
Out of the sum of Rs. 1,50,000 payable by me according to the razinamah entered into in 0.
section No. 114 of 1926 of the file of the Sub Court, Devakotta, on the 29th Ani of this year (13th July, 1927). . . . . the amount towards your share for improving the same by making investments in Chetti firms for interest in your name and to my order and to the order of Athangudi A. P. section Chockalingam Chettiar, is Rs. 75,000.
Rangoon RM.
P. A. Muthiah Chetti shall, on demand, pay money for this sum of Rs. 75,000 together with Rangoon nadappu interest from the 29th Ani of this year (13th July, 1927) to the order of the three viz., (1) AL.
Alagappa Chetti, (2) Muthayi Achi, mother and guardian of minor Periakaruppan Chetti, son of the aforesaid person, and (3) A. P. section Chockalingam Chettiar of Athangudi, and debit it in my account with endorsement of payment made herein.
Periakaruppan Chettiar.
" Now taking para 3 of the Rajinama and this hundi together, it is clear that the banker of Periakaruppa one RM.
P.A. Muthiah Chetti of Rangoon was to pay this amount to the order of the three persons, Alagappa, Muthayi Achi, and Chockalingam and that the said amount was to be invested in the name of the minor in Chetti firms to the order of Periakaruppa and Chockalingam.
Now it is the contention of the learned counsel for junior Periakaruppa that the word 'order ' used in both these places has the same meaning as in the , (XX VI of 188 1) and that therefore what is contemplated is that the money under the hundi was in the first instance payable by Muthiah Chetti on whom it was drawn on the joint signatures of all the three persons named in the hundi 244 i.e., Alagappa, Muthayi Achi and Chockalingam and that what is further contemplated is the investment of that money by Periakaruppa and Chockalingam in Chetti firms in the name of junior Periakaruppa to the joint order of both of them.
On this view, it is said that both these persons have the power to draw the money so invested whenever they choose and have the control of the money and in that sense have the legal ownership of the money vested in themselves notwithstanding that the amount is invested in the name of the minor to indicate his beneficiary ownership.
Learned counsel for the appellant Ranganatha contends that this is not the proper interpretation of the word ' order ' as used in reference to the joint names of Periakaruppa and Chockalingam.
He refers us to certain cases of the Madras High Court which recognised the practice of Chetti firms receiving deposits in the name of a particular person to the maral of certain other person or persons and that the idea of maral is merely to indicate that the change of investment was to be made with the consent of the maraldar without in any way affecting the ownership of the person in whose name the money is deposited.
According to the cases on which he relies, the maraldar has no right to operate on the account and withdraw the money.
It has been pointed out to us on the other side that the material word used in this context both in para 3 of the Rajinama and in the hundi itself is " order ' and not maral '.
It is also urged that the word maral has acquired no such settled meaning, as the appellant ascribes to it.
There are decisions showing that the question as to what the word maral means is one that must depend on the proof in each particular case of usage of that word by the Nattukottai Chetti firms.
This has been laid down by the Privy Council in Arunachalam vs Vairavan (1) and in Muthuraman vs Periannan (2).
In view of these decisions and the fact to which our attention has been drawn that there is no pleading in this case as to the meaning of the word 'maral ' or that the word 'order ' in the context of this case has been used in the sense (1) A.I.R. 1929 P.C. 254, 256.
(2) A.I.R, 1934 Mad. 621, 622.
245 of maral, we are not prepared to uphold the contention that the word ' order ' in this case can be given the meaning which is attributed to the word 'maral ' in some of the cases which have been cited to us for the appellant.
It does not, however, follow that the word ' order ' in this case in its application to the two persons Periakaruppa and Chockalingam, is used in the sense which it has under the Negotiable Instruments,Act.
Learned counsel for the respondent, junior Periakaruppa, relies on section 13(1), Explanation (iii), taken with sections 8, 9, and 78 of the .
He urges that in the case of a negotiable instrument the person who is indicated as the ' orderer ' (if that word may be used in this context) is the holder thereof and is the person who is entitled to receive the amount thereunder and to give a discharge in respect thereof and that, therefore, he is virtually the legal owner thereof.
If, as held in Krishnashet bin Ganshet Shetye vs Hari Valjibhatye (1), the , (in the absence of any local usage to the contrary) applies to hundis, what is urged above may well be applicable to the money of the original hundi for Rs. 75,000 drawn on Muthiah Chetti and specifically payable on demand to the order of the three persons, Alagappa, Muthayi Achi and Chockalingam.
But the position as regards the amount so collected, and thereafter invested in the name of junior Periakaruppa, is not necessarily the same.
It is true that para 3 of the Rajinama and the narration in the relevant hundi clearly show that the amount of the hundi (apparently after realisation thereof) is to be invested in Chetti firms in the name of minor Periakaruppa and that such investment is to be to the order of both Periakaruppa and Chockalingam.
This is obviously nothing more than a deposit in the name of the minor after such collection.
The investment would presumably be covered by an ordinary deposit receipt in the name of the minor.
A deposit receipt of that kind does not fall within the definition of 'negotiable instrument ' under section 13 of the .
There is no authority for showing that such a deposit receipt is a# (1) Bom.
246 document to which the notions of as to the use of the word order ' and the legal implications thereof would be applicable.
On the other hand there appears to, be authority to the contrary.
See Sethna vs Hemmingway(1) and In re Travancore National and Quilon Bank Ltd.(1).
Both these cases indicate that a deposit receipt is not a negotiable instrument.
It is true that in the language of the hundi, at both places, i.e., (1) where the hundi is to be cashed, and (2) at the place where the cash so collected is to be invested, the same word 'order ' is used with reference to different sets of persons.
It is, therefore, suggested that they have to be understood in the same sense.
But the hundi, though intended for the minor and credited to him, is not drawn specifically in favour of the, minor but only to the order of certain named individuals, while the investment is to be made specifically in the name of the minor indicating that he is the owner thereof.
It would be begging the question to say that the orderdars in this context are the legal owners and that hence this indicates only his beneficial ownership.
It appears to us reasonably clear that merely because para 3 of the Rajinama and the narration in the relevant hundi both contemplate the amount of hundi on realisation to be invested in Chetti firms in the name of the minor to the order of both Periakaruppa and Chockalinga, it does not ipso facto follow as a matter of law that both of them are authorised to operate on it in the sense that they can withdraw the money and have the control of it in the same way as a person, to whose.
order a bill of exchange or a cheque is payable, can have.
While it is true that the appellant Ranganatha has not made out that the word 'order ' is used in the ,sense of the word 'maral ' and has not pleaded or proved what maral or order in this case means, the plaintiff has not equally made out that the word 'order ' in para 3 of the Rajinama in its application to Periakaruppa and Chockalingam in the context, authorises them to obtain absolute control of the money deposited.
But it is urged that this is implicit (1) A.I.R. 1914 BOM.
286, 287.
(2) A.I.R. 1940 Mad. 157, 159.
247 in the language of para 3 which refers to investment and management.
Undoubtedly under the terms of the Rajinama the amount is to be invested in Chetti firms in the name of the second plaintiff and the two persons, Periakaruppa and Chockalingam, are to be associated with the investment, by its being designated as being to their order, whatever that may mean, and they are also enjoined and associated with it in the following terms.
" Iruvarghalum mel parthu varavendiyadu This clause which is in Tamil language has been translated in the official translation as " the aforesaid two persons shall be in management.
" Two out of us in this Bench who have a fairly working acquaintance with Tamil language are not satisfied that ' management is a correct translation for the word 'mel parthu '.
What the clause contemplates is ' mel parve ' which literally means 'over seeing '.
It conveys the idea of ,;supervision ' and does not imply the capacity to operate on the deposit.
But it is suggested that the relevant clause taken as a whole indicates that both together have the power of investment and reinvestment as indicated by the use of the phrase in Tamil, viz., 'koduthu vangi ', which means 'giving and taking ', i.e., 'lending and taking back. ' This phrase is generally used to indicate 'investing. ' But it is not very clear in the structure of the sentence in which this phrase occurs that it is the two persons Periakaruppa and Chockalingam that are to do this 'investing. ' The word 'iruvarkalum ' in this sentence follows 'koduthu vangi ' and precedes 'mel parthu varavendiyathu` and indicates rather that their joint responsibility relates to only 'mel parvai ' and not 'koduthu vangal '.
In a matter like this, however, relating not merely to the meaning of a particular word such as ' mel parthu ' as above but to the contextual meaning of an entire clause in which a particular phrase like 'koduthu vangi ' is used, we do not wish to base the decision on our own impression as to the implication of that phrase in the context and would prefer to go by the official English translation which is as follows; 248 "The amount. . . shall be invested in Chetti houses in the name of the second plaintiff, to the order of Periakaruppan Chettiar, the first defendant, and to the order of A.P.S. Chockalingam Chettiar of Athangudi, the junior paternal uncle of the aforesaid Muthayi Achi, and the aforesaid two persons shall be in management.
" But even this does not indicate that the power of investment is vested in them but only 'mel parve ' which, in our view, has been wrongly translated as 'management. ' Taking the whole of this clause carefully we are not satisfied that the language clearly indicates that the power of operating in respect of the deposit by way of withdrawing the amount and being in control thereof is vested in Periakaruppa and Chockalingam.
All that the language indicates with certainty is that these two persons are specially enjoined to supervise the investments and that they are "orderdars," whose meaning has not been made out.
In such an ambiguous situation as to the, meaning of the words used and the intention of the parties thereto, it is permissible to look into and consider what the contemporaneous actings of the parties are which may be treated as virtually part of the same transaction.
The hundi for Rs. 75,000 for the benefit of junior Periakaruppa dated August 15, 1927, was, according to para 2 of the Rajinama, payable by April 11, 1928.
There is an endorsement on the hundi signed by Alagappa, Muthayi Achi and Chockalingam dated May 31, 1928, to the effect that the money due under that hundi is to be paid to Rangoon A. P. section Firm (which means Chockalingam 's firm) together with interest thereon.
On the terms of the hundi the interest was payable from July 13, 1927, on which date the Panchayatdars appear to have settled the terms of the Rajinama.
This shows that the amount was actually drawn on the signatures of the three persons and was intended to be collected by Chockalingam 's firm at Rangoon.
The hundi also bears a note signed by Chockalingara 's agent, A. P. section Somasundaram, that the principal and interest of the hundi amounting to Rs. 80,726 15 3 was received through another banker 249 named KM.
Somasundaram Chetti as per letter of Periakaruppa to KM.
Somasundaram Chetti on April 10, 1928.
It is in the evidence of this A. P. section Somasundaram, clerk of Chockalingam, who was examined as P.W. 2 on commission, that after its withdrawal the money was in fact credited on or about June 19, 1928, in the accounts of A. P. section Firm at Rangoon in the name of junior Periakaruppa, to the order of (senior) Periakaruppa and Chocklingam under the directions of Chockalingam.
It is the evidence of this Somasundaram that Chockalingam directed him to invest the amount in Rs. 4,000 or Rs. 5,000 in reliable and sound Chetti firms, presumably meaning thereby that the idea was to keep the money in the A.P.S. Firm provisionally until he was able to invest the money safely by distributing it over several reliable Chetti firms in comparatively small sums.
That this was the real intention of everybody concerned in entrusting the money to the A.P.S. Firm is confirmed by what is narrated in exhibit P 4, a receipt issued in favour of Periakaruppa, for the total sum of Rs. 75,000 collected in respect of the two hundies for the amounts of Rs. 50,000 and Rs. 25,000 respectively, belonging to Alagappa under the compromise.
That receipt shows the collection of a sum of Rs. 76,274 1 9 being the principal and interest of the two hundies, and recites also some other matters.
It ends with the following significant narration : "We shall obtain money for the hundi for Rs. 75,000 of minor Periakaruppan Chettiar and for the hundi for Rs. 14,000 credit it in the firm of Rangoon A.P.S. invest it in our Nattukottai Chetti firms for thavani to the order of (1) AL.
Periakaruppan Chetti of A. Muthupattanam, and (2) A.P.S. Chockalingam Chetti of Athangudi, and deliver the copy of the aforesaid debit and credit account, and copies of the signature letters.
" This is signed by A.P.S. Chockalingam Chettiar as the power agent of AL.
Alagappa Chettiar and also by Muthayi Achi for herself and for minor Periakaruppan Chetti.
This narration in the receipt 32 250 indicates quite clearly that it was the father and the mother of the junior Periakaruppa that took the responsibility of authorising the A.P.S. firm to collect the hundi amount and of investing it in other Nattukottai Chetti firms for thavanai.
The intention clearly appears to be that it is Chockalingam that was to collect the money on the hundi and it was Chockalingam that was to arrange for the investment of the same (on the legal responsibility of Alagappa and Muthayi Achi, the natural guardians of the minor).
This is exactly what is borne out as to what happened thereafter as appears from the evidence of Chocka lingam 's clerk, Somasundaram, P. W. 2.
This seems really to indicate that what the parties throughout intended was that while the collection of the money under the hundi was to be under the signature of all the three, viz., Alagappa, Muthayi Achi and Chockalingam, the agency actually to collect was to be the firm of Chockalingam in Rangoon and it is that firm that was to arrange for distributing the money over various other Nattukottai Chetti firms by way of safe and good investments on the implied authority of the natural guardians, viz., the father and mother.
This obviously would take some time and during this time Chockalingam 's firm would naturally have to be in charge of the funds.
It appears reasonably clear, however, that a long term investment in Chockalingam 's firm as such was not contemplated.
This may be inferred from the wording in para 3 of the Rajinama which says that "the signature letters and accounts pertaining to the aforesaid amount shall be with the aforesaid Chockalingam Chettiar.
In the context this obviously means that the deposit receipt and the periodical accounts relating to that deposit by way of addition of interest and so forth were to be in the custody of Chockalingam.
Thus Chockalingam was the person primarily intended to collect the money and to be in charge of the investment, that pending final investment Chockalingam was to have temporary custody of the amount.
The point to be noted about this subsequent conduct of the persons concerned is that in respect of these various matters Periakaruppa 251 does not at all come into the picture.
The narration in the receipt, exhibit P 4, which recites under the two signatures thereto, of Chockalingam as agent of Alagappa and Muthayi Achi as guardian, is that they undertake to obtain the money and invest it in Nattukottai Chetti firms for thavanai.
It does not indicate that it will be so invested on the instructions or consent also of Periakaruppa.
Nor does Somasundaram, P.W. 2, in his evidence give any indication that the collection by and investment in, Chockalingam 's firm was actually done under the instructions of Periakaruppa or that it was thereafter contemplated that in splitting the amount into smaller sums, it would have to be under instructions of Periakaruppa also.
There is no evidence that Chockalingam sent his instructions to his clerk Somasundaram with the knowledge and consent of Periakaruppa or in collaboration with him.
It is also significant that the only further act of reinvestment which was made during Periakaruppa 's lifetime, viz., the purchase of a house for Rs. 30,000 at Athangudi in the name of junior Periakaruppa and of which the minor is admittedly enjoying the benefit, does not.
appear to have been with the knowledge or consent of Periakaruppa.
Thus looking at the actings of the parties concerned, there is nothing to show that the parties understood the term in para 3 of the Rajinama as laying on Periakaruppa the responsibility of actually making investments and reinvestment for that purpose to operate and withdraw the amounts from the banker or bankers with whom the hundi money after collection was to be invested.
Learned Judges of the High Court were greatly influenced by the assumption that it could not have been the intention of Periakaruppa to allow a spendthrift like Alagappa to handle the funds of the minor for purposes of investment or change of investment, and that therefore it must have been intended that both the persons Periakaruppa and Chockalingam were to have that power and that this was what was meant by directing that the minor 's money must be invested " to the order of Periakaruppa and Chockalingam ".
It is true that the handling of the minor 's funds by his 252 father Alagappa alone was not likely to have been contemplated.
But that does not necessarily mean that Periakaruppa took upon himself the responsibility for such handling either by himself or jointly with Chockalingam.
On the other hand it looks as though that it was Chockalingam that took such responsibility.
Though not himself a panchayatdar he must have helped to bring about the compromise on the side of Alagappa, Muthayi Achi and junior Periakaruppa.
This is indicated by his having signed the Rajinama as a witness thereto.
The entire set up of the Rajinama and the subsequent actings show that all the parties concerned including Periakaruppa himself had con fidence in Chockalingam who was no other than the paternal uncle of Muthayi Achi, the mother of the minor.
In fact even as regards the sum of Rs. 75,000/payable to Alagappa himself under the two hundies it was Chockalingam alone that was constituted virtually the trustee for collecting the said hundi amounts and paying thereout the debts which had by then been incurred by Alagappa.
This is clear from the fact appearing in paras 4 and 10 of the Rajinama.
Para 10 says that the plaintiff Alagappa has endorsed on the two hundies belonging to him that they are payable to the order of Chockalingam and it further recites that the hundies have been delivered to the aforesaid Chockalingam.
It is specifically stated in that para that Chockalingam was liable for the discharge of encumbrances that have been created by the first plaintiff therein (Alagappa).
This was reiteration of what was stated in para 4 which says that whatever be the encumbrances created by the first plaintiff in respect of any property mentioned in the plaint in the suit, the aforesaid Chockalingam shall discharge them without any liability whatever to the first defendant.
It is clear that Periakaruppa was willing to trust Chocklingam completely even in respect of a matter which would directly affect him, viz., the discharge of Alagappa 's debts incurred by way of encumbrances, so as to relieve him from all liabilities for such debts.
It is unreasonable, therefore, to assume that he was not prepared to leave the responsibility for the collection 253 and investment of the minor 's funds also with Chockalingam but that he undertook a joint responsibility with him in respect of the same.
Undoubtedly para 3 of the Rajinama indicates that the amount was to be deposited to the order of Periakaruppa as also Chockalingam and that both together are to have 'mel parve ' (supervision).
But whatever may be the connotation of this provision, it does not appear to us, with great respect to the learned Judges of the High Court, reasonable to attribute to Periakaruppa the undertaking of the responsibility of a trustee on its basis.
Trusteeship is a position which is to be imputed to a person on clear and conclusive evidence of transfer of ownership and of the liability attached to such ownership on account of confidence reposed, and on such liability having been accepted by the alleged trustee.
There is no clear and conclusive proof of any of these elements in the present case so far as Periakaruppa is concerned.
Learned counsel for the respondent has also relied upon a statement in the affidavit of Muthayi Achi,mother of junior Periakaruppa dated August 6, 1927, in respect of the application for compromise the litigation on behalf of the minor in which it is stated as follows: " The first defendant (meaning Periakaruppa) has given a hundi for Rs. 75,000 to my junior paternal uncle A. P. section Chockalingam Chettiar on behalf of the minor 2nd plaintiff in accordance with the award of the Panchayatdars.
It has been settled that the aforesaid amount of Rs. 75,000 should be deposited in Chetti firms in the name of the aforesaid minor, to the order of the 1st defendant and the aforesaid A. P. section Chockalingam Chettiar and improved.
" It is urged that when the hundi itself has been handed over to Chockalingam, as this affidavit indicates, the very property belonging to the minor must be taken to have been delivered over to Chockalingam as one of the two persons in whose order the money was to be deposited and that this, in law, amounts to transfer of ownership to one, on behalf of both, with the obligation attached and that the acceptance thereof 254 must be assumed in view of the fact that the whole of the Rajinama including this term was agreed to by Periakaruppa along with the others.
It is quite clear, however, in this case that the mere delivery of the hundi to Chockalingam cannot be treated as itself transfer of ownership of the money which was to be collected in respect thereof.
Paras 1 and 2 of the Rajinama itself are in substance as follows: " That the Panchayadars directed the first defendant (Periakaruppa) to pay to the plaintiffs a total of 1,50,000, and that the first defendant accordingly executed three hundies in the names of the plaintiffs.
" Thus by virtue of the direction to pay, the compromise brought about between Periakaruppa on one side and Alagappa and junior Periakaruppa on the other the relationship of debtor and creditor.
It is obvious that until the hundies are realised that relation would continue.
There is no transfer of ownership till then.
(See In re Beaumont, Beaumont vs Ewbank(1).
Further, as has already been noticed, the hundi issued by Periakaruppa in respect of junior Periakaruppa 's share of Rs. 75,000 was originally issued upon Muthiah Chettiar of Burma but was ultimately realised through one KM.
Somasundaram Chetti on a letter written by Periakaruppa to him.
This indicates that for some reason or other the hundi could not be cashed on the original banker and had to be realised through another banker.
In this state of facts it is not feasible to say that the mere handing over to Chockalingam of the original hundi drawn on Muthiah Chettiar on the date of the compromise itself (as mentioned in the affidavit of Muthayi Achi) can be treated as transfer to Chockalingam of the very property of junior Periakaruppa under the Rajinama.
The trust, therefore, if any, in respect of that amount must attach only after realisation of the amount and by reason of the acting of the parties subsequent thereto implying acceptance of the obligations under the trust.
The more fact that Periakaruppa agreed to all the terms of the Rajinama does not constitute such acceptance.
It is at best only indication of a prospective willingness to accept.
As already stated there is absolutely no evidence of an (1) 255 actual acceptance after the hundi was cashed and the amount was in fact treated by Chockalingam as an investment in his firm.
Indeed even if it be assumed that Periakaruppa became a joint trustee with Chockalingam in respect of the amount belonging to the minor it does not follow that Periakaruppa was responsible for the breach of trust in this case, committed obviously by Chockalingam only.
As already stated ' it appears quite clearly that collection by Chocka lingam of the minor 's hundi and his keeping custody thereof in his own firm until the amount is regularly invested in other Chetti firms was a matter which was under the initial contemplation of everybody concerned and in particular of the father and the mother who are his natural guardians.
That this was the position as late as July, 1928, is quite clear from the evidence of Chockalingam 's clerk, Somasundaram, P. W. 2.
Periakaruppa died in July, 1929, about an year later.
There is absolutely nothing to indicate that 'the provisional retention of the amount in Chockalingam 's firm for that period, was unreasonable or that Periakaruppa had any notion that Chockalingam was financially in embarrassed circumstances and that he made use of the funds.
It is true that, under law, the investment of funds by a trustee with himself would constitute breach of trust.
But before a co trustee can be made liable therefor some kind of knowledge or connivance or gross negligence or the like contributing factor on his part has got to be made out.
It may be that in this case the minor 's funds have been frittered away by the embarrassed circumstances of Chockalingam in whom everybody seems to have reposed confidence.
If that was in fact what happened, it may be unfortunate for the minor.
But that cannot be any reason for affecting Periakaruppa or his estate with the liability for Chockalingam 's breach on an assumed construction of what appears at best to be equivocal and ambiguous language in the Rajinama.
The burden is on the plaintiff, junior Periakaruppa, to make out clearly that by the Rajinama Periakaruppa became a trustee for the minor 's fund and incurred 256 liability therefor for his co trustee 's breach.
At the time of the compromise the minor was less than two years in age.
Periakaruppa was more anxious to get rid of all his liabilities arising from his son 's past and wanted his son 's family to clear out bag and baggage from the family house.
In such a situation if he was anxious for the minor boy 's welfare to the extent of taking responsibility for his money on himself though it be jointly with Chockalingam, clearer and decisive language was to be expected.
In our opinion this has not been made out.
Hence this suit of the plaintiff, junior Periakaruppa, also fails, against Ranganatha and his minor son.
The appeal is accordingly allowed and the suit is dismissed as against defendants 1 and 2 with costs throughout.
GOVINDA MENON J.
I am in perfect agreement with the reasoning and conclusions contained in the judgment of my learned brother B. Jagannadhadas J. in Civil Appeal No. 169 of 1956, and I agree that the appeal be allowed with costs.
In Appeal No. 104 of 1954, 1 have considerable doubts regarding the construction of cl.
(3) of Exhibit P. 1.
If Periakaruppa and Chockalingam were entrusted with the duty of investment, there can be no doubt whatever that they are constituted trustees.
The Tamil expression 'Koduthu Vanghi ' clearly signifies investment, but the question is who is to make the investment.
If Periakaruppa and Chockalingam have merely to supervise the investment, as the Tamil expression 'Mel Parthu ' means, and not actually invest the amount then the view taken by my learned brothers is right.
I am inclined to think that the duty of investment is cast on Periakaruppa and Chockalingam, but as this is a matter which is not free from doubt, not without hesitation, I agree with the order passed by my learned brothers.
Appeals allowed.
| P adopted A in 1914 but on account of the acute differences which arose between them later, he made a second adoption of the first appellant in 1926 on the footing that such an adoption was permitted by special custom in Nattukottai Chetti families.
In the partition suit filed by A for himself and on behalf of his minor son, the first respondent, the validity of the second adoption was challenged, but the matter was compromised by a Rajinama under which P was directed to pay the plaintiffs therein Rs. 75,000 each separately in lieu of their right to partition.
Under the terms of para 3 of the Rajinama and the hundi executed by P in favour of the first respondent, the amount was to be paid to the order of three persons, viz., the father and mother of the first respondent and C, and the amount itself was to be invested in the name of the first respondent in Chetti firms to the order of P and C who were to be in management.
In 1929 P executed a will whereby he made arrangements for certain religious gifts and charities and gave the residue of the property to his wife for her life and thereafter to his second adopted son, the first appellant.
On attaining majority in 1943 the first respondent filed two suits.
The first was on the footing that the amount of Rs. 75,000 which was given to him under the Rajinama was constituted a trust for his benefit during his minority under the trusteeship of P and C, that the money was wrongfully appropriated by C, contrary to the terms of the Rajinama, and that P as a co trustee with C was equally responsible for C 's breach of trust and that the first respondent was entitled to have the amount paid out of the estate of P in the hands of the appellants.
The second suit was for the recovery of the entire properties of P on the ground that the second adoption was invalid and that the will executed by P was ineffective.
It was found that the adoption of the first appellant was invalid and that the customary adoption set up by P was made for temporal rather than spiritual purposes, and the question was whether, notwithstanding his description as adopted son in, the will in several places, the intention was that he was to take the property as Persona designata.
As regards the terms of para 3 of the 215 Rajinama the language used was ambiguous, whether the power of investment was vested in both P and C, but looking at the subsequent conduct of the parties it was found that it was C who was authorised to collect the amount of the hundi and to arrange for the investment of the same on the responsibility of the father and mother of the first respondent.
Held:(1) The question whether a disposition to a person is intended as a Persona designata or by reason of his filling particular legal status which turns out to be invalid, depends on the facts of the case and the terms of the particular document containing the disposition, and in the instant case, in view of the exclusion of the validly adopted son and his heirs from succession and the conduct of the parties for over 14 years in allowing the first appellant to retain the property, taking an overall picture of the various provisions of the will, it was clear that the first appellant was intended by the testator to take the property as persona designata and that the will was therefore effective to convey title to him.
Nidhoomoni Debya vs Saroda Pershad Mookerjee, (1876) L.R. 3 I.A. 253 and Fanindra Deb Raikat vs Rajeswar Das, (1884) L.R. 12 I.A. 72, referred to.
(2)Trusteeship is a position which is to be imputed to a person on clear and conclusive evidence of transfer of ownership and of the liability attached to such ownership on account of confidence reposed, and on such liability having been accepted by the alleged trustee, and in the present case there was no proof that P became a trustee for the minor 's fund and incurred liability for C 's breach of trust.
|
Summarize this legal judgement text concisely | Appeal No. 165 of 1954.
Appeal from the judgment and order dated May 27, 1953, of the Calcutta High Court in Income tax Reference No. 35 of 1952.
G. N. Joshi and R. H. Dhebar, for the appellant.
Jyotish Chandra Pal and D. N. Mukherjee, for the respondent.
May 23.
The Judgment of the Court was delivered by BHAGWATI, J.
This appeal with certificate of fitness under section 66A(2) of the Indian Income tax Act (XI of 1922) is directed against the Judgment and order of the High Court of Judicature at Calcutta on a reference under section 66(1) of the Act.
The respondent owns an area of 6,000 acres of forest land assessed to land revenue and grown with Sal and Piyasal trees.
The forest was originally of spontaneous growth, "not grown by the aid of human skill and 104 labour" and it has been in ' existence for about 150 years.
A considerable income is derived by the assessee from sales of trees from this forest.
The assessment year in which this forest income was last taxed under the Indian Income tax Act was 1923 24 but thereafter and till 1944 45 which is the assessment year in question, it was always left out of account.
The assessment for 1944 45 also was first made without including therein any forest income, but the assessment was subsequently re opened under section 34.
In response to a, notice under section 22(2) read with section 34 of the Act, the respondent submitted a return showing the gross receipt of Rs. 51,978 from the said forest.
A claim was, however, made that the said income was not assessable under the Act as it was agricultural income and was exempt under section 4(3) (viii) of the Act.
The Income Tax Officer rejected this claim and added a sum of Rs. 34,430 to the assessable income as income derived from the forest after allowing a sum of Rs. 17,548 as expenditure.
The Appellate Assistant Commissioner confirmed the assessment and the Income Tax Appellate Tribunal also was of opinion that the said income was not agricultural income but was income derived from the sale of jungle produce of spontaneous growth and as such was not covered by section 2(1) of the Act.
At the instance of the assessee the Tribunal referred to the High Court under section 66(1) of the Act two questions of law arising out of its order, one of which was: "Whether on the facts and in the circumstances of this case, the sum of Rs. 34,430 is "agricultural income" and as such is exempt from payment of tax under section 4(3)(viii) of the Indian Income Tax Act?" The Tribunal submitted a statement of case from which the following facts appear as admitted or established : " (i) The area covered by the forest is about 6,000 acres, trees growing being Sal and Piyasal; (ii)It is of spontaneous growth being about 150 years old.
It is not a forest grown by the aid of human skill and labour; 105 (iii)The forest is occasionally parcelled out for the purposes of sale and the space from which trees sold are out away is guarded by forest guards to protect offshoots; (iv)It has been satisfactorily proved that considerable amount of human labour and care is being applied year after year for keeping the forest alive as also for reviving the portions that get denuded as a result of destruction by cattle and other causes; (v)The staff is employed by the assessee to perform the following specific operations: (a) Pruning, (b) Weeding, (c) Felling, (d) Clearing, (e) Cutting of channels to help the flow of rain water, (f) Guarding the trees against pests and other destructive elements, (g) Sowing of seeds after digging of the soil in denuded areas.
" The Tribunal found that the employment of human labour and skill in items (a) to (f) was necessary for the maintenance and upkeep of any forest of spontaneous growth.
Regarding item (g), however, it found that the said operation had been performed only occasionally and over a small fraction of the area where the original growth had been found to have been completely denuded.
Such occasions were however few and far between, the normal process being that whenever a tree was cut, a stump of about 6" height was left intact which sent forth off shoots all round bringing about fresh growth in course of time.
This went on perpetually unless an area got otherwise completely denuded.
The reference was heard by the High Court and the High Court held that actual cultivation of the land was not required and as human labour and skill were spent for the growth of the forest the income from the forest was agricultural income.
It accordingly answered the above question in the affirmative.
The 14 106 Revenue obtained the requisite certificate of fitness for appeal to this Court and hence this appeal.
The question that arises for consideration in this appeal is whether income derived from the sale of Sal and Piyasal trees in the forest owned by the assessee which was originally a forest of spontaneous growth "not grown by the aid of human skill and labour" but on which forestry operations described in the statement of case had been carried on by the assessee involving considerable amount of expenditure of human skill and labour is agricultural income within the meaning Of section 2(1) and as such exempt from payment of tax under section 4(3)(viii) of the Indian Income tax Act.
Section 2(1) of the Act defines agricultural income and states (so far as it is relevant for the purposes of this appeal): (1) "agricultural income" means (a) any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land revenue in the taxable territories or subject to a local rate assessed and collected by officers of the Government as such : (b) any income derived from such land by: (i) agriculture, or (ii) the performance by a cultivator or receiver of rent in kind of any process ordinarily employed by a cultivator or receiver of rent in kind to render the produce raised or received by him fit to be taken to market, or (iii) the sale by a cultivator or receiver of rentin kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in sub clause (ii) . . . . . . . . . . .
Section 4(3) of the Act provides: " (3) Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them; . . . . . . . . . . . (viii) Agricultural income. . . 107 Even though "agricultural income" which is exempted under section 4 (3) (viii) of the Act is defined in section 2(1) as above, there is no definition of "agriculture" or "agricultural purpose" to be found in the Act and it therefore falls to be determined what is the connotation of these terms.
An argument based on entries 14 and 19 of List II of the Seventh Schedule to the Constitution may be disposed of at once.
It was urged that entry No. 14 referred to agriculture including agricultural education and research protection against pests and prevention of plant diseases while entry No. 19 referred to forests and there was therefore a clear line of demarcation between agriculture and forests with the result that forestry could not be comprised within agriculture.
If forestry was thus not comprised within agriculture, any income from forestry could not be agricultural income and the income derived by the assessee from the sale of the forest trees could not be agricultural income at all, as it was not derived from land by agriculture within the meaning of the definition of agricultural income given in the Indian Income tax Act.
This argument, however, does not take account of the fact that the entries in the lists of the Seventh Schedule to the Constitution are heads of legislation which are to be interpreted in a liberal manner comprising within their scope all matters incidental thereto.
They are not mutually exclusive.
If the assessee plants on a vacant site trees with a view that they should grow into a forest, as for example, Casuarina plantations and expends labour and skill for that purpose, the income from such trees would clearly be agricultural produce.
It has to be remembered that even though this demarcation between agriculture and forestry was available in the Lists contained in the Seventh Schedule to the Government of India Act, 1935, no such demarcation existed in the Devolution Rules made under the Government of India Act, 1919, and in any event the definition of agri cultural income with which we are concerned was incorporated in the Indian Income tax Acts as early as 1886, if not earlier: vide section 5 of the Indian Income tax of 1886).
It has also to be remembered that inspite of this demarcation between agriculture and forests in the Constitution, taxes on agricultural income are a separate head under entry 46 of List II of the Seventh Schedule and would comprise within their scope even income from forestry operations provided it falls within the definition of agricultural income which according to the definition given under article 366(1) means agricultural income as defined for the purposes of the enactments relating to Indian Income tax.
The terms " agriculture " and " agricultural purpose" not having been defined in the Indian Income tax Act, we must necessarily fall back upon the general sense in which they have been understood in common parlance.
"Agriculture" in its root sense means ager, a field and culture, cultivation, cultivation of field which 'of course implies expenditure of human skill and labour upon land.
The term has, however, acquired a wider significance and that is to be found in the various dictionary meanings ascribed to it.
It may be permissible to look the dictionary meaning of the term in the absence of any definition thereof in the relevant statutes.
As was observed by Lord Coleridge, in R. vs Peters (1): I am quite aware that dictionaries are not to be taken as authoritative exponents of the meanings of words used in Acts of Parliament, but it is a wellknown rule of courts of law that words should be taken to be used in their ordinary sense, and we are therefore sent for instruction to these books.
" Cozens Hardy, M. R., also said in Camden (Marquis) vs I.R.C. (2): "It is for the Court to interpret the statute as best it may.
In so doing the Courts may no doubt assist themselves in the discharge of their duty by any literary help they can find, including of course the consultation of standard authors and reference to wellknown and authoritative dictionaries. " (1) , 641.
(2) 1, 647.
109 Turning therefore to the dictionary meaning of agriculture " we find Webster 's New International Dictionary describing it as " the art or science of cultivating the ground, including rearing and management of livestock, husbandry, farming, etc.
and also including in its broad sense farming, horticulture, forestry, butter and ' cheese making etc.
" Murray 's ' Oxford Dictionary describes it as " the science and art of cultivating the soil; including the allied pursuits of gathering in the crop and rearing live stock; tillage, husbandry, farming (in the widest sense)".
In Bouvier 's Law Dictionary quoting the Standard Dictionary" agriculture " is defined as " the cultivation of soil for food products or any other useful or valuable growths of the field of garden; tillage, husbandry; also, by extension, farming, including any industry practised by cultivator of the soil in connection with such cultivation, as breeding and rearing of stock, dairying, etc.
The science that treats of the cultivation of the soil.
" In Corpus Juris the term " agriculture " has been understood to mean: " art or science of cultivating the ground, especially in fields or large quantities, including the preparation of the soil, the planting of seeds, the raising and harvesting of crops, and the rearing, feeding and management of live stock; tillage, husbandry and farming.
In its general sense the word also includes gardening or horticulture.
" Bhashyam Ayyangar J. in Murugesa Chetti vs Chinnathambi Goundan(1) gave the following dictionary meanings of agriculture as culled out from the Century Dictionary and Anderson 's Dictionary of Law: " The primary meaning of agriculture is the cultivation of the ground (The Century Dictionary) and in its general sense it is the cultivation of the ground for the purpose of procuring vegetables and fruits for the use of man and beast including gardening or horticulture and the raising or feeding of cattle and other stock (Anderson 's Dictionary of Law).
Its less general and more ordinary signification is the cultivation with the plough and in large areas in order to raise (1) Mad.
421,423.
110 food for man and beast (The Century Dictionary) or, in other words, "that species of cultivation which is intended to raise grain and other field crops for man and beast." (Anderson 's Dictionary of Law).
Horticulture, which denotes the cultivation of garden or orchards, is a species of agriculture in its primary and more general sense." Ramesam J. in Panadai Pathan vs Ramasami Chetti (1) referred to the following connotation of 'agriculture ': "Wharton 's Law Lexicon adopts the definition of ,,agriculture" in 8 Edw.
VII, c. 36, as including "horticulture, forestry, and the use of land for any purpose of husbandry etc.
In 10 Edw.
VII, c. 8 section 41, it was defined so as to include the use of land as "meadow" or pasture land or orchard or osier or woodland, or for market gardens, nursery grounds or allotments, etc.
In 57 and 58 Viet.
c. 30 section 22, the term agricultural property ' was defined so as to include agricultural land, pasture and woodland, etc.
" These are the various meanings ascribed to the term " agriculture" in various dictionaries and it is significant to note that the term has been used both in the narrow sense of the cultivation of the field and the wider sense of comprising all activities in relation to the land including horticulture, forestry, breeding and rearing of livestock, dairying, butter and cheesemaking, husbandry etc.
It was urged on behalf of the assessee that the Court should accept the wider significance of the term and include forestry operations also within its connotation even though they did not involve tilling of the land, sowing of seeds, planting, or similar work on the land.
The argument was that tilling of the land, sowing of the seeds planting or similar work on the land were no doubt agricultural operations and if they were part of the forestry operations carried on by the assessee the subsequent operations would certainly be a, continuation of the same and would therefore acquire the characteristic of agricultural operations.
But the (1) Mad.
absence of these basic operations would not necessarily make any difference to the character of the subsequent operations and would not divest them of their character of agricultural operations, so that if in a particular case one found that the forest was of spontaneous growth, even so if forestry operations were carried on in such forests for the purpose of furthering the growth of forest trees, these operations would also enjoy the character of agricultural operations.
If breeding and rearing of live stock, dairying butter and cheese making etc., could be comprised within the term "agriculture", it was asked, why should these also be not classed as agricultural operations.
Considerable stress was laid on the fact that section 4(3)(viii) of the Act enacted a provision in regard to the exemption of "agricultural income" from assessment and it was contended that exemptions should be liberally construed.
Reliance was placed on the observations of Vishwanatha Sastri J. in Commissioner of Income tax, Madras vs K. E. Sundara Mudaliar (1): " Exemption from tax granted by a Statute should be given full scope and amplitude and should not be whittled down by importing limitations not inserted by the Legislature.
" Mookerjee J. in Commissioner of Agricultural Income tax, West Bengal vs Raja Jagadish Chandra Deo Dhabal Deb (2) also expressed himself similarly: " and the present day view seems to be that where an exemption is conferred by statute, that clause has to be interpreted liberally and in favour of the assessee but must always be without any violence to the language used.
The rule must be construed together with the exempting provisions, which must be regarded as paramount.
" He also quoted a passage from The Upper India Chamber of Commerce vs Commissioner of Income tax, C.P. & U.P. (3) : (1) , 271.
(3) ; A.I.R.1948 All.70 (2) , 438. 112 " It is needless to observe that, as in the present case, we are concerned with the interpretation of an exemption clause in a taxing statute, that clause must be, as far as possible, liberally construed and in favour of the assessee, provided no violence is done to the language used.
" It was also pointed out that " Taxes on agricultural income " formed a head of legislation specified in item 46 of List.
II of the Seventh Schedule to the Constitution and should be liberally construed, with the result that agriculture should be understood in the wider significance of the term and all agricultural income derived from agriculture or so understood should be included within the category.
There was authority for the proposition that the expression " agricultural land " mentioned in Entry 21 of List II of the Seventh Schedule to the Government of India Act, 1935, should be interpreted in its wider significance as including lands which are used or are capable of being used for raising any valuable plants or trees or for any other purpose of husbandry.
(see Sarojinidevi vs Shri Krishna Anjanneya Subrahmanyam (1) and Megh Raj vs Allah Rakhia (2).
While recognizing the force of the above expressions of opinion we cannot press them into service in favour of the assessee for the simple reason that "agricultural income " has been defined in the Constitution itself in article 366(1) to mean agricultural income as defined for the purposes of enactments relating to Indian incometax and there is a definition of " agricultural income " to be found in section 2(1) of the Indian Income tax Act.
We have therefore got to look to the terms of the definition itself and construe the same regardless of any other consideration, though, in so far as the terms " agriculture " and " agricultural purposes " are concerned, we feel free in view of the same not having been defined in the Act itself, to consider the various meanings which have been ascribed to the same in the legal and other dictionaries.
(1) I.L.R. (2) , 62. 113 We may also note here the dictionary meanings of the terms "Forestry" and "Cultivation." The Shorter Oxford Dictionary, Vol.1, page 735, gives the meaning of "forestry" as the "science and art of forming and cultivating forests, management of growing timber.
" Webster 's New International Dictionary, Vol. 1, page 990, gives the following meaning of forestry: " Science and art of farming, caring for, or cultivating forests; the management of growing timber.
" Webster 's New International Dictionary.
Vol. 1, page 643, while talking of cultivation says that "to cultivate" means "(i) to prepare, or to prepare and use, for the raising of crops; to till; as, to cultivate the soil; to loosen or break up the soil about (growing crop or plants) for the purpose of killing weeds, etc., especially with a cultivator, as to cultivate the corn; (2)to raise, or foster the growth of, by tillage or by labour and care; to produce by culture; as to cultivate roses; to cultivate oysters.
" Whether the narrower or the wider sense of the term agriculture" should be adopted in a particular case depends not only upon the provisions of the various statutes in which the same occurs but also upon the facts and circumstances of each case.
The definition of the term in one statute does not afford a guide to the construction of the same term in another statute and the sense in which the term has been understood in the several statutes does not necessarily throw any light on the manner in which the term should be understood generally.
The decided cases disclose a variety of opinions in regard to the connotation of the terms "agriculture" and "agricultural purposes.
" At one time "agriculture" was understood in its primary sense of cultivation of field and that too for production of food crops for human beings and beasts.
This limited interpretation could not be adhered to even though tilling of the land, sowing of the seeds, planting or similar work on the land were the basic operations, the scope of the crops produced was enlarged and all crops raised on the land, whether they be food crops or not were included in the produce raised by agriculture.
There was however another school of thought 15 114 which extended the term "agriculture" and included within its connotation not only the products raised by the cultivation of the land but also allied activities which had relation to the land and operations which had the effect of fostering the growth, preservation and maintenance as also the regeneration of the products of the land, thus bringing within its compass not only the basic agricultural operations but also the further operations performed on the products of the land even though they were not necessarily accompanied by these preliminary basic operations.
As against these cases which dealt with these preliminary basic operations and also the further operations either by themselves or in conjunction with the former which of course necessarily involved the expenditure of human skill and labour in carrying out those operations, there were instances of products of land which grew wild or were of spontaneous growth without the expenditure of human skill and labour and which it was agreed on all hands could not be comprised within "agriculture" and the income from which could not fall within the definition of "agricultural income".
We shall briefly discuss the various cases dealing with these different aspects and try to evolve some principle therefrom which would serve as a guide in the determination of the question before us.
Kunhaven Haji vs Mavan (1) was the earliest case in which it was held that a lease of a coffee garden was not an I agricultural lease within the meaning of Transfer of Property Act, section 117.
The case however concerned itself with the situation where as far as the Court could gather from the Karar the lease was of the coffee plants only.
There was no further discussion of the legal position and it may be noted that Shephard, J., who was a party to this decision stated in the later case of Murugesa Chetti vs Chinnathambi Gounden (2) that he was wrong in the opinion he expressed with regard to a coffee garden in this case.
Murugesa Chetti vs Chinnathambi Goundan (2) also was concerned with section 117 of the Transfer of Property Act.
The lease there was a lease of land for (1) Mad. 98.
(2) Mad.
421,423.
115 the cultivation of betel and the Court held that such a lease was an agricultural lease falling under section 117.
Bhashyam Ayyangar, J., who delivered the main judgment of the Court discussed the dictionary meanings of the term " agriculture " and stated that in section 117 of the Transfer of Property Act it was used in its more general sense as comprehending the raising of vegetables, fruits and other garden products as food for men or beast, though some of them may be regarded in England as products of horticulture as distinguished from agriculture.
The learned Judge considered the distinction between " agriculture " and " horticulture " and observed : " The distinction between agriculture when it is used otherwise than in its primary and more general sense and horticulture is a fine one even in England and in India, especially, it will be impossible in the case of several products of the land to draw a line between agriculture and horticulture according to English notions.
The only practical distinction which I can suggest and one which will give effect to the policy of the Legislature in exempting agricultural leases from the operations of section 107, etc., of the Transfer of Property Act is to regard as agriculture, as distinguished from horticulture, not only all field cultivation by tillage but also all garden cultivation for the purpose chiefly of procuring vegetables or fruits as food for man or beast and other products fit for human consumption by way of luxury, if not as an article of diet.
" He then discussed the policy of exemptions setting out the observations of Cave J. in Ellis & Co. vs Hilse(l): " The very object of this exemption is the wellknown one of favouring agriculture an old object of English Legislation in favour of a very important industry ", and stated: " This observation of Mr. Justice Cave will apply with much greater force in this country where the agricultural industry is more, important than in England and is one that is common to wet cultivation (1) 116 as to garden and dry cultivation, the object of all such cultivation being chiefly to procure food for men and cattle and other products of the soil which are usually consumed by the people as gentle stimulants or by way of luxury.
Betel leaf is an article of daily consumption with all classes in this country as tobacco leaf is with most classes and betel vine is generally grown side by side with plantations, the products of which are among the chief articles of vegetable food.
" The lease in that case being one for the cultivation of betel was therefore held to be agricultural lease and Shephard, J., agreed with this conclusion revising the opinion which he had expressed earlier in Kunhavan Haji vs Mavan (supra).
In Raja of Venkatagiri vs Ayyappa Reddy (1) the question was whether land usually fit only for pasturing cattle and not for cultivation, i.e., ploughing and raising agricultural crops, was "ryoti" land, though it might have been "old waste" and a tenant of such land was a "ryot" and any amount agreed to be paid for pasturing cattle was " rent " within the definitions of section 3 of the Madras Estates Land Act (Mad.
I of 1908).
The Court held that such land was not " ryoti " land inasmuch as it was not fit for ploughing and raising agricultural crops.
The ordinary meaning of " agriculture " was taken to be " the raising of annual or periodical grain crops through the operations of ploughing, sowing, etc." (Per Sadasiva Ayyar, J., at page 741).
The Chief Commissioner of Income Tax, Madras vs Zamindar of Singampatti (2) was a reference arising out of the assessment for income tax under Act VII of 1918 of the income derived by the Zamindar of Singampatti from forests and fisheries within the ambit of his Zamindari.
The assessee objected to the assessment (i) on the ground that the income was agricultural income within the meaning of section 4 of the Act and, therefore, not chargeable to income tax; (ii) that the (1) (1913) I.L.R. 38 Mad. 738.
(2) Mad, 5 18 (F.B.) 117 assessment was illegal as contravening the terms of his permanent sanad for the Zamindari and the provisions of Regulation XXV of 1802.
The Court held ' that where the peishkush of a permanently settled estate was fixed in commutation not only of the rentals of the cultivated lands but also of all income which might be derived from forests or fisheries, both under the terms of the sanad and section I of Regulation XXV of 1802, these incomes were exempt from further taxation by the Government, and section 3 of the Income tax Act did not abrogate this exemption.
In view of this conclusion the Court did not think it necessary to determine whether income from forests or fisheries came under the definition of " agricultural income.
" The Court, however, pointed out that " a reference to Murray 's and Webster 's dictionaries shows that the word "agriculture ", while sometimes used in the narrow sense of the art or science of cultivating the ground, is also used in a much wider sense so as to include even " forestry ", according to Webster.
In which sense it was used by the framers of the Income tax Act would be a matter for determination and to this end it would not be out of place to consider the probable reason for the exemption of agricultural income from income tax.
No other reason is suggested than the equity of exempting from further burden income which had already paid toll to the State in the shape of land revenue.
" The question, therefore, whether the income from forests would be " agricultural income " within the meaning of section 4 of the Income tax Act ' was thus left open and the decision that income from forests was not liable to income tax was reached under the terms of the Sanad of section I of Regulation No. 25 of 1802.
Kaju Mal vs Salig Ram(1) was concerned inter alia with a field in which tea was grown and the question was whether the land fell within the definition of Cc agricultural income " or " village immoveable property " as given in section 3(i) and (ii) of the Punjab Pre emption Act, 1905.
The Court held that fields planted with tea bushes were fields used for agricultural (1) (1919) P.R. NO.
118 purposes and this decision was affirmed by the Privy council in Kaju Mall vs Salig Ram(1).
It was held that the words " agricultural purposes " in section 2 (iii) of the Punjab Alienation of Land Act, 1900, included the cultivation of tea; consequently, land which was not occupied as the site of any building in a town or Village, and was occupied or let for the cultivation of tea was " agricultural land" within the meaning of section 3(i) of the Punjab Pre emption Act, 1905.
Emperor vs Probhat Chandra Barua (2) was a case under the Indian Income tax Act and the classes of income derived from permanently settled estates were "1.
Income from fisheries.
Income from land used for stacking timber.
Income from pasturage.
" The income from the first two heads was certainly not agricultural income or income derived from "land which is used for agricultural purposes" within the meaning of sections 2 and 4 of the Act.
But income derived from pasturage was held to be agricultural income which could not lawfully be charged with income tax.
There was a difference of opinion between Rankin, J., and Page, J., in regard to the liability of income from fisheries and income from land used for stacking timber based on the construction of the Permanent Settlement Regulations of 1793.
But that is immaterial for our present purposes.
What is material is that both the learned Judges were unanimous in their opinion that income from pasturage was income derived from "land which is used for agricultural purposes" and was, therefore, within the exemption given by a. 4(3)(viii) to agricultural income as defined by section 2(1)(a) of the Act.
In Kesho Prasad Singh vs Sheo Pragash Ojha (3) the Privy Council held that a grove was not land " held for agricultural purposes " within the meaning of section 70 of the Agra Tenancy Act, 1901, affirming the decision of the High Court of Allahabad that it was impossible to hold that that section had, any application whatever to such a property as the grove in fact was.
(1)(1923) I.L.R. (2)(1924) I.L.R. (3) All.
831. 119 The Commissioner of Income tax, Madras vs T. Manavedan Tirumalpad (1) was also a decision under the Indian Income tax Act (XI of 1922) and the assessee there was assessed by the Income Tax Officer for the year 1928 29 on the amount received by the sale of timber trees cut and removed from the forests.
The question was whether these amounts were liable as such to income tax and the Court observed derived from the sale of paddy which is grown on land and the income derived from the sale of timber cut in a forest; but the profits earned from the sale of paddy would be assessable to income tax but for the special exemption given to that income in the Incometax Act, by reason of its being agricultural income.
There is such exemption in the case of income derived from the sale of timber.
" There is no further discussion to be found in the judgment which would throw light on the question whether such receipts by the assessee were agricultural income and as such exempt from income tax.
The later decision of the Madras High Court in Chandrasekhara Bharathi Swamigal vs Duraisami Naidu (2) however contains an elaborate discussion as to the connotation of the term "agriculture ".
The case arose under the Madras Estates Land Act (Mad.
I of 1908) and the question which the Court had to consider was whether growing Casuarina trees, i.e., trees for fuel, was an agricultural purpose so as to make the person who held the land for that purpose a " ryot " within the meaning of the Madras Estates Land Act.
The Court held that land held for growing Casuarina trees was not land held for purposes of agriculture and the person holding the land for that purpose was not a " ryot " within the meaning of the Act.
While delivering the judgment of the Court Reilly, J., embarked upon a consideration of what the term " agriculture " meant and came to the conclusion that agriculture could not be defined by the nature of the product cultivated but should be defined rather by (1) Mad. 21 (S.B.) (2) Mad.
120 the circumstances in which the cultivation was carried on.
He observed at page 902: " I agree with the remark of Shephard, J., in Murugesa Chetti vs Chinnathambi Goundan(l) that a man who plants or maintains trees for firewood is not in ordinary parlance an agriculturist.
If we take the strict meaning of " agriculture " according to its derivation, it means the cultivation of a field, the cultivation of an open space, as opposed to horticulture, the cultivation of a comparatively small enclosed space.
The cultivation either of the field in agriculture or of the garden in horticulture cannot be confined, I think, to any particular product.
With great respect, I do not agree with the opinion of Bhashyam Ayyangar, J:, in Murugesa Chetti vs Chinnathambi Goundan(l) that agriculture implies production of things useful as food for men or beast or other products fit for human consumption by way of luxury.
That appears to me to be too narrow an interpretation.
Still less do I agree with the opinion expressed by Sadasiva Ayyar, J., in Raja of Venkatagiri vs Ayyappa Reddi that agriculture is confined to the production of grain crops.
I can see no reason why the cultivation in open spaces of such useful products as cotton, jute, flax and hemp should not be agriculture.
Indeed I think agriculture cannot be defined by the nature of the products cultivated but should be defined rather by the circumstances in which the cultivation is carried on.
In some cases it has been suggested that agriculture is confined to tillage.
I think it can easily be shown that agriculture was carried on in this world before ploughs were invented.
In the present day in many places cultivation is done with spades and not with ploughs, but the planting of timber or firewood trees, which are to stand on the land for a considerable number of years, forming plantations or woods or forests, appears to me to be opposed to the idea of agriculture, the cultivation of an open space.
It is true that for the purpose of growing trees in a plantation it may be necessary first to prepare the land.
(1) Mad.
42I, 423.
(2) (1913) I.L.R. 38 Mad.
121 Later on it may be necessary to protect and water the young plants.
Still later it may be necessary to thin out the plantation.
But, when the land is covered with trees which had to stand on it for a number of years, sometimes as long as a century, during most of which period the land itself is untouched, to describe that as agriculture appears to me inappropriate.
To my mind it is something very different from the cultivation of a field or of an open space.
It may be noticed that in Kesho Prasad Singh vs Sheo Pragash Ojha (1) their Lordships of the Privy Council approved of the opinion expressed by two learned judges of the Allahabad High Court that land let for a grove was not let for an agricultural purpose.
It happened that the case then under consideration was one arising under the Agra Tenancy Act.
But in that Act there is no definition of 'agriculture '.
Therefore both the learned judges of the Allahabad High Court and their Lordships of the Privy Council were, we may take it, considering what is the meaning of the word I agriculture ' in its general sense.
I may mention also that in Commissioner of Income Tax vs Manavedan Tirumalpad (2) a Full Bench of this Court remarked that income from cutting timber was not agricultural income.
" It may be noticed that the learned Judge enlarged the connotation of the term "agriculture " by having regard to the circumstances in which the cultivation was carried on rather than the nature of the products cultivated and embraced within the scope of the term not merely the production of things useful as food for man or beast or other products fit for human consumption by way of luxury but also such useful products as cotton, jute, flax and hemp, though he stopped short at those products and hesitated to include therein growing of trees in plantation where the land was covered with trees which have to stand on it for a number of years.
The last case to be referred in this series is that of Deen Mohammad Mian vs Hulas Narain Singh(2) (1)(1924) I.L.R. 46 All.
(2) , 152.
16 122 where it was held that an orchard is an agricultural land.
It was observed: it The case of an orchard is quite different.
Orchard trees ordinarily are, and can be presumed to have been, planted by men after preparation of the ground which is cultivation and seasonal crops are gathered.
Fruit trees also require seasonal attention such as pruning and digging of the soil around the roots and it cannot be said that this ceases to be cultivation merely because the whole tree is not replanted every year. . .
In my opinion the land in suit is agricultural land; it is land from which by preparing the soil and planting and cultivating trees the raiyat expects to enjoy periodical returns in the way of produce for food.
" This was a further extension of the idea which had 'germinated in the opinion expressed by Reilly, J., in Chandrasekhara Bharathi Swamigal vs C. P. Duraisami Naidu(1) and even plantation of trees in orchards which did not require to be replanted every year was included in the connotation of the term "agriculture".
A still further extension of the term is to be found in the following observations of Vishwanatha Sastri, J., in The Commissioner of Income tax, Madras vs K. E. Sundara Mudaliar (2) at p. 273: " It is a matter of ordinary experience, at least in this part of the country, that mango, cocoanut, palmyra, orange, jack, arecanut, tamarind and other trees are planted usually in an enclosed land, and that these trees do not yield any fruit or crop in the early years of their growth.
They remain on the land for a long number of years yielding fruit only after their maturity.
There is no reason why the planting, rearing, watering, fencing and protection of such trees and the gathering of their fruits during the annual seasons should not be held to be "agriculture".
There is some kind of cultivation or prodding of the soil at the inception when the planting is done and subsequently also at intervals.
In the. case of coffee grown on hill slopes, there is no ploughing or tillage as in the (1) Mad.
(2) , 271.
123 case of wet and dry fields; but it cannot be maintained that growing coffee is not an agricultural operation.
Coffee and tea plants stand on the soil for many years, and their produce is gathered periodically.
In the padugai lands or lands lying between the sandy bed and flood bank of rivers, plantains are grown in many places in deltaic tracts.
Young plants are often brought and planted in pits dug for the purpose in a row with sufficient interspaces.
Trenches are dug by the side of a row of plantain trees in order to catch and detain water.
The plantain trees last for about two years, and from each tree off shoots spring up and grow in place of the parent tree.
There is thus a natural replenishment of the plantain garden.
It cannot be said that the raising of plantains is not an agricultural purpose.
Similarly in the case of sugarcane the plants stand on the land for two years or a little more, and there are usually two cuttings.
Castor plants stand for some years on the soil and the seeds are periodically gathered in.
Bamboo is often planted in enclosed lands by digging pits, filling them with sand and manure and then planting the young stalks in a bunch at suitable distances.
Watering is done for the first 2 or 3 years.
Every year, the land surrounding each bamboo cluster is dug with a spade and small earthen ridges are put up so as to catch and retain rain water.
Bamboo plants attain maturity in about 3 or 4 years, and the thorny branches which grow on the main stem are then fit to be cut off and used for fencing purposes. . . . .
I am unable to see why these operations are not agricultural operations.
" The cases above noted all of them interpret the term "agriculture" in its narrower sense, though there is a marked progress from the extremely narrow construction put upon it by Bhashyam Ayyangar J. in Murugesa Chetti vs Chinnathambi Goundan(1) to the somewhat wider connotation thereof adopted by Reilly J. in Chandrasekhara Bharathi Swamigal vs C.P. Duraisami Naidu (2) and by Vishwanatha, Sastri J. in The Commissioner of Income tax, Madras vs K. E. Sundara (1) Mad.
421, 423.
(2) Mad.
124 Mudaliar(1) It is interesting to note that all throughout these cases runs the central idea of either tillage of the land or sowing of seeds or planting or similar work on the land which invests the operation with the characteristic of agricultural operations and whenever that central idea is fulfilled there is the user of land for agricultural purposes and the income derived therefrom becomes agricultural income.
There were, on the other hand, decisions which interpreted the term "agriculture" in the wider sense as including all activities in relation to the land, even though they did not comprise these basic agricultural operations.
King Emperor vs Alexander Allen(2) involved the interpretation of the expression "land used solely for agricultural purposes" in sub section
(3) of section 63 of the Madras District Municipalities Act (Mad. IV of 1884) as amended by the Madras District Municipalities Amendment Act (Mad. III of 1897) and the Court held that the lands on which potatoes, grain, vegetables, etc., were grown, as well as pasture land, were used solely for agricultural purposes " within the meaning of the sub section.
The Court adopted the definition of agricultural land given in the Agricultural Rates Act (59 and 60 Vict., Chap.
16) section 9: " The expression " agricultural land " means any land used as arable, meadow, or pasture ground only, cottage gardens exceeding one quarter of an acre, market gardens, nursery grounds, orchards, or allotments, but does not include land occupied together with a house as a park, gardens other than as aforesaid, pleasure grounds or any land kept or preserved mainly or exclusively for purposes of sport or recreation or land used as a race course." and also the meaning ascribed to it in Murray 's Oxford English Dictionary quoted above and observed: " We also note that it is there pointed out that the restriction of the word agriculture to tillage, as in the following quotation, is rare.
The lands were not fields for agriculture but pastures for cattle.
We believe that we cannot do better than follow these definitions in (1) , 271.
(2) Mad.
627, 629,630.
125 attempting to decide what, for the purposes of subsection (3) of section 63 of the Municipalities Act, are or are not lands used solely for agricultural purposes . .
We do not consider that any distinction can be drawn between large and small plots of lands on which roots of grain are cultivated.
All such land must be held to be land used solely for agricultural purposes Counsel has urged before us that these so called waste lands are pasture lands and as such should be held to be lands used solely for agricultural purposes If, therefore, it could be shown that these so called waste lands were in reality pasture grounds or lands used for "rearing livestock", we should certainly decide that they were lands used solely for agricultural purposes.
" The learned Judges there were influenced by the dictionary meaning of the term agriculture as given in Murray 's New Oxford Dictionary and understood the term agriculture in the widen sense as including the user of land for rearing live stock also.
In Panadai Pathan vs Ramaswami Chetti(1) a lease of land was given for growing casuarina trees and the question was whether such a lease was a lease for agricultural purposes within the meaning of section 117 of the Transfer of Property Act.
The Court held that it was a lease for agricultural purposes and therefore did not require a registered instrument for its creation.
Spence J. in the course of his judgment differed from the opinion of Bhashyam Ayyangar, J., in Murugesa Chetti vs Chinnathambi Goundan (2) that the word agriculture in its more general sense comprehends the raising of vegetables, fruits and other garden products as food for man or beast, if the learned Judge intended thereby to limit it to the raising of food products.
For to so restrict the word would be to exclude flower, indigo, cotton, jute, flax, tobacco and other such cultivation.
He also differed from the opinion expressed by Sadasiva Ayyar J. in Seshayya vs Rajah of (1) Mad. 710.
(2) Mad.
42I, 423.
126 Pittapur (1) and Rajah of Venkatagiri vs Ayyappa Reddi (2) that agriculture meant the raising of annual or periodical grain crops through the operation of ploughing, sowing, etc., as such definition would exclude sugar cane, indigo, tea, flower, tobacco, and betel cultivation from agriculture.
He then referred to the dictionary meaning of the term "agriculture" as given in the Oxford Dictionary and the Bouvier 's Law Dictionary set out above and observed: " In my opinion agriculture connotes the raising of useful or valuable products which derive nutriment from the soil with the aid of human skill and labour; and thus it will include horticulture, arboriculture and silviculture, in all cases where growth of trees is effected by the expenditure of human care and attention in such operations as those of ploughing, sowing, planting, pruning, manuring, watering, protecting etc.
" Ramesam, J., who delivered a concurring judgment referred to the definition of agriculture adopted in Wharton 's Law Lexicon and was of opinion that it would include the use of land as " meadow or pasture or orchard or osier or woodland, or for market gardens, nursery grounds or allotments etc." but would exclude all cultivation of fibrous plants such as cotton, jute and linen and all plants used for dyeing purposes, such as indigo etc., and all timber trees and flowering plants etc.
According to him, the rearing of a Casuarina plantation requires some preparation of the ground and subsequent care by watering the plants and he was therefore of Opinion that rearing of Casuarina trees was an agricultural purpose within the meaning of section 117 of the Transfer of Property Act.
It may be observed however that according to both the learned Judges some preparation of the ground or some expenditure of human care and attention in such operations as those of ploughing, sowing, planting etc., was considered essential for constituting these operations agricultural operations.
In Commissioner of Income tax, Burma vs Kokine Dairy, Rangoon(3) the question was whether income (1) (1916) 31 M.L.J. 284; 1916 M.W.N. 396.
(3) , 509.
(2) Mad.
738. 127 from a dairy farm and the milk derived from the farm is agricultural income and exempt as such from incometax.
Roberts C.J. who delivered the opinion ' of the Court observed: "Where cattle are wholly stall fed and not pastured upon the land at all, doubtless it is trade and no agricultural operation is being carried on; where cattle are being exclusively or mainly pastured and are none the less fed with small amounts of oil cake or the like, it may well be that the income derived from the sale of their milk is agricultural income.
But between the two extremes there must be a number of varying degrees, and the task of the Income tax Officer is to apply his mind to the two distinctions and to decide in any particular case on which side of the fence, if I may use the term, the matter falls.
" He then referred to the case of Lean and Dickinson vs Ball (1) where Lord Cullen had said that he proceeded on the footing that the case, which was one dealing with poultry farming, was one in which poultry derived sustenance to a material extent from the produce of the ground.
This method of approach was on a par with the one adopted by Lord Wright in Lord Glanely vs Wightman(2) where it was observed: " If authority were needed, the provisions just quoted do at least show that profits of occupation ' include gains from the animal produce as well as the agricultural, horticultural, or arboricultural produce of the soil;. . . . equally it is obvious that the rearing of animals, regarded as they must be as products of the soil since it is from the soil that they draw their sustenance and on the soil that they liveis a source of profit from the occupation of land, whether these animals are for consumption as food (such as bullocks, pigs or chickens), or for the provision of food (such as cows, goats or fowls), or for recreation (such as hunters or race horses), or for use (such as draught or plough horses).
All these animals are appurtenant to the soil, in the relevant sense for this purpose, as much as trees, wheat crops, flowers or roots though no doubt they differ in obvious respects.
Nor (1) 128 is it now material towards determining what are products of occupation that farming has developed in its use of mechanical appliances and power, not only in such matters as ploughing, reaping, threshing, and so forth, but in such ' ancient methods of preparing its products as making cream, butter or cheese.
The farmer is still dealing with the products of the soil, and Schedule B covers the income.
" The House of Lords were dealing with the profits of occupation of land not with income derived from user of land for agricultural purposes and therefore not restricted in their interpretation of the term " occupation " and all these activities which were described therein might as well have been comprised within the scope of the taxing statutes.
What we have, however, to see is whether these activities fall within the connotation of the terms " agriculture " and " agricultural purpose " which are the only terms to be considered for bringing the income derived therefrom within the definition of agricultural income in section 2 (1) (a) of the Indian Income tax Act.
In Moolji Sicka & Co., In re(1) Derbyshire C.J. understood the term ,agriculture" in a wider sense as including operations not only on the land itself but on the shrubs which grew on the soil and were according to him a part of the soil.
The assessees were manufacturers of biri, a kind of cigarette consisting of tobacco wrapped in tendu leaves.
The tendu plant was of entirely wild growth and propagated itself without human agency in jungle and waste lands.
The assessees had taken several villages on " lease " for plucking the leaves of such plants and the work done by the assessees consisted in pruning the trees and burning the dead branches and dried leaves lying on the ground.
The Court held that the profits accruing to the assessees by the sale of tendu leaves was not exempt as agricultural income but to the extent to which pruning of the tendu shrub occurred, there was in a technical and legal sense a cultivation of the soil (1) 129 in which the shrub grew and therefore so much of the income as was shown by the.
assessee to be profit derived from the collection and preparation, so as to make them fit to be taken to the market, of tendu leaves produced by the pruning of the tendu shrubs was exempt as agricultural income under section 2 (1) and section 4 (3) (viii) of the Indian Income tax Act.
The learned Chief Justice observed: " Cutting back or pruning the wild tendu clearly contributes to the growth of the leaves in that shrub and I am prepared to hold that the pruning of the shrub is a cultivation of the shrub and as the shrub grows in the soil and as a part of it, is a cultivation of the soil in a legal and technical sense." The word cultivation was here understood by the learned Chief Justice not only in the sense of cultivation of the soil but in the sense of cultivation of the tendu shrubs which grew on the soil and were therefore a part of it.
The operations which were performed on the shrubs were certainly not operations performed on the soil itself and the opinion expressed by the learned Chief Justice has certainly given an extended meaning to the term cultivation and used with reference to the soil.
It is significant however to observe that cultivation of the soil was considered an essential ingredient which rendered the income derived from the tendu leaves agricultural income within the meaning of its definition in section 2(1)(a) of the Act.
Commissioner of Income Tax, Madras vs K. E. Sundara Mudaliar (1) contains a further extension of this idea where Vishwanatha Sastri J. observed at p. 274: " Pasture land used for the feeding and rearing of livestock is land used for agricultural purposes: Emperor vs Alexander Allen (2) .
Rearing of livestock such as cows, buffaloes, sheep and poultry is included in "husbandry".
These animals are considered to be the products of the soil, just like crops, roots, flowers and trees, for they live on the land and derive their sustenance from the soil and its produce: Glanely vs Wightman(3) ; Commissioner of Income tax, Burma vs (1) , 27I. (3) ; 638.
(2) Mad.
627, 629, 630.
17 130 Kokine Dairy Co. (1) It is therefore not legitimate, in my opinion, to confine the word "agriculture" to the cultivation of an open field with annual or periodical crops like wheat, rice, ragi, cotton, tobacco, jute, etc.
Casuarina is usually raised on dry lands of poor quality, and it is usual to find the same land used alternatively "for the cultivation of ordinary cereal crops like ground nut, gingelly, cholam, kambu, etc., and for the raising of Casuarina plantations.
The land bears the dry assessment whatever be the nature of the crop raised.
" This enlarged connotation of the term "agriculture" has been tinged by the dictionary meanings ascribed to it in Murray 's Oxford Dictionary and the Webster 's Dictionary quoted above which understood the term as including the allied pursuits of rearing, feeding and management of live stock and also including husbandry, farming horticulture, etc., in the widest sense, as also butter, cheese making etc.
We shall have to consider at the appropriate stage as to how far such enlargement is warranted, by the definition of " agri cultural income " as given in section 2 (1) (a) of the Indian Income tax Act.
The cases above noted all of them involve some expenditure of human skill and labour either on the land or the produce of the land, for without such expenditure there would be no question of the income derived from such land being agricultural income.
Where, however, the products of the land are of wild, or spontaneous growth involving no expenditure of human labour and skill there is unanimity of opinion that no agricultural operations were at all involved and there is no agricultural income.
In such cases, it would be the absence of any such operations rather than the performance thereof which would be the prime cause of growth of such products.
The cases bearing on this aspect of the question may be noted.
Kaju Mal & others vs Salig Ram (2) is the earliest case where a stretch of natural forest came in for consideration.
It was a forest land and it was held to (1) , 509.
(2) (1919) P.R. No. 131 be agricultural land or land used for purposes subservient to agriculture or for pasture, and therefore exempt from pre emption under section 4 of the Punjab Premption Act, 1905.
There was no discussion of any legal principles in that decision but when we come to the next case of Province of Bihar vs Maharaja Pratap Udai Nath Sahi Deo(l) which was a case under the Bihar Agricultural Income Tax Act (Bihar VII of 1938), we find the ratio of these decisions laid down in clear terms.
The assessees there derived their income from " Bankar " and " Palkar ".
" Bankar " was income derived from the sale of wood from virgin jungles or jungles not actually cultivated; and "Phalkar" was income derived from the fruits of wild jungle trees and bushes.
The question was whether this income was agricultural income within the meaning of the term as defined in the Act.
Harries C.J. who delivered the judgment of the Court observed: "Bankar" : It appears that this head of income was derived from virgin jungles or jungle land not actually cultivated.
A few forest guards appear to have been employed to protect the property, but it cannot be said that the trees have grown as the result of cultivation.
They appear to have grown naturally in the jungles without the intervention of the human agency, and in my view the growth of these trees cannot be said to result from the cultivation of the soil.
In fact, it was the absence of cultivation that permitted the area to develop into a jungle. . . . " " Phalkar ": This is income derived from wild jungle fruits, and it cannot be said that the fruit gathered is the result of the cultivation, but, on the contrary, it is the result of the absence of cultivation.
Trees and bushes yielding these fruits grow not on cultivated soil but on the land not under cultivation and frequently the more neglected and wild the land is the thicker grow these wild bushes and trees yielding such crop.
Practically in all cases the crop is the result of want of cultivation and not the result of cultivation.
(1) [194I] , 328. 132 In my judgment it is not established that the income described as phalkar in these cases is income derived from land used for agriculture or from agriculture and is, therefore, not assessable to agricultural income tax.
" In Raja Mustafa Ali Khan vs Commissioner of Income Tax, U. P. & C. P. (1) which went up to the Privy Council, the Oudh Chief Court held that income from the sale of forest trees growing on land naturally and without the intervention of human agency, even if the land was assessed to land revenue, was not agricultural income within the meaning of section 2(1)(a) of the Income tax Act.
The Court followed an earlier decision given by it in the case of Maharaja of Kapurthala vs Commissioner of Income Tax C. P. & U. P. (2) in which the court had discussed the meaning to be ascribed to the term "agriculture" and observed at page 93: "A fiscal statute should no doubt be construed strictly, and, if there be any doubt about its construction, the subject must be given the benefit.
But we do not feel any doubt that the expression "land used for agricultural purposes" in the Income tax Act does not extend to forests of spontaneous growth, where nothing is done to prepare the soil for trees to be planted therein, and where the growth of the trees is not fostered by tillage.
We should not be justified in giving the taxpayer the benefit of the dictionary definition when it is not disputed that the meaning of the term " agricultural" cannot be extended for the purpose of the Income tax Act to all the secondary implications therein suggested.
We therefore construe the term in its primary sense.
We accordingly hold that income from the sale of forest trees of spontaneous growth growing on land which is assessed to land revenue is not agricultural income within the meaning of section 2(1)(a) of the Income Tax Act.
" Yuvarajah of Pithapuram & Anr.
V. Commissioner of Income Tax, Madras(3)was also a case where the (1) (2)[1945] ,93.
(3)[1946] ,99.
133 assessee derived income from forests of spontaneous growth by the sale of wood, bark, leaves, other usufruct of trees, minor forest produce and licence fees and from trees that had grown wild in non forest areas.
The Zamindari of Pithapuram was a permanently settled estate under the Permanent Settlement Regulation (Regulation XXV of 1802) and it was contended that the imposition of income tax in respect of income other than agricultural income derived from a permanently settled estate would not be a breach of Regulation XXV of 1802 relating to permanent settlement.
Reliance was placed in support of this position on the decision in Chief Commissioner of Income Tax vs Zamindar of Singampatti (1).
It was, however, held that the case was impliedly overruled by the decision of the Privy Council in Probat Chandra Barua vs King Emperor (2) and the Court proceeded to consider whether income derived from forests of spontaneous growth by the sale of wood, bark, leaves, other usufruct of trees, minor forest produce and licence fees and from trees which have grown wild in nonforest areas was agricultural income within the meaning of section 2(1) of the Indian Income tax Act.
The Court observed : "There is ample authority for holding that income derived from trees which have grown wild is not agricultural income but without the aid of authority, we should have no hesitation in saying that to describe it as such would involve a distortion of the meaning of the word agriculture '.
and such income was accordingly held to be not agricultural income within the meaning of section 2 (1) of the Act.
(It may be noted that the appellant preferred an appeal to the Privy Council against this decision but the same was dismissed vide Yuvarajah of Pithapuram & Anr.
vs Commr.
of Income Tax, Madras (3) Benoy Ratan Banerji vs Commissioner of Income Tax, U.P., C.P. & Berar (4) was another case in which the assessee derived income from the sale of timber from (1) Mad. 518 (F.B.).
(2) (1930) L.R. 57 I.A. 228.
(3) (4) 134 the Zamindari on which there had been for many years, a number of forest trees, khar and wild plants.
There was no evidence on the record to show that the growth of the trees in question was the result of any actual culivation by the assessee at all.
The various trees which he sold were of spontaneous growth, not having grown as a result of actual cultivation.
The Court held that in order to come within the definition of " agricultural income ", the income had not only to be derived from land which was used for "agricultural purposes" but such income had also to be derived by the process of " agriculture ".
The Court observed that being trees of spontaneous growth, to the pro duction of which the assessee had made no contribution by way of cultivation, no question could arise either of the land on which they grew being "used for agricultural purposes" or of the trees themselves and the income they produced being the result of "agriculture." The Court accordingly held that the income from the sale of forest trees of spontaneous growth, growing on land naturally and without the intervention of human agency, was not agricultural income within the meaning of section 2(1)(a) of the Income Tax Act even if such land was subject to a local rate assessed and collected by officers of the Crown as such and such income was not exempt from income tax under section 4(3) (viii) of the Act.
A decision of the Nagpur High Court in Beohar Singh Raghubir Singh vs Commissioner of Income Tax, U.P., C.P., and Berar (1) (delivered on September 4, 1946, but reported in 1948) may be noted here.
There also the income in question was derived by the assessee from the sale of forest produce such as timber, tendu leaves, mohua flowers, harranuts etc., derived from a forest which was not a cultivated one but was of spontaneous growth.
The question was whether such income was agricultural income and as such exempt from taxation under section 4(3)(viii) of the Indian Incometax Act.
The Court considered the dictionary meanings of the term "agriculture" which included forestry within its compass but observed that the essence of (1) 135 agriculture even when it was extended to include "forestry", was the application of human skill and labour; without that it could neither be an art nor a science and that was according to them the determining factor in such class of cases.
The Court then referred to the various decisions referred to above and cited with approval the following passage from the Judgment of the Federal Court in Meghraj vs Allah Rakhia (1).
"Their Lordships confirmed a decision of the Punjab Chief Court to the effect that land used as a tea garden was used for "agricultural purposes." In the judgment of the Chief Court (which was generally approved by their Lordships) it was observed that the term "agricultural land" is used in the Act of 1905 in its widest sense to denote all land which is tilled. . .
The, Chief Court had held that land covered by a natural forest was not agricultural land, and this view also would seem to have been confirmed by the Judicial Committee," and they further proceeded to observe " We have underlined the word "tilled" because, in our opinion, that brings out the distinction which we have sought to draw between an agricultural and a non agricultural purpose.
The decisions referred to are Kaju Mal vs Saligram and Kajumal vs Saligram (2)".
The Court came to the conclusion that it was essential that the income should be derived from some activity which necessitated the employment of human skill and labour and which was not merely a product of man 's neglect or inaction except for the gathering in of the spoils.
Not only must the assessee labour to reap the harvest, but he must also labour to produce it and they accordingly held that the income in question was not agricultural income and was not exempt from taxation under section 4(3)(viii) of the Indian Income tax Act.
We now come to the decision of the Privy Council in Raja Mustafa Ali Khan vs Commissioner of (1) ,62.
(2) [1919] P. R. No. and Lah.
136 Income tax, U. P. Ajmer and Ajmer Merwara (1).
It will be recalled that the Oudh Chief Court had in Raja Mustafa Ali Khan vs Commissioner of Income Tax, U. P. & C. P. (2) decided that income from the sale of forest trees growing on land naturally and without the intervention of human agency even if the land was "assessed to land revenue was not agricultural income within the meaning of section 2(1)(a) of the Indian Income tax Act.
The appellant took an appeal to the Privy Council against this decision and the main question for consideration before their Lordships was whether the land was 'used for agricultural purposes and the income derived therefrom was agricultural income.
Their Lordships of the Privy Council observed that the income in question " was derived from the sale of trees described as forest trees growing on land naturally and the case has throughout proceeded upon the footing that there was nothing to show that the assessee was carrying on any regular operations in forestry and that the jungle from which trees had been cut and sold was a spontaneous growth.
Upon those facts the question is whether such income is (within section 2(1)(a) of the Act) rent or revenue. . or alternatively. . whether such income was, within section 2(1)(b), income derived from such land by agriculture.
It appears to their Lordships that, whether exemption is sought under section 2(1)(a) or section 2(1)(b), the primary condition must be satisfied that the land in question is used for agricultural purposes; the expression " such land" in (b).
refers back to the land mentioned in (a) and must have the same quality.
It is not then necessary to consider any other difficulty which may stand in the way of the assessee.
His case fails if he does not prove that the land is "used for agricultural purposes.
" Upon this point their Lordships concur in the views which have been expressed not only in the Chief Court of Oudh but in the High Court of Madras (see Yuvarajah of Pithapuram vs (1) (2) 137 Commissioner of Income Tax, Madras (1), and the High Court of Allahabad (see Benoy Ratan Banerji vs Commissioner of Income Tax, U.P., C.P. & Berar(2) and elsewhere in India.
The question seems not yet to have been decided whether land can be said to be used for agricultural purposes within the section, if it has been planted with trees and cultivated in the regular course of arboriculture, and upon this question their Lordships express no opinion.
It is sufficient for the purpose of the present appeal to say (1) that in their opinion no assistance is to be got from the meaning ascribed to the word "agriculture" in other statutes and (2) that, though it must always be difficult to draw the line, yet, unless there is some measure of cultivation of the land, some expenditure of skill and labour upon it, it cannot be said to be used for agricultural purposes within the meaning of the Indian Income tax Act.
In the present case their Lordships agree with the High Court in thinking that there is no evidence which would justify the conclusion that this condition is satisfied.
" It may be noted that the Privy Council also proceeded upon the footing that there was nothing to show that the assessee was carrying on any regular operations in forestry and these observations are patient of argument that if any regular operations in forestry had been carried on the land they might have made a difference to the result.
Their Lordships also did not express any opinion on the question whether land can be said to be used for agricultural purposes within the section if it has been planted with trees and cultivated in the regular course of arboriculture.
They were, however, definite in their opinion that unless there is some measure of cultivation of the land, some expenditure of skill and labour upon it, the land cannot be said to be used for agricultural purposes within the meaning of the Act.
Agricultural operations are thus defined by them to be operations where there was some measure of cultivation of the land, some expenditure of skill and labour upon it.
If these conditions were satisfied in regard to any particular land, then (1) , 99.
(2) , 18 138 such land can be said to be used for agricultural purposes and the income derived therefrom constitute agricultural income within the meaning of section 2(1)(a) of the Act.
The term "agriculture" for the purposes of the Indian Income Tax Act was thus in effect defined by their Lordships to mean some measure of cultivation of the land and some expenditure of skill and labour upon it and unless the operations, whether they be agricultural operations or forestry operations conformed with those definitions, they could not be styled agricultural operations so as to constitute land on which they were performed land used for agricultural purposes.
One should have thought that this decision of the Privy Council would put an end to all controversies with regard to the connotation of the term " agriculture " and " agricultural purposes ".
That was, however, not to be.
The words used by their Lordships in their judgment were cryptic and the controversy arose immediately thereafter as to whether " some measure of cultivation of the land" and "some expenditure of skill and labour upon it" were used by them as cumulative or in the alternative.
Considerable ingenuity was exercised in determining what were regular operations in forestry and whether they could be assimilated to agricultural operations which could have the effect of constituting the land upon which they were performed land used for agricultural purposes within the meaning of the Indian Income tax Act so that income derived therefrom could fall within the definition of agricultural income" contained therein.
The first case which came up for consideration after the above decision of the Privy Council was the case of Commissioner of Agricultural Income Tax, West Bengal vs Raja Jagadish Chandra Deo Dhabal Deb (1) before the Calcutta High Court.
The assessee was the Zamindar of Chilkigarh in the district of Midnapore the western part of which contained jungle mahal.
The income in question was derived from the sale of Sal trees which grew in the forest.
The forest was not an uncared for virgin forest.
The assessee maintained a staff of one forester, 6 guards and 24 Chaukas to look after the (1) , 438.
139 forest and for the proper cultivation of the same.
The Sal trees were generally sold off in blocks when about 15 years old.
Annually blocks of about 1,000 acres were sold up.
All the trees in the blocks sold up were cut down by the purchasers for sale as fuel and house posts.
During the rainy season from the stumps of the trees cut down, new shoots come out which grew into mature trees in 15 years, to be cut down again.
In order to prevent damage to the young shoots in the early stages of their growth the areas cut down were closely guarded for one year at least from the time when the block in question had been completely denuded of trees, in order to keep cattle and men off from the lands so that they may not damage the young growing shoots.
In order to promote the growth of shoots, the ground was also kept free from undergrowth jungle.
This was not cleared at the assessee 's expense but the villagers were allowed to clear the grounds of the undergrowth and take the same away free of cost.
The existing Sal trees in the forests and the Sal trees which had been sold off in 1350 B.S. had been grown in the same manner as described above.
From the above facts it was clear that human care and skill had been utilised for promoting the growth of the Sal trees from which the income was derived in 1350 B.S.
The Court discussed the dictionary meaning of the term " agriculture " and following the decision of the Privy Council in Raja Mustafa Ali Khan vs Commissioner of Income Tax U.P., Ajmer & Ajmer Merwara(l) came to the conclusion that income from a virgin forest or forests of spontaneous growth was not agricultural income.
The view that the tilling of the soil was the sine qua non for bringing a pursuit within the term agriculture was also held to have been exploded and it was observed at p. 440: " Whether a particular forest is one of spontaneous growth or not has to be decided on one important consideration as indicated by the Judicial Committee in that decision i.e., whether there has been I some expenditure of skill and labour upon it '." (1) [1948] 16 1.L.R. 330.
140 Reliance was placed upon the further observations of the Privy Council that, whether there were " any regular operations in forestry " would be a material fact for consideration and it was observed: " To put it in another form, the introduction of human agency and the application of human efforts would be the criteria for consideration" and after discussing several cases on the subject the Court observed at p. 441 : " On a careful analysis of the reasons given by the learned Judges in the various decisions referred to above it will be apparent that the facts of each particular case must be considered for determining whether there has or has not been sufficient application of human efforts before it can be determined whether the income from a particular forest is agricultural or otherwise.
" On the findings of fact recorded by the Tribunal in the case before them the Court was of opinion that the forest in question was not either a virgin forest or containing trees which grew spontaneously and naturally without any human intervention whatever.
The circumstance that there was felling of the trees, the new shoots appearing during the rainy season without any human intervention, guarding of the new shoots from either being trampled under foot or being browsed by animals and the removal of undergrowth of fallen leaves were considered regular operations in forestry in the forests in question which required the application of human efforts sufficient to include them under the head agricultural income.
It was further observed : " If the view of the Judicial Committee were to exclude all kinds of income from the category of agricultural income unless there was actual cultivation of the soil, reference to "regular operations of forestry" would have been unnecessary.
Not that there must always be " some measure of cultivation of the land " and " some expenditure of skill and labour upon it " but that the proof of either would be sufficient to bring the case within either clause (a) or (b) of section 2(1) of 141 the Act.
" Regular operations in forestry " do require expenditure of skill and labour upon the land on which the forest grows. " The Court, therefore, came to the conclusion that in the special circumstances as disclosed in the case, there were regular operations in forestry and the income, derived from forests in question was agricultural income within the meaning of section 2 (1) (a) of the Bengal Agricultural Income tax Act, 1944.
Jyotirindra Narayan Sinha Choudhury vs The State of Assam (1) arose under the Assam Agricultural Income tax Act, 1939 and the question for the consideration of the Court was whether the amounts realised by the assessee from the sale of Sal tree, , growing in the forest was agricultural income within the meaning of section 2 (1) of the Act.
There was no evidence to show that these Sal trees were of spontaneous growth.
Even though the possibility of the forests originally having been of spontaneous growth was recognised, it was an admitted fact that forest trees were protected and fostered in growth by the application of human labour and skill.
In these forests, operations ' in forestry such as clearing jungles, creepers and climbers, thinning by removal of less healthy trees from thickly grown areas, removal of unsound, crooked and diseased trees, burning of leaves to fertilise the ground, cutting of trees at special heights, reservation of blocks by turns and their operation in cyclic order, preservation of mother trees for the spread of seed, protection of forests from fire, etc., were regularly carried on and regular operations were thus being undertaken for their growth, preservation and regeneration.
The Court held that as extensive operations in forestry were employed in the forest of Sal trees, the income from the sale of such trees would be agricultural income as defined in the Assam Agricultural Income tax Act.
In arriving at this conclusion, the Court relying on the various dictionary meanings of the term "agriculture " observed at p. 390: (1) 142 " in spite of the diversity as to the scope and purpose of agriculture as revealed by the different definitions, there is one feature which is essentially common to all of these.
This is the application of human skill and labour without which there can be no agriculture.
" The Court then referred to the decision of the Privy Council in Raja Mustafa Ali Khan vs Commissioner of Income Tax(1) and after quoting the passage from the judgment above referred to proceeded to observe : " Their Lordships have not laid down that some measure of cultivation is absolutely necessary before it can be said that land is used for agricultural purposes.
In fact " some measure of cultivation " is placed on a par with " some expenditure of skill and labour ".
If either of the two conditions exists, the land could be said as being used for agricultural purposes.
Tillage or actual cultivation would not in their view be an essential pre requisite of " agriculture " in its wider implication.
" After referring to a decision of the Calcutta High Court in Hedayat Ali vs Kamalanand Singh(2) and Commissioner of Agricultural Income Tax vs Jagadish Chandra Deo Dhabal Deb (3) the Court observed: " The review of the authorities considered above leads to the conclusion that purpose within the meaning of the Assam Act can be agricultural even if its achievement does not involve actual cultivation of the soil.
In the words of their Lordships of the Privy Council in the case of receipts from the sale of forest trees, the income would be agricultural if there is some expenditure of skill and labour upon it.
Regular operations in forestry necessarily involve expenditure of skill and labour.
Where, therefore, such operations take place, the income from the sale of trees in the forest would be within the ambit of agricultural income as defined in the Assam Act." In Pratap Singh Balbeer Singh vs Commissioner of Income Tax, U. P., C. P. & Berar (4), however, the (1)[1948] (2)[1913] 17 C.L.J. 411.
(3)[1949] , 438.
(4)[1952] 143 High Court of Allahabad struck a different note.
The assessee there derived the income from the sale of forest trees growing on land naturally and spontaneously without the intervention of any human agency but carried on forestry operations working the forest for at least some time on scientific lines in accordance with a scheme of making profits.
There was a regular working plan and the assessee was deriving regular income from the forest and spending money to increase the profit.
The Court held that the " agriculture " and " agricultural purposes " with reference to land clearly implied that some operations must be carried on on the land itself; human skill and labour should be used for the purpose of ploughing the land, manuring it, planting the trees or some similar process, and that mere weeding care and preservation of forest trees which grew spontaneously were not operations on the land which were necessary to constitute the process a process of agriculture.
In the course of the judgment, the Court interpreted the above passage from the judgment of their Lordships of the Privy Council in Raja Mustafa Ali Khan vs Commissioner of Income Tax (1) a. , under: " It is quite clear that their Lordships were of the view that, for income to be agricultural income, the essential element that must exist is that there should be "some measure of cultivation of the land" or " some expenditure of skill and labour upon it".
The language used by their Lordships of the Privy Council shows that the expenditure of skill and labour must be upon the land and not merely oil the trees which are already growing on it as a result of spontaneous growth." Mere regeneration and preservation of trees could not be said to be expenditure of human skill and labour upon the land itself and the land could not under the circumstances be held to be used for agricultural purposes nor could it be held that any process of agriculture was being carried on.
The Court observed that planned and scientific exploitation of a forest of spontaneous growth, though it might yield (1) 144 regular income, would not be income from agriculture as no operations were carried out and no human skill and labour was expended in such a case, on the land itself.
Raja Benoy Kumar Sahas Roy vs Commissioner of Income Tax, West Bengal (1) the judgment under appeal before us here struck a middle path.
The Tribunal had found that except the sowing of seeds, the operations carried out, though equally necessary for the maintenance and upkeep of any forest of spontaneous growth, did not involve such expenditure of human labour and skill as to constitute them operations in agriculture.
The sowing of seeds were " few and far between " and the normal process by which the forest grew again, after a part of it had been cut down, was by the growing out off shoots from the stumps left, the operations were therefore in the main only operations for the " maintenance, preservation, nursing and rearing ", of the forest.
It was urged before the High Court on behalf of the assessee that the exemption from agricultural income tax determined in Commissioner of Agricultural Income Tax, West Bengal vs Raja Jagadish Chandra Deo Dhabal Deb(2) covered the case and it was submitted that the facts here were if at all far stronger in favour of the assessee.
The decision of the Privy Council in Raja Mustafa Ali Khan vs Commissioner of Income Tax, U.P., Ajmer and Ajmer Merwara (3) was considered and the Court observed at p. 87: " I do not think that when the Privy Council said that there must be 'some measure of Cultivation on the land, some expenditure of skill and labour upon it ", their Lordships intended to say that the expenditure of skill and labour must always be in the form of cultivation.
The word "or" introduced by the Allahabad High Court between the two phrases does not occur in the original, but I think it is implied.
The idea, it seems to me, is that if the land has been left to the forces of nature to grow what products such forces could, there is no agriculture and there can be (1) , 87.
(2) [1049] , 438.
(3) 145 SUPREME COURT REPORTS agriculture only if the labour and skill of man has operated on the land to cause or aid the growth of certain products.
All that is necessary is that the land should be actively exploited with a view to procuring growth or better growths from the soil but it does not seem to be also necessary that the exploitation should be by tillage.
" The Court accordingly came to the conclusion that even though tillage was thus not essential, human labour and skill must be expended on the land itself and not merely on the growth from the land.
When income is derived from the natural growths from the land, it is derived from land but not derived from land by the process of agriculture.
It is derived from land by agriculture only when the land is subjected to the labour and skill of man, whether in the form of cultivation or otherwise, in order to produce or the improvement of the produce which yields the income.
On the facts before them the learned Judges were of opinion that if forest of natural growth was taken over and then the land was regularly weeded and cleared, if it was supplied with moisture, necessary for the nourishment of the trees, by the cutting of channels across it and by the distribution of rain water through them and if the land was dug, and sown with seeds whenever bare patches appeared and while all this was done, if elaborate subsidiary arrangements were also maintained for the protection of the trees and the tending of new shoots springing from the stumps of old trees cut down till they themselves grew into new trees, it might well be said that operations in forestry involving agricultural operations were carried on on the forest land and that income derived from the land was derived from agriculture.
Sir Kameshwar Singh vs Commissioner of Income tax, Bihar & Orissa (1) which is the subject matter of C.A. Nos. 11 2 to II 7 of 1956 before us also was a case under the Indian Income tax Act (XI of 1922).
It was found by the Appellate Tribunal that the Sal and ebony trees which grew in the forest were conserved by allowing each a circle of 15 feet, that there was cutting down (1) , 19 146 of the trees and jungles which fell within that circle leaving sufficient space for growth and that forest conservancy staff was maintained to look after the forest.
The Court construed the observations of the Privy Council in Raja Mustafa Ali Khan 's case (1) to mean that " in order to show that an income is agricultural income within the meaning of the definition, it must be found that the land itself was cultivated and that there was some expenditure of skill and labour upon it." The Court held that even conceding that the two conditions laid down by the Privy Council in Raja Mustafa Ali Khan 's case were to be read as alternative conditions, there was no material on which to hold that there was any expenditure of skill and labour upon the land and therefore the income from the sale of forest trees was not agricultural income.
In Jyotikana Chowdhurani vs Commissioner of Income Tax, Assam (3) which is also under appeal before us in Civil Appeals Nos. 57 to 62, a Special Bench of the Assam High Court considered whether income, derived by the assessees from the sale of trees of spontaneous growth where there was no planting or sowing or employment of any human agency for the purpose of tilling the land but operations in forestry were carried on by the assessee involving considerable expenditure of human skill and labour was agricultural income within the meaning of section 2 (1) (a) of the Indian Income Tax Act.
The majority of the Court consisting of Sarjoo Prasad C.J. and Ram Labhaya J. (Deka J. dissenting) held that even though there was no tilling of the land or planting of seed or saplings and the trees were of spontaneous germination, the operations carried on by the assessees were conducive to the growth and development of the trees and in essence involved the expenditure of human skill and labour on the land itself.
Those operations were "agricultural operations" and the land on which the trees stood was being used for "agricultural purposes" and, therefore, the income from the sale of the trees was "agricultural income" and was exempt from taxation under section 4(3)(viii) of the Income tax Act.
(1) (2) , 439, 461.
147 Sarjoo Prasad C.J. explained the test laid down in Raja Mustafa Ali Khan vs Commissioner of Incometax(1) in the manner following: " The contention of Mr. Iyengar is that the expression "some expenditure of skill and labour upon it" is used merely in further clarification of the expression "cultivation of the land" and, therefore, all ' that their Lordships held was that cultivation of the land was necessary.
I do not concede that the word "cultivation" is necessarily synonymous with ploughing or tillage.
But even if it were, I am unable to accept the argument for the simple reason that if precision is the hallmark of Privy Council decisions, as I think it is, then their Lordships would have stopped short with the phrase "some measure of cultivation of the land".
This, in itself, was quite expressive and no further expressions were needed to clarify the matter.
Therefore, when they proceeded to add after a 'comma, the phrase "some expenditure of skill and labour upon it", they evidently intended to signify something more than mere cultivation.
There is, of course, no conjunctive phrase between the two expressions, but in the context the meaning seems to be plain." Ram Labhaya J. expressed himself in the test laid down by the Privy Council in these words: " A test however was laid down for finding out when land may be said to be used for agricultural purposes.
The test requires that there must be some measure of cultivation of the land; some expenditure of skill and labour upon it.
It has however to be borne in mind that their Lordships when stating the facts did point out that the case had proceeded on the footing that there was nothing to show that the assessee was carrying on any regular operations in forestry.
This statement has an important bearing on the inter pretation of the test.
Such operations in forestry are carried on in forests.
They involve the use of human labour and skill on the soil.
They aim at stimulating growth and could easily satisfy the requirements of the (1) 148 test evolved by their Lordships.
Due importance, therefore, has to be given to the absence of operations in forestry in Raja Mustafa Ali Khan 's Case (1) when interpreting the test laid down therein.
" Vikram Deo Varma vs Commissioner of Income tax, 'Bihar & Orissa (2) is the last case of this series.
The assessee derived income from extensive forest areas in the impartible estate of which he was proprietor.
Over several decades the whole of the forest area had been subjected by hill tribes to a process of "podu" cultivation setting fire to ' the trees and cultivating the forest lands and raising crops thereon so that it was impossible to say that there was any virgin forest left.
Through a huge forest establishment considerable amount of human labour and skill was spent (i) in fostering the growth of trees and preserving them from destruction by men and cattle; (ii) in cultivation of the soil by felling and burning trees from time to time; (iii) in planned exploitation of trees by marking out the areas into blocks: (iv) in systematic cutting down of trees of Particular girth and at particular heights (v) in planting new trees where patches occur; and (vi) watering, pruning, dibbling and digging.
The Tribunal had held that as there was no forest cultivation or tilling as such the income was not due to agricultural operations and therefore not exempt under section 4(3)(viii) of the Indian Income Tax Act.
In the course of the judgment the learned Judges referred to the observations of their Lordships of the Privy Council in Raja Mustafa Ali Khan 's Case (1) but observed that their Lordships did not lay down what the measure of that cultivation should be or what the nature of skill and labour expended should be, in order to bring the operations within the meaning of the expression " agricultural purposes " as used in the definition section.
The question to be determined in each case should, therefore, be whether the land out of which the rent or revenue was derived was used for " agricultural purposes.
" Unless the land was subject to some measure of cultivation or there was some expenditure of human skill and labour on it in order to (1) (2) 149 derive the rent or revenue, the purpose would not be agricultural.
It was observed that the cultivation was not mere tilling but the science and art of cultivating the soil may depend upon the nature of the soil the atmosphere and various other factors.
It was therefore idle to regard" tilling " as the sole or indispensable test of agriculture.
On the facts before it, the Court held that the operations carried on by the assessee through the forest establishment showed that there had been both cultivation of the soil as well as the application of human skill and labour upon the land as well as on the trees themselves, and that therefore the income derived from the forest was exempt from taxation under section 4(3) (viii) of the Indian Income tax Act.
Before parting with these cases it may be apposite here to note the following observations of Vishwanatha Sastri J. in Commissioner of Income Tax, Madras vs K.E. Sundara Mudaliar (1) at page 277: " In Commissioner of Agricultural Income Tax vs Raja Jagdish Chandra Deo Dhabal Deb (2) it was held by a Division Bench of the Calcutta High Court that income derived from the sale of sal trees growing spontaneously in forest and not planted by man was " agricultural " income within the meaning of section 2(1) of the Bengal Agricultural Income Tax Act.
There was no digging or ploughing of the land nor planting of trees but there were " operations in forestry " such as guarding the forest trees to keep away cattle and allowing leaves and undergrowth to be removed by people of the locality.
There was no breaking up of the soil, no sowing or planting or watering or fencing.
Whether the decision is correct or not can only be authoritatively declared by the Supreme Court of India.
It seems to rest on an undue extension of the principle laid down by the Judicial Committee in Raja Mustafa Ali Khan 's Case(3) and goes much further than our decision in the present case.
" It appears from the above survey that there has been a divergence of opinion amongst the various (1) ,271.
(2) , 438.
(3) 150 Courts not only in regard to the connotation of the terms "agriculture ' and "agricultural purposes" but also in regard to the nature of forestry operations performed in the forest which can be styled agricultural operations so as to constitute the "land used for agricultural purposes" within the definition of agricultural income as given both in the Indian Income tax Act and in the several Agricultural Income Tax Acts passed by the various States.
It may be noted at the outset that the definition of "agricultural income" given in section 2(1) of the Indian Income tax Act is in identical terms with the definitions of that term as given in the various Agricultural Income tax Acts passed by the several States.
It will be idle therefore to treat "Taxes on Agricultural Income" which fall within the legislative competence of the State Legislature as having no relation at all to the corresponding provisions of the Indian Income tax Act.
Once it is determined that the income in question is derived from land used for agricultural purposes by agriculture, it would be agricultural income and as such exempt from tax under section 4(3)(viii) of the Indian Income tax Act and would fall within the purview of the relevant provisions of the several Agricultural Income tax Acts passed by the various States.
The result of this determination would be that the assessee would not be liable to assessment under the Indian Income tax Act but he would have to pay the Agricultural Income tax which would be levied upon him under the relative Agricultural Income tax Acts.
The only enquiry which would therefore be relevant is whether the income in question is agricultural income within the terms of the definition thereof and that would have to be determined in each case by the Court having regard to the facts and circumstances of the particular case before it.
In order that an income derived by the assessee should fall within the definition of agricultural income two conditions are necessary to be satisfied and they are: (i) that the land from which it is derived should be used for agricultural purposes and is either assessed for land revenue in the taxable territories or is subject 151 to local rates assessed and collected by the officers of /the Government as such; and (ii) that the income should be derived from such land by agriculture or by one or the other of the operations described in cls.
(ii) and (iii) of section 2 (1) (b) of the Indian Income tax Act.
It was at one time thought that the assessment of the land to land revenue in the taxable territories was intended to exempt the income derived from that land from liability for payment of income tax altogether and that theory was based on the assumption that an assessee who was subject to payment of land revenue should not further be subjected to the payment of income tax, because if he was so subjected he would be liable to pay double taxation.
It is interesting to note at this stage the genesis of the provision exempting agricultural income derived from the lands assessed to land revenue as understood by the Courts.
Vishwanatha Sastri J. in this context observed in the Commissioner of Income Tax, Madras vs
K.E.Sundara Mudaliar(l) at page 270: "I shall briefly advert to the genesis of the provision exempting agricultural income derived from lands assessed to land revenue, as I consider that the subject matter with which the Legislature was dealing, and the facts existing at the time with respect to which the legislation was made, are legitimate topics for consideration in ascertaining the object and scope of the exemption from income tax conferred on agricultural income.
This exemption, it would be noticed, has been a persistent feature of the Income tax legislation of this country from 1867 onwards, and nothing like it is found in the English Income Tax Acts.
Even at a time when there was no provision like Section 100 of the Government of India Act, 1935, with Federal and Provincial Lists and there was no incompetency on the part of the Central Legislature to levy a tax on agricultural income, the Income Tax Acts passed from time to time by the Central Legislature including the existing Act of 1922, exempted from income tax the agricultural income of land assessed to public revenue.
(1) , 271.
152 This exemption was granted for no other reason than the justice and equity of exempting from further burden income which had already paid its toll to the State in the shape of land revenue either as a permanently fixed peishkush under Regulation No. XXV of 1802 or as an assessment periodically fixed under the ryotwari settlement.
Under what may be called the common law in India, the State had the immemorial prerogative right to collect a share of the produce of the land from its owner, the latter having the full right to enjoyment of the land and its produce, subject only to the aforesaid contribution to the State.
Land revenue is collected annually from the proprietor of the land and is presumably exigible from the income of the land.
Cash payment in lieu of a share of the produce due to the State was substituted long ago to facilitate collection of revenue.
Income derived from the produce of the land having been subjected to the payment of the annual land revenue, it was thought inequitable to subject the same income again to annual income tax.
Hence the exemption of the agricultural income of assessed lands or lands whose revenue had been remitted either in whole or in part, as in the case of the inams.
Mines, minerals, and quarries having been reserved by the State, at any rate in respect of lands other than those comprised in a permanently settled estate, income derived from such sources was not exempted from income tax.
The revenue assessment was based on the quality of the soil and the income derived from the produce of the lands, and therefore the exemption from income tax was limited to agricultural income derived from assessed lands.
Such is the reason for exemption from income tax of agricultural income.
" Whatever may have been the genesis of the exemption of agricultural income from income tax, the liability to pay land revenue or fixed peishkush under Regulation XXV of 1902 was not considered by Rankin J. as a deterrent against the levy of incometax in appropriate cases, even on certain classes of income derived from the permanently settled estates, if that was the clear intention of the legislature.
The 153 learned Judge observed in Emperor vs Probhat Chandra Barua (1): ,,Some reference was made at the bar to the practice of the Revenue Authorities since 1886 as regards fisheries in permanently settled estates but there is no agreement as to what that practice if there be any practice has been.
Assuming that it would have been open to us to place some degree of reliance upon an interpretation settled by practice as contemporanea expositio we are in fact without any such assistance.
" Some reference was also made to what has been called a" presumption against double taxation ".
In Manindra Chandra Nandi vs Secretary of State (2), royalties from a coal mine were held liable both to cess under the Cess Act, 1880, and to income tax under the Act of 1886, but it was said that "it may be considered that courts always look with disfavour upon double taxation, and Statute will be construed, if possible, to avoid double taxes.
" Reference was made to certain dicta of American Courts and to the English case of Carr vs Fowle (3) But the only observation in this case was to the effect that the statute presumably did not intend that a vicar should in effect pay the same tax (land tax) twice on the same hereditament.
This is plain enough.
Thus the income tax is one tax, and income assessed under one schedule cannot be assessed all over again under another.
That there is any legal presumption of a general character against " double taxation " in any wider sense is a proposition to which I respectfully demur as a principle for the construction of a modern statute.
In Manindra Chandra Nandi vs Secretary of State (2) it did not avail to cut down clear ' though absolutely general language.
" This view of Rankin J. was upheld by the Privy Council in Prabhat Chandra Barua vs King Emperor(4).
In the later case of Yuvarajah of Pittapuram vs Commissioner of Income Tax, Madras (5) the Privy Council held that the imposition of Income tax in respect of income derived from the permanently settled estate (1) Cal. 504.
(2) Cal.
257, 287.
(3) (4) (1930) L.R. 57 I.A. 228.
(5) 20 154 would not be a breach of the Madras Permanent Settlement Regulations No. XXV of 1802.
The assessment of land to land revenue or its being subject to local rates assessed and collected by the officers of the Government as such is merely an indication that the land is an agricultural land as distinguished from land which can be used for agricultural purposes but carries the matter no further.
We have, therefore, to consider when it can be said that the land is used for agricultural purposes or agricultural operations are performed on it.
Agriculture is the basic idea underlying the expressions "agricultural purposes" and "agricultural operations" and it is pertinent therefore to enquire what is the connotation of the term "agriculture".
As we have noted above, the primary sense in which the term agriculture is understood is agar field and cultra cultivation, i.e., the cultivation of the field and if the term is understood only in that sense, agriculture would be restricted only to cultivation of the land in the strict sense of the term meaning thereby, tilling of the land, sowing of the seeds, planting and similar operations on the land.
They would be the basic operations and would require the expenditure of human skill and labour upon the land itself.
There are however other operations which have got to be resorted to by the agriculturist and which are absolutely necessary for the purpose of effectively raising the produce from the land.
They are operations to be performed after the produce sprouts from the land, e.g., weeding, digging the soil around the growth, removal of undesirable under growths and all operations which foster the growth and preserve the same not only from insects and pests but also from depredation from outside, tending, pruning, cutting, harvesting, and rendering the produce fit for the market.
The latter would all be agricultural operations when taken in conjunction with the basic operations above described, and it would be futile to urge that they are not agricultural operations at all.
But even though these subsequent operations may be assimilated to agricultural operations, when they are in conjunction with these basic operations, could it be said that even 155 though they are divorced from these basic operations they would nevertheless enjoy the characteristic of agricultural operations ? Can one eliminate these basic operations altogether and say that even if these basic operations are not performed in a given case the mere performance of these subsequent operations would be tantamount to the performance of agricultural operations on the land so as to constitute the income derived by the assessee therefrom agricultural income within the definition on that term ? We are of opinion that the mere performance of these subsequent operations on the products of the land, where such products have not been raised on the land by the performance of the basic operations which we have described above would not be enough to characterise them as agricultural operations.
In order to invest them with the character of agricultural operations, these subsequent operations must necessarily be in conjunction with and a continuation of the basic operations which are the effective cause of the products being raised from the land.
It is only if the products are raised from the land by the performance of these basic operations that the subsequent operations attach themselves to the products of the land and acquire the characteristic of agricultural operations.
The cultivation of the land does not comprise merely of raising the products of the land in the narrower sense of the term like tilling of the land, sowing of the seeds, planting, and similar work done on the land but also includes the subsequent operations set out above all of which operations, basic as well as subsequent, form one integrated activity of the agriculturist and the term "agriculture" has got to be understood as connoting this integrated activity of the agriculturist.
One cannot dissociate the basic operations from the subsequent operations, and say that the subsequent operations, even though they are divorced from the basic operations can constitute agricultural operations by themselves.
If this integrated activity which constitutes agriculture is undertaken and performed in regard to any land that land can be said to have been used for " agricultural purposes " and the income 156 derived therefrom can be said to be " agricultural income" derived from the land by agriculture.
In considering the connotation of the term " agriculture" we have so far thought of cultivation of land in the wider sense as comprising within its scope the basic as well as the subsequent operations described above, regardless of the nature of the products raised on the land.
These products may be grain or vegetables or fruits which are necessary for the sustenance of human beings including plantations and groves, or grass or pasture for consumption of beasts or articles of luxury such as, betel, coffee, tea, spices, tobacco etc., or commercial crops like, cotton, flax, jute, hemp, indigo etc.
All these are products raised from the land and the term "agriculture" cannot be confined merely to the production of grain and food products for human beings and beasts as was sought to be done by Bhashyam Ayyangar J. in Murugesa Chetti vs Chinnathambi Goundun (1) or Sadashiva Ayyar J. in Rajah of Venkatagiri vs Ayyappa Reddi (2) but must be understood as comprising all the products of the I and which have some utility either for consumption or for trade and commerce and would also include forest products such as timber, sal and piyasal trees, casuarina plantations, tendu leaves, horranuts etc.
The question still remains whether there is any warrant for the further extension of the term " agriculture " to all activities in relation to the land or having connection with the land including breeding and rearing of livestock, dairy farming, butter and cheese making, poultry farming, etc.
This extension is based on the dictionary meanings of the term and the definitions of agriculture " collated in Wharton 's Law Lexicon, as also the dicta of Lord Cullen and Lord Wright in Lean & Dickinson vs Ball (3) and Lord Glaneley vs Wightman (4) quoted above.
Derbyshire C.J. in Moolji Sicka & Co., In re(5) treated tendu plants growing on the soil as part of the soil and therefore considered the pruning of the shrub (1) Mad.
421, 423.
(2) Mad.
(3) (4) ; 638.
(5) 157 as cultivation of the soil in a legal and technical sense and this extension of the term "agriculture" was also approved by Vishwanatha Sastri J. in Commissioner of Income Tax vs K. E. Sundara Mudaliar (1).
We are however of opinion that the mere fact that an activity has some connection with or is in some way dependent on land is not sufficient to bring it within the scope of the term and such extension of the term "agriculture" is unwarranted.
The term "agriculture" cannot be dissociated from the primary significance thereof which is that of cultivation of the land and even though it can be extended in the manner we have stated before both in regard to the process of agriculture and the products which are raised upon the land, there is no warrant at all for extending it to all activities which have relation to the land or are in any way connected with the land.
The use of the word agriculture in regard to such activities would certainly be a distortion of the term.
A critical examination of the definition of "agricultural income" as given in section 2(1) of the Indian Income tax Act and the relevant provisions of the several Agricultural Income tax Acts of the various States also lends support to this position.
In the first instance, it is defined as rent or revenue derived from land which is used for agricultural purposes; and it is next defined as income derived from such land by agriculture or by the activities described in cls.
2 and 3 of section 2(1)(b) of the Act.
These activities are postulated to be performed by the cultivator or receiver of rent in kind of such land in regard to the products raised or received by him which necessarily means the produce raised on the land either by himself or by the actual cultivator of the land who pays such rent in kind to him.
If produce raised or received by the cultivator or receiver of rent in kind is thus made the subject matter of cls.
(ii) and (iii) in section 2 (1)(b) of the Act, the term "agriculture" used in cl.
(i) of section 2(1)(b) must also be similarly restricted to the performance of the basic operations on the land and there is no scope for reading the term agriculture " in the still wider sense indicated above.
(1) , 271. 158 If the term " agriculture " is thus understood as comprising within its scope the basic as well as subsequent operations in the process of agriculture and the raising on the land of products which have some utility either for consumption or for trade and commerce, it will be seen that the term " agriculture " receives a wider interpretation both in regard to its operations as well as the results of the same '.
Nevertheless there is present all throughout the basic idea that there must be at the bottom of it cultivation of land in the sense of tilling of the land, sowing of the seeds, planting, and similar work done on the land itself This basic conception is the essential sine qua non of any operation performed on the land constituting agricultural operation.
If the basic operations are there, the rest of the operations found themselves upon the same.
But if these basic operations are wanting the subsequent operations do not acquire the characteristic of agricultural operations.
All these operations no doubt require the expenditure of human labour and skill but the human labour and skill spent in the performance of the basic operations only can be said to have been spent upon the land.
The human labour and skill spent in the performance of subsequent operations cannot be said to have been spent on the land itself, though it may have the effect of preserving, fostering and regenerating the products of the land.
This distinction is not so important in cases where the agriculturist performs these operations as a part of his integrated activity in cultivation of the land.
Where, however, the products of the land are of spontaneous growth, unassisted by human skill and labour, and human skill and labour are spent merely in fostering the growth, preservation and regeneration of such products of land, the question falls to be considered whether these subsequent operations performed by the agriculturist are agricultural operations and enjoy the characteristic of agricultural operations.
It is agreed on all hands that products which grow wild on the land or are of spontaneous growth not involving any human labour or skill upon the land are 159 not products of agriculture and the income derived therefrom is not agricultural income.
There is no process of agriculture involved in the raising of these products from the land.
There are no agricultural operations performed by the assessee in respect of the same, and the only work which the assessee performs here is that of collecting the produce and consuming and marketing the same.
No agricultural operations have been performed and there is no question at all of the income derived therefrom being agricultural income within the definition given in section 2(1) of the Indian Income tax Act.
Where, however, the assessee performs subsequent operations on these products of land which are of wild or spontaneous growth, the nature of those operations would have to be determined in the light of the principles enunciated above.
Applying these principles to the facts of the present case, we no doubt start with the finding that the forest in question was of spontaneous growth.
If there were no other facts found, that would entail the conclusion that the income is not agricultural income.
But, then, it has also been found by the Tribunal that the forest is more than 150 years old, though portions of the forest have from time to time been denuded, that is to say, trees have completely fallen and the proprietors have planted fresh trees in those areas, and they have performed operations for the purpose of nursing the trees planted by them.
It cannot be denied that so far as those trees are concerned, the income derived therefrom would be agricultural income.
In view of the fact that the forest is more than 150 years old, the areas which had thus become denuded and replanted cannot be considered to be negligible.
The position therefore is that the whole of the income derived from the forest cannot be treated as non agricultural income.
If the enquiry had been directed on proper lines, it would have been possible for the Income tax authorities to ascertain how much of the income is attributable to forest of spontaneous growth and how much to trees planted by the proprietors.
But no such enquiry had been directed, and in view of the long lapse of time, we do not consider it desirable to direct any such 160 enquiry now.
The expenditure shown by the assessee for the maintenance of the forest is about Rs. 17,000 as against a total income of about Rs. 51,000.
Having regard to the magnitude of this figure, we think that a substantial portion of the income must have been derived from trees planted by the proprietors themselves.
As no attempt has been made by the Department to establish which portion of the income is attributable to forest of spontaneous growth, there are no materials on which we could say that the judgment of the court below is wrong.
The appeal is accordingly dismissed with costs.
Appeal dismissed.
| The question for decision in this appeal by the Commissioner of Income tax was whether a sum of Rs. 51,978 shown by the assessee in his return as income from his forest land was agricultural income within the meaning of section 2(1) Of the Indian Incometax Act and was as such exempt from taxation under section 4(3)(viii) of the Act.
The forest was of spontaneous growth, 150 years old, and consisted of sal and piyasal trees.
It was in parts denuded of trees from time to time by destructive elements and the assessee had to plant fresh trees in those parts.
Considerable amount of human labour and skill had to be applied year after year for maintaining the 'forest, protecting the offshoots from the stumps of the trees that had been cut and sold and in reviving its denuded parts by fresh plantation.
The staff employed by the assessee performed such operations as pruning, weeding, felling, clearing, cutting of channels, guarding the trees and sowing seeds by digging the soil in the denuded areas.
The Income tax Officer rejected the assessee 's claim of exemption and added a sum of Rs. 34,430 to the assessable income, allowing a sum of Rs. 17,548 as expenditure.
The Assistant Commissioner of Income tax confirmed the assessment.
The Appellate Tribunal held that the sowing of seeds were few and far between and the income, derived as it was from jungle products, was not agricultural income within the meaning of the Act.
The High Court took a contrary view, held that tillage of the soil was not essential, and the income was agricultural income as human labour and skill had been expended on the land itself and answered the question in favour of the assessee.
No attempt was, however, made by the Income tax Authorities to ascertain the income actually derived from the trees planted by the assessee, nor were any materials placed on the record from which its exact amount could be ascertained, but having regard to the magnitude of the expenditure shown by the assessee as against the total income this Court held that a substantial portion of it must have been derived from the trees planted by the assessee.
Held, that the income actually derived from the trees planted by the assessee was agricultural income within the meaning of 2(1) of the Indian Income tax Act and no attempt having been 102 made to ascertain its exact amount and a fresh enquiry being undesirable after such a long lapse of time, the appeal must be dismissed.
The term 'agriculture 'in section 2(1)(b)(i) of the Indian Income tax Act connotes the entire and integrated activity of an agriculturist performed on the land in order to raise its produce and consists of such basic and essential operations, requiring human skill and labour on the land itself, as the tilling of the soil, sowing of the seeds, planting and similar operations on the land and such other subsequent operations, performed after the produce sprouts from the land, as weeding, digging of the soil around the growth, removal of undesirable under growths, tending, pruning, cutting, harvesting and marketing.
But these subsequent operations, if unconnected with the basic operations, cannot by themselves constitute agriculture.
It is only when the land is subjected to such integrated activity, that :It can be said to be used for ,agricultural purpose ' and its income called agricultural income within the meaning of the Act.
Case law discussed.
Whatever is produced by such agriculture must be an agricul tural product and the ambit of the term 'agriculture ' cannot be confined merely to the production of grain and food for men and cattle but must extend to all products of the land that have some utility either for consumption or trade and commerce.
Fruit and vegetable plantations, groves, pastures, articles of luxury such as betel, coffee, tea, spices, tobacco etc.
or commercial crops like cotton, flax, jute, hemp, indigo etc.
as also forest products such as timber, sal and Piyasal trees, Casuarina plantations, tendu leaves, horranuts etc., can come within its ambit.
Murugesa Chetti vs Chinnathambi Goundan, Mad. 421 and Raja of Venkatagiri vs Ayyappa Reddy, Mad. 738, disapproved.
Such an extended meaning of the term 'agriculture ' and its processes and products can be tenable only where there is cultivation, which means the basic operations, and can never be dissociated from them.
There is, therefore, no warrant for its further extension so as to include activities which are in some way connected with or dependent on land, such as breeding and rearing of livestock, dairy farming, butter and cheese making and poultry farming.
Moolji Sicka & Co., In re,(1925) 10 T.C.341 and Commissioner of Income Tax vs K. E. Sundara Mudaliar, (1950) 18 I.T.R. 259, disapproved.
Although human labour and skill are required both in the performance of the basic as well as the subseqent operations, it is only in the case of the basic operations alone that such skill and labour can be said to have been spent on the land itself, and this distinction becomes important where they are disjointed and do 103 not form an integrated activity, as in the case of products of land that are of spontaneous growth where human skill and labour are spent merely in fostering the growth, preservation and regeneration of such products.
Judicial opinion is unanimous that products which grow wild on the land or are of spontaneous growth and do not involve any human skill or labour on the land, and all that the assessee has to perform in respect of them is only to collect them for consumption and marketing, are not products of agriculture and the income derived from them is not agricultural income within the meaning Of section 2(1) Of the Act.
When, however, the assessee performs subsequent operations on these products of land, the nature of those operations will have to be determined in the light of the principles enunciated above.
Held further, that there is no basis for the argument that the demarcation of agriculture and forestry as separate heads of legislation in Entries 14 and 19 of List 11 of the Seventh Schedule to the Constitution has the effect of making them mutually exclusive.
Income from forestry coming within the definition of agricultural income ' contained in section 2(1) of the Indian Income tax Act will be agricultural income under Entry 46 and thus fall within the purview of that Act.
|
Summarize this legal judgement text concisely | Appeal No. 246 of 1954.
Appeal by special leave from the judgment an order dated October 6, 1952, of the Bombay High Court in Income tax Reference No. 1 of 1952.
N. A. Palkhivala, J. B. Dadachanji, section N. Andley Rameshwar Nath and P. L. Vohra, for the appellant.
O. N. Joshi and R. H. Dhebar, for the respondent.
May 22.
The Judgment of the Court was delivered by VENKATARAMA AIYAR J.
'This is an appeal by special leave against the judgment of the Bombay High Court passed in a reference under section 66(1) of the Indian Income tax Act, 1922 (hereinafter referred to as the Act) and sections 21 and 19 of the Excess Profits Tax Act, 1940, and of the Business Profits Tax Act, 1947, respectively read with section 66(1) of the Act.
The dispute between the parties relates to the assessment of income tax for the assessment years 1946 47, 1947 48 and 1948 49 and of excess profits tax for the chargeable accounting periods, September 3, 1945, to March 31, 1946, April 1, 1946, to March 31, 1947 and April 1, 1947, to March 31, 1948, and it arises out of the same facts and involves the same points for determination, 67 On June 15, 1945, three brothers Sir Padampat Singhania, Lala Kailashpat Singhania and Lala Lakshmipat Singhania who were carrying on business under the name of Juggilal Kamlapat, executed a deed of trust, exhibit A, whereby they settled a sum of Rs. 1,00,000 on various charities specified therein and called the J. K. Trust, Bombay, and appointed themselves and two other persons Lala Ramdeo Podar and Sir Chunnilal Mehta as its trustees.
The trust deed provided inter alia that "the trustees may with the help of the trust fund, for and on behalf of and for the benefit of the trust, carry on such business including the taking up and conducting the managing agency or selling agency of any company in such name or names as they in their absolute discretion may think fit and proper and may close and re start such business and utilise the profits for all or any of the objects aforesaid.".
Large powers were conferred on them in the conduct of the business, and they were also authorised to "raise or borrow money required for the purpose of the trust".
At this time, Messrs. E. D. Sassoon and Co., Ltd. were the managing agents of a public Company called the Raymond Woollen Mills Ltd. The firm of Juggilal Kamlapat of which the three Singhania brothers were the partners, acquired a controlling interest in the said Mills by purchase of the shares of Messrs. E. D. Sassoon and Co. therein; and following on this, the shareholders passed a special resolution on September 3, 1945, appointing the trustees of the J. K. Trust as managing agents of the Company in the place of Messrs. E. D. Sassoon and Co ', Lid., who resigned.
On September 10, 1945, a memorandum of agreement, exhibit B, was duly executed by the Company constituting the trustees of the J. K. Trust, Bombay, as its managing agents on the terms and conditions set out therein.
It is to be noted that the five persons named as trustees under exhibit A were appointed as managing agents in their character as trustees, and it is expressly provided therein that the expression 'managing agents ', "unless excluded by or repugnant to the context shall include the Trustees for the time being of the said Trust or 68 any other Trust with which the same may be amalgamated".
The agency was to be for a period of 20 years; but it was open to the trustees to throw it up on giving three months ' notice.
The managing agents were to get a remuneration of 10 per cent.
of the net annual profits subject to a minimum of Rs. 50,000 and an office allowance of Rs. 1,000 per mensem.
Clause 7 of the agreement provided that, " During the continuance of this agreement, the Managing Agents shall maintain with the Company a deposit of Rs. 1,00,000 (Rupees one lack only) in cash by way of security for due fulfilment of their obligations as specified therein and shall be entitled to charge interest at 3 1/2 per cent.
per annum on the amount of such deposit in addition to their remuneration.
" Clause 8 laid an obligation on the managing agents "to arrange loans and advances to the Company as and when required up to and not exceeding Rs. 10 lacs at any time and if necessary to guarantee such loans or advances from time to time".
Under el. 14, "Notwithstanding anything herein contained, all the terms and conditions of this Agreement including the period of appointment of the Managing Agents may be varied or abrogated by mutual agreement.
" The trustees entered on their duties as managing agents under this agreement, and by an agreement dated May 14, 1946, they appointed one Tej Narain Khaitan, son in law of one of the three Singhania brothers as their representative to carry on the managing agency work on a remuneration of 30 per cent.
of the annual income which would be payable to them under exhibit B.
Before the Income tax authorities, the appellant claimed that the income derived from the managing agency was income derived from property held under trust to be applied wholly for charitable purposes, and was, in consequence, exempt from taxation under section 4 (3) (i) of the Act.
The Income tax authorities held that the income in question was remuneration for services rendered, and was not derived from any property, and that, therefore, it did not fall within section 4 (3) (i) of the Act.
They further held 69 that even if the managing agency business could be regarded as property within section 4 (3) (i), it was governed by the special provision contained in section 4 (3) (ia), and as the conditions laid down therein had not been satisfied, no exemption could be claimed.
In this view, they allowed a sum of Rs. 30,000 per annum for remuneration of Mr. Khaitan as a deduction under section 10 (2) (x) of the Act, and held that the balance of the income, Rs. 23,287 in 1946 47, Rs. 36,786 in 1947 48 and Rs. 2,16,460 in 1948 49 was liable to be taxed under the provisions of the taxing statutes.
On applications made by the assessee under a. 66(1) of the Act and the corresponding provisions in the Excess Profits Tax Act and the Business Profits Tax Act, the Tribunal referred the following questions for the decision of the High Court of Bombay: 1. " Whether on the facts of the case the commission earned by the managing agents for managing.
the Raymond Woollen Mills was income earned by the managing agents for services rendered and not income derived from property held under trust or for other legal obligations and therefore not exempt under section 4 (3) (i) of the Income tax Act? 2.
Whether on the facts of the case the business carried on by the Trustees falls to be considered under section 4 (3) (i) or section 4 (3) (ia) of the Income tax Act?" The reference was heard by Chagla, C.J., and Tendolkar, J., who held that no part of the sum of Rs. 1,00,000 which was the only property settled on trust under exhibit A was actually invested in the managing agency business, which could not, therefore, be regarded as trust property, and that the income received from that business was 'not within the exemption enacted in section 4 (3) (i).
They accordingly answered the first question against the appellant.
As regards the second question, the learned Judges held that it was unnecessary to express any opinion thereon, as it was common ground that even if section 4 (3) (ia) applied, neither of the conditions laid down in sub cl.
(a) or (b) had been fulfilled, and that accordingly no relief could be granted thereunder.
70 The points that arise for determination in this appeal are (1) whether the income received by the trustees of J.K. Trust, Bombay, as managing agents of Raymond Woollen Mills, Ltd., is income derived from property held on trust or on an obligation in the nature of trust; and (2) whether the claim for exemption in respect of such income is to be determined under section 4 (3) (i) or section 4 (3) (ia).
With reference to the first question, the contention of Mr. Palkhivala is that managing agency is business and therefore it is property, and that it is property held on trust because it is conducted by the trustees on behalf of the trust with the help of trust properties and in accordance with the directions contained in the trust deed.
He also contends that even if the business is not held on trust, it is at least held, on the principle laid down in section 88 of the Trusts Act, on an obligation in the nature of trust, and that section 4 (3) (ii) is, in consequence, attracted.
For the respondent, Mr. Joshi does not dispute that managing agency is to be regarded as business, but he contends that there can be no trust of such agency, because it really involves rendering of services and cannot be said to be property in respect of which alone trust can be created, and further because managing agency is an office, and that again is not property.
He also contends that, in any event, ,the managing agency created under exhibit B could not be held to be trust property, because it could be terminated at any time, if the trustees so desired, on three months ' notice and that there could be no trust of ' such a precarious, ephemeral or evanescent kind of property, if indeed it could be held to be property.
He also contends that section 88 was inapplicable, as there was no property which was held on an obligation in the nature of a trust.
Whether a managing agency could be regarded as business was considered by this Court in Lakshminarayan Ram Gopal and Son Ltd. vs The Government of Hyderabad (1), where the question arose with reference to assessment of excess profits tax on the remuneration received by managing agents, tax being leviable under (1) 71 that Act only on business income and it was held that it was business, and that the profits therefrom were rightly assessed to tax under the Act.
The law must therefore be taken to be settled beyond controversy that managing agency is itself business.
Then the question is whether that business can be held to be property within section 4(3)(i) of the Act.
Now 'property ' is a term of the widest import, and subject to any limitation or qualification which the context might require, it signifies every possible interest which a person can acquire, hold and enjoy.
Business would undoubtedly be property, unless there is something to the contrary in the enactment.
Section 4(3)(i) of the Act under which exemption is claimed runs as follows: "4.
(3) Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them (i) any income derived from property held under trust or other legal obligation wholly for religious or charitable purpose, and in the case of property so held in part only for such purposes, the income applied, or finally set apart for application thereto." Now, confining ourselves solely to the language of section 4 (3)(i), there is nothing in it which restricts in any manner the normal and accepted meaning of the word property ', and excludes business from its connotation.
There is also authority in support of the view that business is property within the intendment of section 4(3)(i).
In In re The Tribune (1), the question was whether a trust created over the Tribune press and newspaper was for a charitable purpose as defined in section 4 (3) (i) of the Act.
The majoritv of the learned Judges of the High Court took,the view that the object of the trust was not wholly religious or charitable, and that accordingly the exemption under that section could not be claimed.
This decision was taken in appeal to the Privy Council, which held reversing the judgment of the High Court that the object of the trust was in its entirety charitable and that it came within the exemption enacted in section 4 (3) (i).
Vide In re The Trustees of the Tribune (2).
That is a question with (1) [ 1035] (2) ; L.R. 66 I.A. 72 which we are not concerned in this appeal, and the actual decision of the Privy Council does not bear on the present controversy.
What is relevant to our purposes is that before the High Court, a contention was raised that the word 'property ' must bear the same meaning both in sections 9 and 4 (3) (i), that in section 9 it was used in contradistinction to business which was dealt with under section 10, and that therefore 'property ' in section 4 (3)(i) could not include business.
This contention was repelled by the High Court, which held that the meaning of the word 'property ' in section 4 (3) (i) could not be controlled by the connotation of that word in section 9.
Vide In re The Tribune (1).
Before the Privy Council, however, the question whether business of the Tribune press and newspaper was property was not raised, the Board merely observing that in the letter of reference there was "no suggestion that the income under assessment is not derived from property held under trust declared in the 20th and 21st paragraphs of the will".
The point, however, arose directly for decision in All India Spinners ' Association vs Commissioner of Income tax, Bombay (2).
There, the assessee was an unregistered association called the All India Spinners ' Association, and it was formed for the purpose of development of the village industries of handspinning and handweaving.
The Association collected subscriptions from its members and also donations and invested them in the purchase of raw cotton which was supplied to poor labourers for being spun into yarn, the yarn being.
then supplied to them for being woven into cloth, which was then sold and the sale proceeds appropriated to the funds of the Association for the purposes aforesaid.
The assessee claimed exemption under section 4(3) (i) on the ground that its income was derived from property held under trust.
The High Court was of the opinion that the yarn and the cloth the sale of which yielded the income, could not be regarded as property held in trust, and that, in consequence, section 4(3) (i) did not apply.
In reversing this judgment, the Privy Council held that "the property consisted of the Organisation and the undertaking as well as in the (1) (2) ; L.R. 71 I.A. 159, 73 fluctuating stock of yarn and cloth", and that the exemption in section 4(3)(i) applied.
This is direct authority in support of the contention of the appellant.
As against these authorities, the respondent relied on the decision in Eggar vs Commissioner of Incometax (1).
There, a certain professor agreed to hand over the remuneration which would be payable to him by the University for lectures to be delivered by him, for certain charitable purposes, but, in fact, no deed of trust was executed.
The question was whether the amounts actually paid to him by the University were exempt from taxation, and it was held that they were not, and that the income in question was at the time of the receipt the private property of the assessee being remuneration for services rendered by him.
There could be no question in this case of any source of income being dedicated to trust, and the decision accordingly has no bearing on the point, which falls to 'be decided here.
The weight of authority is therefore clearly in favour of the view that business would be 'property ' for purposes of section 4(3)(i) of the Act.
It is next contended for the respondent that even if business could in general be held to be property within section 4(3) (i), managing agency cannot be so regarded, because having regard to sections 2(9A), 87A and 87B of the Indian Companies Act, it is merely an office which consists in the performance of services and discharge of certain obligations, and that that could not be regarded as property, which could be the subject matter of trust.
We are unable to accede to this contention.
In Angurbala Mullick vs Debabrata Mullick (2), and The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur MUtt (3), even an office of trusteeship was held to be property especially when emoluments were attached to it, and that must a fortiori be the position in the case of office of managing agency, which is clearly one of profit and even alienable under certain circumstances.
The office requires no doubt the performance of services; but there is no antithesis between service (1) (2) [195I] S.C.R. 1125.
(3) ; , 1019.
10 74 and business, as there are several kinds of business, which involve the performance of services, such as insurance and commission agency.
The true test is whether the services are a regular source of income.
And if managing agency is business, as was held in Lakshminarayan Ram Gopal and Son Ltd. vs The Government of Hyderabad (1), then there is no reason why it should not be property for purposes of section 4(3)(i) of the Act.
Nor is it an accurate statement of the true position to describe trust of the managing agency as a trust of an obligation.
It is in truth a trust of property, which carries with it certain obligations, and in law, there is no objection to creating a trust over property burdened with obligations, though, if it is onerous by reason of such obligations, the trustee may be entitled to disclaim it.
It is then contended that even if managing agency could be the subject of trust, the managing agency created by exhibit B must be held to be incapable of being held on trust because it is of the essence of public, as distinguished from private, charity that it must be permanent and incapable of being revoked or put an end to at the option of the trustee, whereas the managing agency created by exhibit B could be terminated by the trustees by giving three months ' notice.
This is to confuse charity with properties devoted to charity.
It is true that a public charity is perpetual in character, and that means that it is capable of enforcement, so long as there is any property left which can be appropriated for its objects.
And even if some or all of the objects become incapable of fulfilment, the trust properties will be devoted to the performance of similar or allied charitable purposes on the doctrine of cy pres.
But so far as the trust properties themselves are concerned, they will be held only on the incidents to which they are subject under the law.
Thus, if the property is a leasehold interest, it must cease on the termination of the lease.
Likewise, if trust property is alienated under circumstances binding on the trust, it will go out of the trust.
But that does not operate (1) [1955] I S.C.R. 393.
75 as an extinction of the trust, unless there is no property at all left, with which the trust could be carried out.
That is the principle enacted in section 77(c) of the , which in terms, however, applies only to private trusts.
We must therefore hold that the fact that the trustees have the option at any.
time to throw up the managing agency is no legal ' impediment to its being property which could be held on trust.
Lastly, it is contended that on the terms of exhibit A, the properties which the trustees are " to hold and stand possessed of " are " the sum of Rupees One Lao and any donations or contributions received by the Trustees and all accretions thereto and thereof and the investments in securities for the time being and from time to time representing the same ", that on the terms aforesaid, the managing agency cannot be held to be property held in trust, as no part of the sum of Rs. 1,00,000 was utilised in the acquisition of the business so as to impress it with the character of accretion.
It is argued that though the sum of Rs. 1,00,000 was given as security by the trustees under exhibit B, that was only for the due performance of their obligations as managing agents, and that the amount itself was not actually thrown into the business.
But it is to be observed that cl. 3 of the trust deed expressly provides for the acquisition of the business of managing agency on behalf of the trust and " with the help of the trust fund", and that precisely is what has happened and indeed, reading together Exs.
A and B, it is impossible to resist the conclusion that both the documents formed part of an integral scheme, and that what the settlors had in view in cl. 3 of exhibit A is the very managing agency, which was acquired under exhibit B.
There is considerable authority in England that when trustees carry on business with the aid of trust fund, the position in law is the same as if they actually employed it in the business, though, in fact, it be not actually invested therein.
Thus, in Rocke vs Hart (1), Sir William Grant observed: (1) ; ; , 1010.
76 a trader lodges money at his banker 's, he has in effect a benefit from that.
As he must generally keep a balance in his banker 's, it answers the purpose of his credit; as if it was his own money; and I should hold that to be employment in his trade.
" There are similar observations by Lord Gifford, in Moons vs De Bernales (1).
In the result, we are of opinion that the word I property ' in section 4(3)(i) of the Act is of sufficient amplitude to comprehend 'business ', and if the question fell to be decided solely on the terms of that sub section, the managing agency constituted under exhibit B must be treated as property held on trust within section 4(3)(i) of the Act.
This conclusion, however, is not sufficient to dispose of the appeal in favour of the appellant, because there is still the question raised by the respondent that even if under the general law, the word I property ' is wide enough in its significance to include business, in its context in section 4(3)(i) read along with section 4(3)(ia) it bears a more restricted sense as meaning only property other than business.
And it is this contention that forms the subject matter of the second question under reference.
In order to understand this question, it is necessary to state that in the Act as originally passed, the only provision for exemption from taxation of income derived from property dedicated to religious or, charitable trust was contained in section 4(3)(i).
On this section, the question arose whether when a business was carried on for and on behalf of a trust, the profits derived therefrom were exempt from taxation.
It was held in Commissioner of Income tax, Madras vs Arunachalam Chettiar (2), following a decision of the House of Lords in Coman vs Governors of the Rotunda Hospital, Dublin(3), that they were not.
That was also the view taken by the Allahabad High Court in Lachhman Das Narain Das, In re (4).
Then came the decision in In re The Tribune (5) already referred to, wherein the Lahore High Court held that 'property ' in section 4(3)(i) was (1) ; ; (3) [1021] A.C. 1.
(2) I.L.R. (4) I.L.R. (1925) 47 All.
(5) 77 sufficiently comprehensive to include business, and that profits from business carried on by trustees would be exempt from taxation.
As already stated, though the matter was taken in appeal to the Privy Council this question was not raised.
It was in this state of the law that the Legislature intervened, and enacted a new provision, section 4(3)(ia), which is as follows: " 4(3) Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them: (ia) Any income derived from business carried on on behalf of a religious or charitable institution when the income is applied solely to the purposes of the institution and (a) the business is carried on in the course of the carrying out of a primary purpose of the institution, or (b) the work in connection with the business is mainly carried on by beneficiaries of the institution.
" Under this provision, the profits of business would be exempt only if the conditions laid down therein are satisfied.
It is the contention of the Department that as this is a special provision dealing with the topic of exemption in respect of business carried on for and on behalf of a trust, any claim for exemption as regards profits derived from any such business can be made only under that provision, and when the conditions laid down therein are not satisfied, it is not open to the assessee to fall back upon the general provision contained in section 4(3)(i) and claim exemption thereunder on the ground that business is property.
The basis of this contention is the well known maxim, Generalia specialibus non derogant.
In Charitable Gadodia Swadeshi Stores vs Commissioner of Income tax, Punjab(1), this question came up for consideration before the Lahore High Court.
It was held by the learned Judges that the fact that the business failed to satisfy the two conditions laid down in section 4(3)(ia) was no reason why it should not be exempt from taxation if it fell within 1) 78 section 4(3) (i), and the main ground of the decision was that the two categories mentioned in section 4(3) (i) and section 4(3) (i)(a) having been enacted as two different clauses, it must be taken that the one did not exclude the other.
It was this decision that was relied upon by the appellant before the Tribunal, which, however, considered it distinguishable.
A reading of its order, however, shows that it was not really satisfied about its correctness.
Accordingly, when the appellant applied for reference under section 66 (1) of the Act, the Tribunal referred the second question also for the decision of the High Court.
But in the view which the learned Judges of the Bombay High Court took that business was not property within section 4(3)(i), it became unnecessary for them to express an opinion on that question.
Now that we have held that the word property in section 4 (3) (i), standing by itself, is susceptible of a wider connotation so as to include business, it becomes necessary to consider the second question under reference.
Learned counsel on both sides agree that it would be more satisfactory that this question should be remitted to the High Court for determination.
In the result, we remand the case to the High Court of Bombay for a fresh disposal of the reference on a consideration of the second question.
As for costs, we direct that the respondent do pay the appellant the costs of this appeal as also the costs of the hearing before the High Court.
The costs of the further hearing which we have directed will be dealt with by the High Court on remand.
Appeal allowed.
Case remanded.
| A deed of trust whereby a sum of Rs. 1 lac was settled on various charities specified therein provided for the acquisition of the business of managing agency on behalf of the trust and with the help of the trust fund.
The trustees of the said trust (appellant) became the managing agents of a public company.
The agreement for the agency provided, inter alia, that the agency was for a period of twenty years but that it was open to the trustees to give up the agency on giving three months ' notice and that the managing agents were to get a remuneration of 10 per cent. ' of the net annual profits subject to a minimum of Rs. 50000 and an office allowance of Rs. 1,000 per mensem.
The appellant claimed that the income derived from the managing agency was income from property held under trust to be applied wholly for charitable purposes, and was, in consequence, exempt from taxation under section 4(3)(i) of the Indian Income tax Act, 1922.
It was contended on behalf of the Income tax authorities (1) that the income in question was remuneration for services rendered and was not derived from any property, as a managing agency could not be considered to be property, and that, therefore, it did not fall within section 4(3)(i) of the Act, (2) that on the terms of the deed of trust the managing agency could not be property held on trust, as no part of the sum of Rs. 1 lac was utilised in the acquisition of the business so as to impress it with the character of accretion, and (3) that even if the managing agency business could be regarded as property within section 4(3)(i), it was governed by the special provision contained in section 4(3)(ia), and as the conditions laid down therein had not been satisfied, no exemption could be claimed.
Held: (1) A managing agency is business which would be property within section 4(3)(i) of the Act.
Lakshminarayan Ram Gopal and Son Ltd. vs The Government of Hyderabad, (1955) I.S.C.R. 393, followed.
All India Spinners ' Association vs Commissioner of Income tax,, Bombay , relied on, 66 (2)Though the office of managing agency carries with it certain obligations, in law there can be no objection to creating a trust over property burdened with obligations, though, if it is onerous by reason of such obligations, the trustee may be entitled to disclaim it.
(3)When trustees carry on business with the aid of trust fund the position in law is the same as if they actually employed it in the business, though, in fact, it be not actually invested therein and, taking the provisions of the deed of trust and the agreement of agency together, the managing agency must be held to be property held on trust.
Rocke vs Hart, ; and Moons vs De Bernales, ; , relied on.
The case was remanded to the High Court for a decision on the question whether profits from business would be exempt from taxation under section 4(3)(i) of the Act when the conditions laid down in section 4(3)(ia) were not satisfied.
|
Summarize this legal judgement text concisely | vil Appeal No. 291 of 1955.
Appeal by special leave from the judgment and order dated March 29, 1955, of the Calcutta High Court in appeal from Appellate Order No. 134 of 1954, affirming the appeal against the judgment and order 361 dated July 29, 1954, of the Court of the District Judge of 24 Parganas in Misc.
Appeal No. 87 of 1954, arising out of the order of the 1st Additional Court of the Munsif at Sealdah dated February 2, 1954, in Misc.
Judicial Case No. 96 of 1953.
N. C. Chatterjee and section N. Mukherjee, for the appellant.
A. V. Viswanatha Sastri and D. N. Mukherjee, for the respondent.
1957 September 10.
The following Judgment of the Court was delivered by GAJENDRAGADKAR J.
This is an appeal by special leave in execution proceedings and the short point which the appellant has raised before us is that, under section 5 (1) of the Calcutta Thika Tenancy Act, 1949 (West Bengal II of 1949) as amended by the Calcutta Thika Tenancy (Amendment) Act, 1953 (West Bengal VI of 1953), execution proceedings taken out by the decrees against him could be entertained only by the controller and not by the civil courts.
This point arises in this way.
The appellant is a thika tenant in respect of a portion of the premises No. 28, R. G. Kar Road in Calcutta.
In Suit No. 46 of 1948 a decree for ejectment was passed against him and in favour of the respondent on March 16, 1949.
This decree was challenged by the appellant by preferring an appeal before the District Court and a second appeal before the High Court at Calcutta; but both those appeals failed and the decree for ejectment passed by the trial court was confirmed.
Then followed several proceedings between the parties and the course of litigation between them turned out to be protracted and tortuous.
Ultimately on May 22, 1953, the respondent filed an execution case before the First Additional Court, Sealdah (Title Execution Case No. 34 of 1953).
By this application the respondent claimed that the possession of the property covered by the decree should be delivered to him.
Thereupon the appellant filed a Miscellaneous Judicial Case under section 47 of the Code of Civil Procedure in the court raising several objections to the decree holder 's claim for execution (Miscellaneous 362 Judicial Case No. 96 of 1953).
This case was dismissed by the executing court on February 2, 1954.
A miscellaneous appeal preferred by the appellant before the learned District Judge, 24 Parganas, as well as the second miscellaneous appeal preferred by him before the High Court at Calcutta were likewise dismissed.
The appellant then applied for leave to prefer an appeal under the Letters Patent.
This application was rejected by Mr. Justice Renupada Mukherjee who had heard the second appeal.
On May 10, 1955, the appellant filed a petition for special leave to appeal to this Court and special leave was granted to him on May 18, 1955.
The courts below have held that the decree holder 's application for execution of the decree passed in his favour can and ought to be entertained by the civil courts and an order has been passed against the appellant that he should vacate the premises in question before the end of Jaistha 1362 B.S. (1 5th June, 1955), failing which execution will proceed according to law.
The appellant 's contention is that the view taken by the courts below about the competence of the civil courts to entertain the decree holder 's execution application proceeds on a misconstruction of section 5 (1) of the Calcutta Thika Tenancy Act.
That is how the only question which arises for our decision is about the construction of the said relevant section.
Before dealing with this point, it would be useful to consider briefly the history of legislation passed by the West Bengal Legislature with the object of affording protection to the thika tenants.
Until 1948 the rights and liabilities of the landlords and their thika tenants were governed by the provisions of the Transfer of Property Act.
On October 26, 1948, the Calcutta Thika Tenancy Ordinance XI of 1948, was promulgated because it was thought expedient, pending the enactment of appropriate legislation to provide for the temporary stay of the execution of certain decrees and orders of ejectment of thika tenants in Calcutta.
Section 2 of the Ordinance defined the thika tenant.
Section 3 provided that no decree or order for the ejectment of a thika tenant shall be executed during the continuance in operation of the Ordinance, From the 363 operation of this section were excluded decrees or orders for ejectment passed against, thika tenants on the ground of non payment of rent unless the tenants deposited in court the amount of the decree or order as required by the proviso.
The object of the Ordinance clearly appears to be to give protection to the thika tenants in Calcutta and to afford them interim ' relief by staying execution of certain decrees and orders as mentioned in section 3 until an appropriate Act was passed by the Legislature in that behalf.
Then followed Act II of 1949 on February 28, 1949.
Section 2, sub section
(5) of this Act defines a thika tenant.
Section 3 lays down the grounds on which a thika tenant may be ejected.
The effect of this section is that it is only where one or more of the six grounds recognized by section 3 is proved against a thika tenant that a decree for ejectment against him can be passed.
In other words, grounds other than those mentioned in section 3 on which a landlord would have been entitled to eject his thika tenant under the provisions of the Transfer of Property Act became inapplicable to the case of the thika tenants by virtue of section 3.
Section 5, sub section (1) reads thus: "section 5.
(1) Notwithstanding anything contained in any other law for the time being in force, a landlord wishing to eject a thika tenant on one or more of the grounds specified in section 3 shall apply in the prescribed manner to the Controller for an order in that behalf and, on receipt of such application, the Controller shall, after giving the thika tenant a notice to show cause within thirty days from the date of service of the notice why the application shall not be allowed and after making an inquiry in the prescribed manner either allow the application or reject it after recording the reasons for making such order, and, if he allows the application, shall make an order directing the thika tenant to vacate the holding and, subject to the provisions of section 10, to put the landlord in possession thereof." This section requires the landlord wishing to eject his thika tenant on one or more of the grounds specified in section 3 to apply in the prescribed manner to the Controller 47 364 for an order in that behalf.
This section further provides for the procedure to be followed by the Controller in dealing with such an application.
Two other sections of this Act need to be considered.
Section 28 deals with cases where decrees or orders for the recovery of possession of any holding from a thika tenant have been passed before the date of the commencement of the Act and it lays down that if possession has not been obtained by the decree holder in execution of such decrees or orders the court may consider whether the decree or order in question is or is not in conformity with any of the provisions of the Act other than subs.
(1) of section 5 or section 27.
On considering this matter jurisdiction is given to the court to rescind or vary the decree or the order for the purpose of giving effect to the relevant provisions of this Act.
A decree or order so varied has then to be sent to the Controller for execution as if it were an order made under and in accordance with the provisions of the Act.
Having thus dealt with decrees and orders for ejectment passed against thika tenants prior to the commencement of this Act, section 29 proceeds to deal with pending, proceedings for ejectment between the landlords and the thika tenants.
This section lays down that all pending proceedings of this character shall be transferred to the Controller who shall thereupon deal with them in accordance with the provisions of this Act as if this Act had been in operation on the date of the institution of the suit or proceeding.
The proviso to this section exempts the application of section 4 of this Act to such proceedings for obvious reasons.
It appears that the definition of the expression thika tenant " contained in the Act gave rise to some difficulties and it was discovered that some of the tenants in Calcutta who were in substance thika tenants failed to obtain the protection of the Act owing to some words used in the said definition.
In order to afford protection to the whole class of thika tenants in Calcutta, West Bengal Ordinance No. XV of 1952 was promulgated on October 21, 1952.
Accordingly, section 2 of this Ordinance amended section 2, sub section
(5) of the Calcutta Thika Tenancy Act II of 1949.
This is one important 365 change introduced by this Ordinance.
The other important change introduced by this Ordinance is to be found in section 5 of the Ordinance.
Section 5, sub section
(1) lays down that all cases pending before a court or Controller on the date of the commencement of this Ordinance shall be governed by the provisions of Act II of 1949, as amended by this Ordinance.
Sub section (2) of section 5 then deals with cases where decrees or orders have been passed for the recovery of possession at any time between the commencement of the said Act and this Ordinance.
In the present appeal, we are dealing with a decree falling under section 5, sub section
(2) of this Ordinance.
In respect of such decrees this sub section lays down that the judgment debtor could apply within three months of the commencement of the Ordinance to the court or the Controller as the case may be and invite his decision on the question of his status as thika tenant; according to the provisions of this subsection, the status of the judgment debtor as a thika tenant would then have to be determined under the amended definition of the expression "thika tenant".
If the finding on the question of status is in favour of the judgment debtor then the decree or order would have to be set aside and execution proceedings annulled, and the matter sent back to the court or Controller for disposal in accordance with law.
Subsection (3) of section 5 enables the court or the Controller to stay proceedings, if any, in execution pending the disposal of an application made under sub section
In other words, the effect of sub section
(2) of section 5 clearly appears to be that, in regard to decrees passed during the period mentioned by this subsection, a judgment debt or was given a right to challenge the validity of the said decree or order on the ground that he was a thika tenant under the amended definition of the said expression and this right could be exercised by making an appropriate application within the prescribed period of three months.
If no such application is made by the judgment debtor within the prescribed period, then the decree or order for ejectment passed against him would be executed under the ordinary law.
366 This Ordinance was followed by the Calcutta Thika Tenancy (Amendment) Act, 1953 (West Bengal VI of 1953).
This Act came into force immediately on the Calcutta Thika Tenancy (Amendment) Ordinance, 1952 (West Bengal Ordinance No. XV of 1952), ceasing to operate.
Under the proviso to section 1, sub section (2) of this Act, the provisions of the Calcutta Thika Tenancy Act II of 1949, as amended by this Act, shall also apply and be deemed to always apply to all suits, appeals and proceedings pending before any court or before the Controller or before a person deciding an appeal under section 27 of this Act on the date of the commencement of the said Ordinance of 1952.
It must, however, be added that this proviso was subject to the provisions of section 9 of this Act.
We will presently refer to section 9.
Section 2 of this Act adopted the amendment of the definition of the expression, " thika tenancy" introduced by the amending Ordinance of 1952.
Section 4 of this amending Act has amended a. 5, sub section
(1) of the original Act by deleting the words "but subject to the provisions of section 28" which occurred in the said section.
By s.8 of this Act, sections 28 and 29 in the original Act II of 1949 have been omitted and by a. 9 it is laid down that any proceedings commenced under sub section
(2) of section 5 of the amending Ordinance of 1952 shall, on the said Ordinance ceasing to operate be continued as if sub sections
(2), (3) and (4) of that section and the explanations to that section were in force.
It would thus appear that though the Ordinance ceased to be operative the remedy provided by section 5, sub section
(2) of the Ordinance to judgment debtors continued to be available to them and the applications made by them to seek.
the protection of the said provision bad to be dealt with as if the material provisions of the Ordinance were in operation.
It is true that section 9 of the amending Act has not been incorporated in the original Act II of 1949 but it is conceded that the omission to include this section in the original Act does not make any difference.
Mr. N. C. Chatterjee, for the appellant, has contended that the object in enacting the relevant 367 Thika Tenancy Acts and Ordinances is absolutely clear.
It is a piece of welfare legislation and as such its operative provisions should receive a beneficient construction from the courts.
If the scheme of the Act and the object underlying it is to afford full protection to the thika tenants, says Mr. Chatterjee, courts should be slow to reach the conclusion that any class of thika tenants are excluded from the benefit of the said Act.
In support of his argument Mr. Chatterjee hasnaturally relied on the observations made by Barons of the Exchequer in Heydon 's case (1).Indeed these observations have been so frequently cited with approval by courts administering provisions of welfare enactments that they have now attained the status of a classic on the subject and their validity cannot be challenged.
However, in applying these observations to the provisions of any statute, it must always be borne in mind that the first and primary rule of construction is that the intention of the Legislature must be found in the words used by the Legislature itself.
If the words used are capable of one construction only then it would not be open to the courts to adopt any other hypothetical construction on the ground that such hypothetical construction is more consistent with the alleged object and policy of the Act.
The words used in the material provisions of the statute must be interpreted in their plain grammatical meaning and it is only when such words are capable of two constructions that the question of giving effect to the policy or object of the Act can legitimately arise.
When the material words are capable of two constructions, one of which is likely to defeat or impair the policy of the Act whilst the other construction is likely to assist the achievement of the said policy, then the courts would prefer to adopt the latter construction.
It is only in such cases that it becomes relevant to consider the mischief and defect which the, Act purports to remedy and correct.
Indeed Mr. Chatterjee himself fairly conceded that be would not be justified in asking the court to put an undue strain on the words used in the section in order (1) (1584) 3 Co. Rep. 8. 368 that a construction favourable to the thika tenants should be deduced.
It is in the light of this legal position that we must now consider section 5, sub section
(1) of West Bengal Act II of 1949, amended by West Bengal Act VI of 1953.
Under the provisions of sections 5 and 28 of the original West Bengal Act II of 1949, the position was clear.
If a landlord wished to eject his tenant he could have obtained an order for ejectment only if his claim was justified on one or more of the grounds recognized by section 3 of the Act.
If, after the commencement of the Act, the landlord wanted to enforce his claim for ejectment, he had to apply for the said relief before the Controller under section 5 in the prescribed manner.
The application of section 5, sub section
(1) was, however, subject to the provisions of section 28.
As we have already pointed out, section 28 dealt with decrees or orders already passed whereas section 29 dealt with suits and proceedings pending at the commencement of the Act.
The appellant 's contention is that the effect of sections 5, 28 and 29 was to submit the claims of landlords for ejectment of the thika tenants to a scrutiny in the light of the provisions of section 3 and other relevant sections of the Act.
Whether the claim had merged in a decree or was pending in a proceeding at the time when the Act came into force or it was made after the commencement of the Act, in every case the test laid down by section 3 had to be applied; and the argument is that/ this position is not altered by the amendments made by Act VI of 1953.
In our opinion, this argument cannot be accepted.
Section 3 clearly refers to the claim for ejectment made by the landlord in a proceeding instituted by him.
It is difficult to understand how section 3 could be invoked against a landlord who has obtained a decree for ejectment of his thika tenant.
It is quite plain that when a decree holder seeks to obtain possession of his property in execution of a decree he cannot be said to obtain such possession on any of the grounds mentioned in section 3.
All that he does is to rely upon the decree passed by a court of competent jurisdiction and to insist upon its execution.
Similarly the proceedings contemplated by section 5, sub section
(1), cannot in 369 our opinion, be said to include execution proceedings of this type.
Section 5, sub section
(1) deals with cases where the landlord initiates original proceedings for ejecting his thika tenant.
This sub section refers to a landlord wishing to eject a thika tenant on one or more of the grounds specified in section 3.
Now this description is wholly inapplicable to a landlord who holds ' a decree for ejectment in his favour.
That is why we feel no hesitation in coming to the conclusion that landlords who have obtained decrees of ejectment against their thika tenants cannot be required to apply under the provisions of section 5, sub section
(1) of the Act.
That is one aspect of the matter.
The other provisions of the said sub section also point to the same conclusion.
When an application for ejectment is made under section 5, sub section
(1), notice is ordered to be issued to the thika tenant and enquiry follows in the light of the pro visions of section 3.
It is only if the Controller is satisfied that one or more of the grounds recognized by section 3 is proved by the landlord that an order for ejectment would be passed by him and this order would be followed by a direction in consequence of which the landlord would be put in possession of the premises.
Section 5, sub section
(1) thus provides for a self contained procedure for dealing with applications for ejectment made by a landlord against his thika tenant before the Controller.
Mr. Chatterjee, however, suggests that the deletion of the words " subject to the provisions of section 28 " which originally occurred in section 5 indicates that the Controller has been given jurisdiction not only to entertain original applications for ejectment made by the landlords but also to deal with decrees already passed in their favour.
Whether or not the use of the deleted words in the original section 5 (1) served any useful purpose and what exactly was their denotation are matters on which it is unnecessary to pronounce a judgment in the present case.
It is clear that since section 28 along with section 29 has been deleted from the Act by the subsequent amending Act VI of 1953, any reference to section 28 in section 5 (1) would have been entirely out of place.
But the deletion of the material words does not enlarge the 370 jurisdiction of the Controller to reopen disputes between the landlords and their thika tenants when in respect of such disputes decrees have already been passed by courts of competent jurisdiction in favour of landlords.
All the relevant provisions of section 5, sub section
(1) are absolutely inapplicable to cases of such decrees and so we are unable to accept the argument that even where a decree has been passed in favour of the landlord a claim for the execution of the decree would have to be entertained and considered by the Controller under section 5, sub section
Then it is urged that it would be unreasonable to hold that a certain class of thika tenants was precluded from obtaining the benefit of the Act merely because decrees for ejectment were passed before the Act came into force; and it is emphasised that the scheme of the original Act as evidenced by sections 5, 28 and 29 clearly was to afford protection to all thika tenants even where decrees for ejectment had been passed against them.
It must be conceded that under the original Act, section 28 purported to give protection to judgmentdebtors ' and required that the decrees passed against thika tenants should be examined by the courts that passed the decrees in the light of the provisions of the Thika Tenancy Act.
But, later on, it appears to have been thought prudent to limit the protection to such judgment debtors in the manner contemplated by section 5, sub section
(2) of the amending Ordinance of 1952.
Such judgment debtors were allowed liberty to apply for setting aside the decrees passed against them within three months after the commencement of the said Ordinance and such applications were required to be dealt with according to law even after the Ordinance ceased to be operative.
As we have already pointed out, the decree with which we are concerned in the present appeal falls within the purview of the provision of section 5, sub section
(2) of the Ordinance.
If the judgment.
debtor did not avail himself of the right conferred on him by this provision, he cannot now seek to rectify the omission by relying on the provisions of section 5, sub section
(1) as amended.
It may be unfortunate that owing to the steps that he was taking in several 371 proceedings adopted by him in the present litigation he was probably not advised to make a proper application under section 5, sub section
(2) of the Ordinance; but that is the only protection that he and judgment debtors of his class were entitled to after the amending Ordinance of 1952 came into force.
It would, therefore, not be reasonable to complain that no protection whatever has been given to this class of thika tenants.
It may be that the extent of the protection now afforded to this class may not be as wide as it originally was under section 28 of Act II of 1949 but the deletion of section 28 clearly indicates that the Legislature wanted to revise its policy in this matter.
The position, therefore, is that the conclusion which follows from a reasonable construction of section 5, sub section
(1) is corroborated by the deletion of section 28 from the Act and by the provision of section 5, sub section
(2) of the amending Ordinance of 1952 and section 9 of the amending Act VI of 1953.
We must,accordingly, hold that the Calcutta High Court was right in rejecting the appellant 's argument that civil courts had no jurisdiction to entertain the execution petition filed by the respondent against the appellant.
In the result, the appeal fails and must be dismissed with costs.
Appeal dismissed.
| Respondent obtained a decree for ejectment against the appellant, a thika tenant, and filed an application for execution of the decree before the civil Court.
Appellant resisted the application on the ground that in view Of section 5(1) Of the Calcutta Thika Tenancy Act, 1949, the civil Court had no jurisdiction to entertain the application.
Section 5(1) provides that a landlord wishing to eject a thika tenant on the grounds specified in section 3 shall apply to the Controller in that behalf.
Held that section 5(1) did not apply to a case where the landlord had already obtained a decree for ejectment against his thika tenant and consequently the civil Court had jurisdiction to entertain the execution application.
The operative provisions of welfare legislation should receive a beneficent construction from the Courts.
But the words used in a statute must be interpreted in their plain grammatical meaning and it is only when such words are capable of two constructions that the question of adopting the construction which is more consistent with the policy of the Act arises.
Heydon 's Case, (1584) 3 Co. Rep. 8, referred to.
|
Summarize this legal judgement text concisely | Appeal No. 170 of 1956.
Appeal by special leave from the judgment and order dated the 12th January, 1955, of the Calcutta High Court in exercise of its Special Jurisdiction under the , in Matter No. 107 of 1954.
M. C. Setalvad, Attorney General for India, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the appellants.
Aswini Kumar Ghose, T. section Venkataraman and K. R. Chaudhury, for the respondents.
373 1957.
September 10.
The following Judgment of the Court was delivered by GAJENDRAGADKAR J.
The material facts leading to the present appeal are not in dispute and may be conveniently stated at the outset.
On July 17, 1933, the respondent was enrolled as a registered accountant under the Auditors Certificate Rules, 1932.
When the , came into, operation, the respondent 's name was entered as a Member of the Institute of Chartered Accountants of lndia on July 1, 1949.
On September 13, 1950, the respondent was appointed a Liquidator of three companies.
The respondent obtained refund of the sums and securities deposited on behalf of the three companies with the Reserve Bank of India.
He, however, made no report about the progress of liquidation of the said three companies.
Repeated requests made to him by the Assistant Controller of Insurance found no response.
As Liquidator the respondent gave a cheque to Shri section K. Mandal, Solicitor to the Central Government at Calcutta, towards payment of the taxed costs in the winding up proceedings of one of the companies.
The said cheque was, however, returned dishonoured on the ground that the payment had not been arranged for.
When the Assistant Controller of Insurance found that the conduct of the respondent as Liquidator was wholly unsatisfactory and that he would not even show the ordinary courtesy of replying to the letters addressed to him, he proceeded to cancel the appointment of the respondent as Liquidator by his letter dated October 29, 1952.
The respondent was then called upon to hand over all books of account, records, documents, etc., to Shri N. N. Das, who was appointed a Liquidator in his place.
Shri Das as well as the Assistant Controller of Insurance then made repeated demands on the respondent to deliver to Shri Das the assets and records of the three companies.
It is common ground that the respondent had with him securities of the value of Rs. 11,950 and a cash sum of Rs. 642 on account of the United Common 374 Provident Insurance Co. Ltd. He had also with him securities to the value of Rs. 12,100 on account of the Asiatic Provident Co. Ltd., and securities and cash on account of the Citizens of India Provident Insurance Co. Ltd. Out of these amounts the respondent returned only securities of the face value of Rs. 10,000 and Rs. 350 of Asiatic Provident Co. Ltd., and United Common Provident Insurance Co. Ltd., respectively.
He failed to send any further securities or cash held by him on account of the said three companies.
It was at this stage that a complaint was lodged against the respondent with the Council of the Institute of Chartered Accountants of India in Calcutta.
As required by the provisions of the Act, the disciplinary committee of the Council inquired into the matter.
Notice was served on the respondent but he filed no written statements within the time fixed.
On August 1, 1953, a letter was received from the respondent that he was ill and was unable to attend personally.
The respondent had also requested for the adjournment of the case.
Proceedings were accordingly adjourned to August 29, 1953, on which date the respondent was represented by a counsel who filed the respondent 's affidavit stating that he was prepared to hand over the entire cash, books of account, etc., to the newly appointed Liquidator without rendering the necessary accounts.
It appears that Shri Das, the subsequently appointed Liquidator, gave evidence before the disciplinary committee.
Though several opportunities were given to the respondent to appear before the disciplinary committee he failed to appear or to take part in the proceedings.
Ultimately the committee made its report on September 13, 1953, and found that the respondent was guilty of gross negligence in the conduct of his professional duty in not handing over charge of the assets and the books of account of the said companies to the newly appointed Liquidator.
This report was considered by the Council itself as required by the Act.
Tile Council agreed with the finding recorded by the disciplinary committee in substance, but took the view that the 375 acts and omissions of the respondent were more serious than what can be described as gross negligence.
The finding of the Council was then forwarded to the High Court of Judicature at Calcutta as required by section 21 (1) of the Act and the matter was heard by the learned Chief Justice and Mr. Justice Lahiri.
By their judgment delivered on January 12, 1955, the reference was rejected on the ground that no action could be taken against the respondent under the Act though the facts proved against the respondent showed that " he had been guilty of grossly improper conduct if not dishonesty".
On these facts the main point which arises for our decision is what is the nature, scope and extent of the disciplinary jurisdiction which can be exercised under the provisions of this Act against the respondent.
It would now be necessary to examine the scheme of the material provisions of the Act.
This Act came into force in 1949 and it was passed, because the Legislature thought it expedient to make provision for the regulation of professional accountants and for that purpose it has provided for the establishment of the Institute of Chartered Accountants.
Section 2, sub section
(1) (b) defines a Chartered Accountant as meaning "a person who is a member of the Institute and who is in practice".
Section 2, sub section
(2) provides that a member of the Institute shall be deemed to be in practice when, individually or in partnership with chartered accountants, he, in consideration of the remuneration received or to be received, does any of the acts mentioned in the following 4 sub clauses: . .
Sub clause (iv) is relevant for our purpose: " section 2 (2) (iv): " (Where a member) renders such other services as in the opinion of the Council are or may be rendered by a chartered accountant, (he is deemed to be in practice).
" Section 4 provides for the entry of names in the register of chartered accountants.
Section 5 divides the members of the Institute into two classes designated respectively as Associates and Fellows.
Section 6 lays down that no member of the Institute shall be 376 entitled to practise unless he has obtained from the 'Council a certificate of practice.
Under section 7, every member of the Institute in practice shall be designated as a chartered accountant and no person practising the profession of accountancy in India shall use any other designation whether in addition thereto or in substitution therefor.
Section 8 deals with disabilities.
Any person who incurs any one of the disabilities enumerated in sub cls.
(i) to (vi) of section 8 shall not be entitled to have his name entered in or borne on the Register.
Sub clause (v) deals with the disability arising by reason of conviction by a competent court whether within or without India of an offence involving moral turpitude and punishable with transportation or imprisonment or of an offence not of a technical nature committed by him in his professional capacity unless in respect of the offence committed be has either been granted a pardon or, on an application made by him in this behalf, the Central Government has, by an order in writing, removed the disability.
Sub clause (vi) deals with the disability in cases where the chartered accountant is found on an inquiry to be guilty of conduct which renders him unfit to be a member of the Institute.
Chapter III deals with the constitution of the Council, the committees of the Council and the finances of the Council.
Chapter IV deals with the register of members and the removal from the Register of the name of a chartered accountant, as provided by section 20, sub cls.
(a), (b) and (c).
Under section 20, sub section
(2), it is provided that the Council shall remove from the Register the name of any member who has been found by the High Court to have been guilty of conduct which renders him unfit to be a member of the Institute.
Chapter V deals with the question of misconduct.
It consists of sections 21 and 22.
Chapter VI deals with the constitution and functions of the Regional Councils; chapter VII deals with penalties and chapter VIII deals with miscellaneous matters.
Section 21 deals with the procedure of enquiries relating to misconduct of members of the Institute.
It reads thus: 377 " section 21.
(1) Where on receipt of information or on receipt of a complaint made to it, the Council is of opinion that any member of the Institute has been guilty of conduct which, if proved, will render him unfit to be a member of the Institute, or where a complaint against a member of the Institute has been made by or on behalf of the Central Government, the Council shall cause an inquiry to be held in such manner as may be prescribe and the finding of the Council shall be forwarded to the High Court.
(2). . . . (3). . . . (4). . . .
Sub sections (2), (3) and (4) of section 21 deal with the powers of the High Court in dealing with the reference made to it, under section 21, sub section
Section 22 defines misconduct.
It reads thus: " section 22.
For the purposes of this Act, the expression conduct which, if proved, will render a person unfit to be a member of the Institute " shall be deemed to include any act or omission specified in the Schedule, but nothing in this section shall be construed to limit or abridge in any way the power conferred on the Council under sub section
(1) of section 21 to inquire into the conduct of any member of the Institute under any other circumstances." The learned Judges of the Calcutta High Court have held that the conduct of which the respondent is proved to have been guilty cannot be said to be professional misconduct properly so called and cannot, therefore, attract the provisions of sections 21 and 22 of the Act.
"There, thus, seems to be no room for contending"# observes the learned Chief Justice in his judgment, " that misconduct not connected with the exercise of the profession is also within the ambit of the Act, provided it involves moral turpitude or appears to render a person unworthy to remain a member of a responsible profession".
It has also been found by the learned Judges that even if they were to hold that the misconduct proved against the respondent attracted the provisions of sections 21 and 22 of 378 the Act it would not be open to them to take any action against the respondent on that ground because the Institute cannot expect the Court to take action in the present case on the footing that the respondent had been guilty of misconduct otherwise than in his professional capacity since that is not the finding which the Council arrived at and which is reported to the Court.
It is the correctness of these findings that is challenged before us by the learned Attorney General.
lie contends that the learned Judges of the Calcutta High Court have put an unduly restricted and narrow construction on the provisions of section 21 and section 22 in holding that the respondent 's conduct does not amount to professional misconduct; and he has also urged that the technical reason given by the learned Judges in not taking any action against the respondent even if they had accepted the broader interpretation of the two said sections proceeds on a misconception about the nature and extent of the powers of the High Court while hearing references made to it under the provisions of section 21, sub sections
(2), (3) and (4).
In our opinion, the contentions raised by the learned Attorney General are well founded and must be upheld.
Let us first consider whether the conduct of the respondent amounts to professional misconduct or not.
In dealing with this question it is necessary to bear in mind the provisions of section 2, sub section
(2) (iv) of the Act.
A member of the Institute under this provision shall be deemed to be in practice when he renders such other services as in the opinion of the Council are or may be rendered by a chartered accountant.
In other words, just as a member of the Institute Who engages himself in the practice of accountancy is by such conduct deemed to be in practice as a chartered accountant, so is he deemed to be in practice as a chartered accountant when he renders other services mentioned in section 2, sub s.(2) (iv).
What other services attract the provisions of this sub section has to be determined in the light of the regulations framed under provisions of this Act.
Section 30 of the Act confers power on the Council to make regulations by notification 379 in the Gazette of India for the purpose of carrying out the object of the Act and it provides that a copy of such regulation should be sent to each member of the Institute.
Section 30, sub section 2 sets out the several topics in respect of which regulations can be framed though, as usual, it provides that the enumeration of the different topics is without prejudice to the generality of the powers conferred by section 30, sub s.(1).
Sub section
(4) lays down that, notwithstanding anything contained in sub sections
(1) and (2), the Central Government may frame the first regulations for the purposes mentioned in the section and such regulations shall be deemed to have been made by the Council and shall remain in force from the date of coming into force of this Act until they are amended, altered or revoked by the Council.
Regulation 78 is one of the regulations originally framed by the Central Government under section 30, sub section
It reads thus: " Regulation 78.
Without prejudice to the discretion vested in the Council in this behalf, a Chartered Accountant may act as liquidator, trustee, executor, administrator, arbitrator, receiver, adviser, or as representative for costing financial and taxation matter or may take up an appointment that may be made by Central or State Governments and Courts of law or any Legal Authority, or may act as Secretary in his professional capacity not being an employment on a salary cum full time basis.
" The last clause has been added by the Council by a notification dated August 22, 1953.
Now it is clear that when the respondent accepted his appointment as liquidator of the three companies in question he agreed to work as a liquidator in pursuance of an order passed by the High Court of Judicature at Calcutta and there can be no doubt that in working as such liquidator he was rendering services which in the opinion of the Council may be rendered by a chartered accountant.
The provisions of Regulation 78 must inevitably be considered in the light of section 2, sub s.(2), cl.(iv) and the result of considering the two provisions together obviously is that when the respondent was working as a liquidator in pursuance of an order passed by the Calcutta High Court he 49 380 must be deemed to be in practice within the meaning of section 2, sub s.(2).
We feel no difficulty in holding that chartered accountants who render services falling within section 2, sub section
(2), cl.
(iv) are as much entitled to be deemed to be in practice as those whose duties attract the provisions of cls.
(i), (ii) and (iii) of sub section
If that be the true position it is difficult to accept the view that the conduct of the respondent while he discharged his duties as a liquidator is not the professional conduct of a chartered accountant even within the narrow and restricted sense of the term.
If, while acting as liquidator, the respondent must be deemed to be in practice as a chartered accountant, all acts and omissions proved against him in respect of such conduct as liquidator must be characterised as his professional acts and omissions.
"Practice" according to Webster 's New International Dictionary means Cc exercise of any profession or occupation " and if the performance of the duties as liquidator attracts the provisions of section 2, sub section
(2), whatever the chartered accountant does as a liquidator must be held to be conduct attributable to him in the course of his practice.
The object with which cl.
(iv) in sub section
(2) of section 2 has been deliberately introduced by the Legislature ' in our opinion, appears to be to bring within the disciplinary Jurisdiction of the statutory bodies recognized under the Act, conduct of chartered accountants even while they are rendering services otherwise than as chartered accountants properly so called.
It is because the Legislature wanted to provide for a self contained code of conduct in respect of chartered accountants that the denotation of the expression " to be in practice " has been in a sense deliberately and artificially extended by virtue of section 2, sub section
(2), el.
We must, therefore, hold that, on the facts proved, the respondent is clearly guilty of professional misconduct.
This would really dispose of the appeal before us, because once it is held that the respondent is guilty of professional misconduct it would be obviously necessary to deal with him on that basis and make an appropriate order under section 21, sub section
(3) of the Act.
However, 381 since the learned Attorney General has alternatively urged before us that in confining the exercise of disciplinary jurisdiction only to cases of professional misconduct, technically so called, the learned Judges of the Calcutta High Court have misconstrued the relevant provisions of the Act, we propose to deal very briefly with that question also.
Section 21, sub section
(1), deals with two categories of cases in which the alleged misconduct of members of the Institute can be inquired into.
If information is received or complaint is made to the Institute against the conduct of any chartered accountant the Council is not bound to hold an inquiry straightaway.
The Council is required.
to examine the nature of the information or complaint made and decide whether, if the facts alleged against the member are proved, they would render the member unfit to be a member of the Institute.
In other words, in the case of a private complaint made against members, it is only where the Council is satisfied prima.facie that facts alleged against the member, if proved, would justify the exercise of disciplinary jurisdiction against the member that the Council is required to hold an inquiry.
The conduct alleged must be such as, if proved, would render the member unfit to be a member of the Institute.
The other class of cases has reference to.
the complaint received by the Council from the Central Government.
In regard to this class of cases, the Council is not required, and indeed has no jurisdiction to apply the primarily test before holding an inquiry.
The Council is required to cause an inquiry to be held on such complaint straightaway.
In both the cases when the inquiry is concluded, the findings of the Council are to be forwarded to the High Court.
Section 22 purports to define the expression "conduct which, if proved, will render a person unfit to be a member of the Institute".
It is an inclusive definition ; it includes any act or omission specified in the schedule but the latter portion of section 22 clearly lays down that nothing contained in this section shall be construed to limit or abridge in any way the power conferred on the Council under sub section
(1) of section 21.
The position thus 382 appears to be that though the definition of the Material expression used in section 21, sub section
(1), refers to the acts and omissions specified in the schedule, the list of the said acts and omissions is not exhaustive;and, in any event, the said list does not purport to limit the powers of the Council under section 21, sub section
(1), which may otherwise flow from the words used in the said sub section itself.
The schedule to which section 22 refers has enumerated in cls.
(a) to (v) several acts and omissions and it provides that, if any of these acts or omissions is proved against a chartered accountant, he shall be deemed to be guilty of professional misconduct which renders him unfit to be member of the Institute.
Clause (v) is rather general in terms since it provides for cases where the accountant is guilty of such other act or omission in his professional capacity as may be specified by the Council in this behalf by notification in the Gazette of India.
It must be conceded that the conduct of the respondent in the present case cannot attract any of the provisions in the schedule and may not therefore be regarded as falling within the first part of section 22; but if the definition given by section 22 itself purports to be an inclusive definition and if the section itself in its latter portion specifically preserves the larger powers and jurisdiction conferred upon the Council to hold inquiries by section 21, sub section
(1), it would not be right to hold that such disciplinary jurisdiction can be invoked only in respect of conduct falling specifically and expressly within the inclusive definition given by section 22.
In this connection it would be relevant to mention section 8 which deals with disabilities.
Section 8, sub sections
(v) and (vi), support the argument that disciplinary jurisdiction can be exercised against chartered accountants even in respect of conduct which may not fall expressly within the inclusive definition contained in section 22.
We, therefore, take the view that, if a member of the Institute is found, prima facie, guilty of conduct which, in the opinion of the Council, renders him unfit to be a member of the Institute, even though such conduct may not attract any of the provisions of the schedule, it would still be open to the Council to hold an inquiry against the 383 member in respect of such conduct and a finding against him in such an inquiry would justify appropriate action.
being taken by the High Court under section 21, sub section
It is true that the High Court would take action against the offending member only if the High Court accepts the finding made by the Council and not otherwise.
This conclusion is strengthened if we bear in mind the extended meaning of the expression "to be in practice" given in section 2, sub section
(2), which we have already dealt with.
In this view of the matter we must reverse the conclusion of the learned Judges of the Calcutta High Court that the conduct proved against the respondent does not fall within as.
21 and 22 because it is not conduct connected with the exercise of his profession as a chartered accountant in the narrow sense of that term.
The next question to consider is in regard to the extent of the jurisdiction and powers of the High Court when the High Court deals with references under section 21, sub sections
(2), (3) and (4).
The learned Judges of the Calcutta High Court took the view that even if they had agreed to put a wider construction on the material words used in sections 21 and 22, they would not be justified in passing any orders against the respondent in the present proceedings because the finding which had been referred to the High Court was only one and that was that the respondent was guilty of professional misconduct in the narrow sense of the term.
In other words, the High Court thought that in accepting, and acting or the larger construction of the material words the High Court would be making out a new case on the reference and the High Court would not be justified in adopting such a course.
In our opinion, this view is not well founded.
Section 2 1, sub section
(2), lays down the procedure to be followed by the High Court when a finding made by the Council is referred to it under section 21, sub section
Notice of the day fixed for the hearing of the reference has to be given to the parties specified in section 21, subs.
(1) and an opportunity of being heard has to be given to them.
Section 21, sub section
(3), then lays down that the High Court may either pass such final orders on the case as it thinks fit or refer it back for further 384 inquiry by the Council and, upon receipt of the finding after such inquiry, deal with the case in the manner provided in sub section
(2) and pass final orders thereon.
It is clear that, in hearing references made under section 21, sub section
(1), the High Court can examine the correctness of the findings recorded by the statutory bodies in that behalf.
The High Court can even refer the matter back for further inquiry by the Council and call for a fresh finding.
It is not as if the High Court is bound in every case to deal with the merits of the finding as it has been recorded and either to accept or reject the said finding.
If, in a given case, it appears to the High Court that, on facts alleged and proved, an alternative finding may be recorded, the High Court 'can well send the case back to the Council with appropriate directions in that behalf.
The powers of the High Court under section 21, sub section
(8), are undoubtedly wide enough to enable the High Court to adopt any course which in its opinion will,, enable the High Court to do complete justice between the parties.
Besides, in the present case, no such technical considerations can really come into operation because the material facts have not been in dispute between the parties at any stage of the proceedings.
The only point in dispute between the parties has been whether on the facts proved disciplinary jurisdiction can be invoked against the respondent under the provisions of the Act.
We, therefore, take the view that the learned Judges of the High Court were in error in holding that, even if they had accepted the broader interpretation of section 21 and section 22, they could not make an appropriate order in the present case against the respondent having regard to the specific finding recorded by the Council in the inquiry in question.
It would now be necessary to refer to some judicial decisions to which our attention has been invited.
In G. M. Oka, In re (1), it has been held by a Division Bench of the Bombay High Court that, when a chartered accountant gives evidence before a court of law and he is in the witness box not as a chartered (1) [1952] 22 Comp.
385 accountant but as a witness, the falsity of his ,statement does not give rise to any disciplinary proceedings against him as a chartered accountant.
If he gives false evidence he may be guilty of perjury and if he is convicted the conviction itself may call for disciplinary action.
These observations undoubtedly lend support to the view taken by the Calcutta High Court.
It is of course.
true that the conviction of a chartered accountant would attract the provisions of section 8, sub a.
(vi) and in that sense the conclusion of the Bombay High Court that the conviction itself may be the basis of disciplinary action is, with respect, wholly correct; but the other observations on which reliance is placed by the respondent before us are obiter and it also appears from the judgment that the attention of the learned Judges was not drawn to the provision of section 2 (2) (iv) and other relevant considerations do not appear to have been urged before them in that case.
As the judgment itself points out, apart from the technical points which were urged before the court on behalf of the chartered accountant, there was a large volume of other evidence produced against him which conclusively proved that he was guilty of misconduct.
Mr. Ashwini Kumar Ghosh, for the respondent, has also sought to rely on Haseldine vs Hosken (1).
In this case the solicitor had taken out an indemnity policy which insured him against loss arising by reason of any neglect, omission or error while acting in his.
professional capacity.
During the subsistence of this policy, the solicitor sustained loss through having, without realizing the fact, entered into a champertous agreement.
When the solicitor made a claim to be indemnified, it was held that the loss in respect of which indemnity was claimed did not arise by reason of any neglect, omission or error committed by the solicitor in his professional capacity but arose from his entering into a personal speculation.
We do not see how this case can assist the respondent in any way.
In considering the question as to whether the respondent has been guilty of professional misconduct in the present case, we are concerned with (1) 386 the material provisions of the itself.
Observations made by the learned Judges in Haseldine 's case can afford no assistance to us in interpreting the said provisions.
Similarly the decision in Krishnaswamy vs The Council of the Institute of Chartered Accountants (1) where the court was primarily concerned with the question as to whether orders passed under section 21 (2) of the Act are orders passed in civil proceedings or not is wholly inapplicable and gives us no help in deciding the points before us.
The only question which now remains to be considered is the final order to be passed against the respondent.
The conduct of the respondent is, in our opinion, wholl yunworthy of a chartered accountant in practice.
His refusal to give prompt replies to the letters received from the Assistant Controller of Insurance followed by his failure to return the documents and all securities and cash received by him as liquidator leave no room for doubt that he was unable to return the said amount and the said securities and cash and that he was merely employing delaying tactics with the object of postponing the evil day.
It is not conduct which is only technically improper or unworthy; it is conduct which is grossly improper and unworthy and as such it calls for a deterrent order.
The respondent was appointed a liquidator by the Calcutta High Court presumably because he was a chartered accountant in practice.
He thus received the benefit of this appointment as a result of his status as chartered accountant in practice and in acting as a liquidator he has been guilty of conduct which is absolutely unworthy of his status and it renders him unfit to be a member of the Institute.
We, therefore, think that the ends of justice require that the respondent 's name should be removed from the Register for four years.
In regard to costs we direct that the respondent should pay the costs of the appellants in this Court and that the parties should bear their own costs in the court below.
Appeal allowed.
(1) A.I.R. 1953 Madras 79.
| Respondent, a chartered accountant and a member of the Institute of Chartered Accountants, was appointed liquidator of three insurance companies in pursuance of the orders of the High 48 372 Court.
He received records, cash and securities on behalf of these companies.
The Assistant Controller of Insurance found that his conduct as liquidator was wholly unsatisfactory and that he would not even reply to the letters addressed to him.
His appointment was cancelled and another person was appointed.
In spite of repeated demands he failed to return all the records, cash and securities.
A complaint was lodged against him with the Council of the Institute of Chartered Accountants.
After inquiry the respondent was found guilty of misconduct, and the report was forwarded by the Council to the High Court for necessary action under section 21 of the .
The High Court rejected the reference on the ground that the conduct of which the respondent was found guilty could not be said to be professional misconduct and did not attract the provisions of sections 21 and 22 of the Act.
Held, that the respondent, when working as a liquidator, must be deemed to have been in practice as a chartered accountant within the meaning Of section 2(2) of the Act.
The definition of misconduct in section 22 is inclusive and the Council may hold an inquiry and find a member guilty of conduct which, in its opinion, renders him unfit to be a member of the Institute, even though such conduct does not attract any of the provisions of the schedule referred to in section 22.
The conduct of the respondent was grossly improper and unworthy and amounted to professional misconduct within the meaning of the Act.
In a reference under section 21 of the Act the High Court has ample powers to adopt any course which would enable it to do complete justice between the parties.
It can examine the correctness of the findings recorded by the Council or refer the matter back for further inquiry and call for a fresh finding.
The High Court is not bound to deal with the merits of the finding as it has been recorded and either to accept or reject it.
|
Summarize this legal judgement text concisely | Appeal No. 335 of 1957.
Appeal by special leave from the judgment and order dated January 31, 1957, of the Election Tribunal, Ajmer, in Election Petition No. 2 of 1956.
50 388 Mukat Behari Lal Bhargava and Naunit Lal, for the appellant.
Respondent No. 1 in person.
September 12.
The following Judgment of the Court was delivered by KAPUR,J. This is an appeal from the order of the Election Tribunal dated January 31, 1957, setting aside the election of the appellant, Maulana Abdul Shakoor, who was elected to the Council of States by the Electoral College of Ajmer which consisted of 30 members constituting the State Legislature of Ajmer.
He received 19 votes as against 7 polled in favour of the other candidate who is respondent No. 1 in this appeal.
The total number of valid votes polled was 26 and there were 3 invalid votes.
The result of the election was published in the Official Gazette on March 31, 1957, declaring the election of the appellant.
The unsuccessful candidate, the present first respondent, filed his election petition on May 2, 1956.
It is not necessary to set out all the allegations in the petition because the main controversy between the parties is whether the successful candidate, the present appellant, held an " office of profit " under the Government.
The impugned election was held on March 22, 1956.
By a notification issued on February 17, 1956, the nominations for candidature were to be filed between February 28, 1956, and March 1, 1956.
The date for scrutiny was March 5, 1956, and for the polling March 22, 1956.
The appellant filed two nomination papers on February 28, 1956, and a third one on March 1, 1956.
The respondent Rikhab Chand Jain also filed his nomination papers on March 1, 1956.
On March 5, 1956, the respondent Rikhab Chand Jain raised certain objections to the validity of the appellant 's nomination, the main ground being that the appellant was holding an office of profit under the Government.
The Returning Officer by his order dated March 6, 1956, rejected the two nomination papers of the appellant filed on February 28, 1956, but accepted the third one, i.e., of March 1, 1956, because, according to that officer, 389 under the provisions of Durgah Khwaja Saheb (Emeregency Provisions) Act, 1950 (XVII of 1950) which was in force up to February 29, 1956, the appellant was holding an office of profit under the Government but on the coming into force of the Durgah Khwaja Saheb Act (XXXVI of 1955) on March 1, 1956, he no longer held such office under the Government.
On May 3, 1956, the respondent filed an election petition under section 81 of the Representation of the People Act, 1951, in which he submitted that the third nomination paper of the appellant should also have been rejected as even under the provisions of Durgah Khwaja Saheb Act (XXXVI of 1955), the appellant was holding an office of profit under the Government and therefore his case was covered by the provisions of article 102 (1)(a) of the Constitution.
He also prayed that he be declared elected as the votes cast in the appellant 's favour were " thrown away " votes and the respondent alone received a majority of valid votes.
A majority of the Election Tribunal by their order dated January 31, 1957, held that on March 1, 1956, the appellant was holding an office of profit under the Government and therefore his nomination paper was hit by article 102(1) (a) of the Constitution.
They set aside his election and accepting the contention as to " thrown away " votes declared the respondent elected.
Disagreeing with the majority, the Chairman of the Election Tribunal held that on March 1, 1956, the appellant was no longer holding an office of profit under the Government, his nomination paper was rightly accepted and his election was valid and therefore the respondent could not be declared elected.
On the question whether the two nomination papers of the appellant dated February 28, 1956, were valid or not the Tribunal unanimously held them to be invalid on the ground that the appellant held an office of profit under the Government on that date.
It is not necessary to go into the question whether the two nomination papers filed by the appellant on February 28, 1956, were valid or not because if the nomination paper filed on March 1, 1956, is valid the question of their validity would not arise.
It may 390 here be stated that the argument before us has proceeded on the assumption that the appellant held an office of profit.
The controversy between the parties was therefore confined to whether this office of profit was held under the Government of India and therefore the disqualification for membership under article 102(1)(a) applies to the appellant.
In order to resolve this controversy the important question of construction that arises is: was the appellant holding an office of profit under the Government of India and does article 102(1)(a) of the Constitution operate ? This article is as follows: 102(1) " A person shall be disqualified for being chosen as, and for being, a member of either House of Parliament (a) if he holds any office of profit under the Government of India or the Government of any State, other than an office declared by Parliament by law not to disqualify its holder; " This article occurs under the heading Disqualifications of Members.
In the same part of the Constitution, i.e., Part V, are given the disqualifications for election to the offices of President and Vice President.
The relevant part of article 58 which lays down the disqualification for the office of the President is: article 58(1) "No person shall be eligible for election as President unless he (a). . . . . . (b). . . . . . (c). . . . . . (2) A person shall not be eligible for election as President if he holds any office of profit under the Government of India or the Government of any State or under any local or other authority subject to the control of any of the said Governments.
" There is a similar provision in regard to the Vice President in article 66(4).
Counsel has rightly pointed out the difference in the language between the two articles.
Whereas in the case of the President and Vice President the holding of an office of profit under an authority subject to the 391 control of the Government is a, disqualification, it is not so prescribed in the case of members of the legislatures.
The Madarsa Durgah Khwaja Saheb Akbari in which the appellant held the appointment of a manager (mohatmin) is a school for teaching Persian, Arabic and Muslim theology.
Before 1951 it was managed and run by the Government of the Nizam of Hyderabad.
In 1951 this school was taken over by the Durgah Committee.
On February 28, 1955, the appellant was given an honorary appointment of mohatmin (manager) of the school by the Administrator of Durgah Khwaja Saheb.
He was to work under the Administrator and was to hold charge of the management of the school.
But from May 1955 he was being paid Rs. 100 per month which has been variously described as salary and honorarium.
Counsel for the appellant raised three questions of construction that this appointment as manager of the school amounted neither to an office nor to an office of profit nor to an office of profit under the Government.
A decision favorable to the appellant on the last question, i.e., office of profit under the Government, would render the decision of the other two questions wholly unnecessary and therefore assuming that the appellant held an office of profit, the question remains: was it an office of profit under the Government and therefore fell within article 102 (1)(a) of the Constitution.
In order to determine this we have to examine the provisions of the Statute under which the appointing authority came into existence and its powers under the statute.
Before and up to 1936 the Durgah Khwaja Saheb Endowment was administered by a committee which was constituted by the Chief Commissioner of Ajmer under section 7 of the Religious Endowments Act (XX of 1863).
In 1936 the then Central Legislature enacted the Durgah Khwaja Saheb Act (XXIII of 1936).
By the provisions of that Act the management and administration was vested in Durgah Committee constituted under section 4 of the Act.
It was a body corporate with perpetual succession and common seal having the right to sue and be sued in the 392 name of the president of the Committee.
Under section 5 which dealt with the constitution of the Committee it was to consist of 25 members some of whom were elected and some nominated.
Section 11(f) of the Act gave to the Committee the power to appoint all its servants.
The Act of 1936 was replaced by the Durgah Khwaja Saheb (Emergency Provisions) Ordinance 3 of 1949, which in turn was replaced by the Durgah Khwaja Saheb (Emergency Provisions) Act (XV11 of 1950).
By section 3 of that Act the Durgah Committee constituted under the Act of 1936 was superseded and the management was vested in an Administrator appointed by the Central Government who under section 7 was to be under the control of the Central Government and had all the powers of the committee constituted under the Act of 1936.
That Act continued to be in force up to February 29, 1956, and it was during its continuance that the appellant filed two nomination papers on February 28, 1956, which were rejected by the Returning Officer.
The Act of 1950 was replaced by the Durgah Khwaja Saheb Act (XXXVI of 1955) which, received the assent of the President on October 14, 1955, but came into force oil March 1, 1956.
Under section 4(1) of this Act the administration, control and management of the Durgah Endowment came to be vested in a Committee, which is a body corporate having perpetual succession and common seal and which can sue and be sued through its President.
Under section 5 the Committee is to consist of not less than 5 and not more than 9 members.
of the Hanafi Muslim faith all of whom are to be appointed by the Central Government.
Section 8 gives power to the Central Government to supersede the Committee.
Under section 9 the Central Government in consultation with the Committee can appoint a Nazim (administrator) of the Durgah who is an ex officio secretary of the committee.
His salary is to be fixed by the Central Government but is to be paid out of the revenues of the Durgah Endowment funds.
The Committee exercises its power of administration, control and management through the Nazim, 393 The powers and duties of the Committee are given in section 11 of the Act; clause (i) of this section which is relevant for the purpose of this case when quoted runs as under: s.11 " The powers and duties of the Committee shall be (i) to appoint, suspend or dismiss servants of the Durgah Endowment.
" Under section 20 the Committee has the power to make bye laws to carry out the purposes of the Act, and the respondent emphasised clause (1) of sub section 2 which provides: section 20 (2) " In particular and without prejudice to the generality of the foregoing power such bye laws may provide for (i) the duties and powers of the employees of the Durgah.
" Sub section 5 of this section is as follows: " (5) The Central Government may, after previous publication of its intention, cancel any bye law which it has approved and confirmed, and thereupon the bye law shall cease to have effect.
" The respondent contended that because under the Act of 1955, the Committee of Management is to be appointed by the Government who also appoint the Nazim (administrator) through whom the Committee acts and because under section 6(2) the Government has the power of removal from office of any member of the Committee and because the Committee can make bylaws prescribing the duties and powers of the employees of the Durgah, the appellant was under the control and supervision of the Central Government and therefore he was holding an office of profit under the Government of India.
It is significant to note that in laying down the disqualifications of the President and the Vice President the Constitution has expressly provided the disqualifications which include not only an office of profit under the Government of India or 394 the Government of any State but also an office of profit under any local or other authority subject to the control of any of the said Governments.
This last disqualification the Constitution does not make applicable to the members of the legislatures.
No doubt the Committee of the Durgah Endowment is to be appointed by the Government of India but it is a body corporate with perpetual succession acting within the four corners of the Act.
Merely because the Committee or the members of the Committee are removeable by the Government of India or the Committee can make bye laws prescribing the duties and powers of its employees cannot in our opinion convert the servants of the Committee into holders of office of profit under the Government of India.
The appellant is neither appointed by the Government of India nor is removeable by the Government of India nor is he paid out of the revenues of India.
The power of the Government to appoint a person to an office of profit or to continue him in that office or revoke his appointment at their discretion and payment from out of Government revenues are important factors in determining whether that person is holding an office of profit under the Government though payment from a source other than Government revenue is not always a decisive factor.
But the appointment of the appellant does not come within this test.
A number of election cases reported in the Election Law Reports were cited before us but they were decided on their own facts and are of little assistance in the decision of the present case.
The test of the power of dismissal by the Government or by an officer to whom such power has been delegated which was pressed in support of his case by the respondent is equally inapplicable to the facts of the present case because the appellant cannot be dismissed by the Government or by a person so authorised by the Government.
He is a servant of a statutory body which in the matter of its servants acts within the powers conferred upon it by the statute.
The respondent then sought to fortify his sub.
missions by relying on Shivnandan Sharma vs The, 395 Punjab National Bank Ltd. (1).
That was a case under the Industrial Disputes Act and the question for decision was whether a cashier appointed by the Bank 's treasurer on behalf of the Bank and paid by the Bank was a servant of the Bank.
It was held that he was.
The rule of that case is that if the master employs a servant and authorises him to employ a number of persons to do a particular job and to guarantee their fidelity and efficiency for cash consideration, the employees thus appointed by the servant would be, equally with the servant,, servants of the master.
But that again has no application to the facts of the present case because the appellant has not been employed by a servant of the Government who is authorised to employ servants for doing some service for the Government nor is he paid out of Indian revenues.
No doubt the non payment from out of the revenues of the Union is not always a factor of any consequence but it is of some importance in the circumstances of this case.
A comparison of the different articles of the Constitution 58(2), 66(4), 102 (1)(a) and 19 1 (1)(a) dealing with membership of the State Legislatures shows in the case of members of the Legislatures unlike the case of the President and the Vice President of the Union the disqualification arises on account of holding an office of profit under the Government of India or the Governments of the States but not if such officer is under a local or any other authority under the control of these Governments.
As we have said the power of appointment and dismissal by the Government or control exercised by the Government is an important consideration which determines in favour of the person holding an office of profit under the Government, but the fact that he is not paid from out of the State revenues is by itself a neutral factor.
It has not been shown that the appellant 's appointment as a mohatmin (manager) of the school satisfies any of the tests which have been discussed above.
On the other hand on March 1, 1956, he was holding (1) ; 51 396 his appointment under a Committee which is a statutory body and such appointment cannot be called an appointment by or under the control of the Government of India nor is his salary paid out of the revenues of the Government but out of the funds of Durgah Endowment.
In the circumstances the majority of the Tribunal has erred in holding that the appellant held an office of profit under the Government and the opinion of the Chairman to the contrary lays down the correct position.
In view of this finding in regard to the office of profit under the Government, it is not necessary to go into the question whether there were any " thrown away " votes or whether the respondent has been rightly declared to have been elected.
We are of the opinion that the election of the appellant has been wrongly set aside and we would allow the appeal and set aside the order of the majority of the Tribunal.
The appellant will have his costs in this court as also before the Tribunal.
Appeal allowed.
| The appellant was the manager of a school run by a committee of management formed under the provisions of the Durgah Khwaja Saheb Act, 1955.
He was appointed by the administrator of Durgah Khwaja Saheb and was being paid Rs. 100 per month.
He was elected to the Council of States by the Electoral College of Ajmer and the unsuccessful candidate, the first respondent, challenged the election on the ground that the appellant wag holding an office of profit under the Government at the time of the election and was, therefore, disqualified to be chosen as a member of Parliament in view of article 102(1) (a) of the Constitution of India.
It was contended for the first respondent inter alia that as under sections 5 and 9 of the Act the Government of India had the power of appointment and removal of members of the committee of management as also the power to appoint the administrator in consultation with the committee, the appellant was under the control and supervision of the Government and that therefore he was holding an office of profit under the Government of India.
But the appellant was neither appointed by the Government of India nor removable by it nor was his salary fixed by the Government and it was paid out of the funds of the Durgah Endowment.
Held, that the appellant was holding his appointment under a committee which was a statutory body and could not be considered as the holder of an office of profit under the Government of India within the meaning of article 102(1) (a) of the Constitution of India.
Accordingly, the election of the appellant was valid.
Shivnandan Sharma vs The Punjab National Bank Ltd., ; , distinguished.
|
Summarize this legal judgement text concisely | : Civil Appeal No. 329 of 1956.
Appeal by special leave from the decision dated April 29, 1954, of the Labour Appellate Tribunal, Lucknow, in Appeal No. III 97 of 1953 arising out of the Award dated January 24, 1953, made by the 57 444 Central Government Industrial Tribunal, Calcutta, in Appli cation No. 106 of 1952.
B.R. L. Iyengar and B. C. Misra, for the appellant.
Veda Vyasa, K. L. Mehta and I. section Sawhney, for the respond ent. 1957.
September 17.
The following Judgment of the Court was delivered by BHAGWATIJ.
This appeal with special leave is directed against the decision of the Labour Appellate Tribunal of India, Lucknow, confirming, on appeal, the award made by the Central Government Industrial Tribunal, Calcutta, in a dispute between the appellant and the respondent.
The appellant took up service with the respondent then knownm the Bharat Bank Ltd., with effect from July 1, 1944, as an Inspector at Bombay in the grade of Rs. 170 10 200 20 400 and was given three increments when the first increment fell due as from October 1, 1945.
He was also given promo tions on October 1, 1946, and on October 1, 1947, and was drawing Rs. 240 per month plus a special allowance for a servant of Rs. 30 per month at the time when he was dis charged by the respondent on August 5, 1949, on the plea that he had become surplus to the requirement of the re spondent.
The Government of India, Ministry of Labour had by Notification No. LR. 2 (273), dated February 21, 1950, referred for adjudication to the Central Government Indus trial Tribunal at Calcutta the disputes pending between the various banks and their employees, and the appellant 's case came up for hearing in the course of those proceedings before the Tribunal which held on December 5, 1950, that the order of discharge of the appellant was illegal and that the respondent should take him back in service as well as pay the appellant his arrears of salary and allowances from the date of discharge.
This direction was to be carried out within a month of the date of the publication of the award which was actually published in the Gazette of India (Part II, Section 3, page 1143) of December 30, 1950.
445 On January 30, 1951, the respondent preferred an appeal against the said order to the Labour Appellate Tribunal, Calcutta, sitting at Allahabad, which by its decision dated September 25, 1951, upheld the directions given by the Industrial Tribunal and dismissed the appeal.
The respond ent failed and neglected to implement the decision of the Labour Appellate Tribunal within the prescribed period in spite of the appellant 's intimating to the respondent by his letter dated October 10, 1951, at its address at 37, Faiz Bazar, Delhi, that he was at Bombay and that he would like to know where he should report himself for duty.
By this letter he also claimed arrears of salary and allowances which had not till then been paid to him, apart from the payments made under the interim orders of the Labour Appel late Tribunal.
The respondent did not send any reply to the said letter with the result that the appellant served on the respondent a notice on November 5, 1951, through his solici tors intimating that the respondent had failed and neglected to reinstate the appellant inspite of his letter dated October 10, 1951, requesting it to do so.
The appellant further intimated to the respondent that by reason of its failure to reinstate him within the prescribed period the respondent had committed a breach of the directions of the Labour Appellate Tribunal and the appellant had therefore become entitled to compensation for the same.
The appellant therefore called upon the respondent to pay to him a sum of Rs. 32,388 as the amount of compensation to which he was entitled on account of the pay he would have earned till his 55th year, i.e., upto May 4, 1960, Provident Fund contribu tion on pay at 6 1/4 % as allowed by the Rules of the Bank and gratuity for about 16 years from July 1, 1944, to May 4, 1960, at month 's pay per year of service, adjustment being made at 6% per annum for payment, if made as demanded.
This amount was exclusive of other claims against the respondent such as amounts due to him under the order dated February 17, 1951, of the Labour Appellate Tribunal of India, Allaha bad, arrears of salary etc.
, withheld by the respondent.
A, , the respondent failed 446 and neglected to send any reply to the said notice or to comply with the requisitions therein contained, the appel lant made an application to the Government of India on February 22, 1952, for recovery of money under section 20(1) of the Industrial Disputes (Appellate Tribunal) Act, 1950 (hereinafter referred to as " the Act ") to which he re ceived a reply on May 13, 1952, stating that an application for recovery of money under that section could be enter tained only if it was confined to the arrears of salary and allowances from the date of his discharge upto the date of the application, and advising him to submit a revised appli cation accordingly.
A suggestion was also made in that letter that the appellant might approach the Industrial Tribunal, Calcutta, under s.20(2) of the Act for a computa tion in terms of money of the benefit of reinstatement, as it was only when a definite sum had been so determined that action for recovery under section 20(1) of the Act could be taken by the Government.
It appears that in the meantime the respondent had trans ferred its banking business under an agreement with the Punjab National Bank Ltd., and had also changed its name to Bharat Nidhi Ltd.
By its letter dated April 3, 1952, the respondent in its new name of the Bharat Nidhi Ltd., ad dressed a letter to the appellant stating that due to the transfer of its liabilities and equivalent assets to the Punjab National Bank Ltd., and the closure of all its branches in India, the appellant was surplus to its require ments.
It therefore purported to give to the appellant two months ' notice of its intention to terminate the said award and his services in terms of section 19(6) of the .
The letter further proceeded to state that the appellant had not so far reported himself for duty at its office at Delhi which was the only office that it had in India since March 10, 1951, and which was its Head Office and registered office before that date.
The appel lant replied by his Advocate 's letter dated April 16, 1952, pointing out that in spite of his letter dated October 10, 1951, addressed to the respondent the latter had not in formed him as 447 to when and where he should report for duty nor had it cared to respond to the same.
He intimated that he had already made an application to the Government of India under section 20(1) of the Act and was awaiting the result thereof.
The letter dated April 3, 1952, addressed by the respondent to the appellant was under the circumstances characterized by the appellant as evidently addressed to him with some ulte rior motive.
The respondent by its letter dated May 10, 1952, addressed to the appellant reiterated that in spite of its asking the appellant to do so, he had failed to join its office.
It stated that by its letter dated April 3, 1952, it had clearly asked the appellant to join at Delhi but that the appellant had failed to do so and the conduct of the appellant clearly amounted to evasion of its instructions and absence from duty.
It also stated that the notice dated April 3, 1952, had effect from the date of receipt thereof by the appellant, viz., April 9, 1952.
No further reply was made by the appellant to the aforesaid letter but it appears that on June 28, 1952) the respondent addressed a letter to the Under Secretary, Government of India, New Delhi, in answer to a communication dated June 12, 1952, addressed by the latter to it that the appellant had already been paid arrears of his pay and allowances awarded by the Tribunal, that he was further asked by it to resume duty which he had failed to do, and, in the circumstances be was being consid ered absent from duty.
A copy of the letter dated May 10, 1952, addressed by it to the appellant as also a copy of the letter of the same date addressed to the Chief Labour Com missioner (Central), New Delhi, were enclosed therewith for information.
Nothing further transpired and on October 8, 1952, the appellant filed the petition under section 20(2) of the Act for computation of the money value of the benefit of reinstatement because of non implementation of the direc tions contained in the award by the respondent.
He claimed a sum of Rs. 47,738 computed in the mariner indicated in annexure 'D ' to that petition.
The respondent filed its written statement on December 4, 1952, wherein the only plea taken was 448 that there was a flagrant violation by the appellant of its instructions to join duty and that thereby the appellant had forfeited his right to claim reinstatement and all benefits flowing therefrom.
It further stated that without prejudice and with a view to close his case it had offered him salary upto June 19, 1952, by its letter dated November 15, 1952, under intimation to the Conciliation Officer, Central Gov ernment, New Delhi, but the appellant had not replied to the same.
The respondent further contended that the award in question was in force for only one year under section 19(3) of the , and that the same was therefore no longer in force and the respondent had already terminated the same.
The claim of the appellant was there fore illegal and preposterous and the respondent prayed that the petition be dismissed with costs.
The petition came up for hearing before the Central Govern ment Industrial Tribunal at Calcutta and it was observed that there were three aspects of the case, viz., (i) whether the respondent refused to implement the award or the subse quent decision of the Labour Appellate Tribunal by not taking the appellant in service as directed by the Tribunals (as urged on behalf of the appellant); (ii) whether it was the petitioner who failed to resume his duty in spite of having been asked to do so and thereby forfeited the right conferred upon him in terms of the award (as urged by the respondent); (iii) To what relief or compensation in lieu of reinstatement the petitioner was entitled in the peculiar circumstances in which Bharat Bank ceased functioning soon after the award of December, 1950, and in the light of various other applications of other employees in which only retrenchment relief was awarded.
On the first two questions the Industrial Tribunal held in favour of the appellant and then proceeded to consider the third question, viz., as to what relief or compensation in lieu of reinstatement the appellant was entitled to.
After discussing the legal position it came to the conclusion that the measure of damages was that laid down under section 95 of.
the Code of Civil Procedure which put it at a figure 449 of Rs. 1,000.
It therefore assessed the value of rein.
statement asked for at the sum of Rs. 1,000 and awarded that sum under section 20(2) of the Act.
The other prayers of the appellant regarding arrears were not dealt with by the ' Industrial Tribunal in so far as they were the subject matter of the application under section 20(1) of the Act which the appellant had already made to the Central Government.
The appellant being, aggrieved by the award of the Industri al Tribunal carried an appeal to the Labour Appellate Tribu nal of India at Lucknow.
A preliminary objection was taken by the respondent before the Labour Appellate Tribunal that the appeal was not competent under the provisions of section 7 of the Act.
This objection found favour with the Labour Appel late Tribunal and holding that no substantial question of law was raised by the award it dismissed the appeal as incompetent.
The appellant applied for and obtained special leave to appeal against this decision of the Labour Appel late Tribunal and that is bow the present appeal is before us.
The two questions of fact, viz., (i) whether the respondent refused to implement the award by not taking .the appellant back in service and (ii) whether it was the appellant who had failed to resume his duty in spite of having been asked to do so and thereby forfeited the right conferred upon him in terms of the award are concluded by the findings arrived at by the Industrial Tribunal after due consideration of the correspondence which passed between the parties.
We also have perused the said correspondence and we see no reason to disturb those findings.
If therefore the appellant was ready and willing to be reinstated in the service of the respondent and was not guilty of any default in the matter of reporting himself for duty, the only question that re mains to be considered by us here is what is the amount at which this benefit of reinstatement which was awarded to the appellant should be computed within the meaning of section 20(2) of the Act.
That was the only scope of the enquiry before the Industrial Tribunal and we have to determine what is the correct method of such computation.
450 Section 20(2) of the Act reads as follows: Section 20.
Recovery of money due from an employer under an award or decision.
(1). . . . . (2)Where any workman is entitled to receive from the empoly er any benefit under an award or decision of an industrial tribunal which is capable of being computed in terms of money, the amount at which such benefit should be computed may, subject to the rules made under this Act, be determined by that industrial tribunal, and the amount so determined may be recovered as provided for in subsection (1).
It may be noted that sub section (1) above referred to provides that: any money due from an employer under any award or decision of an industrial tribunal may be recovered as arrears of land revenue or as a public demand by the appropriate Gov ernment on an application made to it by the person entitled to the money under that award or decision.
The petition of the appellant proceeded on the basis that the benefit of reinstatement which he was entitled to re ceive under the terms of the award was capable of being computed in terms of money and that position was not disput ed by the respondent.
Even though there was no plea by the respondent in its written statement that there were any circumstances which made it impossible for the respondent to reinstate the appellant in its service except the failure of the appellant to resume his duty in spite of his having been asked to do so, the respondent.
was allowed to lead evidence in regard to the transfer of its liabilities and equivalent assets to the Punjab National Bank Ltd., and the closure of its banking business in all of its branches in India in order to show that the respondent was not in default and the value of the benefit of reinstatement in terms of money had thus dwindled into insignificance.
Reliance was placed on the further circumstance that the Punjab National Bank Ltd., was not under any obligation to take into its employ the employees of the respondent, that as a matter of fact only 10% of the employees of the 451 respondent bad been absorbed by the Punjab National Bank Ltd., and in regard to the rest who were not so absorbed the only sums awarded to them by the Industrial Tribunals were salary for the notice month.
and retrenchment compensation.
We are of opinion that these circumstances cannot be availed of by the respondent.
It is no doubt true that the respond ent transferred its liabilities and equivalent assets to the Punjab National Bank Ltd., some time in March 1951.
The correspondence which was carried on between the appellant and the respondent however shows that in spite of such transfer to the Punjab National Bank Ltd., and the change of the name of the respondent from the Bharat Bank Ltd., to Bharat Nidhi Ltd., the respondent never contended that Bharat Nidhi Ltd. was not in a position to reinstate the appellant in its service.
The correspondence proceeded all along on the footing that Bharat Nidhi Ltd., was in a posi tion to reinstate the appellant in its service and as a matter of fact took up the plea that it had invited the appellant to join it at Delhi but that the appellant bad failed and neglected to do so.
Not only in its letter dated May 10, 1952, did the Bharat Nidhi Ltd., state that the appellant 's failure to join it at Delhi amounted to absence from duty but as late as June 28, 1952, in its letter ad dressed to the Under Secretary to the Government of India, New Delhi, it reiterated that the appellant was asked to resume duty which he had failed to do and that in the cir cumstances he was being considered as absent from duty.
It is clear therefore that the Bharat Nidhi Ltd., was all the time insisting that the appellant should join its service at Delhi and never took up the plea that the transfer of its liabilities and equivalent assets to the Punjab National Bank Ltd., and also the possibility of the Punjab National Bank Ltd., not absorbing the appellant in its employ were circumstances available to it by way of defence.
The appel lant having become surplus to its requirement was of course a plea taken by it in the course of the correspondence and by its letter dated April 3, 1952, the Bharat Nidhi Ltd., gave the appellant two months ' notice of its intention to 58 452 terminate the award and service of the appellant.
In this behalf it also relied on the provisions of section 19 (6) of the , but when it came to file its written statement it did not put forward that plea as an answer to the claim of the appellant under section 20(2) of the Act.
We fail to understand therefore how these circum stances could ever have been taken into consideration by the Industrial Tribunal while arriving at the computation in terms of money of the benefit of reinstatement awarded to the appellant under the terms of the award.
Such computa tion has therefore got to be made regardless of those cir cumstances which were put forward by the respondent as a last resort.
The Industrial Tribunal computed the money value of this benefit on the analogy of section 95 of the Code of Civil Proce dure.
It treated the non implementation of the direction in the award made by an Industrial Tribunal on a par with the obtaining of arrest, attachment or injunction on insuffi cient grounds and awarded to the appellant the sum of Rs. 1,000 which it deemed to be a reasonable compensation for the injury caused to him.
Even if the direction given by the Industrial Tribunal in its award be treated as a statu tory obligation imposed on the respondent, this certainly could not be a measure of compensation or damaoes and it was fairly conceded by the learned counsel for the respondent that he was not in a position to support that part of the judgment.
Mr. lyengar who appeared for the appellant before us urged that the computation of the money value of the benefit of reinstatement awarded to the appellant should be made on one or the other of the three bases which he suggested for the purpose, viz., (i) the order of reinstatement should be construed as entitling the appellant to the full tenure of service in accordance with the terms of the original con tract and the appellant should be awarded compensation commensurate with the salary and the benefits which he would have earned during his service with the respondent for the full term of 55 years which was the age of superanntiation; (ii) the non implementation of the direction as 453 to reinstatement should be treated as a breach of contract on the part of the respondent and the appellant should be awarded damages for breach of the contract which would be calculated again on the same, basis; (iii) the non implemen tation should be treated as a breach of a statutory duty and the appellant should be awarded damages for non implementa tion as on a tort committed by the respondent.
The appel lant would in that event be entitled not only to general damages but also special damages by reason of oppressive conduct on the part of the respondent.
The position as it obtains in the ordinary law of master and servant is quite clear.
The master who wrongfully dismisses his servant is bound to pay him such damages as will compensate him for the wrong that he has sustained.
" They are to be assessed by reference to the amount earned in the service wrongfully terminated and the time likely to elapse before the servant obtains another post for which he is fitted.
If the contract expressly provides that it is terminable upon, e.g., a month 's notice, the damages will ordinarily be a month 's wages. . .
No compensa tion can be claimed in respect of the injury done to the servant 's feelings by the circumstances of his dismissal, nor in respect of extra difficulty of finding work resulting from those circumstances.
A servant who has been wrongfully dismissed must use diligence to seek another employment, and the fact that he has been offered a suitable post may be taken into account in assessing the damages." (Chitty on Contracts, 21st Ed., Vol.
(2), p. 559 para.
1040).
If the contract of employment is for a specific term, the servant would in that event be entitled to damages the amount of which would be measured prima facie and subject to the rule of maitigation in the salary of which the master had deprived him.
(Vide Collier vs Sunday Referee Publishing Co., Ltd. (1)).
The servant would then be entitled to the whole of the salary, benefits, etc., which he would have earned had be continued in the employ of the master for the full (1) [1940] 4 All E.R. 237.
454 term of the contract, subject of course to mitigation of damages by way of seeking alternative employment.
Such damages would be recoverable by the servant .for his wrongful dismissal by the master only on the basis of the master having committed a breach of the contract of employ ment.
If, however, the contract is treated as subsisting and a claim is made by the servant for a declaration that he continues in the employ of the master and should be awarded his salary, benefits, etc., on the basis of the continuation of the contract, the servant would be entitled to a declara tion that he continues in the employ of the master and would only be entitled to the payment of salary, benefits, etc., which accrued due to him up to the date of the institution of the suit.
The benefit of reinstatement which is awarded to a workman under the terms of the award does not become a term or condition of the contract between him and the employer.
There are no doubt other reliefs by way of changes in the terms and conditions of employment which when awarded by the appropriate tribunal might be treated as implied terms of the contract between the employer and the workers to whom the award applies and would enure for the benefit of the worker until varied by appropriate legal proceedings.
There is no statutory provision in that behalf contained in the Industrial "Disputes Act, 1947.
But it is interesting to note that in the Industrial Disputes Order, 1951, obtaining in England there is enacted section 10 which runs as follows: Section 10: Award to be implied term of contract: Where an award on a dispute or issue has been made by the Tribunal then as from the date of the award or from such other date, not being earlier than the date on which the dispute or issue to which the award relates first arose, as the Tribu nal may direct, it shall be an implied term of the contract between the employer and workers to whom the award applies that the terms and conditions of employment to be observed under the contract shall be in accordance with the award until varied by agreement between the parties or by a subse quent award of the Tribunal 455 or until different terms and conditions of employment in respect of the workers concerned are settled through the machinery of negotiation or arbitration for the settlement of terms and conditions of employment in, the trade or industry or section of trade or industry or undertaking in which those workers are employed.
Whatever be the position in regard to the terms and condi tions of employment thus varied in accordance with the terms of the award, the benefit of reinstatement awarded to a workman certainly cannot be treated as part of the contract between him and the employer.
The effect of an order of reinstatement is merely to set at nought the order of wrong ful dismissal of the workman by the employer and to rein state him in the service of the employer as if the Contract of employment originally entered into had been contiuning.
The terms and conditions of the contract which obtained when the workman was in the employ of the employer prior to his wrongful dismissal which has been set aside continue to govern the relations between the parties and the workman continues in the employ of the employer under those terms and conditions.
There is no variation of those terms and conditions of the contract.
The only thing which happens is that the workman is reinstated in his old service as before.
The monetary value of the benefits of such reinstatement is therefore to be computed not on the basis of a breach of the contract of employment nor on them basis of a tort alleged to have been committed by the employer by reason of the non implementation of the direction for reinstatement contained in the award.
The analogy of a suit for a declaration that the workman is continuing in the employ of the employer and that he should be paid the safary and benefits, etc., which would have been earned by him up to the date of the institu tion of the suit also does not strictly apply for the simple reason that the workman here is not asking for a declaration that he is still continuing in service on the ground that there was a termination of his service after the award, which termination is void.
What he is asking for is a computation in terms 456 of money of the benefit of reinstatement which was granted to him by the Industrial Tribunal and which the employer did not implement.
The purpose of the enactment of section 20(2) of the Act is not to award to the workman compensation or damages for a breach of contract or a breach of a statutory obligation on the part of the employer.
Any money which is due from an em ployer under the award can by virtue of the provisions of section 20(1) of the Act be recovered by the appropriate Government on an application made to it by the workman.
Where however any benefit which is not expressed in terms of money is awarded to the workman under the terms of the award it will be necessary to compute in terms of money the value of that benefit before the workman can ask the appropriate Govern ment to help him in such recovery.
Section 20 sub section
(2) provides for the computation in terms of money of the value of such benefit and the amount at which such benefit should be computed is to be determined by the Industrial Tribunal to which reference would be made by the appropriate Govern ment for the purpose.
Such computation has relation only to the date from which the reinstatement of the workman has been ordered under the terms of the award and would have to be made by the Industrial Tribunal having regard to all the circumstances of the case.
The Industrial Tribunal would have to take into account the terms and conditions of em ployment, the tenure of service, the possibility of termina tion of the employment at the instance of either party, the possibility of retrenchment by the employer or resignation or retirement by the workman and even of the employer him self ceasing to exist or of the workman being awarded var ious benefits including reinstatement under the terms of future awards by Industrial Tribunals in the event of indus trial disputes arising between the parties in the future.
Even in the case of ordinary contracts 'between master and servant such considerations have been imported by the courts.
The observations of Greer, 457 L.J., in Salt vs Power Plant Co., Ltd. (1) are apposite in this context: " This is the case of a man who had, according to my view, got an engagement which was to last for life, or at any rate for the joint lives of himself and the company, but I think for his life, because, I think there are authorities to the effect that if a company winds up, that is a dismissal of the servants, and they can then prove for damages and get their dividend, whatever it may happen to be.
Fortunately, the company has not been wound up, but in estimating the damages, of course, the tribunal estimating them will have to take into consideration the fact that at any time after June 26, 1935, it might have appeared to the directors that they had good reasons for terminating the plaintiff 's serv ices, reasons connected with his conduct.
The present value of what his salary would be for the rest of his life must also be considered, and there must also be taken into ac count the fact that he is a man who might at any time termi nate his service by his life coming to an end, and other matters with which I need not deal." These and similar considerations would equally be germane in the matter of the computation in terms of money of the value of the benefit of reinstatement which was awarded to the appellant in the case before us.
Turning therefore to the terms and conditions of employment we find that the respondent had enacted bye laws for the employees of Bharat Bank Ltd., which were applicable to the appellant.
Bye law 9 provides that an employee may resign from the service of the respondent by giving one month 's notice.
Bye law 11 provides that the respondent shall have the option to terminate an employee 's service on giving him the same notice as he is required to give to the respondent under rule No. 9 (which can be served even when the employee may be on leave), or by paying him salary for the notice period in lieu of notice, in the absence of an agreement to the contrary, provided that no notice shall be necessary when he is (1) , 325.
458 dismissed on account of misconduct, dishonesty, gross negli gence, insubordination or disregard of any of the standing instructions.
Bye law 13 lays down that every employee is required to retire on attaining the age of 55 years.
He may be retained in service after that age only with the express sanction of the authorities but such extension of service will not exceed more than 2 years at a time.
If regard be had to these terms and conditions, it was possible for the respondent to terminate the service of the appellant by paying him one month 's salary in lieu of no tice.
If there was nothing more the appellant would have been entitled only to that amount as and by way of compensa tion for nonimplementation of the direction for reinstate ment.
There was however a finding recorded by the Industri al Tribunal which made the award dated December 5, 1950, that the respondent had been guilty of unfair labour prac tice and victimization and the ordinary right, which the respondent would have been in a position to exercise, of terminating the service of the appellant on giving him one month 's salary in lieu of notice could not be availed of by the respondent.
On an industrial dispute raised by the appellant on the respondent 's terminating his service at any time in the future, it would be open to the Industrial Tribunal to go into the question whether the termination of the appellant 's service by the respondent was justified and if the Industrial Tribunal came to an adverse conclusion, it would be open to it to reinstate the appellant in the serv ice of the respondent with all back salary, allowances, etc.
Even if the respondent wanted to retrench the appellant, the same considerations would arise with a possible result against the respondent.
On the other hand, there was also a possibility of the respondent being in the right and being entitled to lawfully terminate the service of the appellant in which event of course the appellant would be without any redress whatever.
In computing the money value of the benefit of reinstatement the Industrial Tribunal would also have to take into account the present value of what his salary, benefits, 459 etc ' would be till he attained the age of superannuation and the value of such benefits would have to be computed as from the date when such reinstatement was ordered under the terms of the award.
Having regard to the considerations detailed above it is impossible to compute the money value of this benefit of reinstatement awarded to the appellant with mathematical exactitude and the best that any Tribunal or Court would do under the circumstances would be to make as correct an estimate as is possible bearing of course in mind all the relevant factors pro and con.
We have ourselves devoted very anxious thought to this aspect of the matter and we have come to the conclusion that having regard to all the circumstances of the case it would be reasonable to compute the benefit of reinstatement which was awarded to the appel lant at an amount of Rs. 12,500 (Rupees twelve thousand and five hundred only).
We accordingly allow the appeal and set aside the decision of the Labour Appellate Tribunal of India, Lucknow as well as the award made by the Central Government Industrial Tribunal, Calcutta and award that the appellant shall recov er from the respondent the said sum of Rs. 12,500 (Rupees twelve thousand and five hundred only) being the computation of the money value of the benefit of reinstatement awarded to him under the terms of the award of the Central Govern ment Industrial Tribunal at Calcutta dated December 5, 1950.
The respondent will pay the appellant 's costs of this appeal as well as the proceedings before the Industrial Tribunal and the Labour Appellate Tribunal.
Appeal allowed.
| The appellant was in the service of the respondent but sub sequently he was discharged on the plea that he had become surplus 4443 to the requirement of the respondent.
The Industrial Tribu nal found that the respondent had been guilty of unfair labour practice and victimisation and held that the order of discharge was illegal and that he should be reinstated, with arrears of salary and allowances from the date of discharge.
The respondent having failed to implement the award, the appellant filed an application under section 2o(2) of the Industrial Disputes (Appellate Tribunal) Act, 1950, for computation of the money value of the benefit of reinstate ment.
The Industrial Tribunal assessed the value of rein statement at the sum of Rs. 1,000 by adopting the measure of damages as laid down under section 95 of the Code of Civil Procedure.
Under the bye laws framed by the respondent the services of an employee could be terminated on giving one month 's notice.
Held, that the monetary value of the benefit of reinstate ment is to be computed not on the basis of a breach of the contract of employment nor on the basis of a tort alleged to have been committed by the employer by reason of the non implementation of the direction for reinstatement contained in the award.
The computation has to be made by the Indus trial Tribunal having regard to all the.circumstances of the case, such a?, the terms and conditions of employment, the tenure of service, the possibility of termination of the employment at the instance of either party, the possibility of retrenchment by the employer or resignation or retirement by the employee and even of the employer himself ceasing to exist, or of the employee being awarded various benefits including reinstatement under the terms of future awards by Industrial Tribunals in the event of industrial disputes arising between the parties in the future.
The observations of Greer L. J. in Salt vs Power Plant Co., Ltd. , 325, relied on.
In the instant case, having regard to the bye laws, the appellant would have been entitled to only one month 's salary in lieu of notice, as and by way of compensation for non implementation of the direction for reinstatement, but this right could not be availed of by the respondent in view of the finding of the Tribunal that he was guilty of unfair labour practice and victimisation, and a correct estimate of the value of the benefit of reinstatement had to be made bearing in mind all the relevant factors.
|
Summarize this legal judgement text concisely | Civil Appeal No. 49 of 1954.
Appeal by special leave from the judgment and order dated the 16th August, 1949, of the Punjab High Court in Regular First Appeal No. 57 of 1949 arising out of the judgment and order dated the 30th November, 1945, of the Court of Senior Sub Judge, Gurdaspur, in Suit No. 298 of 1944.
H. J. Umrigar and K. L. Mehta, for the appellants.
B. section Narula, for the respondents.
549 1957.
September 24.
The following Judgment of the Court was delivered by KAPUR J.
This appeal by Special Leave is brought from the judgment and decree of the High Court of the Punjab, dated August 16, 1949, reversing the decree of the trial court which had decreed the plaintiffs ' suit on a mortgage.
The plaintiffs who are the appellants in this appeal claim to be the legatees under a registered will of their mother 's father Lala Guranditta Mal executed on September 6, 1944.
One of the items bequeathed to them was the rights in a mortgage executed by the defendants in favour of the testa tor on October 24, 1932, for Rs. 6,000.
On October 25, 1944, they brought a suit in the court of the Senior Subor dinate Judge, Gurdaspur for the recovery of Rs. 5,392 2 0 on the basis of the mortgage.
They alleged that they were the " representatives and heirs " of Lala Guranditta Mal under the will and in their replication they just stated: " We are heirs and representatives of Lala Gurandit ta Mal mortgagee deceased. " Inter alia the defendants pleaded that they had no knowledge of the will alleged to have been made by Guranditta Mal and they denied that the plaintiffs were heirs and representa tives of the mortgagee and therefore had no locus standi to sue.
Five issues were stated by the learned trial judge out of which the issue now relevant for the purpose of this appeal is the first one: (1) Have the plaintiffs a locus standi to maintain the present suit as successors in interest of Guranditta de ceased ? The learned Subordinate Judge held that the will had the presumption of its correct execution " because it was regis tered and also that not obtaining the pro.
bate of the will was no bar to the.
plaintiffs obtaining a decree and passed a preliminary mortgage decree.
On the matter being taken in appeal to the High Court the decree of the trial court was reversed and the suit of the plaintiffs dismissed but the parties were left to bear their own costs.
The High Court held; 550 It is thus clear that attestation by two witnesses was necessary in order to validate the will now before us.
As this requirement of law has not been satisfied the plain tiffs had no locus standi to maintain the suit.
" A prayer made for the admission of additional evidence under 0. 41, r. 27 of the Civil Procedure Code was rejected.
The High Court refused leave to appeal under article 133 but Spe cial Leave was granted on October 21, 1952.
In the mean while the probate of the will of Lala Guranditta Mal was granted by the District Judge of Gurdaspur on July 11, 1951, in favour of the present appellants and their mother Mussam mat Har Devi.
The appellants made an application in this court for the admission of additional evidence and prayed that the " probate be placed on the record " as the "probate of the will operated as a judgment in rem ".
They also applied to add Mussammat Har Devi as a respondent in the appeal.
An objection to the admission of additional evidence at this stage, is taken by the respondents on the ground that the probate was obtained without their knowledge and that the application was made at a late stage, it deprived the re spondents of the valuable right which vests in them because the claim has become statute barred and that there is no provision in the Rules of this court for the admission of additional evidence.
It is clear that the probate was applied for and obtained after the judgment of the High Court and therefore could not have been produced in that court.
The judgment of the Probate Court must be presumed to have been obtained in accordance with the procedure prescribed by law and it is a judgment in rem.
The objec tion that the respondents were not parties to it is thus unsustainable because of the nature of the judgment itself.
As to the power of this court, there is no specific provi sion for the admission of additional evidence but r. 5 of 0.
45 of the Supreme Court Rules recognises the inherent power of the court to make such orders as may be necessary for the ends of justice or to prevent 551 an abuse of process of the court.
The Privy Council in Indrajit Pratap Sahi vs Amar Singh(1) said: " that there is no restriction on the powers of the Board to admit such evidence for the non productior, of which at the initial stage sufficient ground has been made out.
The powers of this Court in regard to the admission of additional evidence are in no way less than that of the Privy Council.
Moreover in deciding the appeal we have to take the circumstances as they are at the time when the appeal is being decided and a judgment in rem having been passed in favour of the appellants it is necessary to take that additional fact into consideration.
It was so held by the Federal Court in Lachmeshwar Prasad Shukul vs Keshwar Lal Chaudhuri (2) where Gwyer C.J. quoted with approval the following observation of Chief Justice Hughes in Patterson vs State of Alabama(3): " We have frequently held that in the exercise of our appel late jurisdiction we have power not only to correct error in the judgment under review but to make such disposition of the case as justice requires.
And in determining what justice does require, the court is bound to consider any change, either in fact or in law, which has supervened since the judgment was entered.
" Varadachari j. was of the opinion that the hearing of an appeal is under the processual law of this country in the nature of a rehearing and therefore in moulding the relief to be granted in appeal an appellate court is entitled to take into account even facts and events which have come into existence since the decree appealed from was passed.
He referred to many Indian cases and to the practice of the Judicial Committee of the Privy Council and to some English cases.
In our opinion the fact of the grant of the probate which has supervened since the decision under appeal was given and which has been placed before this court must be taken into consideration in deciding the appeal.
In that event the infirmity in the appellant 's (i) LR.
(1923) 50 I.A. 183, 19r.
(2) (3) ; , 607 552 case due to the want of proper attestation of the will inder section 63(1)(c) of the Indian Succession Act would be removed.
Because of the view we have taken the other objection raised by the respondents becomes wholly inefficacious.
The find ing of the High Court on this point is therefore reversed.
We, therefore, allow this appeal, set aside the judgment and decree of the Punjab High Court and remit the case to the High Court for decision of the other issues which had not been decided.
As the appellants did not obtain the probate till after the appeal was filed in this court and made the application for the admission of additional evidence at such a late stage, they will pay Rs. 500 as costs of this court to the respond ents within two months.
In default of such payment the appeal shall stand dismissed with costs, i.e., Rs. 500.
Appeal allowed.
| Under a registered will, mortgagee rights in certain proper ty were bequeathed to the appellants.
They filed a suit to recover the money on the basis of the mortgage without obtaining probate of the will.
The respondents challenged the locus standi of the appellants to sue.
The trial Court decreed the suit holding that the will being registered there was a presumption of due execution.
On appeal the High Court dismissed the suit on the ground that attestation of the will by two witnesses had not been proved.
Thereaf ter probate of the will was obtained in favour of the appel lants and their mother.
In appeal before the Supreme Court appellants made an application for the admission of the probate as additional evidence and for making their mother a party.
The respondents opposed the application.
Held, that the Supreme Court has the power to admit addi tional evidence in appeal.
In deciding an appeal the Su preme Court has to take the circumstances as they are at the time when the appeal is being decided, and the probate being a judgment in rem must be taken into consideration.
The objection that the respondents were not parties to the probate proceedings is unsustainable because of the nature of the judgment itself.
Inderjit Pratap Sahi vs Amar Sinah, L. R. (1923) 50 I. A. 183, Lachmeshwar Prasad Shukul vs Kishwar Lal Chaudhuri, , followed.
|
Summarize this legal judgement text concisely | ON: Criminal Appeal No. 127 of 1957.
Appeal by special leave from the judgment and order dated the 12th February, 1957, of the Madras High Court in Crimi nal Appeal No. 728 of 1956 and Referred Trial No. 144 of 1956, arising out of the judgment and order dated the 23rd October, 1956, of the Court of the Addl.
Sessions Judge of the Coimbatore Division in section C. Nos.
120 & 135 of 1956.
H.J. Umrigar and T. section Venkataraman, for the appellant.
P.Rama Reddy and T. M. Sen, for the respondent.
September 17.
The following Judgment of the Court was delivered by GOVINDA MENON J. Before the Additional Judge of the court of Sessions of Coimbatore Division there were four accused, of whom the first accused Subramania Goundan has now appealed to this court against the confirmation by the High Court of Madras of the conviction and sentence by the trial court, by which, 430 on charges Nos. 1 & 2, he was sentenced to death, and also sentenced to rigorous imprisonment for two years on charge No. 3.
Special leave to appeal was granted by order of this court, dated the 6th of May, 1957.
Along with the appellant were tried three others, of whom the second accused (Marappa Goundan) was his father.
The third accused (Karuppa) was the grandson of the second accused 's paternal uncle, while the fourth accused (Iyyavu) was an agnate in the fourth degree of the second accused.
It is thus seen that all the accused were related to each other.
The learned Sessions Judge framed four charges of which the first was against the appellant, that he on June 6, 1956, at night in the Village of Vengakalpalayam, committed the murder of Marappa Goundan by cutting him with an aruval; while the second charge was that at about the same time and place and in the course of the same transaction, he commit ted the murder of Muthu Goundan by stabbing him with a spear.
The third count of the charge was against the first and the second accused that they conjointly committed the offence of attempt to murder by stabbing one Munia Goundan with a spear and knife, and the last count of the charge was against accused Nos. 3 & 4 that they abetted the commission of the offence of attempt to murder of Munia Goundan by being present on the scene.
The learned Sessions Judge acquitted accused Nos. 2, 3 & 4, but convicted and sentenced the appellant before us in the manner stated above.
The village, where the offences were committed, was faction ridden in which the appellant, his father and others took one side, whereas the two deceased individuals along with Munia Goundan and others, former the leaders of the rival faction.
It was also stated that the appellant 's father was the leading man of the village, having been assigned that dignity by the consent of the villagers.
The prosecution case is that the dignity of the appellant 's family had been offended by certain actions of the rival party and it was apprehended by the appellants father that his prestige and 431 influence, as the chief man of the village, were being gradually undermined and usurped by the rival group.
About three days prior to the occurrence, which took place on the night between the 6th and the 7th of June, 1956, Munia Goundan is said to have stated to the hearing of the appel lant that he (Munia Goundan) would wipe out the appellant 's father and his partisans, and if that were not possible, in a spirit of humiliation, Munia Goundan would shave off his moustache.
It is further alleged that the two deceased individuals also proclaimed words to that effect.
Angered at this threat of extermination of his family and inflamed by the enmity due to the faction that had already existed, the appellant, according to the prosecution, having armed himself with an aruval (a sickle) a spear and a knife left his house on the night of the 6th and 7th June, 1956, proceeded to a place known as Chettithottam where the de ceased Marappa Goundan was sleeping in his field shed, and cut him on the neck with the aruval, and inflicted other injuries on him before leaving the place.
Thereafter while on his way to the house of Munia Goundan to do away with him, the appellant met the deceased Muthu Goundan who was coming in the opposite direction and thinking that Muthu Goundan would catch him, inflicted a stab wound on Muthu Goundan.
After this the appellant went to the house of Munia Goundan (P. W. 5) and stabbed him also.
Not being content with committing these crimes, he set fire to the shed of Sennimalai Goundan (P. W. 4 who was also a partisan of the rival faction) which lay at a distance about four furlongs from the village.
Thereafter the appellant re turned to his own garden and lay down.
Karuppa Goundan (P.W. 1) hearing cries and noise from the direction of the house of Munia Goundan, ran towards that place, followed by Sennimalai Goundan (P.W. 4) who similarly heard the same cries.
They found Munia Goundan (P.W. 5) with injuries on him and also saw the shed of Sennimalai Goundan (P.W. 4) aflame.
At this P.W. 4 and P.W. 5 proceed ed to the burning shed and on the way saw Natarajan 432 (P.W. 10), the son of the deceased Marappa Coundan, weeping and lamenting in his field.
Reaching the place wherefrom P.W. 10 was wailing, P.W. 4 and P.W. 5 saw Marappa Goundan lying dead on a cot in s the shed with injuries.
It is in evidence that the witnesses then saw the shed of P.W. 4 completely burnt down and after that Karuppa Goundan and Sennimalai Goundan went to the house of the village Munsif who was living about four miles away from the village and gave a report about the occurrence at about 5 a.m. on 7 6 1956 and which is on record as Exhibit P.I. Information reached the Sub Inspector of Police of Avanashi (P.W.17) at 8 30 a.m. who reached the place of occurrence at 11 a.m.
Investigation was then started, the details of which it is unnecessary to mention.
At about 12 noon near a temple in the village finding the appellant there, the SubInspector of Police arrested him after which the appellant made a state ment, the admissible portions of which are marked as Exhibit P. 13.
From the appellant material objects Nos.
10 and 11, a bloodstained drawer and a baniyan respectively worn by him were seized and the appellant thereafter took the Police Officer to his garden and took out M. 0. 12, a blood stained bed sheet from a rafter in the garden shed which, according to the prosecution, was used by the appellant for wrapping himself up after he lay down in his shed subsequent to the commission of the crime.
Statements were taken by the Sub Inspector from a number of persons, including Natarajan (P.W. 10), son of Marappa Goundan, Nachimuthu Goundan (P.W. 11) son of Muthu Goundan, Munia Goundan (P.W. 5) and others.
We do not think it necessary to describe the details of the investigation and the examination of witnesses regarding the accusations against the acquitted persons.
On June 9, 1956, at about 3 50 p.m. the appellant was pro duced before Sri P. I. Veeraswami, Sub Magistrate (P. W. 7), who administered the necessary warnings under the Crimi nal Rules of Practice and being satisfied that the appellant wanted to make a voluntary statement, he was given two day 's time for 433 reflection till June 11, 1956, on which date the appellant was produced before the same Magistrate at 3 50 p.m.
The same warnings were again administered to him and the Magis trate was satisfied that the statement about to be made was a voluntary one.
Thereafter it was recorded in the, appellant 's own words, read over to him and acknowledged by him to be correct.
This statement in which the appellant confessed to having committed the murder of Marappa Goundan and Muthu Goundan and also inflicted injuries on Munia Goundan on the night in question, is exhibited as P. 3/A.
In order to prove the case against the appellant the main reliance on the side of the prosecution was on Natarajan (P.W. 10), the eye witness to the attack on his father Marappa Goundan, and with regard to the murder of Muthu Goundan, the case rested on the testimony of Nachimuthu Goundan (P.W. 11), son of Muthu Goundan, who is said to have told the witness (P.W. 12) that the appellant had stabbed Muthu with a spear.
Subbanna Goundan (P.W. 12), a neighbour of Muthu Goundan, also spoke to the fact that he heard Muthu Goundan saying that the appellant had stabbed him with a spear.
The assault on Munia Goundan (P.W. 5) is spoken to by himself.
In addition to this evidence, the prosecution rested its case on the confession of the appellant .
Before the learned Sessions Judge the appellant denied the offence and retracted the confession made by him on the ground that the Sub Inspector and the Circle Inspector of Police threat ened to implicate the appellant 's father and five others in the crime if he did not confess and that was the reason why he made a false confession.
The learned Sessions Judge accepted the testimony of Natara jan (P. W. 10), Nachimuthu Goundan (P.W. 11) and Subbanna Goundan (P.W. 12) with regard to the murders and also that of Munia Goundan (P.W. 5) and Komaraswami Goundan (P.W. 6) with regard to the attack on Munia Goundan.
He also held that the confession, Exhibit P. 3/A, was voluntary and true and on the footing of the oral evidence, 434 corroborated amply by the confession, the appellant was convicted and sentenced.
In the High Court Somasundaram J. who delivered the judgment of the court, was not inclined to place reliance on the oral testimony of P.W. 5, P.W. 10 and P.W. 1 1.
The learned Judge was of the opinion that it was not safe to act on the evidence of Natarajan (P.W. 10) and convict the appellant of the offence of murder of Marappa Goundan.
The High Court did not accept the evidence of Nachimuthu Goundan (P.W. 11) and Subbanna Goundan (P.W. 12).
In the same strain the judgment of the High Court states that it is not safe to act on the evidence of Munia Goundan (P.W. 5) and (P.W. 6) Komaraswami Goundan.
The conclusion was that the oral evidence did not reach that standard of proof necessary for reliance to sustain a conviction, but the learned judge upheld the conviction on the ground that as the confession was voluntary and true, it can be believed though the same was retracted.
Opinion was also expressed that the confession was corroborated by the recovery of M. 0.
12, as a result of the statement made by the appellant which contained human blood for which there was no explana tion whatsoever.
Corroboration was also afforded by the existence of human blood on M. Os.
10 & 11.
The question, therefore, before us is whether the High Court erred in law in agreeing with the trial court regarding the guilt of the appellant.
Had the High Court come to the conclusion that the evidence of P.Ws. 5, 10 & 11 can be accepted in order to sustain the conviction of the appellant, the question would have been simpler of solution, and alternatively were this court inclined to appraise the credibility or otherwise of their testimony, whether a different conclusion would have been arrived at, is unnecessary to speculate.
On a perusal of the evidence of these witnesses, it cannot be said that their testimony is such as should be relegated to the realm of disbelief Even so, we have decided to proceed on the footing that the testimony of the important prosecution witnesses would not be sufficient 435 for a conclusion that the appellant is guilty beyond reason able doubt.
The ultimate approach, therefore, to the question should be whether the confession, exhibit P. 3/A, is entitled to credence and be acted upon.
The learned counsel for the appellant, Sri Umrigar, was at pains to show, firstly that the confes sion was not voluntary ; secondly it is not true and lastly that even if these ' two tests are answered in the affirma tive so far as the prosecution is concerned, it would be very unsafe to act on this retracted confession which, according to him, was resiled from as early as an opportuni ty occurred.
Dealing with the first question, he pointed out that the appellant was produced at 3 45 p.m., on June 9, 1956, before the Sub Magistrate in the court hall which was cleared of all police officials, and the Jail Warder alone was placed in charge; thereafter the Sub Magistrate gave the necessary warnings and enough time was given for reflection.
The criticism levelled by the appellant 's counsel is that despite these beneficient actions, still the influence of the police on the appellant still remained and that even at the time when the confession was given.
it cannot be said that the appellant was free from police pressure.
Our attention was invited to passages in cross examination of P.W. 7 where he had stated that on both the occasions when the appellant was produced for recording of the confession, the Police Constable in guard at the Sub Jail was in charge and further that there is a gate way between the Police Station and the court, and that gate way is the approach to the Subjail.
From these circumstances inference is sought to be drawn that though during the relevant periods the incarceration of the appellant was in a Sub Jail, still he was under police custody and influence and, therefore, there was no clearance of the supervening police control on him, in order to make his mind free from all such influence.
We have carefully gone through the questions put by the Magis trate, not only on June 9, 1956, when the appellant was given time for reflection, but also on those on June 11, 1956, when he gave the confessional statement, and we are satisfied 56 436 that nothing could be said against the procedure followed.
The learned Magistrate has clearly conformed to the proce dure prescribed by sections 164 and 364 of the Criminal Procedure Code, as well as to the directions laid down in the Madras Criminal Rules of Practice as a preliminary to the recording of the confession.
The meagre cross examination of the Sub Magistrate has not brought out any material circumstances which would, in any way, detract from the satisfactory was in which he has performed his official duty.
In the en dorsement at the foot of the confessional statement the Sub Magistrate (P.W. 7) says that he had explained to the appel lant that he (the appellant) was not bound to make a confes sion and if he does so, it may be used as evidence against him; and the endorsement further goes on to add that the Sub Magistrate believed that the confession was voluntarily made.
The next remark is that it was taken in his presence and hearing and read over to the confessor who admitted it to be correct.
But it is urged against the voluntary nature of the confession, that an inducement was given by the Magistrate by the manner in which the questions were put.
One of the questions was 'Why do you want to give a state ment and the answer given was It is suspected that those who have committed murder are others.
To prove that it is I who have stabbed, I am giving the statement. ' The above was the question put and the answer given on June 9, 1956.
On June 11, 1956, the question and the answer were as follows: " Q.
For what purpose are you going to make a statement ? A. Others will be implicated in the case for murder, I alone have committed murder.
I am going to give the state ment to that effect.
" When he resiled from the confession in the Sessions Court, the appellant stated that the Sub Inspector and the Circle Inspector went to him in Sub Jail and threatened to impli cate his father, accused No. 2 in the lower court, and five others, unless he confessed.
Therefore, it was on this account that the statement exhibit P. 3/A was made before the Magistrate which the 437 accused alleged was neither true, nor voluntary.
The argu ment of the learned counsel is that in order to save his father and some others, the appellant implicated himself and confessed falsely to an act which he did not commit.
Criti cism has been levelled against the mode and manner in which the question was put as directly inducing the appellant to immolate himself and thereby save his kith and kin.
We are asked to say that the appellant, being an emotional young man of noble sentiments and spirit, did not desire to have his father implicated in a crime of this sort and what may be ascribed as a filial obligation was performed in trying to get release of his father from the enmeshes of the po lice.
Such an argument, we are afraid, cannot carry any conviction.
The form of the question is prescribed by the Criminal Rules of Practice and if the officer before whom the confession is made, fails to put it, then his failure will be criticised as blameworthy.
We do not feel that any nefarious object existed in putting a perfectly innocuous and obligatory question to the appellant asking him "Why he wants to make a statement?" Further, P.W. 17, the Investi gating Sub Inspector, has clearly denied the alleged induce ment by the police that if be did not confess, others, including his father, would be implicated in the case.
It is, therefore, difficult to conclude that there was any kind of inducement or threat as a result of which an involuntary confession was made.
A complaint is made by the learned counsel that before the Committing Magistrate no question under section 342 Cr. P. C. was put to the appellant with regard to the confession and, therefore, he had no opportunity to put forward his com plaint about the confession until the case came before the Sessions court.
No doubt a scrutiny of the statement of the accused before the Sub Magistrate does not reveal any spe cific questions as having been put to him about the confes sion, but the fact remains that the confession was exhibited before the Committing court and the contents were known to the appellant then and there.
Under section 207 A, sub cl.
(3) of the Criminal Procedure Code, even at the commencement of the enquiry into a case triable by a 438 Sessions Court the Committing Magistrate is enjoined, when the accused is brought before him, to satisfy himself that the documents mentioned in section 173 have been furnished to the accused and if it is found that they have not so far been furnished, it is the duty of the Magistrate to cause the same to be furnished.
Section 173, sub cl.
(4) makes it obligatory upon the Police to furnish the accused free of cost with a copy of the police report, the F.I.R. under section 154 and all other documents on which the prosecution propose to rely, including statements and confessions if any record ed under section 164.
The result, therefore, is that even before the commencement of the committal proceedings the ' appellant had been provided with the copy of the confessional state ment sought to be relied upon for justifying a prima facie case against him.
We do not ,think, granting that the confession was not placed in the fore front as a piece of evidence against the accused in the Committing Court, such a default if it is one, would in any way show that the confes sion was involuntary.
The second aspect of the learned counsel 's contention is that the confession is not true.
In Sarawan Singh and Harbans Singh v, The State of Punjab (1) this court ex pressed the opinion that for the purpose of finding out whether a confession is true, it would be necessary to examine the same and compare it with the rest of the prose cution evidence and the probabilities of the case, and Mr. Umrigar relying on these observations urges that on a com parison of the confession with the other parts of the prose cution evidence, the irresistible conclusion should follow that on the face of it the confessional statement is untrue.
The material portions of the confessional document concern ing the actual crime are to the following effect: " So, on Wednesday night at about 11 O 'clock, I took aruval, spear and knife sharp on both sides and went to Chetty Thottam, near our garden.
Marappa Goundan, then was lying on the cot in his shed and sleeping.
I cut him with aruval on the neck.
While coming from there, to the house of Muniappa Gouildan (1) Criminal Appeals NOS.
22 and 23 Of 1957, decided April 10, 1957.
439 in our village, Muthu Goundail came opposite to me in our village street.
Thinking that he came to catch me, I stabbed him.
The aruval fell there itself.
Then, I went to Muniappa Gouudan 's house, and stabbed Mu niappa Goundan.
Afterwards, I set fire to the shed of Sennimalai Goundan at a distance of four furlongs to our village.
Then I came to our garden and lay." From this, according to the defence counsel, it is seen that only one cut was inflicted with an aruval on the neck of Marappa Goundan and a single stab was given to Muthu Goun dan.
Similarly Munia Goundan was only stabbed once, but in exhibit P. 4 the postmortem certificate on the body of Marappa Goundan there are as many as thirteen injuries of which the neck injuries were 4, 5 and 6, the others being on other parts of the body.
It is, therefore, urged that the unques tionable fact of the existence of a number of injuries on Marappa belies the truth of the confession, in that only one cut was given on the neck.
Similarly the confession does not make any mention of the presence of any One else when Munia Goundan was stabbed, though both P. W. 5 and P.W. 6 have deposed that there were three persons who were coming northward from the shed of Marappa Goundan at the time P.W. 5 was stabbed.
The statement made by P.W. 5 (exhibit D. 2) before the Medical Officer on June 8, 1956, was also to the effect that more persons than one were involved in the attack on him.
The confession also does not make any refer ence to the recovery of the incriminating articles such as M. 0.
12 as a result of a statement made by the appellant to the police officer.
From these circumstances we are asked to say that the confession cannot be true.
Mr. Umrigar urges that the learned Judges of the High Court have not paid sufficient attention to this method of examining how far a confession is true by comparing it with the other evidence in the case in accordance with the test laid down by this court.
Even in the absence of such comparison in the judgment of the High Court we do not think that on that ground it can be predicated that the appellant made an untrue statement voluntarily.
After all the absence of elaborate 440 details in a confession cannot brand it as false.
There is no statement in the confession which is contrary to the oral evidence though the details put forward when the witnesses were examined in court do not appear in extenso in the confession and for that reason we are not prepared to say that the confession.
in untrue.
The next question is whether there is corroboration of the confession since it has been retracted.
A confession of a crime by a person, who has perpetrated it, is usually the outcome of penitence and remorse and in normal circumstances is the best evidence against the maker.
The question has very often arisen whether a retracted confession may form the basis of conviction if believed to be true and volun tarily made.
For the purpose of arriving at this conclusion the court has to take into consideration not only the rea sons given for making the confession or retracting it but the attending facts and circumstances surrounding the same.
It may be remarked that there can be no absolute rule that a retracted confession cannot be acted upon unless the same is corroborated materially.
It was laid down in certain cases one such being Kesava Pillai alias Koralan and another and Kesava Pillai alias Thillai Kannu Pillai (1) that if the reasons given by an accused person for retracting a confes sion are on the face of them false, the confession may be acted upon as it stands and without any corroboration.
But the view taken by this court on more occasions than one is that as a matter of prudence and caution which has sancti fied itself into a rule of law, a retracted confession cannot be made solely the basis of conviction unless the same is corroborated one of the latest cases being 'Balbir Singh Versus State of Punjab (2), but it does not necessari ly mean that each and every circumstance mentioned in the confession regarding the complicity of the accused must be separately and independently corroborated, nor is it essen tial that the corroboration must come from facts and circum stances discovered after the confession was made.
It would be sufficient, in our opinion, that the (1) I.L.R. (2) A.I.R. 1957 S.C. 216.
441 general trend of the confession is substantiated by some evidence which would tally with what is contained in the confession.
In this connection it would be profitable to contrast a retracted confession with the evidence of an approver or an accomplice.
Though under section 133 of the Evidence Act a conviction is not illegal merely because it proceeds on the uncorroborated testimony of witnesses, illustration (b) to section 114 lays down that a court may pre sume that an accomplice is unworthy of credit unless he is corroborated in material particulars.
In the case of such a person on his own showing he is a depraved and debased individual who having taken part in the crime tries to exculpate himself and wants to fasten the liability on another.
In such circumstances it is absolutely necessary that what he has deposed must be corroborated in material particulars.
In contrasting this with the statement of a person making a confession who stands on a better footing, one need only find out when there is a retraction whether the earlier statement, which was the result of remorse, repentance and contrition, was voluntary and true or not and it is with that object that corroboration is sought for.
Not infrequently one is apt to fall in error in equating a retracted confession with the evidence of an accomplice and.therefore, it is advisable to clearly understand the distinction between the two.
The standards of corroboration in the two are quite different.
In the case of the person confessing who has resiled from his statement, general corroboration is sufficient while an accomplice 's evidence should be corroborated in material particulars.
In addition the court must feel that the reasons given for the retrac tion in the case of a confession are untrue.
Applying this test to the present case, we are of the opin ion that when the appellant has given no satisfactory expla nation for the presence of human blood on material objects Nos. 10, 11 & 12, it follows that the blood of the murdered was on these material objects.
The reasons for retraction are also false.
A criticism is levelled that the Chemical Examiner 's report does not show the extent of blood on M.O. 442 No. 12, the bed sheet, in which the appellant wrapped him self after the offence.
All that the document states is that among other items it is also stained with humanblood, but Mr. Umrigar argues that this description only shows that there would have been only a speck or a spot of blood on the bed sheet, for according to him, as a matter of fact, there should have been a large quantity of blood on the hands of the appellant if he had, without washing, used a bed sheet, thereafter large patches of blood are likely to be present on the bed sheet.
If that is so, the mere fact that the presence of blood is described as stains would show that the prosecution case cannot be true.
We do not feel inclined to put such a restricted meaning on the word I stain '. 'Stained with human blood ' is an expression commonly found in Chemical Examiner 's reports and it does not necessarily refer to specks of blood alone.
We do not think that any inference can be drawn from the use of the word 'stain ' in the Chemical Examiner 's report, that there was not suffi cient blood on the bed sheet.
The appellant has given no explanation as to how blood came to be present on material objects Nos.
10 to 12.
Agreeing with the High Court that this is corroboration of the confession made by the appel lant, we are of the opinion that the confession can be acted upon.
If that is so, the appellant 's guilt has been proved beyond reasonable doubt.
The appeal is dismissed.
Appeal dismissed.
| The appellant was charged with murder.
The eye witnesses against him were not relied upon.
He made a confession before a magistrate.
One of the questions put by the magis trate to the appellant before recording the confession was: " For what purpose are you going to make a statement?" To this he replied, " Others will be implicated in the case for murder, I alone have committed murder.
" It was argued that an inducement was given by the magistrate by the manner in which the question was put.
The next day after the murder " a drawer, a baniyan and a bed sheet", all stained with human blood were recovered from the appellant, for which no expla nation was given by him.
The confession was retracted before the Court of Session.
These recoveries 429 were used as corroboration of the confession.
It was con tended that this was no corroboration.
Held, that the confession was voluntary and the putting by the magistrate of a perfectly innocuous question which was prescribed by the Madras Criminal Rules of Practice did not amount to an inducement to make a confession.
Held, further, that there can be no absolute rule that retracted confession cannot be acted upon unless it is corroborated materially.
But as a matter of prudence and caution, which has sanctified itself into a rule of law, a retracted confession cannot be made solely the basis of conviction unless it is corroborated.
It is not necessary that each and every circumstance mentioned in the confession regarding the complicity of the accused should be separately and independently corroborated, nor is it essential that the corroboration must come from facts and circumstances discov ered after the confession was made.
It would be sufficient if the general trend of the confession is substantiated by some evidence which would tally with what is contained in the confession.
In the instant case the recovery of clothes stained with human blood for which the appellant gave no explanation was sufficient corroboration of the confession.
Balbir Singh vs State of Panjab, A.I.R. (1957) S.C. 216 relied on.
|
Summarize this legal judgement text concisely | Appeals Nos. 322 and 25 of 1955.
Appeal from the judgment and order dated April 13, 1954, of the Nagpur High Court in Miscellaneous Civil Case No. 71 of 1956 and appeal from the judgment and order dated August 26, 1952, of the Punjab High Court in Civil Reference No. 11 of 1952.
C. K. Daphtary, Solicitor General of India, G. N. Joshi and R. H. Dhebar, for the appellant in C.A. No. 322 of 1955 and respondent in C.A. No. 25 of 1955.
R. J. Kolah, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the respondent in C.A. No. 322 of 1955.
G. section Pathak and M. L. Kapur, for the appellant in C.A. No. 25 of 1955.
May 17.
The Judgment of Bhagwati and J.L. Kapur JJ.
was delivered by Bhagwati J. S.K.
Das J. delivered a separate judgment.
BHAGWATI J.
These two appeals with certificates under Section 66A (2) of the Indian Income Tax Act (hereinafter referred to as the Act) raise a common question of law and will be governed by this common judgment.
3 The facts leading up to these appeals may be shortly stated as under.
Prior to October 18, 1944, one Rai Bahadur Narsingdas Daga (since deceased), his wife Shrimati Sodradevi (the assessee), and his three major and three minor sons constituted a joint and undivided Hindu family.
There was a severance of joint status between the erstwhile members of the said joint family on October 18, 1944, and the joint family properties were accordingly partitioned.
On such partition, the business of the Spinning and Weaving Mills and agency shop at Hinganghat fell to the share of the assessee and her three major and three minor sons.
A partnership was entered into between the assessee and her three major sons for the purpose of carrying on the business of the Spinning and Weaving Mills and the agency firm at Hinganghat.
The three minor sons of the assessee were admitted to the benefits of the partnership.
The genuineness of the partnership was not disputed.
The only question which arose for the consideration of the Tribunal was whether the income falling to the share of the three minor sons was liable to be included in the total income of the assessee.
Oil a construction of section 16 (3) (a) (ii) of the Act, the Tribunal held that the income falling to the shares of the three minor sons of the assessee was liable to be included in her total income.
The assessee thereupon applied to the Tribunal for a reference to the High Court of Judicature at Nagpur of the question of law arising out of its order under section 66 (1) of the Act and the Tribunal submitted a statement of case referring the following question of law for the determination of the High Court: " Whether on a true construction of the provisions of section 16 (3) (a) (ii) of the Indian Income tax Act, 1922, the income of the three minor sons of the assessee is liable to be included in her total income.
" The High Court heard the reference and came to the conclusion that it was not the intention of the Legislature to include in the income of the mother, the income of her minor children arising from the benefits of partnership of a firm in which the mother is a 4 partner and accordingly answered the referred question in the negative.
The High Court, however, granted the necessary certificate under section 66A (2) of the Act to the Commissioner of Income tax, Madhya Pradesh and Bhopal, and hence Civil Appeal No. 322 of 1955 before us.
One Ishwardas Sahni who died on November 7, 1946, was a partner in the firm of Messrs. Ishwardas Sahni & Bros. The firm 's accounting year ended on March 31, 1947.
The said Ishwardas Sahni left him surviving his widow Damayanti (the assessee) and two minor sons.
The assessee became a partner in the said firm which also admitted her two minor sons to the benefits of the partnership.
The Income tax authorities included the minor sons ' shares in the reconstituted firm 's profits in computing the income of the assessee on the ground that " individual " in section 16 (3) (a) (ii) of the Act meant an individual person of either sex.
The Income tax Appellate Tribunal held that the word "individual" must be taken as referring only to a male assessee wherever that occurred in section 16 (3) and directed the deletion from the assessee 's income of the shares of her minor sons in the profits of the firm.
At the instance of the Commissioner of Income tax, Delhi, the Tribunal referred to the High Court of Punjab at Simla the question of law arising out of its order under section 66 (1) of the Act together with a statement of case.
The referred question was: " Whether the word " individual " in Section 16(3) (a) (ii) of the Income Tax Act, 1922, includes also a female and whether the shares of the two minor sons of Shrimati Damayanti Sahni in the profits of the re constituted firm of Messrs. Ishwardas Sahni and Brothers should be included in the income of Shrimati Damayanti Sahni in assessing her income, profits and gains.
" The High Court heard the reference and following the decision given by the High Court of Allahabad in Shrimati Chanda Devi vs The Commissioner of Incometax (1), answered the referred question in the affirmative.
(1) 5 The assessee obtained the requisite certificate under section 66A (2) of the Act from the High Court and that is how Civil Appeal No. 25 of 1955 is before us.
The common question of law which we have to determine in these appeals is whether the word " individual " in section 16 (3) (a) (ii) of the Act includes also a female and the income of the minor sons derived from a partnership to the benefits of which they have been admitted is liable to be included in the income of the mother who is a member of that partnership.
Section 16(3) of the Act provides: " In computing the total income of any individual for the purpose of assessment, there shall be included (a) so much of the income of a wife or minor child of such individual as arises directly or indirectly: (i)from the membership of the wife in a firm of which her husband is a partner; (ii)from the admission of the minor to the benefits of the partnership in a firm of which such individual is a partner; (iii)from assets transferred directly or indirectly to the wife by the husband otherwise than for adequate consideration or in connection with an agreement to live apart; or (iv)from assets transferred directly or indirectly to the minor child, not being a married daughter, by such individual otherwise than for adequate consideration; and (b)so much of the income of any person or association of persons as arises from assets transferred otherwise than for adequate consideration to the person or association by such individual for the benefit of his wife or a minor child or both." Section 3 of the Act may also be referred to in this context and it runs as follows: Section 3.
Charge of Income Tax: " Where any Central Act enacts that income tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of this Act in respect of the total income of the previous year of every individual, Hindu undivided 6 family, company and local authority, and of every firm and other association of persons or the partners of the firm or the members of the association individually.
" The same description of the assessee is also to be found in section 4A, which deals with residence in the taxable territories, section 48 dealing with refund and section 58 dealing with the charge of super tax.
The word assessee is wide enough to cover not only an "individual" but also a Hindu undivided family, company and local authority and every firm and other association of persons or the partners of the firm or the members of the association individually.
Whereas the word " individual " is narrower in its connotation being one of the units for the purposes of taxation than the word " assessee ", the word " individual " has not been defined in the Act and there is authority for the proposition that the word " individual " does not mean only a human being but is wide enough to include a group of persons forming a unit.
It has been held that the word " individual " includes a Corpora tion created by a statute, e.g., a University or a Bar Council, or the trustees of a baronetcy trust incorporated by a Baronetcy Act.
It would also include a minor or a person of unsound mind.
If this is the connotation of the word " individual " it follows that when section 16(3) talks of an "individual" it is only in a restricted sense that the word has been used.
The section only talks of " individual " capable of having a wife or minor child or both.
It therefore necessarily excludes from its purview a group of persons forming a unit or a corporation created by a statute and is confined only to human beings who in the context would be comprised within that category.
The Revenue urges before us that the word " individual " as used qua human beings is capable of including within its connotation a male as well as a female of the species and having regard to the context in which the word has been used in section 16(3), it should be construed as meaning a male of the species when used in Juxtaposition with " a wife " and as meaning both a male and a female when used in juxtaposition with "minor child" so that when section 16(3) talks of 7 such individual" in sub cls.
(ii) and (iv) of cl.
(a) thereof it refers to both a male and a female of the species so as to include within its compass not only a father of the minor child but also a mother.
The assessees, on the other hand, contend that the word " individual " used in section 16(3) is not used in its generic sense but is used in a restricted and narrower sense as connoting only human being and if it is thus restricted there is ample justification for restricting it still further to the male of the species when regarded in the context of section 16(3).
Sub clauses (i) to (iv) of cl.
(a) are specific cases where the income of a wife or a minor child of ,such individual" arising directly or indirectly from the several sources therein indicated is to be included in computing the total income of the "individual" for the purpose of assessment and the word could not have been 'Used in a different sense for the purposes of sub cls.
(i) and (iii) and sub cls.
(ii) and (iv) of cl.
The word " such individual " as used in sub cl.
(a) can only have been used in one sense and one sense only and if that is the sense in which it could have been used " such individual " should be one who is capable of having a wife or minor child or both and that individual can only be a male of the species and not a female.
The question for our determination is a very narrow one and it turns on the construction of section 16(3) of the Act.
The High Court of Madhya Pradesh plunged headlong into a discussion of the reasons which motivated the Legislature into enacting section 16 (3) by Act IV of 1937, and took into consideration the recommendations made in the Income Tax Enquiry Report, 1936 and also the statement of objects and reasons for the enactment of the same, without considering in the first instance whether there was any ambiguity in the word individual " as used therein.
It is clear that unless there is any such ambiguity it would not be open to the court to depart from the normal rule of construction which is that the intention of the Legislature should be primarily gathered from the words which are used.
It is only when the words used are ambiguous that they would stand to be examined and 8 construed in the light of surrounding circumstances and constitutional principle and practice (Per Lord Ashbourne in Nairn vs University of St. Andrews(1).
In the latter event the following observations of Lord Lindley M. R. in Thomson vs Lord Clanmorris(2) would be apposite: " In construing any statutory enactment, regard must be had not only to the words used, but to the history of the Act and the reasons which led to its being passed.
You must look at the mischief which had to be cured as well as at the cure provided" (See also the observations of Goddard C. J. in B. vs Paddington and St. Marylebone Rent Tribunal (3).
The position in law has been thus enunciated in the judgment of Das, Actg.
C.J. (as he then was) in the Bengal Immunity Company Limited vs The State of Bihar (4) : " It is a sound rule of construction of a statute firmly established in England as far back as 1584 when Heydon 's Case (5) was decided that ". . for the sure and true interpretation of all statutes in general (be they penal or beneficial, restrictive or enlarging of the common law) four things are to be discerned and considered: 1st.
What was the common law before the making of the Act.
, 2nd.
What was the mischief and defect for which the common law did not provide.
, 3rd.
What remedy the Parliament hath resolved and appointed to cure the disease of the Commonwealth., and 4th.
The true reason of the remedy; and then the office of all judges is always to make such construction as shall suppress the mischief, and advance the remedy, and to suppress subtle inventions and evasions for continuance of the mischief, and pro privato commodo, and to add force and life to the cure and remedy, according to the true intent of the makers of the Act, pro bono publico. " (1) ; (2) , 725 (3) , 203.
(4) , 632.
(5) ; ; 76 E.R. 637, 9 In In re Mayfair Property Company (1) Lindley M. R. in 1898 found the rule " as necessary now as it was when Lord Coke reported Heydon 's case ".
In Eastman Photographic Materials Company vs Comptroller General of Patents, Designs and Trade Marks (2) Earl of Halsbury re affirmed the rule as follows: " My Lords, it appears to me that to construe the statute now in question, it is not only legitimate but highly convenient to refer both to the former Act and to the ascertained evils to which the former Act had given rise, and to the later Act which provided the remedy.
These three things being compared, I cannot doubt the conclusion.
" The High Court of Punjab based its conclusion primarily on the use of the word "or" between the word "wife" and the words "minor child" in section 16(3)(a) of the Act and it was of opinion that these words were used disjunctively and the "individual" referred to in section 16(3) (a) of the Act may have a wife and minor child or may not have a wife but have a " minor child ".
If the individual assessed to income tax is a female that individual will have no wife but she may have a minor child and therefore section 16 (3) (a) of the Act does not imply that the individual must necessarily be a male.
The argument based on the disjunctive user of the word "wife" and the words "minor child" is capable of being summarily disposed of.
Even if the words "such individual" in section 16 (3)(a) of the Act meant only a male of the species the word "wife" and the words "minor child" could only have been used with the word "or" in between.
A male of the species may.
not necessarily have both a wife and a minor child.
He may have a wife but no "minor child".
He may have a minor child but may have no wife at the relevant period.
If therefore provision had to be made for the inclusion of the income of a wife or minor child or both in the total income of a male of the species the word "or" was absolutely necessary to be interposed between the word "wife" and the words 'minor child".
To construe the word "or" as disjunctive between the word "wife" and (1) , 35.
(2) , 576.
10 the words "minor child" does not necessarily lead to the conclusion that the words "such individual" were used for both a male and a female of the species and were necessarily inconsistent with the user of those words for the male of the species if the context otherwise lead to that conclusion.
The reasoning adopted by the learned Judges of the High Court of Punjab therefore does not clinch the matter.
We have therefore got to examine whether the use of the word "individual" in section 16(3) (a) of the Act is in any manner ambiguous.
The opening words of section 16(3) talk of "any individual" whose total income has got to be computed for the purpose of assessment and the words "such individual" used in section 16(3) (a) have reference only to that individual.
That individual must be an assessee and it is in the computation of his total income for the purpose of assessment that the income of the persons mentioned in cls.
(a) and (b) have got to be included.
Sub clause (a) refers to two distinct sets of persons bearing a relationship with "such individual", the assessee.
One is a wife and the other is a minor child.
The case of the wife is dealt with in sub cls.
(i) and (iii) and the case of a minor child is dealt in sub cls.
(ii) and (iv).
Sub clauses (i) and (iii) use the word "her husband" or "the husband" in place of the words "such individual" with reference to the income derived by the wife in the circumstances therein mentioned, though, it may be observed that the user of the words "such individual" would not have made the slightest difference to the position.
Subclauses (ii) and (iv) which deal with a "minor child" use the words "such individual" in relation to the minor child whose income under the circumstances therein mentioned has to be included in computing the total income of "such individual" for the purpose of assessment.
Whereas the words used in sub cls.
(i) and (iii) are specific and refer only to "her husband" and "the husband" as "such individual", the words used in sub cls.
(ii) and (iv) leave it indefinite as to which is meant by the words "such individual" whether a male and/or a female of the species.
If the words used in all these four sub clauses were to be 11 harmoniously read and the two cases which are mentioned in sub cls.
(i) and (iii) are not to be read differently from the cases mentioned in sub cls.
(ii) and (iv) the only way in which the words "such individual" as used in sub cls.
(ii) and (iv) could be understood would be to read them as confined to a male of the species and not including the female.
If these words "such individual" as used in sub cls.
(ii) and (iv) are thus read restricted to a male of the species, all these sub clauses would have reference only to the male of the species irrespective of the fact that the words "her husband" and "the husband" have been used in sub cls.
(i) and (iii) instead of the words "such individual".
If the words "such individual" had been used in sub cls.
(i) and (iii) as they have been used in sub cls.
(ii) and (iv) the position would have been just the same because in that event also we would have had to determine whether there was any justification for reading the words "such individual" used with reference to sub cls.
(i) and (iii) in any different sense from the same words "such individual" as used in sub cls.
(ii) and (iv).
The crux of the question, therefore, is whether the words "such individual" used in the opening part of section 16 (3) (a) are used to mean a male of the species when they are read in juxtaposition with the words "a wife" and are used to mean both a male as well as a female of the species, as the case may be, when used in juxtaposition with the words "minor child".
If that was the intention of the Legislature there was nothing to prevent it from dividing cl.
(a) into two sub clauses whether they were numbered (a) and (ai) or (a) and (b) respectively.
The Legislature could as well have enacted the provisions in the manner following: (a):so much of the income of a wife of such individual as arises directly or indirectly; (i)from the membership of the wife in a firm of which her husband (or such individual) is a partner; or (ii)from assets transferred directly or indirectly to the wife by the husband (or such individual) 12 otherwise than for adequate consideration or in connection with an agreement to live apart; (ai) or (b): so much of the income of a minor child of such individual as arises directly or indirectly ; (i)from the admission of the minor to the benefits of the partnership in a firm of which such individual is a partner; or (ii)from assets transferred directly or indirectly to the minor child, not being a married daughter, by such individual otherwise than for adequate consideration.
If these provisions had been enacted in the manner aforesaid it would have been possible to urge, as has been urged before us by the Revenue, that cl.
(a) referred only to a male of the species who only could have a wife and cl.
(ai) or (b) referred to a male and/or a female of the species.
The Legislature however chose to adopt a peculiar mode of enactment either for the purpose of economy of words or structural beauty and mixed up both these sets of provisions into the enactment of cl.
(a) of section 16(3) of the Act as it stands at present.
It rolled in both these sets of cases and used the words "a wife" or "minor child" of "such individual" raising thus the question of construction which has got to be determined by us.
"Such individual" as is talked of in section 16(3) (a) may have a wife, may have a minor child or may have both a wife and a minor child.
When "such individual" is thought of in connection with a wife, it can only be a male of the species, but when "such individual" is thought of in connection with a minor child it can be both a male as well as a female of the species, though, of course, when "such individual" is thought of in connection with "both" then again it would have to be a male of the species and certainly not a female.
Such an interpretation would lead to the interpretation of the same words "such individual" as meaning two different things in two different contexts.
They would mean one thing when used in relation to "a wife" and would mean another thing when used in relation to a " minor child".
They would be capable ' of being understood in a narrower sense when used in connection with "a wife" and would be capable of being 13 understood in a wider sense when used in connection with a "minor child".
One may as well question the elegance or the propriety of such user of the words "such individual" where the words "as the case may be" are necessarily to be imported in order to understand the true import of these words, when again they are used not in different parts of the same section but at one place only.
If one turns to section 16 (3) (b) the words used therein are "transferred. . by "such individual" for the benefit of his wife or a minor child or both".
There is the indefinite article "a" used before the words "minor child".
If that indefinite article "a" had not been used, the expression would have run "for the benefit of his wife or minor child or both" thus leaving no doubt at all that in cl.
(b) at least the words "such individual" meant only a male of the species.
It is urged however that the use of the indefinite article "a" shows that the words "his wife" and "minor child" mid "both" have been used disjunctively and should be read in the same manner as in section 16(3)(a) of the Act.
The words " his wife " would appropriately go with a male of the species but the words "a minor child" would appropriately go with a male as well as a female of the species, though the word "both" could only be appropriate in relation to a male of the species and not a female who can have a minor child but not both a wife and a minor child.
The same want of elegance or propriety can be predicated of this expression also and the use of such expressions both in section 16 (3)(a) and section 16 (3)(b) raise questions of construction whether what was meant by the Legislature was only a male of the species in both these contexts or a male and/or female of the species, as the case may be, applying one or the other in accordance with the circumstances attendant, upon the computation of the total income of " any individual " for the purpose of assessment.
We are of opinion that the very manner in which all the four sub clauses have been grouped together in section 16 (3) (a) and the manner in which the expression "for the benefit of his wife, a minor child or both" is used in section 16 (3) (b) renders the words "any individual" 14 or " such individual " ambiguous.
There is no knowing with certainty as to whether the Legislature meant to enact these provisions with reference only to a male of the species using the words "any individual" or " such individual " in the narrower sense of the term indicated above or intended to include within the connotation of the words "any individual" or " such individual " also a female of the species, wherever appropriate which would of course only be possible in the cases contemplated in sub cls.
(ii) and (iv) of section 16 (3)(a) and in one of the three cases contemplated in section 16 (3)(b).
The Legislature certainly was guilty of using, an ambiguous term in enacting section 16 (3) of the Act as it did.
In order to resolve this ambiguity therefore we must of necessity have resort to the state of the law before the enactment of the provisions; the mischief and defect for which the law did not provide; the remedy which the legislature resolved and appointed to cure the defect and; the true reason of the remedy within the meaning of the authorities referred to above.
Before the enactment of section 16 (3) of the Act by the Indian Income tax (Amendment) Act, 1937 (IV of 1937), there was no provision at all for the inclusion of the income of a wife or a minor child in the computation of the total income of " any individual " for the purpose of assessment.
Whatever may have been the income of a wife from her membership in a firm of which her husband was a partner or from assets transferred directly or indirectly to her by her husband otherwise than for adequate consideration or in connection with an agreement to live apart, her income was not included in the income of her husband in computing the total income of the husband for the purpose of assessment.
Similar was the position in the case of income derived by a minor child from the admission of the minor to the benefits of partnership in a firm of which "such individual" was a partner or from assets transferred directly or indirectly to the minor child, not being a married daughter, by "such individual" otherwise than for adequate consideration.
The income derived by such minor child could not be added to the 15 income of the father for the purpose of assessment.
The income derived by the wife or minor child could only be included in computing his or its total income for the purposes of assessment and neither the husband nor the father could be made liable for income tax in respect of such income, whatever may be the reason which actuated them in providing such income for the wife or the minor child.
The position was pregnant with difficulties for the Revenue.
There were no doubt genuine cases where a wife or the minor child as the case may be, was provided with such income on bona fide severance of joint status between the erstwhile members of a joint and undivided Hindu family and where after such partition the adult member of the family entered into a bona fide partnership admitting the minors to the benefits of the partnership.
There were, on the other hand, innumerable cases where such severance of joint status was resorted to mainly with a view to evade a higher incidence of income tax.
There were also cases where husbands and fathers provided shares for their wives and minor sons and thus evaded payment of income tax in regard to their shares in the profits of such partnerships.
This evil was so rampant that the Income Tax Enquiry Report, 1936, recognised the same and made the following recommendations for remedying the situation (vide pp.
19 & 20 of the Report).
CHAPTER III Assessees Section I Individuals.
(a) Wife 's Income.
Our attention has been drawn to the extent to which taxation is avoided by nominal partnerships between husband and wife and minor children.
In some parts of the country, avoidance of taxation by this means has attained very serious dimensions.
The obvious remedy for this state of affairs so far as husband and wife are concerned is the aggregation for assessment of their incomes, but such a course would involve aggregation in a quite different class of cases i.e., where the wife 's income arises from sources unconnected with the husband. . . . . . . . . . .
16 We recommend, therefore, that the incomes of a wife should be deemed to be, for income tax purposes, the income of her husband, but that where the income of the wife is derived from her personal exertions and is unconnected with any business of her husband, her income from her personal exertions upto a certain limit, say Rs. 500, should not be so included .
(b) Income of Minor Children.
There is also a growing and serious tendency to avoid taxation by the admission of minor children to the benefits of partnership in the father 's business.
Moreover, the admission is, as a rule, merely nominal, but being supported by entries in the firm 's books, the Income Tax Officer is rarely in a position to prove that the alleged participation in the benefits of partnership is unreal. . . . . .
We suggest that the income of a minor should be deemed to be the income of the father (i) if it arises from the benefits of partnership in a business in which the father is a partner or (ii) if, being the income of a minor other than a married daughter, it is derived from assets transferred directly or indirectly to the minor by his or her father or mother, (iii) if it is derived from assets apportioned to him in the partition of a Hindu Undivided Family.
It may be noted that the recommendations of the Enquiry Committee even in the cases hereinbefore mentioned went to the length of including the income of the wife or the minor child as the case may be in the income of the husband or the father in the computation of his total income for the purpose of assessment.
The mischief which the Enquiry Report sought to remedy by its recommendations was one which was the result of husbands entering into nominal partner ships between themselves and their wives and fathers admitting their minor children to the benefits of such partnerships.
The mischief, if any, resulting from the mothers admitting their minor children to the benefits of partnerships in which they were members was farthest from the thoughts of the Enquiry Committee and was nowhere sought to be remedied.
Having 17 regard to the circumstances which prevailed at the time when the Enquiry Committee made its report, the only mischief which they sought to remedy by their recommendations was the one resulting from the male assessees indulging in such tactics for the evasion of income tax by creating nominal partnerships between themselves and their wives on the one hand and their minor children on the other.
These recommendations were duly considered by the Government and as a result thereof Act IV of 1937 was enacted introducing a. 16(3) in the Act.
What was intended to be done by the Legislature in enacting this amendment may be gleaned to a certain extent from the statement of objects and reasons appended to the Bill which eventually became the amending Act.
Though it is not legitimate to refer to the statement of objects and reasons as an aid to the construction or for ascertaining the meaning of any particular word used in the Act or Statute (See Aswani Kumar Ghose vs Arabinda Bose (1), nevertheless, this Court in The State of West Bengal vs Subodh Gopal Bose(2) referred to the same "for the limited purpose of ascertaining the conditions prevailing at the time which actuated the sponsor of the Bill to introduce the same and the extent and urgency of evil which he sought to remedy.
" The statement of objects and reasons which led to the passing of Act IV of 1937 ran as follows: " Reference is made in sections I and 4 of Chapter III of the Income Tax Enquiry Report, 1936, to the practice of avoiding taxation by means of nominal partnerships between husband and wife or parent and minor child or by the nominal transfer of assets to a wife or minor child (or to an " Association " consisting of husband and wife) when there is no substantial separation of the interests of the assessee and the wife or child.
These practices are reported to have become very widespread already, with considerable detriment to the revenue, and there is little doubt that if they are not checked there will be progressive deterioration.
The proposals in the Report regarding the aggregation (1) ; (2) ; , 628.
3 18 of the incomes of husband and wife go beyond the immediate necessities of the case and to that extent their adoption would involve the admission of a new principle which the Government of India do not desire to establish in advance of the general public discussion of the Report which has been arranged; and the present Bill has been so drafted as to deal only with the abuses to which I have referred.
" It is clear from the above extracts that the evil which was sought to be remedied was the one resulting from the widespread practice of husbands entering into nominal partnerships with their wives and fathers admitting their minor children to the benefits of the partnerships of which they were members.
This evil was sought to be remedied by the enactment of section 16(3) in the Act.
If this background of the enactment of section 16(3) is borne in mind, there is no room for any doubt that howsoever that mischief was sought to be remedied by the amending Act, the only intention of the Legislature in doing so was to include the income derived by the wife or a minor child, in the computation of the total income of the male assessee, the husband or the father, as the case may be, for the purpose of assessment.
If that was the position, howsoever wide the words "any individual" or "such individual" as used in section 16(3) and section 16(3)(a) may appear be so as to include within their connotation the male as well as the female of the species taken by the themselves, these words in the context could only have been meant as restricted to the male and not including the female of the species.
If these words are used as referring only to the male of the species the whole of the section 16(3)(a) can be read harmoniously in the manner above comprehending within its scope all the four cases specified in sub cls.
(i) to (iv) thereof and so also section 16(3)(b).We are, therefore, of opinion that the words" any individual" and "such individual" occurring in section 16(3) and section 16(3)(a) of the Act are restricted in their connotation to mean only the male of the species, and do not include the female of the species, even though by a disjunctive reading of the expression "the wife" or "a minor child" of "such individual" in section 16(3)(a) 19 and the expression "by such individual" for the benefit of his wife or a minor child or both" in section 16(3)(b), it may be possible in the particular instances of the mothers being connected with the minor children in the manner suggested by the Revenue to include the mothers also within the connotation of these words.
Such inclusion which involves different interpretations of the words "any individual" or "such individual" in the different contexts could never have been intended by the Legislature and would in any event involve the addition of the words "as the case may be" which addition is not normally permissible in the interpretation of a statute.
We shall now refer to the decisions of the several High Courts in India bearing on the construction of section 16(3) of the Act.
The earliest decision is that of the High Court of Allahabad in Shrimati Chanda Devi vs Commissioner of Income tax, U.P. (1).
That decision emphasised that the sub cl.
(i) of cl.
(a) of sub section
(3) of section 16 made it clear that where the husband was a partner the income of the wife, by reason of her being a member of the firm, was to be computed in the income of the husband, and if the Legislature had intended that the word "individual" in sub cl.
(ii) should mean only the father and not the mother there was no reason why they should not have used similar language as in sub cl.
(i) and said "from the admission of the minor to the benefits of partnership in a firm in which his father is a partner.
" Why the Legislature used a particular expression and why it did not use any expression which would have been clearer and better expressive of its intention is really difficult to fathom.
We may as well wonder why the Legislature did not use the words "such individual" in sub cls.
(i) and (iii), of section 16(3)(a) in place of the words "her husband" or "the husband" when the intention of the Legislature would have been equally carried out by the use of those words.
It may be that the draftsman considered the use of the words "her husband" or "the husband" when he used the same in juxtaposition with the words "a wife" as appropriate or more elegant and therefore ignored the obvious user of the words "such (1) 20 individual" which would have been equally appropriate in that context.
It would have been better expressive of the intention of the Legislature, as we have already divined above (viz., to use the words "any individual" and "such individual" in section 16(3) and 16(3)(a) respectively in the restricted meaning of the male of the species), to have used the words "the father" in place of the words "such individual" in sub cls.
(ii) and (iv) of section 16(3)(a).
It is however difficult to fathom the mind of the draftsman when he used one particular expression in preference to the other and not much help can be derived from the ratio adopted by the learned Judges of the High Court of Allahabad in the decision just referred to.
It is also significant to observe that the learned Judges considered that the language of the section does not create any real difficulty and therefore did not think it worth their while to refer to the Income Tax Enquiry Report, 1936, and the passage therefrom which we have quoted above.
Suffice it to say that we do not concur with the reasoning adopted by the learned Judges of the High Court of Allahabad and are of the opinion that the decision just referred to in so far as it militates against the reasoning adopted by us herein is incorrect.
The later case of Musta Quima Begum, In re(1) decided by the same High Court merely follows the judgment in Shrimati Chanda Devi 's case (2) and is subject to the same criticism as above.
The decision of the High Court of Punjab in Shrimati Damayanti Sahni vs Commissioner of Incometax, Delhi (3) is the one under appeal before us in Civil Appeal No. 25 of 1955.
The learned Judges there followed the decision of the High Court of Allahabad in Shrimati Chanda Devi 's case (2) and answered the referred question in the affirmative.
It follows from what we have said above that that decision is also incorrect and the referred question ought to have been answered by them in the negative.
The latest decision in this context is that of the High Court of Madhya Pradesh in commissioner of (1) (2) (3) 21 Income tax,Madhya Pradesh and Bhopal vs Smt.
Sodra Devi (1) which is the subject matter of Civil Appeal No. 322 of 1955 before us.
The High Court there observed that the word "individual" as used in section 16(3) of the Act was ambiguous and referred to the above quoted passage from the Inquiry Committee 's Report, 1936, as also the statement of objects and reasons and came to the conclusion that the word "individual" was restricted to the male of the species and it was not the intention of the Legislature to impose additional tax on a mother assessee by including in her income the income of her minor children arising from the benefits of partnership of a firm in which the mother and the minors were partners.
We are of opinion that the decision reached by the learned judges of the High Court of Madhya Pradesh in that case was correct and the referred question was rightly answered by them in the negative.
The result therefore is that Civil Appeal No. 322 of 1955 will be dismissed with costs, and Civil Appeal No. 25 of 1955 will be allowed with costs, the referred question being answered in the negative.
section K. DAS J.
The substantial question which falls for decision in these two appeals is if the word "individual" in sub section
(3) of section 16 of the Indian Income tax Act, hereinafter referred to as the Act, includes also a female, and therefore the income of the minor sons which arises directly or indirectly from their admission to the benefits of partnership in a firm of which their mother is a member is to be included in computing the total income of the mother within the meaning of sub section
(3), cl.
(a), sub cl.
(ii), of section 16.
The question is really one of pure construction, that is, construction of sub section
(3) of section 16 of the Act.
Nothing turns upon the facts of the case, and as the material facts have been clearly set out in the judgment just read by my learned brother Bhagwati J.
I do not think that any useful purpose will be served by restating them.
Therefore, I proceed at once to a consideration of sub section
(3) of section 16 of the Act and state at the very (1) 22 outset that, to my great regret, I have come to a conclusion different from that of my learned brethren.
I shall presently read the sub section; but before I do so, it will help the exposition which follows if I explain in a few words the standpoint from which I have approached the question.
Speaking generally, the expression "construction" includes two things: first, the meaning of the words; and, secondly, their legal effect or the effect which is to be given to them by the courts.
As in the case of documents, so in the case of statutes also, they should be construed in a manner which carries out the intention of the Legislature.
It may be reasonably asked how is the intention of the Legislature to be discovered? The answer is that the intention must first be gathered from the words of the statute itself.
If the words are unambiguous or plain, they will indicate the intention with which the statute was passed and the object to be attained by it; in other words, the intention is best declared by the words themselves, and the words of a statute are to be interpreted as bearing their ordinary, natural meaning unless the context requires a different meaning to be given to them.
If, however, the words are ambiguous, the policy of the legislation and the scope and object of the statute, where these can be discovered, will show the intention, which may further be brought to light by applying the various well settled rules and presumptions of construction.
One such rule is that the statute must be read as a whole and the construction made of all the parts together.
I am emphasising this aspect of the question to guard against any possible suggestion that I have started with some a priori idea of the meaning or intention behind subs.
(3) of section 16 of the Act and have tried by construction to work that idea into the words of the sub section.
I have been conscious all through of the warning given by Lord Halsbury, in the following observations in Leader vs Duffey (1): " All these refinements and nice distinctions of words appear to me to be inconsistent with the modern view, which is I think in accordance with reason and (i) , 301.
23 common sense, that, whatever the instrument, it must receive a construction according to the plain meaning of the words and sentences therein contained.
But I agree that you must look at the whole instrument, and, inasmuch as there may be inaccuracy and inconsistency, you must, if you can, ascertain what is the meaning of the instrument taken as a whole in order to give effect, if it be possible to do so, to the intention of the framer of it.
But it appears to me to be arguing in a vicious circle to begin by assuming an intention apart from the language of the instrument itself, and having made that fallacious assumption to bend the language in favour of the presumption so made." Keeping that warning in mind, I shall first take the words of sub section
(3) of section 16 and see if they are plain or unambiguous.
Alternatively, I shall also consider the proper construction of sub section
(3) of section 16 on the assumption that the word "individual" used in the sub section is ambiguous and should therefore be interpreted consistently with the principles laid down in the locus classicus on the subject, namely, the celebrated Heydon 's case (1) reported by Lord Coke and decided by the Barons of the Exchequer in the sixteenth century.
I shall now read sub section
(3) of section 16 of the Act: " 16.
(3) In computing the total income of any individual for the purpose of assessment, there shall be included (a) so much of the income of a wife or minor child of such individual as arises directly or indirectly (i) from the membership of the wife in a firm of which her husband is a partner; (ii)from the admission of the minor to the benefits of partnership in a firm of which such individual is a partner; (iii)from assets transferred directly or indirectly to the wife by the husband otherwise than for adequate consideration or in connection with an agreement to live apart; or (1) ; , 24 (iv)from assets transferred directly or indirectly to the minor child, not being a married daughter, by such individual otherwise than for adequate consideration ; and (b) so much of the income of any person or association of persons as arises from asset,,; transferred otherwise than for adequate consideration to the person or association by such individual for the benefit of his wife or a minor child or both.
" I have already stated that the sub section must be read as a whole and in the context of the other provisions of the Act, particularly section 16 of which it is a part; it is only then that we shall arrive at its correct meaning consistent with the other provisions of the Act.
The word "individual" used in sub section
(3) of section 16 occurs in several other provisions of the Act, e.g., section 3, section 4A, section 48 and section 55.
It is necessary to quote section 3 in extensor That section is in these terms: " Where any Central Act enacts that income tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of this Act in respect of the total income of the previous year of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or the members of the association individually.
" It is not disputed before us that the word "individual " occurring in sections 3, 4A, 48 and 55 means either a male or a female; nor has it been disputed before us that, according to the ordinary accepted meaning of the word, it means a single human being as opposed to "society," "family" etc., and that a single human being may be of either sex.
Learned counsel appearing for the assessees in the two appeals have pointed out, however, that the word "individual" has not the same width of meaning in sub section
(3) of section 16 as it has in the other provisions; for example, in section 3, the word "individual" has been held to include a Corporation created by a statute, e.g., a University or a Bar 25 Council or the trustees of a baronetcy trust incorporated by a Baronetcy Act etc; whereas sub section
(3) of section 16 makes it quite clear that the word " individual " there does not include a Corporation created by a statute.
This indeed is correct.
But the question before us is whether, in its context, sub section
(3) of section 16 imposes a further restriction on the word "individual", confining it to a male individual only.
The critical question before us is whether such a further restriction is imposed on the word "individual" either by the express words used in the sub section or by necessary implication from the clauses and sub clauses thereof.
It is said to be a presumption in construction that the same words are used in the same meaning in the same statute and particularly in the same section or sub section.
The presumption is, however, of the slightest, and there are many instances where the application of this rule or presumption is impossible.
The same words may often receive a different interpretation in different parts of the same Act, for words used with reference to one set of circumstances "may convey an intention quite different from what the selfsame set of words used with reference to another set of circumstances would or might have produced." (Edinburgh Street Tramways Co. vs Torbain (1), per Lord Blackburn).
The classic example of the same word having a somewhat different meaning in the same section is provided by Offences against the Person Act, 1861, section 57 of which deals with bigamy and enacts: "Whosoever, being married, shall marry any other person during the life of the former husband or wife. .
Shall be guilty of felony.
" It is obvious that the word "marry" is used in two different senses in the same section.
There is another classic example in article 31 of our Constitution where the word "law" in el.
(3) of the said Article has been used in different senses.
This is referred to in a decision of this Court in The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga (2).
(1) , 68.
(2) , 908, 909.
26 The word "individual" is not defined in the Act, but the meaning of the word in sections 3, 4A, 48 and 55 is reasonably clear.
The word "assessee" is defined in cl.
(2) of section 2 of the Act, as meaning a person by whom income tax or any other sum of money (which would include super tax, penalty or interest) is payable under the Act.
It also includes every person in respect of whom any proceeding under the Act is taken for the assessment (a) of his income, (b) of his loss or (c) of the amount of refund due to him.
Thus the definition covers two categories: first, persons by whom any tax, penalty or interest is payable under the Act, whether any proceeding under the Act has been actually taken against them or not; and secondly, persons against whom any of the proceedings specified in this clause has been taken, whether he is or is not liable to pay any tax, penalty or interest. 'A person ', under section 3(42) of the General Clauses Act, includes any company or association or.
body of individuals, whether incorporated or not; and under cl.
(9) of the section 'a person ' also includes a Hindu undivided family and a local authority.
Thus, we have six categories of assessees referred to in section 3 (a) the individual, (b) the Hindu undivided family, (c) the local authority, (d) the company, (e) the firm and (f) other association of persons.
Read in the context of section 3 of the Act, the word "individual" means, in the other sections, one of the six categories of assessees referred to in section 3.
The same category is also referred to in sub section
(3) of section 16, subject only to this restriction that in the context of the sub section, the word "individual" does not include a Corporation etc.
We now turn to the critical question before us is there a further restriction in the sub section confining the word "individual" to a male individual only? My answer is that there is nothing in the context of section 16 or of the sub section which confines the word "individual" to a male individual only.
Section 16 deals with the computation of total income and provides what sums are to be included or excluded in determining the total income.
The effect of including exempted income in the assessee 's total income is 27 mainly two fold: first, the tax payable by the assessee is determined with reference to the total income and therefore exempted income which is included in the total income would affect the rate of tax applicable to the chargeable portion of the total income; secondly, in several cases reliefs are given or calculations made with reference to the total income.
Sub section (3) of section 16 appears ex facie to be directed towards preventing an individual 's attempt to avoid or reduce the incidence of tax by transferring the assets to his wife or a minor child or admitting the wife as a partner or admitting a minor child to the benefits of partnership in a firm in which such individual is a partner.
I agree that the sub section creates, to some extent, an artificial liability to tax by including the income of A in the income of B, and must therefore be strictly construed; that merely means that the words of the subsection must be given their strictly natural meaning, and there should be no attempt at artificial stretching one way or the other.
What then is the proper construction of the subsection ? It naturally falls into three interconnected parts.
The first part controls both cl.
(a) and cl.
(b), and states that "in computing the total income of any individual for the purpose of assessment, there shall be included so much of the income etc.
" as is specified in cls.
(a) and (b).
The second part is cl.
( 'a) itself which starts with an opening sentence that "so much of the income of a wife or minor child of such individual as arises directly or indirectly" from four specific cases shall be included in the total income of the individual, and then the cases are enumerated in four sub clauses numbered (i), (ii), (iii) and (iv).
Then, comes the third part which deals with cl.
I have divided the sub section into its three natural parts, but I must make it clear that all the three parts must be construed together as they are interconnected and interdependent.
In the first part, there is no difficulty whatsoever, in my opinion, in giving the word "individual" its natural meaning, that is, that the word means either a male or a female.
The opening sentence of cl.
(a) contains the expression "so much of the income of a 28 wife or minor child of such individual".
Does the use of the word "individual" in the opening sentence of cl.
(a) give rise to any ambiguity or difficulty? I do not think that it does.
It is quite obvious that a female individual cannot have a wife, but she can have a minor child whereas a male individual can have a wife, minor child or both.
It has been argued that el.
(a) must be interpreted noscitur a sociis, and as the expression "a wife or minor child" is capable of meaning only when used in connection with a male individual, the whole sub section must be confined to a male individual.
I am unable to accede to this argument.
The collocation or association of the words "a wife or minor child" in connection with the words "such individual" in the opening sentence of cl.
(a) does not necessarily mean that the individual contemplated is a male individual only.
I agree that the word "or" in between the words "wife" and "minor child" must be there, even when the individual talked of is a male only; in other words, the use of the dis junctive word "or" does not necessarily clinch the issue.
But I do not see any real difficulty in reading the opening sentence of el.
(a) distributively so as to mean a male individual when the wife is being talked of and either a male or a female individual when a minor child is talked of I do not think that such a construction does any violence to the words used; on the contrary, in my opinion, it gives effect to the plain meaning of the word "individual".
Turning now to the sub clauses numbered (i) to (iv), there can be no doubt from the phraseology used that sub cls.
(i) and (iii) refer only to a male individual, because a female individual cannot have a wife.
It is worthy of note, however and this is very important that sub cls.
(ii) and (iv) make it equally clear that they are not confined to the male individual only in the manner in which sub cls.
(i) and (iii) are so confined.
In sub cls.
(i) and (iii) the word "individual" is not used, and the words used are "her husband" and "the husband".
In sub cls.
(ii) and (iv) the words used are "such individual".
Why did the Legislature make this difference in phraseology? If the intention was to 29 confine the entire sub section to a male individual only, nothing could have been easier than to qualify the word "individual" by the adjective "male" in the first part of the sub section which controls both clauses (a) and (b); alternatively, in sub cls.
(ii) and (iv) it would have been easy to use the word "father" instead of "such individual".
It is true that a change of language is some, though possibly slight, indication of a change of intention.
I am unable, however, to accept the argument advanced before us that the phraseology employed in sub cls.
(i) and (iii) different as it is from that employed in sub cls.
(ii) and (iv) can be accounted for on the ground of elegance or felicity of expression.
It seems to me that if the intention was to confine the word "individual" to a male individual only, elegance and clarity both required that the word "individual" should be qualified by the adjective "male", and the word "father" should have been used in sub cls.
(ii) and (iv).
I am aware that a draftsman often uses different words merely to avoid repetition.
I am also aware that it is dangerous to suppose that the Legislature foresees every possible result that may ensue from the "unguarded use of a single word, or that the language used in statutes is so precisely accurate that you can pick out. this and that expression and skilfully, piecing them together, lay a safe foundation for some remote inference." (as per Lord Loreburn, L.C., in Nairn vs University of St. Andrews and Others (1).
But what is noteworthy in the present case is that the difference in phraseology between sub cls.
(i) and (iii) on the one side and sub cls.
(ii) and (iv) on the other, is so striking that the conclusion appears to me to be reasonably plain; it is not really a case of the unguarded use of a single word or picking out an expression here or picking out another expression there in order to piece out some remote inference.
The striking difference in phraseology hits, as it were, one in the face when one reads the four sub clauses.
It seems to me that the meaning, is very clear.
In the opening part of el.
(a), the word "individual" is used to mean a male or a female; two of the sub clauses, however, are confined (1) ; , 161. 30 to the male only and therefore the word "husband" is used in juxtaposition to the word "wife".
In the other two sub clauses, however, the word "individual " is used in order to make it clear that they refer either to a male or to a female individual.
I do not see any incongruity or disharmony in the enumeration of the four sub clauses, nor do I appreciate the argument urged before us that the word " individual ", on the construction adopted by me, has a different meaning in two of the four sub clauses of cl.
The word "individual" has and retains the same meaning, namely a male or a female, all throughout the subsection.
All that happens is that in two of the subclauses of cl.
(a), when the Legislature intends that they should be confined to a male individual only, the word "husband" is used to make the intention clear.
On the same reasoning, when the Legislature intends in two other sub clauses that they should apply to either a male or a female, the word " individual " is used to include either of them.
I am unable to accept the contention that such an interpretation offends against the rule of harmonious construction.
So far as el.
(b) of the sub section is concerned, the word " individual " is again used and that again relates to a male or a female.
The last part of the clause reads "by such individual for the benefit of his wife or a minor child or both.
" Here again the sentence has to be read distributively that is, when the wife is talked of, the individual can only be a male; when a minor child is talked of, the individual can be a male or a female; when both wife and minor child are talked of, the individual can again be a male only.
There was some argument before us with regard to the use of the indefinite article "a" before the words "minor child" and it was submitted by the learned Solicitor General that if the Legislature intended to confine cl.
(b) to a male individual only, it could have easily dropped the indefinite article and used the word "his" before the words "minor child".
Personally, I do not attach much significance to the use of the indefinite article "a".
It is to be noted that no such indefinite article is used before the words "minor child" in the opening 31 sentence of cl.
(a); but I do not see any compelling reasons why the natural meaning of the word " individual " should not be given to it in el.
(a) and cl.
(b) of the sub section.
Such meaning can be easily given to both the clauses if they are read distributively, and such reading does not, in my opinion, do any violence to the language used.
On a plain reading of the sub section, I have come to the conclusion that there really is no ambiguity and the word "individual" has been used in the sub section in its ordinary accepted connotation, that is, either a male or a female individual; two of the sub clauses of cl.
(a) are no doubt confined to a male individual and that has been made clear by the use of the words " wife" and "husband", instead of the words "such individual ".
Assuming, however, that there is some ambiguity in the sub section by reason of (1) the use of the phraseology in sub cls.
(i) and (iii) of cl.
(a), and (2) of the opening sentence of cl.
(a) which controls all the four sub clauses of that clause, what then is the position ? The four principles laid down in Heydon 's case have been thus summarised: " That for the sure and true interpretation of all statutes in general (be they penal or beneficial, restrictive or enlarging of the common law) four things are to be discerned and considered: (1) what was the common law before the passing of the Act; (2) what was the mischief and defect for which the common law did not provide; (3) what remedy the Parliament hath resolved and appointed to cure the disease of the commonwealth; (4) the true reason of the remedy.
And then the office all the Judges is always to make such construction as shall suppress the mischief and advance the remedy, and to suppress subtle inventions and evasions for the continuance of the mischief and pro privato commedo, and to add force and life to the cure and remedy according to the true intent of the makers of the Act pro bono publico.
" Let me now apply these principles in the construction of sub section
(3) of section 16 of the Act, 32 The subjection was introduced in 1937, and before the enactment of the sub section, there was no provision for the inclusion of the income of a wife or a, minor child in the computation of the total income of an individual.
The Income Tax Enquiry Report, 1936, referred to the widespread evil of the evasion of tax by the severance of the joint status amongst members of a joint and undivided Hindu family.
The Report said : " Our attention has been drawn to the extent to which taxation is avoided by nominal partnerships between husband and wife and minor children.
In some parts of the country, avoidance of taxation by this means has attained very serious dimensions.
The obvious remedy for this state of affairs so far as husband and wife are concerned is the aggregation for assessment of their incomes, but such a course would involve aggregation in a quite different class of case, i.e., where the wife 's income arises from sources quite unconnected with the husband We recommend, therefore, that the incomes of a wife should be deemed to be, for Income tax purposes, the income of her husband, but that where the income of the wife is derived from her personal exertions and is unconnected with any business of her husband, her income from her personal exertions up to a certain limit, say Rs. 500, should not be so included. . . . . . (b)Income of minor children.
There is also a growing and serious tendency to avoid taxation by the admission of minor children to the benefits of partnership in the father 's business.
Moreover, the admission is, as a rule, merely nominal, but being supported by entries in the firm 's books, the Income tax Officer is rarely in a position to prove that the alleged participation in the benefits of partnership is unreal.
. . . . . . . We suggest that the income of a minor should be deemed to be the income of the father (i) if it arises 33 from the benefits of partnership in a business in which the father is a partner or (ii) if, being the income of a minor other than a married daughter, it is derived from assets transferred directly or indirectly to the minor by his or her father or mother, (iii) if it is derived from assets apportioned to him in the partition of a Hindu Undivided Family.
" It is clear, however, that the report is of very little help in the construction of the sub section, because the Legislature did not accept in full the recommendations made in the Report.
Two of the rules in Heydon 's case lay down (1) that we must find what was the mischief or defect for which the earlier law did not provide and (2) what remedy the Parliament has resolved and appointed to cure the mischief or defect.
In the case under our consideration, the interpretation which has been put by me on sub section
(3) of section 16 does not militate against any of the aforesaid rules of Heydon 's case.
The interpretation put by me undoubtedly remedies the mischief or defect for which the earlier law did not provide.
The only serious criticism made by learned counsel for the assessees against that interpretation Is that the remedy not merely cures the mischief for which the earlier law did not provide, but it goes a little further and attacks the evil even when the evil is committed by a female individual, though the Income Tax Enquiry Report (except in one part) did not in specific terms refer to such an evil committed by a female individual.
I can see nothing in the rules laid down in ' Heydon 's case which militates against the view taken by me.
There is no presumption that, while remedying an evil, the Legislature may not cast its net very wide so as to remedy the evil in all its aspects.
Let me again refer to sub cls.
(i) and (ii) of cl.
(a) of sub section
(3) of section 16 of the Act.
Those two sub clauses are absolute and unqualified in terms and not subject to any exception.
If the wife owns and manages a business and she takes her husband into partnership with her in the business, the result of the partnership would be that the wife 's income from the business would be no longer taxable in her hands but would be included in the total income of her 5 34 husband under the sub section, even though the husband may be a dormant partner.
This clearly shows that the Legislature was not confining itself to the recommendations made in the Income Tax Enquiry Report.
What is to be included in the total income of an individual under cl.
(a) is the income of a wife or minor child arising directly or indirectly "from the membership of the wife" in the firm or "from the admission of the minor to the benefits of partnership" in the firm of which the individual is a partner.
The clause covers the share of the profits of the firm received by the wife in her capacity as a partner or by the minor child in his or her capacity as one admitted to the benefits of partnership.
But the income received from the firm by the wife or the minor child under any other contract with the firm or in any other capacity, does not fall within the clause and is not included in the husband 's or parent 's total income.
From what is stated above, it is clear that the Legislature did not confine itself strictly or solely to the recommendations made by the Income Tax Enquiry Committee but provided for all such aspects of the evil or mischief as it thought fit to remedy by the Indian Income tax (Amendment) Act, 1937 (Act IV of 1937).
In these circumstances, I do not think that the recommendations made by the Income tax Enquiry Committee can be relied upon to restrict the meaning of the word "individual" used in sub section
(3) of section 16 of the Act.
, As to the Statement of Objects and Reasons which led to the passing of Act IV of 1 937 and which has been set out in the judgment of the High Court of Madhya Pradesh, I do not think that the Statement can be referred to as an aid to construction for ascertaining the meaning of the word "individual" used in the sub section.
Even if it is referred to "for the limited purpose of ascertaining the conditions prevailing at the time which actuated the sponsor of the Bill to introduce the same and the extent and urgency of the evil which he sought to remedy", the use of the word "Parent" in the Statement of Objects and Reasons shows that the evil was not confined to the male individual only, and the sponsor of the Bill was aware of 35 it.
The Statement reads: "Sec.
16(3) was thus designed to bring within the ambit of taxation incomes of wives and minor children as income of husband or parent, which otherwise would escape the whole burden of taxation.
" I emphasise the use of the word "parent" which would show that the evil contemplated was an evil which was not confined to the "father" only but included the mother as well.
My conclusion therefore is that there is nothing in the policy of the legislation and the scope and object of the statute which compels one to cut down the natural meaning of the word "individual" used in sub section
(3) of section 16 of the Act so as to confine it to a male individual alone.
I now turn to such authorities as have been cited before us.
There has been a difference of opinion in the High Courts with regard to the interpretation of sub section
(3) of section 16 of the Act.
In Shrimati Chanda Devi vs Commissioner of Income tax (1), the Allahabad High Court has taken the view that the minor 's income which arises directly or indirectly from the admission of the minor to the benefits of partnership in a firm of which the, mother is a partner, can be included in the mother 's assessable income under section 16(3)(a)(ii) of the Act.
The Allahabad High Court proceeded on the footing that the language of the sub section.
did not create any real difficulty and it was not open to it to take the help of the Income tax Enquiry Report.
I have considered this case from both the points of view, and have arrived at the same conclusion at which the Allahabad High Court arrived.
It is not necessary to mention the other reasons given by the Allahabad High Court, because they have already been stated by me in an earlier part of this judgment.
This decision of the Allahabad High Court was followed by the Punjab High Court in Commissioner of Income tax, Delhi vs Shrimati Damayanti Sahni(2), which has given rise to one of the two appeals before us.
The Punjab High Court gave no additional reason except to state that in cl.
(a) of sub section
(3) of section 16, the word "wife" and the (1) (2) 36 words "minor child" were used disjunctively.
I have already stated that the use of the disjunctive "or" is not decisive; but there is no real difficulty in reading clauses (a) and (b) distributively.
The Madhya Pradesh High Court took a different view in Sahodradevi N. Daga vs Commissioner of Income tax (1), which has given rise to the other appeal before us.
In my view, the learned Judges in that case did not attach sufficient importance to sub cls.
(ii) and (iv) of cl.
If I may say so with great respect, they confined their attention primarily to sub cls.
(i) and (iii) of el.
(a) and to cl.
(b), and from those provisions they inferred that the intention was to confine the word "individual" to a male individual.
I venture to think that all the three parts of the sub section, including the four sub clauses of cl.
(a), must be read together in order to understand the true meaning and effect of the sub section.
The learned Judges further seemed to think that the use of the words "such individual" in sub cl.
(ii) of el.
(a) was due to inadvertence.
I am unable to agree.
I have already pointed out that the phraseology in sub cls.
(i) and (iii) of cl.
(a) is so strikingly different from the phraseology used in sub cls.
(ii) and (iv) that only one and one reasonable conclusion can be drawn, namely, that the word "individual" has been used in its accepted connotation, and when the Legislature wanted to confine the operation of a sub clause to the male individual only, it used the word "wife" and "husband"; where, however, the Legislature wanted to refer to either a male or a female, it used the word "individual" which, in its ordinary connotation, means either a male or a female.
For the reasons given above, I agree with the view expressed by the Allahabad and the Punjab High Courts and do not accept the interpretation given by the Madhya Pradesh High Court.
In my opinion, the question should be answered in the way the Allahabad and the Punjab High Courts answered it; therefore, Civil Appeal No. 322 of 1955 should be allowed with costs and Civil Appeal No. 25 of 1955 should be dismissed with costs.
(1) 37 By COURT: In accordance with the Judgment of the majority Civil Appeal No. 322 of 1955 is dismissed with costs and Civil Appeal No. 25 of 1955 is allowed with costs, the referred question being answered in the negative.
| The common question of law for determination in these two appeals was whether the word 'individual ' in section 16(3) of the 'Indian Income tax Act, 1922, as amended by Act IV of 1937, includes a female and whether the income of minor sons from a partnership, to the benefits of which they were admitted, was liable to be included in computing the total income of the mother who was a member of the partnership.
Held, (Per Bhagwati and Kapur jj.
, section K. Das J. dissenting) that the question must be answered in the negative.
The word 'individual ' occurring in section 16(3) of the Indian Income tax Act, as amended by Act IV Of 1937, means only a male and does not include a female.
Shrimati Chanda Devi vs The Commissioner of Income tax, and Musta Quima Begum, In re, , disapproved.
Where the Legislature uses ambiguous language in enacting a statute, as it has undoubtedly done in the instant case, recourse must necessarily be had, for a clarification of such ambiguity, to the pre existing state of the law in order to see what defect or mischief therein was being sought to be remedied, the remedy that was prescribed by the statute and the reason for it.
Bengal Immunity Company Limited vs The State of Bihar, , Thomson vs Lord Clanmorris, and Eastman Photographic Materials Company vs Comptroller General of Patents, Designs and Trade Marks, , relied on.
A reference to the Income Tax Enquiry Report, 1936, and the Statement of objects and reasons that led to the passing of the Indian Income tax (Amendment) Act IV of 1937 makes it clear beyond doubt that the mischief the Legislature was seeking to remedy was one that resulted from a husband entering into a 2 nominal partnership with his wife or a father admitting his minor children to the benefits of a partnership, and the possibility of a mother doing so was not even thought of.
Per section K. Das J.
There is no ambiguity in section 16(3) of the Indian Income Tax Act, as amended by Act IV Of 1937, and, read in the context of the other provisions of the Act and construed as a whole, it clearly indicates that the Legislature used the word 'individual ' in that sub section in its ordinary connotation to mean both a male and a female person.
Even if, on the assumption that there is ambiguity in the phraseology used in the sub section, reference is made to the Income Tax Enquiry Report, 1936, and the Statement of objects and reasons of the Amending Act IV of 1937 for the limited purpose for which it is permissible to do so, they disclose nothing concerning the policy adopted by the Legislature or the object the, statute was intended to accomplish that makes any other meaning inevitable.
The recommendations made by the Report were not fully accepted by the Legislature and it cannot be a reliable guide and the use of the word 'parent ' in the Statement clearly shows that the mischief envisaged was not confined to the father alone.
|
Summarize this legal judgement text concisely | Civil Appeal No. 8 of 1957.
Appeal from the judgment and order dated the 30th August, 1955, of the Allahabad High Court in Special Appeal No. 8 of 1955 arising out of the judgment and order dated the 10th December, 1954, of the Single Judge of the Allahabad High Court in Civil Misc.
Writ No. 1245 of 1954.
R. section Narula, for the appellant.
B. B. Tawakley and K. P. Gupta, for the respondent.
September 17.
The following Judgment of the Court was delivered by section K. DAS, J.
This appeal has been preferred to this Court on the strength of a certificate granted by the High Court of Allahabad on February 3, 1956, to the effect that the case is a fit one for appeal to the Supreme Court under article 133(1)(c) of the Constitution.
The question that falls for decision is the true scope, meaning and effect of cl, (g) of section 13 D of the U. P. Municipalities Act, 1916 (U. P. II of 1916), hereinafter referred to as the Act.
The relevant facts, which are not now in dispute, are these.
There was a general election to the Municipal 54 420 Board of Bareilly in October, 1953.
The appellant, Mangoo Singh, and respondent No. 3, Imdad Husain, along with sever al others, were candidates at the said election from Ward No. 15.
The date fixed for filing nominations was October 5, 1953, and the date for scrutiny of the nominations filed was October 7, 1953.
The appellant and respondent No. 3 both filed their nominations on the due date, and at the time of scrutiny lmdad Husain raised an objection to the nomination of the appellant on the ground that the latter was disqualified under cl.
(g) of section 13 D of the Act for being chosen as a member of the said Municipal Board because he was in arrears in the payment of municipal tax in excess of one year 's demand.
This objection was dismissed, and the nomination of the appellant was accepted by the Assistant Returning Officer.
The poll took place on October 26, 1953, and the counting of votes was done on October 29, 1953.
Four persons were to be elected from the said Ward, and the appellant was the third in the list by reason of the number of votes which he had obtained.
Imdad Husain was fifth in the list.
Accordingly, the appellant was declared as one of the returned candidates, and lmdad Husain was at the top of the unsuccessful candidates.
lmdad Husain then filed an election petition to set aside the election of the present appellant on various grounds.
The only ground with which we are now concerned is the disqualification under cl.
(g) of section 13 D of the Act.
This election petition was heard by the Election Tribunal and by its judgment dated October 20, 1954, the Election Tribunal held that the appellant was in arrears in the payment of municipal tax in excess of one year 's demand to which section 166 of the Act applied and, there fore, came under the disqualification in cl.
(g) of section 13 D of the Act It further held that the payment of a sum of Rs. 115 3 0 on October 10, 1953, five days after the date fixed for the filing of nominations, did not wipe off that dis qualification, and the appellant was not entitled to the benefit of the second proviso to section 13 D of the Act.
It may be here stated that the Election Tribunal also held that no bill for payment of the tax was presented to the appellant 421 as required by section 166, nor was any demand notice served on him as required by section 168 of the Act.
On the above find ings, the Tribunal allowed the election petition, set aside the election of the appellant and declared a casual vacancy under cl.
(a) of sub section
(2) of section 25 of the Act, which vacancy was subsequently filled up by the election of the third respondent on April 5, 1955.
The next general elec tion in the Municipality is due in October, 1957.
Against the decision of the Election Tribunal, the appellant moved the High Court of Allahabad for the issue of a writ under article 226 of the Constitution.
The main point urged by the appellant was that the Election Tribunal was in error in its interpretation of cl.
(g) of section 13 D of the Act.
Cha turvedi J. who dealt with the application of the appellant, agreed with the view of the law as expressed by the Election Tribunal and dismissed the application.
The appellant then preferred an appeal to a Division Bench of the said High Court.
This appeal was also dismissed by Agarwala and Sahai JJ.
by their judgment dated August 30, 1955.
The appellant then moved and obtained a certificate of fitness under article 133(1)(c) of the Constitution from the said High Court.
Learned counsel for the appellant has not contested any of the findings of fact arrived at by the Election Tribunal and has confined his submissions to the question of the true construction of cl.
(g) of section 13 D of the Act.
Therefore, it is necessary to read that section, in so far as it is relevant for our purpose: " 13 D. Disqualifications for membership.
A person, not withstanding that he is otherwise qualified, shall be dis qualified for being chosen as, and for being, a member of a board if he (a) . . . . . . . . . . (b). . . . . . . . . . (c). . . . . . . . . . (d). . . . . . . . . . (e) . . . . . . . . . . (f). . . . . . . . . . 422 (g) is in arrears in the payment of municipal tax or other dues in excess of one year 's demand to which section 166 applies: Provided further that in the case of (g) the disqualifica tion shall cease as soon as the arrears are paid.
" The first contention of learned counsel for the appellant relates to and arises out of the expression " for being chosen as " occurring in the section.
The argument is this.
It is submitted that a person is "chosen as a member of a board " when the poll takes place and a majority of voters vote for him as their chosen candidate ; therefore, the relevant date for the operation of the disqualification is the date of the poll, and inasmuch as on October 10, 1953, which was several days before the date of the poll, the appellant was no longer in arrears of municipal tax in excess of one year 's demand by reason of the payment made on that date, the disqualification did not attach to him on the date of the poll.
We are unable to accept this argument.
It is worthy of note that an identical expression "shall be disqualified for being chosen as " occurs in article 102 of the Constitution and section 7 of the Representation of the People Act, 1951.
This expression occurring in section 7 of the Repre sentation of the People Act, 1951, was considered by this Court in Chatturbhuj Vithaldas Jasani vs Moreshwar Parashram and Others (1).
In that case the question was when the disqualification mentioned in cl.
(d) of section 7 of the Repre sentation of the People Act, 1951, arose and it was held that the date for putting in the nominations was one of the crucial dates.
On this point, the following observations made in that case are apposite : "Now the words of the section are "shall be disqualified for being chosen".
The choice is made by a series of steps starting with the nomination and ending with the announce ment of the election.
It follows that if a disqualification attaches to a candidate at any one of these stages, he cannot be chosen." (1) ; , 821. 423 It was pointed out in N. P. Ponnuswami vs The Returning Officer, Namakkal Constituency and Others (1) that ' elec tion ' is a continuous process consisting of several stages and embracing many steps of which nomination is one; nomina tion is the foundation of a candidate 's a right to go to the polls and must be treated as an integral part of the elec tion.
If a person is disqualified on the date of nomina tion, he cannot be chosen as a candidate because the dis qualification mentioned in section 13 D attaches to him on that date.
This is also clear from para.
22(2) of the U. P. Municipali ties (Conduct of Election of Members) Order, 1953.
That sub para.
states " 22 (2) The Returning Officer shall then examine the nomi nation papers and shall decide all objections, which may be made to any nomination, and may, either on such objection or on his own motion, after such summary inquiry, if any, as he thinks necessary, refuse any nomination on any of the fol lowing grounds: (a) that the candidate is not qualified to be chosen to fill the seat under the Act; or (b) that the candidate is disqualified for being chosen to fill the seat under the Act; or (c)that there has been any failure to comply with any of the provisions of paras.
16 and 17; or (d) that the signature of the candidate or any proposer or seconder is not genuine or has been obtained by fraud.
" If the disqualification of cl.
(g) of section 13 D of the Act is to come into operation only oil the day of the poll, then it is quite unnecessary for the Returning Officer to consider that disqualification at the time of scrutiny ; and indeed it will be improper for him to refuse nomination on the ground of such disqualification.
Clause (b) of para.
22 (2) uses the same expression "disqualified for.
being chosen" showing clearly enough that the starting point of the act of choosing is not on the date of the poll only.
The process of choosing commences on the date of filing nominations.
(1) ; 424 We now turn to the second proviso to section 13 D.
The submis sion of learned counsel for the appellant is that, as stated in the proviso, the disqualification is transient and ceases to operate as soon as the arrears are paid; Oil October 10, 1953, the appellant was no longer disqualified and, there fore, he could be chosen on the date of the poll, that is, on October 26, 1953.
The argument is that in the case of such a transient disqualification, the second proviso must be so read as to mean that a disqualification subsisting on the day of nomination can be wiped off completely by subse quent payment of arrears of tax; otherwise a disqualifica tion at the time of nomination will disentitle a person to stand for election ; even though it ceases to operate before the day of the poll.
This argument also we cannot accept as correct; it is really the first argument in a different form.
The wiping off of the disqualification under the second proviso has no retrospective effect, and the disqual ification which subsisted on the day of filing nominations did not cease to subsist on that day by reason of a subse quent payment of the arrears of municipal tax.
On this point we accept as correct the view expressed in Ahmed Hossain vs Aswini Kumar(1), where a similar question under the Bengal Municipal Act (Ben.
XV of 1932), fell for con sideration.
The question was if a person disqualified on the date of nomination could shake off his pre existing disqualification by acquiring a new right between the date of nomination and the date of scrutiny.
What happened in that case was this : on the material date, that is, the last date for submission of nominations, a person was in arrears for more than three months in payment of the tax which he was liable to pay, and he came within the mischief of el.
(g) of amended a. 22(1) of the Bengal Municipal Act.
The contention was that the name of the Press of which the candidate was the proprietor and not his name was recorded in the books of the Municipality as the assessee and that the name of the candidate was in the electoral roll by reason of his educational qualifications.
This contention was repelled and it was (1) A.l.
R. 425 observed that if a person was disqualified on the date of the nomination, he could not shake off his preexisting disqualification by acquiring a new right between the date of nomination and the date of scrutiny.
There is also other judicial authority which ', supports the same view.
In Harford vs Linskey (1), a similar question arose for deci sion under the Municipal Corporations Act, 1882, section 12 whereof enacted that " a person shall be disqualified for being elected and for being a councillor " if and while he is interested in contracts with the Corporation.
The peti tioner in that case admitted that at the time of his nomina tion he was interested in contracts with the Corporation, but contended that he could and would have got rid of his disqualification before the day fixed for the poll, and was therefore not disqualified for nomination.
The question was whether he was so disqualified.
Wright J. delivering the judgment of the Court observed " In the absence of any guide, we think it safest to hold that in cases of elections under the Municipal Corporations Acts a person, who at the time of nomination is disquali fied for election in the manner in which this petitioner was disqualified, is disqualified also for nomination.
The nomination is for this purpose an essential part of the election, and if there are no competitors it of itself constitutes the election by virtue of the express words of section 56.
A different construction might produce much confu sion.
On the nomination day no one could know whether the persons nominated will at the poll be effective candidates or not.
It is true that in the case put the disqualifica tion may be removed before the election is completed ; but what is to be the effect if the disqualification continues until the poll begins, or until the middle of the polling day, or until the close of the poll ? Will votes given before the removal of the disqualification be valid? If not how is the number of them to be ascertained ? it seems to us unreason able to hold that the Act means to leave the matter in such a state of uncertainty, and for these reasons (1) , 858.
426 we think that this petitioner was disqualified for nomina tion or election.
" The same state of uncertainty and confusion, to which a reference has been made in the aforesaid observations, will arise if the construction which learned counsel for the appellant has pressed for our acceptance is adopted in the case before us.
Lastly, it has been argued on behalf of the appellant that the expression 'to which section 166 applies ' in cl.
(g) of section 13 D means that a bill of the sum due must be presented to the person liable for it, as required by that section, before he can come within the mischief of the clause; fur thermore, the use of the expression 'demand ' makes it essen tial that a demand notice must also be served as required by section 168 of the Act.
As on the finding of the Election Tribu nal neither a bill was presented to the appellant, nor was he served with a demand notice, learned counsel contends that the appellant does not come within the mischief of the clause.
Sections 166 and 168 are in these terms section 166.
Presentation of bill. (1) As soon as a person becomes liable for the payment of (a) any sum on account of a tax, other than an octroi or toll or any similar tax payable upon immediate demand, or (b) any sum payable under clause (c) of section 196 or section 229 or section 230 in respect of the supply of water, or payable in respect of any other municipal service or undertaking, or (c) any other sum declared by this Act or or by rule (or bye law) to be recoverable in the manner provided by this chapter, the board shall, with all convenient speed, cause a bill to be presented to the persons so liable.
(2) Unless otherwise provided by rule, a person ,shall be deemed to become liable for the payment of every tax and licence fee upon the commencement of the period in respect of which such tax or fee is payable," 427 " section 168.
Notice of demand.
If the sum for which a bill has been presented as aforesaid is not paid in municipal office, or to a person empowered by a regulation to receive such payments, within fifteen days from the presentation thereof, the board may cause to be served upon the person liable for the payment of the said sum a notice of demand in the form set forth in schedule IV, or to the like effect.
" We are clearly of the view that the expression 'to which section 166 applies ' cannot bear the meaning sought to be given to it on behalf of the appellant.
That expression merely describes the nature of the demand referred to in cl.
Section 166 refers to three types of dues; el.
(a) of sub section
(1) refers to any sum on account of a tax other than an octroi or toll or any similar tax payable upon immediate demand; cl.
(b) refers to sums payable under el.
(c) of section 196 or section 229 or section 230 in respect of the supply of water, etc., and cl.
(c) refers to any other sum declared by the Act or by rule or bye law to be recoverable in the manner provided by Chapter VI.
The demand to which section 166 applies must be a demand of the nature or type mentioned in one or other of the aforesaid three clauses, and the demand re ferred to in el.
(g) of section 13 D must be of that nature or type; this, in our view, is the true meaning and effect of the expression 'to which section 166 applies '.
Nor do we think that the word demand ' attracts the operation of section 168.
It may be readily conceded that the word 'de mand ' ordinarily means something more than what is due; it means something which has been demanded, called for or asked for.
But the meaning of a word must take colour from the context in which it is used.
In el.
(g) the context in which the word 'demand ' is used has a very obvious and clear reference to the amount of arrears or dues on which the disqualification depends; therefore, the expression used is 'arrears in the payment of municipal tax or other dues in excess of one year 's demand '.
The word 'demand ' in that context and in the collocation of words in which it has been used can only mean 'in excess of one year 's municipal tax or other dues '.
We have been referred to several meanings of the word 55 428 'demand ' in standard English dictionaries and law lexicons.
When the context makes the meaning of a word quite clear, it becomes unnecessary to search for and select a particular meaning out of the diverse meanings a word is capable of, according to lexicographers.
It is sufficient for our purpose to state that even in standard dictionaries and law lexicons, it is well recognised that the word demand ' may mean simply a 'claim or 'due ', without importing any further meaning of calling upon the person liable to pay the claim or due.
For the reasons given above, we hold that not one of the contentions urged on behalf of the appellant is worthy of acceptance.
The election petition was rightly decided, as the appellant was disqualified for being chosen as a member of the Municipal Board in question on the day he filed his nomination, under cl.
(g) of section 13 D of the Act.
According ly, the appeal is dismissed with costs in favour of respond ent 3 who alone contested the appeal before us.
Appeal dismissed.
| The appellant was elected to the Municipal Board under the U. P. Municipalities Act, 19i6.
He was in arrears in the payment of Municipal tax in excess of one year 's demand, to which section 166 of the Act applied, at the time of the filing of nominations, but made the payment before the date of the poll.
Under section 13D, cl.
(g) of the Act "a person shall be disqualified for being chosen as, and for being, a member of a board if he is in arrears in the pay ment of Municipal tax or other dues in excess of one year 's demand to which section 166 applies, provided that the disquali fication shall cease as soon as the arrears are paid.
" On an election petition filed by a defeated candidate, the elec tion was set aside by the Election Tribunal on the ground that the appellant was not entitled to the benefit of the proviso to section I3 P. cl.
(g) of the Act.
It was contended for the appellant that the relevant date for the operation of the disqualification was the date of the poll and that, in any case, he did not come within the mischief of the disqualification clause in that section, as a bill for payment of the tax was not presented to him, nor a notice of demand served on him under section 168.
Held:(1) that if a person is disqualified on the date of nomination, he cannot be chosen as a candidate within the meaning of section 13 D of the U. P. Municipalities Act, 19i6, because the disqualification attaches to him on that date and the process of choosing consists of a series of steps starting with nomination and ending with the announcement of the election.
The wiping off of the 419 disqualification has no retrospective effect, and the dis qualification which subsisted on the date of the nomination cannot cease to subsist on that day by reason of a subse quent payment of the arrears of Municipal tax.
Chatturbhuj Withaldas jasani vs Moreshway Parashram and Others, ; , N. P. Ponnuswami vs The Returning Officer, Namakkal Constituency and Others, ; and Harford vs Linskey, , relied on.
Ahmed Hossain vs Aswini Kumar, A.I.R. 1953 Cal.
542, ap proved.
(2)that the expression "to which section 166 applies" in section 13 D, cl.
(g) of the Act merely describes the nature or type of dues mentioned in that section and that the effect is that the demand referred to in section 13 D, cl.
(g) must be of that nature or type.
(3)that the word 'demand" in section 13 D, cl.
(g) of the Act means "claim" or "due" and only refers to the amount of arrears or dues on which the disqualification depends and does not attract the operation of section 168.
|
Summarize this legal judgement text concisely | iminal Appeal No. 57 of 1957 and Criminal Misc.
Petition No. 294 of 1957.
Appeal from the judgment and order dated September 28, 1956, of the former Andhra High Court at Guntur in Criminal Revision Case No. 241 of 1956.
398 T. V. Sarma, K. Ramaseshayya Chaudhury and T. section Venkataraman, for the appellants.
T. V. R. Tatachari and T. M. Sen, for the respondent.
C. K. Daphtary, Solicitor General of India and T. M. Sen, for the Intervener (Union of India).
September 17.
The following Judgment of the Court was delivered by SINHA J.
The only question that arises for determination in this appeal on a certificate granted by the High Court of Andhra Pradesh at Hyderabad, under article 134(1)(c) of the Constitution, is the constitutionality of the provisions of sections 207 and 207A, Code of Criminal Procedure (hereinafter referred to as the Code), which, read together, were introduced into the Code by Act XXVI of 1955.
The 26 appellants have been committed to the Court of Session, Guntur Division, to take their trial for offences punishable under sections 147, 148, 323, 324 and 302, read with sections 34 and 149, Indian Penal Code.
They impleaded the State of Andhra Pradesh as the sole respondent.
The Union of India has been allowed to intervene on an application made in that behalf in view of the fact that the provisions of the Central Act have been impugned as unconstitutional.
For the purposes of this appeal, it is only necessary to state the following relevant facts.
The local police took cognizance of a serious occurrence of rioting with murder on December 22, 1955.
The local police investigated the case, and after recording such evidence as it could collect in respect of the occurrence, submitted a charge sheet under the aforesaid sections of the Indian Penal Code, to the magistrate having jurisdiction to entertain the case.
The magistrate, following the procedure laid down in section 207 A of the Code committed the persons shown in the chargesheet as the accused persons, to take their trial before the Court of Session.
A number of applications in revision, under sections 435 and 439 of the Code, were made on behalf of the accused persons, to the High Court of 399 Andhra Pradesh, to quash the order of commitment, chiefly on the ground that the said order having been passed under the provisions of section 207A of the Code( was void, as those provisions were unconstitutional for the reason that they introduced discrimination as against accused persons in respect of whom a police charge sheet had been submitted.
The revisional applications were heard by Krishna Rao J. who dismissed them, holding that the provisions impugned were not unconstitutional and that, therefore, the order of commitment was valid in law.
The appellants applied for and obtained the necessary certificate under article 134(1)(c) of the Constitution that the case was a fit one for appeal to this Court.
The arguments addressed to the High Court have been repeated in this Court and are to the effect that sections 207 and 207A, as they now stand, provide for two separate procedures in the committing court, namely, (1) in respect of a case instituted on a police report for which the procedure specified in section 207 A is prescribed, and (2) in respect of any other proceeding, the procedure laid down in other provisions of Chapter XV111 is prescribed.
The argument is that a comparison and contrast of the two different procedures prescribed in respect of the two classes of cases, when examined in their details, show that the procedure in respect of a case instituted on a police report is less advantageous to the accused than the other procedure.
Thus, it is further argued, in the sections following section 207A in Chapter XVIII of the Code, the accused have been granted facilities which are not available to them in the procedure laid down in section 207A.
By way of illustration, it was urged that under section 208(3), it is open to an accused person to apply to the magistrate to issue process to compel the attendance of any witness or the production of any document, but sub section
(2) of section 207A, which corresponds to the provisions of section 208(3), speaks only of the prosecution and not of the accused.
Again, it is pointed out that sub section
(4) of section 207A, makes reference only to the prosecution evidence, whereas the corresponding section 208(1) makes reference to the evidence that may be produced in 200 support of the prosecution or on behalf of the accused.
Similarly, it has been pointed out that there are no 'provisions in section 207A corresponding to those of section 209(2), and section 213(2), empowering the magistrate to discharge the accused; nor is there any provision in the impugned section 207A corresponding to section 215 relating to quashing of commitments.
Further, it was pointed out that whereas section 209(1) contains the words " not sufficient grounds for committing the accused person", sub section
(6) of section 207A has the words " no grounds for committing the accused".
It has further been argued that in the new procedure adopted in the impugned section 207A, the accused person has been deprived of the benefits under sections 162 and 215 of the Code, and under sections 27, 101 to 106 and 114 1ll.
(g) of the Evidence Act.
It has, thus, been sought to be made out that the procedure laid down in section 207A in the matter of commitment is less advantageous to the accused persons than the one prescribed in the succeeding sections of Chapter XVIII.
We shall assume for the purpose of examining the constitutionality of the impugned provisions of the amended Code that there are differences in the two kinds of procedure envisaged in Chapter XVIII of the Code, relating to commitment proceedings, but it is by no means clear that the changes introduced by the amending Act XXVI of 1955 are always to the disadvantage or prejudice of an accused person.
It is a well known fact that the amending Act aforesaid introduced changes into the old Code with a view to simplifying and expediting procedure relating to trial of offences and to inquiries preceding such trials.
It has also to be remembered that the Code has always prescribed different procedures for trial of offences varying with the gravity of the offences charged, or with the power of the court before which an accused person is placed on trial.
Generally speaking, minor offences have been made triable summarily, or the same accused person in respect of an offence triable summarily, may be so tried by a magistrate specially empowered in that behalf, or may be tried according to the ordinary procedure by a magistrate not so 401 empowered.
Less serious offences are triable by magistrates and more serious offences are triable by a Court of Session or by a High Court after there has been a preliminary in quiry and investigation by a police officer, or an inquiry by a magistrate, commonly described as commitment proceed ings, or, after inquiry by a Civil or Revenue Court, in connection with certain specified offences committed in the course of or in relation to judicial proceedings or in ' respect of proceedings affecting the administration of justice.
The Code has further classified offences triable by magistrates of any class or by magistrates of higher classes.
There is, again, a cross division of cases into warrant cases and summons cases.
With reference to the powers of police officers, offences have been classified as cognizable offences and non cognizable offences.
Thus, the principle of classification of offences and of different categories of cases relating to the trial of offences is a well establisbed rule of criminal procedure.
It is true that for the first time, the impugned sections have pre scribed two different procedures in respect of commitment proceedings as already indicated, but we have to remember that there is absolutely no difference in the procedure at the trial in contra distinction to the procedure relating to the enquiry leading up to commitment of an accused person to a Court of Session or a High Court in cases triable exclu sively by such a Court.
It must also be remembered that every case involving a serious offence comes under the category of 'cognizable case ' in respect of which a police officer may arrest a person named as an accused person without warrant and investigate the case without any order of a magistrate in that behalf Hence, ordinarily speaking, as soon as information of the commission of a cognizable offence has been laid before a police officer in charge of a police station, it becomes his duty to record the first information; and even in the absence of such a first infor mation if such an officer receives information reading to a suspicion that a cognizable offence has been committed, he has to investigate the case and take all steps necessary for the apprehension and 402 arrest of the persons alleged to have been concerned with the crime.
Even in cases which are not, in the first in stance, of cognizable nature, it becomes the duty of a police officer to investigate such a case if he is so or dered by a competent magistrate, taking cognizance of the offence under section 190 of the Code.
In all such cases, it becomes the duty of a police officer in charge of a police station, or of a superior officer if deputed to investigate a case, to follow the procedure laid down .in
Chapter XIV of the Code.
Under section 169 of the Code, if, as a result of the investigation under Chapter XIV, the police officer making the investigation, comes to the conclusion that there is no sufficient evidence or reasonable ground of suspicion to justify the forwarding of the accused to a magistrate, he has to release the accused person if in custody.
If, on the other hand, on such an investigation, it appears to the investigating officer that there is sufficient evidence or reasonable ground of suspicion, it becomes his duty to forward the accused to a competent magistrate to try the accused or to commit him for trial.
Section 173 of the Code requires the investigation to be concluded without any unnecessary delay and the submission of a report containing the result of the investigation, to a competent magistrate.
After the submission of the police report, the police offi cer in charge of a police station, before the commencement of the inquiry or trial by a magistrate, has to furnish to the accused, free of cost, a copy of the report aforesaid, of the first information report and of all other documents or relevant extracts thereof, on which prosecution proposes to rely, including statements and confessions, if any, recorded under section 164, and the statements recorded under sub section
3 of section 161, of all persons whom the prosecution proposes to examine as witnesses.
On receipt of the police report and the documents aforesaid, under section 173 of the Code, the magistrate concerned has to make up his mind whether the case has to be tried by him or by some other competent magistrate or by a Court of Session or a High Court.
If the magistrate finds that the case is triable exclusively by a Court of Session or a High Court, he has 403 to follow the new procedure laid down in section 207A At the commencement of the inquiry before the magistrate, when the accused appears before him, the magistrate has to satisfy himself that the documents referred to in section 173 have been furnished to the accused and to have them furnished if the police officer has not done his duty.
The magistrate then has to record the evidence of such witnesses as figure as eyewitnesses to the occurrence. and are produced before him. 'He has also the power, in the interest of justice, to record such other evidence of the prosecution as he may think necessary, but he is not obliged to 'record any evi dence.
Without recording any evidence but after considering all the documents referred to in section 173 and after examining the accused person and after hearing the parties, it is open to the magistrate to discharge the accused person after recording his reasons that no ground for committing the accused for trial has been made out, unless he decides to try the accused himself or to send him for trial by another magistrate.
If, on the other hand, he finds that the ac cused should be committed for trial,, he is required to frame a charge disclosing the offence with which the accused is charged.
The accused is then required to submit a list of persons whom he wishes to be summoned, to give evidence at his trial.
After all this, the case is placed before the Court of Session or the High Court for trial in accordance with the procedure laid down by the Code.
But if the investigating police officer, instead of submit ting a charge sheet as required by a. 173, submits what is popularly called the "final report" to the effect that there was no evidence in support of the prosecution case and that it was not a fit case for a trial either by a magistrate or by a Court of Session or High Court, the matter may not end there.
It is open to the first informant or any other person interested in prosecuting the accused person, to make a regular petition of complaint before a competent magis trate under section 190 of the Code.
The magistrate, upon taking cognizance under that section, may start an inquiry of his own, notwithstanding the fact that the police 52 404 has refused to prosecute the case.
The magistrate, in a case triable exclusively by a Court of Session or by a High Court, has to follow the procedure laid down in section 208 and subsequent sections of Chapter XVIII.
The magistrate natu rally has to make a record of the evidence given by the complainant and such other witnesses as may have been pro duced in support of the prosecution or on behalf of the accused if the accused chooses to adduce any evidence at that stage.
Ordinarily, an accused person does not choose to do so for the fear that he might disclose his defence too early.
After recording the evidence adduced on behalf of the prosecution as also on behalf of the accused, if ad duced, and examining the accused for the purpose of enabling him to explain any circumstances appearing in the evidence against him, the magistrate may either discharge the accused person if he finds that there is no sufficient ground for committing him for trial after recording his reasons, or direct him to be tried by himself or some other magistrate.
The order of discharge may be made by the magistrate even at an earlier stage if he records the reasons for considering the charge to be groundless, or, he may commit the accused for trial after framing a charge declaring the offence with which the accused has been charged.
It is also open to an accused person, if the magistrate in his discretion allows him to do so, to examine more witnesses.
If after examining those additional witnesses, the magistrate is satisfied that there are no sufficient grounds for committing the accused, he may cancel the charge and discharge the accused.
It will, thus, be seen that where the magistrate conducts commitment proceeding as on a complaint, the accused has the advantage of three stages at which he may be discharged.
It has, therefore,. been contended on behalf of the appellants that the procedure under section 207A is less advantageous to the accused than the other procedure.
The answer to this con tention is that the Legislature, in its wisdom, has proceed ed on the basis that it is primarily the function of the State through its police officers who are charged with the 405 duty of preventing the commission of crime and of bringing offenders to justice, to prosecute criminals or alleged criminals ' in serious cases, that is to say, cases involving not only personal injury to the complainant but also public peace and order.
Such police officers have been enjoined by law to see to it that all persons alleged to have been concerned in a crime of that character, should be speedily brought to justice.
Chapter XIV of the Code, as stated above, lays down the procedure which police officers have to follow.
Hence, the Code has provided that all cases involv ing public peace and order, should be investigated by public servants who are expected to be vigilant in bringing all offenders to justice without any avoidable delay.
If the police have not thought it necessary or feasible to do so after following the procedure laid down in Chapter XIV, the private party may figure before the magistrate as complain ant The magistrate has got, therefore, to be more vigilant in seeing that private vendetta and considerations other than those of vindicating justice, are not allowed to inter fere with the administration of public justice.
Hence, the procedure laid down in section 208 and the sections follow ing that section, naturally gives greater facilities to persons accused of an offence, to vindicate their character.
As indicated above, there is no doubt that there are materi al differences in the two procedures relating to commitment according as the case has been investigated by a competent police officer who has submitted a charge sheet and a report under section 173 of the Code, or, a competent magistrate has taken cognizance of an offence on a complaint.
In the latter case, the procedure before the committing magistrate is more elaborate.
But is it always to the advantage of an accused person that there should be an elaborate procedure before such a magistrate and not a summary one? It is the avowed policy of the Legislature and there can be no doubt that it is in the general interest of administration of justice, that crimes should be investigated and criminals brought to justice as expeditiously as circumstances of the case would 406 permit.
That must also be in the interest of an accused person himself if he claims not to be guilty of any offence.
Generally speaking, therefore, only a real offender would be interested in prolonging the inquiry or trial so as to postpone the day of judgment.
If a person has been falsely or wrongly accused of an offence, it is in his interest that he should get himself declared innocent by a competent court as early as possible.
In view of these considerations, there cannot be the least doubt that the Legislature has been well advised to amend the procedure relating to commit ment proceedings in cases which have been investigated by a competent police officer.
The Legislature has rightly retained the old elaborate .procedure only in those cases which have not been investigated by such a public officer, or, after investigation, have been declared not to be fit to be proceeded with in public interest.
Having found that there are substantial differences intro duced by the impugned provisions, we have to consider the question of the constitutionality of those provisions.
At the threshold, it is pertinent to observe that these provi sions have not in any way affected the procedure at the trial.
After a case has been committed to a Court of Ses sion, the procedure for the trial of offences in either class of cases, remains the same.
Hence, all those cases which came up to this Court in which it was laid down that the law introduced substantial changes in the procedure at the trial, to the disadvantage of an accused person, have absolutely no relevance to the present case.
The main attack on the constitutionality of those provisions is based on article 14 of the Constitution.
This Court had to consider the provisions of that article in a series of cases, namely, Chiranjit Lal Chowdhuri vs The Union of India (1), The State of Bombay vs F. N. Balsara (2), The, State of West Bengal vs Anwar Ali Sarkar (3), Kathi Raning Rawat vs The State of Saurashtra(4), Lachmandas (1) ; (3) ; (2) [1951]S.C.R. 682.
(4) ; 407 Kewalram Ahuja vs The State of Bombay (1), Qasim Razvi vs The State of Hyderabad(2), Habeeb Mohamad vs The State of Hyderabad(3) The State of Punjab vs Ajaib Singh(4), which were all referred to in the case of Budhan Choudhry vs The State of Bihar(5), which is the nearest case to the case now before us, with this distinction that in that case, there was a difference at the trial stage itself.
In that case, the same accused person in respect of the same of fence, could be tried under section 30 of the Code by a magistrate empowered under that section, and by a Court of Session, if the offence happened to have taken place in a jurisdiction to which section 30 had not been applied.
In that case, this Court upheld the constitutionality of that section of the Code, and repelled the Contention that the provisions of that section infringed the fundamental right to equality guaranteed by article 14 of the Constitution.
In the course of his judgment, Das J. (as he then was) made the following observations which apply to the case in hand with full force : ". .
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 classifi cation 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 that differ entia must have a rational relation to the object sought to be achieved by the statute in question.
The classification may be founded on different basis; 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 considera tion.
It is also well established by the decisions of this Court that article 14 condemns (1) [1952] S.C.R. 710.
(2) [I953] S.C.R. 581.
(3)[1953] S.C.R. 661.
(4) ; (5) ; , 1049.
408 discrimination not only by a substantive law but also by a law of procedure.
" The later case before this Court dealing with.
the question of discrimination in respect of provisions of the Code is the one reported in Matajog Dobey vs H.C. Bhari(1).
In that case, the constitutionality of section 197 of the Code, was questioned.
The contention raised in that case was that the section vested arbitrary power in the Government to grant or withhold sanction which could be withheld or granted at the sweet will of the Executive.
This Court overruled that contention and held that a discretionary power is not neces sarily discriminatory.
Applying the principles laid down by this Court to the case in hand to judge whether or not there has been objectionable discrimination, there could not be the least doubt that the Legislature has provided for a clear classification between the two kinds of proceedings at the commitment stage based upon a very relevant consideration, namely, whether or not there has been a previous inquiry by a responsible public servant whose duty it is to discover crime and to bring criminals to speedy justice.
This basis of classification is clearly connected with the underlying principle of admin istration of justice that an alleged criminal should be placed on his trial as soon after the commission of the crime as circumstances of the case would permit.
This classification cannot be said to be unreasonable and not to have any relation to the object of the legislation, namely, a more speedy trial of offences without any avoidable delay.
For the reasons given above, it must be held that there is no discrimination and that the provisions of article 14 of the Constitution have not been contravened.
The provisions of the Code, impugned in this case, must, therefore, be held to be constitutional.
The appeal is, accordingly, dismissed.
Appeal dismissed.
| The point in controversy in this appeal was whether SS. 207 and 207A inserted into the Code of Criminal Procedure by the amending Act 26 of 1955, violated the provision of article 14 of the Constitution and were, therefore, invalid in law.
The appellants were committed for trial to the Court of Session by the inquiring 397 Magistrate in a proceeding instituted against them on a Police report and he followed the procedure laid down in section 207A of the Code as required by section 207 Of the Code.
The appellants moved the High Court for quashing the order of commitment on the ground that the provisions of section 207A introduced discrimination as against accused persons against whom proceedings were ' instituted on Police report and were unconstitutional in character.
The High Court held against them.
The contention was reiterated in this Court and it was sought to be made out that the provisions Of section 207A of the Code, in comparison and contrast to other provisions of Ch.
XVIII of the Code, prescribed a less advantageous procedure for the accused persons in a proceeding started on Police report than the procedure prescribed for other cases in the succeeding sections of the chapter.
Held, that sections 207 and 207A of the Code were not discriminatory and did not contravene article 14 of the Constitution and their constitutional validity was beyond question.
Although there can be no doubt that the impugned sections introduced substantial difference in the procedure relating to commitment proceedings applicable to the two classes of cases, they did not in any way affect the procedure at the trial, and the true test of the constitutional validity of the classification they made, was whether it was reasonable and pertinent to the object the Legislature had in view, namely, a speedy trial of offences with the least possible delay.
So judged there could be no doubt that the Legislature in prescribing the two different procedures at the commitment stage, one for proceedings instituted on Police report and the other for those that were not, had acted on a consideration that was reasonable and connected with the object it had in view.
Budhan Choudhry vs The State of Bihar, ; , applied.
Matajog Dobey vs H. C. Bhari, ; , Chiranjit Lal Chowdhuri vs The Union of India, ; , The State of Bombay vs F. N. Balsara, ; , The State of West Bengal vs Anwar Ali Sarkar, ; , Kathi Raning Rawat vs The State of Saurashtra, (1952) S.C.R. 435, Lachmandas Kewalram Ahuja vs The State of Bombay, ; , Qasim Razvi vs The State of Hyderabad, ; , Habeeb Mohamad vs The State of Hyderabad, ; and The State of Punjab vs Ajaib Singh; , , referred to.
|
Summarize this legal judgement text concisely | ON: Criminal Appeal No. 205 of 1956.
Appeal by special leave from the judgment and order dated the 30th November, 1955, of the Punjab High Court in Crimi nal Appeal No. 282 of 1955, arising out of the judgment and order dated the 15th February, 1955, of the Court of the Additional Sessions Judge at Amritsar in Sessions Case No. 64 of Trial No. 6 of 1955.
R. L. Anand, and section N. Anand, for the appellant.
Kartar Singh Chawla, Assistant Advocate General, for the State of Punjab and T. M. Sen, for the respondent.
September 17.
The following Judgment of the Court was delivered by KAPUR J. This is an appeal against the judgment and order of the Punjab High Court reversing an order of acquittal by the Additional Sessions Judge, Amritsar.
The appellant Bakshish Singh and his brother Gurbakshi Singh were tried for an offence under sections 302/34 of the Indian Penal Code but were acquitted.
Against this judgment the State took an appeal to the High Court.
As Gurbaksh Singh was said to be ab sconding the appeal against the appellant alone was heard and decided by the High Court.
On August 1, 1954, sometime between 7 and 8 p.m Bachhinder Singh son of Bhagwan Singh of village Kairon was shot in the lane in front of their house and as a result of bullet injuries be died the next day in the hospital at Amritsar.
He was at the time of shooting accompanied by his younger brother Narvel Singh, a boy of 13, and after getting injured Bachhinder Singh and his brother returned to the house.
Bhagwan Singh states that he was informed of the identity of the assailants by Bachhinder Singh who was, at his own request, carried from the house to the hospital at Kairon but as the injuries were serious 411 the doctor at Kairon rendered " first aid " and advised the father to take his son to V. J. Hospital at Amritsar.
Bhagwan Singh then took Bachhinder Singh to the Railway Station but before the arrival of the train he went to the Police Post at Kairon which is at a distance of about 100 yds.
from the Railway Station in order to make a report.
As the Assistant Sub Inspector was away at Sarhali, he returned to the Railway Station and took his son to the Amritsar hospital by the train leaving Kairon at 9 47 p.m. Bhagwan Singh was accompanied at that time by his younger son, Narvel Singh, P.W. 12, and by Shamir Singh, Inder Singh and Narinjan Singh.
Soon after their arrival at the Amritsar hospital Bachhinder Singh was examined by Dr. Kanwal Ki shore, P.W. 2, at 11 45 p.m. and finding the injury to be of a serious nature the doctor sent information to the Police as a result of which Head Constable Maya Ram Sharma, P.W. 4, arrived at the hospital sometime after midnight and, in the presence of Dr. Mahavir Sud, P.W. 17, recorded the dying declaration of Bachhinder Singh, Exhibit P H, after getting a certificate from the doctor that the injured person was in a fit state to make a statement.
This statement is the basis of the First Information Report, Exhibit P H. 1, which is a copy of Exhibit P H.
This report was recorded on August 2, 1954, at 7 50 a.m. at Police Station Sarhali which, we were told, is about 20 miles or so away from Amritsar.
In the early hours of the morning Dr. K. C. Saronwala P.W. I performed an operation on Bachhinder Singh and extracted a bullet from the left abdominal wall which was handed over to the Police.
But Bachhinder Singh died at 1 35 p.m. on August 2, 1954.
An inquest report Exhibit P K was prepared at 2 30 p.m. by Head Constable Maya Ram, P.W. 4.
The case for the prosecution rests on the dying declaration of Bachhinder Singh, exhibit P H, and on the statement of Narvel Singh, P.W. 12, who was an eye witness to the occur rence and on the statement made by the deceased to his father as to his assailant as soon as he (Bachhinder Singh) was brought to the house after receiving the injuries.
The prosecution 53 412 also relied on an extra judicial confession made to Teja Singh, P.W. 13, but both the courts below have rejected this piece of evidence and it is unnecessary to consider it any further.
The learned Additional Sessions Judge rejected the dying declaration made by Bachhinder Singh on two grounds; that at the time of recording the dying declaration not only Bhagwan Singh, the father, and Narvel Singh, the brother of Bachhin der Singh, were " present but the police officer had actually made enquiries from them about the occurrence before he proceeded to record the dying declaration of Bachhinder Singh de ceased.
Head Constable Maya Ram, P.W. 4, has admitted in cross examination that Bachhinder Singh gave his statement in Punjabi but the form and the detailed account given in the statement, Exhibit P H, would show that it was not the product of Bachhinder Singh 's creation alone but it was a touched up ' declaration of the deceased.
It is laid down in 1954 Lahore 805 that a dying declaration which records the very words of the dying man unassisted by interested persons is most valuable evidence but the value of a dying declara tion altogether disappears when parts of it had obviously been supplied to the dead man by other persons whether interested or Police Officer.
As the dying declaration, Exhibit P H, in this case cannot be regarded as the creation of Bachhinder Singh deceased, no reliance whatsoever can be placed on it and it could not form the basis for the convic tion of any of the accused.
" The learned Judges of the High Court did not agree with this criticism.
Birhan Narain J., who delivered the main judg ment, said: " This criticism appears to me to be without any substance.
The statement was recorded by Head Constable Maya Ram who was posted in Amritsar and was not posted in village Kairon and therefore had no knowledge of the parties nor had any interest in them Thus there was no reason why he should record the statement falsely or irregularly.
Throughout the time that the statement was recorded Dr. Mahavir Sud of the Amritsar hospital was present.
He has appeared 413 as P.W. 17 in the present case.
He is a respectable and disinterested person and he 'is positive in his testimony before the court that the statement was made by the deceased voluntarily and that there was nobody present to prompt him.
He has further stated that he did not allow any person to be present at that time.
There is absolutely no reason for doubting the correctness of this statement. . . . . . . . . . . . .
Coming to the other objection of the Additional Sessions Judge, it is difficult to understand the significance at tached by him to the fact that the deceased spoke in Punjabi while the statement was recorded by Maya Ram in Urdu.
The court language is Urdu and the Police generally records statements in Urdu even if they are made in the Punjabi language.
I have no doubt in my mind that the dying decla ration recorded in the present case is a voluntary one and was made without any prompting from anybody.
The High Court in our opinion correctly appreciated the evidence and was right in accepting the authenticity of the dying declaration.
The statement of Maya Ram, P. W. 4, does not support the criticism of the learned trial judge.
And he had read more in the statement of Narvel Singh, P. W. 12, made before the Committing Magistrate, than it really con tains.
It is unfortunate that the criticism has proceeded on the English record of the Magistrate 's Court which does not appear to have been correctly recorded as the Urdu record is in many parts materially different.
The fact that the statement contained in Exhibit P H was made without any prompting is also supported by the testimony of a wholly disinterested witness, Dr. Mahavir Sud, whose statement made before the Committing Magistrate was transferred at the trial stage under section 33 of the Evidence Act.
He stated: " The statement of Bachhinder Singh was voluntary and there was none to prompt it.
I did not allow any attendant on Bachhinder Singh then.
" In cross examination he made it clearer that there was no relation or friend of the deceased person when 414 the statement was recorded.
Some criticism was levelled against the dying declaration based on a sentence in the statement of Dr. Mahavir Sud P. W. 17 that the Head Consta ble put certain questions to clarify the ambiguities and these questions and answers do not find place in Exhibit P H, the record of the dying declaration.
No such question was put to the Head Constable who recorded the statement.
The Head Constable stated that the dying declaration was written at the declarant 's own dictation without any addi tion or omission.
In/ cross examination nothing was asked as to any questions having been put to the deceased by this witness.
Therein the witness also stated : " It is not correct that I first made the inquiry from the father of the deceased and other persons before I proceeded to record his statement ".
He also made it clear that before he allowed the statement to be made he satisfied himself that Bachhinder Singh was in a fit state to make the statement.
We are of the opinion that the High Court rightly held the dying declaration to be a statement made by the deceased unaided by any outside agency and without prompting by anybody.
The declarant was free from any outside influence in making his statement.
Another reason given by the Additional Sessions Judge for rejecting the dying declaration was that the deceased gave the narrative of events in Punjabi and the statement was taken down in urdu.
In the Punjab that is how the dying declarations are taken down and that has been so ever since the courts were established and judicial authority has never held that to be an infirmity in dying declarations making them inefficacious.
As a matter of fact in the Punjab the language used in the subordinate courts and that employed by the Police for recording of statements has always been Urdu and the recording of the dying declaration in Urdu cannot be a ground for saying that the statement does not correctly reproduce what was stated by the declarant.
This, in our opinion, was a wholly in.
adequate reason for rejecting the dying declaration.
415 Exhibit P H, the dying declaration, is a long document and is a narrative of a large number of incidents which happened before the actual assault.
Such long statements which are more in the nature of First Information Reports than recital of the cause of death or circumstances resulting in it are likely to give the impression of their being not genuine or not having been made unaided and without prompting.
The dying declaration is the statement made by a person as to the cause of his death or as to any of the circumstances of the transaction which resulted in his death and such details which fall outside the ambit of this are not strictly within the permissible limits laid down by section 32 (1) of the Evi dence Act and unless absolutely necessary to make a state ment coherent or complete should not be included in the statement.
We are informed that, in the Punjab, no rules have been made in regard to the recording of dying declara tions which, we are told, has been done in several other States.
We think it would be desirable if some such rules were framed and included in the Rules and Orders made by the High Court for the guidance of persons recording dying declarations.
Of course the authenticity of the dying declaration has to be judged in accordance with the circum stances of each case depending upon many factors which would vary with each case but those recording such statements would be well advised to keep in view the fact that the object of a dying declaration is to get from the person making the statement the cause of death or the circumstances of the transaction which resulted in death.
The admissibility of the statement of Dr. Mahavir Sud was assailed by counsel for the appellant on the ground that the conditions laid down for the admissibility of statements under section 33 had not been complied with and several decided cases were relied upon.
This question does not seem to have been raised at any previous stage of the proceedings, nei ther before the Additional Sessions Judge nor before the High Court, and this criticism seems to be without much substance.
At the trial the prosecution produced Foot Constable Kartar Singh, P. W. 14, who deposed that he took the 416 summons for this witness to the hospital where he was previ ously employed and the Superintendent of the hospital made a report that he was no longer in service and it was not known where he was.
This witness also stated that " from the inquiries made by me, I learnt that his whereabouts are not known.
" In cross examination he again stated that he made inquiries but he could not discover the whereabouts of this witness.
After the statement of Kartar Singh, P. W. 14, the Public Prosecutor made a statement that Dr. Mahavir Sud 's whereabouts were not known ' and prayed that his statement be transferred under section 33 of the Evidence Act on the ground that there was no likelihood of the witness being available without unreasonable delay and expense and no objection is shown to have been taken by the defence at that stage.
Thereupon the learned trial judge ordered the statement to be transferred under section 33 of the Evidence Act.
He might have been well advised to give fuller reasons for making the order transferring the statement.
It appears to us that the learned judge transferred it on the ground of unreasonable delay and expense and we do not find any infirmity in this order of transfer.
Counsel then contended that for the efficacy of the dying declaration, corroboration was essential.
In the present case there is the statement of Narvel Singh, P. W. 12, who is an eye witness to the occurrence which is relied upon by the prosecution as corroboration of the dying declaration.
The learned Additional Sessions Judge rejected the testimony of this witness on the ground that there were discrepancies between his statement made in the commitment proceedings and at the trial.
We have already pointed out that the cross examination of this witness was based on somewhat inaccurate English record of his statement in the Committing Court, the statement in Urdu record puts a different complexion on it.
But even if this were not so the High Court, in our opinion, has taken a correct view of the testimony of this witness and has accepted it for cogent reasons.
Besides Narvel Singh there is the statement of Bhagwan Singh, the father, who stated that as soon as Bachhinder Singh 417 came into the house he mentioned the names of his assailants to him.
The incident took place just outside the house of Bhagwan Singh and it was never disputed that he was present in the house when the incident took place.
It is only natural that as soon as the injured son came into the house he would be asked as to who had injured him or would himself state who had caused him the injury.
He was in his senses at that time and no reason has been suggested why the son would not disclose to his father the names of his assail ants.
There is no adequate reason for rejecting this por tion of the testimony of Bhagwan Singh and merely because the dying declaration does not mention it, is hardly a reason for not accepting it.
The non production of Sucha Singh who is stated in the dying declaration and in the statement of Narvel Singh, P.W. 12, to have witnessed the occurrence was commented upon by counsel as a very serious omission.
The Public Prosecutor stated at the trial that he was giving up Sucha Singh as he had been won over.
Therefore, if produced, Sucha Singh would have been no better than a suborned.
witnesss.
He was not a witness "essential to the unfolding of the narrative on which the prosecution was based" and if examined the result would have been confusion, because the prosecution would have automatically proceeded to discredit him by cross examination.
No oblique reason for his non production was alleged, least of all proved.
There was, therefore, no obligation on the part of the prosecution to examine this witness: See Abdul Moham.
mad vs Attorney General of Pales tine (1) ; Stephen Servaratne vs The King (1); Habeeb Moham mad vs The State, of Hyderabad (3).
In the circumstances the court would not interfere with the discretion of the prosecutor as to what witnesses should be called for the prosecution and no adverse inference under section 114 of the Evidence Act can be drawn against the State.
The High Court, in our opinion, have kept in view correct principles governing appeals against acquittals and have rightly applied them to the circumstances (i) A.I.R. 1945 P.C. 42 (2) A.I.R. 1936 P.C. 289.
(3) ; 418 of this case.
The erroneous view that the learned Sessions Judge took of the dying declaration and of the oral evidence were compelling enough reasons for the reversal of that judgment.
We therefore dismiss this appeal.
Appeal dismissed.
| The appellant was convicted for murder on the basis inter alia of the dying declaration of the deceased.
The Sessions Court rejected it on the ground that though the deceased gave the narrative of events in Punjabi the statement was taken down in Urdu.
Held, that in view of the fact that in the Punjab the lan guage used in the subordinate courts and by the Police for recording statements has always been Urdu, the recording of dying declarations in Urdu cannot be a ground for saying that the statement does not correctly reproduce what was stated by the declarant.
Accordingly, the dying declaration should not have been rejected.
The dying declaration in the instant case was a long docu ment containing a narrative of a large number of incidents which happened before the actual assault, which was more in the nature of the First Information Report : Held, that the object of a dying declaration being to get from the person making the statement the cause of his death or the circumstances of the transaction which resulted in his death, persons who record such declaration should not include in that statement details which are not relevant under section 32(1) of the , unless they are necessary to make the statement coherent or complete.
It is desirable that rules should be framed for the guidance of persons recording dying declarations, and included in the Rules and Orders made by the High Court.
Where a person who was stated in the dying declaration to have witnessed the occurrence was not examined by the prose cution at the trial on the ground that he had been won over and it was contended that this was a serious omission and an adverse inference should be drawn: Held, that there was no obligation on the part of the prose cution to examine this witness and that the court would not interfere with the discretion of the prosecutor, 410 Abdul Mohammad vs Attorney General of Palestine, A.I.R. , Stephen Servaraine vs The King, A. 1.
R. ,and Habeeb Mohammed vs The State of Hydera bad; , , referred to.
|
Summarize this legal judgement text concisely | : Civil Appeal No. 118 of 1957.
Appeal by special leave from the judgment and order dated January 31, 1956, of the Circuit Bench of the Punjab High Court at Delhi in Civil Writ No. 243 D of 1954.
C. K. Daphtary, Solicitor General of India, R. Ganapathy Iyer and R. H. Dhebar, for the appellant.
Purshottam Tricumdas, T. section Venkataraman and K. R. Chaud hury, for the respondent.
September 18.
The following Judgment of the Court was delivered by VENKATARAMA AIYAR,J: This is an appeal by special leave against the judgment and order of the High Court of Punjab in an application under article 226 of the Constitution setting aside an order dated September 16, 1954, dismissing the respondent herein, from Government service on the ground that it was in contravention of article 311 (2) of the Consti tution.
The respondent was, at the material dates, an Assistant Controller in the Commerce Department of the Union Govern ment.
Sometime in the middle of March, 1953, one Shri Bhan, a representative of a Calcutta firm styled Messrs. Gattulal Chhaganlal Joshi, came to Delhi with a view to get the name of the firm removed from black list in which it had been placed, and for that purpose, he was contacting the officers in the Department.
Information was given to Sri Tawakley an assistant in the Ministry of Commerce and Industry (Com plaints Branch), that Sri Bhan was offering to give bribe for getting an order in his favour.
He immediately reported the matter to the Special Police Establishment, and they decided to lay a trap for him.
Sri Bhan, however, was willing to pay the bribe only after an order in his favour had been made and communicated, but he offered that he would get the respondent to stand as surety for payment by him.
The police thereafter decided to set a trap for the respond ent, and it war,, accordingly arranged that Sri 501 Tawakley should meet, by appointment, Sri Bhan and the respondent in the Kwality Restaurant in the evening on March 24, 1953.
The meeting took place as arranged, and three members of the Special Police Establishment were present there incognito.
Then, there was a talk between Sri Tawak ley, Sri Bhan and the respondent, and it is the case of the appellant that during that talk, an assurance was given by the respondent to Sri Tawakley that the amount would be paid by Sri Bhan.
After the conversation was over, when the respondent was about to depart, one of the officers, the Superintendent of Police, disclosed his identity, got from the respondent his identity card and initialled it, and Sri Bhan also initialled it.
On March 28, 1953, the respondent received a notice from the Secretary to the Ministry of Commerce and Industry charging him with aiding and abetting Sri Bhan in offering illegal gratification to Sri Tawakley and attempting to induce Sri Tawakley to accept the gratification offered by Sri Bhan, and in support of the charges, there were detailed.
allega tions relating to meetings between the respondent and Sri Tawakley on March 17, 1953, on March 21, 1953, a telephonic conversation with reference to the same matter later on that day, and the meeting in the Kwality Restaurant already mentioned.
The respondent was called upon to give his explanation to the charges, and he was directed to state whether he wished to lead oral or documentary evidence in defence.
The enquiry was delegated to Mt. J. Byrne, Joint Chief Controller of Imports and Exports.
On April 10, 1953, the respondent submitted a detailed explanation denying that he met Sri Tawakley either on the 17th or on the 21st March, or that there was any telephonic conversation that day with him, and stating that the conversation which he had in the Kwality Restaurant on the 24th related to an insurance policy of his, and had nothing to do with any bribe proposed to be offered by Sri Bhan.
The respondent also asked for an oral enquiry and desired to examine Sri Bhan, Sri Fateh Singh and Sri Jai Narayan in support of his version.
On April 17, 1953 Mc.
Byrne gave notice to the 502 respondent that there would be an oral enquiry, and pursuant thereto, witnesses were examined on April 20, 1953, and the following days, and the hearing was concluded on April 27, 1953.
On July 28,1953, Mr. Byrne submitted his report, and there in, he found that the charges against the respondent had been clearly established.
On this, a communication was issued to the respondent on August 29, 1953, wherein he was informed that it was provisionally decided that he should be dismissed, and asked to show cause against the proposed action.
Along with the notice, the whole of the report of Mr. Byrne, omitting his recommendations, was sent.
Oil September 11, 1953, the respondent sent his explanation.
Therein, he again discussed at great length the evidence that had been adduced, and submitted that the finding of guilt was not proper, and that no action should be taken against him.
He also complained in this explanation that the enquiry was vitiated by the fact that he had not been permitted to cross examine.
the witnesses, who gave evidence against him.
The papers were then submitted to the Union Public Service Commission in accordance with article 320, and it sent its report on September 6, 1954, that the charges were made out, that there was no substance in the complaint of the respondent that he was not allowed to cross examine the witnesses, and that he should be dismissed.
The Presi dent.
accepting the finding of the Enquiring Officer and the recommendation of the Union Public Service Commission, made an order on September 16, 1954, that.
the respondent should be dismissed from Government service.
The respondent then filed the application out of which the present appeal arises, in the High Court of Punjab for an appropriate writ to quash the order of dismissal dated September 16, 1954, for the reason that there was no proper enquiry.
As many as seven grounds were set forth in support of the Petition, and of these, the learned Judges held that three had been established.
They held that the respondent had been denied an opportunity to cross examine witnesses, who gave evidence in support of the charge, that further, 503 he was not allowed to make his own statement, but wag merely cross examined by the Enquiring Officer, and that likewise, his witnesses were merely cross examined by the Officer without the respondent himself being allowed to examine them.
These defects, they observed, amounted to a denial of reasonable opportunity to the respondent to show cause against his dismissal, and that the order dated September 16, 1954, which followed on such enquiry, was bad as being in contravention of article 311(2).
In the result, they set aside the order, and directed him to be reinstated.
The correctness of this order is challenged by the Solicitor General on two grounds : (1) that the finding that the respondent had no reasonable opportunity afforded to him at the enquiry is not supported by the evidence; and (2) that even if there was a defect in the enquiry, that was a matter that could be set right in the stage following the show cause notice, and as the respondent did not ask for an opportunity to cross examine the witnesses, he could not be heard to urge that the order dated September 16, 1954, was bad as contravening article 311(2).
At the very outset, we have to observe that a writ petition under article 226 is not the appropriate proceeding for adjudi cation of disputes like the present.
Under the law, a person whose services have been wrongfully terminated, is entitled to institute an action to vindicate his rights, and in such an action, the Court will be competent to award all the relief 's to which he may be entitled, including some which would not be admissible in a writ petition.
It is well settled that when an alternative and equally effica cious remedy is open to a litigant, he should be required to pursue that remedy and not invoke the special jurisdiction of the High Court to issue a prerogative writ.
It is true that the existence of another remedy does not affect the jurisdiction of the Court to issue a writ; but, as observed by this Court in Raghid Ahmed vs Municipal Board, Kairana (1), " the existence of an adequate legal remedy is a thing to be taken into consideration in the matter of granting writs ".
Vide also K. section Rashid and (i) 504 Son vs The Income tax Investigation Commission And where such remedy exists, it will be a sound exercise of discre tion to refuse to interfere in a petition under article 226, unless there are good grounds therefor.
None such appears in the present case.
On the other hand, the point for determination in this petition whether the respondent was denied a reasonable opportunity to present his case, turns mainly on the question whether he was prevented from cross examining the witnesses, who gave evidence in support of the charge.
That is a question on which there is a serious dispute, which cannot be satisfactorily decided without taking evidence.
It is not the practice of Courts to decide questions of that character in a writ petition, and it would have been a proper exercise of discretion in the present case if the learned Judges had referred the respondent to a suit.
In this appeal, we should have ourselves adopted that course, and passed the order which the learned Judges should have passed.
But we feel pressed by the fact that the order dismissing the respondent having been made on September 16, 1954, an action to set it aside would now be timebarred.
As the High Court has gone into the matter on the merits, we propose to dispose of this appeal on a consideration of the merits.
The main ground on which the respondent attacked the order dated September 16, 1954, was that at the enquiry held by Mr. Byrne, he was not given an opportunity to cross examine the witnesses, who deposed against him, and that the find ings reached at such enquiry could not be accepted.
But the question is ,whether that allegation has been made out.
In para.
7 of his petition, the respondent stated : " Despite repeated verbal requests of the petitioner, the inquiry Officer did not permit him to crossexamine any wit ness, who deposed against him." But this was contradicted by Mr. Byrne, who filed a counter affidavit, in which he stated: " (4) That it is incorrect that no opportunity was given to the petitioner at the time of the oral enquiry (1) ; , 747. 505 to cross examine the witnesses who had deposed against the petitioner.
(5) That all witnesses were examined in petitioner 's presence and he was asked by me at the end of each examina tion whether he had any questions to put.
(6) That the petitioner only put questions to one witness Shri P. Govindan Nair, and to others he did not.
" On this affidavit, Mr. Byrne was examined in Court, and he repeated these allegations and added: " I have distinct recollection that I asked Shri T. R. Varma to put questions in cross examination to witnesses.
" It was elicited in the course of his further examination that he did not make any note that he asked Shri T. R. Varma to put questions in cross examination to witnesses, and that that might have been due to a slip on his part.
We have thus before us two statements, one by Mr. Byrne and the other by the respondent, and they are in flat contradic tion of each other.
The question is which of them is to be accepted.
When there is a dispute as to what happened before a court or tribunal, the statement of the Presiding Officer in regard to it is generally taken to be correct, and there is no reason why the statement of Mr. Byrne should not be accepted as true.
He was admittedly an officer hold ing a high position, and it is not suggested that there was any motive for him to give false evidence.
There are more over, features in the record, which clearly show that the statement of Mr. Byrne must be correct.
The examination of witnesses began on April 20,1953, and four witnesses were examined on that date, among them being Sri C. B. Tawakley.
If, as stated by the respondent, he asked for permission to crossexamine witnesses, and that was refused, it is surpris ing that he should not have put the complaint in writing on the subsequent dates on which the enquiry was continued.
To one of the witnesses, Sri.
P. Govindan Nair, he did actual ly put a question in cross examination, and it is difficult to reconcile this 506 with his statement that permission had been refused to cross examine the previous witnesses.
A reading of the deposition of the witnesses shows that the Enquiring Officer himself had put searching questions, and elicited all rele vant facts.
It is not suggested that there was any specific matter in respect of which cross examination could have been but was not directed.
We think it likely that the respond ent did not cross examine the witnesses because there was nothing left for him to cross examine.
The learned Judges gave two reasons for accepting the statement of the re spondent in preference to that of Mr. Byrne.
One is that there was no record made in the depositions of the witnesses that there was no cross examination.
But what follows from this? That, in fact, there was no cross examination, which is a fact; not that the request of the respondent to cross examine was disallowed.
Then again, the learned Judges say that the respondent was present at the hearing of the writ petition before them, that they put questions to him, and formed the opinion that he was sufficiently intelligent, and that it was difficult to believe that he would not have cross examined the witnesses.
We are of opinion that this was a consideration which ought not to have been taken into account in a judicial determination of the question, and that it should have been wholly excluded.
On a considera tion of the record and of the probabilities, we accept the statement of Mr. Byrne as true, and hold that the respondent was not refused permission to cross examine the witnesses, and that the charge that the enquiry was defective for this reason cannot be sustained.
The respondent attacked the enquiry on two other grounds, which were stated by him in his petition in the following terms: "(C) That the petitioner was cross examined and was not enabled to make an ' oral statement on his own behalf.
(D) That the defence witnesses were not given an opportuni ty to tell their own version or to be examined by the peti tioner as their depositions were confined 507 to answers in reply to questions put by the Inquiry Officer.
" In substance, the charge is that the respondent and his witnesses should have been allowed to give their evidence by way of examination in chief, and that only thereafter the officer should have cross examined them, but that he took upon himself to cross examine them from the very start and had thereby violated well recognised rules of procedure.
There is also a complaint that the respondent was not al lowed to put questions to them.
Now, it is no doubt true that the evidence of the respondent and his witnesses was not taken in the mode prescribed in the Evidence Act; but that Act has no application to en quiries conducted by tribunals, even though they may be judicial in character.
The law requires that such tribunals should observe rules of natural justice in the conduct of the enquiry, and if they do so, their decision is not liable to be impeached on the ground that the procedure followed was not in accordance with that, which obtains in a Court of law.
Stating it broadly and without intending it to be exhaustive, it may be observed that rules of natural justice require that a party should have the opportunity of adducing all relevant evidence on which he relies, that the evidence of the opponent should be taken in his presence, and that he should be given the opportunity of cross examining the witnesses examined by that party, and that no materials should be relied on against him without his being given an opportunity of explaining them.
If these rules are satis fied, the enquiry is not open to attack on the ground that the procedure laid down in the Evidence Act for taking evidence was not strictly followed.
Vide the recent deci sion of this Court in New Prakash Transport Co. vs New Suwarna Transport Co. (1), where this question is discussed.
We have examined the record in the light of the above prin ciples, and find that there has been no violation of the principles of natural justice.
The (1) 65 508 witnesses have been,examined at great length, and have spoken to all relevant facts bearing on the question, and it is not suggested that there is any other matter, on which they could have spoken.
We do not accept the version of the respondent that he was not allowed to put any questions to the witnesses. 'Indeed, the evidence of Sri Jai Narayan at p. 188 of the Paper Book shows that the only question on which the respondent wished this witness to testify was put to him by Mr. Byrne.
The evidence of Sri Bhan and Sri Fateh Singh was, it should be noted, wholly in support of the respondent.
The findings of Mr. Byrne are based entirely on an appreciation of the oral evidence taken in the presence of the respondent.
It should also be mentioned that the respondent did not put forward these grounds of complaint in his explanation dated September 11, 1953, and we are satis fied that they are wholly without substance, and are an afterthought.
We accordingly hold, differing from the learned Judges of the Court below, that the enquiry before Mr. Byrne was not defective, that the respondent had full opportunity of placing his evidence before him, and that he did avail himself of the same.
, In this view, it becomes unnecessary to express any opinion on the second question, which was raised by the learned Solicitor General.
In the result, we allow the appeal, set aside the order of the Court below, and dismiss the writ application.
There will be no order as to costs.
Appeal allowed.
| The respondent was dismissed from service under the Govern ment of India in pursuance of an enquiry held under article 311 of the Constitution of India.
He filed an application in the High Court under article 226 to quash the order of dismiss al on the grounds inter alia that in the enquiry the evi dence of the respondent and his witnesses was not taken in the mode prescribed by the Indian Evidence Act and that as a result.
he was not given a reasonable opportunity as re quired under article 311(2).
It was found that though the procedure laid down in that Act was not strictly followed the respondent was given a full opportunity of placing his evidence before the Enquiring Officer.
Held : (1) Petitions under article 226 of the Constitution should not generally be entertained by the High Courts where an alternative and equally efficacious remedy is available.
It is not the practice of Courts to decide in a writ peti tion disputed questions which cannot be satisfactorily decided without taking evidence.
Rashid Ahmed vs Munsicipal Board, Kairana, ; and K. section Rashid and Son vs The Income tax Investigation Commission ; , relied on.
(2) Tile Indian Evidence Act has no application to en quiries conducted by tribunals.
The law only requires that tribunals should observe rules of natural justice such as that a party should have the opportunity of adducing all relevant evidence on which he relies, that the evidence of the opponent should be taken in his presence and that he should be given the opportunity of cross examining the witnesses examined by that party, and that no materials should be relied on against him without his being given an opportunity of explaining them.
If these rules are satis fied then the enquiry is not open to attack on the ground that the procedure laid down in the Indian Evidence Act for taking evidence was not strictly followed.
New Prakash Transport Co. vs New Suwarna Transport Co,, , followed, 64 500
|
Summarize this legal judgement text concisely | Appeal No. 165 of 1953.
Appeal by special leave from the judgment and order dated October 3, 1950, of the former Travancore Cochin High Court in A. section No. 288 of 1120(T) arising out of the judgment and order dated the 3rd Thulum 1120 of the 2nd Judge, District Court, Quilon in C.M.P. No. 2391 dated 15 8 1103 in I.P. 3/1100.
K. section Krishnaswamy Iyengar, Alladi Kuppuswami and M. section K. Sastri, for the appellant.
N. C. Chatterjee, M. R. Krishna Pillai and Sardar Bahadur, for respondent No. 1. 1957, May 24.
The Judgment of the Court was delivered by SINHA J.
This appeal by special leave is directed against the concurrent orders of the Courts below allowing the Official Receiver 's application under section 35 of Travancore Regulation VIII of 1090 (= 1915), to which we shall refer in the course of this judgment as the Insolvency Regulation, for annulling the usufructuary mortgage (exhibit I) for Rs. 75,000 dated August 18, 1924, executed by a number of persons who may now be conveniently described as the insolvents.
The main question for determination in this appeal on behalf of the transferee is whether the transaction in his favour is within the third exception to section 35 aforesaid.
(In this judgment we shall use the dates with reference to the Gregorian Calendar equivalent to the dates maintained under the Malayalam Calendar).
259 In order to appreciate the arguments in this appeal it is necessary to state the following facts.
Koya Kunju was a flourishing merchant at Quilon carrying on trade in piece goods, yarn, provisions etc.
He died in or about the year 1921 leaving him surviving his widow, two sons and two daughters, who jointly carried on the ancestral business through the eldest son under a power of attorney.
They added to the family business a tile factory and an oil mill.
In June July 1924 the sons approached the appellant 's father, who was a flourishing money lender living about fifty to sixty miles away from Quilon at a place called Mankompu.
He agreed to advance the sum of Rs. 75,000 on the usufructuary mortgage of certain immovable properties in and near Quilon belonging to the family, for the purpose of carrying on their trade and business after his two sons had made certain enquiries at Quilon about the status and means of the borrowers and whether the transaction would be worth their while.
After a draft had been made at the instance of the creditor, the mortgage bond and a lease deed granting a lease of the mortgaged properties to the mortgagors themselves bearing the same date, namely, August 18, 1924, were executed and registered by the heirs aforesaid.said of Koya Kunju.
The purpose of the loan is stated in the document to be the family necessity, namely, carrying on trade etc.
In lieu of interest on the Rs. 75,000 advanced at the rate of nine per cent.
per annum for a period of three years the mortgaged properties, namely, buildings, fields and coconut orchards etc., were said to have been delivered to the mortgagee who in his turn granted a lease back to the mortgagors on payment of a stated sum by way of annual rents, viz., Rs. 6,750, equivalent to interest at nine per cent.
on the principal sum advanced.
It was also stipulated in the lease deed that if rent was in arrears for two years, the lessees would surrender the properties to the lessor and accrued arrears of rent also would be a charge on those properties.
It is common ground that the mortgaged properties were unencumbered at the date of the transaction, but soon after a hypothecation deed in favour of a third party named Kadir Moideen 260 Rowther was executed on August 30, 1924, for the sum of Rs. 78,859 15 0, hypothecating the equity of redemption in respect of the properties mortgaged to the appellant and certain other properties.
The second bond which will hereinafter be called the hypothecation bond, to distinguish it from the usufructuary mortgage bond in question, was admittedly executed to liquidate the outstanding debts due to the hypothecatee himself in respect of dealings in cloth, yarn and iron goods between the parties to that transaction.
It appears that those two parties were having dealings in those commodities from about the year 1911.
Hence they were very well known to each other on account of their business dealings, whereas the mortgagee in respect of the usufructuary mortgage bond in question was a complete stranger to the family of the mortgagors.
On September 15, 1924, one of the business creditors of the family of the mortgagors,S. M. Sheikh Mohideen Rowther, made an application in the District Court of Quilon for adjudicating them as insolvents.
He implement the mortgagors, the five heirs aforesaid of Koya Kunju.
Amongst the acts of insolvency were mentioned the transactions between the insolvents and the appellant and the hypothecation bond aforesaid.
In his affidavit in answer, the first counter petitioner for himself and as agent of the other members of the family admitted their joint trading business and the debts incurred by his firm.
He also admitted the debts due under the usufructuary mortgage bond in question and the hypothecation bond aforesaid and ended by saying that the debts of the counter petitioners including the debts covered by the said usufructuary mortgage bond and the hypothecation bond amounted to two and a half lakhs of rupees and that their assets were worth not less than seven lakhs of rupees.
He denied that they had committed any acts of insolvency or had done anything to delay or defeat their creditors and expressed their readiness to pay the debts due to the petitioning creditor.
A number of other creditors also made similar applications for adjudicating the mortgagors as insolvents.
All those proceedings appear to have been 261 consolidated and the District Judge by his orders dated August 29, 1927, adjudged the counter petitioners insolvents.
About the contents and effect of this order of adjudication something more will have to be said in the course of this judgment while dealing with the most important question of law raised by the learned counsel for the Official Receiver.
By his orders dated October 19, 1924, the District Judge appointed the Official Receiver as the interim receiver in respect of the insolvent 's properties to take immediate possession thereof.
The interim receiver, Sri V. N. Narayana Pillai, made a report to the court on February 11, 1925, stating inter alia that the total yield of the properties mortgaged to the appellant could be estimated at Rs. 1,600 per year and that the insolvents were not prepared to continue in possession of the mortgaged property at a rent of Rs. 6,750 as stipulated in the lease deed aforesaid; and that, therefore, the mortgaged property was not expected to fetch an income equivalent to nine per cent.
on the mortgage bond as stipulated.
The rent having fallen in arrears over two years, the mortgagee instituted a suit against the mortgagors, impleading the Official Receiver also for recovery of arrears of rent with interest, as also for recovery_ of possession of the mortgaged property ; and the suit appears to have been decreed for the reliefs prayed for.
Since then the mortgagee appears to have been in direct possession of the property.
It does not appear that in that suit any question as to the want of consideration or of bona fides of the mortgage bond was raised either by the mortgagors themselves or by the Official Receiver.
It was on March 28, 1928, that the Official Receiver made his application to the court praying "that the court may be pleased to declare the transfers described in schedule A, void as against your petitioner".
Schedule A comprised the usufructuary mortgage bond aforesaid and the lease deed, as also the hypothecation bond for Rs. 78,859 15 0.
It is remarkable that no allegations of fact bearing on the bona fides of the transactions impeached are made in respect of the mortgage bond in question.
After stating the insolvency 262 proceedings and the fact of the execution of the deeds in schedule A and that the insolvency petition on which the order of adjudication was passed had been filed in court within two years after the dates of transfer, the only relevant statement made in the petition is para.
4 to the following effect: "That the said transfers are void as against your petitioner under sections 35 and 36 of the Insolvency Regulation.
" This petition of the Official Receiver was opposed by the mortgagee 's son, N. Krishna Iyer, on his father 's behalf, ' chiefly on the ground that the mortgage was a bona fide transaction for valuable consideration which was not affected by the Insolvency Regulation, that there was a misjoinder of parties and causes of action, apparently objecting to the Receiver filing a single petition in respect of the usufructuary mortgage deed arid.
the hypothecation bond; and that it was barred by limitation and estoppel.
A number of issues were raised on July 24, 1929, the most important of them being the first issue to the following effect : " Whether the otti and lease deeds impeached by the Receiver were executed in good faith and for valuable consideration ?" Other issues related to the formal issues in bar of the proceedings.
Before the learned District Judge (Mrs. Anna Chandy) a preliminary objection was raised on behalf of the Receiver to the effect that in view of the decision of the Judicial Committee of the Privy Council in Mahomed Siddique Yousuf vs Official Assignee of Calcutta (1), the matter was res judicata between the parties and the order of adjudication could be questioned only by an appeal against it, which had not been done.
The learned Judge gave effect to that objection and held that the transferee was precluded from agitating the matter and that his only remedy was by way of appeal against the order of adjudication.
This point has been very prominently raised by the learned counsel for the respondent, the Official Receiver, at the forefront of his arguments and will (1) (1943) L. R. 70 I. A. 93.
263 have to be dealt with at the proper place.
The learned Judge held on the merits that exhibit I, the usufructuary mortgage bond, was not for the full consideration stated in the deed but that only Rs. 20,000 had been paid to the mortgagors and that in any event the transaction did not represent a bona fide transfer.
As the hypothecation bond is not the subject matter of this appeal, it is no more necessary to follow the course of the proceedings in respect of that transaction.
The Receiver 's application was therefore allowed, both on the ground of incompetency of the transferee to challenge the adjudication order and on the finding that it was a "fraudulent transfer".
On appeal by the mortgagee, the learned Judges of the High Court dis agreed with the trial Judge and held that the decision in Mahomed Siddique YOUSUF 's case (1) could not stand in the way of the appellant and that the entire consideration of Rs. 75,000 had been proved to have been paid to the mortgagors but agreed with the trial Judge in holding that the transaction was not made in good faith in the sense that it had not been entered into with due care and attention.
In the result the appeal was dismissed.
The transferee prayed for a certificate of fitness to appeal to this Court, but the High Court refused that application.
The appellant then moved this Court and obtained special leave to appeal.
A number of points were raised on behalf of the appellant and at the threshold of the arguments it was contended, and in our opinion rightly, that the courts below had erred in throwing the burden on the transferee of proving affirmatively that the transaction impeached, namely, the usufructuary mortgage bond dated August 18, 1924, was supported by good faith and valuable consideration.
The Judicial Committee of the Privy Council laid it down in the case of Official Assignee vs Khoo Saw Cheow (2), that upon a true construction of the Bankruptcy Ordinance of the Straits Settlements, section 50, sub section
(3), which in terms is similar to the provisions of section 35 of the Insolvency Regulation, the onus is upon the Official Assignee to prove that a conveyance which he was seeking to set aside was not made in good faith and for valuable consideration.
In (1) (1943) L.R. 70 I.A. 93.
(2) 264 that case the trial Judge had ruled that the onus of proof lay upon the transferee and had set aside the transaction upon failure of proof led by the transferee.
On appeal it was held that the trial Judge had misdirected himself as to the onus and that as the result of the misdirection was very serious in that it had coloured the whole outlook as to the facts and had substantially prejudiced the appellant 's case a retrial was necessary.
The Privy Council affirmed the decision of the Appeal Court and dismissed the Official Assignee 's appeal, the respondent transferee not appearing before the Judicial Committee.
In the same year the Judicial Committee followed the aforesaid precedent in the case of Official Receiver vs P.L.K.M.R.M. Chettyar Firm (1), which was a case under the .
On a consideration of the provisions of section 53 of the Act their Lordships reaffirmed the proposition laid down in the earlier case of that very year reported in Official Assignee vs Khoo.
Saw Cheow(2).
Their Lordships examined the terms of section 53 and section 50 of Ordinance No. 44 of the Straits Settlements dealt with in that previous decision and came to the conclusion that they were in substance the same.
The third decision of their Lordships of the Privy Council to the same effect is reported in Pope vs Official Assignee, Rangoon (3).
This case went up in appeal from a decision of the Rangoon High Court under the provisions of section 55 of the Presidency Towns Insolvency Act.
In this case their Lordships observed further that if the transaction impeached was a real and not fictitious one, the receiver could not be said to have brought the case within the section unless he proved that the transferee knew that the transferor was insolvent at the time the transfer was made, even though the transfer was of the entire assets of the transferor.
These three decisions of the Judicial Committee settled the law in this country contrary to what had been the consensus of judicial opinion previously, that the initial burden of proving that the transaction impeached had not been made (1) (1930) L. R.58 1.
A. 115.
(2) (3) (1933) L.R. 60 I.A. 362, 265 in good faith and for valuable consideration lies on the party seeking to set aside the transaction.
The learned counsel for the respondent was not able to adduce any reasons to the contrary and it must therefore be taken that it is settled law in insolvency proceedings that the burden of proof lies on the Official Assignee or Receiver who challenges the transaction.
In this case, as already pointed out, the issue framed in terms laid the burden of proof on the transferee, the appellant.
He led the evidence recording of which began on November 21, 1930, and the evidence of his witnesses, C. P. Ws.
1 to 7 was recorded between November 21, 1930 and November 20, 1932, on different dates.
C. P. W. 8, one of the insolvents, appears to have been examined in the interest of the second mortgagee, that is to say, in support of the hypothecation bond.
He was crossed on behalf of the petitioning creditor, as also of the appellant.
He was examined and crossexamined in February and March 1933.
It was then for the first time that it was alleged on behalf of the mortgagors that only Rs. 20,000 out of Rs. 75,000 secured under the mortgage in question had actually been paid and that the remaining Rs. 55,000 had so far remained unpaid.
More will have to be said about this aspect of the case later.
C. P. W. 10, one of the other mortgagors was examined on the same lines as his brother, C.P.W. 8.
C.P.W. 12 is the younger brother of S.K. Kadir Moideen Rowther, the second mortgagee, who had taken the hypothecation bond.
He was examined on October 9, 1935.
Curiously enough, nothing appears to have happened until the first Official Receiver, V. N. Narayana Pillai, aged 64 years, was examined as C.P.W. 13 on November 29,1943.
It was he who had started the annulment proceedings in respect of the mortgage bond in question.
His evidence and conduct of the proceedings will have to be dealt with presently.
We have pointed out the extremely dilatory way in which the proceedings in the Insolvency Court were conducted.
The annulment proceedings commenced in 1928 and were determined by the Court of first instance by its orders dated October 19, 1944, 34 For a period of more than sixteen years the annulment proceedings were kept hanging.
For whose benefit it does not appear.
We would fain believe that this extremely dilatory way of dealing with litigation involving the business community is not a habit in that part of the country and that the present case is only an exception.
On appeal the High Court has noticed the delay but without any apparent disapproval.
We have not been able to discover any reasons, valid or otherwise, for this callous disregard of public time and litigants ' interest.
Realising that the annulment proceedings had taken a dubious course on an issue wrongly throwing the onus of proof on the transferee, the learned counsel for the Receiver sought to support the order annulling the encumbrance on the short ground that the matter was res judicata between the Receiver and the incumbrancer on the authority of the decision of the Privy Council in Mahomed Siddique Yousuf vs Official Assignee of Calcutta (1).
That was an appeal from the Calcutta High Court in a case arising under the Presidency Towns Insolvency Act, III of 1909.
In that case the Judicial Committee, following the well established rule in England as laid down in the leading case of Ex parte Learoyd In re Foulds (2), has held that the order of adjudication based on the allegation that one of the several acts of insolvency was the impugned transfer was conclusive against the transferee in subsequent proceedings taken by the Official Assignee to set aside the transfer by virtue of section 116, sub section
(2) of the Presidency Towns Insolvency Act, 1909.
Their Lordships have pointed out in the course of their judgment that the provisions of the Presidency Towns Insolvency Act then before their Lordships were in terms similar to those of the Bankruptcy Act of 1869 which had been repeated in the subsequent Acts of 1883 and 1914.
They also point out that it is rather anomalous that the decision should adversely affect a party who was not before the court when the adjudication order was made.
But they held that the words of the statute and the requirements of public policy in relation to (1) (1943) L.R. 70, I.A. 93.
(2) 267 adjudication proceedings were enough to outweigh any considerations of hardship to individuals.
On this view they affirmed the decision of the Calcutta High Court and overruled that of the Madras High Court in Official Assignee of Madras vs O.R.M.O.R.S. Firm(1).
Naturally very strong reliance was placed by the learned counsel for the respondent Receiver on that case.
It was argued that as the order of adjudication dated August 29, 1927, had with reference to the transaction in question, amongst others, held that the debtors had committed acts of insolvency by executing the deed (exhibit I) with a view to defeat or delay their creditors, it was no more an open controversy and the findings then recorded were conclusive in the present proceedings.
There are, in our opinion, insurmountable difficulties in the way of the respondents on this aspect of the case.
It was stated by the petitioning creditors that the counter petitioners (insolvents) had executed the usufructuary mortgage bond in question and the hypothecation deed in respect of almost all their properties with a view to defeat or delay the other creditors.
Issue 5 was raised in these terms: " Have the defendants committed acts of insolvency as alleged in the petition ? " and the finding of the court was that those were acts of insolvency " with intent to defeat or delay their creditors.
" It is said that these findings are resjudicata between the Receiver and the appellant.
Even so, there is no finding that the transferee was privy to such acts.
It was not necessary to find at that stage, and it has not in terms been found, that the transaction impugned in this case was not bonafide so far as the transferee is concerned or without consideration matters which directly arise for determination in the annulment proceedings leading up to this appeal.
Hence, even assuming that the rule laid down by their Lordships of the Judicial Committee in Mohomed Siddique Yousuf vs Official Assignee of Calculta(2) in a case arising under the Presidency Towns Insolvency Act, applies to a case like the present governed by the Insolvency Regulation, which follows more closely the (1) Mad. 541.
(2) (1943) L.R. 70 I.A. 93.
268 and not the Presidency Towns Insolvency Act, the present controversy is not barred by any finding in the order of adjudication.
In this appeal we are concerned with the bona fides of the transferee.
Nor has it been found that there was no valuable consideration for the mortgage.
Hence, without pronouncing on the applicability of the decision aforesaid of the Judicial Committee it must be held that the question under section 35 is still open.
Having disposed of the preliminary questions raised on behalf of the parties, we have now to determine the main question in controversy, namely, whether it has been proved that the usufructuary mortgage bond dated August 18,1924, was not made in good faith and for valuable consideration.
Section 35 of Travancore Regulation VIII of 1090 (= 1915) is in these terms: "Any transfer of property not being(i) a transfer made before, or at, and in consideration of, marriage, (ii)or a transfer made to, or for, the wife or children of the transferor of property that has accrued to the transferor in consideration of the marriage or in right of his wife, (iii)or a transfer made in favour of a purchaser or incumbrancer in good faith and for valuable consideration, shall, if the transferor is adjudged insolvent within two years after the date of the transfer, be void against the receiver, and may be annulled by the Court.
" This section is equivalent to section 36 of the (III of 1907) and to section 53 of the (V of 1920), except for the addition of the second exception which was apparently added in the Travancore law to make it in consonance with local laws relating to devolution of family property, and secondly that the word "void" in the last clause of the section in the Insolvency Regulation and in section 36 of the of 1907 has been changed into "voidable".
Regulation VIII of 1915 aforesaid has been replaced by Travancore 269 Regulation VIII of 1108 (1932).
Section 53 of the latter has taken the place of section 35 of the former and is exactly in the same terms except for the fact that the word "void" has been changed into "voidable", thus bringing the Regulation of 1932 in line with the Act of 1920.
It is not necessary for the purposes of this case to go into the question of whether any legal significance attaches to the change of the word " void" into " voidable ".
The legislative history of the law relating to annulment of transfers or encumbrances made or created by a person who has since been declared insolvent, indicated above, shows that the law in the united State of Travancore and Cochin was the same as the law in what used to be called British India.
The question now is, has the Receiver on whom the burden of proof lay, as shown above, been successful in discharging that burden.
It has not been argued before us by the learned counsel for the Receiver that the courts below were not in error in discussing the evidence and deciding this controversy on the basis that the burden Jay on the transferee to prove that the transfer in his favour was bona fide and for consideration.
If the burden lay on the transferee, he would have to show not only that he paid some consideration but that he paid valuable consideration and that consideration was paid bona fide.
As to what is the legal import of " bona fide" will be discussed presently.
But we are in this case proceeding on the law so far settled in this country after the decisions aforesaid of the Privy Council that the burden lies on the Receiver.
The contrary proposition has not been pressed upon us and we need not therefore pronounce upon that.
If the burden lay on the Receiver, in our opinion, his application for annulment can be allowed on proof either that there was no consideration for the transaction or that the consideration was so inadequate as to raise the presumption of want of good faith.
Alternatively, the Receiver may also succeed on showing that though there was valuable consideration for the transaction impeached, there was want of good faith in the sense 270 that the transferee knowing all the circumstances of the,, transferor who had since been adjudged an insolvent entered into the transaction with a view to screening the assets of the insolvent from the Receiver in whom the insolvent 's property vests for the benefit of the creditors.
Such will be mostly cases of benami transactions in favour of some relative of the insolvent or a person in whom he has full confidence that he will hold it ultimately for the benefit of the insolvent or persons in whom he may be interested.
Or it may be that a person finding himself over head and ears in debts wishes to convert his assets into liquid assets with the collusion or connivance of the transferee.
In both cases the intention clearly is to shield the assets against the claims of creditors and in such cases, though the transfer may have been for consideration, either adequate or otherwise, but having been entered into with a view to defraud or delay the creditors, the transferor and the transferee sharing the common intention, the transaction must be annulled and the assets must be brought into the common hotchpotch for the benefit of the insolvent 's creditors.
Though the learned District Judge held that only Rs. 20,000 had been paid by the mortgagee to the insolvents and Rs. 55,000 out of Rs. 75,000, the stated amount of the mortgage money, had remained unpaid, the High Court has found that the entire consideration passed.
If this finding is correct, then the fact that such a large amount had been paid by the mortgagee would take him a long way to success in proving the bona fides of the transaction.
But it has been argued by the learned counsel for the respondent Receiver that, finding is not correct.
It has been strenuously argued on behalf of the respondent that the mortgage bond in question was without consideration.
The Official Receiver had also filed a memorandum of objections in the High Court challenging the correctness of the finding by the learned District Judge that Rs. 20,000 had as a matter of fact been paid to the transferors.
As on the question of consideration the two courts below have materially differed in their conclusions, the question is open 271 before us.
We have, therefore, to examine how far the transaction in question was for valuable consideration.
Before advancing this large sum of money the creditor had deputed his two advocate sons, C.P. Ws. 1 and 2, to make enquiries into the antecedents of the persons who had applied for the loan and as to whether they were financially sound and otherwise desirable persons to deal with.
The two young men who had just entered upon their legal career went and stayed with a relation of theirs who has been examined as C. P. W. 6, Venkitarama Iyer Ramakrishna Iyer, who was at the relevant dates posted as Assistant Excise Commissioner at Quilon.
This gentleman being interested in the welfare of the family of the intending lenders, claims to have made confidential enquiries from respectable merchants at Quilon and told his two young guests that the borrowers were persons of position and good business reputation and that they had ample unencumbered properties on the security of which advance up to a lakh of rupees could be made.
The two sons of the mortgagee having satisfied themselves that the proposed mortgagors were persons of good status in society and sound financial position reported to their father who on the strength of the reports by his sons agreed to lend Rs. 75,000 on a first mortgage of properties reportedly worth more than at least a lakh of rupees.
The mortgagee also examined himself as C.P.W. 7.
The father and the two sons have given evidence in support of their case that out of the Rs. 75,000 agreed to be advanced on the mortgage when some of the mortgagors went with the registered document to the mortgagee 's place, Rs. 55,000 was paid in cash to them on the basis of the receipt (exhibit LIV) dated August 20, 1924.
The remaining Rs. 20,000, according to the evidence, was paid later.
Those payments were made in six instalments between September 1, and September 9, 1924, as evidenced by receipts (Exs. LVII and LVIII) and endorsements on letters, Exs. LIX(a), LXI(a), LXIV(a) and LXV(a).
All these payments are also supported by the corresponding entries in the books of account regularly kept by 272 the mortgagee and proved in court as Exs.
LXVII to LXXII series.
Of the six instalments paid as aforesaid, some of them were paid to the mortgagors ' creditors and some of those creditors have been examined.
C.P.W. 4 admits having received Rs. 2,500 and endorsed receipt of the same, exhibit LIX(a).
C.P.W. 3 similarly speaks of having received Rs. 1,500 and endorsed receipt of the same, exhibit LXIV(a) and is corroborated by his accountant, C.P.W. 9, who proves the ledger and day book, Exs.
LXXX and LXXXI.
Thus we have not only the evidence of the mortgagee and his relations but also of third parties, creditors of the insolvents, proving the passing of consideration.
The case does not rest only upon oral testimony.
It is amply corroborated by contemporaneous entries in books of account maintained by the lender himself and by third parties who have been paid by him on account of the mortgagors.
This considerable body of oral and documentary evidence is supported by the admissions of the mortgagors, not in the mortgage bond itself which stand rebutted, but by a series of admissions of receipt of the entire consideration money in the several receipts and endorsements made by some of them.
All this voluminous evidence has been very carefully considered by the learned Chief Justice at pages 31 to 34 of the judgment of the High Court.
We need not repeat all that has been said by the High Court for recording the finding that it was coiistrained to differ from the conclusions of the learned District Judge and to hold that exhibit I "is fully supported by consideration ".
As already indicated, neither the mortgagors themselves nor the Official Receiver in their pleadings made out a case that the transaction was unsupported by consideration or that the consideration paid was not full amount shown in the document as having been advanced or that a much smaller sum like only Rs. 20,000 had been actually paid.
It has been shown above with reference to the dates of the examination of witnesses that C.P. Ws. 1 to 7 had been examined and their evidence recorded between November 21, 1930, and November 20, 1932.
Until that date it was not even suggested to those 273 witnesses in cross examination that only Rs. 20,000 had been paid and no more.
For the first time on February 4, 1933, when one of the mortgagors was examined as C.P.W. 8, it was alleged that only Rs. 20,000 had been received by the mortgagors, which amount they paid to their creditors.
C.P.W. 10, the second of the mortgagors, was examined on June 12, 1933.
He does not in any way improve the Receiver 's case that the transaction was without con sideration.
He does not even say that only Rs. 20,000 out of the consideration stated in the mortgage bond had been received by the mortgagors.
Lastly, the then Receiver himself was examined as C. P. W. 13 on November 29, 1943.
This gentleman, who is described in the judgments below as one of the leading advocates, does not appear to have taken his duty as a Receiver very seriously.
He does not appear to have examined the insolvents themselves or their books of account carefully to find out the exact financial position of this trading family.
He seems to suggest in his evidence that at the material dates the Quilon Bank was functioning and that the insolvents "did not get additional accommodation in the said bank or the other hundi shops during 1099" (1923 24).
These statements, to put it mildly, are disingenuous.
In the first instance, they would suggest that the insolvents had borrowings from the Quilon Bank or other hundi shops and secondly that their financial position was so embarrassed that the said bank or other hundi shops had refused to give them any further advance of money.
As a matter of fact, it is nobody 's case that the insolvents had at any time any dealings with the Quilon Bank.
We know from the evidence that the insolvents owed to the Imperial Bank anything between Rs. 30,000 to, Rs. 40,000.
Either a portion or the whole of the dues of the Bank have been liquidated.
The evidence is not specific.
One of the mortgagors claims to have paid a portion of the Imperial Bank 's dues by selling ornaments of the ladies of his family, thereby directly suggesting that no portion of the mortgagee 's money was utilised for payment of the dues of the Imperial 35 274 Bank.
The High Court rightly refused to accept the mortgagors ' belated attempt to prove by their bare testimony that any amount out of the consideration of the mortgage bond in question had remained unpaid.
The Receiver 's evidence was directed mostly to making statements suggesting that the mortgagee had not made such enquiry about the financial position and status of the mortgagors as a reasonable man of business would do.
He has not made any definite statement that the mortgage bond in question was without consideration.
In cross examination he has been constrained to admit that he did not remember to have examined the mortgagor who was in charge of the business (first counter petitioner).
He admits that it is usual for an Official Receiver to examine the insolvent.
He has said further that he did not consider it necessary to examine the insolvents regarding the subject matter of the petition for annulment.
He also admitted that he had not examined any of the accounts to see whether the insolvents had received the entire consideration of the mortgage in question, and that "the mortgagee Nilakanta Iyer is a very rich man.
My information is that the insolvents had no dealings with him before the insolvency.
" He was also questioned as to the insolvents ' dealings with the Imperial Bank and he gave the very vague answer that he was not sure as to what amount was due to the bank.
He also admitted that he had never seen the mortgagee under exhibit 1, nor bad he asked him anything in connection with the mortgage, and that the mortgagee had obtained a decree and in execution of the said decree he took delivery of the property which was in his possession as Receiver.
According to him, the properties covered by the usufructuary mortgage bond and the hypothecation bond would be worth about a lakh and a half rupees.
It would thus appear from the statements of the Receiver himself as C.P.W. 13 examined about 19 years after the insolvency proceedings began, that he had not made such enquiries as he was bound to make as Official Receiver.
From what has been said above there cannot be the least doubt that if the burden lay on the Receiver 275 to prove that the transaction in question was without consideration, he has hopelessly failed to discharge that burden.
We are prepared to go further and say that even if the burden were on the transferee to show affirmatively that he had paid the full consideration, we would have no hesitation in confirming the findings of the High Court on this part of the case which have been arrived at after a very full and fair consideration of the evidence on the record, pro and con, though there is very little evidence adduced in support of the allegation that the mortgage bond in question was without consideration or full consideration.
The finding on the question of consideration being entirely in favour of the appellant mortgagee, the, only other serious question which remains to be considered is whether the transaction was bona fide.
We have already indicated that it is settled law not only of the Insolvency Acts in England but also in this country that it is not necessary in annulment proceedings to prove that the transferor who has been subsequently adjudged an insolvent should have been honest and straightforward in the matter of the transaction impeached.
If lie was really so, there would not be much difficulty in coming to the conclusion that the transaction as a whole was bona fide.
Even if the mortgagors were wanting in bona fides and assuming that to be so in the present case, the crucial question still remains to be answered.
Unless it is found that the transferee was wanting in bona fides in respect of the transaction in question, he cannot be affected by the dishonest course of conduct of the transferor.
Has it been shown by the evidence on the record that the mortgagee was a party or privy to the dishonest intentions of the mortgagors in so far as they may have intended to defeat or delay their creditors by executing the mortgage bond? The courts below, and particularly the High Court, have taken the view that the mortgagee had failed affirmatively to prove his bona fides.
This conclusion is based upon the consideration that the General Clauses Act (II of 1072)=(1897), in cl.
(6) of section 2 provides that "Nothing is said to be done or believed in good faith which is done or believed 276 without due care and attention.
" Applying this definition of "good faith" to the present case, the High Court came to the conclusion that the mortgagee has not proved that the mortgage transaction was entered into with "due care and attention".
The United State of Travancore and Cochin Interpretation and General Clauses Act (VII of 1125)=(1950) repeats the same definition which appears to have been taken from the definition of the term from the Madras General Clauses Act (1 of 1891).
The definition of "good faith" in the Indian General Clauses Act (X of 1897) is in these terms: " A thing shall be deemed to be done in good faith where it is in fact done honestly, whether it is done negligently or not." The High Court was of the opinion that if the definition of "good faith" contained in the Indian General Clauses Act quoted above were to apply to the case, different considerations might arise.
But the definition of that term as quoted above in the Travancore Cochin Act is different.
Applying that definition to the present case, the High Court 's conclusion was that the appellant mortgagee had not shown due care and attention while entering into the transaction.
In this connection it is necessary to determine whether the High Court was right in applying the test aforesaid in determining the question of bona fides.
We have to find which of the two tests, the one laid down in the General Clauses Act of Travancore Cochin or the other laid down in the Indian Act, is more appropriate to proceedings in insolvency.
Act 11 of 1070 (1897), even as Act VII of 1125 (1950), contains the following saving clause "Unless there be something repugnant in the subject or context.
" As a matter of fact, these words or words to similar effect are to be found in all General Clauses Acts.
The question, therefore, naturally arises whether there is anything in the subject or context of the Insolvency Regulation which is repugnant to the idea of applying the test of due care and attention.
The law of insolvency aims at a just and equal distribution of the assets of a person, who has suffered loss 277 in trade or business or otherwise, amongst his creditors whose debts are provable under the law; and provides a machinery for expeditious disposal of his assets amongst those entitled.
The law is calculated to advance the interest of the business community.
On the one hand, it protects the creditors by compelling the insolvent to place all his assets at the disposal of the court without concealing any of his assets.
Similarly it protects the interests of an honest alienee or an honest secured creditor of the insolvent.
On the other hand, it protects an honest debtor from harassment by creditors who may take simultaneous proceedings for realization of their debts from their common debtor even by sending him to civil prison.
It is necessary for the promotion of trade and commerce that an honest debtor should be released from his multifarious obligations as soon as his assets have been placed at the disposal of the court for the benefit of his creditors.
It also lays down penal provisions for punishing a dishonest debtor.
It also makes provisions for saving the debtor and his creditors from the unscrupulous conduct of persons who may have entered into unconscionable bargains with a person who is financially involved.
The law of insolvency is aimed against a dishonest debtor but not necessarily against a debtor who has suffered loss in his trade or business as a result of transactions which may not have been done with due care and attention.
Business sometimes is an adventure and very often involves risks which cannot be easily foreseen even by persons of common prudence.
Annulment proceedings are aimed at transactions between a debtor who has become insolvent and a creditor who, knowing the true state of the debtor 's crashing business, has taken undue advantage of the embarrassed financial position of the debtor.
In view of these considerations, in our opinion, the test of honesty is more appropriate than the test of due care and attention.
It may be added that a General Clauses Act is enacted in order to shorten language used in parliamentary legislation and to avoid repetition of the same words in the course of the same piece of legislation.
Such an Act is not meant to give 278 a hide bound meaning to terms and phrases generally occurring in legislation.
That is the reason why the definition section contains words like "Unless there is anything repugnant in the subject or context.
" Words and phrases have either a very narrow significance or a very wide significance according as the context and subject of the legislation requires the one or the other meaning to be attached to those words or phrases.
The books contain many illustrations showing that the same words have been used in different senses in different contexts.
The significance attaching to the expression " good faith " in the Travancore Cochin General Clauses Act is, in terms of the definition of that phrase in the Indian Penal Code and in the Indian Limitation Act.
The Indian General Clauses Act applies to all legislation after the coming into effect of that Act.
The definition of "good faith" in the Indian General Clauses Act would have been applicable to the Indian Limitation Act also but the legislature in its wisdom has given a special definition of "good faith " different from the one in the Indian General Clauses Act advisedly.
The Indian Penal Code which came into existence earlier than the Indian General Clauses Act contains its own definitions to serve its own special purposes.
The Travancore Cochin General Clauses Act, 1950, of course, applies by virtue of s.2 to all enactments then in force or passed after the commencement of the Act unless there was anything repugnant in the subject or context.
Hence it cannot be said that the definition of " good faith " as contained in the General Clauses Act of 1950 must apply in the same sense to every piece of legislation to which it may apply irrespective of the subject or the context.
The Insolvency Regulation is on the same lines as the and therefore must be understood in the same sense.
If that is the correct approach to the law of in solvency, a secured creditor who has advanced money to a debtor honestly, even though he may not have taken all due precautions, would not come within the mischief of section 35.
It must, therefore, be held that the test of good faith as laid down in the law generally applicable to Indian 279 Statutes is more appropriate to proceedings under the insolvency law.
That being so it must also be held that the courts below have approached the question of bona fides from a wrong standpoint and have applied a wrong test.
Having come to the conclusion that honesty is the test to be applied in judging the bona fides of the creditor, a secured creditor in this case, we have to see how far he has satisfied that test.
In this connection it has to be remembered that it is common ground that the mortgagee had absolutely nothing to do with the mortgagors before the mortgage transaction was concluded.
There is no blood relationship or any other kind of relationship which could be urged as the motive for entering into a dishonest transaction in the sense that the creditor had joined hands with the debtors in screening the property against the claims of the latters ' creditors.
It may be that the debtors were financially involved; but there is no evidence on the record even to suggest that the mortgagee was aware or apprised of their true financial position.
We have no doubt in our mind that if the mortgagee had the least suspicion that he would have to face a prolonged litigation to realise his money from the debtors, he would have been the last person to enter into the transaction in question.
He was certainly interested in earning good interest on his capital.
But that is not the same thing as saying that he had entered into a dishonest deal with persons who were about to crash in their business.
It is also noteworthy that the insolvent 's ancestor had died only about three years before the transaction in question.
During this period of three years they had added to their business by having a file factory and an oil mill.
That is not the conduct of a family which was about to crash.
It may be that they were much too ambitious to become rich quickly.
But it has not been suggested or found that they had indulged in unscrupulous dealings in the way of their business.
At least that was not their reputation at about the time the mortgage transaction was entered into.
Otherwise C.P.W. 6, the Assistant Commissioner of Excise, the mortgagee 's 280 relation, would certainly not have advised them, being their well wisher, to enter into a hazardous transaction.
We have not been shown any evidence which could lead us to believe that the insolvents ' reputation at that time in the way of their trade and business was anything but sound, notwithstanding the ipse dixits of the receiver, the last witness, examined 19 years after the proceedings had started.
It is very easy to be wise after the event.
But there were no indications until August 1924, so far as the mortgagee is concerned, that he was dealing with a party who was about to crash.
Whatever may have been the intentions or the course of conduct of the insolvents, there is nothing to attribute that intention or course of conduct to the mortgagee.
His evidence, as also of his two sons who helped him in entering into this transaction, has impressed us as truthful and straightforward.
Assuming that the courts below were right in applying the test of due care and attention, what is there to show that the mortgagee was wanting in that respect ? Being a complete stranger to the family of the borrowers, he deputed his young lawyer sons to make such enquiries as they could from persons who were expected to know them and their business dealings and after satisfying themselves that the borrowers had a good reputation and had unencumbered properties of much greater value than the sum proposed to be advanced, the mortgage transaction was finalized.
It must be remembered in this connection that even the test applied to a lender while lending money to the karta of a joint Hindu family does not insist upon the creditor seeing to the application of the funds advanced.
In the instant case the borrowers represented to the creditor that they required funds in the way of their business.
Their enquiry yielded the information that they had borrowings to the extent of Rs. 30,000 to Rs. 40,000 and outstanding claims against their debtors to a much larger extent.
That is the state of affairs in a normal trading family.
The fact that all their immovable properties worth, according to the Receiver, more than a lakh and a half rupees till then were unencumbered was another indication of the 281 apparent solvency of the family.
But it has been argued on behalf of the respondent that the mortgagee was put on his enquiry by the very fact that the debtors ' account books disclosed debts against them.
Therefore, it is said, the mortgagee should have pursued his enquiry further.
It was suggested that the business houses in the town of Quilon and the Quilon Bank itself should have been contacted in order to ascertain the financial position of the debtors.
It has already been pointed out that they had no business dealings with that Bank.
The mortgagee 's sons have deposed that they made enquiries of respectable persons named, as also of two leading hundi houses which may have been expected to know about the financial position of the borrowers ' family.
It was further argued that it was not specifically stated in the mortgage bond itself that the money was intended for payment to creditors specifically named.
Ordinarily a trading firm has no fixed list of its creditors or its debtors.
It is always a floating list.
Hence when it was said that money was being borrowed with a view to carrying on the business of the trading family, that was comprehensive enough to include the necessity of paying the outstanding debts of the firm.
Unless the lender had reasons to suspect that the money was not intended for carrying on the business of the firm but was meant to corner the same with a view to defeating or delaying creditors, it would not ordinarily be the look out of the lender dealing at arm 's length to try to pry into the business secrets of the borrower.
In our opinion, therefore, it was not necessary for the lender either to insist upon a list of the borrower 's creditors to be specifically mentioned in the deed or upon paying the money directly to those creditors.
That would be throwing too great a burden on a lender honestly dealing with a trading family and it would be equally an irksome thing for a trading family to be dealt with on those terms.
It cannot, therefore, be said that the lender had not shown such care and attention as a reasonable person in those circumstances would do.
The learned counsel for the respondent further pointed out certain discrepancies in the statements in the 36 282 mortgage deed and in the oral evidence adduced by the mortgagee as pointing to the conclusion that the lender had not been careful and cautious and was therefore wanting in good faith.
Those are very speculative arguments which cannot be the foundation for a finding that the Receiver had succeeded in disproving good faith.
In this connection it was also pointed out that there was no satisfactory evidence as to how the lender raised Rs. 55,000 which he paid soon after the registered mortgage bond was delivered to him.
There is evidence in the shape of an entry in the passbook in the name of the mortgagee issued by a respectable hundi shop in Alleppey, exhibit LXVI (a), showing that Rs. 40,000 was withdrawn by him on August 19, 1924, just the day previous to the date of payment of Rs. 55,000.
It is the mortgagee 's case that he paid the sum of Rs. 55,000 to the mortgagors with the amount of Rs. 40,000 thus withdrawn to which was added Rs. 15,000 which he had with him already.
There is no reason to doubt the truth of this version which has been accepted by the High Court.
It must, therefore, be held that the evidence adduced by the mortgagee apart from the question of burden of proof has affirmatively proved the passing of consideration for the mortgage and that there are no circumstances which could throw any suspicion on the bona fides of the transaction.
It had been argued on behalf of the appellant that his case had been seriously prejudiced by the joint trial, so to say, of the issue relating to his transaction with the one relating to the hypothecation bond dated August 30, 1924.
It was also argued that the mortgage bond in question had been executed and registered and given effect to beyond two years from the date of adjudication and that therefore this transaction could not be brought within the mischief of section 35 of the Insolvency Regulation.
In view of our findings on the other and more direct and important issues it is not necessary to pronounce upon these additional grounds urged on behalf of the appellant.
In view of our findings on the main issues in the case, the appeal must be allowed, the judgments and 283 orders of the courts below annulling the usufructuary mortgage bond in question set aside and the transaction held binding on the estate of the insolvents.
It follows that the lease back to the mortgagors being a part of the same transaction is equally binding on the estate of the insolvents.
The appellant is entitled to his costs throughout, to come out of the estate in the hands of the Official Receiver who must pay his own costs.
Appeal allowed.
| An usufructuary mortgage in favour of the appellant 's predecessor in interest was sought to be annulled by the Official Receiver as having been executed within two years of the adjudication of the mortgagors as insolvents, under section 35(iii) of the Travancore Regulation VIII of 1090 (=1915) as not having been entered into in good faith and for valuable consideration.
By an issue framed in the case the burden of proving affirmatively that the transfer was supported by good faith and valuable consideration was thrown on the transferee.
There was also a preliminary objection by the Receiver that the usufructuary mortgage having been found to be an act of insolvency in the insolvency proceedings, that finding was res judicata between him and the transferee.
The trial judge found in favour of the Receiver.
On appeal by the transferee, the High Court affirmed the order of the trial judge allowing the Receiver 's application for annulment solely on the ground that the appellant had failed to prove his bona fides in the sense that he had entered into the transaction without due care and attention within the meaning of section 2(6) of the Travancore and Cochin General Clauses Act.
Held: that the courts below had erred in placing the onus on the transferee and their orders must be set aside.
It is the settled law in insolvency proceedings that the burden of proving that a particular transaction is not supported by good faith and valuable consideration lies on the Official Receiver who challenges the transaction.
Official Assignee vs Khoo Saw Cheow, , Official Receiver vs P.L.K.M.R.M. Chettyar Firm, (1930) L.R. 58 I.A. 115 and Pope vs Official Assignee, Rangoon, (1933) L.R. 60 I.A. 362, relied on.
Held further, that there was no scope for the application of the principle of res judicata in the instant case as the matter that directly arose for determination in it was whether the impugned transaction was not bona fide or for valuable consideration so far as the transferee was concerned and that was not in issue in the 33 258 insolvency proceedings, nor had he been found in such pro ceedings to be privy to any act of insolvency intended to defeat or delay the creditors.
Mahomed Siddique Yousuf vs official Assignee of Calcutta, (1943) L.R. 70 I.A. 93, considered.
The crucial question for decision in such a case would be whether the transferee was wanting in bona fides in respect of the transfer sought to be annulled and the correct test would be the one of honesty as laid down by section 2(22) Of the Indian General Clauses Act and not that of due care and attention as contemplated by section 2(6) of the Travancore and Cochin General Clauses Act.
|
Summarize this legal judgement text concisely | ions Nos, 95 and 96 of 1957.
311 Petitions under Article 32 of the Constitution of India for the enforcement of Fundamental Rights.
N. C. Chatterjee, Charan Das Puri and Naunit Lal, for the petitioners (in both the petitions).
C. K. Daphtary, Solicitor General of India, Lachman Das Kaushal, Deputy Advocate General for the State of Punjab and T. M. Sen, for the respondents.
September 6.
The following Judgment of the Court was delivered by DAS C.J.
In these two petitions under article 32 of the Constitution of India the petitioners call in question the validity of the Punjab Special Powers (Press) Act, 1956 (being Act No. 38 of 1956), hereinafter referred to as " the impugned Act ", and pray for an appropriate writ or order directing the respondents to withdraw the Notifications issued by them on the two petitioners as the editors, printers and publishers of two newspapers, Pratap and Vir Arjun.
The Daily Pratap was started about 38 years back in Lahore, the capital of the united Punjab.
It is a daily newspaper printed in the Urdu language and ,script.
Since the partition of the country the Daily Pratap is being published simultaneously from Jullundur and from New Delhi Vir Arjun is a Hindi daily newspaper also published simultaneously from Jullundur and from New Delhi.
Virendra, the petitioner, in Petition No. 95 of 1957 is the editor, printer and publisher of the two papers published from Jullundur and K. Narendra is the editor, printer and publisher of the two papers published from New Delhi.
The petitioners allege that after the appointment of the States Reorganisation Commission on December 29, 1953, the Akali party in the Punjab started a campaign for the partition of the State of Punjab on communal and linguistic basis.
According to the petitioners this agitation soon degenerated into a campaign of hatred which threatened the peace of the State.
The petitioners maintain that the Hindu inhabitants of the State belonging to all shades of opinion and also a section of the Sikh community and 312 the Congress Party were strongly opposed to that proposal.
It is in the circumstances reasonable to infer that the Hindus would also indulge in a counter propaganda in the Press and from the platform against the agitation started by the Akali party.
It is admitted that the policy of these two papers, the Daily Pratap and Vir Arjun, has been to oppose the Akali demand for partition of the State of Punjab.
Obviously a good deal of tension was generated in the State by reason of the two bitterly opposing parties trying to propagate their respective ideologies.
About a year back the Congress Party, which is the ruling party, is said to have surrendered to the communal pressure of the Akalies and accepted what has since come to be known as the regional formula.
It was amidst the din and bustle of this ideological war and to prevent and combat any possible activity prejudicial to the maintenance of communal harmony that the Legislature of the State of Punjab found it necessary to pass the impugned Act which received the assent of the President on October 19, 1956, and came into force on the 25th of the same month.
The provisions of the impugned Act, in so far as they are material, may now be referred to.
Section 2 (1) (a) runs as follows: " 2(1) The State Government or any authority so authorised in this behalf if satisfied that such action is necessary for the purpose of preventing or combating any activity prejudicial to the maintenance of communal harmony affecting or likely to affect public order, may, by order in writing addressed to a printer publisher or editor, (a) prohibit the printing or publication in any document or any class of documents of any matter relating to a particular subject or class of subjects for a specified period or in a particular issue or issues of a newspaper or periodical; Provided that no such order shall remain in force for more than two months from the making thereof; Provided further that the person against whom the order has been made may within ten days of the 313 passing of this order make a representation to the State Government which may on consideration thereof modify, confirm or rescind the order;" Section 2(1)(b) authorises the State Government or any authority so authorised in this behalf to require that any matter covering not more than two columns be published in any particular issue or issues of a newspaper or periodical on payment of adequate remuneration and to specify the period (not exceeding one week) during which and the manner in which such publication shall take place.
Clause (c) of section 2(1) authorises the State Government or the delegated authority to impose pre censorship.
Sub section (2) of section 2 enables the State Government or the authority issuing the order in the event of any disobedience of an order made under section 2 to order the seizure of all copies of any publication and of the printing press or other instrument or apparatus used in the publication.
Section 3(1) runs as follows: " The State Government or any authority authorised by it in this behalf, if satisfied that such action is necessary for the purpose of preventing or combating any activity prejudical to the maintenance of communal harmony affecting or likely to affect public order, may, by notification, prohibit the bringing into Punjab of any newspaper, periodical, leaflet or other publication.
" Sub section (2) of section 3 gives power to the State Government or the authority issuing the order, in the event of any disobedience of an order made under section 3, to order the seizure of all copies of any newspaper, periodical, leaflet or other publication concerned.
Section 4 provides punishment for the contravention of any of the provisions of the Act by imprisonment of either description which may extend to one year or with fine up to one thousand rupees or with both.
It appears that on or about May 30, 1957, a movement known as the "save Hindi agitation " was started by a Samiti which goes by the name of Hindi Raksha Samiti.
The Arya Samaj, which claims to be a cultural and religious society, joined this campaign 314 for changing what they conceive to be the objectionable features of the regional formula and the Sachar formula on language.
According to the petitioners the Hindi Raksha Samiti, the sponsor of the " save Hindi agitation " claims that it has the support of practically all sections of the Hindus of the State.
The petitioners who are the editors, printers and publishers of the two newspapers published simultaneously from Jullunder and New Delhi respectively consider that the objectionable clauses of those formulae are not only unjust and unfair to the cause of propagating that national language in the country, but are also a contrivance to secure the political domination of the minority community over the majority.
Admittedly the petitioners have been publishing criticisms and news concerning the agitation which, according to them, are quite fair and legitimate, but they allege that newspapers like Prabhat and Ajit, which support the Akali party in the State have been publishing articles and news couched in a strong and violent language against the " save Hindi agitation " and the Hindu community.
The agitation apparently followed the usual course and pattern of all political agitation of this kind with its attendant demonstrations, slogans and satyagraha by the volunteers and lathi charge by the police.
Eventually on July 10, 1957, the agitation culminated in the " save Hindi agitation " volunteers ' forcible entry into the Secretariat of the Punjab Government at Chandigarh.
It was in these circumstances that the four Notifications complained of were issued.
On July 13, 1957, a Notification under section 2(1)(a) of the impugned Act was issued against the petitioner Virendra, as the editor, printer and publisher of the Daily Pratap published from Jullundar.
It was in the following terms: " Whereas 1, Ranbir Singh, Home Secretary, Punjab Government, authorised by the said Government under section 2(1) of the Punjab Special Powers (Press) Act, 1956, on examination of the publications enumerated in the annexure relating to the " save Hindi agitation " have satisfied myself that action is 315 necessary for combating the calculated and persistent propaganda carried on in the newspaper the Pratap ' published at Jullundar to disturb communal harmony in the State of Punjab; And whereas the said propaganda by making an appeal to communal sentiments has created a situation which is likely to affect public order and tranquillity in the State ; And therefore in pursuance of the powers conferred under sub clause (a) of clause (1) of section 2 of the said Act, 1 prohibit Shri Virendra, the printer, publisher and the editor of 'Pratap ' from printing and publishing any article, report, news item, letter or any other material of any character whatso ever relating to or connected with "save Hindi agitation" for a period of two months from this date.
Sd./ Rome Secretary to Government Punjab.
No: 8472 C(H) 57/14679 " The annexure referred to in the Notifications sets out the headings of fifteen several articles published in this paper between May 30, 1957, to July 8, 1957.
Another Notification in identical terms with an annexure setting forth the heading of sixteen articles published during the same period in Vir Arjun was issued on the same day against Virendra as the editor, printer and publisher of Vir Arjun published from Jullundar.
On July 14, 1957, two Notifications in identical terms were issued under section 3 of the impugned Act against K. Narendra as the editor, printer and publisher of Daily Pratap and Vir Arjun published from New Delhi.
It will suffice to set out the Notification in respect of Daily Pratap which ran as follows: Punjab Government Gazette Extraordinary Published by Authority Chandigarh, Sunday, July 14, 1957.
Home Department Notification The 14th July, 1957, 41 316 No. 8453 C(H) 57/14580: Whereas 1, Ranbir Singh, Home Secretary to Government, Punjab, authorised by the said Government under section 3 of the Punjab Special Powers (Press) Act, 1956, have satisfied myself that it is necessary to combat and prevent the propaganda relating to " save Hindi agitation " carried on in the Pratap with the object of disturbing communal harmony in the State of Punjab and thereby affecting public order; Now, therefore, in exercise of the powers conferred by section 3(1) of the said Act, I do hereby prohibit the bringing into Punjab of the newspaper printed and published at Delhi, from the date of publication of this notification.
" The petitioners contend that both sections 2 and 3 of the impugned Act are ultra vires the State Legislature, because they infringe the fundamental rights of the petitioners guaranteed by articles 19(1)(a) and 19(1)(g) of the Constitution and are not saved by the protecting provisions embodied in article 19(2) or article 19(6).
In the first place it is contended that these sections impose not merely restrictions on but total prohibition against the exercise of the said fundamental rights, for in the case of the Notifications under section 2 there is a total prohibition against the publication of all matters ' relating to or in connection with the " save Hindi agitation " and in the case of the Notifications made under section 3 there is a complete prohibition against the entry and the circulation of the papers published from New Delhi in the whole of Punjab.
There is and can be no dispute that the right to freedom of speech and expression carries with it the right to propagate and circulate one 's views and opinions subject to reasonable restrictions.
The point to be kept in view is that the several rights of freedom guaranteed to the citizens by article 19(1) are exercisable by them throughout and in all parts of the territory of India.
The Notifications under section 2(1)(a) prohibiting the printing and publishing of any article, report, news item, letter or any other material of any character whatsoever relating to or connected with " save Hindi agitation " or those under section 3(1) imposing a ban against the entry 317 and the circulation of the said papers published from New Delhi in the State of Punjab do not obviously take away the entire right, for the petitioners are yet at liberty to print and publish all other matters and are free to circulate the papers in all other parts of the territory of India.
The restrictions, so far as they extend, are certainly complete but whether they amount to a total prohibition of the exercise of the fundamental rights must be judged by reference to the ambit of the rights and, so judged, there can be no question that the entire rights under articles 19(1)(a) and 19(1)(g) have not been completely taken away, but restrictions have been imposed upon the exercise of those rights with reference to the publication of only articles etc.relating to a particular topic and with reference to the circulation of the papers only in a particular territory and, therefore, it is not right to say that these sections have imposed a total prohibition upon the exercise of those fundamental rights.
Learned counsel then urges that assuming these sections impose only restrictions they are, nevertheless, void as being repugnant to the Constitution, because the restrictions are not reasonable.
As regards the right to freedom of speech and expression guaranteed by article 19(1)(a) it is qualified by article 19(2) which protects a law in so far as it imposes reasonable restriction on the exercise of the right conferred by article 19(1)(a) "in the interests of. . . . . . . public order. . .
Likewise the right to carry on any occupation, trade or business guaranteed by article 19(1)(g) is out down by article 19(6) which protects a law imposing "in the interests of the general public" reasonable restrictions on the exercise of the right conferred by article 19(1)(g).
As has been explained by this Court in Ramji Lal Modi vs The State of U. P. (1) the words " in the interests of " are words of great amplitude and are much wider than the words " for the maintenance of ".
The expression " in the interest of " makes the ambit of the protection very wide, for a law may not have been designed to directly maintain the public order or to directly protect the general public against any particular evil and yet it (1) Petition No. 252 of 1955 decided on April 5, 1957.
318 may have been enacted "in the interests of " the public order or the general public as the case may be.
It is against this background, therefore, that we are to see whether the restrictions imposed by sections 2 and 3 can be said to be reasonable restrictions within the meaning of articles 19(2) and 19(6).
The test of reasonableness has been laid down by this Court in The State of Madras vs V. G. Row (1) in the following words: " It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard or general pattern, of reason ableness can be laid down as applicable to all cases.
The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict.
This dictum has been adopted and applied by this Court in several subsequent cases.
The surrounding circumstances in which the impugned law came to be enacted, the underlying purpose of the enactment and the extent and the urgency of the evil sought to be remedied have already been adverted to.
It cannot be overlooked that the Press is a mighty institution wielding enormous powers which are expected to be exercised for the protection and the good of the people but which may conceivably be abused and exercised for anti social purposes by exciting the passions and prejudices of a section of the people against another section and thereby disturbing the public order and tranquillity or in support of a policy which may be of a subversive character.
The powerful influence of the newspapers, for good or evil, on the minds of the readers, the wide sweep of their reach, the modern facilities for their swift circulation to territories, distant and near, must all enter into the judicial verdict and the reasonableness of the restrictions imposed upon (1) ; ,607. 319 the Press has to be tested against this background.
It is certainly a serious encroachment on the valuable and cherished right to freedom of speech and expression if a newspaper is prevented from publishing its own views or the views of its correspondent& relating to or concerning what may be the burning topic of the day.
Our social interest ordinarily demands the free propagation and interchange of views but circumstances may arise when the social interest in public order may require a reasonable subordination of the social interest in free speech and expression to the needs of our social interest in public order.
Our Constitution recognises this necessity and has attempted to strike a balance between the two social interests.
It permits the imposition of reasonable restrictions on the freedom of speech and expression in the interest of public order and on the freedom of carrying on trade or business in the interest of the general public.
Therefore, the crucial question must always be : Are the restrictions imposed on the exercise of the rights under articles 19 (1) (a) and 19 (1) (g) reasonable in view of all the surrounding circumstances ? In other words are the restrictions reasonably necessary in the interest of public order under article 19(2) or in the interest of the general public under article 19(6) ? It is conceded that a serious tension had arisen between the Hindus and the Akalis over the question of the partition of the State on linguistic and communal basis.
The people were divided into two warring groups, one supporting the agitation and the other opposing it.
The agitation and the counter agitation were being carried on in the Press and from the platforms.
Quite conceivably this agitation might at any time assume a nasty communal turn and flare up into a communal frenzy and factious fight disturbing the public order of the State which is on the border of a foreign State and where consequently the public order and tranquillity were and are essential in the interest of the safety of the State.
It was for preserving the safety of the State and for maintaining the public order that the Legislature enacted this impugned Statute.
Legislature had to ask itself the question, who will be 320 the appropriate authority to determine at any given point of time as to whether the prevailing cicumstances require some restriction to be placed on the right to freedom of speech and expression and the right to carry on any occupation, trade or business and to what extent? The answer was obvious, namely, that as the State Government was charged with the preservation of law and order in the State, as it alone was in possession of all material facts it would be the beat authority to investigate the circumstances and assess the urgency of the situation that might arise and to make up its mind whether any and, if so.
, what anticipatory action must be taken for the prevention of the threatened or anticipated breach of the peace The court is wholly unsuited to gauge the seriousness of the situation, for it cannot be in possession of materials which are available only to the executive Government.
Therefore, the determination of the time when and the extent to which restrictions should be imposed on the Press must of necessity be left to the judgment and discretion of the State Government and that is exactly what the Legislature did by passing the statute.
It gave wide powers to the State Government, or the authority to whom it might delegate the same, to be exercised only if it were satisfied as to the things mentioned in the two sections.
The conferment of such wide powers to be exercised on the subjective satisfaction of the Government or its delegate as to the necessity for its exercise for the purpose of preventing or combating any activity prejudicial to the maintenance of communal harmony affecting or likely to affect public order cannot, in view of the surrounding circumstances and tension brought about or aided by the agitation in the Press, be regarded as anything but the imposition of permissible reasonable restrictions on the two fundamental rights.
Quick decision and swift and effective action must be of the essence of those powers and the exercise of it must, therefore, be left to the subjective satisfaction of the Government charged with the duty of maintaining law and order.
To make the exercise of these powers justiciable and subject to the judicial scrutiny will defeat the very purpose of the enactment.
Even in his dissenting judgment in Dr. N. B. Khare vs The State of Delhi (1) Mukherjea, J., conceded that in cases of this description certain authorities could be invested with power to make initial orders on their own satisfaction and not on materials which satisfy certain objective tests.
It is said that the sections give unfettered and uncontrolled discretion to the State Government or to the officer authorised by it in the exercise of the drastic powers given by the sections.
We are referred to the observations of Mukherjea, J., in Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh (2).
That case does not seem to us to have any application to the facts of this case. ' In the first place, the discretion is given in the first instance to the State Government itself and not to a very subordinate officer like the licensing officer as was done in Dwaraka Prasad 's case (supra).
It is true that the State Government may delegate the power to any officer or person but the fact that the power of delegation is to be exercised by the State Government itself is some safeguard against the abuse of this power of delegation.
That apart, it will be remembered that the Uttar Pradesh Coal Control Order, 1953, with reference to which the observations were made, prescribed no principles and gave no guidance in the matter of the exercise of the power.
There was nothing in that order to indicate the purpose for which and the circumstances under which the licensing authority could grant or refuse to grant, renew or refuse to renew, or suspend, revoke, cancel or modify any license under that order and, therefore, the power could be exercised by any person to whom the State Coal Controller might have chosen to delegate the same.
No rules had been framed and no directions had been given on the relevant matters to regulate or to guide the exercise of the discretion of the licensing officer.
That cannot, in our judgment, be said about section 2 or section 3 of the impugned Act, for the exercise of the power under either of these two sections is conditioned by the State Government or the authority authorised by the said Government being satisfied that such (1) (2) ; ,813.
322 action was necessary for the purpose of preventing or combating any activity prejudicial to the maintenance of communal harmony affecting or likely to affect the public order.
As explained by this Court in Harishankar Bagla vs The State of Madhya Pradesh(1), the dictum of Mukherjea, J., can have no application to a law which sets out its underlying policy so that the order to be made under the law is to be governed by that policy and the discretion given to the authority is to be exercised in such a way as to effectuate that policy, and the conferment of such a discretion so regulated cannot be called invalid.
The two sections before us lay down the principle that the State Government or the delegated authority can exercise the power only if it is satisfied that its exercise is necessary for the purposes mentioned in the sections.
It cannot, be exercised for any other purposes.
In this view of the matter neither of these sections can be questioned on the ground that they give unfettered and uncontrolled discretion to the State Government or one executive officer in the exercise of discretionary powers given by the section.
It is next said that an executive officer may untruthfully say, as a matter of form, that he has been satisfied and there is nothing in the section which may prevent him from abusing the power so conferred by these sections.
But, as pointed out in Khare 's case (supra), the, exercise of a discretionary preventive power to be exercised in anticipation for preventing a breach of public order must necessarily be left to the State Government or its officers to whom the State Government may delegate the authority.
No assumption ought to be made that the State Government or the authority will abuse its power.
To make the exercise of the power justiciable will defeat the very purpose for which the power is given.
Further, even if the officer may conceivably abuse the power, what will be struck down is not the statute but the abuse of power.
Reference has been made to the principles enunciated by this Court in Ramesh Thappar vs The, State Of (1) , 386, 387.
323 Madras (1), and applied in Chintaman Rao vs The State of Madhya Pradesh(2), namely, that if the language employed in the impugned law is wide enough to cover restriction both within and outside the limits of constitutionally permissible legislative action affecting the guaranteed fundamental rights and so long as the possibility of the statute being applied for purposes not sanctioned by the Constitution cannot be ruled out, the sections must be struck down as ultra vires the Constitution.
We do not think those principles have any applications the instant case.
It will be remembered that Art.19(2), as it was then worded, gave protection to a law relating to any matter which under mined the security of or tended to overthrow the State.
Section 9(1 A) of the Madras Maintenance of Public Order was made "for the purpose of securing public safety and the maintenance of public order".
It was pointed out that whatever end the impugned Act might have been intended to subserve and whatever aim its framers might have had in view, its application and scope could not, in the absence of limiting words in the statute itself, be restricted to the aggravated form of activities which were calculated to endanger the security of the State.
Nor was there any guarantee that those officers who exercised the power under the Act would, in using them, discriminate between those who acted prejudicially to the security of the State and those who did not.
This consideration cannot apply to the case now under consideration.
Article 19(2) has been amended so as to extend its protection to a law imposing reasonable restrictions in the interests of public order and the language used in the two sections of the impugned Act quite clearly and explicitly limits the exercise of the powers conferred by them to the purposes specifically mentioned in the sections and to no other purpose.
Apart from the limitations and conditions for the exercise of the powers contained in the body of the two sections as hereinbefore mentioned, there are two provisos to section 2(1)(a) which are important.
Under the first proviso the orders made under section 2(1)(a) can only remain (1) ; 42 (2) ; 324 in force for two months from the making thereof.
Further, there is another proviso permitting the aggrieved person to make a representation to the State Government which may, on consideration thereof, modify, confirm or rescind the order.
A power the exercise of which is conditioned by the positive requirement of the existence of the satisfaction of the authority as to the necessity for making the order for the specific purposes mentioned in the section and the effect of the exercise of which is to remain in operation for a limited period only and is liable to be modified or rescinded upon a representation being made cannot, in our opinion, in view of the attending circumstances, be characterised as unreasonable and outside the protection given by article 19(2) or article 19(6).
Under el.(b) of sub section(1) of section 2 also there are several conditions, namely, that the matter required to be published must not be more than two columns, that adquate remuneration must be paid for such publication and that such requirement cannot prevail for more than one week.
A consideration of these safeguards must, in our opinion, have an important bearing in determining the reasonableness of the restrictions imposed by section 2.
The prevailing circumstances which led to the passing of the statute, the urgency and extent of the evil of communal antagonism and hatred which must be combated and prevented, the facility with which the evil might be aggravated by partisan news and views published in daily newspapers having large circulation and the conditions imposed by the section itself on the exercise of the power conferred by it must all be taken into consideration in judging the reasonableness or otherwise of the law and, so judged, section 2 must be held to have imposed reasonable restrictions on the exercise of the rights guaranteed by articles 19(1)(a) and 19(1)(g) in the interest of public order and of the general public and is protected by articles 19(2) and 19(6).
Learned counsel appearing for the petitioner Virendra also maintains that assuming that section 2(1)(a) is valid, the Notifications actually issued thereunder are much too wide in language and cannot be supported.
The 325 operative part of the Notification prevents the petitioner from publishing any article, news item, letter or any other matter of any character whatsoever relating to or connected with the "save Hindi agitation".
It is said that the petitioner cannot even publish a report or a letter from a correspondent against the it save Hindi agitation ".
It cannot publish a report of the statement made on the floor of the House by the Prime Minister deprecating the " save Hindi agitation ".
This argument appears to us to have no real substance.
If the section is good and that is what we hold it to be and that is what, for the purposes of this part of the argument, learned counsel is prepared to assume then the section has conferred on the State Government this power to be exercised if it is satisfied as to the necessity for its exercise for the purposes mentioned in the section.
In other words the exercise of the power is made dependent on the subjective satisfaction of the State Government or its delegate.
If the State Government or its delegate is satisfied that for the purposes of achieving the specified objects it is necessary to prohibit the publication of any matter relating to the " save Hindi agitation " then for the court to say that so much restriction is not necessary to achieve those objects is only to substitute its own satisfaction for that of the State Government or its delegate.
The authority before making the order had applied its mind and had made its estimate of the general trend of the policy of these papers and their possible reactions and had formed its satisfaction as to the necessity for making the orders founded on the several articles published in these papers between May 30, 1957, and July 8, 1957, wherein the petitioner had systematically published matters in support of the agitation and its disapproval of everything which might run counter to that agitation.
It is admitted that the policy of the papers is to support the " save Hindi agitation ".
Therefore, a grievance that the papers are not allowed even to publish anything against the agitation sounds hollow, wholly unconvincing and of no substance at all.
It may not be unreasonable for the Government to hold the opinion, in 326 view of the antecedents and policy of these papers that they will not publish any news or views running counter to their policy without adverse comments.
Further, if there happens to be a change in their policy there will be nothing to prevent the petitioner from making a representation to the State Government asking it to modify its Notifications.
In our view, having regard to the body of section 2(1)(a) and the two provisos thereto, namely, the conditions as to the satisfaction of the authority in respect of certain matters specified in the section, the time limit as to the efficacy of the Notifications and the right to make a representation given to the aggrieved party makes this grievance wholly illusory.
It is said that the Notifications should have been qualified so as to prohibit the publication of any matter relating to the " save Hindi agitation " which was likely to prejudicially affect the public order.
Suppose such a qualification had been super added, then there should be somebody who would have to judge whether any given publication did or did not affect the public order.
If the editor claimed that it did not but the State held that it did who would decide and when ? It would obviously be the court then which would have to decide whether the publication was likely to prejudicially affect the public order.
If the Government exercised the power of seizure to stop the circulation of the offending issue then it would do so at the risk of having to satisfy the court that for preventing the public order being prejudicially affected it was necessary to stop such circulation.
That would be the issue before the court.
Likewise if the Government launched a prosecution under section 4 then also the issue would be the same.
That would obviously defeat the very purpose of the section itself which, for this argument, is accepted as valid.
Thequestion of the necessity for the exercise of the power for the purpose of achieving the specified objects is, having regard to the very nature of the thing and the surrounding circumstances, left by the section entirely to the subjective satisfaction of the Government and if the Government exercises that power after being 327 satisfied that it is necessary so to do for the purposes mentioned in the section and if the Notification is within the section, in the sense that it directs or prohibits the doing of something which the section itself authorises the Government to direct or prohibit, then nothing further remains to be considered.
The ' only issue that can then arise will be whether the Notification has been complied with and the court will only have to decide whether there has been a contravention of the Notification.
To introduce the suggested qualification in the Notification will be to make the exercise of the power which is by the section left to the subjective satisfaction of the Government dependent on an objective test subject to judicial scrutiny.
That, as we have explained, will defeat the very purpose of the section itself.
It is lastly contended that the impugned Notifications have been made mala fide in order only to suppress legitimate criticisms and fair comments on public affairs.
We have perused the articles annexed to the affidavit in opposition and referred to in the Notifications themselves and we are not satisfied that no reasonable person reading those articles could entertain the opinion and feel satisfied that it was necessary to make the order for the purposes mentioned in the section.
We are unable to hold, on the materials before us, that the Notifications issued under s.2 were mala fide.
The observations hereinbefore made as to the safeguards set forth in the provisions of section 2(1)(a) and (b) cannot, however, apply to the provisions of section 3.
Although the exercise of the powers under section 3(1) is subject to the same condition as to the satisfaction of the State Government or its delegate as is mentioned in section 2(1)(a), there is, however, no time limit for the operation of an order made under this section nor is there any provision made for any representation being made to the State Government.
The absence of these safeguards in section 3 clearly makes its provisions unreasonable and the learned Solicitor General obviously felt some difficulty in supporting the validity of this 328 section.
It is surprising how in the same statute the two sections came to be worded differently.
For reasons stated above petition No. 95 of 1957 (Virendra vs The State of Punjab) which impugns the Notifications issued under section 2(1)(a) must be dismissed and petition No. 96 of 1957 (K. Narendra vs The State of Pun ab) which challenges section 3 must be allowed.
In the circumstances of these cases we make no order as to the costs of these applications.
Petition No. 95 of 1957 dismissed.
Petition No. 96 of 1957 allowed.
| These two petitions challenged the constitutional validity of the Punjab Special Powers (Press) Act, 1956 (No. 38 of 1956) passed by the State Legislature in the wake of the serious communal tension that had arisen between the Hindus and the Akali Sikhs over the question of the partition of the State on a linguistic and communal basis.
The petitioners were the editors, printers and publishers, respectively, of the two daily newspapers, Pratap and Vir Arjun, printed and published simultaneously from jullundur and New Delhi, whose admitted policy was to support the "Save Hindi agitation".
Two notifications under section 2(1)(a) of the impugned Act were issued against the editor, printer and publisher of the two papers published from Jullundur by the Home Secretary prohibiting him from printing and publishing any matter relating to the 'Save Hindi agitation ' in the two papers for a period of two months.
Two other notifications in identical terms were issued under section 3(1) of the impugned Act against the other petitioner, the editor, printer and publisher of the two papers in New Delhi prohibiting him from bringing into the Punjab the newspapers printed and published in.
New Delhi from the date of the publication of the notifications.
Unlike section 2(1) of the impugned Act which provided a time limit for the operation of an order made thereunder as also for a representation to be made by the aggrieved person, section 3 of the Act made no such provision.
It was contended on behalf of the petitioners that both the sections were ultra vires the State Legislature inasmuch as they infringed articles 19(1)(a) and 19(1)(g) of the Constitution and were not saved by articles 19(2) and 19(6) of the Constitution.
It was urged that the sections imposed not merely restrictions but a total prohibition against the exercise of the said fundamental rights by prohibiting the publication of all matters relating to the 'Save Hindi agitation ' under section 2(1)(a) and by a complete prohibition of the entry of the two papers into the whole of the Punjab under section 3(1) of the Act, that even supposing 309 that the sections merely imposed restrictions and not a total prohibition, the restrictions were not reasonable, that the sections gave unfettered and uncontrolled discretion to the State Government and its delegate, that the Act did not provide for any safeguard against an abuse of the power, that the language of the sections being wide enough to cover restrictions both within and cutside the limits of constitutionally permissible legislative action they were ultra vires the Constitution and that the notification under section 2(1)(a) of the Act as made would prevent even the publication of anything against the 'Save Hindi agitation ' and should have been restricted to such matters alone as were likely to prejudicially affect the public order.
Held, that the restrictions imposed by section 2(1)(a) of the impugned Act were reasonable restrictions within the meaning of article 19(2) of the Constitution and the petition directed against the notifications issued thereunder must fail, but since section 3 Of the Act did not provide for any time limit for the operation of an order made thereunder nor for a representation by the aggrieved party to the State Government, the restrictions imposed by it were not reasonable restrictions under article 19(6) of the Constitution and the petition directed against the notifications made thereunder must succeed.
Held further, that there can be no doubt that the right of freedom of speech and expression carries with it the right to propagate one 's views and the several rights of freedom guaranteed by article 19(1) of the Constitution are exercisable throughout India but whether or not any restrictions put on those rights amount to a total prohibition of the exercise of such rights must be judged by reference to their ambit.
So judged, the restrictions imposed in the instant cases with regard to the publications relating to only one topic and the circulation of the papers only in a particular territory could not amount to a total prohibition of the exercise of the fundamental rights.
The expression "in the interest of" in articles 19(2) and 19(6) of the Constitution makes the protection they afford very wide and although free propagation and interchange of views are ordinarily in social interest, circumstances may arise when social interest in public order is greater and the imposition of reasonable restrictions on the freedom of speech and expression and on the freedom of carrying on trade or business becomes imperative.
Regard being had to the surrounding circumstances in which the impugned Act was passed, its object, the extent and urgency of the evil it sought to remedy, and the enormous power wielded by the Press, with modern facilities of quick circulation, and the consequence that any abuse of it might lead to, the restrictions imposed by the impugned Act must be held to be reasonable restrictions under the Articles.
The State of Madras vs V. G. Row, ; , followed.
310 It was only in the fitness of things that the State Legislature should have left the wide preventive powers under the sections to the discretion of the State Government, charged with the maintenance of law and order, or to its delegate, to be exercised on their subjective satisfaction.
To make the exercise of these powers justiciable and subject to judicial scrutiny would be to defeat the purpose of the enactment.
Dr. N. B. Khare vs The State of Delhi, ; , referred to.
But such discretion was by no means unfettered and uncontrolled.
The two sections laid down the principle that the State Government or its delegate could exercise such powers only if they were satisfied that such exercise was necessary for the purpose mentioned in the sections and not otherwise.
Where there was any abuse of such powers, therefore, what could be struck down was the abuse itself but not the statute.
Dwaraka Prasad Laxmi Nayain vs The State of Uttar Pradesh, ; , held inapplicable.
Harishankar Bagla vs The State of Madhya Pradesh, , relied on.
In view of the amended provisions of article 19(2) of the Constitution and the language of the two sections limiting the exercise of the powers to the purposes specifically mentioned therein, the principles enunciated by this Court in Ramesh Thappay 's case and applied to Chintaman Rao 's case could have no application to the instant cases.
Ramesh Thappay vs The State of Madras, ; and Chintaman Rao vs The State of Madhya Pradesh, (1950) S.C. R. 759, held inapplicable.
The two provisos to section 2(1)(a) and cl.
(b) of section 2(1) clearly show that the restrictions imposed by section 2 are reasonable restrictions on the exercise of the rights guaranteed by articles 19(1)(a) and 19(1)(g) and are, therefore, protected by articles 9(2) and 19(6) of the Constitution.
There could be no basis for the grievance that the notifica tion under section 2(1)(a) prevented the publication even of matters against the 'Save Hindi agitation '.
If there was a change in the policy of the papers, the time limit provided for the operation of the notifications and the right to make a representation provided ample remedies for the petitioner.
To introduce into the notifications the suggested qualification would be to make the exercise of the powers conferred by the section dependent on an objective test subject to judicial scrutiny and defeat the very purpose of the section.
|
Summarize this legal judgement text concisely | ION: Criminal Appeal No. 5 of 1957.
Appeal by special leave from the judgment and order dated the 6th September, 1955, of the Madras High Court in Crimi nal Appeal No. 498 of 1954 and Criminal Revision Case No. 257 of 1955, arising out of the judgment and order dated the 12th July, 1954 of the Special Judge, Coimbatore in C. C. No. I of 1952.
H. J. Umrigar, H. R. Khanna and R. H. Dhebar, for the appellants.
Krishnaswamy Iyengar and Sardar Bahadur, for the re spondent.
September 26.
The following Judgment of the Court was delivered by KAPUR J. This is an appeal by the State of Madras from the judgment and order of the High Court of Madras reversing the judgment of the Special Judge of Coimbatore and thereby acquitting the respondent who had been convicted of an offence under section 161 Indian Penal Code and sentenced to six months simple imprisonment.
The respondent, Vaidyanatha Aiyer, was at all material times the Income tax Officer of Coimbatore and it is not disputed that he was there in the beginning 582 of June 1951.
According to the prosecution the respondent in the end of September 1951 demanded from K.S. Narayana Iyer (hereinafter referred to as the complainant) who is a proprietor of a "Coffee Hotel" called Nehru cafe in Coimba tore with another similar hotel at Bhavanisagar a bribe of Rs. 1,000.
The complainant had been assessed to income tax all along since 1942.
During the course of assessment for the year 1950 51 it was discovered that he had failed to pay advance income tax.
A notice was therefore issued to him on March 24.
, 1951 under section 28 read with section 18 A (2) of the Income tax Act.
to show cause why a penalty should not be.
imposed for underestimating his income.
For the assessment year 195152 also the complainant in the usual course filed his return on August 11, 1951 and on a notice being issued to him produced his accounts before the Income tax Officer on September 27, 1951.
He again appeared before him on the 28th and the respondent told him that the " penalty papers had.
not been disposed of and that the accounts of the current year had also not been gone through " and asked the complainant to see him at his house on the following morn ing, which the complainant did.
There he was told by the respondent that if he wanted to have his return accepted and to be helped in the matter of penalty proceedings he should pay the respondent Rs. 1,000 as illegal gratification.
The complainant mentioned this fact to his manager and also that he had been told by the Income tax Officer that his accounts were unsatisfactory.
Because he was asked to do so the complainant saw the respondent at the latter 's house on October 6 or 7 and he asked the complainant if he had brought the money and after some talk about the assessment the respondent asked the complainant to pay half the amount as it was Deepavali time.
There is evidence of a defence witness also to show that towards the end of October 1951, the complainant was seen coming from the house of the re spondent though the prosecution and the defence are not in accord as to the purpose of this visit.
583 The Circle Inspector, Munisami P. W. 12, claims to have received complaints while at Madras about the respondent being corrupt and his " indulging in corrupt practices".
He then came toCoimbatoreandgot into touchwith the complain ant and asked him if he had paid anybribetotherespoiident.
The complainant mentioned to the Inspector about the demand of a bribe by the respondent.
At the instance of the In spector the complainant appeared before the Tehsildar Magis trate who recorded his statement P 17 wherein the whole story of the demand of the bribe has been set out.
The Inspector then gave ten one hundred currency notes to the complainant after their numbers were taken down in exhibit P 17.
The complain ant then went to the office of the accused but no money was accepted on that day because the respondent had received an anonymous letter exhibit P 18 warning, him of the trap which was being laid by the Malayalam people.
The respondent naturally got very annoyed with the complainant and sent him.
The same evening the complainant was told that he was required to go to the house of the respond ent on the following morning which he did at 8 a. m.
The respondent told him that he should take no notice of the anonymous letter which must have been sent by his enemies and asked him to pay some money.
The complainant paid a sum of Rs. 200 which on his return he entered in his kacha account book which the High Court has rejected without sufficient reason.
On the evening of November 15, the complainant again went to the house of the respondent and the latter told him that he would pass final orders and that money should be paid.
The record, P 7 and P 7 (a), shows that an order was dictated on November 13 although there is no proof or even indication that the complainant knew about it.
The complainant was given 8 one hundred rupee notes by the Inspector and the complainant paid them to the respond ent on the morning of November 17 at the latter 's house.
On this occasion the complainant accompanied by his manager P. W. 14 had gone towards the house of the respondent along with the Magistrate and Circle Inspector and Venkates, lyer 584 P. W. 14 in a car which was stopped three or four blocks away from the house of the respondent and only the complain ant and his manager went into the respondent 's house and paid the money.
Two or three minutes later the Inspector P. W. 12 and the Magistrate P. W. 13 and one Sesha Ayyar who had joined the party en route also came into the house on receiving the signal from the complainant.
They disclosed their identity to the respondent and told him that they had information that he had received Rs. 800 from the complain ant as illegal gratification and asked him to produce the money which he had received from the complainant.
The respondent did not say anything and got up from the chair on which he was sitting and tried to go into the house but was prevented from doing so by the Inspector and he then pro duced the money from the folds of his dhoti.
While the mahazar was being prepared the respondent said that he bad received this money as a loan from the complainant who denied this and said it had been paid as a bribe.
A tele gram was then sent to the Superintendent of Special Police Establishment and under his orders a case was registered and the investigation was then taken up by a Deputy Superintend ent of Police who searched the house of the respondent on November 19 but no pronote seems to have been received or taken into possession on that date.
A pronote with four anna stamps affixed was later produced in the court by the respondent on July 17,1952 during the course of his state ment under section 342 Criminal Procedure Code but it was not mentioned to the Magistrate P. W. 13 by the respondent.
The charge against the respondent was that he had obtained from the complainant Rs. 800 as gratification other than legal remuneration as a motive for the reward for showing favour to him in the exercise of official functions and had thereby committeed an offence punishable under section 161 of the Indian Penal Code read with a. 4 of the Prevention of Cor ruption Act (Act II of 47).
The explanation of the respondent was that be men tioned to the complainant about his money difficulties 585 when accidentally he met him on the road towards the end of August or beginning of September 1951.
The complainant offered to lend him Rs 1,000/ .
At that time he was not aware that the complainant had an assessment pending before him.
It was the complainant who told him on November 15 when he met him again that the anonymous letter was the " 'work of his enemies" and promised to advance the loan as previously promised and he also suggested that the respond ent should execute a pronote for Rs. 1,000 which would be attested by Venkatesa Ayyar to which he (the respondent) was agreeable.
The complainant paid Rs. 800 on the morning of November 17 and promised to pay Rs. 200 in the evening.
The respondent had the pronote ready and offered to hand it over in the morning but the complainant said he would take it when " he left the house ".
The learned Special Judge accepted the story of the prosecu tion and after a careful analysis of the evidence found the respondent guilty of the offence charged and sentenced him to six months simple imprisonment.
On appeal being taken to the High Court the learned Single Judge reversed the judgment and acquitted the respondent.
It will be convenient to give here the main findings of the learned judge in his own words: (i)" It is true that at the time when the money was accepted by The accused, the proceedings in relation to assessment of income tax on P. W. 8 were pending before the accused.
Naturally, therefore, if in such circumstances, the accused should receive money from an assessee, the suspicion is readily aroused that the money must have been paid only as an illegal gratification.
On going through the judgment of the learned trial Judge, I formed the impression that he was totally influenced by such suspicion." (ii)" The result is that if the version of P. W. 8 and thatof the accused are balanced, the probability seems totilt the scale in favour of the accused 's version.
In any case, the evidence is not enough to show that the explana tion offered by the accused 586 cannot reasonably be true, and so, the benefit of doubt must go to him." (iii)" But this was not a case of ordinary lendee, but an Income tax Officer whose favour was needed by the lender.
(iv)"Evidence shows that in November, 1951, the accused was in need of a sum of Rs. 1,000 and, for that purpose, has asked P.W. 8 for a loan." (v)" In my view, the evidence does not necessarily make out a case that the accused must have accepted the money only as a bribe. " (vi)" I do not therefore feel certain that the taking of a loan with an obligation to repay it with interest, would fall within the meaning of the term I gratification '.
" The extent of the power of the Supreme Court to interfere with a judgment of acquittal was raised before us by the respondent 's counsel and it was contended that the jurisdic tion exercised by this court under article 136 was the same as that exercised by the Judicial Committee of the Privy Coun cil and reliance was placed on a minority judgment by Venka tarama Aiyar J. in Aher Raja Khima vs The State Of Saurash tra(1) where the learned judge after discussing the various Privy Council judgments and quoting a passage from the judgment of this court in Pritam Singh vs The State(2) observed: " The preceding article referred to in the opening passage is clearly article 134.
Article 134(1) confers a right of appeal to this court in certain cases, in terms unqualified, on questions both of fact and law, and if the scope of an appeal under Article 136 is to be extended likewise to questions of fact, then article 134(1) would become super fluous.
It is obvious that the intention of the Constitu tion in providing for an appeal on facts under Article 134(1)(a) and (b) was to exclude it under Article 136, and it strongly supports the conclusion reached in Pritam Singh vs The State (3)that like the Privy Council this Court would not function as a further court of appeal on facts in crimi nal cases. " (I) [1955]2 S.C.R. 1285, 1301.
(2) ; , 458, 587 The State of Madhya Pradesh vs Ramakrishna Ganpatrao Limsey (1) was also referred to by counsel for the respondent and it was contended that the Supreme Court should not interfere with the order of the High Court merely on the ground that it took a different view of the facts.
That was an appeal which had been brought on a certificate by the High Court and not by Special Leave of this Court.
That judgment was considered by a Constitution Bench in State of Madras vs Gurviah Naidu & Co., Ltd. (2) and section R. Das, Acting C.J., delivering the judgment of the court pointed out that that was a decision of a bench of three judges and not of a Constitution bench and the observation that there was no provision corresponding to section 417 of the Criminal Procedure Code only emphasised that this Court should not in appeal by Special Leave interfere with the order of acquittal passed by the High Court merely for correcting errors of fact or of law.
Gurviah Naidu 's case (2) was an appeal against a judgment of acquittal and this court reversed the judgment saying: " In our view, the High Court erred in holding that the prosecution had failed to establish their case and in ac quitting the accused.
This case negatives the contention that under article 136 interference by this court with findings of High Courts in judgments of acquittal is not intended.
Even in State of Madhya Pradesh vs Ramakrishna Ganpatrao (1) Mahajan J. was of the opinion that the Supreme Court can interfere where the High Court "acts perversely or otherwise improperly or has been deceived by fraud.
" In Pritam Singh vs The State (3) Fazl Ali J. after a careful examination of article 136 along with the preceding articles stated the scope of the appeal under article 136 to be: " Generally speaking, this court will not grant special leave, unless it is shown that exceptional and special circumstances exist, that substantial and grave injustice has been done and that the case in question (i) (2) A.I.R. 1956 S.C. 158, 161. 75 (3) ; 458.
588 presents features of sufficient gravity to warrant a review of the decision appealed against.
Even the Privy Council in laying down the permissible limits for review in criminal matters included things " so irregu lar or so outrageous as to shock the very basis of justice ".
See Mohinder Singh vs The King (1).
An instance of this principle is the decision of the Privy Council in Stephen Seneviratne vs The King (2) which will be discussed later in this judgment and which has been approved of by this court.
Interpreting the following words of section 205 of the Government of India Act, 1935, "any judgment, decree or final order of a court " and " it shall be the duty of every High Court in British India to consider in every case ", Lord Thankerton in King Emperor vs Sibnath Bannerji (3) said : "The purpose of the provision is to confer a right of appeal in every case that involves a substantial question of law as to the interpretation of the Act or of any Order in Council made thereunder.
" One of the questions for decision in that case was whether an appeal lay in cases of habeas corpus.
Lord Thankerton there observed : " In the absence of an express exception of habeas corpus cases, and having in view the terms and purpose of the section, their Lordships are unable to limit tile terms of the section by mere construction so as to exclude these cases from its operation.
" In article 136 the use of the words " Supreme Court may in its discretion grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the terri tory of India " show that in criminal matters no distinction can be made as a matter of construction between a judgment of conviction or acquittal.
In Bhagwan Das vs The State of Rajasthan(4) the following, observation of the Judicial Committee of the Privy Council in Stephen Seneviratne vs The King(2) at p. 299: (1) (I932) L.R. 59 I.A. 233, 235.(3) (1945) L.R. 72 I.A. 241, 255.
(2) ; A.I.R. 1936 P.C. 289.(4) 589 ". . 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. . " was quoted with approval and after an examination of all the facts and circumstances of the case the Supreme Court re versed the judgment of conviction by the High Court under article 136.
The question for decision in the present case is whether it falls within the limits laid down in the above mentioned cases.
This court will not readily interfere with the findings of fact given by the High Court but if the High Court acts perversely or otherwise improperly interference will be called for.
The findings of the High Court in the present case are, to say the least, halting, and the approach to the whole ques tion has been such that it falls within what Mr. Justice Mahajan in State of Madhya Pradesh vs Ramakrishna Ganpatrao (1) described as " acting perversely or otherwise improperly ".
Although the learned High Court Judge has in the begin ning of the judgment mentioned the presumption which arises under section 4 of the Prevention of Corruption Act (II of 1947), the following passage in the judgment: " in any case, the evidence is not enough to show that the explanation offered by the accused cannot reasonably be true, and so, the benefit of doubt must go to him, " is indicative of a disregard of the presumption which the law requires to be raised under section 4.
The relevant words of this section are: " Where in any trial of an offence punishable under section 161 . . . it is proved that an accused. . person has accepted. . . any gratification (other than legal remuneration). . from any person,it shall be presumed unless thecontrary is proved that he accepted . . . that gratifica tion as a motive or reward such as is mentioned in the said section 161 . . . . ." Therefore where it is proved that a gratification has been accepted, then the presumption shall at once arise (i) A.1.R. 1054 S.C. 20.
590 under the section.
It introduces an exception to the gener al rule as to the burden of proof in criminal cases and shifts the onus on to the accused.
It may here be mentioned that the legislature has chosen to use the words ' shall presume ' and not 'may presume ', the former a presumption of law and latter of fact.
Both these phrases have been de fined in the Indian Evidence Act, no doubt for the purpose of that Act, but section 4 of the Prevention of Corruption Act is in part materia with the Evidence Act because it deals with a branch of law of evidence, e.g., presumptions, and there fore should have the same meaning. " Shall presume" has been defined in the Evidence Act as follows: " Whenever it is directed by this Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved.
" It is a presumption of law and therefore it is obligatory on the court to raise this presumption in every case brought under section 4 of the Prevention of Corruption Act because unlike the case of presumptions of fact, presumptions of law constitute a branch of jurisprudence.
While giving the finding quoted above the learned judge seems to have disre garded the special rule of burden of proof under section 4 and therefore his approach in this case has been on erroneous lines.
The judgment also shows that certain salient pieces of evidence were missed or were not properly appreciated.
At the time when the penalty notice was issued under section 28 of the Income tax Act the respondent was not the Income tax Officer at Coimbatore but by June 6, he had been posted at Coimbatore and the note on the Penalty File dated June 6,1951: "put up proposal to I.A.C. for levy of standard penalty," was made by him.
Although this proposal was made on June 6, 1951, it is not clear as to what final orders were passed in these proceedings and when.
At least there is nothing to indicate that any intimation was given to the complainant in regard to this matter.
The complainant has stated on oath as P.W. 8: 591 " I alone went to the accused on 28th September, 1951.
He then told me that the penalty paper was not disposed of and that the accounts for the current year had not also been gone through.
" On the day following this the respondent asked the complain ant for illegal gratification of Rs. 1,000.
Counsel for the respondent contended that there was no occasion for the respondent to say anything about the penalty proceedings because as far as he was concerned the recommendation had already been made by him but the real question is whether the complainant was told as to what had happened or had any knowledge of this.
He states that he had none and there is nothing to indicate that he bad.
The respondent has then stated that the complainant was known to him since 1942 when he, the respondent, was the Head Clerk of the Appellate Assistant Commissioner of In come tax and that is the reason why towards the end of August or the beginning of September when be casually met the complain.
ant on the road, he told him that he was in financial difficulties and the complainant offered him a loan of Rs. 1,000 to be returned in easy instalments and that he did not know at that time that the complainant was an assessee before him.
This statement of the respondent has been accepted by the High Court without considering the following important facts.
Notice was issued to the com plainant and he filed his return on August 11, 1951.
The notice must have been issued to the complainant under a. 22(2) of the Income tax Act by the respondent himself as he was at that time the Income tax Officer.
So it is difficult to believe his statement about his not knowing that the complainant was an assessee before him and it is improbable that the respondent would mention his financial troubles to a more or less casual acquaintance who has neither been shown to be a banker, nor a money lender nor a wealthy person.
The complainant has stated that he visited the respondent on 6th or 7th October, 1951, when he asked him if he had brought the money.
The complaint replied that he had no money to spare as he had purchased a house 592 and he also asked him if the respondent had finished the assessment.
The latter 's reply was that he would look into the matter and also told him that the complainant might pay half the amount (of the illegal gratification) before the deepavali time.
This statement the respondent has denied but the statement of the complainant as to his having no money as he had purchased a house has not been seriously challenged in cross examination.
The complainant had been asked to produce the accounts and be did produce them on September 27.
The notes made by the respondent in P 7 and P 7(a) show that the accounts of the complainant were not being accepted in regard to Coimbatore Hotel.
The portion of the order was : " All the defects that are usual in hotel accounts exist here.
" In regard to Bhavanisagar hotel the note stated: : " Purchases are not fully supported and sales are reckoned from till takings." On October 1, 1951, the assesses had filed his written statement and also some other documents.
Nothing more seems to have been done till November 7, when the relevant part of the note on the file is: "I have been keeping this in order to compare the results with other nearby hotels.
" As to why no enquiries could be made in the whole of this period is not clear from the assessment record and it ]ends support to the prosecution case that the respondent was making approaches to the complainant to get money from him.
The respondent during the pendency of assessment proceedings of the complainant allowed the complainant to visit him at his house and even paid visit to his cafe.
Even according to the findings of the High Court the complainant was "needing the favours" of the respondent who on his own showing was himself in dire need of a thousand rupees as he had succeeded in collecting only a thousand rupees by November2, and needed twice that amount for his son 's premi um or security as he chooses to call it.
No importance was attached to this aspect of the case by the learned 593 judge of the High Court.
In our opinion the learned trial judge correctly appreciated this part of the prosecution case and his judgment is not, as tile High Court has said, coloured by nere suspicion.
On November 6, 1951, Circle Inspector Munisami contacted the complainant and arrangement was made for Rs. 1,000 to be paid by the complainant to the respondent and the money was actually taken by the complainant and offered to the re spondent on November 8 which the respondent did not accept as he had received an anonymous letter exhibit P 18 which was dated November 6, 1951 in which the respondent had been warned that Malayalam people were attempting to "ruin him".
In spite of this warning the respondent continued to have truck with the complainant and actually accepted Rs. 800 from him.
It is true that when soon after the money was paid and the Inspector P. W. 12 and the Magistrate P.W. 13 arrived at the house of the respondent and asked him about this money he stated that he had taken it as a loan but in the context it assumes a different complexion.
The state ment of the Magistrate P.W. 13 was: " While the mahazar.
was being prepared the accused volun teered and told me that he had received the 800 rupees as a loan from P.W. 8 the complainant.
" This witness had also stated that when he went into the verandah of the house, he asked the respondent whether he had received an illegal gratification from the complainant and also asked him to produce the money.
The accused did not say anything but got up from the chair and tried to go inside the house which he was prevented from doing by the Inspector P. W. 12.
The witness added: " The accused was seen trembling and meddling with something under the towel.
I asked the accused to remove the towel.
The accused removed the towel.
I saw some bulging at his waist in the dhoti be was wearing.
I asked him again to produce the currency notes.
He produced them from the folds of the dhoti be was wearing.
When producing the currency notes the accused did not say anything." 594 No real cross examination was directed against these por tions of the statement of the Magistrate P.W. 13 nor has the High Court correctly appreciated them or given them due weight.
The respondent produced before the Special First Class Magistrate on July 11, 1952, an unsigned promote for Rs. 1,000 executed by him in favour of the complainant.
That promote was not found in the house when the search was made by the Deputy Superintendent of Police on November 19, 1951, and it is not explained why the promote should have been made for Rs. 1,000 when actually the amount paid was only Rs. 800 and why the respondent offered to give this promote to the complainant without receiving full considera tion.
These salient features of the case do not seem to have been properly appreciated or given due weight to by the High Court and in our opinion the learned judge 's approach to the question whether the sum of Rs. 800 was an illegal gratifi cation or a loan is such that the judgment falls within the words of Mahajan J. in Ramakrishna 's case (1), i.e. that the High Court has acted perversely or otherwise improperly.
The evidence and the circumstances lead to the conclusion that the transaction was not one of loan but illegal grati fication.
In view of the finding that the sum of Rs. 800 was a bribe and not a loan it is not necessary to consider whether in this case the loan would be an illegal gratification within section 4 of the Prevention of Corruption Act (II of 1947) or not.
We would, therefore, allow this appeal, set aside the judg ment and order of the High Court of Madras and restore that of the Special Judge of Coimbatore convicting the respondent of the offence he was charged with.
The respondent must surrender to his bail bond.
Appeal allowed.
| Respondent, an Income tax Officer, called an assessee to his house and took a sum of Rs. 800 from him.
Immediately afterwards a search was made and the respondent, after some evasion, produced the money.
The respondent 's defence was that he had taken the money as a loan and not as illegal, gratification.
The Special judge who tried the respondent found him guilty under section 16i, Indian Penal Code, and sen tenced him to six months simple imprisonment.
On appeal, the High Court acquitted the respondent.
The State obtained special leave and appealed.
Held, that the words used in article I36 of the Constitution show that in criminal matters no distinction can be made as a matter of construction between a judgment of conviction and one of acquittal.
The Supreme Court will not readily interfere with the findings of fact given by the High Court but if the High Court (i) A.I.R. (1954) S.C. 680.
581 acts perversely or otherwise improperly interference will be called for.
The findings of the High Court are halting and its approach to the case has been erroneous as it disregarded the special rule of burden of proof under section 4 Of the Prevention of Corruption Act (II Of 1947).
The judgment of the High Court shows that certain salient pieces of evidence were missed or were not properly appreciated.
In this situation the Supreme Court can interfere in an appeal by special leave.
Where it is proved that a gratification has been accepted, the presumption under s 4 Of the Prevention of Corruption Act shall at once arise.
It is a presumption of law and it is obligatory on the Court to raise it in every case brought under section 4.
The evidence and circumstances in this case lead to the conclusion that the transaction was not one of loan but of illegal gratification.
|
Summarize this legal judgement text concisely | ON: criminal Appeal No. 184 of 1956.
Appeal. from the judgment and order dated October 15, 1956, of the former Nagpur High Court in Criminal Appeal No. 205 of 1956 and Criminal Reference No. 15 of 1956, arising out of the judgment and order dated July 10, 1956, of the First Additional District Judge, Nagpur in Sessions Trial No. 34 of 1956.
554 J. N. Banerjee and P. C. Agarwala, for the appellant.
Jindra Lal and R.H.Dhebdr, for the respondent.
September 25.
The following Judgment of the Court was delivered by SINHA J.
This appeal on a certificate of fitness under article 134(1)(c), granted by the High Court at Nagpur (as it then was), is directed against the concurrent judgment and orders of the courts below, so far as the appellant Khushal is concerned, convicting and sentencing him to death under section 302, Indian Penal Code, for the pre meditated murder of Baboolal on the night of February 12, 1956, in one of the quarters of the city of Nagpur.
It appears that there are two rival factions in what has been called the Mill area in Nagpur.
The appellant and Tukaram who has been acquitted by the High Court, are the leaders of one of the factions, and Ramgopal, P.W. 4, Inaya tullah, P.W. 1, and Tantu, P.W. 5, are said to be the lead ers of the opposite faction.
Before the time and date of the occurrence, there had been a number of incidents between the two rival factions in respect of some of which Inayatul lah and Tantu aforesaid had been prosecuted.
Even on the date of the occurrence, apart from the one leading to the murder of Baboolal, which is the subject matter of the present appeal, Tantu and Inayatullah had made two separate reports about the attacks on them by Khushal 's party.
There was another report lodged by Sampat one of the four persons placed on trial along with the appellant, for the murder of Baboolal.
That report was lodged at Ganeshpeth police station at about 9.30 p.m. on the same date February 12, 1956 against Inayatullah alias Kalia and Tantu, that they had attacked the former with sharp edged weapons (exhibit P 26).
The prosecution case is that the appellant Khushal was on bad terms with Baboolal who was on very friendly terms with the leaders of the opposite faction aforesaid.
Being infuriated by the conduct of Baboolal in associating with the enemies of the party of the accused, Sampat, Mahadeo, Khushal and Tukaram 555 suddenly attacked Baboolal with swords and spears and in flicted injuries on different parts of his body.
The occur rence took place in a narrow lane of Nagpur at about 9 p.m. Baboolal was taken by his father and other persons to the Mayo hospital where he reached at about 925 p.m.
The doctor in attendance Dr. Kanikdale (P.W. 14) at once questioned him about the incident and Baboolat is said to have made a statement to the doctor which the latter noted in the bed head ticket (exhibit P 17) that he had been assaulted by Khu shal and Tukaram with swords and spears.
After noting the statement aforesaid, of Baboolal, the doctor telephoned to the Ganeshpeth police station where the information was noted at 9.45 p.m.
On receiving the information, Sub Inspec tor A. K. Khan recorded 'exhibit P 1) and registered an offence under section 307, Indian Penal Code, and immediately went to the Mayo hospital along with a head constable and several con stables.
He found Baboolal in a serious condition and suspecting that he might not survive and apprebending that it might take time for the magistrate to be informed and to be at the spot, to record the dying declaration, he consult ed Dr. Ingle, the attending doctor, whether Baboolal was in a fit condition to make a statement.
The doctor advised him to have the dying declaration recorded by a magistrate.
The Sub Inspector decided that it would be more advisable for him to record the dying declaration without any delay.
Hence, he actually recorded Baboolal 's statement in answer to the questions put by him (exhibit P 2) at 10 15 p.m.
In the meantime, Shri M. section Khetkar, a magistrate, first class, was called in, and he recorded the dying declaration (exhibit P 16) between 11 15 and 11 35 p.m. in the presence of Dr. Ingle who certified that he had examined Baboolal and had found him mentally in a fit condition to make his dying declara tion.
Besides these three dying declarations recorded in quick succession, as aforesaid, by responsible public serv ants, Baboolal is said to have made oral statements to a number of persons, which it is not necessary to set out because the High Court has not acted upon those oral dying declarations.
We 71 556 shall have to advert, later, to the recorded dying declara tions in some detail, in the course of this judgment.
It is enough to say at this stage that the courts below have founded their orders of conviction of the appellant mainly on those dying declarations.
Baboolal died the next morning at about 10 a.m. in hospital.
Having come to know the names of two of the alleged assail ants of Baboolal from his recorded dying declarations, the police became busy apprehending those persons.
They could not be found at their respective houses.
The appellant was arrested four days later in an out house locked from out side, of a bungalow on Seminary Hill in Nagpur.
The other person named as one of the assailants, Tukaram, was arrested much later.
The prosecution case is that these persons were absconding and keeping out of the way of the police.
After investigation and the necessary inquiry, four persons were placed on trial and the appellant was one of them.
The Additional Sessions Judge acquitted two of them and convict ed the remaining two the appellant and Tukaram under section 302.
Indian Penal Code, or in the alternative, tinder section 302, read with section 34, Indian Penal Code.
He sentenced the appel lant to death because in his opinion, he had caused Baboolal 's death intentionally, and there were no extenuat ing circumstances.
He sentenced Tukaram to imprisonment for life, because in the learned Judge 's view of the case, Tukaram had acted under the instigation of the appellant.
Accordingly, the learned Additional Sessions Judge made a reference to the High Court for confirmation of the sentence of death.
That reference was heard along with the appeal filed by the condemned prisoner.
The reference, the appeal by the convicted accused persons, as also the appeal by the Government of Madhya Pradesh, against the two accused per sons who had been acquitted by the learned trial Judge, and the revisional application for enhancement of sentence passed upon Tukaram, also filed by the State Government, were all heard together and disposed of by one judgment, 557 by a Bench consisting of Hidayatullah C. J. and Mangalmurti J. The High Court, apparently with a view to understanding the evidence adduced in the case on behalf of the parties, made a local inspection on September 17, 1956, and recorded their impressions in a note which forms part of the record of the High Court.
In a very well considered judgment, the High Court, by its judgment and orders dated October 13, 1956, acquitted Tukaram, giving him the benefit of the doubt caused chiefly by the fact that in the dying declaration (exhibit P 16) recorded by the magistrate as aforesaid, he has been described as a Teli, whereas Tukaram before the Court is a Kolhi, as stated in the charge sheet.
The doubt was further accentuated by the fact that there were three or four persons of the name of Tukaram, residing in the neigh bourhood and some of them are Telis.
The High Court exam ined, in meticulous details, the evidence of the eye wit nesses Inayatullah, P.W. 1, and Sadashiv, P.W. 3, and agreed with the trial Judge in his estimate of their testimony that those witnesses being partisan, their evidence could not be relied upon, to base a conviction.
The High Court went further and came to the. conclusion that their evidence being suspect, could not be used even as corroboration, if corroboration was needed of the three dying declarations made by Baboolal, as aforesaid.
They upheld the conviction and sentence of the appellant on the ground that the dying declarations were corroborated by the fact that the appel lant had been absconding and keeping out of the way of the police, and had been arrested under very suspicious circum stances.
These circumstances and the alleged absconding by Tukaram were not so suspicious.
as to afford corroboration against him.
In that view, the High Court " very reluctant ly " gave the benefit of the doubt to Tukaram and allowed his appeal.
The High Court also agreed with the trial Judge in acquitting the other two accused persons Sampat and Maha deo because these two persons had not been named in the dying declarations, and the oral testimony was not of such a character as to justify conviction.
Accordingly, the Gov ernment appeal and 558 application in revision were dismissed.
As against the appellant, the reference made by the learned trial judge was accepted and his appeal dismissed.
Thus, under the orders of the High Court, only the appellant stood convicted on the charge of murder with a sentence of death against him.
He moved the High Court for a certificate under article 134(1)(c) of the Constitution, and the High Court granted a " certifi cate of fitness ".
Hence, this appeal.
At the outset, we must repeat what this Court has observed in a number of appeals coming up to this Court on certifi cates of fitness granted by High Courts, mainly on questions of fact.
The main ground for the grant of the certificate may be reproduced in the words of the High Court itself: "The main ground is that there is not enough evidence against the accused and that there is an error in our judg ment in holding that there was no evidence to show that Khushal whose absconding has been held to corroborate the dying declaration, was involved in a liquor case.
During the course of the argument neither side drew our attention to the documents which were in the record; nor was any point made of it, though we questioned why the absconding should not be taken into consideration.
Now it seems that there are one or two defence exhibits in which it has been shown that Khushal was not found in his house when he was wanted in a liquor case after a search on 5th February, 1956.
In view of the fact that there is this error and the sufficien cy of the evidence might be a matter for consideration in the light of this additional evidence, we think this is a fit case for a special certificate under article 134(1)(c) of the Constitution.
" It is clear that the High Court granted the certificate of fitness under article 134(1)(c) of the Constitution not on any difficult question of law or procedure which it thought required to be settled by this Court, but on a question which is essentially one of fact, namely, whether there was sufficient evidence of the guilt of the accused.
The latest reported case of this Court, bearing on this aspect of this appeal, is Haripada 559 Dey vs The State of West Bengal(1), to the effect that a High Court exceeds its power of granting a certificate of fitness under that article if the certificate discloses that the main ground on which it was based related to a question of fact, and that the High Court is not justified in sending up such a case for further consideration by this Court which does not, ordinarily, concern itself with deciding mere questions of fact unless such questions arise on a certifi cate granted under cls.
(a) or (b) of article 134 (1) of the Constitution.
In other words, this Court does not function ' ordinarily, as a Court of Criminal Appeal.
Under the Con stitution, it has the power, and it is its duty, to hear appeals, as a Regular Court of Appeal, on facts involved in cases coming up to this Court on a certificate under article 134(1)(a) or (b).
To the same effect are the other deci sions of this Court, referred to in the reported decision aforesaid, for example, Narsingh vs The State of Uttar Pradesh (2) Baladin vs The State of Uttar Pradesh(3) sunder Singh vs State of Uttar Pradesh(4) It is, therefore, incumbent upon the High Courts to be vigilant in cases coming up before them, by way of an appli cation for a certificate of fitness under article 134(1) (c) of the Constitution.
In view of these considerations, it has got to be held that the certificate of fitness granted by the High Court does not satisfy the requirements of article 134(1)(c) of the Con stitution.
The appeal on such a certificate has, therefore, to be dismissed in limine; but we have to satisfy ourselves whether there are such grounds as would justify this Court in granting special leave to appeal to this Court, if the appellant had approached this Court in that behalf.
We have, therefore, examined the record of this case from that point of view.
It appears from the judgments of the courts below that the prosecution case rests mainly upon the three dying declarations of Baboolal who died shortly after making those statements as to his assailants, in quick succession within about two and a half hours of the (1) [I956] S.C.R. 639.
(2) [1955] i S.C.R. 238.
(3) A.I.R. 1956 S.C. 181.
(4) A.I.R. 1956 S.C.411.
560 occurrence indeed, the first one to the doctor, was made within half an hour; as also upon the evidence of two per sons Inayatullah, P.W. I and Sadashiv, P.W. 3, who figure as eye witnesses, and Trimbak, P.W. 2 and Ramgopal, P.W. 4, who claimed to have turned up in the nick of time, to witness the last stages of the occurrence.
Though the trial Judge did not disbelieve the oral testimony of the witnesses aforesaid, and only insisted upon corroboration, the High Court was more pronounced in its view that the testimony of those four witnesses was not trustworthy.
The High Court has discussed their evidence in great detail, and was not prepared to accept any part of their testimony on the ground that they were strongly partisan witnesses and that they did not come to the rescue of the victim of the murderous as sault if they were really in the neighbourhood of the place of the occurrence, as claimed by them.
If we had to assess the value of that body of oral evidence, we may not have come to the same conclusion, but we proceed on the assump tion that the High Court is right in its estimate of the oral testimony adduced on behalf of the prosecution.
After discussing all that evidence, the High Court took the view that it could not place any reliance on the oral testimony of what Baboolal had spoken to P.Ws. 2 and 19 when they deposed that Baboolal had named two of his assailants, namely, the appellant and Tukaram.
The High Court reiied upon the three dying declarations recorded at the hospital first, by the attending doctor, second, by the Sub Inspector of police and the third, by the magistrate, first class, between 9 25 and 11 35 p. m.
As regards authenticity of the record of those three statements of the deceased, the High Court had no doubt, nor has any doubt been cast upon them by counsel for the appellant.
The High Court then considered the question whether the conviction of the accused could be based on those dying declarations alone.
It pointed out that in that High Court as also in other High Courts, con victions on dying declarations alone had been rested if the Court was satisfied that the dying declaration was true and, therefore, could be acted upon.
But the decision of 561 this Court in Ram Nath Madhoprasad vs State of Madhya Pra desh (1) was brought to their notice, and in view of that decision, the High Court looked for corroboration of the dying declarations aforesaid.
It found that corroboration in the subsequent conduct of the appellant in that, as deposed to by prosecution witness 31 the Sub Inspector in charge of Ganeshpetli police station the appellant could not be traced till February 16, 1956, on which day, the police obtained information to the effect that the accused had been concealing himself in the premises of Ganesh dhobi at Hazari Pahar.
He went there and found the appellant sitting in a room which had been locked from the front side.
He arrested the accused.
The High Court did not believe the defence suggestion that the appellant bad been concealing himself for fear of the police in connection with an excise case in which be had been suspected.
The records in connection with that case have been placed before us, and, after examining those records, we do not find any good reasons for differing from the High Court in its appreciation of the circumstances connected with the absconding of the accused.
The High Court took the view that the circumstance of the appellant 's conduct in concealing himself and evading the police for a number of days was consistent with the prosecution case that he was concerned in the crime which was the subject matter of the charge against him.
Thus, in effect, the High Court found corroboration which, according to the ruling of this Court referred to above, was necessary in order to base the conviction upon the dying declarations of Baboolal.
The question whether the circumstances of the appellant 's alleged keeping out of the way of the police, for a number of days after the occurrence, can be used as corroboration of the dying declarations, is not free from doubt and diffi culty.
The argument on behalf of the accused that he had been keeping out of the way of the police because he was suspected in the excise case is not entirely unfounded.
He had not left the city of Nagpur and gone out of the juris diction of the local police.
In those circumstances we are not (1) A.I.R. 1953 S.C. 420. 562 prepared to say that the alleged absconding of the accused could afford sufficient corroboration, if corroboration of the dying declarations was needed.
In this Court, a good deal of argument was addressed to us, to the effect that the ruling of this Court lays down a sound proposition of law which should have been followed by the High Court, and that the alleged fact of the accused absconding and keeping out of the way of the police could not be used as corroboration of the dying declaration.
The decision of this Court in Ram Nath Madhoprasad vs State of Madhya Pradesh (1), contains the following observations, at p. 423, which have been very strongly relied upon, on behalf of the appellant, as having a great bearing upon the value to be placed upon the dying declarations: "It is settled law that it is not safe to convict an accused person merely on the evidence furnished by a dying declara tion without further corroboration because such a statement is not made on oath and is not subject to cross examination and because the maker of it might be mentally and physically in a state of confusion and might well be drawing upon his imagination while he was making the declaration.
It is in this light that the different dying declarations made by the deceased and sought to be proved in the case have to be considered. .
We have, therefore, to examine the legal position whether it is settled law that a dying declaration by itself can, in no circumstances, be the basis of a conviction.
In the first place, we have to examine the decision aforesaid of this Court from this point of view.
This Court examined the evidence in detail with a view to satisfying itself that the dying declarations relied upon in that case were true.
In that case, apart from the dying declarations, there was the evidence of the approver.
This Court found that the evi dence of the approver and other oral testimony had been rightly rejected by the High Court.
In that case also, the Court had mainly relied upon the dying declarations for basing the conviction under section 302, (i) A.I.R. 1953 S.C. 420.
563 read with section 34, Indian Penal Code.
This Court examined for itself, the dying declarations and the other evidence bear ing upon the truth and reliability of the dying declara tions, and after an elaborate discussion of all that evi dence, came to the conclusion that the dying declarations did not contain "a truthful version of what actually hap pened".
Thus after a very careful and cautious examination of the facts of the case, connected with the recording of the dying declaration, and of the other evidence in the case and of the fact that it was a dark night without any lights available at the place of occurrence, this Court distinctly came to the conclusion that the dying declaration was not true and could not be relied upon to base, upon that alone, the conviction of the appellants.
It is, thus ' clear that the observations quoted above, of this Court, are in the nature of obiter dicta.
But as it was insisted that those observations were binding upon the courts in India and upon us, we have to examine them with the care and caution they rightly deserve.
The Legislature in its wisdom has enacted in section 32(1) of the Evidence Act that "When the statement is made by a person as to the cause of his death, or as to any of the circumstances of the transaction which resulted in his death, in cases in which the cause of that person 's death comes into question", such a statement written or verbal made by a person who is dead (omitting the unnecessary words) is itself a relevant fact.
This provision has been made by the Legislature, advisedly, as a matter of sheer necessity by way of an exception to the general rule that hearsay is no evidence and that evidence, which has not been tested by cross exami nation, is not admissible.
The purpose of cross examination is to test the veracity of the statements made by a witness.
In the view of the Legislature, that test is supplied by the solemn occasion when it was made, namely, at a time when the person making the statement was in danger of losing his life.
At such a serious and solemn moment, that person is not expected to tell lies; and secondly, the test of cross examination would not be available.
In such a case, the necessity of oath also has been 72 564 dispensed with for the same reasons.
Thus, a statement made by a dying person as to the cause of death has been accorded by the Legislature a special sanctity which should, on first principles, be respected unless there are clear circum stances brought out in the evidence to show that the person making the statement was not in expectation of death, not that that circumstance would affect the admissibility of the statement, but only its weight.
It may also be shown by evidence that a dying declaration is not reliable because it was not made at the earliest opportunity, and, thus, there was a reasonable ground to believe its having been put into the mouth of the dying man, when his power of resistance against telling a falsehood was ebbing away; or because the statement has not been properly recorded, for example, the statement bad been recorded as a result of prompting by some interested parties or was in answer to leading questions put by the recording officer, or, by the person purporting to reproduce that statement.
These may be some of the circum stances which can be said to detract from the value of a dying declaration.
But in our opinion, there is no absolute rule of law, or even a rule of prudence which has ripened into a rule of law, that a dying declaration unless corrobo rated by other independent evidence, is Dot fit to be acted upon, and made the basis of a conviction.
No decision of this Court, apart from the decision already noticed, has been pointed out to us as an authority for the proposition that a dying declaration, in order to be acted upon by a court, must be corroborated by independent evidence.
On the other hand, the different High Courts in India (including Burma) have taken conflicting views as to the value of a dying declaration in part or in its entirety, without any independent corroboration.
For example, a Division Bench of the Bombay High Court, presided over by Sir John Beaumont C.J., has laid down in the case of Emperor vs Akbarali Karimbhai (I), that a statement which is covered by section 32(1) of the Evidence Act is relevant evidence and has to be judged on the same principles as other evidence, bearing in mind that such a (i) I.L.R. 565 declaration was not made on oath and was not subject to cross examination, and is, therefore, a weaker type ,of evidence than that given by a witness on oath.
Therefore, if a part of a dying declaration is deliberately false, it will not be safe to act upon the other part of the declara tion without very definite corroboration, That Bench also ruled that it is not correct to postulate that because some part of the dying declaration is false, the whole declara tion must necessarily be disregarded.
The Bombay High Court, thus, did not agree with the observations of the Calcutta High Court in the case of Emperor vs Premananda Dutt (1) to the effect that it is not permissible to accept a dying declaration in part and to reject the other part and that a dying declaration stood on a widely different footing from the testimony of a witness given in court.
On the other hand, we have the decision of the Rangoon High Court, reported in the case of the King vs Maung Po Thi (2).
In that case, the positive evidence led on behalf of the prose cution was found to have been tampered with and unreliable.
The Court set aside the order of acquittal passed by the trial judge, and recorded an order of conviction for murder, practically on the dying declaration of the victim of the crime.
The Court observed that there was.
no such rule of prudence as had been invoked in aid of the accused by the trial judge who had observed that an accusation by a dying man, without corroboration from an independent source, could not be the sole basis for conviction.
The learned Judges of the High Court further observed that in order to found on a dying declaration alone, a judgment of conviction of an accused person, the Court must be fully satisfied that the dying declaration has the impress of truth on it, after examining all the circumstances in which the dying person made his statement ex parte and without the accused having the opportunity of cross examining him.
If, on such an examination, the Court was satisfied that the dying declara tion was the true version of the occurrence, conviction could be based solely upon it.
(1) Cal.
(2) A.I.R. 1938 Rang.
282 566 In the High Court of Madras, there was a difference of judicial opinion, as expressed in certain unreported cases, which resulted in a reference to a Full Bench.
Sir Lionel Leach C. J. presiding over the Full Bench (In re, Guruswami Tevar (1) ), delivered the unanimous opinion of the Court after examining the decisions of that High Court and of other High Courts in India.
His conclusions are expressed in the penultimate paragraph of his judgment, thus: " In my judgment it is not possible to lay down any hard and fast rule when a dying declaration should be accepted, beyond saying that each case must be decided in the light of the other facts and the surrounding circumstances, but if the Court, after taking everything into consideration, is convinced that the statement is true, it is its duty to convict, notwithstanding that there is no corroboration in the true sense.
The Court must, of course, be fully con vinced of the truth of the statement and, naturally, it could not be fully convinced if there were anything in the other evidence or in the surrounding circumstances to raise suspicion as to its credibility.
" To the same effect are the decisions of the Patna High Court in the case of Mohamad Arif vs Emperor(2), and of the Nag pur.
High Court in Gulabrao Krishnajee Maratha vs King Emperor(3).
The Judicial Committee of the Privy Council had to consider, in the case of Chandrasekera alias Alisandiri vs The King(4), the question whether mere signs made by the victim of a murderous attack which had resulted in the cutting of the throat, thus, disabling her from speaking out, could come within the meaning of section 32 of the Ceylon Evidence Ordinance, which was analogous to section 32(1) of the Indian Evidence Act.
The Pi ivy Council affirmed the decision of the Supreme Court of Ceylon, and made the following observa tions in the course of their judgment, which would suggest that a dying declaration, if found reliable by a jury, may, by itself, sustain a conviction: (1) I.L.R. ,170.
(2) A.I.R. 1941 Patna 409.
(3) I.L.R. [1945] Nag. 613; A.I.R. 1945 Nag.
(4) [I937] A.C. 220, 229.
567 ".
Apart from the evidence proceeding from the deceased woman, the other evidence was not sufficient to warrant a conviction, but at the same time that other evidence was not merely consistent with the deceased 's statement but pointed in the same direction. ' It was.% case in which, if the deceased 's statement was received, and was believed, as it evidently was by the jury, to be clear and unmistakable in its effect, then a conviction was abundantly justified and, indeed, inevitable.
" In 'Phipson on Evidence ', 9th ed., p. 335, the author has discussed the question Whether, a dying declaration without other evidence in corroboration, could be sufficient for a conviction, and has made the following observations which are pertinent to this case : ".
The deceased then signed a statement implicating the prisoner, but which was not elicited by question and answer, and died on March 20.
It was objected that being begun in that form, it was inadmissible: Held (1) the questions and answers as to his state of mind were no part of the dying declaration; (2) that even if they were, they only affected its weight, not its admissibility ; and (3) that the decla ration was sufficient, without other evidence, for convic tion (R. vs Fitzpatrick (1910) 46 Ir.
L.T.R. 173, C.C.R).
" Sometimes, attempts have been made to equate a dying decla ration with the evidence of an accomplice or the evidence furnished by a confession as against the maker, if it is retracted, and as against others, even though not retracted.
But,,in our opinion, it is not right in principle to do so.
Though under section 133 of the Evidence Act, it is not illegal to convict a person on the uncorroborated testimony of an accomplice, illustration (b) to section 114 of the Act lays down as a rule of prudence based on experience, that an accom plice is unworthy of credit unless his evidence is corrobo rated in material particulars and this has now been accepted as a rule of law.
The same cannot be said of a dying decla ration because a dying declaration may not, unlike a confes sion, or the testimony of an approver, come from a tainted source.
If a dying 568 declaration has been made by a person whose antecedents are as doubtful as in the other cases, that may be a ground for looking upon it with suspicion, but generally speaking, the maker of a dying declaration cannot be tarnished with the same brush as the maker of a confession or an approver.
On a review of the relevant provisions of the Evidence Act and of the decided cases in the different High Courts in India and in this Court, we have come to the conclusion, in agreement with the opinion of the Full Bench of the Madras High Court, aforesaid, (1) that it cannot be laid down as an absolute rule of law that a dying declaration cannot form the sole basis of conviction unless it is corroborated; (2) that each case must be determined on its own facts keeping in view the circumstances in which the dying decla ration was made ; (3) that it cannot be laid down as a general proposition that a dying declaration is a weaker kind of evidence than other pieces of evidence; (4) that a dying declaration stands on the same footing as another piece of evidence and has to be judged in the light of surrounding circumstances and with reference to the princi ples governing the weighing of evidence; (5) that a dying declaration which has been recorded by a competent magis trate in the proper manner, that is to say, in the form of questions and answers, and, as far as practicable, in the words of the maker of the declaration, stands on a much higher footing than a dying declaration which depends upon oral testimony which may suffer from all the infirmities of human, memory and human character, and (6) that in order to test the reliability of a dying declaration, the Court has to keep in view the.
circumstances like the opportunity of the dying man for observation, for example, whether there was sufficient light if the crime was committed at night; whether the capacity of the man to remember the facts stated had not been impaired at the time he was making the state ment, by circumstances beyond his control; that the state ment has been consistent throughout if he had several oppor tunities of making a dying declaration apart from the offi cial record of it ; and that the statement had been made at the 569 earliest opportunity and was not the result of tutoring by interested parties.
Hence, in order to pass the test of reliability, a dying declaration has to be subjected to a very close scrutiny, keeping in view the fact that the statement has been made in the absence of the accused who had no opportunity of testing the veracity of the statement by cross examination.
But once the court has come to the conclusion that the dying declaration was the truthful version as to the circumstances of the, death and the assailants of the victim, there is no question of further corroboration.
If, on the other hand, the court, after examining the dying declaration in all its aspects, and testing its veracity has come to the conclusion that it is not reliable by itself, and that it suffers from an infirmity, then, without corroboration it cannot form the basis of a conviction.
Thus, the necessity for corrobora tion arises not from any inherent weakness of a dying decla ration as a piece of evidence, as held in some of the re ported cases, but from the fact that the court, in a given case, has come to the conclusion that that particular dying declaration was not free from the infirmities referred to above or from such other infirmities as may be disclosed in evidence in that case.
Having made the general observations bearing on the question of the legality of basing a conviction on a dying declara tion alone, and keeping in view the tests set out above, let us examine the dying declarations now in question before us.
The most remarkable fact which emerges from an examination of the three successive dying declarations made in the course of about two hours, by the deceased, is that he con sistently named the appellant and Tukaram as the persons who had assaulted him with sword and spear.
The injuries found on his person, namely, the punctured wounds and the incised wounds on different parts, of his body, are entirely con sistent with his statement that he was attacked by a number of persons with cutting and piercing weapons.
No part of his dying declarations has been shown to be false.
Of the two assailants named by him, Tukaram was convicted by the learned trial judge, but acquitted 570 by the High Court which very reluctantly gave him the bene fit of the doubt created by the similarity of names in that locality, as already stated.
There was no such confusion in the case of the appellant.
The deceased indicated that there were two more persons concerned in the crime, but he could not name them.
The other two accused persons who were acquitted by the courts below had not been named in the dying declarations and, therefore, their acquittal did not, in any way militate against the truth of the dying declara tions.
The courts below also agreed in holding that Babool al was in a position to see his assailants and to identify them in the light of the electric lamp nearby.
They have also pointed out that there was no "coaching".
There is no doubt, therefore, that Baboolal had been consistent through out in naming the appellant as one of his assailants, and he named him within less than half an hour of the occurrence and as soon as he reached the Mayo Hospital.
There was, thus, no opportunity or time to tutor the dying man to tell a lie.
At all material times, he was in a proper state of mind in spite of multiple injuries on his person, to remem ber the names of his assailants.
Hence, we have no reasons to doubt the truth of the dying declarations and their reliability.
We have also no doubt that from the legal and from the practical points of view, the dying declarations of the deceased Baboolal are sufficient to sustain the appellant 's conviction for murder.
The only other question that remains to be considered is whether there are any extenuating circumstances in favour of the accused justify ing the lesser of the two sentences prescribed by law.
In our opinion, there are none.
It was a case of a deliberate cold blooded murder.
For the reasons given above, we uphold the judgment and order of the High Court convicting the appellant of murder and sentencing him to death.
The appeal is, accordingly, dismissed.
Appeal dismissed.
| The Supreme Court does not ordinarily function as a Court of criminal appeal, and it is not competent for a High Court under article 134(1)(c) of the Constitution to grant a certifi cate of fitness for appeal to this Court on a ground which is essentially one of fact.
Haripada Dey vs The State of West Bengal" (1956) S.C.R. 639, followed.
There is no absolute rule of law, not even a rule of pru dence that has ripened into a: rule of law that a dying declaration in order that it may sustain an order of convic tion must be corroborated by, other independent evidence.
The observations made 553 by this Court in Madhoprasad vs The State of Madhya Pradesh are in the nature of obiter dicta and do not lay down the law.
Madhoprasad vs The State of Madhya Pradesh, A.I.R. (1953) S.C. 420, considered.
In re Guruswami Tevar, I.L.R. , approved.
Case law reviewed.
The provision of section 32(I) of the Indian Evidence Act " which makes the statement in a dying declaration as to the cause of death and the circumstances that brought it about rele vant, is an exception to the general rule of exclusion of hearsay evidence and evidence untested by cross examination.
The special sanctity which the Legislature attaches to such a declaration must be respected unless such declaration can be shown not to have been made in expectation of death or to be otherwise unreliable and any evidence adduced for this purpose can only detract from its value but not affect its admissibility.
Although a dying declaration has to be very closely scruti nised, and tested as any other piece of evidence, once the Court comes to the conclusion, in any particular case, that it is true, no question of corroboration arises.
A dying declaration cannot be placed in the same category as the evidence of an accomplice or a confession.
Consequently, in a case where the trial judge as also the High Court founded their orders of conviction of an accused person under section 302 Of the Indian Penal Code mainly on three dying declarations made by the murdered person in quick succession one after the other, and the High Court, relying on a decision of this Court, sought for corroboration of such dying declarations in the fact that the accused person had absconded and was arrested in suspicious circumstances, but was in doubt as to the sufficiency of such evidence of corroboration and granted the certificate of fitness under article I34(I)(c): Held, that the certificate granted by the High Court was incompetent and as the case disclosed no grounds on which this Court could possibly grant special leave to appeal under article 136 of the Constitution, the appeal must be dismissed.
|
Summarize this legal judgement text concisely | Miscellaneous Petition No. 915 of 1957.
Appeal under Order V, rule 3 of the Supreme Court Rules.
R. V. section Mani and Ganpat Rai, for the petitioner.
October 14.
The following Judgment of the Court was delivered by VENKATARAMA AIYAR J.
This is a petition under article 71(1) of the Constitution of India.
On May 6, there was an election to the office of the President 649 and Shri Rajendra Prasad was declared elected.
Thereafter Dr. N. B. Khare filed the present petition describing himself as an intending candidate and alleging that there had been violations of the provisions of the Constitution and that the election was in consequence not valid.
The prayers in the petition are " that grave doubts that exist in connection with the Presidential election be enquired into, resolved and decided " and " the entire proceedings of the Presidential election be quashed as void ".
The Registrar of this Court returned the petition as not being in conformity with the provisions of the (XXXI of 1952), and as not satisfying the requirements of the Rules of this Court contained in 0.
XXXVII A Section 14 of Act XXXI of 1952 provides that no election shall be called in question except by an election petition presented to the Supreme Court in accordance with the provisions of the Act and of the Rules made by the Supreme Court under article 145 of the Constitution; and it further provides that it should be presented by any candidate at such election or by ten or more electors.
The Rules framed by this Court with reference to this matter are contained in 0.
XXXVII A. Rule 3 prescribes that a court fee of the value of Rs. 250 should be paid on the petition and r. 12 requires the petitioner to deposit a sum of Rs. 2,000 in cash as security for the payment of costs that may become payable by him.
The petitioner is not a person entitled to apply under section 14 of the Act and his petition was also defective as it did not comply with the requirements of rr. 3 and 12.
It was accordingly returned by the Registrar.
Against that order, the present appeal has been brought.
It is firstly contended by Mr. Mani that the present petition is outside the purview of Act XXXI of 1952 and of 0.
XXXVII A of the Supreme Court Rules.
It is argued that the Supreme Court is invested with jurisdiction to enquire into and decide all doubts and disputes arising out of or in connection with the election of the President, that Act XXXI of 1952 and O. XXXVII A apply only when there is a dispute 650 as to the election, but where the petition is founded upon doubts as to the validity of the election, it is not covered either by the Act or the Rules.
We are unable to accept this contention.
When once an election has been held, any doubt concerning its validity is material only as a ground for setting aside the election and that in fact is the prayer in the petition itself In substance the petition is one calling the election in question and it must satisfy the requirements of Act XXXI of 1952 and of the Rules in 0.
XXXVII A.
It is next contended that the Act and the Rules in question are void on the ground that they derogate from the jurisdiction of the Supreme Court to enquire into and decide all disputes and doubts arising out of or in connection with the election of the President or the Vice President.
It is argued that under section 18, the election could be set aside only on certain grounds and that further under clause (b) it could be done only if the result of the election is shown to have been materially affected, and that these are restrictions on the jurisdiction conferred by article 71(1) and are ultra vires.
Article 71(1) merely prescribes the forum in which disputes in connection with the election of the President and Vice President would be enquired into.
It does not prescribe the conditions under which the petition for setting aside an election could be presented.
Under article 71(3), it is Parliament that is authorised It( make law for regulating any matter relating to or connected with the election of the President or Vice President, and Act XXXI of 1952 has been passed by Parliament in accordance with this provision.
The right to stand for election and the right to move for setting aside an election are not common law rights.
They must be conferred by statute and can be enforced only in accordance with the conditions laid down therein.
The contention that the Act and the Rules derogate from the jurisdiction of the Supreme Court under article 71(1) must accordingly be rejected.
The petitioner has, therefore, no right to move for setting aside the election except in accordance with the provisions of Act XXXI of 1952.
651 And finally it is contended that the petitioner has a right as a citizen to approach this Court under article 71(1) whenever an election has been held in breach of the constitutional provisions.
For the reasons already given, this contention must fail.
The right of a person to file an application for setting aside an election must be determined by the statute which gives it, and that statute is Act XXXI of 1952 passed under article 71 (3).
The petitioner must strictly bring himself within the four corners of that statute and has no rights apart from it.
The order appealed against is clearly right and this appeal is dismissed.
Petition dismissed.
| The petitioner describing himself as an intending candidate for the Presidential Election filed a petition in the Supreme Court under article 71 (1) of the Constitution of India impugning the election of the President, but it was returned by the Registrar of the Court on the ground that it was not in conformity with the provisions of the Presidential and Vice Presidential Elections Act, 152, and the Rules of the Supreme Court contained in Or.
XXXVII A.
On appeal to the Court it was contended for the appellant that (1) the petition was founded upon doubts as to the validity of the election and, in consequence, was not covered either by the Act or the Rules of the Supreme Court, (2) the Act and the Rules in question were void on the ground that they derogate from the jurisdiction conferred on the Supreme Court under article 71(1) and (3) in any case, the petitioner has a right as a citizen to approach this Court for relief whenever an election has been held in breach of the constitutional provisions.
Held that article 71(1) merely prescribes the forum in which doubts and disputes in connection with the election of the President and Vice President would be enquired into, but the right to move the Supreme Court as well as the procedure therefor, are determined by the Act of Parliament as authorised by article 71 (3).
Accordingly the Act and the Rules in question are valid, and the petitioner has no rights apart from those given by the statute to file an application for setting aside an election.
|
Summarize this legal judgement text concisely | Civil Appeal No. 92 of 1957.
Appeal by special leave from the judgment and order dated May 11, 1956, of the Labour Appellate Tribunal of India, Calcutta, in Misc.
Case No. C 152 of 1955.
B. Sen, section N. Mukherjee and B. N. Ghosh, for the appel lants.
D. L. Sen Gupta (with him Dipak Dutta Choudhri), for the respondent.
September 20.
The following Judgment of the Court was delivered by BHAGWATI J.
This appeal with special leave against the decision of the Labour Appellate Tribunal of India, Calcut ta, arises out of an application made by the appellant under section 22 of the Industrial Disputes 66 516 (Appellate Tribunal) Act, 1950, (hereinafter referred to as "the Act") for permission to discharge the respondent.
The respondent had been appointed as a pay clerk in the appellant 's cash department on April 30.
1945, and had been con and had been confirmed in service with effect from August 1, 1945.
Since the beginning of 1949, the respondent was found to have become negligent and careless in his work and he was also disobedient and slow in the performance of the duties that were allotted to him.
Repeated verbal and written I warnings were given to him but they had no effect whatever.
Consequently the Chief Cashier by his letter dated October 24, 1949, addressed to the Manager of the appellant, complained that he was very negligent and care less in his work, and habitually showed sulkiness, that he was also disobedient, and shirked the duties that were allotted to him an that recently, he was careless enough to keep the Company 's money in an open drawer of a safe, and go home, without locking the same.
The Management thereupon asked for his written explanation which he submitted on October 28, 1949, stating that if there was anything wrong on his part that was due to his ill health, hard work and mental anxiety.
He, therefore, asked to be excused and stated that he would take much more care in future about his work.
On November 17, 1949, the Chief Cashier again com plained against the respondent stating that he had not only registered no improvement but was grossly negligent in his duties, in spite of repeated warnings, and was in the habit of absenting himself on flimsy grounds, and always tried to avoid duties that were entrusted to him and was very inso lent in his behaviour and conduct.
A charge sheet was submitted to him on November 18, 1949, and he was suspended till the final disposal of the enquiry.
On November 19, 1949, the respondent wrote a letter to the Managing Director of the appellant pleading not guilty to the charges framed against him and asking for an interview so that he may have a chance to represent his grievances personally.
The re spondent was granted an interview with the Manager of 517 the appellant who investigated the case of the respondent and found him guilty of the charges framed against him.
The respondent had admitted having been rude to his superior officer in a fit of temper but appeared to be repentant of his conduct and had tendered an apology to the Chief Cash ier.
He also submitted on November 29, 1949, a letter asking to be excused.
Under the circumstances, the manager of the appellant recommended in his report dated November 29, 1949, that the respondent be given one more opportunity to prove himself of good behaviour but having regard to the request made by the respondent in that behalf suggested that he be transferred to the Mechanical Engineering Department.
The Manager also stated at the end of the said report that he had warned the respondent that if he got any further adverse report about his work or conduct, his services would be terminated forthwith.
Following upon that report a letter was addressed by the appellant to the respondent on the same day intimating that the appellant had decided to give him one more chance of working in the organization on the distinct understanding that should there be any further adverse report about his work or conduct his services would be terminated forthwith.
He was directed on that under standing to report to Mr. Hooper of the M. E. Department, where he was being transferred with effect from the next day.
In spite of these chances being given to him the respondent did not improve and he was again found seriously neglecting his work.
There were also complaints from the typists to the effect that the respondent 's chatter interfered with their work.
Mr. Hooper after giving him verbal warnings on several occasions without any effect ultimately gave him a written warning on February 9, 1951, recording the above facts and asking that the respondent should show immediate improvement in his conduct failing which he would take the matter further.
The respondent replied by his letter dated February 16, 195 1, denying the allegations contained in the said letter of Mr. Hooper: He Pleaded that he was not negli gent in his duty inasmuch 518 as he had to discharge the arrears of work which were out standing at the time when he took over the work of writing parcel challans and he was also asked to do other work of the clerks who were absent on leave.
He however admitted that he had occasionally talked with his co workers though he contended that that was not in such a way as would prompt his coworkers to complain against him.
He further asked to be excused for the faults, if any, and gave an assurance that he was trying and would try his level best to improve further.
The respondent however did not show any improvement and again there were complaints against him that his work had not been done properly and also that he had been noisy, causing disturbance to the other clerks ' work and that he had been twice found by his superior officer Mr. Girling with his head on his arms apparently sleeping.
On September 3, 1952, Mr. Girling on behalf of the appellant gave the respondent a warning to which he replied on September 8, 1952, denying all the allegations except that of his being found with his head on his arms but excused himself by stating that he was ill and it was under the advice of Mr. Girhng himself that he consulted the office doctor who had advised him rest.
He however promised to endeavour his utmost to give every satisfaction in the discharge of his duties.
In spite of these warnings the respondent showed no improve ment in his work and conduct and continued neglecting his duties and indulging in insubordination with the result that by its letter dated February 9, 1953, the Management of the appellant wrote to him that the only course left to it was to dispense with his services but as a measure of leniency it had decided to give him another chance to show satisfac tory improvement and in doing so it had also decided to stop his annual increment.
The respondent protested against the stopping of his annual increment by his letter dated Febru ary 17, 1953, and contended that the charges levelled against him were absolutely groundless and asked the Manage ment to re consider his case.
The Labour Directorate of the Government of West 519 Bengal was approached on his behalf but that body also refused to intervene.
The Management asked Mr. Hooper to report upon the respondent 's work and conduct by May 31, 1953, and intimated to the respondent that unless definite improvement was reported by that date his services with the appellant would be terminated as from June 30, 1953.
Mr. Hooper observed the respondent 's work and conduct and not finding them satisfactory, by his memo dated August 19, 1953, reported on the same to the Management of the appel lant.
No action was however taken immediately against the respondent and on May 4, 1954, Mr. Hooper made his final report to the Management on the strength of which the appel lant wrote to the respondent its letter dated May 10, 1954, in which it stated that on receipt of the complaint from Mr. Hooper it had made a thorough enquiry into his record of service, had found that he was unsuitable to be retained in its service and had, therefore, decided to terminate his service on payment of full retrenchment compensation.
It asked the respondent to choose one of the two alternatives, viz., that it may forthwith terminate his services if he was agreeable to accept payment of retrenchment compensation or in case he refused to accept the same to make an application before the Fifth Industrial Tribunal for permission to terminate his service.
The respondent failed and neglected to send any reply with the result that by its letter dated June 21, 1954, the appellant intimated to the respondent that it was approaching the Tribunal for permission to terminate his service as per its letter dated May 28, 1954.
The appellant thereafter filed on September 21, 1954, an application before the Fifth Industrial Tribunal, West Bengal.
under section 33 of the , for permission to discharge the respondent.
The Fifth Industrial Tribunal however became functus officio on the expiry of thirty days from the publication of its Award in the dispute which was then pending before it with the result that the said application could not be disposed of and was accordingly struck off.
520 The appellant eventually filed an application under section 22 of the Act before the Labour Appellate Tribunal of India at Calcutta for permission to discharge the respondent from its service.
This step became necessary as there was an appeal being No. Cal. 152 pending before the Labour Appellate Tribunal to which the appellant and the respondent were parties.
The Labour Appellate Tribunal consisting of Shri M.N. Gan (President) and Shri P. R. Mukherji (Member) heard the appellant ex parte and by its order dated October 14, 1955, allowed the said application and granted the permis sion to discharge the respondent holding inter alia that a prima facie case had been made out for permission to dismiss the respondent.
The appellant accordingly on November 11, 1955, wrote a letter to the respondent stating that the necessary permission had been granted by the Labour Appel late Tribunal to discharge him from the appellant 's service and that the decision of the Management of the appellant dated May 28, 1954, to terminate his services was therefore given effect to on the terms communicated to him in that letter.
On December 6, 1955, the respondent filed an affidavit before the Labour Appellate Tribunal, Calcutta, praying for a review of the order dated October 14, 1955, for setting it aside and for restoration of the application under section 22 of the Act.
The Labour Appellate Tribunal presided over by Mr. M. N. Gan and Mr. V. N. Dikshitulu heard the parties concerned and by its order dated March 6, 1956, allowed the respondent 's application and restored the appellant 's case to its file.
On a further hearing of that application the parties adduced evidence and after hearing both the parties the Labour Appellate Tribunal presided over this time by Mr. V. N. Dikshitulu rejected the application under section 22 of the Act by its order dated May 11, 1956, and refused to the appel lant permission to discharge the respondent from its serv ice.
The appellant being aggrieved by the said decision of the Labour Appellate Tribunal of India, Calcutta ' 521 applied for and obtained special leave to appeal to this Court.
Mr. Sen on behalf of the appellant raised two contentions: (i) that the Labour Appellate Tribunal had no jurisdiction to review its own order which it had passed on October 14, 1955, and (ii) that the Labour Appellate Tribunal had ex ceeded its jurisdiction under section 22 of the Act in coming to the conclusion that the appellant had failed to make out a prima facie case to discharge the respondent from its serv ice.
Re:(i) It was contended that once the Labour Appellate Tribunal pronounced its order on October 14, 1955, it had become functus officio and thereafter it had no jurisdiction to review its own order.
The circumstances, moreover, did not bring the application which was made by the respondent on December 6, 1955, strictly within the provisions of 0.
47, r. I of the Code of Civil Procedure and no application for review could therefore be maintained.
It is significant, however, to remember that the application made by the respondent on December 6, 1955, was an omnibus one and was intituled as one under 0.
47, r. I of the Code of Civil Procedure for review under 0.
41, r. 21 of the Civil Procedure Code for restoration and under 0. 9, r. 13 of the Code of Civil Procedure for setting aside the permis sion granted ex parte and to restore the respondent in his original position.
The respondent evidently sought to rely upon one or the other of the provisions above set out in order to obtain the relief which he sought in that.
applica tion.
Whether one or more of these provisions of the Code of Civil Procedure could be availed of by the respondent depends upon what are the powers which are vested in the Labour Appellate Tribunal when hearing the matters which come before it.
The Labour Appellate Tribunal is the creature of the statute and all its powers must be found within the four corners of the statute.
The constitution and functions of the Labour Appellate Tribunal are to be found in Chapter 11 of the Act.
Sections 4 to 6 of the Act lay down the 522 constitution and functions of the Labour Appellate Tribunal and section 7 prescribes its jurisdiction in appeal from awards or decisions of the Industrial Tribunals.
Section 9 lays down the powers and procedure of the Labour Appellate Tribu nal.
The provisions of section 9 so far as they are relevant for the purpose of this appeal may be set out here : Section 9.
Powers and procedure of the Appellate Tribunal.
(1)The Appellate Tribunal shall have the same powers as are vested in a civil court, when hearing an appeal, under the Code of Civil Procedure, 1908 (Act V of 1908).
(10)The Appellate Tribunal shall follow such procedure as may be prescribed, and subject thereto, it may, by order, regulate its practice and procedure and the provisions of the Code of Civil Procedure, 1908 (Act V of 1908), shall, so far as they are not inconsistent with this Act, or the rules or orders made thereunder, apply to all proceedings before the Appellate Tribunal.
It may be noted that the Labour Appellate Tribunal not only exercises appellate jurisdiction by way of hearing appeals from the awards or decisions of the Industrial Tribunals but also exercises original jurisdiction when applications are made to it under section 22 of the Act to obtain its permission in writing to alter the conditions of service applicable to the workman or to discharge or punish whether by dismissal or otherwise any workman concerned in appeals pending before it.
If an employer contravenes the provisions of section 22 during the pendency of the proceedings, before the Labour Appellate Tribunal, it also entertains complaints in writing at the instance of the employees aggrieved by such contra vention and the Labour Appellate Tribunal decides these complaints as if they are appeals pending before it in accordance with the provisions of the Act.
This is also an exercise of original jurisdiction though under the express terms of the section the exercise of that jurisdiction is assimilated to the 523 exercise of appellate jurisdiction by the Labour Appellate Tribunal.
Whatever be the nature of the jurisdiction thus exercised by the Labour Appellate Tribunal whether original or appellate that jurisdiction is exercised by it by virtue of the provisions of the Act: And section 9 of the Act has refer ence to the exercise of the whole of that jurisdiction when it talks of the powers and procedure of the Labour Appellate Tribunal.
In regard to such powers and procedure no dis tinction is made between the exercise of original jurisdic tion and the exercise of appellate jurisdiction by the Labour Appellate Tribunal and these provisions apply equally to the jurisdiction exercised by it whether under sections 7, 22, or section 23 of the Act.
Section 9(1) of the Act invests the Labour Appellate Tribu nal with the same powers as are vested in a civil court, when hearing an appeal, under the Code of Civil Procedure, 1908 (Act V of 1908).
A question was mooted before us whether the words " when hearing an appeal" were to be read with the words "Appellate Tribunal" or with the words "a civil court".
It was argued that these words went with the words "Appellate Tribunal" and, therefore, the powers of a civil court under the Code of Civil Procedure were to be exercised by the Labour Appellate Tribunal only when it was exercising its appellate jurisdiction and hearing matters which fall within the purview of section 7 or section 23 of the Act and not when it was exercising original jurisdiction and hearing applications under section 22 of the Act.
This construc tion of the provisions of section 9(1) of the Act however suf fers from this disability that it takes no count of the fact that the Labour Appellate Tribunal under the provisions of the Act itself exercises both original as well as appellate jurisdiction and if such a construction was put on these provisions the result would be that there would be no provi sion as regards the powers of the Labour Appellate Tribunal when it is exercising original jurisdiction.
The powers of the Labour Appellate Tribunal which are sought to be provid ed in section 9(1) of the Act are not limited only to the exer cise 67 524 of appellate jurisdiction by it but have reference to the whole of the jurisdiction which is vested in the Labour Appellate Tribunal under the provisions of the Act.
The words " when hearing an appeal" have, moreover, been used between the words "a civil court" and "under the Code of Civil Procedure, 1908" which in the context in which they have been used could only have been meant to refer to a civil court.
Whatever the jurisdiction the Labour Appellate Tribunal is exercising whether original or appellate it is vested with the powers as are vested in a civil court under the Code of Civil Procedure, 1908, when it is hearing an appeal.
The very juxtaposition of the words " when hearing an appeal " with the words " a civil court ", is sufficient, in our opinion, to invest the Labour Appellate Tribunal while exercising its jurisdiction whether original or appel late with the same powers as are vested in a civil court Under the Code of Civil Procedure when it is exercising its appellate jurisdiction, and hearing appeals.
(See Burmah Shell Oil Storage Case(,) and the New Union Mills Ltd. Case (2).
If this is the true construction to be put on the provisions of section 9(1) of the Act, the provisions of 0.
41 r. 21 of the Code of Civil Procedure are attracted forthwith.
Order 41 r. 21 provides: Where an appeal is heard ex parte and judgment is pronounced against the respondent, he may apply to the appellate court to rehear the appeal; and, if he satisfies the Court that the notice was not duly served or that he was prevented by sufficient cause from appearing when the appeal was called on for hearing, the Court shall rehear the appeal on such terms as to costs or otherwise as it thinks fit to impose upon him.
When the Labour Appellate Tribunal heard the application under section 22 of the Act ex parte on October 14, 1955, the summons had not been served on the respondent owing to its being addressed to hi in at a wrong place.
There was suffi cient cause therefore for the respondent not appearing when the application was called on for hearing and on this (1) (2) 525 circumstance being established he was entitled to a re hearing of the application and setting aside of the ex parte order made against him.
The Labour Appellate Tribunal was, therefore, right in making the order which it did on March 6, 1956.
There is also another aspect of the question which may be dealt with at this stage and it is that under the provisions of section 9, sub section
(10) of the Act the Labour Appellate Tribu nal is enjoined to follow such procedure as may be pre scribed, and subject thereto it may, by order, regulate its practice and procedure and the provisions of the Code of Civil Procedure, 1908 (Act V of 1908), shall, so far as they are not inconsistent with the Act or the rules or orders made thereunder, apply to all proceedings before it.
Pursu ant to the powers conferred upon it by this sub section the Labour Appellate Tribunal has made orders to regulate its practice and procedure and 0.
3 r. 4 provides : " Nothing in these rules shall be deemed to limit or other wise affect the inherent power of the Tribunal to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court.
" This provision is analogous to that which is contained in section 151 of the Code of Civil Procedure which relates to the inherent powers of the Court and even apart from the ap plicability of 0.
41 r. 21 of the Code of Civil Procedure as hereinbefore set out it was open to the Labour Appellate Tribunal to pass the order which it did on March 6, 1956, as it was evidently necessary for the ends of justice or to prevent the abuse of the process of the Court.
We are, therefore, of opinion that the Labour Appellate Tribunal had jurisdiction to set aside the ex parte order dated October 14, 1955, and restore the appellant 's applica tion under section 22 of the Act to its file.
This contention of the appellant therefore is without any substance and must be negatived.
Re:(ii) It was next contended that even though the Labour Appellate Tribunal had jurisdiction to hear an application under section 22 of the Act it misconceived 526 its jurisdiction and in the exercise of it, launched into an inquiry which it was not competent to do and erroneously came to the conclusion that the appellant had failed to make out a prima facie case for terminating the service of the respondent.
The nature and scope of the enquiry before the Labour Appel late Tribunal under section 22 of the Act has been the subject matter of decisions of this Court in Atherton West & Co. Ltd. vs Suti Mill Mazdoor Union and others (1), The Automo bile Products of India Ltd. vs Rukmaji Bala & others(2) and Lakshmi Devi Sugar Mills Limited vs Pt.
Ram Sarup(3).
In the last mentioned case this Court succinctly laid down the principles governing such enquiry and observed at p. 935: " 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 condition of employ ment to the prejudice of the workman or his discharge or punishment whether by dismissal or otherwise during the pendency of the proceedings therein referred to should be lifted.
A prima facie case has to be made out by the em ployer for the lifting of such ban and the only jurisdiction which the Tribunl 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.
" We have, therefore, got to consider whether in the instant case a prima facie case was made out by the appellant for terminating the service of the respondent and whether in giving the notice dated November 1 1, 1955, terminating the respondent 's service the appellant was motivated by any unfair labour practice or victimisation.
The facts as they appear from the narration of events in the earlier part of this judgment go to establish that the respondent was grossly negligent in (1) ; (3) ; (2) [1955] i S.C.R. 1241.
527 the performance of his duties, was in the habit of absenting himself on flimsy grounds, was also insolent in his beha viour and conduct and in spite of repeated warnings, oral as well as written, addressed to him by the Management of the appellant did not show any signs of improvement.
The inci dents of 1949, 195 1, and 1952 culminating in the stoppage of his annual increment in February, 1953, were sufficient to demonstrate that the Management of the appellant dealt with the respondent very leniently in spite of his work and conduct not being at all satisfactory.
The appellant would have been well within its rights if it had taken action against the respondent on each of the several occasions above referred to, but out of sheer compassion went on giving him one opportunity after the other so that he would register an improvement in his work and conduct.
The re spondent however, presisted in his behaviour and the two reports made by Mr. Hooper One on August 19, 1953, and the other on May 4, 1954, were considered by the Management and it came to the conclusion that the respondent was unsuitable to be retained in the appellant 's service and even then instead of deciding to dismiss him without anything more, it offered him the choice of one of the two alternatives, viz., that it may forthwith terminate his service if he was agree able to accept the term of full retrenchment compensation or if he refused to accept the same to make an application before the Fifth Industrial Tribunal for permission to terminate his service.
The whole of the correspondence ending with the respondent 's letter dated February 17, 1953, was sufficient to prove with.
out anything more the unsatis factory nature of his work and conduct and the, appellant was evidently of the opinion that the records of the re spondent taken along with the reports made by Mr. Hooper afforded sufficient material to justify it in taking the step which it ultimately decided to do.
It was under these circumstances that the appellant did not consider it neces sary to furnish to the respondent a chargesheet and to hold a formal enquiry into the work and conduct of the respond ent.
528 This circumstance was considered by the Labour Appellate Tribunal as sufficient to entitle it to determine for itself whether a prima facie case for the termination of the respondent 's service was made out by the appellant.
It was open to the appellant to submit a charge sheet to the re spondent and institute a formal inquiry into his work and conduct.
If that had been done and the appellant had, after holding such formal enquiry, come to the conclusion that the respondent was guilty of the charges which were levelled against him and had then decided to terminate his service, the Tribunal could not have intervened and on its coming to the conclusion that a prima facie case for the termination of the service of the respondent was thus made out, it would.
have granted the appellant the permission asked for.
Unfortunately for the appellant, in spite of the work and conduct of the respondent being demonstrably unsatisfactory and, therefore, justifying the conclusion that he was un suitable to be retained in its service, the appellant did not hold any formal enquiry of the nature indicated above and did not afford to the respondent an opportunity to have his say in the matter of the charges levelled against him.
The Labour Appellate Tribunal therefore rightly took upon itself the burden of determining whether on the material submitted before it by the appellant a prima facie case for the termination of the respondent 's service was made out by the appellant.
The evidence led by the parties before the Labour Appellate Tribunal consisting as it did of the affidavit and oral evidence was not such as would enable it to come to the conclusion that a prima facie case for the termination of the respondent 's service was made out by the appellant.
In paragraphs 8 and 9 of the application the appellant had pointed out that after receipt of Mr. Hooper 's report dated May 4, 1954, to the effect that there will be no improvement of work in the department unless the respondent was removed from the same, the matter was further investigated and the old records of the respondent were carefully considered and the appellant found that enough consideration 529 had been shown to the respondent but without any effect and in the interest of discipline and good work it was necessary that he should be discharged from service.
These allega tions were denied by the respondent in his affidavit in reply and he contended that on no occasion whatever the warnings, letters, suspension or stoppage of increment resorted to by the appellant were done after establishing his guilt or by following the usual methods, viz., by issu ing a charge sheet with specific allegations and on enquiry based on such a charge sheet and explanations rendered by him.
He contended that the whole thing was arbitrary, without any basis and in violation of the principles of natural justice and was by way of unfair labour practice or victimization.
An affidavit in rejoinder was filed on behalf of the appellant by Shri Ramani Ranjan Dhar, a Senior Assistant of the appellant.
He denied these allegations of the respondent and affirmed that the application of the appellant sufficiently disclosed the offences for which it sought the permission of the Labour Appellate Tribunal to dismiss the respondent.
He stated that the appellant was thoroughly satisfied, after full enquiry and investigation and after the respondent was given more than ample opportu nity to explain the charges levelled against him, and after he was given more than one chance at his own prayer to improve his conduct on various occasions that the respondent was guilty of the charges brought against him.
This affida vit evidence was followed by the oral evidence of Mr. Hooper led on behalf of the appellant.
Mr. Hooper, however, did not carry the case of the appellant any further.
Even though the appellant had an opportunity when Mr. Hooper was in the witness box to produce his reports dated August 19, 1953, and May 4, 1954, and have them proved through him, or, in any event, if the absence or loss of those reports was satisfactorily accounted for to lead oral evidence as to their contents the appellant did not do so and beyond a bare reference to his report of May 4, 1954, without disclosing.
the contents thereof there was nothing in the deposition of Mr. Hooper which would 530 even go to show that the contents of that report were preju dicial to the respondent.
In cross examination also he admitted that before reporting on May 4, 1954, against the respondent he did not draw up a chargesheet as it was for the appellant to do so.
The Labour Appellate Tribunal bad to determine on these materials whether a prima facie case had been made out by the appellant for the termination of the respondent 's serv ice.
A prima facie case does not mean a case proved to the hilt but a case which can be said to be established if the evidence which is led in support of the same were believed.
While determining whether a prima facie case had been made out the relevant consideration is whether on the evidence led it was possible to arrive at the conclusion in question and not whether that was the only conclusion which could be arrived at on that evidence.
It may be that the Tribunal considering this question may itself have arrived at a different conclusion.
It has, however, not to substitute its own judgment for the judgment in question.
It has only got to consider whether the view taken is a possible view on the evidence on the record.
(See Buckingham and Carnatic Co., Ltd. Case (1).
The Labour Appellate Tribunal in the instant case discussed the evidence led before it in meticulous detail and came to the conclusion that no prima facie case was made out by the appellant for the termination of the service of the respond ent.
It applied a standard of proof which having regard to the observations made above was not strictly justifiable.
If the matter had rested there it may have been possible to upset the finding of the Labour Appellate Tribunal.
But if regard be had to the evidence which was actually led before it, there is such a lacuna in that evidence that it is impossible to come to the conclusion that even if the evi dence was taken at its face value a prima, ' facie case was made out by the appellant.
Mr. Hooper 's evidence did not go to show what were the contents of his report dated May 4, 1954, and it contained only a bare reference to that report (1) 531 without anything more.
This was not enough to prove the contents of that report, much less to give the respondent an opportunity of controverting the ' allegations made against him.
If, therefore, these essential ingredients were want ing, it cannot be said that the evidence led by the appel lant before the Labour Appellate Tribunal was sufficient to establish a prima facie case for the termination of the respondent 's service.
This contention also does not there fore avail the appellant.
Mr. Sen endeavoured to draw a distinction between discharge on the one hand and punishment by way of dismissal or other wise on the other, in clause (b) of section 22 of the Act.
He contended that no prima facie case need be made out when an employee was sought to be discharged simpliciter by the employer.
A charge sheet was required to be submitted to the workman and an enquiry thereon required to be made in conformity with the principles of natural justice only in those cases where the workman was sought to be punished by dismissal or otherwise.
That was not the case when the workman was sought to be discharged without assigning any reason whatever and such a case did not fall within the category of punishment at all.
For the purpose of the present case we need not dilate upon this; it is sufficient to point out that Shri Raniani Ranjan Dhar in his affidavit in rejoinder filed on behalf of the appellant categorically stated that the respondent was sought to be " dismissed " by reason of his having been found guilty of the various charges which had been levelled against him.
Even at the exparte hearing of the application under section 22 of the Act before the Labour Appellate Tribunal the case of the appel lant was that it had made out a prima facie case for permis sion to " dismiss " the respondent.
This distinction sought to be drawn by Mr. Sen is therefore of no consequence what ever and need not detain us any further.
Mr. Sen also relied upon the circumstance that after the Labour Appellate Tribunal had on the exparte hearing of the application under section 22 of the Act granted to the appellant permission to terminate the 68 532 service of the respondent on October 14, 1955, the appellant had implemented the same and by its notice 'dated November, 11, 1955, actually terminated the service of the respondent offering him full retrenchment compensation.
In so far as the appellant had acted upon such permission and implemented the same, it was contended, that the respondent 's service was irrevocably terminated and nothing more was to be done thereafter, except the possible raising of an industrial dispute by the respondent on the score of his service having been wrongfully terminated.
It was submitted that after such an irrevocable step had been taken by the appellant terminating the respondent 's service, the Labour Appellate Tribunal ought not to have reconsidered its decision and restored the application under section 22 of the Act to its file and that the further decision of the Labour Appellate Tribu nal had no effect so far as the actual termination of the service of the respondent was concerned.
We do not propose to go into these interesting questions for the simple reason that the only question which arises for our consideration in this appeal is whether on the evidence led before it the decision of the Labour Appellate Tribunal dated May 11, 1956, dismissing the appellant 's application under section 22 of the Act was correct.
As a matter of fact no such contention had been urged by the appellant before the Labour Appellate Tribunal when it finally heard the application under section 22 of the Act and the only point to which the attention of the Labour Appellate Tribunal was invited was whether the appel lant had made out a prima facie case for the termination of the respondent 's service.
Whatever rights and remedies are available to the appellant by reason of these circumstances may just as well be asserted by the appellant in appropriate proceedings which may be taken hereafter either at the instance of the appellant or the respondent.
We are not at present concerned with the same.
Under the circumstances, we are of opinion that the decision arrived at by the Labour Appellate Tribunal 533 which is the subject matter of appeal before us was correct.
It is no doubt true that the Labour Appellate Tribunal recorded a finding in favour of the appellant that in termi nating the service of the respondent as it did, the appel lant was not, guilty of any unfair labour practice nor was it actuated by any motive of victimisation against the respondent.
That finding, however, cannot help the appel lant in so far as the Labour Appellate Tribunal held that the appellant had failed to make out a prima facie case for terminating the service of the respondent.
We, therefore, hold that the decision of the Labour Appel late Tribunal refusing permission to the appellant under section 22 of the Act was correct and this appeal is liable to be dismissed.
It will accordingly be dismissed with costs.
Appeal dismissed.
| The respondent was employed by the appellant company, but later on his work and conduct became very unsatisfactory and repeated warnings, both oral and written, did not show any improvement.
A thorough inquiry into his record of service was made and a report was submitted which showed that he was unsuitable to be retained in its service.
No formal enquiry, however, was held by submitting a charge sheet to the respondent and giving him an opportunity to rebut those chares.
The appellant gave him a choice either to terminate his services on payment of full retrenchment compensation, or if he refused to accept the same, to make an application for permission to terminate his services.
Eventually, the appellant filed an application before the Labour Appellate Tribunal under section 22 Of the Industrial Disputes (Appellate Tribunal) Act, 1950, for permission to discharge the respondent from its service.
The application was originally heard ex parte, the respondent not appearing, and the Tribunal, by order dated October 14, 1955, allowed the application.
Subsequently the respondent made an appli cation for a review of the order under Or.
47, R. I, for setting it aside under Or. 9, R. 13 and for restoration of the application under Or. 41, R. 21, Of the Code of Civil Procedure.
The Tribunal found that there was sufficient cause for the respondent not appearing when the application was called on for hearing, and set aside the ex parte order and restored the appellant 's application.
On a further hearing of the application, the parties adduced evidence and the Tribunal, after hearing them, rejected the application on the, ground that a prima facie case had not been made out for permission to discharge the respondent.
On appeal to the Supreme Court it was contended for the appellant (1) that the Labour Appellate Tribunal had no jurisdiction to review its own order and (2) that it exceeded its jurisdic tion under section 22 Of the Act, in discussing the evidence led before it in meticulous detail and coming to the conclu sion that the appellant failed to make out a prima facie case to discharge the respondent from its service.
Held: (1) that under section 9, sub sections
(1) and (10) of the Act the Labour Appellate Tribunal had jurisdiction to set aside the 515 ex parte order dated October 14, 1955, and restore the application to its file.
(2) that under section 22 of the Act, the jurisdiction of the Labour Appellate Tribunal in considering whether a prima facie case has been made out by the employer, is to see whether the employer is acting mala fide or is resorting to any unfair labour practice or victimisation, and whether on the evidence led it is possible to arrive at the conclusion in question.
Though the Tribunal may itself have arrived at a different conclusion it has not to substitute its own judgment for the judgment in question.
Atherton West & Co. Ltd. vs Suti Mill Mazdoor Union and Others, , The Automobile Products of India Ltd. vs Rukmaji Bala & others; , and Laksh mi Devi Sugar Mills Limited vs Pt.
Ram Sarup, (1956) S.C.R. 916, relied on.
In the instant case, though the appellant was justified in making the application for permission to discharge the respondent on account of his work and conduct being demon strably unsatisfactory, and the standard of proof which the Tribunal ];ad applied for finding whether there was a Prima facie case was not strictly justifiable, in view of the fact that no formal inquiry into the charges against the respond ent was held and the evidence on behalf of the appellant did not show that the respondent was given an opportunity to controvert the allegations made against him, the decision of the Tribunal was upheld.
|
Summarize this legal judgement text concisely | ION: Criminal Appeal No. 3 of 1954.
Appeal by special leave from the judgment and order dated the 22nd June, 1951, of the Bombay High Court in Criminal Revision Application No. 1425 of 1950,arising out of the judgment and order dated the 9th September, 1950 of the court of the Presidency) Magistrate Fifth Court, Dadar, Bombay in Cause No. 7825/P of 1949.
P. R. Das, section A. Desai, Shellim Samuel and I. N. Shroff, for the appellant.
B. D. Boovariwala, Jindra Lal and R. H. Dhebar, for the respondent.
October 8.
The following Judgment of the Court was delivered by SINHA, J.
The main question for determination in this appeal by special leave is whether the High Court has power, and, if so, the extent of such power, to revise an order of discharge passed by a Presidency Magistrate.
The, order impugned in this case was passed by a Division Bench of the Bombay High Court (Bhagwati and Vyas, JJ.), dated June 22, 1951, setting aside the order dated September 9, 1950, passed by a Presidency Magistrate of Bombay, directing the appellants who were accused 1 and 2 before the learned magistrate, to take their trial in the Court of Session, on a charge under section 409, Indian Penal Code, as against 620 the first accused and under section 409, read with section 109, Indian Penal Code, as against the second accused.
The facts leading upto this appeal, in bare outline, are as follows: On July 8, 1947, Raja Dhanraj Girji Narsingh Girji, Chairman of the Dhanraj Mills Limited, who will be referred to in the course of this judgment as the complainant, lodged a first information report before the Inspector of Police, General Branch, C.I.D., Bombay, in writing, to the effect that the Dhanraj Mills were formerly his private property which he converted into a limited concern in 1935.
He is the life Chairman of the Board of Directors of the concern.
Till 1937, he was the Managing Agent, but, in that year, he transferred the managing agency to Ramgopal Ganpatrai, the first appellant who converted the managing agency into a private limited concern consisting of himself and members of his family.
In 1943, the first appellant floated two private limited concerns under the name and style of (1) Ramgopal Ganpatrai and Sons as the Managing Agents and (2) Ramrikhdas Balkisan and Sons Limited, as the selling agents.
Thus, the first appellant came to have control of the managing agency and the selling agency as also of the Mills, all inter connected.
The complainant had six annas share in the managing agency and the remaining interest therein was owned by the first appellant and his family.
Differences arose between the complainant and the first appellant in respect of the affairs of the Mills.
The complainant 's suspicions were aroused with respect to the accounts of the Mills, and as a result of his private enquiries, he claims to have discovered that " there were large defalcations committed in the management of this Mill".
It appeared to him that during September to December, 1945, the first appellant as the Managing Agent, in the course of his large purchases of cotton bales for consumption in the Mills, had " dovetailed in these transactions about 20 bogus entries of socalled purchases of 3,719 cotton bales from fictitious merchants in the Bombay market.
The cost of these purchases involved an approximate sum of Rs. 8,27,000.
" Against the customary practice of the 621 Mills, the first appellant made payments in respect of those fictitious purchases by bearer cheques which were cashed by his men and the cash, thus obtained was misappropriated by him to his personal use and account.
In order to cover up those fictitious and bogus purchases, false entries had been made in the books and registers and the receipts, kept by the Mills In order to balance the stock in hand of cotton bales the first appellant and his associates in the crime like the second appellant, who is described as the office manager, showed bogus sales of an equal number of bales said to contain deteriorated cotton at reduce rates.
The sale price of such bogus sales amounted to Rs. 4,19,000, thus, causing a loss of over four lacs of rupees to the shareholders.
The sale price is also said to have been received in cash by bearer cheques which have, likewise, been cashed by the employees of the Mills and similarly misappropriated to the appellant 's account.
A third series of bogus purchases are said to have been in respect of stores, dyes an chemicals, etc., approximately of the value of five lacs of rupees " by falsely debiting various sums of money to a number of non existent parties".
In order to conceal the fraud, thus perpetrated on the Mills other false entries in the books of account and other documents relating to those bogus transactions were alleged to have been made by the first appellant and his underlings.
It was, further, alleged that the complainant 's suspicions were further strengthened by the false statement made at a Directors ' meeting that there was a strike and that the strikers had burnt some records of the Mills.
Three persons, namely, the first appellant, Harprasad Gupta, the second appellant and A. R. Mulla Feroz who was subsequently discharged by the magistrate, were named as the three accused persons concerned in the crime of embezzlement in respect of the funds of the Mills.
During their investigation, the Police had taken possession of the relevant books of account from the precincts of the Mills.
On July 19, 1948, a charge sheet under section 409 and section 409/109, Indian Penal Code, was submitted by the Police, against the aforesaid three persons, for 622 defalcation of Rs. 8,97,735 and odd between August 1, 1945 to July 31, 1956.
The names of 40 witnesses appear in the charge sheet.
The learned Presidency Magistrate, Shri C. B. Velkar, passed a I preliminary order ' in which he considered the question whether the enquiry against the accused persons should take the form of the procedure for summons trial or for a warrant trial or commitment proceedings preliminary to their being placed on trial before a Court of Session.
After a consideration of the police charge sheet and his own powers adequately to punish the offenders if their offence were made out, and the relevant provisions of the Criminal Procedure Code, he recorded the following order: ". .
I hold that this case is governed by section 207 Criminal Procedure Code and as such I order that this case should be proceeded with on Sessions Form.
" Thereafter, the learned magistrate examined as many as 42 witnesses for the prosecution between November, 1948 and October, 1949.
He also considered the written statements of the accused persons, filed in October and December that year and a very large volume of documentary evidence, which was exhibited in the case, numbering many hundreds of exhibits and running into thousands of pages, as will presently appear.
On December 17, 1949, after hearing counsel for the parties and considering their respective versions as contained in the oral and documentary evidence, the learned magistrate recorded the following order: ". .
I agree with this view and order that accused No. 3 should be discharged.
As regards accused Nos. 1 and 2 1 hold that there is a prima facie case to charge them and for reasons already mentioned I restrict the charges to the following counts:".
Then, he framed seven separate charges in respect of much smaller sums against the two accused persons under section 409, read with section 109, Indian Penal Code.
He also decided, apparently on a misunderstanding of a circular issued b the Registrar of City Civil and 623 Sessions Court, of August, 1949, to try the case himself.
This, in our opinion, was a serious mistake on his part inasmuch as he lost sight of those very considerations on which he had previously, in his order of May 6, 1948, decided to bold only a preliminary inquiry " on Sessions Form The learned magistrate appears to have thought that, as an offence under section 409, Indian Penal Code, was not exclusively triable by a Court of Session, irrespective of the enormity of the offence alleged and his power properly and adequately to punish such an offence, he was empowered by the Circular aforesaid to try the case.
This was a grave error in exercise of judicial discretion vested in the magistrate.
The State Government of Bombay moved the High Court against the order aforesaid of the learned Presidency Magistrate deciding to try the case himself on the seven mutilated charges framed by him.
The application in revision was heard by a Division Bench consisting of Bavdekar and Chainani, JJ.
The High Court by its order dated March 1, 1950, remitted the proceedings to the learned magistrate, after reframing the charges which are as under: "That you, accused No. 1 Ramgopal Ganpatrai Ruia being an agent of the Dhanraj Mills Ltd., and in such capacity entrusted with property, viz., the amount of Rs. 6,06,661 3 6, being the proceeds of the cheques Nos.
Exhibits J/22, J/23, J/25, H/3, H/4, J1, J/2, J/4, J15, J/30 to J/32, J/33, J/34, J/10 to /J13, belonging to the said Mills, committed at Bombay, between the dates of the 21st August, 1945 and the 31st of December, 1945, criminal breach of trust with respect to the above property, and thereby committed an offence punishable under section 409 of the Indian Penal Code and within the cognizance of the Court of Session of the City of Greater Bombay.
And I further charge you, accused No. 2 Harprasad Ghasiram Gupta, and the said RamgopaI Ganpatrai Ruia, accused No. 1, between the dates of the 21st of August, 1945 and the 31st of December, 1945, at Bombay committed the offence of criminal breach of trust as an agent in respect of the amount of 624 Rs. 6,06,661 3 6, being the proceeds of the cheques Exhibits J/22, J/23, J/25, H/3 and H/4, J/1, J/2, J/4 J15, J/80 to J/32, J/33, J/34, J/10 to J/13 belonging to the said Mills, and that you between the said dates and at the same place abetted the said accused No. 1.
Ramgopal Ganpatrai Ruia, in the commission of the said offence of criminal breach of trust as an agent, which was committed in consequence of your abetment, and you have thereby committed an offence punishable under section 109, when read with section 409 of the Indian Penal Code, and within the cognizance of the Court of Session, Greater Bombay." After setting out the case of the parties in some detail, the High Court acceded to the arguments made on behalf of the State that the charges framed by the learned Presidency Magistrate, required to be completely changed in form and substance.
Though it did not "desire to fetter the discretion of the magistrate", it clearly expressed the view that "the case ought to be committed to the Court of Session".
The High Court clearly took the view that the magnitude of the case and the amount of punishment in the event of a conviction, clearly justified a committal.
But inspite of giving that clear direction in view of the fact that the magistrate himself had found a prinza facie case for the prosecution, it returned the proceedings to the learned magistrate after reframing the charges, with a direction to expedite the case.
On receiving the case back from the High Court, the learned magistrate recorded the evidence of two defence witnesses in great detail, covering about 50 pages in print and accounting for the months of March to June, 1950.
It appears that in spite of the expression of opinion by the High Court, as aforesaid, that it was a fit case for committal to the Court of Session, the learned magistrate decided to discharge the accused.
On September 9, 1950, after hearing the arguments, he wrote a very elaborate judgment running into more than 30 pages in print.
Though in form it is an order passed in commitment proceedings, it reads like a judgment after a full trial.
The learned magistrate stated the prosecution case in all its details, setting 625 out the documentary evidence on which the charges were based, running into 33 paragraphs and ten pages in print.
Then, he proceeded to state the defence version equally elaborately, and embarked upon a very detailed examination of the evidence in the case, to find which version is the more acceptable one.
He felt convinced that the defence version depending as it did, on the large mass of documentary evidence, explained by oral evidence of both sides, was the more acceptable one.
He discussed seriatim the evidence which according to the prosecution lent itself to the sinister inferences to be drawn against the accused persons, and then weighed all that evidence and balanced it as against the innocent interpretations sought to be put on that large mass of evidence on behalf of the accused.
In the result, be passed the following order in the last paragraph of this judgment: "This case is pending with me for about two years and had gone on practically on the basis of audit of the mill accounts in respect of these transactions in a Criminal Court.
I do not think that I will be justified in permitting the time of another court being occupied for this case unless a conviction in the case is reasonably probable.
For several reasons given above and looking to the evidence of the prosecution as regards the question of delivery being taken or not, I am of the opinion that on the evidence before me no criminal court would convict the accused and I therefore hold that there are no sufficient grounds for committing the accused for trial and this is not a fit case to go to the sessions.
" The Government of Bombay moved the High Court in revision against the aforesaid order of discharge against the two appellants.
The revisional application was heard and disposed of by a Division Bench by its judgment and order, dated June 22, 1951, which is almost as long as that of the learned Presidency Magistrate, running into about 30 printed pages.
The High Court, after going into the history of the case., set out the prosecution version and the voluminous evidence on which the prosecution case was founded.
The High Court pointed out that from a cursory 626 examination of the evidence led on behalf of the prose cution, it appeared: that 3,719 bales of cotton were purported to be purchased by the Mills, and an equal number of bales of that commodity were purported to be sold on behalf of the Mills, during the months of September to December, 1945; that not only the number of bales was the same but also the classification of cotton purchased and sold; that except in two instances, in almost all cases of purchases and sales, the transactions of sales purported to have taken place some days after the alleged purchases, and that in no case did any sale purport to have taken place earlier than the purported purchase; that unlike admittedly genuine transactions, weigh ment certificates were not taken by the sellers but by the accused No. 2 to P. W. Chottey Lal; that the invoices from Chottey Lal were not taken by the sellers but by the accused No. 2; that cheques for large amounts running into thousands and lacs of rupees, prepared by, BhAt A, bank employee were not crossed and order cheques but bearer cheques; that such bearer cheques were not made over to the alleged sellers.
or their agents but were taken away by accused No. 2; that those cheques were not cashed by the alleged sellers but by the employees of the Mills; that the receipts for the amounts were signed by persons like accused No. 2 for fictitious agents of fictitious vendors.
These were some of the circumstances which had been strongly relied upon by the prosecution for showing that all those alleged transactions of sale and purchase of cotton bales were bogus transactions which had been entered in the books of account kept by the company with a view to benefiting the accused persons, particularly the first accused.
It was also pointed out that most of the moneys obtained in the course of the alleged transactions of sales and purchases were in one thousandrupee notes.
278 of such one thousand rupee notes were traced to a bank on account of the first appellant, and 118 of such one thousand rupee notes were traced to another bank on similar account.
It was also pointed out in the judgment that no previous permission of the Textile Controller was obtained in 627 respect of the movement of cotton, which, during the relevant period, was necessary under the law.
Similarly, in respect of the purchases of stores, etc., the persons shown in the memoranda of purchase were not found in the market to be dealing with any such commodities and did not possess the necessary licence.
The High Court also noticed the arguments advanced on behalf of the accused persons to the effect that the transactions of sales and purchases which were alleged by the prosecution to be mere fictitious transactions which had no existence in fact, were real transactions but had been in the ostensible names of some persons for the benefit of the second accused and his partners who did not think it advisable or expedient to use their own names; that the transactions have been regularly entered in the books and registers maintained by the Mills and passed through several hands in the usual course of business, as done by the Mills and as evidenced by the large number of entries relating to the transactions im peached in this case.
The High Court also noticed the several explanations offered by the defence to show that the transactions had no sinister significance, and that they were capable of bearing innocent inter retstions supporting the defence version.
In our opinion, the High Court need not have examined the defence version in as great a detail as they have done; but, perhaps, they took that course in view of the very elaborate judgment written by the learned Presidency Magistrate.
The High Court expressed their conclusions in these terms: " We have referred to the evidence on which the prosecution relies and also to the evidence on which the defence relies.
We do not wish, nor is it our function in this application, to express our views regarding its eventual acceptance or otherwise.
We wish to appraise it only prima facie and from that point of view it appears to us that having regard to the mass of circumstances and evidence in the case it is not possible to say that no Court would ever convict the accused or that the Judge would withdraw the case 628 from the Jury on the (,round of there being no evidence at all." The High Court then examined the legal arguments advanced on behalf of the parties, and a number of rulings of the different High Courts in India.
Upon such an examination, the High Court 's conclusion is as follows: " The correct position is not that be should commit the case to the Sessions Court only if a conviction, in his opinion, is bound to follow.
If there are circumstances for and against, if there are probabilities for and against, if there is evidence for and against with which there is nothing wrong prima facie, which on an appraisement by the jury may lead to a conviction or may not, his duty is to commit the case and not discharge the accused.
The test is that if there is credible evidence which, if accepted, may lead to conviction, he ought to commit.
If the magistrate comes to the conclusion that the evidence is such that no Court would ever convict, he should not commit the case In the result, the High Court allowed the application setting aside the order of the learned magistrate and directing that the appellants shall stand committed to the Court of Session, the first appellant for a charge under section 409, Indian Penal Code, and the second appellant under section 409, read with section 109, Indian Penal Code, that is to say, on the charges as framed by the Division Bench of the High Court in their order dated March 1, 1950, when the matter was before them on the previous occasion.
The accused persons then moved this Court and obtained special leave to appeal from the order aforesaid of the High Court, directing their committal to the Court of Session.
The special leave was granted by this Court, on January 15, 1952, and further proceedings against the appellants in the Court of Session were stayed.
The learned counsel for the appellants has raised three main contentions against the order passed by the High Court: (1) that this Court should not direct a trial of the persons after such a long delay 629 of about 12 years from the time the offence is alleged, to have been committed; (2) that the High Court bad no jurisdiction to revise the order of discharge passed by a Presidency Magistrate, and (3) that assuming that the High Court had such a jurisdiction, it erred.
in setting aside the order of the magistrate when there was no misdirection in the order of discharge, nor had it been shown that it was an improper order in all the circumstances of the case.
Under the last heading, a further contention was raised that the High Court had not considered all the grounds on which the order of discharge was passed.
It is convenient to deal with the contentions in the order in which they have been raised at the Bar.
As regards the delay in bringing the case to trial, it cannot be said that the blame lies all at the door of the prosecution.
As will presently appear, the accused persons themselves have largely contributed to this inordinate delay in bringing the case to trial.
During the period of 1948 to 1951 , the case traveled to the High Court of Bombay four times on interlocutory matters.
Only two of those revisional proceedings have been noticed above, the other two not being necessary to be referred to for the purposes of this appeal.
As already stated, special leave was granted by this Court in January, 1952.
The records, the preparation of which lay mainly with the appellants, was not received until January, 1954.
The record as prepared at the instance of the appellants and as it stands now, runs into eleven big volumes running into over 5,700 closely printed pages.
Of these volumes, only the first three have been referred to in the course of the arguments at the Bar only portions of them.
The remaining eight volume,% have all gone waste.
This case is a very telling illustration of waste of public time and private funds.
Even after the receipt of the records, the parties between them have succeeded in preventing the case from being put up for final hearing and disposal for another three years.
It is not necessary to go into any further details, but the Court must look with great disfavour upon, and publicly denounce the way in which the appeal has 630 been prosecuted during the last more than 5 years that the case has remained pending in this Court.
It cannot, therefore, be said that the appellants have any just grievance that the case has remained pending for more than nine years since after the submission of the charge sheet and has not yet been brought to trial.
They have largely to thank themselves for this result.
We cannot, therefore, for a moment, entertain the plea that on the ground of delay, the case should not proceed to trial, if this Court upholds the order of commitment made by the High Court.
The most important ground of attack against the order of the High Court is that it had no jurisdiction to set aside the order of discharge passed by a Presidency Magistrate.
This contention is based upon the ground, firstly that section 437 of the Code of Criminal Procedure, which specifically deals with the power to order commitment, does not, in terms, apply to a case dealt with by a Presidency Magistrate.
It was, therefore, suggested that the Legislature did not intend that an order of discharge passed by such a magistrate should be interfered with at all.
Secondly, it was contended that those cases, to be presently noticed, which have held that the authority of the High Court to interfere with such an order is derived from the provisions of sections 435 and 439, read with section 423 of the Code, have been wrongly decided.
In other words, it is contended that on a proper construction of those sections of the Code, it should be held that there was no power in the High Court to set aside an order of discharge passed by a Presidency Magistrate, though it has been taken as settled law during the last about half a century, so far as High Courts are concerned, that such an order is revisable by the High Court.
Before examining the rulings of the High Courts of Bombay and Calcutta, bearing on this controversy, we shall first examine the relevant provisions of the Code itself and find out for ourselves whether as a matter of interpretation of those sections, the contention has any force.
Under section 435, the High Court or any Sessions Judge or a District Magistrate or a Subvisional Magistrate specially so empowered, has 631 been vested with the power to call for and examine the record of any proceeding before any inferior criminal court, for the purpose of satisfying itself or himself as to the correctness, legality or propriety of any finding, sentence or order.
Section 436, dealing as it does with the power to direct further inquiry, need not detain us.
Section 437 is equally out of the way, because it deals with the powers of a Sessions Judge or a District Magistrate, to order commitment in cases triable exclusively by a Court of Session.
Section 439 is the operative section and the question now before us must be answered with reference to the terms of that section.
It provides that on examining the record of "any proceeding", the High Court "may, in its discretion, exercise any of the powers conferred on a, court of appeal by sections 423. . . (omitting portions not necessary for our present purpose), except that the section does not authorise a High Court to "convert a finding of acquittal into one of conviction.
" We have, therefore, to examine the terms of section 423 which contains the powers of an appellate court in dealing with appeals.
The learned counsel for the appellants contended that as an order of discharge is not appealable under the Code, it can be set aside only under the specific provisions of the Code contained in sections 436 and 437 and not otherwise.
It has already been pointed out that these two sections are out of the way in this appeal.
In other words, the argument is that only that order is revisable under section 439 of the Code which is appealable under the Code.
This argument has only to be stated to be rejected in view of the very wide terms in which section 439 has been worded.
Section 439 has to be read along with section 435 so far as the present controversy is concerned.
Section 435 certainly authorizes the High Court besides other courts mentioned therein, to "call for and examine the record of any proceeding before any inferior criminal court".
It has not been, and it cannot be contended that a Presidency Magistrate is not such an inferior criminal court.
If the High Court is empowered to call for the record of any proceeding before a Presidency Magistrate, it follows that it may examine the 632 correctness, legality or propriety of any order passed by him and if it finds that the order is not correct or is illegal or improper, it may, acting under section 439, exercise any of the powers conferred on a court of appeal by section 423.
But at this stage, it has been pointed out that the power to order committal for trial is contained in clause (a) of section 423(1), and that clause begins with the words " in an appeal from an order of acquittal".
It has, therefore, been contended that unless there is an appeal against an order of acquittal, the High Court 's power to order that the accused be committed for trial, cannot be exercised under section 439.
But section 417 of the Code specifically deals with an appeal to the High Court against acquittal, and its powers in dealing with such an appeal are contained in section 423 (1)(a).
If the appellant 's argument is well founded, section 439 becomes redundant in so far as it deals with the power of the High Court to order committal for trial.
In our opinion, the fallacy of this argument lies in reading all the words of section 423 into section 439, which the latter section does not contemplate.
Section 439 only authorizes the High Court in revision to exercise any of the powers conferred under, section 423.
It does not further make reference to the cases in which such powers have to be exercised.
The latter question does not arise because section 439 itself makes the sweeping provision that "in the case of any proceeding", the High Court may exercise the powers enumerated in section 423.
We have, therefore, to look into section 423 to find out not the cases in which the High Court can interfere but only the nature of the power that it can exercise in a case, in its revisional jurisdiction, that is to say, we have to incorporate only the several powers contained in section 423, into section 439, except the power to convert a finding of acquittal into one of conviction.
The argument that the power of revision contained in section 439 can be exercised only in cases of appealable orders, is also negatived by referring to section 441 which incorporates section 435.
Section 441 specifically provides for the record "of any proceeding of any Presidency Magistrate" being called for by the High Court under section 435.
In such a case, such a magistrate is empowered 633 to submit, along with the record, a statement setting forth the grounds of his decision or order, and the High Court shall then "consider such statement before overruling or setting aside the said decision or order.
" Section 441 is so widely worded as to include the decision or order of a Presidency Magistrate in any proceeding, which the High Court may set aside in a proper case.
Under the Code, a Presidency Magistrate may pass an order without recording the reasons for such an order, for example, an order under section 213 (1) committing the accused for trial.
If such an order is called in question before the High Court, the Presidency Magistrate concerned, unlike other magistrates, is permitted by the Code to supplement the record by a statement setting forth the grounds of his decision or order, so that the High Court may have before it not only the order or decision in question but also a statement of the reasons therefor.
It is manifest, therefore, that on a consideration of the relevant provisions of the Code, there is no warrant for th extremely wide proposition which has been canvassed before us.
Until the decision of the Calcutta High Court in Malik Pratap Singh vs Khan Mahomed (1), there was a divergence of judicial opinion in that Court as to the power of the High Court under section 439 to revise an order of discharge passed by a Presidency Magistrate.
The cases pro and con are discussed in that ruling and need not be specifically cited here.
The learned counsel for the appellants has not drawn our attention to any decision of any High Court in India to the contrary.
A Division Bench of the Bombay High Court also in the case of Emperor vs Varjivandas alias Kalidas Bhaidas (2 ), has taken the same view after discussing the Calcutta and Allahabad cases.
In view of these considerations, it must be held that there is no merit in the second contention raised on behalf of the appellants.
Having held that the High Court had the necessary jurisdiction, it remains to ' consider the last serious objection raised on behalf of the appellants to th (1) Cal.
(2) Bom, 84.
634 exercise of that jurisdiction by the High Court.
In this connection, it was contended that the High Court erred in reversing the order of the Presidency Magistrate and directing the accused to take their trial in the Court of Session, because, it was further argued, the High Court has not shown any misdirection in the well considered order passed by the Presidency Magistrate, or that it was otherwise improper.
It was further urged that the sole ground on which the High Court has set aside the order of discharge was that the jury may spell out a case which was not alleged by the prosecutions case which is wholly inconsistent with the case set out in the first information report and sought to be made out in evidence.
In order to appreciate the grounds on which this part of the appellants ' contentions has been rested, it is necessary to examine the relevant provisions of the Code of Criminal Procedure.
Chapter XVIII deals with the procedure before a committing magistrate.
Under section 208, the magistrate has to take all such evidence as may be produced by the prosecution and by the accused.
Section 209 authorizes the magistrate to discharge the accused person " if he finds that there are not sufficient grounds for committing the accused person for trial.
" Similarly, section 210 authorizes the magistrate to frame a charge declaring with what offence the accused is charged if he "is satisfied that there are sufficient grounds for committing the accused for trial.
" If the magistrate frames a charge against the accused person as aforesaid, it is open to the latter to examine witnesses in defence.
After such defence witnesses have been examined by the magistrate, section 213 authorizes him either to commit the accused for trial or to cancel the charge and to discharge the accused if he is satisfied that there are not sufficient grounds for committing him to the Court of Session.
As will presently appear, there is a large volume of case law on the question as to when a magistrate should or should not commit an accused person for trial.
The controversy has centered round interpretation of the words "sufficient grounds", occurring in the relevant sections of the Code, set out above.
635 In the earliest case of Lachman vs Juala (1), decided by Mr. Justice Mahmood in the Allababad High Court, governed by section 195 of the Criminal Procedure Code of 1872 (Act No. X of 1872), the eminent judge took the view that the expression "sufficient grounds" has to be understood in a wide sense including the power of the magistrate to weigh evidence.
In that view of the matter, he ruled that if in the opinion of the magistrate, the evidence against the accused "cannot possibly justify a conviction" there was nothing in the Code to prevent the magistrate from discharging the accused even though the evidence consisted of statements of witnesses who claimed to be eye witnesses, but whom the magistrate entirely discredited.
He also held that the High Court could interfere only if it came to the conclusion that the magistrate had committed a material error in discharging the accused or had illegally or improperly underrated the value of the evidence.
Thus, he overruled the contention raised on behalf of the prosecution that the powers of the committing magistrate did not extend to weighing the evidence and that the expression "sufficient grounds" did not include the power of discrediting eye witnesses.
Though the Code of Criminal Procedure was several times substantially amended after the date of that decision, the basic words "sufficient grounds" have continued throughout.
That decision was approved by a Division Bench of the Bombay High Court in In re Bai Parvati(2), and the observations aforesaid in the Allahabad decision were held to be an accurate statement of the law as contained in section 209 of the Code, as it now stands.
The High Court of Bombay held in that case that where the evidence tendered for the prosecution is totally unworthy of credit, it is the duty of the magistrate to discharge the accused.
It also added that where the magistrate entertains any doubt as to the weight or quality of the evidence, he should commit the case to the Court of Session which is the proper authority to resolve that doubt and to assess the value of that evidence.
The question of the extent of the power of a committing court under sections 209 and 210 of the Criminal 636 Procedure Code of 1882 (Act X of 1882), arose in the case of Queen Empress vs Namdev Satvaji (1), and a Division Bench of the Bombay High Court, presided over by Mr. Justice West, made the following observations which correctly laid down the legal position: ". . an accused ought to be committed when there is a prima facie case substantiated against him by the testimony of credible witnesses.
According to the English law, a commitment ought to be made whenever one or two credible witnesses give evidence showing that the accused has perpetrated an indictable offence (see Hale 's Pleas of the Crown, 11, 121 ; Hawkins ' Pleas of the Crown, Ch.
XVI; Cox vs Coleridge (14 Calc.
W. R., Cr. Rul., 16).
And the sort of prima facie case that warrants a committal is defined by Stat.
and 12 Vic., Ch. 42, section 25, as one "that is sufficient to put the party upon his trial for an indictable offence." According to our Criminal Procedure Code, sections 209 and 210, the magistrate is to commit, or not, as there are or are not, in his opinion, "sufficient grounds for committing ".
What are "sufficient grounds for committing" is not in any way defined, but it is manifest that they are not identical with grounds for convicting, since, taken in that sense, the provisions would enable the magistrate virtually to supersede the Court of Session to which the cognizance of the case for actual trial belongs.
The true principle appears to be that expressed in the English statute.
The magistrate ought to commit when the evidence is enough to put the party on his trial, and such a case obviously arises when credible witnesses make statements which, if believed, would sustain a conviction.
The weighing of their testimony with regard to improbabilities and apparent discrepancies is more properly a function of the Court having jurisdiction to try the case.
" A Division Bench of the same High Court dealing with a case arising under the Code of 1898 'Act V of 1898), observed that the words "sufficient grounds for committing", do not mean sufficient grounds for convicting, but have reference to a case in which the evidence is sufficient to put the accused on his trial, that is to (1) Bom.
372, 374 (1) Bom.
372, 374.
637 say, when there is credible evidence which, if believed, would sustain a conviction.
Hence, a committing court has only to be satisfied that there is a prima facie case made out by the prosecution evidence.
In the same High Court, on account of certain observations made in the case of Parasram Bhikha vs Emperor (1), the question of the ambit of the powers of a committing court was referred to a Full Bench presided over by Sir John Beaumont C. J.
The learned Chief Justice, in the course of his judgment, overruled the previous decision in I.L.R. , to the effect that the magistrate was entitled and bound to value and weigh the evidence and that the revisional court could interfere only if the order was perverse or manifestly contrary to the evidence.
He also observed that under section 209, a magistrate has the power to consider the evidence and, thus, to satisfy himself that there are sufficient grounds for committing the accused for trial, and, for that purpose, he has to look into the nature of the evidence and credibility of the witnesses, but that is not the same thing as examining evidence with a view to reaching a conclusion that a case for convicting the accused bad been made out.
In other words, it is not the magistrate 's duty to try the accused, which duty is cast upon the Court of Session.
In his view, if the magistrate came to the conclusion that there was evidence which required to be weighed, he ought to commit the accused for trial and he ought not to discharge the accused simply because in his view, the evidence was not sufficient for the conviction of the accused.
Thus, according to the learned Chief Justice, there is a difference between the power of a committing court to consider and appreciate the evidence and its power to weigh the evidence.
Rangnekar J. who delivered a separate but concurring judgment, does not appear to have agreed with the learned Chief Justice in all his observations, particularly in so far as he made a, distinction between considering the evidence and weighing the same.
(See Ramchandra Babaji Gore vs Emperor (1) Bom.
(2) Born.
638 It is not necessary to multiply instances where the High Courts in India have, in some cases, held that the duty of the committing court is only to satisfy itself that there are sufficient grounds for committing the accused for trial in the sense that there is prima facie evidence which, if believed by the Court of Session, may lead to conviction of the accused.
Whereas, there are also cases, as laid down in the earliest case referred to above in I.L.R. 5 Allahabad 161 (judgment of Mahmood J.), to the effect that the magistrate holding a preliminary inquiry is empowered to weigh the evidence led on behalf of the prosecution, and to decide for himself whether there is a probability of the trial ending in the conviction of the accused.
An examination of the large number of rulings cited before us, which we do not think it necessary to refer to in detail, shows that though it is easy to say that a magistrate should commit the accused for trial if he is satisfied that sufficient grounds for doing so have been made out, it is difficult to apply those crucial words "sufficient grounds" to individual cases.
Apparently conflicting observations about the powers of a committing magistrate have been made in the reported cases, but those observations have to be read in the light of the facts and circumstances disclosed in the case then before the Court.
In our opinion, the law in India and the law in England, on the question now under consideration, appears to be the same.
In "Halsbury 's Laws of England", Vol. 10, 3rd ed.
(Lord Simonds), in article 666 at p. 365, the law has been stated thus: "When all the evidence has been heard, the examining justices then present who have heard all the evidence must decide whether the accused is or is not to be committed for trial.
Before determining this matter they must take into consideration the evidence and any statement of the accused.
If the justices are of opinion that there is sufficient evidence to put the accused upon trial by jury for any indictable offence they must commit him for trial in custody or on bail.
" In each case, therefore, the magistrate holding the preliminary inquiry has to be satisfied that a 639 prima facie case is made out against the accused by the evidence of witnesses entitled to a reasonable degree of credit, and unless he is so satisfied, he is not to commit.
Applying the aforesaid test to the present case, can it be said that there is no evidence to make out a prima facie case, or that the voluminous evidence adduced in this case is so incredible that no reasonable body of persons could rely upon it ? As already indicated, in this case, there is a large volume of oral evidence besides an unusually large volume of documentary evidence the latter being wholly books and registers and other documents kept or issued by the Mills themselves, which may lend themselves to the inference that the accused are guilty, or to the contrary conclusion.
The High Court has taken pains to point out that this is one of those cases where much can be said on both sides.
It will be for the jury to decide which of the two conflicting versions will find acceptance at their hands.
This was pre eminently a case which should have been committed to the Court of Session for trial, and it is a little suprising that the learned Presidency Magistrate allowed himself to be convinced to the contrary.
The learned counsel for the appellants also raised a number of points bearing on the merits of the controversy on facts.
In view of the fact that we do not propose to interfere with the orders passed by the High Court, directing that the accused be committed for trial, we think it inexpedient to express any opinion on those controversial matters.
We do not think it desirable that any observations made by us, should prejudice either party at the trial.
In our opinion, both the courts below have traveled beyond the limits proper for decision at the stage at which the case was before them.
In our opinion, the accused persons did not consult their best interests when they invited the courts below to go into those questions which did not properly arise for determina tion at that stage.
We do not agree with the last contention raised on behalf of the appellants that the High Court has said too little on the merits of the case.
In our opinion, the High Court, in the circum 640 stances of the case, had been taken into matters which should have been left to be determined at the trial.
Perhaps, they had to cover the ground which had been so elaborately discussed in the order of the learned Presidency Magistrate.
For the reasons given above, we have come to the conclusion that there are no merits in this appeal.
It is accordingly dismissed.
It is hoped that the Court of Session, which will now be in seizing of the case, will conduct the trial and conclude the proceedings with all reasonable speed and without any avoidable delay.
We hope that the inordinate delay in bringing this case to trial has not prejudicially affected the case of either party.
Appeal dismissed.
| The High Court has ample power under section 439, read with section 435, of the Code of Criminal Procedure to revise an order of discharge made by a Presidency Magistrate in a commitment proceeding, and to direct the committal of the accused person to the Court of Session.
Section 439 of the Code contemplates all the powers of an Appellate court under section 423.
Of the Code, except the power to convert a finding of acquittal into one of conviction and that such powers may be exercised in the case of any proceeding.
There is, therefore, no basis for the proposition that the High Court can revise only such orders as are made appealable by the Code.
Malik Pratap Singh vs Khan Mahomed, Cal. 994 and Emperor vs Varjivandas alias Kalidas Bhaidas, (19O2) I.L.R. , referred to.
The words "sufficient grounds" occurring in SS. 209, 210 and 213 of the Code of Criminal Procedure do not mean sufficient grounds for the purpose of conviction but mean such evidence as would be sufficient to put the accused upon trial by the jury.
In each case, therefore, the committing Magistrate has to be satisfied whether or not a prima facie case has been made out against the accused person by reasonably reliable evidence.
Where he is satisfied that it has been, he has to commit the accused to the Court of Session and it is for the jury to decide which of the conflicting versions it should accept and either to convict or acquit him.
Queen Empress vs Namdev Satvaji, Bom.
372 approved.
Case law reviewed.
Consequently, in a case where a committing Presidency Magistrate, on a full and elaborate consideration of a large volume of evidence, both oral and documentary, adduced both by the prosecution and the defence came to the conclusion that no Criminal court would convict the accused persons on such evidence and discharged them and the Hi Court in exercise of its powers 619 under section 439 of the Code of Criminal Procedure set aside the order of discharge and directed the committal of the accused persons to the Court of Session on charges under section 409 and S 409 read with section 109 of the Indian Penal Code and it could not be said that the evidence had not made out a prima facie case against the accused persons or that it could not be reasonably relied on.
Held, that it was preeminently a case for committal to the Court of Session, the order of discharge made by the Presidency Magistrate was highly improper and the High Court 's order must be affirmed.
Held further, that the appellants could not be allowed to make a grievance of the inordinate delay in bringing them to trial, for which they themselves were primarily responsible, and such delay could be no ground for not holding the trial at all.
|
Summarize this legal judgement text concisely | Civil Appeal No. 130 of 1956.
Appeal from the judgment and decree dated the 10th March, 1952, of the Allahabad High Court in Civil Writ No. 737 of 1951.
G. C. Mathur and C. P. Lal, for the appellant.
section P. Sinha and section D. Sekhri, for the respondent.
September 30.
The judgment of Das C. J., Venkatarama Aiyar, Jafer Imam and Sarkar JJ.
was delivered by Das C. J. Bose J. delivered a separate judgement.
DAS C. J.
This is an appeal filed under a certificate of fitness granted by the High Court of Judicature at Allahabad under articles 132 (1) and 133 (1) (c) of the Constitution.
It is directed against the judgment and order of a Division Bench of the said High Court pronounced on March 10, 1952, in Civil Misc.
Writ No. 7376 of 1951 quashing the depart mental proceedings against the respondent and the orders passed 597 therein, namely, the order for his dismissal passed by the District Superintendent of Police on December 21, 1948, the order of the Deputy Inspector General of Police passed on June 7, 1949, dismissing his appeal against the order of his dismissal and the order of the Inspector General of Police dated April 22,1950 rejecting his application for revision.
The judgment of the High Court also directed that, if it were desired to proceed against the respondent, the trial should be presided over by a person other than the District Superintendent of Police who gave evidence in the case and also passed the order of dismissal against the respondent and that it should be in strict conformity with the relevant Police Regulations.
The respondent was a constable in the Uttar Pradesh Police Force and was, at the material time, officiating as a Head Constable and posted in the District of Fatenpur.
In Decem ber, 1947, sixty candidates had to be selected from the Police Force for training at tile Police Training College, Moradabad.
The respondent was sent up for selection from the District of Fatehpur.
He, however, failed in the Hindi test and was not selected and sixty other candidates were selected for the training.
On December 8, 1947 a letter, purporting to have been issued from Lucknow, was received in the U. P. Police Head Office at Allahabad intimating that the respondent had been select ed for training at the Police Training College.
As there were only sixty vacancies and as sixty candidates had al ready been selected, the Head Office people were led to make enquiries as to how this letter came to be issued from Lucknow.
The letter having been placed before the Inspector General of Police, Lucknow,he declared it to be a forgery.
As the letter was ostensibly for the benefit of the respond ent, it was naturally suspected that it must have been sent by or at his instance.
On March 15, 1948 the respondent was placed under suspen sion.
Under section 243 of the Government of India Act, 1935, which was then in force, the respondent, who was in the police force, was not governed by sub section
(3) of section 240 which corresponds to article 311 (2) of 598 the Constitution but was governed by the (Act V of 1861) and the Regulations made thereunder by the State Government.
Accordingly, under section 7 of the read with Uttar Pradesh Police Regulations, a departmental enquiry, called a "trial" in the Regulations, was started against the respondent.
One Shri B. N. Bhalla, the then District Superintendent of Police, Fatehpur, was deputed to hold the trial.
He found the respondent guilty and on April 20, 1948 passed an order of dismissal against him.
The respondent went up on appeal to the Deputy Inspector General of Police under Reg.
That appeal was dismissed on June 7, 1949.
The respondent then filed a revision application to the Inspector General of Police under Reg. 512.
That application was also dismissed on April 22, 1950.
Having exhausted all his remedies under the read with the Regulations thereunder the respondent on February 24, 1951, filed a writ petition under article 226 of the Con stitution, praying that the file of the applicant (now respondent) be called for and his dismissal be set aside and that he be given such further and other relief as he may, in law, be entitled to.
The main point taken in the affidavit filed in support of the petition and urged before the High Court was that Shri B. N. Bhalla, District Superintendent of Police, who presided over the trial and as such had to come to a finding and to make an order, also gave his own evi dence in the proceedings at two stages and had thus become disqualified from continuing as the judge, as, in the cir cumstances he was bound to be biased against the respondent.
A preliminary objection was taken on behalf of the appellant State that the High Court had no power, under article 226, to deal with the order of dismissal which had been passed at a time when the Constitution of India had not come into force, but the High Court rejected that plea as it took the view that the order of dismissal passed by the District Superin tendent of Police on December 20, 1948, and the order of dismissal of the appeal passed by the Deputy Inspector General of Police on June 7,1949, had not become final 599 until the Inspector General of Police, on April 22, 1950, made his order dismissing the revision application filed by the respondent under Reg. 512 and that as the last mentioned order had been passed after the Constitution had come into force, and had, by article 226, vested powers in the High Court to issue prerogative writs, the High Court had ample juris diction to exercise its newly acquired powers under that article.
On the merits the High Court came to the conclu sion that the rules of natural justice and fair play had been disregarded, in that the District Superintendent of Police had continued to preside over the trial even after it had become necessary for him to put on the record his own testimony as against that of another witness and it held that the presiding officer had, in the circumstances, become disqualified, on the ground of bias, from further acting as the presiding officer and that the departmental trial con ducted by him thereafter had become vitiated.
The High Court, accordingly, quashed the proceedings and set aside the three several orders herein before mentioned.
The appellant State on February 4, 1955, obtained from the High Court a certificate of fitness under articles 132(1) and 133(1)(c) and hence the present appeal to this Court.
It will be recalled that the forged letter of December 8, 1947, was suspected to have been manufactured or sent by or at the instance of the respondent to further his interest.
The case against the respondent was that the offending letter had been typed by one Shariful Hasan, the typist attached to the office of the Superintendent of Police, Fatehpur, and, therefore, it was essential for the depart ment to establish that the respondent was in friendly rela tions with Shariful Hasan who was said to have typed the letter.
Apparently in some preliminary enquiry and in the presence of Shri B. N. Bhalla one Mohammad Khalil, a Head Constable, had spoken about Shariful Hasan being very friendly with the respondent.
But while giving his evidence at the departmental trial the said Mohammad Khalil denied having made any such statement.
In the circumstances it became necessary to contradict him by the testimony of Shri B. N. Bhalla in whose presence 600 that witness had, on a previous occasion, stated that Shari ful Hasan was very friendly with the respondent.
According ly Shri B. N. Bhalla had his testimony recorded by a Deputy Superintendent of Police.
This was done at two stages, namely, once before the charges were framed and again after the framing of the charges.
The respondent 's grievance is that Shri 'B. N. Bhalla, who had thus become a witness in the case, ought not to have further continued to act as the presiding officer and that his continuing to do so vitiated the trial and his order was a nullity.
That Shri B. N. Bhalla had his own testimony recorded in the case is not denied.
Indeed the appellant State, in opposition to the respondent 's writ application, filed an affidavit affirmed by Shri B. N. Bhalla, paragraph 8 of which runs as follows: " 8.
That the deponent gave his first statement on 13th October, 1948, which was recorded by Shri Mohammad Sadiq, Deputy Superintendent of Police before the charge and the second statement on 25th October, 1948, which was recorded by another Deputy Superintendent of Police after the charge.
One Head Constable, Mohammad Khalil, who was prosecution witness in the case, when cross examined denied to have said that the applicant and Shariful Hasan were on friendly terms.
He turned hostile and it became necessary for the deponent to depose about certain facts which had happened in his presence and which belied the testimony of Mohammad Khalil " The salient facts being thus admitted there can be no escape from the conclusion that Shri B. N. Bhalla should not have presided over the trial any longer.
The point in issue was whether Shariful Hasan was in friendly relationship with the respondent.
Mohammad Khalil had in his evidence at the trial denied having made any statement to this effect.
Shri B. N. Bhalla gave evidence that Mohammad Khalil had in his presence admitted this friendship of Shariful Hasan with the respondent.
Which of the two witnesses, Mohammad Khalil and Shri B. N. Bhalla, was to be believed was the duty of the person presiding over the trial to determine.
Shri B. N. Bhalla was obviously 601 most ill suited to undertake that task.
Having pitted his evidence against that of Mohammad Khalil Shri B. N. Bhalla vacated the Judge 's seat and entered the arena as a witness.
The two roles could not obviously be played by one and the same person.
lndeed Shri B. N. Bhalla himself realised it and accordingly bad his own evidence recorded on both the occasions by other high officers.
It is futile to expect that he could, in the circumstances, hold the scale even.
it is suggested that there might have been other evidence establishing the friendship between Shariful Hasan and the respondent and that the evidence of Shri B. N. Bhalla might not have been relied on or might Dot have been the deciding factor.
There is nothing on the record before us to support this suggestion.
But assuming that Shri B. N. Bhalla did not rely on his own evidence in preference to that of Mohammad Khalil a fact which is hard to believe, especially in the face of his own affidavit quoted above the act of Shri B. N. Bhalla in having his own testimony recorded in the case indubitably evidences a state of mind which clearly discloses considerable bias against the respondent.
If it shocks our notions of judicial propriety and fair play, as indeed it does, it was bound to make a deeper impression on the mind of the respondent as to the Unreality and futility of the proceedings Conducted in this fashion.
We find ourselves in agreement with the High Court that the rules of natural justice were completely discarded and all canons of fair play were grievously violated by Shri B. N. Bhalla continuing to preside over the trial.
Decision arrived at by such process and order founded on such decision cannot possibly be regarded as valid or binding.
Learned counsel appearing for the appellant State then urges that, assuming that any error, irregularity or illegality had been committed by Shri B. N. Bhalla in the course of the trial held by him, a writ application under article 226 was not the proper remedy for correcting the same.
Reference is made to section 7 of the which, subject to such rules as the State Government may make under the Act, gives 602 power to certain specified Police Officers of high rank to dismiss, suspend or reduce any Police Officer of the subordinate ranks whom they may think remiss or negligent in the discharge of his duties or unfit for the same.
Regulation 508 of the Police Regulations made by the State of Uttar Pradesh provides for an appeal from the decision of the officer holding the trial.
Likewise Reg.
512 confers on an officer whose appeal has been rejected to submit an application for revision to the authority next in rank above that by which his appeal has been rejected.
The argument is that the and the Regulations made thereunder having provided for an appeal and a revision and having set up special forums with full powers and jurisdiction to correct the error, irregularity or illegality touching jurisdiction, procedure and the merits committed by the officer presiding over the trial, such forums alone are competent to correct all such errors, irregularities and illegalities.
In this case admittedly the respondent preferred an appeal and then went up to the Inspector General of Police in revision.
In the appeal and in the revision the respondent either took the plea of the breach of the rules of natural justice and fair play now complained of or he did not.
The respondent knew the material facts and must be deemed to have been conscious of his legal rights in the matter and, therefore, if he failed to raise the objection before the officer who was dealing with his appeal or revision he cannot, it is urged, be permitted to do so for the first time on a writ petition under article 226 before the High Court, as has been held by this Court in Manak Lal vs Dr. Prem Chand (1).
On the other hand if he had raised the question in his grounds of appeal or in his revision petition and insisted on it at the hearing of his appeal or his revision application then the orders of dismissal of his appeal and his revision petition by authorities fully competent and having full powers and jurisdiction to decide the question must be taken as a rejection of that plea on its merits and as no error or irregularity or illegality is alleged to have been committed at the 603 stages of the appeal or the revision proceedings, the High Court could not, under article 226, interfere in the matter.
In support of this argument learned counsel for the appellant State relies upon the decision of this Court in Janardan Reddy vs The State of Hyderabad (1).
In that case the petitioners were convicted by a special Tribunal of Hyderabad of murder and other offenses and sentenced to death by hanging.
Their Convictions and sentences had been Confirmed by the Hyderabad High Court before January 26, 1950, when the Constitution of India came into force.
It was after the commencement of the Constitution that the petitioners applied to this Court under article 32 praying (1) for a writ in the nature of certiorari calling Upon the Government of Hyderabad and the Special Judge to produce the records of the case and to show cause why the convictions and sentences should not be quashed and (2) for a writ of prohibition directing the Government and the Special Judge not to execute the petitioners.
Subsequently the petition was amended, with the leave of the court, by adding prayer (3) for a writ of habeas corpus.
A number of points were raised before this Court.
As regards the several points complaining of alleged illegality by reason of misjoinder of charges and the infliction of the sentence of death by hanging and not decapitation this Court at page 351 observed " But, for the purpose of the present case, it is ,sufficient to point out that even if we assume that there was some defect in the procedure followed at the trial, it does not follow that the trial court acted without jurisdiction.
There is a basic difference between want of jurisdiction, and an illegal or irregular exercise of jurisdiction, and our attention has not been drawn to any authority in which mere non compliance with the rules of procedure has been made a ground for granting one of the writs prayed for.
In either case, the defect, if any, can according to the procedure established by law be corrected only by a court of appeal or revision.
Here the appellate court which was competent to deal with the matter has pronounced its judgment against the petitioners, and the matter (1) ; 604 having been finally decided is not one to be reopened in a proceeding under article 32 of the Constitution.
" As regards the prayers for writs of certiorari and prohibition it was held that the writs of certiorari and prohibition were hardly appropriate remedies in that case, because they were usually directed to an inferior court, but at the date when the High Court dealt with those cases and confirmed the convictions and sentences of the petitioners, this Court was not in existence, and at that point of time, by no stretch of reasoning, the High Court could be said to have been subordinate to this court.
Then this Court went on to consider the remaining question, namely, whether after the commencement of the Constitution this Court could exercise its newly acquired jurisdiction under article 32 and issue a writ of habeas corpus as the detention of the petitioners was continuing even after the commencement of the Constitution.
It was urged that it was open to the petitioners to prove by affidavit that the court which passed the order had acted without jurisdiction or in excess of it and the superior court was free to investigate the matter.
After stating that a return that the persons were in detention in execution of sentences on indictment on criminal charges was a sufficient answer to the application for a writ of habeas corpus, this Court proceeded at pages 366 367 to observe as follows: " Assuming however, that it is open even in such cases to investigate the question of jurisdiction, as was held in In re Authers (1), it appears to us that the learned judges who decided that case went too far in holding that notwithstanding the fact that the conviction and sentence had been upheld on appeal by a court of competent jurisdiction, the mere fact that the trial court had acted without jurisdiction would justify interference, treating the appellate order as a nullity.
Evidently, the Appellate Court, in a case which properly comes before it on appeal, is fully competent to decide whether the trial was with or without jurisdiction, and it has jurisdiction to decide the matter rightly as well as wrongly.
If it affirms the conviction (1) I. L.R. 22 B.D. 605 and thereby decides wrongly that the trial court had the jurisdiction to try and convict, it cannot be said to have acted without jurisdiction, and its order cannot be treated as a nullity.
It is true that there is no such thing as the principle of constructive res judicata in a criminal case, but there is such a principle as finality of judgments, which applies to criminal as well as civil cases and is implicit in every system, wherein provisions are to be found for correcting errors in appeal or in revision.
" In the first place it must be noted that the two obser vations quoted from the decision of this Court on which reliance is placed on behalf of the appellant State were made in a case where the alleged error, irregularity or illegality was committed by a special tribunal which had not merely the trappings of a court but was a court of law presided over by a judge with legal training and background and bound by rules of evidence and procedure laid down for it and the appeal from its decision lay before the highest and final court of the State a superior court of record.
But orders made on departmental "trial" held by an officer in the department without any legal training and orders passed by his superior officers in the same department on appeal or in revision which, in the words of Harries C.J. in Assistant Collector of Customs vs Soorajmull Nagarmull (1) were only in the nature of an appeal from Caesar to Caesar and which might not be regarded with any great confidence by persons brought before them can hardly be equated with reasonable propriety with the orders passed by the Special Tribunal and an appeal therefrom by the Hyderabad High Court with reference to which bodies alone the said observations had been made.
In the next place it must be borne in mind that there is no rule, with regard to certiorari as there is with mandamus, that it will lie only where there is no other equally effective remedy.
It is well established that, provided the requisite grounds exist, certiorari will lie although a right of appeal has been conferred by statute.
(Halsbury 's Laws of England, 3rd Ed., Vol.
11, p. 130 and the cases cited there).
The fact (1) , 46. 606 that the aggrieved party has another and adequate remedy may be taken into consideration by the superior court in arriving at a conclusion as to whether it should, in exercise of its discretion, issue a writ of certiorari to quash the proceedings and decisions of inferior courts subordinate to it and ordinarily the superior court will decline to interfere until the aggrieved party has exhausted his other statutory remedies, if any.
But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies.
In the King vs Postmaster General Ex parte Carmichael (1) a certiorari was issued although the aggrieved party had an alternative remedy by way of appeal.
It has been held that the superior court will readily issue a certiorari in a case where there has been a denial of natural justice before a court of summary jurisdiction.
The case of Rex vs
Wadsworth Justices Ex parte Read (2) is an authority in point.
In that case a man had been convicted in a court of summary jurisdiction without giving him an opportunity of being heard.
It was held that his remedy was not by a case stated or by an appeal before the quarter sessions but by application to the High Court for an order of certiorari to remove and quash the conviction.
At page 284 Viscount Caldecote C.J. observed: " It remains to consider the argument that the remedy of certiorari is not open to the applicant because others were available.
It would be ludicrous in such a case as the present for the convicted person to ask for a case to be stated.
It would mean asking this court to consider as a question of law whether justices were right in convicting a man without hearing his evidence.
That is so extravagant an argument as not to merit a moment 's consideration.
As to the right of appeal to quarter sessions, it may be that the applicant could have had his remedy if he (1)[1928] 1 K.B. 201.
(2) 607 had pursued that course, but I am not aware of any reason why, if in such circumstances as these, he preferred to apply for an order of certiorari to quash his conviction, the court should be debarred from granting his application." Likewise in Khurshed Modi vs Rent Controller, Bombay (1), it was held that the High Court would not refuse to issue a writ of certiorari merely because there was a right of appeal.
It was recognized that ordinarily the High Court would require the petitioner to have recourse to his ordinary remedies, but if it found that there had been a breach of fundamental principles of justice, the High Court would certainly not hesitate to issue the writ of certiorari.
To the same effect are the following observations of Harries C.J. in Assistant Collector of Customs vs Soorajmull Nagarmul (2) at page 470: " There can, I think, be no doubt that Court can refuse to issue a certiorari if the petitioner has other remedies equally convenient and effective.
But it appears to me that there can be cases where the court can and should issue a certiorari even where such alternative remedies are available.
Where a Court or Tribunal, which is called upon to exercise judicial or quasi judicial functions discards all rules of natural justice and arrives at a decision contrary to all accepted principles of justice then it appears to me that the court can and must interfere.
" It has also been held that a litigant who has lost his right of appeal or has failed to perfect an appeal by no fault of his own may in a proper case obtain a review by certiorari.
(See Corpus Juris Secundum Vol.
14, article 40, p. 189).
If, therefore, the existence of other adequate legal remedies is not per se a bar to the issue of a writ of certiorari and if in a proper case it may be the duty of the superior court to issue a writ of certiorari to correct the errors of an inferior court or tribunal called upon to exercise judicial or quasi judicial functions and not to relegate the petitioner to other legal remedies available to him and if the superior court can in a proper case exercise its jurisdiction 1) A.I.R. 1 Bom.
6. 2) 608 in favour of a petitioner who has allowed the time to appeal to expire or has not perfected his appeal, e.g., by furnishing security required by the statute, should it then be laid down as an inflexible rule of law that the superior court must deny the writ when an inferior court or tribunal by discarding all principles of natural justice and all accepted rules of procedure arrived at a conclusion which shocks the sense of justice and fair play merely because such decision has been upheld by another inferior court or tribunal on appeal or revision? The case of In re, Authers (1) referred to in Janardan Reddy 's case, (2) furnishes the answer.
There the manager of a club was convicted under a certain statute for selling beer by retail without an excise retail license.
Subsequently he was convicted of selling intoxicating liquor, namely, beer without a license under another statute.
Upon hearing of the later charge the magistrate treated it as a second offence and imposed a full penalty authorised in the case of a second offence by the latter statute.
His appeal to the quarter sessions having been dismissed, he applied for a writ of habeas corpus and it was granted by the King 's Bench Division on the ground that the magistrate could not treat the later offence as a second offence, because it was not a second offence under the Act under which he was convicted for the second time.
Evidently the point was taken that if there had been any error, irregularity or illegality committed by the magistrate, the quarter sessions could have on appeal corrected the same and that the quarter sessions having dismissed the appeal the court of Queen 's Bench Division could not issue the writ of habeas corpus.
This was repelled by the following observation of Hawkins J.: " This is true as a fact, but it puts the prosecution in no better position, for if the magistrate had no power to give himself jurisdiction by finding that there had been a first offence where there had been none, the justices could not give it to him.
" On the authorities referred to above it appears to us that there may conceivably be cases and the instant (1) 889 (2) ; 609 case is in point where the error, irregularity or illegality touching jurisdiction or procedure committed by an inferior court or tribunal of first instance is so patent and loudly obtrusive that it leaves on its decision an indelible stamp of infirmity or vice which cannot be obliterated or cured on appeal or revision.
If an inferior court or tribunal of first instance acts wholly without jurisdiction or patently in excess of jurisdiction or manifestly conducts the proceedings before it in a manner which is contrary to the rules of natural justice and all accepted rules of procedure and which offends the superior court 's sense of fair play the superior court may, we think, quite properly exercise its power to issue the prerogative writ of certiorari to correct the error of the court or tribunal of first instance, even if an appeal to another inferior court or tribunal was available and recourse was not had to it or if recourse was had to it confirmed what ex facie was a nullity for reasons aforementioned.
This would be so all the more if the tribunals holding the original trial and the tribunals hearing the appeal or revision were merely departmental tribunals composed of persons belonging to the departmental hierarchy without adequate legal training and background and whose glaring lapses occasionally come to our notice.
The superior court will ordinarily decline to interfere by issuing certiorari and all we say is that in a proper case of the kind mentioned above it has the power to do so and may and should exercise it.
We say no more than that.
Learned counsel for the appellant State next urges that because the order of dismissal was passed by the District Superintendent of Police on December 20, 1948, and the order dismissing the appeal was passed by the Deputy Inspector General of Police on June 7, 1949, both of which were before the commencement of the Constitution, the High Court could not exercise its powers under article 226 to quash those orders.
This argument is countered by the respondent by the argument that the dismissal order of December 20, 1948, did not become final until after the Inspector General of Police had dismissed the revision, 610 application on April 22,1950, that is to say, after the Constitution came into force, and, therefore, the High Court had ample power to quash all the three orders.
It is not disputed that our Constitution is prospective in its application and has no retrospective operation except where the contrary has been expressly provided for.
It has been held in a series of decisions of the High Courts, some of which are referred to in the judgment under appeal, that article 226 and article 227 have no retrospective operation and transactions which are past and closed and the rights and liabilities which have accrued and vested would remain unaffected.
The correctness of this principle has not been questioned by the High Court when dealing with the present case and has not been disputed before us.
It is, therefore, conceded that if the matter had rested with the order of dismissal passed by the District Superintendent of Police on April 20, 1948, and the order passed by the Deputy Inspector General of Police on June 7, 1949, dismissing the appeal and confirming the order for the dismissal of the respondent, an application for a writ under article 226 would not lie in this High Court to set aside those orders as this was not one of the High Courts that had writ jurisdiction before the Constitution.
It is, however, contended that the order of dismissal dated April 20, 1948, had merged in the order passed on appeal on June 7,1949, and that both the orders merged in the order passed by the Inspector General of Police on April 22, 1950, on the revision application.
It is said that the revisional jurisdiction is a part of the appellate jurisdiction and the principle on which a decree of the court of first instance in a civil suit merges in the decree on appeal applies with equal force to an order made on an application for revision and consequently both the orders passed by the District Superintendent of Police and that passed on appeal by the Deputy Inspector General of Police merged in the order passed on revision by the Inspector General of Police on April 22, 1950.
To put it shortly, the contention of the respondent is that the order of dismissal passed on April 20,became final only on the passing of the order in 611 revision on April 22, 1950, and as that order was passed after the date of the commencement of the Constitution, its validity could be called in question on an application under article 226.
There appear to be two answers to the foregoing contention.
As we have already observed an order of dismissal passed on a departmental enquiry by an officer in the department and an order passed by another officer next higher in rank dis missing an appeal therefrom and an order rejecting an application for revision by the head of the department can hardly be equated with any propriety with decrees made in a civil suit under the Code of Civil Procedure by the court of first instance and the decree dismissing the appeal there from by an appeal court and the order dismissing the revision petition by a yet higher court, as has been sought to be done by the High Court in this case, because the departmental tribunals of the first instance or on appeal or revision are not regular courts manned by persons trained in law although they may have the trappings of the courts of law.
The danger of so doing is evident from what has happened in the very case now before us.
In the next place, while it is true that a decree of a court of first instance may be said to merge in the decree passed on appeal there from or even in the order passed in revision, it does so only for certain purposes, namely, for the purposes of computing the period of limitation for execution of the decree as in Batuk Nath vs Munni Dei(1), or for computing the period of limitation for an application for final decree in a mortgage suit as in Jowad Hussain vs Gendan Singh (2).
But, as pointed out by Sir Lawrence Jenkins in delivering the judgment of the Privy Council in Juscurn Boid vs Prithichand Lal (3), whatever be the theory under other systems of law, under the Indian Law and ' procedure an original decree is not suspended by the presentation of an appeal nor is its operation interrupted where the (1) (1914) L.R. 41 I.A. 104.
(2) (1926) L.R. 53 1 A. 197.
(3) (1918) L.R. 46 I.A, Cal.
670, 678 679.
612 decree on appeal is merely one of dismissal.
There is nothing in the Indian Law to warrant the suggestion that the decree or order of the court or tribunal of the first instance becomes final only on the termination of all proceedings by 'way of appeal or revision.
The filing of the appeal or revision may put the decree or order in jeopardy but until it is reversed or modified it remains effective.
In that view of the matter the original order of dismissal passed on April 20, 1948, was not suspended by the presentation of appeal by the respondent nor was its operation interrupted when the Deputy Inspector General of Police simply dismissed the appeal from that order or the Inspector General simply dismissed the application for revision.
The original order of dismissal, if there were no inherent infirmities in it, was operative on its own strength and it did not gain any greater efficacy from the subsequent orders of dismissal of the appeal or the revision except for the specific purposes hereinbelow mentioned.
That order of dismissal having been passed before the Constitution and rights having accrued to the appellant State and liabilities having attached to the respondent before the Constitution came into force, the subsequent conferment of jurisdiction and powers on the High Court can have no retrospective operation on such rights and liabilities.
Even if the order of dismissal of the respondent was a nullity on the ground that it was passed by disregarding the rules of natural justice, the High Court could not properly be asked to exercise its newly acquired jurisdiction and powers under article 226 to correct errors, irregularities or illegalities committed by the inferior departmental tribunal before the commencement of the Constitution, for then there will be no limit to its going backward and that will certainly amount to giving the provisions of article 226 a retroactive operation.
This aspect of the matter does not appear to have been pressed in the High Court or adverted to by it.
It is only on this ground that we are constrained, not without regret, to accept this appeal.
The appeal is, therefore, allowed, but in the circumstances of the case we make no order as to costs.
613 BOSE J. With great respect I am unable to agree.
I respectfully agree with my Lord that Janardan Reddy 's case (1) must not be construed to mean that a High Court can never interfere under article 226 once a competent Court of appeal has finally decided whether a Court subordinate to it has jurisdiction or not in a given matter.
I also accept the position that the Constitution is not retrospective and that the Courts cannot exercise any new jurisdiction and powers conferred by it to reopen decisions and orders that had become final before it came into being.
But I cannot agree that is the case here.
The very wide powers conferred on the High Courts by article 226, and on this Court by article 136, were given in order to ensure that justice is done in this land and that the Rule of Law prevails.
I see no reason why any narrow or ultra technical restrictions should be placed on them.
Justice should, in my opinion, be administered in our Courts in a common sense liberal way and be broad based on human values rather than on narrow and restricted considerations hedged round with hairsplitting technicalities.
What is the position here ? What would have been the result if the order of April 20, 1948, dismissing the respondent had been passed after the Constitution instead of before it ? At what point of time would the High Court have entertained a petition under article 226 ? I think it is elementary that, save in exceptional cases, the Courts will not interfere under article 226 until all normal remedies available to a petitioner have been exhausted.
The normal remedies in a case of this kind are appeal and revision.
It is true that on a matter of jurisdiction, or on a question that goes to the root of the case, the High Courts can entertain a petition at an earlier stage but they are not bound to do so and a petition would not be thrown out because the petitioner had done that which the Courts usually direct him to do, namely, to exhaust his normal remedies before invoking an extraordinary jurisdiction.
Therefore, if this order of dismissal had (1)[1951] S.C.R.344.
614 been made after the Constitution, the petitioner would have been expected to pursue his remedies of appeal and revision first and could not have come to the High Court in the ordinary way until he had exhausted them; and having come at that stage he could not have been turned away unheard on the ground that he was out of time because his grievance was against the original order.
The very decisions to which my Lord has referred establish that for these purposes, at any rate, the earlier orders would merge in the final one.
But I am not basing on technicalities.
What is plain to me is that if this order of dismissal had been made after the Constitution, the petitioner would have been entitled to wait for the final order (and in the ordinary way would have been bound to wait) before coming to the High Court.
Why is the position any different because he has done before the Constitution exactly what he would have been expected, and in the ordinary course bound, to do after it ? The final order was passed after the Constitution on April 22, 1950.
It is true that if it had been passed before the Constitution came into force on January 26, 1950, the petitioner would have had no remedy in the Courts.
But the Constitution breathed fresh life into this land and conferred precious rights and privileges that were not there before.
Why should they be viewed narrowly ? Why should not that which would have been regarded as still pending for present purposes, if all had been done after the Constitution, be construed in any different way when the final act, which is the decisive one for these purposes, was done after it ? I regard it as unduly narrow and restrictive to equate these broad based constitutional privileges to highly technical procedural decisions dealing with limitation and the merger of decrees.
The question to my mind is not whether there has been merger but whether those proceedings can, on any broad and commons view, be regarded as still pending for the purposes of article 226.
If they would be so regarded when all is done after the Constitution (and about that I have no doubt), what conceivable justification is there for 615 holding that they cannot in this case just because a part of the process had started before it ? The principle that new rights conferred under the Constitution can be used in pending proceedings with devastating effect has been accepted by this Court in many cases.
In Lachmandas Kewalram Ahuja vs The State of Bombay (1) my Lord the Chief Justice, delivering the judgment of the Court, pointed out at page 734 that though the Legislature had power to take away normal rights of, among other things, transfer and revision in a criminal case before the Constitution, that kind of legislation became bad after the Constitution, even if it bad been enacted before, because of the new rights conferred by article 14.
The principle was also applied in Shree Meenakshi Mills Ltd. vs Sri A. V. Visvanatha Sastri (2), Dhirendra Kumar Mandal vs The Superintendent and Remembrance of Legal Affairs to the Government of West Bengal(3), Habeeb Mohamed vs The State of Hyderabad(4) Syed Casim Razvi vs The State of Hyderabad (5) and Keshavan Madhava Menon vs The State of Bombay (6).
These cases are not exactly in point but the principle is there and it is that principle that I invoke here.
On the merits I am clear that the appeal should be dismissed.
In the first place, this Court, following the English decisions, has decided in Manak Lal vs Dr. Prem Chand Singhvi (7) that the principles of natural justice must be observed not only by Courts proper but also by " all tribunals and bodies which are given jurisdiction to determine judicially the rights of parties"; and if they are not observed, the decision is vitiated.
So that is now beyond controversy.
Next, there can, I think, be no doubt that the District Superintendent of Police, who conducted the departmental trial and found the respondent guilty, acted in a judicial capacity.
The Departmental Rules that require an enquiry in such cases call the 2,0.7 (1) [1952) S.C.R. 710.
(2) , 798.
(3) ; ,237.
(4) ; (5) (6) [1951] 9.C.R. 228.
(7) ; , 429.
616 proceedings a trial and the procedure ,set out in them indicates the judicial nature of the enquiry.
So that condition is also fulfilled.
Then, thirdly, were the principles of natural justice ignored in this case ? That also is, I think, settled by authority.
What happened here ? The District Superintendent of Police examined a certain witness in the course of the enquiry.
It seems that witness 's evidence was considered a vital link in the chain of evidence against the respondent.
The District Superintendent of Police reached the conclusion that the witness had turned hostile.
He may have been right about that, but he also considered it necessary to refute this evidence and make good the lacunas by bringing other material on record.
Apparently, no other witness was available, so the District Superintendent of Police, who seems to have had personal knowledge about the facts, stepped down from the Bench and got his testimony recorded by another authority, once before charge and again after charge, and each time, after that was done, stepped back on to the Bench in order solemnly to decide whether he should believe his own testimony in preference to that of the witness who, in his judgment, had committed perjury and gone back on the truth.
It hardly matters whether this was done in good faith or whether the truth lay that way because the spectacle of a judge hopping on and off the bench to act first as judge, then as witness, then as judge again to determine whether he should believe himself in preference to another witness, is startling to say the least.
It would, doubtless delight the hearts of a Gilbert and Sullivan Comic Opera audience but will hardly inspire public confidence in the fairness and impartiality of departmental trials; and certainly not in the mind of the respondent.
Even before the Constitution, departmental trials were instituted to instil a sense of security in the services and inspire confidence in the public about the treatment accorded to government servants.
The question in these cases is always: Whether it is likely to produce, in the minds, of the litigant or the public at large a reasonable doubt 617 about the fairness of the administration of justice.
(Manak Lal vs Dr. Prem Chand) (1).
One of the English cases relied on by this Court in the case just cited was the House of Lords ' decision in Frome United Breweries CO.
vs Bath Justices(2).
At page 600 Lord Atkinson cited an instance which is almost on all fours with the present case.
He said: " It could not possibly have been intended by this statute to authorise a practice which would, I think, be inconsistent with the proper administration of justice namely, that a licensing justice, one of the members of the compensation authority, should, on a given occasion, descend from the Bench, give his evidence on oath, and then return to his place upon the Bench to give a decision possibly based on his own evidence.
" The matter is, as I said, covered by authority and I need say no more except that, even if it were not, I would have had no hesitation in reaching the same conclusion.
Some question arose about waiver.
If the respondent, knowing his rights, had acquiesced in the continuance of the trial despite this defect, then, of course, he would not have been allowed to complain at a later stage.
I do not know whether he was represented by counsel in the enquiry or whether, if he was not, he was aware that this kind of action vitiated the proceedings; nor do I know whether he protested and took the point in the appeal and revision.
Those papers have not been filed.
But I do know that waiver is not raised in the grounds of appeal to this Court nor is the point taken in the appellant 's statement of the case.
As this is a question of fact, I, for one, would not allow it to be urged at this stage.
I would dismiss the appeal.
ORDER.
In accordance with the opinion of the majority, the appeal is allowed.
(1) ; , 429.
| A departmental enquiry against the respondent, a Head Con stable, was held by the District Superintendent of Police.
During the enquiry the District Superintendent of Police himself became a witness and gave evidence at two stages against the respondent, his statement being recorded by a Deputy Superintendent of Police.
The District Superintend ent of Police then found the respondent guilty and on April 20, 1948, passed an order of dismissal against him.
The respondent went up in appeal to the Deputy Inspector General of Police but the appeal was dismissed on May 7, 1949.
The respondent then filed a revision application to the Inspec tor General of Police which was also dismissed on April 22, 1950.
Thereupon, the respondent filed a writ petition under article 226 of the Constitution before the High Court praying for the setting aside of the order of dismissal.
The High Court held that the rules of natural justice and fair play had been disregarded and accordingly, quashed the proceed ings and set aside the three several orders.
The State obtained a certificate of fitness and appealed.
Held, (percuriam) that the District Superintendent of Police who had acted both as the judge and as a witness had dis qualified himself from presiding over the enquiry.
The procedure adopted was contrary to the rules of natural justice and fair play.
Decisions and orders based on such procedure are invalid and not binding.
There is no rule with regard to certiorari, as there is with mandamus, that it will lie only where there is no other equally effective remedy.
The existence of another adequate remedy may be taken into consideration in the exercise of the discretion.
If an inferior Court or tribunal of first instance acts without jurisdiction or in excess of it or contrary to the rules of natural justice, the superior Court may quite properly issue a writ of certiorari to correct the error, even if an appeal to another inferior Court or tribu nal was available, whether recourse was or was not had to it.
This would be so all the more in the case of departmen tal tribunals composed of persons without adequate legal training and background.
76 596 Janardan Reddy vs The State of Hyderabad, ; referred to.
King vs Postmaster General, Exparte Carmichael (1928) i K.B. 291 ; Rex vs Wandsworths justices, Exparte Read, (1942) I K.B. 281; Khurshed Modi vs Rent Controller, Bombay, A. [.R. ; Assistant Collector of Customs vs Soorajmull Nagarmull, relied on.
Held, (per section R. Das, C.J., Venkatarama Ayyar, Jafer Imam and Sarkar, JJ.
Bose, J., dissenting) that article 226 of the Constitution is not retrospective and the High Court could not exercise its powers under article 226 to quash the order of dismissal passed before the commencement of the Constitu tion.
It is wrong to say that the order of dismissal passed on April 20, 1948, merged in the order in the appeal dated May 7, 1949, and the two orders merged in the order in the revision dated April 22, 1950, or that the original order of dismissal became final only on the passing of the order in revision.
The original order of dismissal was operative on its own strength.
Per Bose, J. The High Court had jurisdiction to quash all the orders, as the proceedings should be regarded as still pending till the order in revision was passed on April 22, 195o.
The District Superintendent of Police was acting in a judicial capacity and was bound to observe principles of natural justice.
These principles he ignored.
|
Summarize this legal judgement text concisely | ON: Criminal Appeal No. 165 of 1957.
Appeal by special leave from the judgment and order dated the 4th August, 1955, of the Patna High Court in Criminal Appeal No. 699 of 1953 with Criminal Revision No. 205 of 1954, arising out of the judgment and order dated the 12th December, 1953, 769 of the Court of the Assistant Sessions Judge, Second Court Chapra in Trial No. 70 of 1953.
G. C. Mathur., for the appellants.
section P. Varma, for the respondent.
October 28.
The following judgment of the Court was delivered by SINHA J.
The only question for determination in this appeal is whether the High Court in its revisional jurisdiction, has the power to enhance the sentence, as it has done in the instant case, beyond the limit of the maximum sentence that could have been imposed by the trial court, on the accused persons.
The appellants, along with others, were placed on their trial before the Assistant Sessions Judge of Chapra in the district of Saran, for the offence of dacoity under section 395, Indian Penal Code.
They, along with two others, were convicted under section 395, Indian Penal Code, and sentenced to rigorous imprisonment for 5 years, by the Assistant Sessions Judge, by his Judgment and order dated December 12, 1953.
The other accused were acquitted.
The convicted persons preferred an appeal to the High Court at Patna.
The High Court, in its revisional jurisdiction, while admitting the appeal, called upon the appellants to show cause why, in the event of their convictions being maintained, their sentence should not be enhanced.
The appeal and the rule for enhancement of sentence were heard together by a Division Bench of that Court.
The High Court, by its judgment and order dated August 4, 1955, allowed the appeal of two of the appellants and acquitted them but maintained the conviction as against the remaining six appellants.
On the question of sentence, the High Court observed that the " offence of dacoity has increased tremendously.
It is a very heinous offence as innocent persons, while sleeping in their houses, are attacked and their belongings are taken by force.
" The High Court, therefore, was of the opinion that a sentence of five years ' rigorous imprisonment was "extremely inadequate".
It, therefore, enhanced the sentence to 10 years ' rigorous imprisonment in each 770 and obtained special leave to appeal limited to the question of sentence only, the question being whether the High Court had the jurisdiction to enhance the sentence beyond the limits of the power of the trial court itself The occurrence of dacoity which is the subjectmatter of the charge against the appellants, along with others, took place on the night between July 1 and 2, 1952, in the house of Ranjit Bahadur, a minor.
After midnight, 16 or 17 dacoits, fully armed with various deadly weapons, broke open the main entrance door of the house with an axe.
After going into the house, they broke open boxes and tampered with the iron safe, and removed articles worth twenty thousand rupees.
The inmates of the house were over powered.
Some of them, slipping out of the house, raised a big fire which is the customary form of alarm raised against the invading crowd of dacoits.
On that alarm, a number of people of the village turned up but had not the courage to face the dacoits for fear of being shot.
They contented themselves with using brickbats against the dacoits who made good their escape with their booty.
It would, thus, appear that it was a serious occurrence involving the lives and fortunes of the inmates of the house, and naturally, the High Court took a very serious view of the offence.
In this Court, the learned counsel for the appellants, who appeared amicus curiae, contended, in the first place, that the High Court had exceeded its powers in enhancing the sentence from 5 to 10 years inasmuch as the trial court itself could not have inflicted a sentence of imprisonment for more that 7 years.
Alternatively, he contended that the High Court had not kept in view the dictum of this Court in the case of Bed Raj vs The State of Uttar Pradesh (1), while enhancing the sentence against the appellants before it.
And lastly, it was contended that in any view of the matter, in the circumstances of this case, the sentence of 10 years rigorous imprisonment is too severe.
In our opinion, there is no substance in any one of these contentions.
(1) ; 771 The main point on which the special leave was granted is the question of the competence of the High: Court to impose a higher sentence than that which could have been imposed by the learned Assistant Sessions Judge under section 31(3) of the Code of Criminal Procedure.
The learned trial judge could not have imposed a term of imprisonment exceeding 7 years.
The argument is that the High Court could enhance the sentence from 5 to 7 years and no more.
This argument is sought to be enforced by the consideration that it must be presumed that the learned Assistant Sessions Judge had been entrusted with the trial of the accused persons with the full knowledge that, on conviction, the accused persons could be punished with a term of imprisonment not exceeding 7 years.
In its revisional jurisdiction, the High Court could exercise its powers only to correct any mistakes made by the learned trial judge.
The High Court could, therefore, at the most, say that the trial judge should have inflicted the highest punishment, it had been empowered by the Code, to impose.
The High Court could not, at the revisional stage, it was further argued, insist upon a higher punishment being awarded by the trial court than 7 years ' rigorous imprisonment.
The power of the High Court to enhance a sentence, is contained in sub section
(1) of section 439 of the Code, which clothes the High Court with the powers of a Court of Appeal under the Code, as also the power to enhance the sentence.
Sub section
(1) itself, does not contain any words of limitation on the power to enhance the sentence.
Hence, the High Court could impose any sentence up to the maximum limit prescribed by the Indian Penal Code, for a particular offence.
In this case, therefore, the High Court could impose the maximum sentence of imprisonment for life under section 395, Indian Penal Code.
Is there anything in the Code of Criminal Procedure, which limits that power ? The fact that the trial of the case was entrusted to a court with a limited jurisdiction in the matter of sentence, could not be used to impose a limit on the power of a High Court to impose a proper and 98 772 adequate sentence.
That the Legislature did not intend to impose a limit on the power of the High Court to inflict an adequate sentence in a trial held by a Court of Session, is made clear by the provisions of sub section
(3) of section 439, Criminal Procedure Code, which is in these terms: " (3) Where the sentence dealt with under this section has been passed by a Magistrate acting otherwise than under section 34, the Court shall not inflict a greater punishment for the offence, which, in the opinion of such Court, the accused has committed, than might have been inflicted for such offence by a Presidency Magistrate or a Magistrate of the first class.
" Section 32 of the Code lays down the sentence which magistrates may, ordinarily, impose, which is a term of imprisonment not exceeding two years, in the case of Presidency Magistrates and Magistrates of the first class (omitting all reference to fine).
But in certain specified areas, section 30 empowers the Government to invest a District Magistrate or a Magistrate, first class, with the power to try, as a magistrate, all offences not punishable with death.
A magistrate so empowered under section 30, may pass a sentence of imprisonment for a term of 7 years or less.
Thus, the powers of an Assistant Sessions Judge, under section 31(3) and of a magistrate specially empowered under section 30 to impose a sentence of imprisonment, are the same, the terms of section 31 (3) and section 34 being almost identical.
From the terms of section 439(3), it is clear that the only limitation on the power of a High Court to impose punishment is in respect of cases tried by magistrates other than those specially empowered under section 30, and thus, vested with higher powers of punishment under section 34.
Sub section (3) aforesaid, does not impose any limits on the powers of the High Court in cases dealt with by a magistrate specially empowered under section 30.
Hence, in such a case, the High Court has the power to impose a sentence higher than that which could have been imposed by such a magistrate.
That sub section has no reference to a trial held by a Court of Session.
If the High Court can enhance the sentence beyond 773 the maximum sentence which could be awarded by a magistrate specially empowered under section 30, and acting under section 34, there is no reason to hold that the High Court 's power in respect of enhancing the sentence in a trial held by an Assistant Sessions Judge, should be limited in the way suggested on behalf of the appellants.
Sub section (3) of section 439, thus, makes it clear that there is no limitation on the power of the High Court to enhance a sentence to the maximum prescribed by the Indian Penal Code, except in cases tried by magistrates other than those especially empowered under section 30, Criminal Procedure Code.
The learned counsel for the appellants very properly informed us that there are some reported decisions of some of the High Courts which have gone against his contention, and that there is no decision which has taken a view; in support of his contention.
In our opinion, there is no provision in the Code of Criminal Procedure, which limits the power of the High Court in the way suggested on behalf of the appellants, and there are no reasons which militate against the decision of the High Courts taking that view.
The case relied upon on behalf of the appellants in support of their second contention (Bed Raj vs The State of Uttar Pradesh (1)), also seems to point to the same conclusion as will appear from the following observations at p. 584: " Now, though no limitation has been, placed on the High Court 's power to enhance it is nevertheless a judicial act and, like all judicial acts involving an exercise of discretion, must be exercised along wellknown judicial lines.
" On the second contention, there is no doubt that the question of sentence is a matter of discretion which has to be exercised in a judicial way, that is to say, the sentence imposed by the trial court should not be lightly interfered with and should not be enhanced.
unless the appellate court comes to the conclusion, on a consideration of the entire circumstances disclosed in the evidence, that the sentence imposed is inadequate.
In the instant case, the High Court has (1) ; 774 pointed out that the incidence of the offence of dacoity has gone up to such an extent that in proved cases of serious dacoity, like the one in hand, deterrent punishment is called for.
The High Court was, therefore, justified in imposing the sentence of 10 years ' rigorous imprisonment.
In view of the circumstances disclosed in the case, as indicated above, it cannot be asserted that the sentence as enhanced by the High Court is excessive.
The appeal is, accordingly, dismissed.
Appeal dismissed.
| The appellants were tried before an Assistant Sessions judge for the offence of dacoity under section 395 Indian Penal Code.
Under 3.
31(3) Code of Criminal Procedure, (as it then stood) the Assistant Sessions judge could award a maximum sentence of seven years rigorous imprisonment.
He convicted the appellants and sentenced them to five years rigorous imprisonment each.
The appellants appealed to the High Court, and the High Court, in its revisional jurisdiction, issued a notice to the appellants for enhancement of sentence.
The High Court dismissed the appeal and enhanced the sentence to ten years rigorous imprisonment.
Held, that the High Court had, in its revisional jurisdiction under section 439 Code of Criminal Procedure, the power to enhance the sentence beyond the limit of the maximum sentence that could have been imposed by the trial Court.
Bed Raj vs The State of Uttar Pradesh, ; , referred to.
|
Summarize this legal judgement text concisely | Civil Appeal No. 144 of 1956.
Appeal by special leave from the judgment and order dated the 9th July, 1955, of the former Madhya Bharat High Court in Civil Misc.
Case No. 27 of 1954.
M. A. Khan and Ratanaparkhi, for the appellant.
section N. Bindra and R. H. Dhebar, for the respondent.
October 30.
The following Judgment of the Court was delivered by IMAM J.
This is an appeal by special leave against the order of the Madhya Bharat High Court dated July 9, 1955, rejecting an application filed by the appellant under article 226 of the Constitution.
According to the appellant, his father Habibullah died more than twenty years ago leaving behind the appellant and his brother Bashirullah as his sole heirs.
Habibullah, on his death, left immovable properties in the city of Indore.
Bashirullah, who was unmarried, went mad in 1942 and died in 1950 without any issue.
On his death, the appellant became the sole owner of all the properties left by his father Habibullah.
On September 21, 1954, the respondent purported to serve on the appellant a notice tinder section 7 of the (XXXI of 1950), hereinafter referred to as the Act.
This notice was not served on him and was never pasted on the property concerned.
Service of the notice was, according to the appellant, not proper and therefore illegal.
The appellant desiring to know on what material the notice under section 7 of the Act was issued against him applied on October 1, 1954, for copies of the record and the evidence in the possession of the respondent on the basis of which he formed the opinion that Bashirullah, at his death, had left behind a son Iqbal and a wife Kamrunnissa who had migrated to Pakistan in consequence of which the estate inherited by them from Bashirullah became evacuee property.
The application was rejected by the respondent.
818 The appellant filed a petition under article 226 of the Constitution in the Madhya Bharat High Court, which was dismissed by that Court.
The High Court was of the opinion that two questions fell to be decided in the proceedings before it (I) was the notice dated September 21, 1954, issued by the respondent under section 7 of the Act, illegal and (2) was the refusal of the respondent to supply to the appellant copies of the record and the evidence in possession of the respondent prior to the issue of notice under section 7 of the Act unlawful? Both these questions were decided against the appellant.
The notice dated September 21, 1954, was issued under section 7 of the Act in accordance with the Rules framed under section 56 of the Act.
Under section 7 of the Act the notice has to be given to persons interested in the prescribed manner.
Rule 6 of the Rules framed under the Act requires the notice to be in Form I to be served on persons interested in the property proposed to be declared evacuee property.
We have compared the notice issued in the present case with Form I of the Rules and can find no difference between them in essential particulars.
It was said that the notice in the present case does not state the grounds upon which the property concerned was proposed to be declared evacuee property and Iqbal and Kamrunnissa evacuees.
This contention is without foundation because the notice in question definitely states under the heading "Grounds" that Iqbal and Kamrunnissa migrated to Pakistan after March 1, 1947, on account of the creation of the Dominions.
The notice specifies with sufficient clarity the particulars of the property proposed to be declared evacuee property.
There was no reliable material to prove the assertion of the appellant that the notice was not properly served.
We are, accordingly, of the opinion that the notice in question has not been proved to be illegal on account of contravention of any of the provisions of the Act or the Rules made thereunder.
It was next contended that there was no material before the respondent to justify his issuing the notice and, therefore, the notice was issued without 819 jurisdiction.
Section 7 of the Act provides that where the Custodian is of the opinion that any property is an evacuee property within the meaning of the Act he may, after causing notice thereof to be given in the prescribed manner to the persons interested and after holding such enquiry in the matter, as the circumstances of the case permitted, pass an order declaring any such property to be evacuee property.
It is for the Custodian to form his opinion on such material, as was before him, and on such information which he possessed.
The notice which he issued was in Form I of the Rules framed under the Act and it stated clearly that there was credible information in possession of the respondent that lqbal and Kamrunnissa were evacuees and that the property specified in the notice was evacuee property.
It was for the respondent to decide .
whether, on the information in his possession, he should issue a notice under section 7 of the Act.
It is not for this Court or any other Court to determine whether the information in possession of the respondent was adequate to justify the issuing of the notice.
The contention on behalf of the appellant in this respect cannot be supported on any valid ground.
It was next contended on behalf of the appellant that when bona fides of the respondent bad been challenged in the High Court, that Court should have sent for the record and seen for itself as to whether there was any justification for the issue of the notice under section 7 of the Act.
In our opinion, this contention cannot prevail as there is no material on the record to justify the accusation that the respondent acted with malafides in issuing the notice.
The respondent was free to believe or not to believe the information in his possession.
The mere issue of a notice would not make the persons named therein evacuees or the property mentioned therein evacuee property.
That stage could only be reached after the notice had been issued and after the holding of such enquiry, as the circumstances of the case permitted, when an order declaring the property to be evacuee property could be made in respect of a person who was an evacuee, as defined in 104 820 the Act.
In our opinion, it was unnecessary for, the High Court to have called for the record and to have examined it for itself in order to ascertain whether the respondent was justified in issuing the notice.
We have now to consider whether the application for copies filed by the appellant was improperly rejected.
On his behalf, it was contended that the application for copies should have been allowed as section 7 of the Act contemplates only one proceeding, from the commencement to the end, including the stage prior to the issue of notice, regarding the declaration of any property as evacuee property and that that proceeding is a judicial proceeding.
Since the appel lant was a party to the proceedings under section 7 of the Act, he was entitled to have copies of the record including the evidence which constituted the proceedings.
Reliance was placed on section 49 of the Act, which states that all records prepared or registers maintained under the Act shall be deemed to be public documents within the meaning of the Indian Evidence Act and shall be presumed to be genuine until the contrary is proved.
Reference was also made to section 45 of the Act which states that for the purpose of holding an enquiry under the Act, the Custodian shall have the same powers as are vested in a civil court under the Code of Civil Procedure when trying a suit, in respect of the following matters: (a) enforcing the attendance of any person and examining him on oath; (b) compelling the discovery and production of documents; (c) any prescribed matter; and the enquiry by the Custodian shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code and the Custodian shall be deemed to be a court within the meaning of sections 480 and 482 of the Code of Criminal Procedure.
There can be little doubt that the Custodian, while holding an enquiry under section 7 of the Act is acting in a judicial capacity and that, by virtue of Rule 35 of the Rules, any party to the enquiry would be entitled to copies of any application, 821 objection, petition, affidavit, or statement made by a party or a witness and any other document.
He would also be entitled to copies of the final original order passed by the Custodian or an order passed in appeal, revision or review.
The position, however, is quite different with respect to the material in possession of the Custodian on which he formed his opinion and on which he issued notice under section 7, because at that stage he was not holding an enquiry and was, therefore, not acting in a judicial capacity.
It is a misconception of the entire scheme of the Act to suppose that an enquiry under section 7 of the Act and the issuing of a notice previous to the holding of that enquiry is a single proceeding.
When issuing a, notice under section 7 the Custodian merely has some credible information which, in his opinion, justifies him in issuing it and thereafter to enquire into the matter before making a declaration that the property is evacuee property.
That information may, after the enquiry has been concluded, turn out to be entirely insufficient for making the required declaration.
In our opinion, there are two stages in the process whereby any property can be declared to be evacuee property under the Act.
One is the issuing of the notice to persons interested and the other an enquiry under section 7 of the Act.
The proceedings commence after the issue of a notice and not previous to it.
At the second stage, a party to the proceedings would be entitled to copies of the record and the evidence from the stage of the issuing of the notice until the conclusion of the enquiry but not previous to the issue of the notice.
In our opinion, the appellant would have been well advised to have responded to the notice issued to him and assisted the respondent in holding the enquiry.
The respondent would have had to consider all the material before him at the enquiry before he declared the property in question evacuee property.
If the material in the enquiry was insufficient to justify such a declaration, the appellant had the right of appeal against the order of the respondent.
In our opinion, the application of the respondent for copies was rightly rejected by the respondent as he was not, 822 entitled to copies of the material before the respondent previous to the issuing of the notice under section 7 of the Act.
The appeal, accordingly, fails and is dismissed with costs.
Appeal dismissed.
| The appellant and his brother owned certain properties inherited from their father.
The brother died and the appellant claimed to have become the sole heir.
The respondent issued a notice under section 7 of the , in respect of the share of the brother on the ground that the brother had left a widow and a son who had migrated to Pakistan.
The appellant, desiring to know on what materials the notice was issued, applied for copies of the materials on the basis of which he respondent had formed his opinion.
The application was rejected by the respondent.
The appellant filed a petition under article 226 of the Constitution in the High Court which was also dismissed.
The appellant obtained special leave and contended that the notice was issued without jurisdiction as there was no material before the respondent to justify his issuing of the notice and that the application for the copies had been improperly ejected by the respondent.
Held, that it was for the Custodian to form his opinion on such material as was before him and on such information which he possessed.
It is not for any Court to determine whether the information in the possession of the Custodian was adequate to justify the issue of a notice under section 7 of the Act: Held further, that the application for copies had been rightly rejected.
There are two stages in the process whereby any property can be declared to be evacuee property under the Act.
One is the issuing of the notice to persons interested and the other is the inquiry under section 7.
The proceedings commence after issue of the notice and not prior to it.
A party to the proceedings will be entitled to copies of the record and evidence from the stage of 817 the issuing of the notice until the conclusion of the enquiry but not previous to the issue of the notice.
|
Summarize this legal judgement text concisely | ION: Criminal Appeal No. 82 of 1957.
Appeal by special leave from the judgment and order dated the 12th August, 1953, of the Allahabad High Court in Criminal Appeal No. 114 of 1951 arising out of the judgment and order dated the 31st July, 1950, of the Court of the Additional Sessions Judge at Allahabad in Criminal Sessions Trial No. 22 of 1949.
section P. Sinha and B. C. Misra, for the appellant.
G. C. Mathur and C. P. Lal, for the respondent.
October 14.
The following Judgment of the Court was delivered by SINHA J.
This appeal by special leave is directed against the judgment and order dated August 12, 1953, of a Division Bench of the Allahabad High Court (Desai and Beg JJ.), setting aside the order of acquittal passed by the learned Additional Sessions Judge at Allahabad, dated July 31, 1950, in Sessions Trial No. 22 of 1949.
The appellant bad been charged under sections 408 and 477A of the Indian Penal Code, and tried by jury of 5.
The jury returned a unanimous verdict of not guilty.
The learned Additional Sessions Judge accepted the verdict of the jury and acquitted the accused.
On appeal by the Government of Uttar Pradesh, the High Court in a judgment covering about 130 typed pages set aside the order of acquittal and 642 convicted the appellant under the sections aforesaid, and sentenced him to rigorous imprisonment for four years and a fine of ten thousand rupees, in default of payment, further rigorous imprisonment for one year, under section 408, Indian Penal Code, and to rigorous imprisonment for four years under section 477A, Indian Penal Code, the sentences of imprisonment under the two sections to run consecutively.
Out of the fine, if realized, seven thousand rupees was directed to be paid to the Imperial Bank of India, Allahabad, as compensation.
The prayer for a certificate of fitness for appeal to this Court was refused.
The appellant moved this Court and obtained special leave to appeal by order dated December 15, 1953.
In the view we take of the legality of the trial in this case, it is not necessary to go into the details of the prosecution case except to state that the appellant was charged under the sections aforesaid, for having committed criminal breach of trust in respect of valuable securities amounting to Rs. 7,410 odd of the Imperial Bank at Allahabad, while in the employment of the Bank as a clerk, and had in that capacity, " with intent to defraud, destroyed, altered, mutilated and falsified accounts and other papers " during January to July, 1946.
A number of contentions were raised before us by the learned counsel for the appellants, but it is necessary to notice only two of them, namely, (1) that the appeal by the State of Uttar Pradesh, to the High Court, should not have been entertained as the memorandum of appeal did not comply with the requirements of law as laid down in sections 418 and 419 of the Code of Criminal Procedure; and (2) that the trial in the Sessions Court was no trial at all in the eye of law.
In respect of the first contention, it is enough to say that though the memorandum of appeal filed in the High Court was wholly inadequate, the defect was not such as to render it null and void so as to entitle the High Court to reject it in liming.
The point arises in this way: Apart from the prayer, the only ground taken in the petition of appeal is " that the order of acquittal is against the weight of evidence 643 on the record and contrary to law.
" The argument is that under section 418 of the Criminal Procedure Code, where a trial is by jury, "the appeal shall lie on a matter of law only ", and as no particular error of law is set out in the memorandum of appeal, the consequence of this serious omission, it is further contended, is that in the eye of law, this was no petition of appeal at all, which could have been entertained by the High Court.
This contention was raised before the High Court by way of a preliminary objection to the maintainability of the appeal.
The High Court overruled that objection on the ground that section 419 which is the specific provision of the Code of Criminal Procedure, relating to petition of appeal, only requires that it shall be in writing and accompanied by a copy of the judgment or order appealed against, and in cases tried by jury, a copy of the heads of the charge recorded under a. 367 of the Code.
The High Court observed that there is no provision in the Code which required that the petition of appeals should specify the matters of fact or of law, on which the appeal is based.
The Court also referred to the prevailing practice in that Court according to which no specific grounds are taken either on fact or on law.
According to the High Court, there was no difference between an appeal based on facts and an appeal based only on questions of law, as in the case of a jury trial.
In view of these considerations, the High Court held that the preliminary objection was not well founded in law.
Assuming that the High Court was correct in its appreciation of the legal position, even so, we must express our disapproval of any such practice as has been referred to in the judgment below.
A memorandum of appeal is meant to be a succinct statement of the grounds upon which the appellant proposes to support the appeal.
It is a notice to the Court that such and such specific grounds are proposed to be urged on behalf of the appellant, as also a notice to the respondent that he should be ready to meet those specific grounds.
A memorandum of appeal with a bald ground like the one quoted above is of no help to any of the parties or to the Court.
It may have the 644 merit of relieving the person responsible for drawing up the ground of appeal, of applying his mind to the judgment under appeal and its weak points, but this slight advantage, if it is so, is very much out weighed by the serious disadvantage to the parties to the litigation and the Court which is to hear the appeal.
Such a bald statement of the grounds leaves the door wide open for all kinds of submissions, thus, tending to waste the time of the Court, and taking the respondents by surprise.
It is a notorious fact that courts, particularly in the part of the country from where this appeal comes, are over burdened with large accumu lations of undisposed of cases.
The parties concerned and their legal advisers should concentrate and focus their attention on the essential features of cases so as to facilitate speedy, and consequently, cheap administration of justice.
It may be that a bald ground like the one noticed above, was responsible for the inordinately long judgment of the High Court.
Such a practice, if any, deserves to be discontinued and a more efficient way of drawing up grounds of appeal has to be developed.
If counsel for the parties to a litigation concentrate on the essential features of a case, eliminating all redundancies, the argument becomes more intelligible and helpful to the Court in focussing its attention on the important aspects of the case.
As the appeal succeeds on the second ground, as will presently appear, we need not say anything more on the first ground.
The second ground on which, in our opinion, the appeal must succeed, is based on the findings of the High Court itself This case involved a consideration of a large volume of documentary evidence almost all in English.
The oral evidence was directed mainly to connect those documents and to explain their bearing on the charges framed against the accused, of criminal breach of trust and falsification of relevant accounts and entries in the registers maintained by the Bank.
Mr. Ganguli, prosecution witness No. 26 Agent of the Bank was examined at great length, and be gave his evidence on 12 days between October and December, 1949, It runs into about 45 typed pages.
This 645 evidence appears to have been given by him in English because he put in an application that he had given the evidence in English and that he was not in a position to say whether the Hindi version as recorded by the deposition writer was the correct version, as he was not familiar with Hindi.
The High Court had made the following observations as to the nature of the case and the requisite qualifications of the members of the jury necessary for a proper under.
standing of the case: " We consider that the instant case was not fit to be tried by a jury at least by any ordinary jury.
It was a very complicated case in which a mass of documents was produced.
The decision of the case rested upon the question by whom the various documents were written or prepared.
Those documents are all in English and nobody could decide the case satisfactorily unless he had a good knowledge of English and was in a position to judge the writing.
The offences with which the respondent was charged were under a Government order triable by a jury and the case had to be tried by a jury unless the Government thought fit to revoke or alter the order.
The Government did not revoke or alter the order and did not even declare that the case should be tried by a special jury under section 269(2), Criminal Procedure Code.
" In our opinion, the remarks of the High Court quoted above give a correct impression of the proceedings in the Court of Session.
It further appears from the judgment of the High Court that the learned Advocate General who argued the case in support of the appeal on behalf of the State, urged that the jurors were not equal to the task involved in a proper determination of the controversy.
The High Court directed the trial court to hold an inquiry and report on this aspect of the case.
On a consideration of the report submitted by that court, the High Court recorded its finding to the following effect: "Out of the five jurors selected by the learned Sessions Judge, three had sufficient knowledge of English, fourth knew very little English and could not 646 read the documents produced in the case and the fifth also had not sufficient knowledge of English; he could understand a letter written in English with some difficulty and could not read English newspapers.
This is what we find from a report made by the learned Sessions Judge after summoning the jurors and examining them on a letter issued by us.
We are satisfied that the two jurors, Shri Sheik Ashique Ali and Shri Farman Ali, were not in a position to decide the question of authorship of the forged documents satisfactorily.
It was not merely a question of under standing the contents of the documents produced in the case the jurors also had to decide whether they were written or signed by the respondent as deposed by the prosecution witnesses or not.
They did not possess sufficient acquaintance with English to decide that question satisfactorily.
" On that finding, it is clear that the appellant 's contention that it was a trial coram non judice is well founded.
This case is analogous to the case of Ras Behari Lal vs The King Emperor (1), which went up to the Judicial Committee of the Privy Council, from a judgment of the Patna High Court confirming the conviction and the sentences of the accused persons on a charge of murder and rioting.
In that case, the trial was by a jury of 7.
The jury by a majority of six to one found the accused guilty.
The learned trial judge accepted the verdict and sentenced some of the accused persons to death.
The High Court overruled the accused persons ' contentions that there was no legal trial because some of the jury did not know sufficient English to follow the proceedings in Court.
The Judicial Committee granted special leave to appeal on a report made by the High Court that one of the jurors did not know sufficient English to follow the proceedings in Court.
Before the Judicial Committee, it was conceded, and in their Lordships ' view, rightly, by counsel for the prosecution that the appellants had not been tried, and that, therefore, the convictions and sentences could not stand.
Lord Atkin, who delivered the judgment of the Judicial Committee, made the following 1) (1933) L.R. 60 I.A. 354, 357.
647 observations upon the concession made by counsel for the respondent: " In their Lordships ' opinion, this is necessarily the correct view.
They think that the effect of the incompetence of a juror is to deny to the accused an essential part of the protection accorded to him by law and that the result of the trial in the present case was a clear miscarriage of justice.
They have no doubt that in those circumstances the conviction and sentence should not be allowed to stand.
" In our opinion, the legal position in the instant case is the same.
It was., however, argued on behalf of the State Government that in the instant case, the jury had returned a unanimous verdict of not guilty and that, therefore, there was no prejudice to the accused persons.
It is true that the incompetence of the jury empanelled in this case was raised by the counsel for the State Government in the High Court but in view of the findings arrived at by the High Court, as quoted above, the position is clear in law that irrespective of the result, it was no trial at all The question of prejudice does not arise because it is not a mere irregularity.
but a case of "mis trial", as the Judicial Committee put it.
It is unfortunate that a prosecution which has been pending so long in respect of an offence which is said to have been committed about eleven years ago, should end like this but it will be open to the State Government, if it is so advised, to take steps for a retrial, as was directed by the Judicial Committee in the reported case referred to above.
The appeal is, accordingly, allowed and the convictions and the sentences are set aside.
We do not express any opinion on the question whether it is a fit case for a de novo trial by a competent jury or by a Court of Session without a jury, if the present state of the law permits it.
The matter will go back to the High Court for such directions as may be necessary if the High Court is moved by the Government in that behalf.
Appeal allowed.
| The appellant was tried by a Sessions judge and a jury for offenses under sections 477 A and 408, Indian Penal Code.
A large volume of documentary evidence was in English and the statement of one of the principal witnesses was given in English.
The main question for decision was the authorship of the forged documents.
It was found that the jurors were not well versed in English and were not in a position to decide the main question.
The jury returned a unanimous verdict of not guilty and accepting the verdict the Sessions judge acquitted the appellant.
The State appealed to the High Court.
In the memorandum of appeal only one ground was taken, "that the order of acquittal is against the weight of evidence on the record and contrary to law.
" The High Court accepted the appeal and convicted the appellant.
The appellant contended that the appeal before the High Court was incompetent as no particular errors of law, upon which alone an appeal lay under section 418, Code of Criminal Procedure, were set out in the memorandum of appeal and that the trial in the Session Court was no trial in the eye of law.
641 Held, that a memorandum of appeal is meant to be a succinct statement of the grounds upon which the appellant proposes to support the appeal.
The practice prevailing in the Allahabad High Court of not taking specific grounds either of law or fact is to be disapproved even assuming that section 419 of the Code of Criminal Procedure does not in terms require the setting out of such grounds.
Held further, that the trial before the Session judge was coram non judice on account of the incompetence of the jury to decide the question of the authorship of the forged documents.
In such a case the question of prejudice does not arise as it is not a mere irregularity, but a case of "mis trial." Ras Behari Lal vs The King Emperor, (1933) L.R. 60 I.A. 354 followed.
|
Summarize this legal judgement text concisely | Appeal No. 249 of 1954.
Appeal by special leave from the judgment and order dated January 8, 1952, of the Patna High Court in Misc.
Judicial Cases Nos. 13, 14, 15, 16, 17, 18 and 19 of 1949.
38 Bhawani Lal and K. L. Mehta, for the appellants.
L.K. Jha, B. K. P. Sinha and R. C. Prasad, for the respondent.
May 22.
The Judgment of the Court was delivered by S.K. DAS J.
The appellant Messrs. Raghubar Mandal Harihar Mandal, hereinafter referred to as the assessee, is a firm of bullion dealers carrying on its business at Laheriasarai in the district of Darbhanga in the State of Bihar.
The assessee was assessed to sales tax for seven quarters ending December 31, 1945, March, 31, 1946, June 30, 1946, September 30, 1946, December 31, 1946, March 31, 1947 and June 30, 1947, respectively.
For three of the aforesaid quarters, namely those ending on December 31, 1945, March 31, 1947 and June 30, 1947, the assessee failed to file the necessary returns as required by the provisions of the Bihar Sales Tax Act, 1944 (hereinafter referred to as the Act), which was the Act in force during the material period; therefore, the assessee was assessed for those three quarters under sub section
(4) of section 10 of the Act.
For the remaining four quarters, the assessee did file returns.
The Sales Tax Officer rejected those returns as also the books of account filed by the assessee for all the seven quarters and assessed the assessee under el.
(b) of sub section
(2) of section 10 of the Act.
The Sales Tax Officer passed separate orders assessing the tax for all the seven quarters simultaneously on October 9, 1947.
He assessed the tax on a taxable turnover of Rs. 2,94,000 for each of the five quarters ending December 31, 1945, March 31, 1946, September 30, 1946, December 31, 1946 and March 31, 1947; for the other two quarters ending on June 30, 1946, and June 30, 1947, he assessed the tax on a taxable turnover of Rs. 3,92,000.
The assessee then moved in appeal the Commissioner of Commercial Taxes, Tirhut Division, but the Commissioner dismissed the appeals by his order dated February 23, 1948.
The Board of Revenue was then moved in revision but, by its order dated July 31, 1948, the Board refused to interfere.
The Board expressed 39 the view that the finding of the Sales Tax Officer and the Commissioner that the books of account maintained by the assessee were not dependable was a finding of fact which could not be interfered with in revision ; therefore the assessing officer was bound to assess to ' the best of his judgment.
The Board was then moved under section 21 of the Act to refer certain questions of law to the High Court of Patna which, the assessee contended, arose out of its order.
By its order dated December 10, 1948, the Board rejected the applications for making a reference to the High Court on the same ground, namely, that no question of law was involved and the assessment orders were concluded by a concurrent finding of fact.
The assessee then moved the High Court and by its order dated April 27, 1949, passed in Miscellaneous Judicial Cases Nos. 13 to 19 of of 1949, the High Court directed the Board of Revenue to state a case on the following question: " Whether the Sales Tax.
Officer is entitled under section 10(2)(b) of the Act to make an assessment on any figures of gross turnover without giving any basis to justify the adoption of that figure ?" The Board of Revenue then stated a case, and the High Court disposed of the reference by answering the question in the affirmative by its judgment and order dated January 8, 1952.
The assessee then moved this Court and obtained special leave to appeal from the said judgment and order of the High Court.
The main contention of the assessee is that the High Court has not correctly answered the question of law referred to it.
Before we proceed to consider this contention of the assessee, it is necessary to clear the ground by delimiting the precise scope of the question referred to the High Court.
It is well settled that the jurisdiction of the High Court in the ' matter of incometax references is an advisory jurisdiction and under the Income tax Act the decision of the Tribunal on facts is final, unless it can be successfully assailed on the ground that there was no evidence for the conclusion on facts recorded by the Tribunal or the conclusion was such as no reasonable body of persons could have arrived at.
It is also well settled that the duty 40 of the High Court is to start with the statement of the case as the final statement of the facts and to answer the question of law with reference to that statement.
The provisions of the Indian Income tax Act are in pari materia with the provisions of the Act under our consideration, the main scheme of the relevant provisions of the two Acts being similar in nature, though the wording of the provisions is not exactly the same.
Under section 21 of the Act, the High Court exercises a similar advisory jurisdiction, and under sub section
(3) of that section, the High Court may require the Board of Revenue to state a case and refer it to the High Court, when the High Court is satisfied that the refusal of the Board to make a reference to the High Court under sub section
(2) is not justified.
Under sub section
(5) of section 21 the High Court hears the reference and decides the question of law referred to it, giving in a judgment the grounds of its decision.
In the case under our consideration, the question which was referred to the High Court related to the assessments made under section 10(2)(b) of the Act; in other words, the question related to those four quarters only for which the assessments were made under section 10(2)(b).
The question did not relate to the three quarters for which the assessee had filed no returns and assessments were made under section 10(4) of the Act.
At one place in its judgment, the High Court referred to a slight inaccuracy in the question framed, but it did not reframe the question so as to widen its scope and include the three quarters for which assessments were made under section 10(4) of the Act.
The question, as it stood and as it was answered by the High Court, did not relate to the propriety or legality of the assessments made under section 10(4) of the Act.
We must, therefore, make it clear at the very outset that the question relates to those four quarters only for which assessments were made under section 10(2)(b) of the Act, and the answer given to the question will govern those four quarters only.
Having thus indicated the precise scope of the question referred to the High Court, we proceed now to consider the main contention of the assessee.
We must first read the relevant provisions of the statute 41 under which the assessments were made.
Sub section (1) of section 10 of the Act states that if the Commissioner is satisfied without requiring the presence of a registered dealer or the production by him of any evidence that the returns furnished in respect of any period are correct and complete, he shall assess the amount of tax due from the dealer on the basis of such returns.
Clause (a) of sub section
(2) states what the Commissioner shall do, if he is not satisfied without requiring the presence of a registered dealer who furnished the returns or production of evidence that the returns furnished in respect of any period are correct and complete; the clause states that in that event the Commissioner shall serve on the dealer a notice in the prescribed manner requiring him either to attend in person or to produce or cause to be produced any evidence on which such dealer may rely in support of his returns.
Then comes cl.
(b) of sub section
(2) which must be quoted in extenso: " (b) On the day specified in the notice or as soon afterwards as may be, the Commissioner, after hearing such evidence as the dealer may produce, and such other evidence as the Commissioner may require on specified points, shall assess the amount of tax due from the dealer.
" These provisions are similar to the provisions contained in section 23 of the Indian Income tax Act.
Sub section (1) of section 10 of the Act corresponds to sub section
(1) of section 23 of the Indian Income tax Act; clause (a) of sub section
(2) of section 10 of the Act corresponds to sub section
(2) of section 23 of the Indian Income tax Act; and clause (b) of sub section
(2) of section 10 of the Act corresponds to sub section
(3) of section 23 of the Indian Income tax Act, though there are some verbal differences between the two provisions.
Sub section (3) of section 23 of the Indian Income tax Act requires the Income tax Officer to assess the total income of the assessee and determine the sum payable by him on the basis of such assessment, by "an order in writing"; but cl.
(b) of sub section
(2) of section 10 of the Act requires the Commissioner to assess the amount of tax due from the dealer and does not impose any liability as to "an order in writing.
" In spite of these differences, the 42 two provisions are substantially the same and impose on the assessing authority a duty to assess the tax after hearing such evidence as the dealer may produce and such other evidence as the assessing authority may require on specified points.
The point for our consideration is can the assessing authority, purporting to act under section 10(2)(b) of the Act, assess the amount of tax due from a dealer more or less arbitrarily or without basing the assessment on any materials whatsoever ? In the question referred to the High Court, the expression used is, "make an assessment on any figure of gross turnover without giving any basis to justify the adoption of that figure".
That expression is perhaps a little ambiguous, but read in the context of the statement of the case, the question can only mean this: can the assessing authority adopt a figure of gross turnover by pure guess and without referring to any materials on which the figure is based ? It is clear to us that, understood in that sense, the High Court has answered the question incorrectly.
The High Court went into an elaborate consideration, by way of comparison and contrast, of sub section
(4) and el.
(b) of sub section
(2) of section 10 of the Act.
It is unnecessary for us to make any pronouncement in this appeal with regard to the precise scope of sub section
(4) of section 10 of the Act, which corresponds more or less to sub section
(4) of section 23 of the Indian Income tax Act; nor is it necessary for us to decide if an assessment made under el.
(b) of sub section
(2) of section 10 of the Act, when the account books of the assessee are disbelieved, stands exactly on the same footing as an assessment made under sub section
(4) of section 10 when the assessee has failed to furnish his returns.
In some decisions relating to the corresponding provisions of the Indian Income tax Act, it has been said that the difference between the two is one of degree only, the one being more summary than the other.
These are questions which do not really fall for decision in the present appeal, which is confined to interpreting the true nature and scope of el.
(b) of sub section (2) of section 10 of the Act.
With regard to the corresponding provision in sub section
(3) of section 23 of the Indian Income tax Act, there is a decision of this 43 Court which, in our opinion, answers the question before us.
The decision is that of Dhakeswari Cotton Mills Ltd. vs Commissioner of Income Tax, West Bengal(1).
This Court observed: "As regards the second contention, we are in entire agreement with the learned Solicitor General when he says that the Income tax Officer is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a Court of law, but there the agreement ends; because it is equally clear that in making the assessment under sub section
(3) of section 23 of the Act, the Income tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all.
There must be something more than bare suspicion to support the assessment under section 23(3).
" In our view, the aforesaid observations clearly show that the High Court was in error in answering the question in the affirmative.
Firstly, the High Court treated the question referred to it as a pure question of fact; if that were so, then the High Court should have rejected the reference on the ground that it was not competent to answer a question of fact.
Then, the High Court proceeded to consider certain decisions relating to the interpretation of sub sections
(3) and (4) of section 23 of the Indian Income tax Act, and held that there was no difference between an assessment under sub section
(3) and an assessment under sub section
(4) of section 23.
The High Court applied the same analogy and on that footing held that there being no difference between an assessment under cl.
(b) of sub section
(2) and an assessment under sub section
(4) of section 10 of the Act, the answer to the question must be in the affirmative.
In our view, the approach of the High Court to the question referred to it was erroneous and the answer given to the question by it solely on the basis of sub section
(4) of section 10 of the Act was vitiated by that wrong approach.
It was not sub section
(4) of section 10 of the Act which the High Court had to consider; it had to consider the true scope and effect of cl.
(b) of sub section
(2) of section 10 of the Act.
(1) ; , 949.
44 Learned counsel for the respondent has strongly urged two points in support of the answer which the High Court gave.
Firstly, he has contended that, on a proper reading of the assessment orders and the orders of the Commissioner, it would appear that the gross turnover for the quarters in question was based on certain materials; therefore, the argument of learned counsel is that it is not correct to say that the figure of gross turnover was arbitrarily adopted or was adopted without reference to any evidence or any material at all.
We have examined the assessment orders in question, which form part of the statement of the case.
It is clear to us that what the Sales Tax Officer and the Commissioner did was to hold, for certain reasons, that the returns made by the assessee and the books of account filed by it were incorrect and undependable.
It is not necessary to repeat those reasons, because we must accept the finding of fact arrived at by the assessing authorities that the returns and the books of account were not dependable.
The assessing authorities rightly pointed out that several transactions were not entered in the books of account; and a surprise inspection made on July 15, 1947, disclosed certain transactions with a Bombay firm known as Messrs. Kishundas Lekhraj, which were not mentioned in the books of account; and finally, the assessee Was importing silver in the name of five confederates in order to suppress the details of the transactions etc.
The assessing authorities further pointed out that there was a discrepancy between the return filed for the quarter ending June 30, 1946, and the accounts filed in support of it; the return showed a gross turnover of Rs. 2,28,370 12 0 while the accounts revealed a gross turnover of Rs. 1,48,204.
All these we must accept as correct.
Having rejected the returns and the books of account, the assessing authorities proceeded to estimate the gross turnover.
In so estimating the gross turnover, they did not refer to any materials at all.
On the contrary, they indulged in a pure guess and adopted a figure without reference to any evidence or any material at all.
Let us take, for example, the assessment order for the quarter ending June 30, 1946.
45 The Sales Tax Officer said: "I reject the dealer 's accounts and estimate a gross turnover of Rs. 4,00,000. 1 allow a deduction at 2% on the turnover and assess him on Rs. 3,92,000 to pay sales tax of Rs. 6,125." For the quarter ending on September 30, 1946, the Sales Tax Officer said: "I reject his irregular account and estimate a gross turnover of Rs. 3,00,000 for the quarter and assess him on Rs. 2,94,000 to pay tax of Rs. 4,593 12 0." These and similar orders do not show that the assessment was made with reference to any evidence or material; on the contrary, they show that having rejected the books of account, the assessing authorities indulged in pure guess and made an assessment without reference to any evidence or any material at all.
This the assessing authorities were not entitled to do under cl.
(b) of sub.s.
(2) of section 10 of the Act.
Secondly, learned counsel for the respondent has referred us to several decisions on which the High Court relied and has argued that on the basis of those decisions, it must be held that the answer given by the High Court to the question referred to it was a correct answer.
We propose to examine briefly some of those decisions, though, as we have stated earlier, the question is really answered by the observations made by this Court in Dhakeswari Cotton Mills ' case (1).
The first decision is the Privy Council decision in Income tax Commissioner vs Badridas Ramrai Shop, Akola (2).
Lord Russell of Killowen in delivering the judgment of their Lordships made the following observations as respects a " best of judgment " assessment within the meaning of section 23 (4) of the Indian Income tax Act: " The officer is to make an assessment to the best of his judgment against a person who is in default as regards supplying information.
He must not act dishonestly, or vindictively or capriciously, because he must exercise judgment in the matter.
He must make what he honestly believes to be a fair estimate of the proper figure of assessment, and for this purpose he must, their Lordships think, be able to take into consideration local knowledge and repute in regard to the assessee 's circumstances, and his own knowledge of previous returns by, and assessments of, the assessee, (1) , 949.
(2) (1937) 64 I.A. 102, 114 115.
46 and all other matters which he thinks will assist him in arriving at a fair and proper estimate: and though there must necessarily be guess work in the matter, it must be honest guess work.
" We find nothing in those observations which runs counter to the observations made in Dhakeswari Cotton Mills ' case(1).
No doubt it is true that when the returns and the books of account are rejected, the assessing officer must make an estimate, and to that extent he must make a guess; but the estimate must be related to some evidence or material and it must be something more than mere suspicion.
To use the words of Lord Russell of Killowen again, " he must make what he honestly believes to be a fair estimate of the proper figure of assessment" and for this purpose he must take into consideration such materials as the assessing officer has before him, including the assessee 's circumstances, knowledge of previous returns and all other matters which the assessing officer thinks will assist him in arriving at a fair and proper estimate.
In the case under our consideration, the assessing officer did not do so, and that is where the grievance of the assessee arises.
The next decision is Ganga Ram Balmokand vs Commissioner of Income Tax, Punjab (2).
It was held therein that where the income tax authorities were not satisfied with the correctness or completeness of the assessees ' accounts and, taking into consideration the state of affairs in general and the fact that the assessees had a large business and the profit shown by them was abnormally low in comparison with that of other persons carrying on the same business in the locality, calculated the taxable income by applying a flat rate of 7 per cent.
, the authorities were justified in applying such a flat rate, and the burden was on the assessees to displace the estimate.
There again, the estimate made was not a pure guess and was based on some materials which the Income tax Officer had before him.
Din Mohammad J. who gave the leading judgment, observed: " It cannot be denied that there must be some material before the Income tax Officer on which (1) ; , 949.
(2) 47 to base his estimate, but no hard and fast rule can be laid down by the Court to define what sort of material is required on which his estimate can be founded.
" With that observation we generally agree.
If, in this case, the Sales Tax authorities had based their estimate on some material before them, no objection could have been taken; but the question which was referred to the High, Court and which arose out of the orders of assessment was whether it was open to the said authorities to make an assessment on a figure of gross, turnover, without referring to any materials to justify the adoption of that figure.
In answering that question in the affirmative, the High Court has given a carte blanche to the Sales Tax authorities and has, in our opinion, misdirected itself as to the true scope and effect of cl.
(b) of sub section
(2) of section 10 of the Act.
The next decision is Gunda Subbayya vs Commissioner of Income tax, Madras (1).
This decision also does not help the respondent.
It was held in that decision that though there is nothing in the Indian Income tax Act which imposes a duty on an Incometax Officer, who makes an assessment under section 23 (3), to disclose to the assessee the material on which he proposes to act, natural justice requires that he should draw the assessee 's attention to it and give him an opportunity to show that the officer 's information is wrong and he should also indicate in his order the material on which he has made his estimate.
This decision is really against the respondent and does not lay down any rule which may be said to be inconsistent with the observations made by this Court in Dhakeswari Cotton Mills ' case (2).
The decision of the Lahore High Court in Seth Gurmukh Singh vs Commissioner of Income tax, Punjab (3) was specifically approved by this Court in Dhakeswari Cotton Mills ' case (2).
The rules laid down in that decision were these: (1) While proceeding under sub section
(3) of section 23 of the Income tax Act, the Income tax Officer is not bound to rely on such evidence produced by the assessee as he considers to be false; (2) if he proposes to make an estimate in disregard of (1) 1.
(2) ; , 949.
(3) 48 the evidence, oral or documentary, led by the assessee, he should in fairness disclose to the assessee the material on which he is going to found that estimate; (3) he is not however debarred from relying on private sources of information, which sources he may not disclose to the assessee at all; and (4) in case he proposes to use against the assessee the result of any private inquiries made by him, he must communicate to the assessee the substance of the information so proposed to be utilised to such an extent as to put the assessee in possession of full particulars of the case he is expected to meet and should further give him ample opportunity to meet it, if possible.
The decision does not lay down that it is open to the Income tax Officer to make an estimate on pure guess and without reference to any material or evidence before him.
The last decision to which we have been referred is the decision in Malik Damsaz Khan vs Commissioner of Income tax (1).
That again is a decision of the Privy Council.
In that case, the validity of the assessment under section 23 (3) of the Indian Income tax Act was not challenged by the assessee and the appeal was directed solely to the amount of assessment.
Their Lordships observed: 'But it appears to them that it was clearly competent for the Income tax Officer in the circumstances of the present case to accept the return as a valid return and proceed to assessment under section 23 (1) or section 23 (3) as the case might be.
Since he was not satisfied that the return was correct and complete he could not proceed under section 23 (1); he, therefore, as appeared upon the face of the assessment, proceeded under section 23 (3).
Neither in the incompleteness of the return nor in the fact that in any accompanying statement the appellant referred to his return as an estimate can their Lordships find any possible justification for the plea that the assessment was incompetent or that the Appellate Assistant Commissioner had no jurisdiction to entertain the appeal proceedings which the appellant himself initiated. " (1) 49 These observations do not help the respondent in any way; nor do they lay down any rule contrary to the rules laid down in Seth Gurmukh Singh 's case (1).
For these reasons we hold that the High Court, was in error in answering the question referred to it.
The appeal is accordingly allowed and the judgment and order of the High Court are set aside.
The answer to the question referred to the High Court is in the negative.
The appellant will be entitled to its costs both in this Court and in the High Court.
Appeal allowed.
| The appellant filed the necessary returns, as required by the provisions of the Bihar Sales Tax Act, 1944, and produced the account books.
The Sales Tax Officer considered that the account books were not dependable and, after rejecting them as well as the returns, proceeded to estimate the gross turnover by adopting a figure by pure guess, without reference to any evidence or material, and made the assessment under section 10 (2) (b) of the Act.
Held, that under section 1O (2) (b) of the Bihar Sales Tax Act, 1944, a duty is imposed on the assessing authority to make the assessment after hearing such evidence as the assessee may produce and such other evidence as the assessing authority may require on specified points, and, in case the returns of the assessee and his books of account are rejected, the assessing authority must make an estimate, but this must be based on such evidence or material as the assessing authority has before him, including the assessee 's circumstances, knowledge of previous returns and all other matters which the assessing authority thinks will assist him in arriving at a fair and proper estimate.
Dhakeswari Cotton Mills Ltd. vs Commissioner of Income Tax, West Bengal, ; and Income tax Commissioner vs Badridas Ramrai Shop, Akola, (1937) L.R. 64 I.A. 102, relied on.
|
Summarize this legal judgement text concisely | Civil Appeal No. 5 of 1954.
Appeal from the judgment and decree dated April 7, 1948, of the Nagpur High Court in First 783 Appeal No. 27 of 1954 arising out of the judgment and decree dated July 7, 1944, of the Court of Third Additional District Judge, Nagpur, in Civil Suit No. 10 B of 1943.
N. section Bindra and Gyan Singh Vohra, for the appellants.
B. Sen and H. L. Hathi (for R. H. Dhebar), for the respondent.
October 29.
The following Judgment of the Court was delivered by BHAGWATI J.
This appeal with a certificate of fitness under section 110 of the Code of Civil Procedure raises an important question as to the rights and remedies of a bailor in the event of non delivery of the goods by the bailee.
The appellants carried on business in partnership in the firm name and style of " Ishwarsing Dhiansingh " and were the owners of two motor trucks, one bearing No. AWB 230 (V 8 Ford 1938 Model) and the other bearing No. AWB 253 (Oldsmobile Model 1938).
On May 4, 1942, the appellants entered into an agreement for the hiring out of these trucks to the respondent for imparting tuition to the military personnel.
Rupees 17 per day per truck was stipulated as the hire and the agreement was terminable on one month 's notice by either side.
Pursuant to the said agreement truck No. AWB 230 was handed over to the respondent on April 29, 1942, and truck No. AWB 253 was given on May 4, 1942.
The respondent used truck No. AWB 230 from April 29, 1942, to July 31, 1942, excepting the period from June 4, 1942, to June 9, 1942, and truck No. AWB 253 from May 4, 1942, to July 31, 1942, excepting the period from June 1, 1942, to June 9, 1942.
On June 29, 1942, the respondent gave notice to the appellants terminating the agreement with effect from August 1, 1942, and asked them to remove the trucks on the expiration of that period.
The appellant No. 1 attended upon the Officer Commanding 4 M.T.T. Centre, Kamptee at about 9 a.m. on August 1, 1942, for removing the trucks but they were not delivered 784 to him by the transport in charge and by his letter of the same date addressed to the section S.O., Kamptee, the appellant No. 1 put the above fact on record.
The respondent did not return the trucks to the Appellants nor did it pay any hire charges to them.
The respondent took up the position that the amount of hire had been paid and the trucks had been delivered by it to one Surjan Singh who was alleged to have been a partner of the appellants and thus entitled to receive the said payment and the delivery of the trucks in question.
The appellants controverted the said position and claimed that the respondent was liable to pay the hire money as well as return the trucks to them.
On August 4, 1942, the appellants gave the requisite notice under section 80 of the Code of Civil Procedure to the respondent and claimed (i) the hire money up to July 31, 1942, at Rs. 17 per day for AWB 230 from April 29, 1942, and for AWB 253 from May 4, 1942, and interest at 6% on the hire money from the due date till realization (ii) damages at Rs. 17 per day per truck from and inclusive of August 1, 1942, onwards till delivery of possession and (iii) return of the trucks Nos.
AWB 253 and AWB 230 in good running order with spare wheels, accessories and tools and in good condition or in the alternative Rs. 3,500 being the price of the said two trucks.
The respondent failed and neglected to comply with the requisitions contained in the said letter with the result that on January 8, 1943, the appellants filed a suit against the respondent and the said Surjan Singh claiming the aforesaid reliefs together with future damages from the date of suit to the date of the delivery of the trucks and costs.
In the plaint as filed the cause of action was stated to be the failure of the respondent to pay hire money and the non delivery of the trucks to the appellants by reason of their having been wrongfully delivered by the respondent to the said Surjan Singh.
It was averred that the appellants were entitled to the return of their trucks or their value at the date of the decree.
The appellants reserved their right to claim excess 785 amount if the price of the trucks at that time was found more than what was claimed by them owing to the rise in prices thereof, by paying additional courtfee.
The action was one for wrongful detention and the appellants claimed a return of the trucks or in the alternative the price thereof at the date of the decree, payment of hire and damages for wrongful detention of the said trucks.
The respondent reiterated its contentions in the written statement which it filed and the parties went to a hearing on these pleadings.
The Trial Court held that the respondent was not justified in paying the rent and delivering the trucks to the said Surjan Singh.
It awarded to the appellants the price of the two trucks which had been fixed by the appellants at Rs. 3,500 both in the notice under section 80 of the Code of Civil Procedure and the evidence led on their behalf.
It also awarded to the appellants interest on that sum at 6% per annum by way of damages.
It, however, refused to grant any mesne profits holding that for either detention or conversion, the value of the goods on the date of the tort was sufficient compensation.
The rent of the trucks was calculated at Rs. 2,380 and it awarded to the appellant that sum together with interest thereon at 6% per annum from August 1, 1942, to January 7, 1943.
It accordingly passed a decree in favour of the appellant for Rs. 6,032 4 0 with proportionate costs against the respondent as well as Surjan Singh.
The appellants preferred an appeal to the High Court of Judicature at Nagpur.
They claimed a total sum of Rs. 11,985 as also the highest market value of the trucks.
In so far as a decree for Rs. 6,032 had already been passed by the Trial Court in their favour, they valued the subject matter of the appeal at Rs. 5,953 and accordingly furnished court fee stamp for that amount.
The Office of the Registrar took objection to the amount of that court fee and on February 19, 1945, a Bench of the High Court passed an order that the appellants must pay court fee on Rs. 16,626 being the claim for rent from the date of the suit till the date 786 of the filing of the appeal and the appellants accordingly paid the additional court fee of Rs. 1,279 11 0 on February 28, 1945.
The appeal was heard by a Division Bench of the High Court On April 1, 1948.
The High Court disallowed the appellants ' claim for the higher value of the trucks on the ground that the appellants had merely claimed Rs. 3,500 as the price of the said trucks in the notice under section 80 of the Code of Civil Procedure.
The learned judges were of the opinion that although it might be permissible to allow some latitude when the substance of the claim was clear it would not be right to tell the respondent that only Rs. 3,500 was being claimed if the trucks were not returned and then in the suit to demand something like Rs. 14,000.
They accordingly upheld the decree of the Trial Court in this regard.
As regards the claim for damages for wrongful detention of the trucks the learned judges held that the appellants should be compensated for being deprived of the use of the trucks between August 1, 1942, the date of the breach and July 7, 1944, the date of the Trial Court 's decree.
They, however, observed that the appellants might not have been able to keep the trucks in use for every day all over the period, that there might be days when the trucks would be out of use, that there might be days when there would not be any hirers for the trucks, and that there might be days when the trucks would lie idle for repairs and overhaul and so forth.
Even though all this was taken into consideration the learned judges thought that compensation at the rate of Rs. 17 per day_ per truck for a substantial portion of the period stated above would be fair.
Having arrived at the above conclusion the learned judges observed that the appellants had no doubt paid an additional court fee at a later stage but the fact that they had originally limited their claim to Rs. 5,953 showed that they considered that a fair sum in the beginning.
The learned judges therefore limited the enhancement of the Trial Court 's decree to Rs. 5,953 the sum which the appellant bad originally claimed in the appeal.
The Trial Court 's decree was accordingly enhanced by Rs, 5,953 thus 787 allowing the appellant a further sum of Rs. 5,477 for compensation under that head and the appeal was allowed with costs to that extent.
The appellants thereafter applied for a certificate of fitness to appeal under section 110 of the Code of Civil ' Procedure and hence this appeal.
The two main points which have been urged by the appellants before us are : (i) that the 'appellants ' suit was one for wrongful detention and the appellants were entitled to return of the two trucks or in the alternative to the value thereof as on the date of the decree, that the value of the two trucks at the date of the decree was Rs. 7,000 each and the Trial Court should have awarded to them a sum of Rs. 14,000 in the alternative and (ii) that in addition to the above relief the appellants were entitled to damages for wrongful detention of the trucks calculated at the rate of Rs. 17 per day per truck from August 1, 1942, being the date of the accrual of the cause of action till July 7, 1944, which was the date of the decree passed by the Trial Court in their favour.
The reply of the respondent was (i) that at its worst the respondent was to the knowledge of the appellant guilty of wrongful conversion of the said trucks from August 1, 1942, and that the appellants were only entitled to damages for wrongful conversion which are commensurate with the price of the trucks at the date of such wrongful conversion and (ii) that even if the appellants were entitled to any further damages since August 1, 1942, they were merely the damages for nonpayment of the value of the trucks by the respondent and should be assessed at only 6% interest per annum from the date of such conversion till payment.
The respondent further contended that even on the basis of wrongful detention the appellant would not be entitled to anything more than the price of the said trucks as at the date of the Trial Court 's decree plus nominal damages for the wrongful detention of the trucks from August 1, 1942, till July 7, 1944.
In so far however as the High Court had awarded to the appellants the sum of Rs. 5,953 in addition to the sum 100 788 of Rs. 6,032 already awarded by the Trial Court in their favour, the appellants were not entitled to anything more and that therefore the appeal was liable to be dismissed.
It would be relevant to consider what is the exact scope of the two forms of action, viz., action for wrongful conversion and action for wrongful detention, otherwise known as action in trover and action in detinue.
A conversion is an act of wilful interference, without lawful justification, with any chattel in a manner inconsistent with the right of another, whereby that other is deprived of the use and possession of it.
If a carrier or other bailee wrongfully and mistakenly delivers the chattel to the wrong person or refuses to deliver it to the right person, he can be sued as for a conversion.
Every person is guilty of a conversion, who without lawful justification deprives a person of his goods by delivering them to some one else so as to change the possession.
(Salmond on Torts, 11th Edition, pages 323, 324, 330).
The action of detinue is based upon a wrongful detention of the plaintiff 's chattel by the defendant, evidenced by a refusal to deliver it upon demand and the redress claimed is not damages for the wrong but the return of the chattel or its value.
If a bailee unlawfully or negligently loses or parts with possession he cannot get rid of his contractual liability to restore the bailor 's property on the termination of the bailment and if he fails to do, he may be sued in detinue.
(Clerk & Lindsell on Torts, 11th Edition, pages 441 and 442: paras.
720 & 721).
Detinue at the present day has two main uses.
In the first place, the plaintiff may desire the specific restitution of his chattels and not damages for their conversion.
He will then sue in detinue, not in trover.
In the second place, he will have to sue in detinue if the defendant sets up no claim of ownership and has not been guilty of trespass; but the original acquisition in detinue sur bailment was lawful.
Detinue lies against him who once had but has improperly parted with possession.
At common law the natural remedy 789 for the recovery of chattels was the action in detinue.
In that action the judgment was in the alternative that the plaintiff do recover the possession of the chattels or their assessed value in case possession cannot be had together in any case with damages for their detention.
(Salmond on Torts, 11th Edition, pages 351, 352 & 353).
Judgment for the petitioner in trover is for recovery of damages for the conversion: Judgment for the petitioner in detinue is for delivery of the chattel or payment of its value and damages for detention.
(Halsbury 's Laws of England, Hailsham Edition, Vol.
33, p. 78, para.
These forms of action are survivals of the old forms of action in trover and in detinue and it is interesting to note the evolution of the modern causes of action for wrongful conversion or for detention.
Denning J. (as he then was) in Beaman vs A.R.T.S. Ltd. (1) gave the following history of their evolution at page 92:" The modern causes of action for wrongful detention or for conversion are very different from the old forms of action for detinue or for trover, and must not be confused therewith.
Detinue in its original form was a real action founded on a bailment which was extended later to cases against a finder.
It had, however, many procedural disadvantages, and, in particular, the defendant could wage his law.
On this account, it was superseded in the course of time by trover, which for over 150 years was in practice the common remedy in all cases of taking away or detention of chattels or of their misuse or destruction.
In 1833 the defendant in detinue lost his right to wage his law.
In 1852 the old forms of actions were abolished.
In 1854 the plaintiff gained the right to an order for specific delivery of the chattel detained.
Since that time there have developed the new causes of action of conversion and wrongful detention, the names of which are derived from the old forms of action, but the substance of which is quite different.
I attempt no precise definition, but, broadly speaking, the cause of action in conversion is based on an (1) , 92.
790 unequivocal act of ownership by the defendant over goods of the plaintiff without any authority or right in that behalf.
The act must be an unequivocal act of ownership, i.e., an act such as acquiring, dealing with, or disposing of the goods, which is consistent only with the rights of an owner as distinct from the equivocal acts of one who is entrusted with the custody or handling or carriage of goods.
A demand and refusal is not, therefore, itself a conversion, but it may be evidence of a prior conversion.
The cause of action in wrongful detention is based on a wrongful withholding of the plaintiff 's goods.
It depends on the defendant being in possession of the plaintiff 's goods.
If such a defendant, without any right so to do, withholds the goods from the plaintiff after the plaintiff has demanded their return, he is, for such time as he so withholds them, guilty of wrongful detention: This is the tort of which a bailee or finder is guilty who is in possession of the goods and fails to deliver them up within a reasonable time after demand, though it may also, in the case of a bailee, be a breach of contract.
If the bailee or finder subsequently disposes of the goods, he is guilty of conversion, but the wrongful detention then comes to an end and is swallowed up in the conversion.
" Paton on " Bailment in the Common Law " (1952 Edition) has the following observations to make in regard to these two forms of causes of action at page 404: " The following maxim has been suggested as a guide for plaintiffs: if the market is falling sue in conversion, if it is rising sue in detinue.
This is the orthodox view and it shows that even to day the distinction between the old forms of action is important.
" Whether the plaintiff files an action for wrongful conversion or for wrongful detention this is essentially a matter for his election ; he can sue the bailee who has parted with wrongful possession of the goods in favour of a third person either in trover on in detinue or where the goods have been sold be may waive the tort and sue as upon an implied contract for money 791 had or received.
(Halsbury 's Laws of England, Hailsham Edition, Vol.
33, page 69, para. 115).
The defendant cannot be heard to say that the plaintiff knew or ought to have known of the conversion of the goods by him and therefore should pursue his remedy only in conversion.
He cannot take advantage of his own wrong.
It was held as early as 1858 in Reeve vs Palmer (1) by Cockburn C.J. " It has been held from a very early time that where a chattel has been bailed to a person, it does not lie in his mouth to set up his own wrongful act in answer to an action for detinue, though the chattel has ceased to be in his possession at the time of the demand. . . .
Williams J. also observed: "All the authorities, from the most ancient time, shew that it is no answer to an action of detinue, when a demand is made for the re delivery of the chattel to say that the defendant is unable to comply with the demand by reason of his own breach of duty." The said decision was affirmed in appeal before the Exchequer Chamber and that may be taken to be the settled law on this point.
Wilkinson vs Verity (2) also laid down the same principle of election of the remedies and the following observations of Willes J. at page 210 are apposite: " The misconduct of the party who acts in fraud of the bargain in such cases gives the other party thereto the election of suing either for the first violation or for non performance at the day; and it does not furnish the wrongdoer with any answer to the latter. . . .
On the other hand, if the action of detinue is resorted to as it may be (Com.
Detinue A) for the purpose of asserting against a person entrusted for safe custody a breach of his duty as bailee, by detention after demand, independent of any other act of conversion, such as would make him liable in an action of trover, it should seem that the owner is entitled to sue, at election, either for a wrongful parting with the (1) ; , 90, 91 (2) 792 property (if he discovers and can prove it) or to wait until there is a breach of the bailee 's duty in the ordinary course by refusal to deliver up on request and that in the latter case, it is no answer for the bailee to say that he has by_ his own misconduct incapacitated himself from complying with the lawful demand of the bailor.
In that case, the principle that a man intrusted with property for safe custody cannot better his position by wrongfully parting with possession of it, but must be answerable as if he retained the possession, was applied both in this Court and in the Exchequer Chamber to the action of detinue. . . .
And this is agreeable to the maxim, " Qui dolo desiit possidere pro possidente Damnatur.
" It may be noted that this case of Wilkinson vs Verity (1) was followed by the Court of Appeal in England in Rosenthal vs Alderton & Sons Ltd. (2 ) and by the High Court of Australia in John F. Goulding Proprietary Limited vs The Victorian Railways Commissioners (3).
It is clear therefore that a bailor in the event of the non delivery of the goods by the bailee on a demand made by him in that behalf is entitled at his election to sue the bailee either for wrongful conversion of the goods or the wrongful detention thereof and if the bailor pursues his remedy against the bailee for wrongful detention of the goods it would be no answer for the bailee to say that he was guilty of wrongful conversion of the goods at an earlier date which fact of conversion of the goods the plaintiff knew or ought to have known at or about that time and is therefore not liable to the plaintiff for wrongful detention thereof.
It is the option of the plaintiff to pursue either remedy against the bailee just as it suits him having regard to all the circumstances of the case and the bailee cannot be heard to say anything to the contrary for the simple reason that he cannot take advantage of his own wrong (1) (3) ; , 167.
(2) 793 and cannot ask the plaintiff to choose a remedy which may be less beneficial to him.
This is of course the normal rule, though the courts have tried to soften its rigour by importing the consideration that the plaintiff should not be allowed to delay his action in order to get the advantage of a rising market.
A speculative element might enter into the matter and a shrewd plaintiff might attempt to take unfair advantage of a fluctuating market.
" Just as plaintiff may not waive a conversion so as to pick his own time to demand return and thus evade being statute barred, so he may not bide his time after a conversion so as to make his demand when the market price is highest." (Kialfray (12) Modern Law Review at page 427).
In the present case, however, we are not fettered by any such consideration.
The respondent was the bailee of the two trucks and was bound to return the same to the appellants on the termination of the bailment.
The bailment came to an end on August 1, 1942, and the appellants attended the office of the Officer Commanding 4 M.T.T. Centre, Kamptee on the said date for having the trucks re delivered to them.
When the said trucks were not so delivered the appellants immediately on August 14, 1948, gave the statutory notice to the respondent under section 80 of the Code of Civil Procedure.
The period of the said notice expired on or about October 14, 1942, and the appellants filed their action for wrongful detention on January 8, 1943.
There was no delay on the part of the appellants which would spell out any intention on their part to take advantage of the rising market or to waive their remedy in wrongful conversion with a view to take advantage of the statute of limitation.
There is no evidence to show that the market value of the trucks had appreciated perceptibly between August 1, 1942, and January 8, 1943, and it is significant to note that the only claim which the appellants had made in their notice dated August 4, 1942, was for specific delivery of the said trucks by the respondent.
Even though the appellants knew that the said trucks had been redelivered by the respondent to Surjan Singh and they 794 could have, if they had been so minded, sued the respondent for wrongful conversion of the said trucks, they elected to have the said trucks re delivered to them and asked for the specific delivery thereof and filed their action for wrongful detention of the said trucks.
They were, in our opinion, perfectly entitled to do so and we have to consider the further questions that arise before us on the basis that the action for wrongful detention had been rightly instituted by the appellants against the respondent.
This leads us to the question as to what relief the appellants are entitled to obtain against the respondent.
The claim for the rent already due by the respondent to the appellants up to August 1, 1942, has been settled by the judgments of the courts below and we are not called upon to canvass these findings of fact any further.
The more important questions that require to be dealt with are: (1) What is the amount which the appellants are entitled to recover from the respondent as and by way of the value of the two trucks in the alternative the respondent being admittedly not in a position to re deliver the said trucks to them and (2) what are the damages which the appellants are entitled to recover by reason of wrongful detention of the trucks till the date of judgment.
As regards the first question the Trial Court unfortunately did not properly appreciate the evidence which was led by the appellants before it.
That evidence was given on or about February 1, 1944, more than a year after the institution of the suit and about five months before the date of the decree.
The evidence such as it stood was to the effect that the prices of similar trucks had considerably appreciated after August 1, 1942, and broadly stated were at least twice those which obtained on or about that date.
The claim of the appellants as laid was no doubt exaggerated and on the evidence the Trial Court would not have been justified in awarding to the appellants anything like the sum of Rs. 7,000 per truck which had been claimed.
The evidence however was sufficient to enable the Trial Court to come to the conclusion that the price of the said two trucks which had been fixed at Rs. 3,500 both in the notice under a. 80 of the Civil 795 Procedure Code as well as in the plaint had appreciated at least by 100% and if the Trial Court had come to the conclusion that the appellants were entitled to the value of the trucks as at the (late of the judgment it would certainly have been justified in awarding to the appellants an aggregate sum of Rs. 7,000 in the alternative.
The Trial Court however understood the position in law to be that for either detention or conversion the value on the date of the tort was sufficient compensation and awarded to the appellants only a sum of Rs. 3,500 which was the value thereof on August 1, 1942, together with interest at 6% per annum as and by way of damages.
The Trial Court was obviously wrong in awarding this sum and interest to the plaintiff for the reasons which we shall presently discuss.
When the matter went to the High Court the learned judges of the High Court did not discuss this aspect of the question at all but dismissed the claim of the appellants merely on the ground that the appellants had only claimed Rs. 3,500 in the notice which they had served on the respondent under section 80 of the Code of Civil Procedure and that they were therefore not entitled to recover anything more than the sum of Rs. 3,500 and they accordingly upheld the decree of the Trial Court in this behalf We are constrained to observe that the approach of the High Court to this question was not well founded.
The Privy Council no doubt laid down in Bhagchand Dagadusa vs Secretary of State (1) that the terms of this section should be strictly complied with.
That does not however mean that the terms of the notice should be scrutinized in a pedantic manner or in a manner completely divorced from common sense.
As was stated by Pollock C. B. in Jones vs Nicholls (2) "We must import a little common sense into notices of this kind.
" Beaumont C. J. also observed in Chandu Lal Vadilal vs Government of Bombay (3): "One must construe section 80 with some regard to common sense (1) (1927) L.R. 54 I.A. 338.
(2) ; , 363; ; , 150.
(3) I.L.R. 101 796 and to the object with which it appears to have been passed. . .
If the terms of the notice in question be scrutinized in this manner it is abundantly clear that the relief claimed by the appellant was the a re delivery of the said two trucks or in the alternative payment of Rs. 3,500 being the value thereof.
The value which was placed by the appellants on the trucks was the then value according to them a value as on August 1, 1942, the date on which the delivery of the trucks ought to have been given by the respondent to the appellants.
The appellants could only have demanded that sum as on the date of that notice.
They could not sensibly enough have demanded any other sum.
If the respondent had complied with the terms of that notice then and there and re delivered the trucks to the appellant, nothing further needed to be done.
If on the other hand instead of re delivering the trucks it paid to the appellant the value thereof then also it need not have paid anything more than Rs. 3,500 to the appellant, on that alternative.
If, however, the respondent failed and neglected to comply with the requisitions contained in that notice the appellants would certainly be entitled to recover from the respondent the value of the said trucks in the alternative on the failure of the respondent to re deliver the same to the appellants in accordance with the terms of the decree ultimately passed by the Court in their favour.
That date could certainly not be foreseen by the appellants and it is contrary to all reason and common sense to expect the appellants to have made a claim for the alternative value of the said two trucks as of that date.
The respondent was and ought to have been well aware of the situation as it would develop as a result of its non compliance with the terms of that notice and if on January 8, 1943, the appellants in the suit which they filed for wrongful detention of the said trucks claimed re delivery of the said trucks or in the alternative Rs. 3,500 as their value and reserved their right to claim the further appreciation in the value of the trucks by reason of the rise in prices thereof up to the date of the decree by paying 797 additional court fee in that behalf, it could not be laid at their door that they had not made the specific demand in their notice to the respondent under section 80 of the Code of Civil Procedure and that therefore their claim to recover anything beyond Rs. 3,500 was barred under that section.
A common sense reading of the notice under section 80 would lead any Court to the conclusion that the strict requirements of that section had been complied with and that there was no defect in the same such as to disentitle the appellants from recovering from the respondent the appreciated value of the said two trucks as at the date of the judgment.
It is relevant to note that neither was this point taken by the respondent in the written statement which it filed in answer to the appellants ' claim nor was any issue framed in that behalf by the Trial Court and this may justify the inference that the objection under section 80 bad been waived.
The point appears to have been taken for the first time before the High Court which negatived the claim of the appellants for the appreciated value of the said trucks.
Turning then to the question whether the appellants were entitled to the value of the said trucks in the alternative as at the date of the judgment or at the date of the tort, whether it be conversion or wrongful detention, the position appears to be a little confused.
Recent cases indicate that there is much conflict concerning the true rule to apply as to the measure of damages in detinue and conversion.
As to the time at which the value of the goods which are the subject matter of the tort should be assessed it is not certain (a) whether the rule is the same in trover as in detinue; (b) whether damages should be calculated at the moment of the wrong, or of the verdict or at some intermediate period and (c) whether the doctrine of special damage can be so used as to compensate the owner for fluctuations in value.
(Paton on " Bailment in the Common Law", page 404).
Up to 1946 the trend of the authorities in England was to assess the value of the goods at the date of the breach where the action was for breach of contract and as at the date of the tort where the action was for 798 wrongful conversion or for wrongful detention.
There was an old authority of Mercer vs Jones (1) which laid down that the damages should be the value at the time of the conversion.
This authority was relied upon by the Attorney General in Greening vs Wilkinson (2) but Abbott C.J. observed that case was hardly law, and that the amount of damages was for the jury, who might give the value at the time of the conversion, or at any subsequent time in their discretion, because the plaintiff might have had a good opportunity of selling the goods if they had not been detained.
He expressed the opinion that the jury were not at all limited in giving their verdict by what was the price of the article on the day of the conversion.
This case was considered and not applied in Johnson vs Hook (3) and the position which obtained was that the damages were to be assessed on the value of the property at the date of the conversion.
Bodley vs Reynolds (4) was an action in trover for goods and chattels comprising of carpenters tools.
Special damages were also claimed and proved and the Court awarded not only the value of the goods at the date of conversion but also special damages as laid in the declaration.
Lord Denman C. J. observed that where special damage was laid and proved, there could be no reason for measuring the damages by the value of the chattel converted.
In effect this confirms the position that apart from this circumstance the damages would be measured by the value of the chattel converted which value was taken as at the date of conversion.
Reid vs Fairbanks (5) was also an action in trover.
It was held that the proper principle on which to estimate such damages, would be, the value of the ship and all her store, etc., on the date when the third party took possession of her; and that, as a, mode of ascertaining such value, the referee should consider what would have been the value of the ship, (1) ; ; (2) ; (3) (4) ; ; (5) ; ; 799 if she had been completed by the defendant according to his contract with the plaintiff and deduct therefrom the money that would necessarily have been laid out by the defendant after that date, in order to complete her according to the contract.
The value of the ship was thus calculated as at the date of the conversion even though the method of computation was prescribed by the circumstances of the case.
In section section Celia vs section section Volturno (1) the House of Lords had to consider the question whether the proper date for ascertaining the rate of exchange for the purpose of converting the amount payable into English currency was the date on which the detention occurred or the date on which the damages were assessed or payment made.
Lord Buckmaster at page 548 said: " A judgment, whether for breach of contract or for tort, where, as in this case, the damage is not continuing, does not proceed by determining what is the sum which, without regarding other circumstances, would at the time of the hearing afford compensation for the loss, but what was the loss actually proved to have been incurred either at the time of the breach or in consequence of the wrong.
With regard to an ordinary claim for breach of contract this is plain.
Assuming that the breach complained of was the non delivery of goods according to contract, the measure of damage is the loss sustained at the time of the breach measured by the difference between the contract price and the market price of the goods at that date.
Similar considerations apply to an action for tort.
In cases where, as in the present, the damage is fixed and definite, and due to conditions determined at a particular date, the amount of damage is assessed by reference to the then existing circumstances and subsequent changes would not affect the result.
If these damages be assessed in a foreign currency the judgment here, which must be expressed in sterling, must be based on the amount required to convert this (1) [1921] 2 A.G. (H.L.) 544, 548. 800 currency into sterling at the date when the measure was properly made, and the subsequent fluctuation of exchange, one way or the other, ought not to be taken into account.
" Lord Sumner expressed himself in these terms at page 555: " The matter may be tested in this way.
Suppose that, as an incident of the collision, some seaman belonging to the Celia had taken possession on behalf of her owners of a parcel of Italian currency notes, the property of the owners of the Volturno, and that the former had received and kept it.
The owners of the Volturno could have claimed damages for conversion of the notes or their return with damages for their detention, as they chose.
In the first case the value of the notes would be taken and exchanged into sterling as at the date of the conversion, and as the foundation of the damages in the second case the same date would have been taken.
" The following passage from Lord Wrenbury 's speech at page 563 clearly sets out the position in law: " The argument to the contrary is that the defendant is bound by a pecuniary payment to put the plaintiff in a position as good as that in which he stood before the tort was committed.
That is true, but it is necessary to add the consideration of which we have recently heard so much, in the form of a fourth dimension namely, that of time.
The defendant is bound to make such pecuniary payment as would put the plaintiff at the date of the tort in as good a position as he would have been in had there been no tort.
If the date taken be that not of the tort but of the judg ment, it is giving the plaintiff not damages for the tort, but damages also for the postponement of the payment of those damages until the date of the judgment.
If such later damages can be recovered as under circumstances they may be if the defendant improperly postpones payment, they would be recovered in the form of interest.
They would be damages not for the original tort, but for another and a subsequent wrongful act." 801 In the Arpad (1) where the plaintiff laid alternative claims in contract and tort it was held that the true measure of damages was the value of the goods at the date of the non delivery, disregarding circumstances peculiar to the plaintiffs and that on the alternative claim in tort for damages for conversion also, the measure of damages was the same.
Scrutton L.J. observed in the course of his judgment at page 205 : " In my opinion the damages in conversion should be the value to the purchaser or goods owner at the time of the conversion.
" The last case in this series is that of the Caxton Publishing Co. vs Sutherland Publishing Co. (2).
Lord Porter in his speech at page 201 defines conversion in the terms following: " As to (3) conversion was defined by Atkin J. as he 'then was, in Lancashire and Yorkshire Rly.
Co. vs MacNicoll , 605).
"Dealing", he said ' "with goods in a manner inconsistent with the right of the true owner amounts to a conversion, provided that it is also established that there is also an intention on the part of the defendant in so doing to deny the owner 's right or to assert a right which is inconsistent with the owner 's right.
" This definition was approved by Scrutton L.J. in Oakley vs Lyster , 153. " Atkin J. goes on to point out that, where the act done is necessarily a denial of the owner 's right or an assertion of a right inconsistent therewith, intention does not matter.
Another way of reaching the same conclusion would be to say that conversion Consists in an act intentionally done inconsistent with the owner 's right, though the doer may not know of or intend to challenge the property or possession of the true owner." After thus defining conversion the learned law Lord proceeded to Consider the measure of damages suffered from that act and he observed at page 203: " As to (4) there is no dispute as to the principle on which in general the measure of damages of (1) (2) 802 conversion is calculated.
It is the value of the thing converted at the date of the conversion, and this principle was accepted by both sides in the present case.
" While thus enunciating the principle on which the measure of damages for conversion is to be calculated the noble law Lord referred to the statement of Abbott C. J. in Greening vs Wilkinson (supra) and stated: " I should wish to leave open for consideration in a case in which it directly arises the question whether the statement of Abbott C. J. in Greening vs Wilkinson that the jury " may give the value at the time of the conversion or at any subsequent time " can be supported or not." The catena of authorities quoted above shows that but for the reservation made by Lord Porter in the last mentioned case in regard to the statement of Abbott C. J. in Greening vs Wilkinson (supra) the consensus of opinion was that the damages for tort were to be measured as at the date of the tort, though it may be noted that most of these cases were concerned with wrongful conversion of the goods and not with the wrongful detention thereof.
In 1946 the Court of Appeal in England laid down in the case of Rosenthal vs Alderton & Sons Ltd. (supra) that in detinue the value of the goods should be measured as at the date of the judgment or verdict, and not at the date of the refusal to return the goods.
The action there was one of detinue.
The plaintiff who was a tenant of the defendants surrendered his tenancy in June, 1940, and, by arrangement with the defendants left on the premises certain goods belonging to him.
In 1943, after his return from a period of military service, the plaintiff found that the goods were missing, some of them having been sold by the defendants.
On October 6, 1943, the plaintiff through his solicitors demanded the return of the goods and, on the defendants ' refusal to comply, brought an action against them claiming the return of the goods and, in the alternative, the payment to him of their value and damages for their detention.
It was con tended on behalf of the defendants that a demand by 803 the plaintiff for the return of the goods having been refused by the defendants several months before the issue of the writ; the proper assessment of the value of such of the goods as had not been returned by the defendants should have in accordance with their value on the date when the cause of action arose, which was (as it was claimed), notoriously less than their value as assessed by the official referee after action was brought.
This contention of the defendants was negatived and the Court held that in an action of detinue, the value of the goods to be paid by the defendants to the plaintiff in the event of the defendants ' failing to return the goods to the plaintiff must be assessed as at the date of the verdict or judgment in his favour and not at that of the defendants ' refusal to return the goods.
Evershed J. who delivered the judgment of the Court dealt with this contention at page 378 as under: "In our judgment an assessment of the value of the goods detained (and not subsequently returned) at the date of the accrual of the cause of action (i.e., of the refusal of the plaintiff 's demand) must presuppose that on that date the plaintiff abandoned his property in the goods: and such a premise is inconsistent with the pursuit by the plaintiff of his action of detinue.
The significance of the date of the refusal of the plaintiff 's demand is that the defendant 's failure to return the goods after that date becomes and continues to be, wrongful.
Moreover, the plaintiff may recover damages in respect of the wrongful 'detention ' after that date, e.g., where the plaintiff has suffered loss from a fall in value of the goods between the date of the defendant 's refusal and the date of actual return, (See William vs Archer ; and such damages must equally continue to run until the return of the goods or (in default of return) until payment of their value.
There is (as appears from the forms of judgment mentioned) a clear distinction between the value of the goods claimed in default of their return and damages for their detention, whether returned or not.
The date of the refusal of the plaintiff 's demand is the date from which the latter commence to run, 102 804 but appears to be irrelevant to the former and cannot convert a claim for the return of the goods into a claim for payment of their value on that date.
" A further contention was urged on behalf of the defendants in that case that the value of certain of the goods which they had in fact sold could not in any event be assessed at any higher value than at the date of the sale.
This contention was negatived by the Court in the terms following at page 379: "In other words they say "We have proved that we converted some of your goods and therefore, we can have the benefit of any lower value prevailing at the date of the conversion".
It is, however, clear that it is no answer for a bailee, when sued in detinue, to say that he has by his own misconduct incapacitated himself from complying with the lawful demand of the bailor of.
Wilkinson vs Verity (supra).
It seems to us that the defendants are, in effect, saying "Your real remedy is in conversion," but the bailor can, in such circumstances elect to sue in detinue (at any rate where he was not aware of the conversion at the time), and there is no reason why the value of the goods in fact converted should be assessed on a different basis from the value of the goods which the bailee has not converted but which for some other reason be fails to re deliver." These observations are the basis of the headnote which says that the same principle applies whether the defendant has converted the goods by selling them or has refused to return them for some other reason.
This decision of the Court of Appeal lays down that where the defendant has been guilty of wrongful conversion of the goods or the wrongful detention thereof, the plaintiff is entitled to damages for such tort committed by the defendant measured at the value of the goods which are the subject matter of the tort computed as at the date of the verdict or judgment and not at the date of the tort.
If this is the true position it would run counter to the rule which had been settled all along up to 1946 that the measure of damages in an action for tort would be the value of the goods at the date of the tort.
As a matter 805 of fact Denning J. (as he then was) commented on this position in Beaman vs A. R. T. section Ltd. (supra) at page 93: "A recent decision of the Court of Appeal holds that the damages in such cases are to be assessed at the date of the judgment or verdict in the plaintiff 's favour : See Rosenthal vs Alderton & Sons Ltd. (supra) ; but that does not mean that the cause of action accrues at that time.
The observations of Lord Goddard C. J. in Sachs vs Miklos (1948) (I All E. R. 67) considerably limit the scope of Rosenthal vs Alderton, and, should prices hereafter fall, the courts will probably be faced with the task of reconciling Rosenthal vs Alderton with the settled rule that damages, whether in contract or tort, are to be assessed as at the date of the accrual of the cause of action and that subsequent fluctuations upwards or downwards in rates of exchange or commodity prices, before or during legal proceedings, are irrelevant: See the decision of the House of Lords in section section Celia vs section section Volturno (supra) particularly the speeches of Lord Buckmaster ([1921] 2 A. C. 544, 548), of Lord Sumner (ibid., 556), and Lord Wrenbury (ibid., 563), and the long line of cases of buyers who sue sellers for conversion of, or for failure to deliver, goods bargained and sold (such as France vs Gaudet where the damages are always assessed as at the date of the breach." The qualification added by the Court of Appeal on the bailor 's right to elect to sue in detinue, "at any rate where he was not aware of the conversion at the time",. has also been commented upon by Paton on " Bailment in the Common Law " at page 405, that on a strict historical basis, this qualification is unnecessary, but the Courts have added it to prevent a plaintiff delaying his action in order to get the advantage of a rising market.
In Sachs vs Miklos (1) the Court of Appeal discussed the measure of damages in a case that raised the point very neatly.
In 1940 a bailor agreed with a bailee that the latter should gratuitously store his furniture (1) [1948] 2 K .B. 23. 806 in her house.
In 1944, the bailee wished to get rid of the furniture and, after fruitless attempts to get in touch with the bailor, sold it.
The furniture realised pound 13 at a public auction.
In 1947 the bailor sued for detinue and conversion, and the current value of the furniture was now assessed at pound 115.
Lord Goddard C. J. (with whom Tucker L. J. and Jenkins J. concurred) stated "that the measure of damages is the same in conversion as in detinue, where the facts are only that a defendant has the goods in his possession and could hand them over, and would not do so" and as a result the damages fall to be assessed as at the date of the verdict or judgment.
These observations of Goddard C. J. were understood by Denning J. in Beaman vs A. R. T. section Ltd. (supra) as considerably limiting the scope of Rosenthal vs Alderton (supra).
The following comment oil the case by Winfield on Tort, 6th Edition at page 442 may be noted with interest: "It seems, however, that Rosenthal 's case simply laid down that where the plaintiff sues in detinue the same principle of assessment of damages applies whether the defendant refuses to return the goods because he has converted them or for some other reason fails to return the goods.
This hardly warrants the conclusion that the measure of damages is the same in detinue as in conversion.
As we have seen the two actions are distinct in their nature and purpose.
" Paton on " Bailment in the Common Law " at page 405 has the following comment to make, on this position : " The Court reached a conclusion that was based on common sense and a desire to do justice to both parties, but in certain respects breaks new ground.
The crucial question was: What was the plaintiff 's loss ? What damage did he suffer by the wrongful act of defendant ? If the plaintiff knew or ought to have known in 1944 of the defendant 's intention to sell, the damages would be justly calculated at pound 13.
If he did riot know, or ought not to have known, till 1946 that his goods were sold, then the damages should be 807 assessed at pound 115.
The case was remitted to the County Court judge in order that the facts might be further elucidated.
The Court also emphasised one further factor.
It was clear that the plaintiff knew of the sale in January, 1946, but he did not begin the action till January, 1947.
If the County Court judge found that there was an undue delay in bringing the action and that there had been a rise in price between 1946 and 1947, then allowance must be made.
This point disposes of the criticism that a speculative element enters into the matter and that a shrewd plaintiff might attempt to take unfair advantage of a fluctuating market.
" Paton further states that this is an interesting decision, but a short survey of the cases shows that the earlier authorities, especially with regard to conversion, are by no means clear.
(See also Salmond on Torts, 11th Edition at page 347).
The difficulty, however, arises when there is an increase in the value of the goods which are the subjectmatter of the tort between the date of the tort and the date of the verdict or judgment and there is authority for the proposition that any increment in value due to the act of the defendant is not recoverable by the plaintiff.
Salmond thus summarises the position in his treatise on Torts, 11th Edition at page 348 : " If, on the other hand, where the property increases in value after the date of the conversion, a distinction has to be drawn.
If the increase is due to the act of the defendant, the plaintiff has not title to it, and his claim is limited to the original value of the chattel.
Thus, in Munro vs Willmoti ([1949] 1 K. B. 295) the plaintiff in 1941 deposited a car in the defendant 's yard.
In 1945, the defendant, after endeavouring without success to communicate with the plaintiff, sold the car, having spent pound 85 on repairs necessary to put it into a saleable state.
Lynskey J. assessed the value of the car at the date of the judgment as pound 120, but hold " that the defendant is entitled to credit, not from the point of view of payment for what he has done, but in order to arrive at the true value of the property which the plaintiff has lost": if 808 the repairs had not been done the car could only have been sold for scrap".
It may be noted that Lynslkey J. approved of this statement of the law as enunciated in Salmond.
Paton, however, in his " Bailment in the Common Law " points out at p. 412 that there is a tendency to consider the merits of each case in order to reach a reasonable solution ; although the theoretical rule is that the defendant is entitled to credit, not as payment for what he has done, but rather to arrive at the true value of the property converted.
He further points out that American cases also emphasise the state of mind of the tortfeasor.
An innocent converter is allowed to deduct the value of his improvements, but one who knowingly commits conversion may be forced to pay damages for the, value of the res in its improved state.
This is justified on the ground that it is fair to award punitive damages where the wrong was wilful.
Where, however, the increase in value is not due to the act of the defendant the plaintiff is also entitled to recover the extra value as special damage resulting from the conversion in addition to the original value of the property converted.
The following passage from Paton at page 409 further elucidates this position: " The plaintiff can always recover, in addition to the value of the property, any special damage which the law does not regard as too remote.
Thus if a carpenter 's tools are converted, it has been held that he may recover their value and also special damages for the loss of employment.
France vs Gaudet (supra) explained this decision on the ground that the defendant had some notice of the existing contract.
Such special damage must be pleaded.
If this rule is applied to fluctuations in value, the result is as follows: (a) If the value increases and is highest at the date of verdict, the result is the same as taking the test of the value at the time of verdict, for the plaintiff obtains the value at the time of conversion, and in addition the increase in value as special damages.
(b) If the value decreases, then the plaintiff can still secure the value at the time of conversion: he can 809 claim no special damage and the defendant has no claim to reduce the damages.
It is doubtful, however, whether the rule as to special damage should be applied to the question of fluctuations of value.
There is some authority for it, but it cannot be regarded as established.
If it is accepted, the argument as to the date of the moment of calculating damage loses much of its practical importance.
A commentator in the Harvard Law Review ((1947) 61 Harv.
L. R. 158) states that in measuring damages for conversion the courts started with the "traditional but over simplified value at the time and place of the wrong".
But where the goods are of such a nature that their value fluctuates greatly the courts have been prepared to depart from this rule.
Thus in New York, where stock is concerned, the courts allow the owner to recover the highest value to which the stock rose a reasonable time after he learnt of the conversion, the emphasis on the reasonable time being to prevent speculation by delaying unduly the initiation of the action.
California allows the highest value reached between the date of the conversion and the time of trial.
In Texas the highest intermediate value is allowed in cases of wilful wrong or gross negligence, but only the value at the date of the conversion as against a blameless defendant.
" (See also Restatement of the Law, Volume on Torts, pages 650, 653 and 927).
And further at page 410: " The decisions illustrate the way in which the merits of the defendant 's case have been allowed to determine the technical question of the method of calculating damages.
In England, these considerations have not been discussed so openly, but their influence on decisions is seen in the judgments in Sachs vs Miklos (supra), where the question of reasonable speed in bringing the action was discussed and in Lord Atkin 's speech in Solloway vs McLaughlin ([1938] A.C. 247) where he finds delight in using a technical rule to award damages against the unjust steward.
" It follows from the above that the position in law in regard to the measure of damages in an action for 810 wrongful conversion is far from clear and the law in regard to the same cannot be said to be perfectly well settled.
Whatever be the position in regard to the same in actions for wrongful conversion, one thing is quite clear that in actions for wrongful detention the measure of damages can only be the value of the goods as at the date of the verdict or judgment.
The tort is complete the moment the goods are wrongfully converted by the defendant and no question can arise in those cases of any continuing wrong.
In a case of wrongful detention, however, the cause of action may certainly arise the moment there is a refusal by the defendant to re deliver the goods on demand made by the plaintiff in that behalf.
But even though the cause of action thus arises on a refusal to re deliver the said goods to the plaintiff the wrongful detention of the goods is a continuing wrong and the wrongful detention continues right up to the time when the defendant re delivers the goods either of his own volition or under compulsion of a decree of the Court.
There is moreover this distinction between actions for wrongful conversion and those for wrongful detention that in the former the plaintiff abandons his title to the goods and claims damages from the defendant on the basis that the goods have been wrongfully converted by the defendant either to his own use or have been wrongfully dealt with by him.
In the latter case, however, the plaintiff asserts his title to the goods all the time and sues the defendant for specific delivery of the chattel or for re delivery of the goods bailed to him on the basis that he has a title in those goods.
The claim for the re delivery of the goods by the defendant to him is based on his title in those goods not only at the time when the action is filed but right up to the period when the same are re delivered by the defendant to him.
The wrongful detention thus being a tort which continues all the time until the re delivery of the goods by the defendant to the plaintiff, the only verdict or judgment which the Court can give in actions for wrongful detention is that the defendant do deliver to the plaintiff the goods thus wrongfully detained by him or pay in the alternative the value 811 thereof which can only be ascertained as on the date of the verdict or judgment in favour of the plaintiff.
Winfield thus enunciates the position in his treatise on Tort, 6th Edition at page 414: " The significance of the date of the refusal of the plaintiff 's demand is that the defendant 's failure to return the goods after that date becomes, and continues to be, wrongful, and damages are recoverable for wrongful "detention" after that date until the goods are returned or payment of their value.
The date of the defendant 's refusal cannot convert a claim for the return of the goods into a claim for payment of their value at that date.
" It is, therefore, clear that in actions for wrongful detention the plaintiff is entitled on default of the defendant in re delivering the goods to him, to payment in the alternative of the value of the goods thus wrongfully detained as at the date of the verdict or judgment, in other words, at the date of the decree.
We are, therefore, of opinion that the appellants were entitled to recover from the respondent the value of the said trucks which, as has been already stated, was Rs. 7,000 in the alternative, on default committed by the respondent in re delivery of the same to the appellants.
The next question to consider is what damages are the appellants entitled to recover from the respondent by reason of the wrongful detention of the said trucks from August 1, 1942, up to the date of the decree.
It is well settled that in an action for wrongful detention the plaintiff is entitled besides the re delivery of the chattel or payment of its value in the alternative, also to damages for such wrongful detention.
There is however no definite criterion laid down by the decided cases as to what the measure of such damages should be.
As was observed by Denning L. J. in Strand Electric & Engineering Co., Ltd. (1): " The question in this case is: What is the proper measure of damages for the wrongful detention of goods? Does it fall within the general rule that the plaintiff only recovers for the loss he has suffered or (1) , 253.
103 812 within some other, and if so what, rule? It is strange that there is no authority upon this point in English 'law: but there is plenty on the analogous case of detention of land.
The rule there is that a wrongdoer, Who keeps the owner out of his land, must pay a fair rental value for it, even though the owner would not have been able to use it himself or to let it to anyone else.
So also a wrongdoer who uses land for his own purpose without the owner 's consent, as, for instance, for a fair ground, or as a, way leave, must pay a reasonable hire for it, even though he has done no damage to the land at all: Whitwham vs Westminster Brymbo Coal Company ([1896] 2 Ch. 538).
I see no reason why the same principle should not apply to detention of goods.
" In that case certain portable switchboards were lent by the plaintiff to a Theatre Co., pending the manufacture and installation by the plaintiffs of permanent switchboards.
The hiring out of portable switchboards was a normal part of the plaintiff 's business and it was agreed between the plaintiff and the Theatre Co., on a subsequent date that the company should pay to the plaintiff the hiring charges at a certain rate per week.
Later on the defendant took possession of the theatre and gave instructions that nothing whatsoever must be removed, and the Theatre Co., disclaimed any responsibility for the plaintiffs ' hire equipment as from that date.
The plaintiffs thereafter wrote a number of letters to the defendant demanding the return of their equipment but received neither their property nor any satisfactory reply, and they issued a writ claiming the return of their equipment or its value, and damages for the period of its detention, which at the trial was shown to be for 43 weeks.
Tile question that arose for consideration was what was the quantum of damages which the plaintiffs were entitled to recover and it was held that in an action in detinue in respect of a chattel which the plaintiff, as part of his business, hires out to users, the plaintiff, if the defendant has during the period of detention made beneficial use of the chattel, is entitled to recover as damages the full market rate of hire for the whole 813 period of detention.
After setting out the passage above quoted Denning L. J. continued at page 254: " If a wrongdoer has made use of goods for his own purpose, then he must pay a reasonable hire for them, even though the owner has in fact suffered no loss.
It may be that the owner would not have used the goods himself, or that he had a substitute readily available, which he used without extra cost to himself.
Nevertheless the owner is entitled to a reasonable hire.
If the wrongdoer had asked the owner for permission to use the goods, the owner would be entitled to ask for a reasonable remuneration as the price of his permission.
The wrongdoer cannot be better off by doing wrong than he would be by doing right.
He must therefore pay a reasonable hire." Mr. B. Sen, who appeared on behalf of the respondent, urged before us on the authority of Anderson vs Passman (1) that as the gist of the grievance is mere unlawful detention, the damages will be nominal unless the plaintiff proves that he has suffered special damage.
This position is, however, of no avail to the respondent because it cannot be said that the appellants ' grievance here is merely in regard to the wrongful detention of the trucks.
The appellants in this instant case have also claimed to recover from the respondent future damages from the date of detention till the date of delivery of the trucks and apart from any claim laid in special damages, these are damages which naturally flow from the wrongful act of the respondent and which the appellants would be entitled to recover in the event of non delivery of the trucks to them by the respondent.
This is certainly not a case of nominal damages.
As Earl of Halsbury L.C. pointed out in Owners of the Steamship "Mediana" vs Owners, Master and Crew of Lightship "Comet" (2): "the unlawful keeping back of what belongs to another person is of itself a ground for real damages, not nominal damages at all.
" The quantum of damages may be big or small but it (1) ; (2) 118. 814 does not make any difference to the principle.
The ,principle of assessing the damages is the same and that is that where by the wrongful act of one man something belonging to another is either itself so a injured as not to be capable of being used or is taken away so that it cannot be used at all, that of itself is a ground for damages.
(lbid p. 116).
In the case before us the appellants were the owners of the two trucks and they used to hire out the same to others.
Hiring Out of the trucks was a regular business of theirs and if the said trucks had been re delivered by the respondent to them on August 1, 1942, they would have immediately put the same to the user, viz., that of hiring them out to outsiders and earning thereby a certain sum by way of rent for each truck per day.
The appellants might not have been able to hire them out for every day of the period of wrongful detention by the respondent, viz., from August 1, 1942 to July 7, 1944.
As the learned judges of the High Court have observed, there might be days when the trucks would be out of use; there might be days when the trucks would lie idle for repairs and overhaul and so forth; that would only go to reduce the number of days for which the appellants would be entitled to recover the damages for such wrongful detention.
If the learned judges of the High Court had on taking all the circumstances into consideration arrived at the figure of Rs. 5,953 as the amount of hire which could have been reasonably earned by the appellants in the event of the re delivery of the trucks by the respondent to them on August 1, 1942, their judgment in this behalf could not have been success fully impeached.
What they did, however, was to confine the appellants ' claim to Rs. 5,953 on the ground that the appellants had claimed that amount in the first instance and had paid the court fee on the same.
They, therefore, took it that that sum of Rs. 5,953 represented a fair amount of damages for wrongful detention of the trucks according to the appellants.
We are of opinion that the High Court was clearly in error in adopting this basis for the award of 815 damages.
The payment of court fee stamp on Rs. 5,953 was certainly not conclusive against the appellants because on its being pointed out by the Office of the Registrar, the appellants paid an additional court fee stamp of Rs. 1,279 11 0 on February 28, 1945, and that was done because the appellants did not confine their claim merely to the said sum of Rs. 5,953.
If, according to the judgment of the learned judges of the High Court the appellants were entitled to damages for the wrongful detention of the said two trucks at the rate of Rs. 17 per day per truck from August 1, 1942 to July 7, 1944, they ought to have made a reasonable calculation of the number of days for which the trucks would have been put to use by the appellants and awarded damages to the appellants accordingly.
This, however, they failed to do.
In our opinion, the appellants are entitled to recover such damages from the respondent at the rate of Rs. 17 per truck per day for such reasonable period between August 1, 1942 to July 7, 1944, for which the appellants would have hired out the trucks to outside parties.
The trucks were in a fairly good running condition but were old models of 1938 and it will be quite reasonable to hold that they would have been in commission approximately for one year during that period.
Calculating the hire of these trucks at the rate of Rs. 17 per truck per day the total amount of damages which the appellants would be entitled to, recover from the respondent works out at Rs. 12,410.
The appellants would therefore be entitled to recover over and above the sum of Rs. 5,953 already awarded to them by the High Court an additional sum of Rs. 6,457 by way of damages for wrongful detention of the said trucks by the respondent.
We accordingly allow this appeal and pass in favour of the appellants, in addition to the enhanced decree which they have already obtained from the High Court, a decree against the respondent for Rs. 3,500 being the appreciated value of the said trucks together with interest thereon at 6% per annum from July 7, 1944, till this date as also for a sum of Rs. 6,457 by way of additional damages for wrongful detention of 816 the said trucks, additional proportionate costs both in the Trial Court as well as in the High Court as also the costs of this appeal, subject of course to the payment of additional court fee for the excess amount awarded hereby.
The whole of the decretal amount as above will carry further interest at the rate of 6% per annum from this date till payment.
Appeal allowed.
| The appellants, by an agreement, let out two trucks on hire to the respondent.
The respondent terminated the agreement but failed to return the trucks on the fixed date on the plea that they had already been returned to a partner of the appellants.
The appellants served the statutory notice under section 80 of the Code of Civil Procedure and, on the respondent 's failure to comply, brought a suit for wrongful detention claiming, inter alia, return of the trucks or their value in the alternative as stated in the notice and damages for wrongful detention till delivery.
Claim was also made for such appreciated value of the trucks as would prevail at the date of the decree by paying additional Court fee.
The trial court held that the return of the trucks as alleged by the respondent was not justified, and, besides the rent claimed in the suit, passed a decree for recovery of the price of the trucks in the alternative as stated in the notice and interest thereon by way of damages, holding that the price as at the date of the tort was sufficient compensation in law either for wrongful conversion or for wrongful detention.
The High Court affirmed the decision of the trial court so far as the recovery of the price in the alternative was concerned holding that the respondent could not be called upon to pay more than what it was asked to pay by the notice, but disagreed on the question of award of damages and enhanced the decree to the extent of the claim as tentatively laid in the appeal.
Held, that the courts below were in error in deciding the matter as they did and the appeal must be allowed.
Where the bailee fails to deliver the goods, the bailor has normally the right to elect his own remedy and sue him either for wrongful conversion or for wrongful detention.
If he chooses to adopt the latter remedy, the bailee cannot take advantage of his own wrongful conversion and compel the bailor to choose the other remedy to his disadvantage.
Reeve vs Palmer, ; , and Wilkinson vs Verity, , referred to.
The cause of action in a suit for wrongful detention, unlike that in a suit for wrongful conversion is a continuing one ,and 782 the measure of damages must be the value of the goods not as at the date of the tort but as at the date of the judgment.
Although the cause of action arises with the refusal of the bailee to deliver the goods, it continues till delivery is made by the bailee or he is compelled to do so by a decree of court.
While in a suit for wrongful conversion the plaintiff abandons his title and claims damages in lieu of the goods, in a case of wrongful detention the plaintiff claims delivery of the goods on the basis of his title that subsists till the date of decree.
Consequently, the value of the goods in the alternative on failure of delivery can be ascertained only at the date of the decree.
Rosenthal vs Alderton & Sons Ltd., , referred to.
Case law discussed.
It is well settled that in a suit for wrongful detention the plaintiff is entitled not merely to the delivery of the goods or their value in the alternative but also to damages for the wrongful detention till the date of the decree.
The principle for assessing such damages must be the same as in any other case where the wrongful act of one so injures something belonging to another as to render it unusable or something is taken away so that it can no longer be used, and the amount of damages must be ascertained by a reasonable calculation after taking all relevant circumstances into consideration.
In the instant case the High Court should have made a reasonable calculation of the number of days the trucks could have been put to use by the appellants and awarded damages accordingly.
Strand Electric & Engineering Co., Ltd., , Owners of the Steamship " Mediana " vs Owners, Master and Crew of Lightship "Comet", , referred to.
Anderson vs Passman, ; , held inapplicable.
While the terms of section 80 of the Code of Civil Procedure must be strictly complied with, that does not mean that the terms of the section should be construed in a pedantic manner or in a manner completely divorced from common sense.
There can be no doubt on a reasonable construction of the terms of the section that the value of the trucks as stated in the notice in the instant case, could be no other than the value as on the date fixed for delivery and, consequently, it could be no bar to the recovery of such appreciated value as prevailed at the date of the judgment.
Bhagchand Dagadusa vs Secretary of State, (1927) L.R. 54 I.A. 338, considered.
Jones vs Nicholls, ; E.R. 149, and Chandu Lal Vadilal vs Government of Bombay, I.L.R. , referred to.
|
Summarize this legal judgement text concisely | ION: Criminal Appeal No. 52 of 1955.
Appeal from the judgment and order dated the 15th February, 1955, of the Calcutta High Court in Criminal Appeal No. 40 of 1955 arising out of the 751 judgment and order dated the 22nd January, 1955, of the Additional Sessions Judge, 24 Parganas, Alipore, in Trial No. 1 of January Sessions for 1955.
A. C. Roy Choudhari, K. R. Choudhari and Sukumar Ghosh, for the appellant.
A. C. Mitra, K. B. Bagchi and P. K. Bose, for the respondent.
October 24.
The following Judgment of the Court was delivered by SINHA J.
This appeal on a certificate granted by the High Court at Calcutta, under article 134(1)(c) of the Constitution, is directed against the order of a Division Bench of that Court, dated February 15, 1955, summarily dismissing an appeal from the judgment and order dated January 22, 1955, passed by the learned Second Additional Sessions Judge of Alipore, accepting the unanimous verdict of guilty returned by the jury holding the appellant guilty under section 376 of the Indian Penal Code, for having committed rape on a young girl, named Sudharani Roy, said to be about 14 15 years of age.
The learned trial judge, accepting the unanimous verdict of the jury and agreeing with it, imposed a " deterrent punishment " of rigorous imprisonment for 5 years, in view of the fact that he was in loco parentis to the large number of girls who were the inmates of the Nari Kalyan Ashram of which the appellant had been the secretary for a pretty long time.
The learned counsel for the State of West Bengal raised a preliminary objection that the certificate granted by the Bench of the Calcutta High Court presided over by the learned Chief Justice, was bad on the face of the judgment given by him while granting the certificate.
We have, therefore, first to examine whether the preliminary objection is sound.
As already stated, the Division Bench before which the appeal came up for admission, summarily dismissed it without giving any reasons.
Apparently, the Bench was not satisfied that there was any error of law or mis direction in the learned Sessions Judge 's charge to the jury which had returned a unanimous verdict of 752 guilty against the appellant.
On March 7, 1955, the Bench consisting of Chakravarty C. J. and section C. Lahiri J. passed the order to the effect that having heard the argument on behalf of the applicant for the certificate of fitness for the proposed appeal to this Court on March 4, they had the opportunity of reading through the charge delivered by the learned trial judge, and that they had " come to feel that before the application is disposed of, we should see the depositions in full.
" Accordingly, they directed the records of the original trial to be called for and placed before them.
The case, therefore, stood adjourned till the arrival of the records.
The matter was heard again on March 17, and on March 18, the learned Chief Justice delivered a judgment which appears at pages 220 to 231 of the record.
It is a full judgment giving the facts and history of the case and the evidence adduced on behalf of the prosecution.
The learned Chief Justice, in the course of his very elaborate judgment, observed that the " learned Judge delivered an exhaustive charge to the jury from which he does not appear to have omitted any part of the evidence which was of any materiality whatsoever.
The jury appear to have applied their minds critically. .
Having examined the grounds taken in the appeal as presented to the High Court, he made the following observations: " I have gone through the grounds taken in the petition of appeal to this Court and I have no hesitation in saying that if those were the grounds urged before the learned Judges, no one need be surprised that their Lordships saw nothing arguable or worth attention in the case.
Except one, not one of the grounds urged by Mr. Roy Choudhury before us is to be found in the petition of appeal. . ." On an examination, in great detail, of the grounds urged before the Bench hearing the application for certificate, the learned Chief Justice observed: " Mr. Roy Choudhury, however, urged before us six several points.
Except one, in respect of which there is something to be said, none of them impresses me.
" 753 It was not clearly indicated in the judgment what that single ground was.
The penultimate paragraph of the order passed by the learned Chief Justice, contains the following: " We are oppressed by the feeling that there were arguable points, although they might not bear examination and the accused has not had the satisfaction of feeling that he has been fully heard by the Court of appeal.
I would therefore grant him the leave he asks for, not because we take any view in his favour of the evidence in the case, but because justice should also appear to have been done and therefore the evidence ought to have received a full consideration by the appellate Court, although the result might be to confirm the conviction.
" We have set out the findings of the learned Chief Justice while granting "leave to appeal" to this Court, in his own words, to appreciate the reasons for granting " leave to appeal ".
It appears that the learned Chief Justice and his brother judge, contrary to the legal position that one Bench of the High Court has no jurisdiction to sit in judgment on the decision of another Division Bench, have, in fact, done so.
But in the instant case, the learned Chief Justice has gone further and observed that the summary dismissal of the appeal by the Criminal Bench, has not given satisfaction to the appellant that he had been fully heard, and that it did not appear to him that justice had been done.
Such observations are not conducive to the maintenance of a healthy atmosphere for the administration of justice in the highest Court in the State.
Furthermore, the observation almost amounts to a condemnation of the practice of summary dismissal of appeals, especially against orders passed in a case tried by a jury where the appellant has to make out clear grounds of law.
Such a practice prevails, so far as we know, in almost all the High Courts in India and has the sanction of the statute law as contained in the Code of Criminal Procedure.
This Court has repeatedly called the attention of the High Courts to the legal position that under 754 article 134(1)(c) of the Constitution, it Is not a case of granting leave" but of "certifying that the case is a fit one for appeal to this Court.
" Certifying " is a strong word and, therefore, it has been repeatedly pointed out that a High Court is in error in granting a certificate on a mere question of fact, and that the High Court is not justified in passing on an appeal for determination by this Court when there are no complexities of law involved in the case, requiring an authoritative interpretation by this Court.
On the face of the judgment of the learned Chief Justice, the leave granted cannot be sustained vide the case of Haripada Dey vs The State of West Bengal (1), and a number of decisions of this Court referred to therein.
In view of those authorities of this Court, it is clear that the certificate granted by the High Court is not a proper one.
The preliminary objection is, therefore, upheld.
But the appeal having been placed before this Court, we have to satisfy ourselves whether there are any grounds on which this Court would have granted special leave to appeal under article 136 of the Constitution.
In order to appreciate the grounds raised in support of the appeal by the learned counsel for the appellant, it is necessary to state the following facts: The appellant was the honorary secretary of a large institution for receiving and looking after young girls and women who had no homes of their own or had gone astray.
It is called the ' Nari Kalyan Ashram ' and is located in one of the quarters of the city of Calcutta.
The appellant in his capacity as the secretary, used to come to the Ashram daily in the evening at about 7 p.m., and stay there till mid night or past mid night.
In his office room, there was a bed stead with a bedding spread thereon.
He used to occupy the bed and requisition the services of girls to massage his body.
Between January and April, 1954, the accused who was in the 'habit of calling the girls named Sudharani, Narmaya, Kalyani and others, for that purpose, is said to have committed rape on those girls.
The subject matter of the charge in this case is the offence of rape said to have been 755 committed on the two girls Narmaya and Sudharani, one after the other, on the night of April 20, 1954.
On April 29, 1954, at about 10 p.m., the officer in charge of the Maniktala police station, accompanied by Sub Inspector Nirmal Chandra Kar, went to the Ashram in connection with collecting information regarding the escape of some girls from the Ashram.
Narmaya and Sudharani are said to have given information to the said officer in charge of the police station, alleging rape on them.
They also pointed out a steel locker in the room of the secretary, where, it was alleged, he used to keep rubber sheaths used by him before he had sexual intercourse with each of them.
The police officers aforesaid obtained the key from the appellant, with which the steel locker was opened and a leather bag inside the locker was pointed out by the girls.
The bag was found to have contained a rubber sheath along with other articles.
After recording the information, the police officer in charge of the Maniktala police station, investigated the case and submitted a charge sbeet against the appellant.
After the preliminary inquiry by a magistrate, the appellant was committed for trial to the Court of Session on a charge of rape upon the two girls, under section 376, Indian Penal Code.
The defence of the appellant was that the case against him was completely false and had been concocted by the police with the help of the inmates of the Ashram and the Assistant Secretary, Tarun Kumar Sarkar who was one of the prosecution witnesses.
At the trial, the prosecution examined 23 witnesses, in support of the case against the accused.
The two victims of the alleged outrage by the appellant, were examined, namely, Sudharani Roy, P.W. 2 and Narmaya, P.W. 5, who both deposed that the appellant used to come to the Ashram in the evening at about 7 p.m., and used to stay there till after mid night in his special room which contained a bedstead and a bedding and a steel almirah and other pieces of furniture.
On the &ate of the occurrence in question, first Narmaya was called in by the appellant and then Sudharani, and the appellant is said to have committed rape first on 96 756 Narmaya and then on Sudharani, in the presence of both of them, against their will and without their consent.
They further deposed that the appellant had intercourse with them after putting on the sheath.
In between the two acts, he had a cup of tea with which he swallowed " a black pill " which is suggested to have been an aphrodisiac.
The accused paid them each eight annas and warned them not to divulge those acts on pain of being severely dealt with, if they disclosed the same.
Kalyani, P.W. 19, is another young girl who was an inmate of the Ashram on the material dates.
She is a girl who was both deaf and dumb, and her intelligence was below normal.
As she was feeble minded, she was not allowed to continue her studies at the school.
She has given evidence by signs which were interpreted by the principal of the Deaf and Dumb School, who had taught her at that school.
Her evidence, if accepted, would be a corroboration of the testimony of the victims aforesaid of the outrageous act of the appellant.
Besides this direct oral testimony, there was also evidence tending to show that the appellant was in the habit 'of having himself massaged at night by the girls of the Ashram, and that the police found a rubber sheath in his bag kept in the steel locker inside his special room.
There was also the evidence of a woman employee of the Ashram that she had been asked by the ' appellant to keep a number of rubber sheaths which she had buried underground, and which on her pointing out, had been discovered by the police.
There was also the evidence of a complaint made the next day by the victim girls to the assistant secretary when be came to the Ashram in connection with his work there.
The prosecution also led evidence to show the age of the girl Sudharani to be below 16.
It produced the register of the girls in the Ashram which has a column for mentioning the age of the inmates.
The estimate of her age by medical evidence, was given after X ray examination and the stage of ossification and other indicia for determining the age of a person.
The medical estimate of her age was that she was between 13 and 757 14 years on the date of the X ray examination, that is May 19, 1954.
That, in barest outline, is the prosecution case and the evidence adduced in support of it.
Beyond cross examining the prosecution witnesses and pointing out contradictions and omissions in their evidence, the accused did not adduce any positive evidence in support of his defence.
The appellant was tried by a jury assisted by the learned Additional Sessions Judge at Alipore.
The jury returned a unanimous verdict of guilty against the accused in respect of the charge of committing rape on Sudharani and a unanimous verdict of riot guilty in respect of the charge of rape on Narmaya.
The jury answered the judge 's question as regards the charge with respect to Narmaya in these words: "Not guilty as we found with consent and she is above 16 years of age." As the jury did not give any such clue in respect of their verdict of guilty so far as rape on Sudharani was concerned, it is difficult to say whether they found consent in her case also, and returned a verdict of guilty because they were of the opinion that she was under 16 years of age.
In this Court, the learned counsel for the appellant raised a large number of contentions, but as most of them concerned the appreciation of evidence with reference to omissions and contradictions, it is not necessary to deal with those arguments.
It is only necessary to notice the following points raised, namely, (1) that the learned judge refused permission to counsel for the appellant to read out the written statement filed on behalf of the appellant at the Sessions stage, (2) that there was a serious misdirection in respect of corroboration of the testimony of the alleged victims of rape, and (3) that the direction as to the age of the girl Sudharani was not complete.
In our opinion, there is no substance in any one of these contentions.
Firstly, as regards the refusal to permit the written statement of the accused being placed before the jury, it has to be observed that there is no provision in the 758 Code of Criminal Procedure for such a written statement being filed at the Sessions stage.
Section 256(2) which occurs in Chapter XXI, headed " Of the trial of Warrant Cases by Magistrates ", does contain the specific provision that if the accused person puts in a written statement, the magistrate shall file it with the record.
But there is no corresponding provision in the Code, requiring a Sessions Court to accept a written statement at that stage on behalf of the accused.
But the accused has the right to make a statement under section 342 of the Code, which has to be considered by the Court for what it is worth.
In a jury trial, the Court has got to be circumspect to see that nothing is allowed to be placed before the jury which is not evidence.
It is not necessary to decide whether in the case of a Sessions trial without a jury, such a statement is receivable.
But if such a written statement is allowed to be used at a Sessions trial by a jury, it may throw the door open to irrelevant and inadmissible matter and, thus, throw an additional burden on the presiding judge to extricate matter which was admissible from a mass of inadmissible statements which may have been introduced in the written statement.
In view of these considerations, in our opinion, the learned Sessions Judge rightly refused to allow the written statement put in by the appellant, to be read out before the jury.
On the question of corroboration, the learned judge in his charge to the jury, has, at more than one place, pointed out the necessity of corroboration of the evidence of the victims of the alleged crime.
Referring to the evidence of Kalyani, P.W. 19, aforesaid, the learned judge has charged the jury in these terms: ". whether her evidence is a corroboration with respect to the committing of rape by accused on Sudharani Roy on 20th April, 1954.
If the evidence of Kalyani appears unreliable to you or the evidence of Tarun, there remain the uncorroborated testimonies of Sudharani and Narmaya.
The rule of prudence demands that it is unsafe to convict an accused on the uncorroborated testimony of an accomplice or accomplices.
But I must tell you, gentlemen, that it 759 is within your legal province to convict upon such unconfirmed evidence, provided you can come to the conclusion in the particular circumstances of this case that corroboration can be dispensed with.
" It will be noticed that if the learned judge has made any mistake, the mistake is in favour of the accused and.
not against him in so far as the learned judge refers to the evidence of the two girl victims as that of accomplices.
A girl who is a victim of an outrageous act is, generally speaking, not an accomplice though the rule of prudence requires that the evidence of a prosecutrix should be corroborated before a conviction can be based upon it.
Hence, the girl Sudharani was not exactly in the position of an accomplice though the judge may, as a rule of prudence, warn the jury that such a rule of prudence required corroboration of the testimony of the prosecutrix, but that it was open to the jury to convict even on the uncorroborated testimony of the prosecutrix if the jury, in the particular circumstances of the case before it, came to the conclusion that corroboration was not essential to conviction.
Hence, the learned Sessions Judge was fully justified in telling the jury that there was no rule of law or practice that there must be corroboration in every case, before a conviction for rape.
If the jury had been apprised of the necessity, ordinarily speaking, of corroboration of the evidence of the prosecutrix, it is for the jury to decide whether or not it will convict on the uncorroborated testimony of a prosecutrix in the particular circumstances of the case before it.
In other words, insistence on corroboration is advisable but is not compulsory in the eye of law.
In the instant case, apart from the evidence of the two victims aforesaid, there was the evidence of the deaf and dumb girl, Kalyani, and the other circumstantial evidence in support of the prosecution case.
It is well established that the nature and extent of corroboration, necessary, vary with the circumstances of each case.
The nature of the corroborative evidence should be such as to lend assurance that the evidence of the prosecutrix can be safely acted upon.
See, in this connection, the observations of this Court in the case 760 of Rameshwar vs The State of Rajasthan (1) to the following effect: "The only rule of law is that this rule of prudence must be present to the mind of the judge or the jury as the case may be and be understood and appreciated by him or them.
There is no rule of practice that there must, in every case, be corroboration before a conviction can be allowed to stand.
" Lastly, we do not find anything basically wrong with the direction in the charge to the jury as regards the age of the girl Sudharani and as to the nature of the evidence to prove her age.
The learned judge pointed out the several items of evidence which had been adduced by the prosecution bearing on the question of the girl 's age.
The only conclusive piece of evidence may be the birth certificate, but, unfortunately, in this country such a document is not ordinarily available.
The Court or the jury has to base its conclusions upon all the facts and circumstances disclosed on examining all the physical features of the person whose age is in question, in conjunction with such oral testimony as may be available.
The girl 's father was dead.
Her mother apparently has left her to her own fate, and according to the evidence of the police, the mother 's whereabouts were not traceable.
It was sought to be argued that the police officer who himself made the inquiry, should have been examined, otherwise, the result of the inquiry is a mere hearsay.
An inquiry whether made by one or the other police officer, would, almost in every case, be the result of hearsay.
The girl is said to be a displaced person.
The difficulty of tracing evidence of the parents of such a person is all the greater.
Hence, in all the circumstances of the case, the learned Sessions Judge has not committed any error in this part of his charge to the jury.
On this part of the case, the learned judge gave the following concluding directions: " In criminal trial the accused must get the benefit of doubt and there should not be any conviction unless it can be clearly and unequivocally said that (1) 761 the age of the girl was below 16.
But, gentlemen, in this case you have seen the girls, you have heard the evidence of the experts and you should also take into consideration the various factors found out in cross examination and in considering all these facts you can arrive at the conclusion that Sudharani Roy was under 16 years of age on the night of the occurrence on 20th April, 1954, taking into consideration the facts that ossification test is not a sure guide, even in spite of this, you can come to the conclusion that Sudharani Roy was under 16 years of age on the night of the occurrence, i.e., on 20th April, 1954.
1 would tell you, gentlemen, that the question of consent would be immaterial." In our opinion, the learned Sessions Judge placed the evidence pro and con very fairly and fully, and left it to the jury to come to their own conclusion.
According to the medical evidence, Sudharani was between 13 to 14 years of age on the relevant date, whereas the other girl in respect of whom, the accused was acquitted, was found by the medical test to be between 15 and 16 years.
The jury, therefore, took the commonsense point of view and appeared to have come to the conclusion that Narmaya may well have been above 16, and that, therefore, the accused could not be convicted for rape on her.
In respect of the girl Sudharani, they may have come to the conclusion that she was not above 16, and that, therefore, the prosecution had succeeded in bringing the charge home to the accused.
We have read the charge of the learned judge to the jury more than once, and, in our opinion, it is a very fair and full charge, erring more on the side of verbosity than of brevity.
In our opinion, there is no merit in the appeal.
It is accordingly dismissed.
Appeal dismissed.
| Appellant was tried by the Sessions judge and a jury on the charge of committing rape.
On the question of the age of the girl expert medical evidence was produced but no birth certificate was available.
The father of the girl could not be examined as he was dead.
According to the Police evidence the whereabouts of the mother were not traceable but the Police Officer who himself made the inquiry was not produced.
As regards the commission of the rape the girl herself was examined and there was the evidence of another girl and some circumstantial evidence.
The 750 accused filed a written statement but the judge refused to read it out to the jury.
The jury returned a unanimous verdict of guilty and the judge, accepting the verdict, convicted the appellant and sentenced him to 5 years rigorous imprisonment.
An appeal to the High Court was summarily rejected.
But the High Court granted "leave to appeal" on the ground that on account of the summary dismissal of the appeal appellant did not have the satisfaction of feeling that he had been fully heard and that justice should also appear to have been done by a full consideration of the evidence by the appellate court.
Held that, the certificate granted by the High Court amounts to a condemnation of the practice of summary dismissal of appeals, especially in jury trials.
Such practice prevails in most High Courts and has the sanction of statute law.
No certificate should be granted on a mere question of fact nor in a case where there are no complexities of law involved requiring an authoritative interpretation by the Supreme Court.
Haripada Dey vs The State of West Bengal, ; , followed.
There is no provision in the Code of Criminal Procedure requiring a Session judge to accept a written statement filed by an accused.
If such a written statement is allowed to be used at a Sessions trial by jury, it may throw the door open to irrelevant and inadmissible matter and cast an additional burden on the judge of separating admissible from inadmissible statements.
The judge had rightly refused the written statement to be read to the jury.
There is no rule of law or practice that there must be cor roboration of the testimony of the prosecutrix, before conviction for rape.
If the jury had been appraised of the necessity of corroboration, it was for the jury to decide whether or not it would convict on the uncorroborated testimony of the prosecutrix in the particular circumstances of the case before it.
Rameshwar vs The State of Rajasthan, , followed.
There was no misdirection on the question of the age of the girl.
The Session judge had pointed out the several items of evidence to the jury.
The failure of the prosecution to examine the Police Officer who actually made inquiry into the whereabouts of the mother does not affect the case as in any case the inquiry would be the result of hearsay.
|
Summarize this legal judgement text concisely | Civil Appeal Nos.
44,45, 336, and 337 of 1957.
Appeals by special leave from the decisions dated 29th June, 1956, of the Labour Appellate Tribunal of India, Calcutta in Appeals Nos.
Cal.223, 226, 247 and 250 of 1955.
M. C. Setalvad, Attorney General for India, Dipak Datta Chaudhury and B. N. Ghosh, for the appellants in C. A. No. 44 and respondents in C. A. No. 45.
M. C. Setalvad, Attorney General for India, section N. Mukerji and B. N. Ghosh, for the appellants in C. A. Nos. 336 and respondents in C. A. No. 337.
section K. Acharya, Arun Kumar Dutt, D. L. Sen Gupta and Sukumar Ghosh, for the appellants in C. A. Nos. 45 & 337 and respondents in C. A. Nos. 44 & 336.
October 15.
The Judgment of the Court was delivered by section K. DAS J.
These four appeals by special leave arise out of certain labour disputes between the employer, Messrs. Indian Iron and Steel Company Limited and the Indian Standard Wagon Company Limited, Burnpur, Asansol, (hereinafter compendiously referred to as the Company) on one side and some of their employees on the other.
Messrs. Martin Burn Limited, 12 Mission Row, Calcutta, are the Managing Agents of the Company.
Originally, the case out of which Civil Appeals 44 and 45 have arisen was known as the case of 144 workmen, and the other case out of which Civil Appeals 336 and 337 have arisen was known as the case of 74 workmen.
At present, the 669 number of workmen involved in the four appeals is much smaller.
Civil Appeals 44 and 45 go together as they arise out of the same decision, Civil Appeal 44 being on behalf of the Company in respect now of 104 respondent workmen, and Civil Appeal 45 on behalf of 103 out of the said 104 workmen.
Similarly, Civil Appeals 336 and 337 go together and arise out of a common decision, Civil Appeal 336 being on behalf of the Company in respect of 10 workmen in three groups and Civil Appeal No. 337 on behalf of 31 workmen.
The facts of these two sets of appeals are somewhat different, and it will be conducive to convenience as also to clarity of discussion of the issues involved, if the two sets are dealt with separately.
Civil Appeals 44 and 45.
We take up first Civil Appeals 44 and 45.
With regard to these appeals the relevant facts are these.
In 1947 the Asansol Indian Iron and Steel Workers Union with one Prof.` Abdul Bari as President was recognised by the Company.
On the death of Prof. Bari, one Mr. Michael John became President and the Union continued to be recognised by the Company.
In 1951 the Company was declared a Public Utility Service under the .
It was alleged on behalf of the Company that on September 12, 1951, a procedure was established for an amicable settlement of such disputes as might arise between the Company and its employees.
The procedure was substantially this: in case of a dispute regarding an individual employee, the dispute would be referred first to the Shop in charge and then to a Works Committee, and the Union would discourage an individual approach to the management of the Company; if the Works Committee was able to effect a settlement, it would be final; but if it failed, the Union could take up the case on merits, with the management of the Company.
The above procedure, it is stated, was accepted at a joint meeting of the Works Committee held on November 13, 195 1.
Then we come to 1953.
The case of the company was that on January 18, 1953, certain workers of the, Hot Mills 670 section resorted to an illegal stoppage of work, and on the next day all the three shifts of the Hot Mills section commenced a 'slow down ' strike.
This adversely affected the production of the Company, and it addressed a letter to the Secretary of the Union on January 27, 1953, drawing the attention of the Union to the illegal stoppage of work and 'slow down ' tactics; the letter further stated that if there was no improvement in the attitude of the workers, the Company would be compelled to take such action as it considered necessary to bring about resumption of normal work.
Two days later, the workers of the Hot Mills section submitted certain demands, but not through the Union.
With regard to the demands made by the workers of the Hot Mills section, they were informed that joint petitions, without reference to the Union or the Works Committee, would not be accepted and so long as normal work was not resumed, no consideration could be given to the demands made.
It appears that the Union also informed the Company that the workers concerned had made no representation to the Union, and the Union did not support their activities.
It is obvious that at this stage there was a cleavage between some of the workers of the Hot Mills section and the Union.
The Company then issued certain notices to the workmen advising them of the consequences of their action.
The workers in their turn elected a committee of six men to press their demands; the Company, however, refused to negotiate with this committee.
The impasse continued and in March, 1953, there was a tripartite conference between the Labour Commissioner of the Government of West Bengal, the General Manager of the Company and the President of the Union.
Before this, the Company had issued a notice closing 'B ' and 'C ' shifts of the Hot Mills section.
The tripartite conference came to certain conclusions but failed to restore harmony, and one of the reasons for its failure was that the representatives of the workers of the Hot Mills section were not included therein.
The workers ' committee protested against the closing of two shifts, and the trouble continued till April 8, 1953, when the Company 671 issued a notice to the workmen that unless they voluntarily recorded their willingness to do normal work, they would be considered as no longer employed by the Company from 2 p.m. on April 10, 1953.
It was stated that on April 11, 1953, some 700 workers resorted to an illegal stoppage of work.
The Labour Minister, Government of West Bengal, then visited Asansol, and met the representatives of the workers, and of the Union and the Management.
He made some suggestions, which did not however end the trouble.
Meanwhile, an Action Committee was set up by the workmen.
There was a strike on April 27, 1953.
The Sub Divisional Magistrate, Asansol, promulgated an order under section 144 of the Code of Criminal Procedure and the situation continued to worsen.
Iron and Steel were declared to be essential to the life of the community under the provisions of the West Bengal Security Act, 1950, and leave to all employees was stopped by the Company.
Some 38 workers of different departments were discharged for alleged disobedience of orders, and on August 18,1953, the Action Committee gave a strike notice to the Company, stating that the workmen would resort to strike and abstain from duty from September 11, 1953.
We now come to the crucial date, August 23, 1953.
On this date the Company declared a lock out and issued a notice, which must be set out in full, because a good part of the argument of learned counsel for both parties has centred round this notice : " NOTICE.
Having regard to the continued existence of the go.
slow strike and the unsatisfactory working of the Plant and in consequence of the illegal strike which took place on (1) 18 1 53.
(2) 9 3 53.
(3) 11 4 53 to 20 4 53.
(4) 27 4 53 and 28 4 53.
(5) 15 7 53.
the Management has no option but to declare a lockout of the entire works except the special shifts in the 672 Hot Mills Section of the Sheet Mills with effect from Monday, the 24th August, 1953.
The following Departments will continue to operate: No. 3 Boiler Plant.
No. 2 Power House.
Nos. 1 and 2 Reservoir Pump Houses.
Riverside Pump Station.
Town Water Works.
Town Sub Station.
Coke Ovens.
Workers required in the above Departments will be notified.
The services of all other workers shall be deemed to be discharged with effect from Monday, August 24th, 1953.
Bunpur (Sd.) J. McCraken 23rd August, 1953.
General Manager.
" On September 17, 1953, another notice was issued by the Company lifting the lock out with effect from 6 a.m. on Friday, September 18, 1953.
This notice stated inter alia: "All employees on the Works rolls of the Company on the 23rd August, 1953, and who wish to report for duty, must resume work between 6 a. m. on Friday, the 18th September, 1953, and 10 p.m. on Saturday ' the 19th September, 1953, on their regular shift.
If, however, any worker in the vicinity of the Works is unable to resume duty on account of illness, he should report himself to the Company 's Medical authorities or if unable personally to attend, send written intimation of his sickness to the Company by Saturday, the 19th September, 1953.
In the latter case the Company will make arrangements for his medical examination.
Such worker should resume duty from the date he is declared fit by the Company 's Medical authorities.
Any worker who has left the vicinity of the Works may resume duty on or before Thursday, the 24th September, 1953, provided he produces evidence satisfactory to the Company of his absence.
" On September 23, 1953, the Company issued a third notice, which quoted a request received from the 673 President of the Asansol Iron and Steel Workers ' Union for extension of the time given to the workmen to resume work, and then concluded as follows: "The Company is pleased to accede to this request to the extent of one week 's extension and its notice No. GM/CS 3B/571 dated 17 9 53 may be considered amended accordingly, i.e., the extension will be until Friday, the 2nd October, 1953.
" Of the workmen with whom we are now concerned, 98 workmen reported for duty on October 1, 1953, 4 reported for duty on October 2, 1953, and one on October 9, 1953.
They were not, however, allowed by the Company to resume their duties.
This led to an industrial dispute which the Government of West Bengal referred to the Fifth Industrial Tribunal.
The two issues were (1) whether the Company was justified in keeping the workmen mentioned in three lists A, B & C, out of employment; and (2) whether the said workmen were entitled to employment and any other relief and/or compensation.
The Tribunal held that all the workmen who turned up on or before October 2, 1953, in pursuance of the notices issued by the Company were entitled to be taken back into employment without condition and of the two men who came later, one was ill of typhoid fever and had sufficient reason for reporting himself for duty on October 9, 1953.
On the second issue, the Tribunal said: " Accordingly, I award that these men, barring Shri Satyanarayan, No. 5 of the list C, attached to the order of reference, would get half salary for the entire period from the 2nd October, 1953, up to the date of their actual return to duties after this award.
I allow only half basic pay and no dearness allowance and no other allowance.
" From the decision of the Fifth Industrial Tribunal, two appeals were preferred to the Labour Appellate Tribunal, Calcutta.
The appeal on behalf of the Company was mainly against the order directing that the employees who had turned up on or before October 2, 1953, must be taken back in employment, and the appeal on behalf of the workmen raised the question 674 that full compensation should be given to the work.
, men who were directed to be taken back in employment.
The Labour Appellate Tribunal dismissed both appeals the appeal of the Company on merits, and the appeal of the workmen on the ground that it did not involve any substantial question of law.
Both parties then asked for and obtained special leave from this Court to appeal from the decision of the Labour Appellate Tribunal, Calcutta.
In Civil Appeal No. 44, Mr. M. C. Setalvad, Attorney General, has appeared for the Company and has argued that both the Tribunals below went wrong on principle in construing the notices dated August 23, 1953, and September 17, 1953, respectively.
According to him, the continued illegal stoppages of work, 'slow down ' tactics and strikes indulged in by the workmen despite the advice of their Union, left the Company no alternative but to discharge the workmen, except in some essential departments, with effect from August 24, 1953, and the notice dated August 23, 1953, though it stated that the Company declared a lock out of the entire Works except for some special shifts, really terminated the services of the respondents by discharging them with effect from August 24, 1953.
He has further submitted that the notice dated September 17, 1953, did not revoke the earlier order of discharge, but merely gave the respondents an opportunity of reemployment at the pleasure of the Company on fulfilment of certain conditions.
The learned Attorney General contends that if the notices are so construed, then the Tribunals below are wrong in holding that the respondents are entitled to be taken back in employment as of right.
He has further submitted that the Fifth Industrial Tribunal was wrong in law in holding that there could not be a lock out and discharge at the same time.
In our view, the two notices in question are not capable of bearing the construction which the learned Attorney General has pressed for our acceptance, apart altogether from the question if under the , there can be a simultaneous order of discharge and lock out in respect of the 675 same employees.
The question of construction is really a question of intention to be gathered primarily from the words used in the documents; and if the word .
used are ambiguous, then surrounding circumstances can be looked into for the purpose of construing the notices.
It is worthy of note that the first notice states inter alia that in consequence of the illegal strikes which took place on several previous dates, the Management has no option but to declare a look out of the entire Works except some special shifts with effect from Monday, August 24, 1953; then in the concluding portion the notice states " The services of all other workers shall be deemed to be discharged with effect from Monday, August 24, 1953.
The expression " shall be deemed to be discharged has to be read in the context of the declaration of a lock out; such an expression is neither usually employed nor apt to effectuate an intention to terminate the services of the workmen altogether.
A 'lock out ', according to the definition in the , means the " closing of a place of employment, or the suspension of work, or the refusal by an employer to continue to employ any number of persons employed by him ".
In this context, the notice when it said that the services of all other workers shall be deemed to. be discharged with effect from the date of the lock out really meant that the Company refused to employ the respondent workmen during the period when the place of employment was closed.
The second notice dated September 17, 1953, places the matter beyond any doubt.
It starts by saying that the "management have reasons to believe that many workers are desirous of resuming work" etc.; then it states that "all employees on the Works rolls of the Company on August 23, 1953, and who wish to report for duty, must resume work between 6 a.m. on Friday, September 18 1953, and 10 p.m. on Saturday, September 19, 1953.
" The expressions used in the second notice clearly show that the intention was not reemployment of discharged workmen, but resumption of work by employees who desired to resume work and whose employment had been stopped on account of the 86 676 look out.
The third notice dated September 23, 1953, which extended the date of joining to October 2, 1953, again said that " a large number of workers might have been prevented from resuming their work for reasons beyond their control " and gave that as the reason for extending the date.
If the three notices referred to above are read together against the background of events which bad happened prior to August 23, 1953, the only reasonable construction is the one adopted by the Tribunals, viz., that the employees whose employment had been refused during the lockout were permitted to resume work without any conditions if they reported for duty by a particular date, and on fulfilment of a condition if they reported for duty after that date.
The learned Attorney General has referred us to some oral and documentary evidence to show that the workmen themselves understood the notice dated August 23, 1953, as a notice of discharge.
He has referred particularly to the letter dated September 2, 1953, written by the Action Committee to the General Manager of the Company in which the notice dated August 23, 1953, was referred to as " an illegal and unconstitutional notice of discharge".
On the other side, Mr. section K. Acharya appearing for the respondent workmen has referred us to the evidence given by some of the Company 's servants, which showed that no formal order of discharge was recorded in the service book of the employees, as required by the rules; nor any notice of one month given for discharging the workmen; but on the contrary the workmen were given continuity of service for the entire period of their absence.
We do not, however, think that when the words used in the notices sufficiently and clearly bring out the intention of the Company, it is necessary to refer to other evidence in the record.
Moreover, this Court does not sit as a regular Court of appeal over Industrial Tribunals, and does not ordinarily subject the evidence given on behalf of the parties to a fresh review and scrutiny, unless it is shown that exceptional or special circumstances exist, or that substantial and grave injustice has been done or that the case 677 in question presents features of sufficient gravity to warrant a review of the decision appealed from.
It is necessary now to consider an alternative argument of the learned Attorney General.
He has contended that assuming that the notices bear the construction which we have put on them, the respondent workmen did not join on or before Saturday, September 19, 1953, the latest day by which they could resume work without any condition; they reported for duty on October 1, 1953, or October 2, 1953, but failed to produce evidence satisfactory to the Company of their absence as required by the notice dated September 17, 1953, and, therefore, they were not entitled to be taken back as of right and without any condition.
It is necessary to state here what happened between November 1953, and April 1954.
It appears that a large number of workmen who reported for duty on October 1, 1953, and October 2, 1953, were subsequently interviewed, and as a result of that interview 144 workmen were not taken back to employment.
What happened at the interview was stated by Shri section K. Kanwar, witness for the Company, who said : " Question: Why these 144 men were not taken ? Answer: These men were interviewed, but they could not give satisfactory explanation for not reporting for duty within the time given.
These men did not comply with the condition laid down in the notice of the 17th September, 1953.
Whatever happened during the interview has been put in writing.
" The writing which embodied the result of the interview was not, however, produced.
The same witness said that some workmen who were also subsequently interviewed were taken back without any explanation of their absence.
The evidence on this point is very Conflicting; one witness said that about 2,000 men came to the main gate of the Company on October 1, 1953, and October 2, 1953, and from October 2, 1953, the instruction of the company was " to take back only those who were not harmful to the running of the factory".
Another witness said that he did not 678 remember if any of the respondent workmen appeared before him on October 1, 1953, or October 2, 1953, and if any of them gave any reasons for their absence.
In view of the conflicting evidence on the point, it is not possible to proceed on the footing that the respondent workmen failed to produce satisfactory evidence of their absence, and that was the reason why they were not taken back by the Company.
The learned Attorney General drew our pointed attention to the evidence of Shri Promotho Nath Mukherji, witness No. 9 for the workmen, who said: "When the lock out was lifted I did not think it proper to join immediately because most people were then outside, secondly, my colleagues and others had not then joined, and.
lastly, my social status in the place combined with the above circumstances restrained me from joining.
" It may be that some of the workmen could have presented themselves earlier than they actually did, But that does not prove that the Company refused to take only those workmen who had failed to produce satisfactory evidence of their absence.
If that was the case of the Company, then it should have produced the writing which embodied the result of the interview or given sufficient evidence to establish that in each case the respondent workmen failed to produce satisfactory evidence of absence.
On the contrary, the Tribunal found that the Company scrutinised the conduct of the workmen to find out how far they were associated with the Action Committee, how far they took part in the meetings, etc., and on that basis, some workmen were taken back and some were not taken back.
It is somewhat late in the day to try to make out a case that each of the respondent workmen in these two appeals failed to produce satisfactory evidence of their absence.
For these reasons, we do not think that the appellant Company in Civil Appeal 44 has made out any case for our interference with the decision appealed from.
There was some argument before us as to the illegal nature of the strike declared by the workmen and also as to the legality of the lock out declared by the Company.
We do not pause to decide those 679 questions, because it is unnecessary to do so in the pre sent appeals.
We must make it clear, however, that our reluctance to pronounce on the conduct of the workmen prior to August 23, 1953, does not signify an approval of that conduct which rightly came in for a good deal of criticism by the Industrial Tribunal.
It has been somewhat faintly suggested that if the notice dated August 23, 1953, terminated the services of the workmen and the second notice, dated September 17, 1953, operated as a conditional revocation of the earlier notice, then there was no consideration for the condition imposed and the Company could change its mind : and ignore the condition.
In the view which we have taken of the three notices, it becomes unnecessary" also to examine this submission.
As to Civil Appeal 45 on behalf of the workmen in which the prayer is for payment of full compensation, it is sufficient to state that no question of principle is involved.
The Fifth Industrial Tribunal refused to give compensation, for the period anterior to October 2, 1953, on the. ground that the workmen themselves tried to coerce the Company by 'slow down ' tactics etc.; for the period after October 2, '1953, the Tribunal allowed half the wage as compensation on the ground that some of the workmen were near Burnpur and might have joined earlier, some claimed to come back to their services as of right without any explanations and none of the workmen had done any actual work for the period.
As we have said, no question of principle is involved and we do not think that the Tribunal has committed any error in the matter of awarding compensation.
Civil Appeals 336 and 337.
We now turn to the other two appeals.
We have stated that the case out of which these two appeals have arisen dealt initially with 74 workmen who had been discharged or suspended by the Company for" one reason or another. ' The question which was referred to the Fifth Industrial Tribunal was whether the discharge and/or suspension of these 74 workmen was justified if not, to what relief these men were entitled.
The Tribunal classified these men in four categories 680 (1)those whose services were terminated in accordance with the Standing Orders of the Company, for absence without permission for 14 consecutive days; (2) those who were dismissed for major misdemeanor; (3) those who were suspended but whose cases could not be disposed of finally; and (4) those who were dismissed for disobedience of orders and other activities in pursuance of a concerted plan of "go slow" strike.
The Tribunal considered the case of each workman under the four categories mentioned above and ordered reinstatement of 25 out of 74 workmen and granted to 24 of the workmen directed to be reinstated compensation equal to half basic pay for the period of forced unemployment.
From the decision of the Fifth Industrial Tribunal two appeals were taken to the Labour Appellate Tribunal, Calcutta, one on behalf of the Company and the other for the workmen.
The Labour Appellate Tribunal dismissed both the appeals.
Hence the two appeals before us by special leave.
In Civil Appeal 336 we are concerned with only 10 workmen, seven of whom fall in the category of those whose services were terminated in accordance with Standing Orders of the Company for absence without permission for 14 consecutive days.
These seven men are (1) Bamapado Mukherji, (2) Chandrasekhar Mukherji, (3) Niaz Hossain, (4) Dhani Ram, (5) Chandrabhan Sing, (6) Raja Sing, and (7) Jai Kishore Sing.
Two others, Samar Sen and Abharani Debi, fall in the category of those who were said to have been dismissed for major misdemeanour.
The tenth workman Himansu Chattoraj falls in a class by himself.
In Civil Appeal 337 on behalf of the workmen there are 31 appellants, nine of whom (except Samar Sen) are those who figure in the Company 's appeal.
The rest are those who were not ordered to be reinstated.
The cases of two of these men Akka Hossain and D. P. Das, have been specially placed before us by Mr. section K. Acharya, on the ground that Akka Hossair, stands on the same footing as Himansu Chattoraj and D. P. Das on the same footing as those whose leave was not granted and who were absent for 14 consecutive days without permission.
681 We now proceed to consider the cases of the 10 workmen in Civil Appeal 336.
Let us first take the seven workmen who were absent without leave for 14 consecutive days.
Standing Order No. 9 of the Company, which is the relevant Standing Order on the subject, is in these terms: " Absenteeism Workers absent without leave will be subject to disciplinary action.
Overstaying leave will be considered as absence without leave.
Any worker who is absent for 14 consecutive days without permission will be automatically discharged.
Also, any worker who is absent for 14 individual days during any period of 12 months is liable to discharge.
" What happened in the case of these men is that on diverse dates between July 5, 1953, and July 10, 1953, they were taken in custody by the police and remained in custody for some time; they applied for leave when in custody but leave was refused.
The Industrial Tribunal took the view that Standing Order No. 9 was not an inflexible rule, and a mere application for leave was sufficient to arrest the operation of the Standing Order.
When the case was before the Appellate Tribunal, Mr. section K. Acharya on behalf of the workmen conceded that he was not in a position to support the view of the Fifth Industrial Tribunal in this respect; he contended, however, that the Industrial Tribunal had in each case considered the justification for absence without leave, and in view of the circumstance that the men were in custody, the Company was not justified in refusing leave.
This contention found favour with the Labour Appellate Tribunal.
The point is now covered by a decision of this Court: Burn and Co., Calcutta vs Their Employees (1).
in that case one Ashimananda Bannerji was arrested tinder the West Bengal Security Act and detained in jail from January 25, 1949, to April '5, 1949.
The Company terminated his services on April 22, 1949, on the ground of continued absence.
The Appellate Tribunal Ordered his reinstatement on the ground that he had been discharged without a charge and without holding (1) ; , 798.
682 an enquiry.
This Court observed: "We are unable to agree with this decision.
The ground of discharge is the continued absence of the employee, and his inability to do work, and it is difficult to see what purpose would be served by a formal charge being delivered to him and what conceivable answer he could give thereto.
The order of the Appellate Tribunal is manifestly erroneous and must be set aside.
" The same principle should apply in the present case.
It is true that the arrested men were not in a position to come to their work, because they had been arrested by the police.
This may be unfortunate for them; but it would be unjust to hold that in such, circumstances the Company must always give leave when an application for leave is made.
If a large number of workmen are arrested by the authorities in charge of law and order by reason of their questionable activities in connection with a labour dispute, as in this case, the work of the Company will be paralysed if the Company is forced to give leave to all of them for a "more or less indefinite period.
Such a principle will not be just; nor will it restore harmony between labour and capital or ensure normal flow of production.
It is immaterial whether the charges on Which the workmen are arrested by the police are ultimately proved or not in a court of law.
The Company must carry on its work and may find it impossible to do so if a large number of Workmen are absent.
Whether in such circumstances leave should be granted or not must be left to the discretion of the employer.
It may be readily accepted that if the workmen are arrested at the instance of the Company for the purpose of victimisation and in order to get rid of them on the ostensible pretext of continued absence, the position will be different.
It will then be a colourable or mala fide exercise of power under the relevant Standing Order; that, however, is not the case here.
We, are of the view that the two Tribunals below have misdirect ed themselves as to the true scope and effect of the "Standing Order in question, and their decision with regard to the seven workmen mentioned above cannot be supported.
683 We now turn to the two persons in the second category Samar Sen and Abharani Debi, remembering what we have already stated as to the exercise of our jurisdiction on an appeal by special leave.
Samar Sen worked as the Manager of the Burnpur hotel, and one of the questions raised was if he was a 'workman ' within the meaning of the relevant provisions of the .
At the relevant time, `workman ' was defined in the Act as follows: " Section 2(s).
" workman " means any person employed (including an apprentice) in any industry to do any skilled or unskilled manual or clerical work for hire or reward and includes, for the purposes of any proceedings under this Act in relation to an industrial dispute, a workman discharged during that dispute, but does not include any person employed in the naval, military or air service of the Government.
" The question is if Samar Sen did any clerical work for hire or his duties were merely supervisory in nature.
Both the Tribunals have referred to the evidence on this point and have concurrently found that Samar Sen was a workman within the meaning of that word as used in the ; they have referred to Samar Sen 's own evidence which showed that he had to write ledgers, file correspondence, enter the cash book, etc.
We see no reason to hold that the finding of the two Tribunals on this point is erroneous.
On merits, the case against Samar Sen was that as a result of a regular and proper enquiry, he was found guilty of unauthorised absence and insubordination, etc., and, therefore, the Company dismissed him.
The argument before us is that the Company having held a regular and proper enquiry in which Samar Sen had an opportunity of meeting the charges against him, it was for the Company to decide whether the charges had been proved and the Industrial Tribunal should not have interfered with the decision of the Company, unless it found that the decision was mala fide or amounted to victimisation.
It is necessary to state here, in the words of the Fifth Industrial Tribunal, its finding about Samar Sen.
The Industrial Tribunal said: 87 684 "Next, I consider the merit of the case.
On the 6th July, 1953, he went on leave.
On the 16th July, he applied for extension of leave for one month (vide exhibit 6).
He got a reply from the Company on the 25th or 26th July, 1953.
But as the Company refused his leave, he jointed on the 1st August, 1953, with a medical certificate of fitness.
So practically he was within 14 days ' admissible grace period for joining one 's duty.
When he was on leave, he was suffering from blood pressure and fever.
The doctor advised him to take rest.
Of course, he should have consulted the Companies ' doctor.
But even if he had not done so, it did not matter as he was then on leave allowed by the Company.
So where was his fault? Yes, his fault was that he was the Secretary of the Action Committee at that time.
The Action Committee to the Companies was like a red rag to the bull.
I find absolutely no reason why this man should be dismissed.
So I set aside the order of dismissal passed against him, and order his reinstatement.
I grant him compensation at half basic pay for the period of his forced unemployment.
" The finding really amounts to this that Samar Sen was victimised as he was the Secretary of the Action Committee; he was really ill and the only fault he committed was that he did not consult the Company 's doctor.
The learned Attorney General has very seriously contested the aforesaid finding of the Tribunal and taken us through the relevant evidence including Samar Sen 's own statements before the Enquiry Committee.
He has pointed out that though Samar Sen was said to be suffering from fever and blood pressure, his statements before the Enquiry Committee showed that he was not taking complete rest as " advised by his doctor but was engaged in doing some " public work." The argument advanced by the learned Attorney General might have been urged acceptably to a Court or Tribunal of first instance; but we are not such a Court or Tribunal, and in the absence of exceptional or special circumstances or of grave injustice, we shall not be justified in interfering with what really is a finding of fact.
685 This brings us to the case of Abharani Debi, where also the same principles apply.
She was a nurse in the Burnpur Hospital and the charge against her was that she had incited and instigated one Karu, a sweeper working in the hospital, not to attend his duties on the morning of September 5, 1953.
An enquiry was held and she was found guilty of the charge.
The Tribunal found that the charge against her was completely baseless, and the enquiry report against her made a mountain of a mole hill.
She made some comments to Karu with regard to a pass which had been issued to Karu, and the comments innocuous in themselves were magnified into a charge of intimidation.
It is significant that before the Labour Appellate Tribunal, the Company did not even argue the case of Abharani.
Undoubtedly, the management of a concern has power to direct its own internal administration and discipline; but the power is not unlimited and when a dispute arises, Industrial Tribunals have been given the power to see whether the termination of service of a workman is justified and to give appropriate relief.
In cases of dismissal on misconduct, the Tribunal does not, however, act as a Court of appeal and substitute its own judgment for that of the management.
It will interfere (i) when there is a want of good faith, (ii) when there is victimisation or unfair labour practice, (iii) when the management has been guilty of a basic error or violation of a principle of natural justice, and (iv) when on the materials the finding is completely baseless or perverse.
In our view, Abharani 's case comes under, clause (iv) above.
Lastly, we come to Himansu Chattoraj.
The Company 's case against him was the following.
It was alleged that since January, 1953, he incited other workmen to resort to 'slow down ' tactics.
On March 28, 1953, he was charged that he took an active part in the ` slow down ' strike in the Hot Mills section, and he initiated such action and instigated others to do the same.
On March 29, 1953, he submitted his explanation.
On March 31, 1953, he was suspended pending enquiries.
On April 3, 1953 and April 4, 1953, some 686 evidence was taken against several workmen including Chattoraj in the course of the enquiry, but the evidence not being of an overwhelming character against Chattoraj, the management postponed its decision pending further enquiry.
In May 1953, the Sub divisional Magistrate promulgated an order under section 144, Criminal Procedure Code, in which Chattoraj was mentioned.
In September, 1953, the dispute was referred to the Fifth Industrial Tribunal, which included the case of Chattoraj there being a suspension order against him.
It was stated that an application under section 33 of the , was made for permission to dismiss Chattoraj for activities subsequent to the charge sheet of March 28, 1953.
The Tribunal instead of dealing with that application made the following observations in its award regarding Himansu Chattoraj: " He was, therefore, charged on the 28th March, 1953, along with others.
There was an enquiry.
But as the evidence against this man was not overwhelming, the management postponed their decision for the time being.
This man, however, continued his activities with the result that the Sub divisional Officer of Asansol promulgated an order under section 144, Cr.
P.C., on the 15th May, 1953, and in which order his name was mentioned.
This workman was again obstructing the loyal workers after the lock out had been lifted.
So in view of the above, the Companies decided to terminate his services.
But it could not take any direct action as his case was referred to the Tribunal.
So the position is that the charge sheet on which this man was sought to be punished was not proved even according to the Companies ' own version.
For his other activities there is no charge sheet.
In such circumstances I do not think that the Companies were entitled to dismiss him.
So regard being had to this aspect of the matter, I order his reinstatement.
But as I am satisfied that.
this man indulged in activities which were prejudicial to the interest of the Companies, I do not allow him any compensation during the period of his forced unemployment consequent upon suspension.
This period 687 of unemployment should be treated as leave without pay.
He must be reinstated as soon as the award becomes operative." The Appellate Tribunal dealt with the case of this man very summarily by saying that his reinstatement was not open to any objection.
Before us, it has been argued that the decision that Himansu Chattoraj should be reinstated is vitiated by a basic error.
The only formal order against him was the order of suspension, which was certainly a valid order.
The Industrial Tribunal found that Chattoraj indulged in activities prejudicial to the Company and it is now recognised that deliberate 'slow down ' tactics and an incitement to other workmen to adopt such tactics both amount to misconduct.
The lower Tribunal was apparently satisfied that Chattoraj was guilty of such misconduct; yet it held that the charge sheet on which Chattoraj was suspended had not been proved.
If the order of suspension was the only subject if reference, so far as Chattoraj was concerned, the Tribunal could not order his reinstatement till the enquiry was completed.
If, on the contrary, the Tribunal proceeded on the footing that the company had decided to terminate the services of Chattoraj on the ground of his prejudicial and subversive activities then on being satisfied that Chattoraj was guilty of such activities the proper order would have been to give the Company permission to dismiss Chattoraj.
In either view, the order of his reinstatement is unjustified.
Only a few words are necessary to dispose of Civil Appeal 337.
The Tribunal had considered the case of each workman under the four categories mentioned previously and had refused reinstatement to those against whom it found that the Company had good reasons for dismissal.
Mr. Acharya has not been able to satisfy us that the Tribunals below committed any error with regard to the appellants of this appeal.
He has pressed the case of two persons Akka Hossain and D. P. Das.
Against Akka Hossain there was a charge for slow down tactics; later he was charged with assaulting the Company 's driver.
Though he was acquitted in a criminal proceeding, the Tribunal 688 found that the decision of the Company to terminate his services was justified.
D. P. Das absented himself from duty from July 5, 1953, and was absent without leave for more than 14 days.
His case was fully considered by the Tribunal, which found that his services were rightly terminated under the Standing Orders of the Company.
The result of the foregoing discussion is this: Civil Appeal 44, Civil Appeal 45 and Civil Appeal 337 are without merit and must be dismissed.
Civil Appeal 336 succeeds in part, and the decision of the Tribunals below is set aside in respect of the following eight men, only (1) Bamapada Mukherji (2) Chandrasekhar Mukherji, (3) Niaz Hossain, (4)Dhani Ram, (5) Chandrabhan Sing, (6) Raja Sing, (7) Jai Kishore Sing, and (8) Himansu Chattoraj.
In all other respects, the decision appealed from will stand.
In the peculiar circumstances of this case, the parties will bear their own costs here.
Appeal No. 336 partly allowed.
Others dismissed.
| On account of the continued illegal stoppage of work, 'glow down ' tactics, and strikes indulged in by the workmen despite the advice of their Union, the appellant company issued a notice dated August 23, 1953, that in consequence of the illegal strike the Management has no option but to declare a lock out of the entire works except the special shifts with effect from August 24, 953 The services of all other workers shall be deemed to be discharged with effect from August 24, 953.
" Subsequently, the company lifted the lock out.
and gave notice on September 17, 1953, to the effect that all employees on the Works rolls of the Company on August 23, 1953, and who wish to report for duty, must resume work on September 18, 1953 A third notice gave extension of time to the workmen to resume work.
The question was whether the notice dated August 23, 1953, terminated the services of the respondents by discharging them with effect from August 24, 1953, and the notice dated September 17, 1953, merely gave them an opportunity of re employment at the pleasure of the company on fulfilment of certain conditions.
Held, that, on a construction of the notices, the expression "shall be deemed to be discharged" had to be read in the context of the declaration of a lock out, and the intention of the company was that the employees whose employment bad been refused during the period of lock out were to be permitted to resume work without any conditions if they reported for duty by a particular date, and on fulfilment of a condition if they reported for duty after that date.
Where some of the workmen who were taken in custody by the police applied for leave when in custody but were refused leave by the company acting under Standing Order No. o, and the Labour Appellate Tribunal took the view that as the workmen were in custody the company was not justified in refusing leave, held, that whether in such circumstances leave should be granted or not must be left to the discretion of the employer, unless, it was proved, that it was a case of colourable or mala fide exercise of power under the Standing Order.
668 Burn and Co., Calcutta vs Their Employees, [1956] S.C.R. 781, followed.
The powers of an Industrial Tribunal to interfere in cases of dismissal of workmen by the company, are not unlimited and the Tribunal does not act as a court of appeal and substitute its own judgment for that of the management.
It will interfere (1) when there is want of good faith, (2) when there is victimisation or unfair labour practice, (3) when the management has been guilty of a basic error or violation of a principle of natural justice, or (4) when on the materials the finding is completely baseless or perverse.
|
Summarize this legal judgement text concisely | Civil Appeal No. 65 of 1957.
Appeal from the judgment and order dated January 1, 1956, of the Punjab High Court (Circuit Bench) at Delhi in Letters Patent Appeal No. 28 of 1955, arising out of the judgment and order dated April 15, 1955, of the Single Judge, of the Circuit Bench of the Punjab High Court in Civil Writ 332 No. 36 D of 1955.
A. N. Grover and P. section Safeer, for the appellant.
R. Ganapathy lyer and R. H. Dhebar, for the Respondent.
Frank Anthony and C. P. Aggarwala, for the intervener.
November 1.
The judgment of section R. Das C. J., Venkatarama Aiyar, section K. Das and A. K. Sarkar JJ. was delivered by section R. Das C. J. Bose J. delivered a separate judgment.
DAS C. J.
This appeal has been filed with a certificate of fitness granted by the Punjab High court on August 20.
It is directed against the judgment and order passed by a Division Bench of that court on January 19, 1956, in Letters Patent Appeal No. 28 of 1955, reversing the judgment and order of Mr. Justice Harnam Singh pronounced on April 15, 1955, whereby his Lordship had allowed the appellant 's application being Civil Writ No. 36 D of 1955 and set aside the order passed by the General Manager, Northern Railway on August 19, 1953, reverting the petitioner from the post of Signal and Tele communication Engineer, (Telegraphs) in Class II service where the appellant was officiating to his substantive post in Class III service.
This appeal raises a very important question about the construction of article 311 of the Constitution.
The facts are shortly as follows: In August 1924 the appellant joined the railway service as a Signaller (Telegraphist).
As a result of selection, he was promoted as Section Controller in 1942 and as Deputy Chief Controller in 1947 and as the Chief Controller in 1950.
All these posts were in Class III service.
On March 31, 1951, seven candidates, including the appellant, appeared before a selection board constituted for selecting a candidate for the post of Assistant Superintendent Railway Telegraphs, which was a gazetted post in Class 11 Officer 's cadre.
The appellant was selected out of the seven candidates for this post.
On July 2, 1951, a notice of appointment was issued from the headquarters of the East Punjab Railway, 833 Delhi, notifying that " Mr. Parshotam Lal, Officiating Chief Controller, is appointed to officiate in Class II service as Asstt.
Telegraphs, Headquarters Office vice Mr. Sahu Ram whose term of temporary re employment expires on the afternoon of 3rd July, 1951 ".
The applicant actually relieved Mr. Sahu Ram in the afternoon of July 3, 1951.
It appears that on April 28, 1953, one Gouri Shankar S.S.T.E.I./Hd.
made certain adverse remarks against the appellant in his confidential report for the year ending March 31, 1953.
This confidential report came before Shri section Sen, C.S.T.E., on May 25,1953, who confirmed the views expressed by Shri Gouri Shankar and added his own opinion which was also adverse to the appellant.
According to the usual practice obtaining in the office the aforesaid remarks were placed before the General Manager, Shri Karnail Singh, who on June 11, 1953, remarked thereon as follows: " I am disappointed to read these reports.
He should revert as a subordinate till he makes good the short comings noticed in this chance of his as an officer.
Portions underlined red to be communicated.
" The adverse remarks against the appellant in the confidential report for the year ending March 31, 1953, which were communicated to the appellant for his information by a confidential letter No. E 106/180 dated June 29, 1953, were as follows: ". .
He is, however, inclined to be hasty in his decisions.
His office work is scrappy and does not show attention to detail.
His relations with staff as well as officers have not been happy.
He has displayed a tendency to resort freely to transfers and punishment of staff, as a means of correcting their faults and in regard to officers has not maintained the proper tone and approach in official notings, discussions and letters to Divisions.
The above short comings have been brought to his notice on a number of occasions both in person and in writing, without any improvement.
" Remarks of Shri section Sen, C.S.T.E. ".
. . . This officer suffers from an inflated 834 idea of self importance.
His ways and manners require radical change if he desires to have a successful career as an officer.
" Remarks of the General Manager.
"I am disappointed to read these reports . . . " On July 24, 1953, the appellant, who had by this time earned two increments on July 4, 1952 and July 4, 1953, made a representation against the remarks made against him.
On August 19, 1953, however, notice No. 940 E/14 (E.I.A.) was issued by the General Manager (P) to the following effect: " Shri Bishambar Nath Chopra, Instructor Railway Training School, Saharnpur, is transferred to Headquarters office and appointed to officiate in Class 11 service as Assistant Signal and Tele communication Engineer (Telegraphs) vice Shri Parshotam Lal Dhingra, who on relief reverts to Class III appointment.
" The appellant on August 20, 1953, appealed to the General Manager for reconsideration and thereafter on October 19, 1953, appealed to the Railway Board and made a representation also to the President of India.
On February 2, 1955, the Railway Board wrote to the General Manager as follows: With reference to your letter No. 3780 dated the 30th December, 1953, the Board desires that you should inform Shri Parshotam Lal Dhingra that his reversion for generally unsatisfactory work will stand, but that this reversion will not be a bar to his being considered again for a promotion in the future if his work and conduct justify.
He should also be informed that he has, in his representation, used language unbecoming of a senior official, and that he should desist from this in future.
You may watch his work up to the end of March, 1955 and judging from his work and conduct, you may treat him as eligible for being considered for promotion as Assistant Transportation Superintendent in the Selection that may be made after March 1955.
" This was communicated to the petitioner on February 17, 1955.
835 In the meantime the petitioner had on February 9, 1955, filed his writ petition under article 226 of the Constitution.
Mr. Justice Harnam Singh took the view that the petitioner had been punished by being reduced in rank without being given an opportunity to show cause against the action proposed to be taken in regard to him and that consequently the order was invalid for non compliance with the provisions of article 311 (2) of the Constitution.
On a Letters Patent Appeal filed by the Union of India, a Division Bench (Bhandari C. J. and Falshaw J.) reversed the order of Harnam Singh J. and dismissed the petitioner 's writ application.
The High Court having subsequently certified that it was a fit case for appeal to this Court, the petitioner has now come up on appeal before us and the question for our decision is whether the order passed by the General Manager on August 19, 1953, amounted to a reduction in rank within the meaning of article 311 (2) of the Constitution, for if it did then the order must be held to be invalid as the requirements of that article had admittedly not been compli ed with.
Under the English Common Law all servants of the Crown held office during the pleasure of the Crown and were liable to be dismissed at any time and without any reason being assigned for such dismissal.
No action lay against the Crown in respect of such dismissal, even though it were contrary to the express term of the contract of employment, for the theory was that the Grown could not fetter its future executive action by entering into a contract in matters which concerned the welfare of the State.
A servant of the Crown could not at Common Law sue the Crown even for the arrears of his salary, and his claim could be only on the bounty of the Crown.
The established notion was that the implied condition between the Crown and its servant was that the latter held his office during the pleasure of the Crown, no matter whether it had been referred to when the engagement had been made or not and that public policy demanded this qualification.
(See per Lord Blackburn in 106 836 Mulvenna vs The Admiralty(1).
This rule was applied in full force in Lucas vs Lucas and High Commissioner for India (2), where it was held that the sterling overseas pay of an Indian Civil Servant was not a debt which could be attached in satisfaction of an order for the payment of alimony.
In the State of Bihar v, Abdul Majid (3), however, this Court held, for reasons stated in the judgment delivered by Mahajan C. J. that the Indian Law has not adopted the rule of English Law on the subject in its entirety.
Turning to our Statute Law, we find that in the Government of India Act, 1915 (5 & 6 Geo.
V. Ch.
61) ' as originally enacted, there was no reference to this doctrine of the English Common Law.
By section 45 of the Government of India Act, 1919 (9 & 10 Geo.
V. Ch. 101) read with Part I of the second schedule to that Act several sections, including section 96 B, were introduced into the Government of India Act, 1915 (hereinafter called the " 1915 Act").
The relevant portion of section 96 B was as follows: " 96 B (1).
Subject to the provisions of this Act and the rules made thereunder, every person in the civil service of the Crown in India holds office during His Majesty 's pleasure, and may be employed in any manner required by a proper authority within the scope of his duty, but no person in that service may be dismissed by any authority subordinate to that by which he was appointed and the Secretary of State in Council may (except so far as he may provide by rules to the contrary) re instate any person in that service who has been dismissed.
" Sub section (2) of that section empowered the Secretary of State in Council to make rules for regulating the classification of the Civil Services in India, the method of recruitment, the conditions of service, pay and allowances and discipline and conduct and sub section (4) declared that all service rules then in force had been duly made and confirmed the same.
The point to be noted is that section 96 B for the first time gave a statutory recognition and force to the English Common (1) (3) ; (2) 837 Law rule that the servants of the Crown held their Offices during the pleasure of the Crown and at the same time imposed one important qualification upon the exercise of the Crown 's pleasure, namely, that a servant might not be dismissed by an authority sub ordinate to that by which he had been appointed.
Section 96 B (1) was reproduced as sub sections
(1) and (2) of section 240 of the Government of India Act, 1935 (26 Geo.
V. Ch.
II), (hereinafter referred to as the 1935 Act) and a new sub section was added to section 240 as sub section
The relevant portions of section 240 of the 1935 Act are set out below: " 240 (1) Except as expressly provided by this Act, every person who is a member of a Civil service of the Crown in India, or holds any civil post under the Crown in India, holds office during His Majesty 's pleasure.
(2) No such person as aforesaid shall be dismissed from the service of His Majesty by any authority subordinate to that by which he was appointed.
(3) No such person as aforesaid shall be dismissed or reduced in rank until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him; Then followed a proviso which made sub section
(3) inapplicable to certain persons and then came sub section
(4) providing for compensation for premature termination% of employment in certain cases which it is not necessary to set out here.
The rule making power given by section 96 B (2) of the 1915 Act was reproduced in section 241 of the 1935 Act.
Section 276 of the 1935 Act, like section 96 B (4) of the 1915 Act, continued in force all the rules made under the last mentioned Act, while the existing laws were continued by section 292.
It should be noted that the opening words of section 96 B (1), namely, ,,Subject to the provisions of this Act and the rules made thereunder " were substituted by the words " Except as expressly provided by this Act.
" The effect of this will be discussed hereafter.
Subsection (1) adopted the English Common Law rule regarding the pleasure of the Crown but imposed on it 838 two qualifications by two separate sub sections.
Subsection (2) reproduced the qualification which had been imposed by section 96 B (1), namely that a servant of the class therein mentioned must not be dismissed by an authority subordinate to that by which he had been appointed and sub section
(3) introduced a still more important qualification on the exercise of the Crown 's pleasure, namely, that no such servant must be dismissed or reduced in rank until he had been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him.
Reduction in rank was not referred to in section 96 B (1) but was for the first time added to dismissal in sub section
Then came our Constitution on January 26, 1950.
Part XIV deals with " Services under the Union and the States".
Chapter I contains seven sections grouped under the heading " Services".
Section 240(1) of the 1935 Act has been substantially reproduced in article 310 (1) and sub sections
(2) and (3) of section 240 have become article 311(1) and (2), while section 276 of the 1935 Act, which continued the existing rules in force, has been embodied in article 313.
Article 310(1) and article 311 omitting the proviso to cl.
(2) are as follows: " 310 (1) Except as expressly provided by this Constitution, every person who is a member of a defence service or of a civil service of the Union or of an all India Service or holds any post connected with defence or any civil post under the Union, holds office during the pleasure of the President, and every person who is a member of a civil service of a State or holds any civil post under a State holds office during the pleasure of the Governor of the State.
311 (1) No person who is a member of a civil service of the Union or an all India service or a civil service of a State or holds a civil post under the Union or a St ate shall be dismissed or removed by an authority subordinate to that by which he was appointed.
(2) No such person as aforesaid shall be dismissed or removed or reduced in rank until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him: povided . . . . . . . . 839 (3) If any question arises whether it is reasonably practicable to give any person an opportunity of showing cause under clause (2), the decision thereon of the authority empowered to dismiss or remove such person or to reduce him in rank, as the case may be, shall be final.
" To summarise: As under section 96 B(1) of the 1915 Act and section 240(1) of the 1935 Act, the persons specified therein held office during the pleasure of the Crown, so under article 310(1) they hold their office during the pleasure of the President or of the Governor, as the case may be.
The opening words of article 310(1), namely, Except as expressly provided by this Constitution reproduce the opening words of section 240(1) of the 1935 Act, substituting the word " Constitution " for the word " Act ".
The exceptions contemplated by the opening words of article 310(1) quite clearly refer, inter alia, to articles 124, 148, 218 and 324 which respectively provide expressly that the Supreme Court Judges, the Auditor General, the High Court Judges and the Chief Election Commissioner shall not be removed from his office except by an order of the President passed after an address by each House of Parliament, supported by the requisite majority therein specified, has been presented to him in the same session for such removal on the ground of proved misbehaviour or incapacity.
These are clearly exceptions to the rule embodied in article 310(1), that public servants hold their office during the pleasure of the President or the Governor, as the case may be.
Subject to these exceptions our Constitution, by article 310(1), has adopted the English Common Law rule that public servants hold office during the pleasure of the President or Governor, as the case may be and has, by article 31 1, imposed two qualifications on the exercise of such pleasure.
Though; the two qualifications are set out in a separate article, they quite clearly restrict the operation of the rule embodied in article 310(1).
In other words the provisions of article 311 operate as a proviso to article 310(1).
All existing laws have been continued by article 372, some of which, e.g., the Code of Civil Procedure make, it possible for a public servant to enforce his claims 840 against the State.
It has accordingly been held by this Court in the State of Bihar vs Abdul Majid (supra) that the English Common Law rule regarding the holding of office by public servants only during the pleasure of the Crown has not been adopted by us in its entirety and with all its rigorous implications.
Passing on to article 311 we find that it gives a two fold protection to persons who come within the article, namely, (1) against dismissal or removal by an authority subordinate to that by which they were appointed and (2) against dismissal or removal or reduction in rank without giving them a reasonable opportunity of showing cause against the action proposed to be taken in regard to them.
Incidentally it will be noted that the word removed " has been added after the word "dismissed".
in both cls.
(1) and (2) of article 311.
Upon article 311 two questions arise, namely, (a) who are entitled to the protection and (b) what are the ambit and scope of the protection ? Re (a): Articles 310 and 311 are two of the articles which have been grouped under the heading "Services" in Chapter I of Part XIV which deals with the "Services under the Union and the States".
It is well known that there are different species of Government services.
In the absence of a contract to the contrary the terms of employment of persons in different services are governed by rules made by the appropriate authorities to which reference will hereafter be made.
The strength of a service or a part of a services actioned as a separate unit is, in the Fundamental Rules, section 111, ch. 11, r. 9(4), called the cadre.
Each cadre consists of a certain number of posts.
According to r. 9(22) of the Fundamental Rules, a permanent post means a post carrying a definite rate of pay sanctioned without limit of time.
In each cadre there may be and often is a hierarchy of ranks.
Due to rush of business or other exigencies some "temporary posts" are often created.
A temporary post is defined in r. 9(30) to mean a post carrying a definite rate of pay sanctioned for a limited time.
These temporary posts are very often outside the cadre and are usually for one year and are renewed from year to year, although some of them may be 841 created for a certain specified period.
The conditions of service of a Government servant appointed to a post, permanent or temporary, are regulated by the terms of the contract of employment, express or implied, and subject thereto, by the rules applicable to ' the members of the particular service.
The appointment of a Government servant to a permanent post may be substantive or on probation or on an officiating basis.
A substantive appointment to a permanent post in public service confers normally on the servant so appointed a substantive right to the post and he becomes entitled to hold a "lien" on the post.
This "lien" is defined in Fundamental Rule section 111, ch. 11, r. 9(13) as the title of a Government servant to hold substantively a permanent post, including a tenure post, to which he has been appointed substantively.
The Government cannot terminate his service unless it is entitled to do so (1) by virtue of a special term of the contract of employment, e.g., by giving the requisite notice provided by the contract or (2) by the rules governing the conditions of his service, e.g., on attainment of the age of superannuation prescribed by the rules, or on the fulfilment of the conditions for compulsory retirement or, subject to certain safeguards ' on the abolition of the post or on being found guilty after a proper enquiry on notice to him, of misconduct negligence, inefficiency or any other disqualification ' An appointment to a permanent post in Government service on probation means, as in the case of a person appointed by a private employer, that the servant so appointed is taken on trial.
The period of probation may in some cases be for a fixed period, e.g., for six months or for one year or it may be expressed simply as "on probation" without any specification of any period.
Such an employment on probation, under the ordinary law of master and servant, comes to an end if during or at the end of the probation the servant so appointed on trial is found unsuitable and his service is terminated by a notice.
An appointment to officiate in a permanent post is usually made when the incumbent substantively holding that post is on leave or when the permanent post is vacant and no substantive 842 appointment has yet been made to that post.
Such an officiating appointment comes to an end on the return of the incumbent substantively holding the post from leave in the former case or on a substantive appointment being made to that permanent post in the latter case or on the service of a notice of termination as agreed upon or as may be reasonable under the ordinary law.
It is, therefore, quite clear that appointment to a permanent post in a Government service, either on probation, or on an officiating basis, is, from the very nature of such employment, itself of a transitory character and, in the absence of any special contract or specific rule regulating the conditions of the service, the implied term of such appointment, under the ordinary law of master and servant, is that it is terminable at any time.
In short, in the case of an appointment to a permanent post in a Government service on probation or on an officiating basis, the servant so appointed does not acquire any substantive right to the post and consequently cannot complain, any more than a private servant employed on proba tion or on an officiating basis can do, if his service is terminated at any time.
Likewise an appointment to a temporary post in a Government service may be substantive or on probation or on an officiating basis.
Here also, in the absence of any special stipulation or any specific service rule, the servant so appointed acquires no fight to the post and his service can be terminated at any time except in one case, namely, when the appointment to a temporary post is for a definite period.
In such a case the servant so appointed acquires a right to his tenure for that period which cannot be put an end to unless there is a special contract entitling the employer to do so on giving the requisite notice or, the person so appointed is, on enquiry held on due notice to the servant and after giving him a reasonable opportunity to defend himself, found guilty of misconduct, negligence, inefficiency or any other disqualification and is by way of punishment dismissed or removed from service or reduced in rank.
The substantive appointment to a temporary post, under the rules, used to give the servant so appointed 843 certain benefits regarding pay and leave, but was otherwise on the same footing as appointment to a temporary post on probation or on an officiating basis, that is to say, terminable by notice except where under the rules promulgated in 1949 to which reference Will hereafter be made, his service had ripened into what is called a quasi permanent service.
The position may, therefore, be summarised as follows: In the absence of any special contract the substantive appointment to a permanent post gives the servant so appointed a right to hold the post until, under the rules, he attains the age of superannuation or is compulsorily retired after having put in the prescribed number of years ' service or the post is abolished and his service cannot be terminated except by way Of punishment for misconduct, negligence, inefficiency or any other disqualification found against him on proper enquiry after due notice to him.
An appointment to a temporary post for a certain specified period also gives the servant so appointed a right to hold the post for the entire period of his tenure and his tenure cannot be put an end to during that period unless he is, by way of punishment, dismissed or removed from the service.
Except in these two cases the appointment to a post, permanent or temporary, on probation or on an officiating basis or a substantive appointment to a temporary post gives to the servant so appointed no right to the Post and his srvice 'may be terminated unless his service had ripened into what is, in the service rules, called a quasi permanent service.
The question for our consideration is whether the protections of article 311 are available to each of these several categories of Government servants.
A number of decisions bearing on the question of construction of articles 310 and 311 have been cited before us which indicate that there is some difference of opinion between the Judges of the different High Courts and in some cases amongst the Judges of the same High Court.
Thus it has been held in some cases that articles 310 and 311 do not make any distinction between Government servants who are employed in permanent posts and those who are employed in 107 844 temporary posts.
See Jayanti Prasad vs The State of Uttar Pradesh (1), 0.
P. Oak vs The State of Bombay(2) Kishanlal Laxmilal vs The State of Madhya Bharat (3), Gopi Kishore Prasad vs The State of Bihar (4), Punit lal Saha vs The State of Bihar(5) and Yusuf Ali Khan vs Province of the Punjab(6).
On the other hand it has been held in some cases that a Government servant cannot be deemed to be a member of a service unless he is permanently absorbed therein, nor can he be deemed to be a holder of such post unless he holds it permanently and that such a Government servant is not entitled to claim the benefit of article 311.
See Laxminarayan Chiranjilal Bhargava vs The Union of India (7), Engnneer in Chief, Army Head Quarters vs C. A. Gupta Ram (8), State of Punjab vs section Sukhbans Singh (9) and Chironjilal vs Union of India (10).
The cases cited before us also indicate that the preponderance of view is that only a dismissal or removal or reduction in rank by way of penalty attracts the operation of article 311 (2), but that a termination of service brought about otherwise than by way of punishment, e.g., by the exercise of the right under the terms of employment or under the relevant rules regulating the conditions of service which form part of the terms of employment does not.
See Jayanti Prasad vs The State of Uttar Pradesh (supra), Shrinivas Ganesh vs Union of India (11); Jatindra Nath Biswas vs R. Gupta (12), Rabindra Nath Das vs The General Manager, Eastern Railway (13), Jatindra Nath Mukherjee vs The Government of the Union of India("), Ahmad Sheikh vs Ghulam Hassan (15), Ganesh Balkrishna Deshmukh vs The State of Madhya Bharat (16), D. P. Ragunath vs The State of Coorg (17), M. V. Vichoray vs The State of Madhya Pradesh (18), Kamta Charan Srivastava vs Post Master General (19) and Sebastian vs State(").
The cases, (I) A.I.R. (1951) All. 793.(2) A.I.R. (1957) Bom.
(3) A.I.R. (1956) M B. 1oo.(4) A.I.R. (1955) Pat.372.
(5) A.I.R. (1957) Pat.
357(6) A.I.R. (1950) Lah.
(7) 1.1,.
R. ;A. I. R. (1956) Nag.(8) A.I.R. (1957)Punj.
(9) A.I.R. (1957) Punj.
191.113.(10) A.I.R. (1957) Raj.
(11) L.R. 58 Bom.
673; A.I.R. (1956) Bom.
455.(12) A.I.R. (1954) Cal.
(13) (14) (1957) 611C.W.N. 815.
(15) A.I.R. (1957) J. & K. xi.(16) A.I.R. (1956) M.B. 172.
(17) A.I.R. (1957) Mys.
(18) Al.
R. (1952) Nag.
(19) A.I.R. (1955) Pat.
381.(2o) A.I.R. (1955) Tr.
Co. 12, 845 however, do not lay down or clearly indicate any test for ascertaining whether in any particular case a termination of service is inflicted by way of penalty so as to amount to dismissal, removal or reduction in rank within the meaning of article 311 (2) or is brought about by the exercise of the right to terminate it arising out of the terms of employment agreed upon between the parties or contained in rules regulating the conditions of service subject to which the employment was made.
Further a certain amount of confusion arises because of the indiscriminate use of the words "temporary", Cc provisional ", " officiating " and " on probation ".
We, therefore, consider it right to examine and ascertain for ourselves the scope and effect of the relevant provisions of the Constitution.
Article 311 does not, in terms, say that the protections of that article extend only to persons who are permanent members of the services or who hold permanent civil posts.
To limit the operation of the protective provisions of this article to these classes of persons will be to add qualifying words to the article which will be.
contrary to sound principles 'of interpretation of a Constitution or a statute.
In the next place, el.
(2) of article 311 refers to "such person as aforesaid" and this reference takes us back to cl.
(1) of that article which speaks of a " person who is a member of a civil service of the Union or an all India service or a civil service of a State or holds a civil post under the Union or a State".
These persons also come within article 3 10(1) which, besides them, also includes persons who are members of a defence service or who hold any post connected with defence.
Article 310 also is not, in terms ' confined to persons who are permanent members of the specified services or who hold permanent posts connected with the services therein mentioned.
To hold that that article covers only those persons who are permanent members of the specified services or who hold posts connected with the services therein mentioned will be to say that persons, who are not permanent members of those services or who do not hold permanent posts therein, do not hold their respective offices during the pleasure of the President 846 or the Governor, as the case may be a proposition which obviously cannot stand scrutiny.
The matter, however, does not rest here.
Coming to article 31 1, it is obvious that if that article is limited to persons who are permanent members of the services or who hold permanent civil posts, then the constitutional protection given by cls.
(1) and (2) will not extend to persons who officiate in a permanent post or in a temporary post and consequently such persons will be liable to be dismissed or removed by an authority subordinate to that by which they were appointed or be liable to be dismissed, removed or reduced in rank without being given any opportunity to defend themselves.
The latter classes of servants require the constitutional protections as much as the other classes do and there is nothing in the language of article 311 to indicate that the Constitution makers intended to make any distinction between the two classes.
There is no apparent reason for such distinction.
It is said that persons who are merely officiating in the posts cannot be said to " hold " the post, for they only perform the duties of those posts.
The word " hold " is also used in articles 58 and 66 of the Constitution.
There is no reason to think that our Constitution makers intended that the disqualification referred to in cl.
(2) of the former and cl.
(4) of the latter should extend only to persons who substantively held permanent posts and not to those who held temporary posts and that persons officiating in permanent or temporary posts would be eligible for election as President or Vice President of India.
There could be no rational basis for any such distinction.
In our judgment, just as article 310, in terms, makes no distinction between permanent and temporary members of the services or between persons holding permanent or temporary posts in the matter of their tenure being dependent upon the pleasure of the President or the Governor, so does article 311, in our view, make no distinction between the two classes, both of which are, therefore, within its protections and the decisions holding the contrary view cannot be supported as correct,.
Re: (b) : Clause (1) of article 311 is quite explicit and 847 hardly requires discussion, The scope and the ambi of that protection are that Government servants of the kinds referred to therein are entitled to the judgmen of the authority by which they were appointed or some authority superior to that authority and that the should not be dismissed or removed by a lesser authority in whose judgment they may not have the same faith.
The underlying idea obviously is that a provision like this will ensure to them a certain amount of security of tenure.
Clause (2) protects Government servant: against being dismissed or removed or reduced in rank without being given a reasonable opportunity of showing cause against the action proposed to be taken in regard to them.
It will be noted that in cl.
(1) the words " dismissed " and " removed " have been used while in cl.
(2) the words " dismissed ", " removed " and " reduced in rank " have been used.
The two, protections are (1) against being dismissed or removed by an authority subordinate to that by which the appointment had been made and (2) against being dismissed, removed or reduced in rank without being heard.
What, then, is the meaning of those expressions " dismissed ", " removed " or " reduced in rank" ? It has been said in Jayanti Prasad vs The State Of Uttar Pradesh (supra) that these are technical words used in cases in which a person 's services are terminated by way of punishment.
Those expressions, it is urged, have been taken from the service rules, where they were used to denote the three major punishments and it is submitted that those expressions should be read and understood in the same sense and treated as words of article This leads us to embark upon an examination of the service rules relating to punishments to which the Government servants can be subjected.
Rule 418 of the Civil Service Regulations of 1902 (hereinafter called the 1902 Rules) provide, inter alia, that the removal of public servants from the service for misconduct, insolvency, inefficiency not due to age or failure to pass a prescribed examination entailed forfeiture of past services.
Those 1902 Rules, however, did not Bay under what circumstances or in what 848 manner and by which authority public servants could be removed.
In exercise of the powers conferred by section 96 B(2) of ,he 1915 Act the Secretary of State in Council framed the Civil Service (Governor 's Provinces) Classification Rules (hereinafter referred to as the 1920 Classification Rules) which came into force in December, 1920 and were applicable to Government servants serving in the Governor 's Provinces.
Rule X of these 1920 Classification Rules laid down that a local Government might for good and sufficient reasons (1) censure, (2) reduce to a lower post, (3) withhold promotion from or (4) suspend from service, any officer of an all India service, provided that no head of the department appointed with the approval of the Governor General in Council would be reduced to a lower post without the sanction of the Governor General in Council.
Likewise r. XIII provided that, without prejudice to the provisions of any law for the time being in force, the local Government might for good and sufficient reasons (1) censure, (2) withhold promotion from, (3) reduce to a lower post, (4) suspend, (5) remove, or (6) dismiss any officer holding a post in a provincial or subordinate service or a special appointment.
Rule XIV laid down the procedure in cases of dismissal, removal or reduction in the following terms: " Rule XIV Without prejudice to the provisions of the Public Servants Inquiries Act, 1850, in all cases in which the dismissal, removal or reduction of any officer is ordered, the order shall, except when it is based on facts or conclusions established at a judicial trial, or when the officer concerned has absconded with the accusation hanging over him, be preceded by a properly recorded departmental enquiry.
At such an enquiry a definite charge in writing shall be framed in respect of each offence and explained to the accused, the evidence in support of it and any evidence which he may adduce in his defence shall be recorded in his presence and his defence shall be taken down in writing.
Each of the charges framed shall be discussed and a finding shall be recorded on each charge. " Thus we find that these 1920 Classification Rules 849 enumerated the different kind , of punishments that could be inflicted on the different classes of Government servants and elaborately prescribed the procedure which had to be followed before those punishments could be inflicted.
The Secretary of State in Council also promulgated, with effect from January 1, 1922, what are known and what will hereafter be referred to as the Fundamental Rules governing the conditions of service, leave, pay and pension of all Government servants whose pay was debitable to civil estimates in India and to any other class of Government servants in India to which the Secretary of State in Council might by general or special order declare them to be applicable.
Like r. 418 of the 1902 Rules, r. 52 of the Fundamental Rules provided that the pay and allowances of Government servants, who were dismissed or removed from service, would cease from the day of such dismissal or removal.
Thus the penal consequences of loss of pay and allowances continued to follow dismissal or removal.
On May 27, 1930, the Secretary of State for India in Council, in exercise of the powers conferred by section 96 B(2) of the Government of India Act, 1919, made the Civil Services (Classification, Control and Appeal) Rules, (hereinafter called the 1930 Classification Rules) which superseded the 1920 Classification Rules.
The 1930 Classification Rules, by r. 3, applied to every person in the whole time civil employment of a Government in India (other than a person so employed only occasionally or sub ject to discharge at less than one month 's notice) except certain classes of persons therein specified which included, inter alia, railway servants.
Under r. 14 the public services in India were classified under six heads, namely, (1) All India Services, (2) Central Services Class I, (3) Central Services Class II, (4)Provincial Services, (5) Specialist Services and (6) the Subordinate Services.
Under r. 15 read with sch.
I the following were the all India services: (I) Indian Civil Service, (2) Indian Police Service, (3) Indian Agricultural Service, (4) Indian Educational Service, 850 (5) Indian Forest Service, (6) Indian Forest Engineering Service, (7) Indian Medical Service, (8) Indian Service of Engineers, (9) Indian Veterinary Service and (10) Indian General Service.
The Indian Railway ,Service was not included in the list.
Rule 49, as originally framed, provided as follows: "The following penalties may, for good and sufficient reason and as hereinafter provided, be imposed upon members of the services comprised in any of the class (1) to (5) specified in rule 14, namely: (i) Censure, (ii) Withholding of increments or promotion, including stoppage at an efficiency bar, (iii) Reduction to a lower post or time scale, or to a lower stage in a time scale, (iv) Recovery from pay of the whole or part of any pecuniary loss caused to Government by negligence or breach of orders, (v) Suspension, (vi) Removal from the civil service of the Crown which does not disqualify from future employment, (vii) Dismissal from the Civil Service of the Crown, which, ordinarily disqualifies from future employment.
Explanation, The discharge (a) of a person appointed on probation, during the period of probation, (b) of a person appointed otherwise than under contract to hold a temporary appointment, on the expiration of the period of the appointment, (c) of a person engaged under contract, in accordance with the terms of his contract, does not amount to removal or dismissal within the meaning of this rule.
" The Explanation to r. 49 was amended on March 28, 1948, on February 28, 1950, and finally on January 28, 1955, when the Explanation was numbered as Explanation I and the words in cl.
(ii) of r. 49, namely, " including stoppage at an efficiency bar" were deleted and Explanation II was added.
So amended the Explanations read as follows: " Explanation I The termination of employment (a) of a person appointed on probation during or at the end of the period of probation, in accordance with the terms of the appointment and the rules governing the probationary service; or (b) of a temporary Government servant appointed 851 otherwise than under contract, in accordance with rule 5 of the Central Civil Services (Temporary Service) Rules, 1949; or (c) of a person engaged under a contract does not amount to removal or dismissal within the meaning of this rule or of rule 55.
Explanation II : Stopping a Government servant at an efficiency bar in the time scale of his pay on the ground of his unfitness to cross the bar does not amount to withholding of increments or promotion within the meaning of this rule.
" Like r. XIV of the 1920 Classification Rules, r. 55 of the 1930 Classification Rules, as originally framed in 1930, provided that, without prejudice to the Public Servants Enquiries Act, 1850, no order of dismissal, removal or reduction should be passed on a member of a service (other than an order passed on facts which had led to his conviction in a criminal court or by a court martial) unless he had been informed in writing of the grounds on which it was proposed to take action and had been afforded an adequate opportunity of defending himself Detailed provisions were made as to the grounds on which it was proposed to take action being reduced to the form of a definite charge or charges and for the communication thereof to the officer together with a statement of the allegations on which each charge was based and further provisions were made as to the procedure relating to the filing of the defence, the right to cross examine and to give evidence in person or to have such witnesses called as he might wish to examine in his defence.
Thus in the 1930 Classification Rules, as in the 1920 Classification Rules, were enumerated the different kinds of punishments which could be inflicted on the Government servants of the class to which those rules were applicable and out of those varieties of punishments mentioned in r. 49, three of them, namely, dismissal, removal and reduction in rank, were treated as major punish ments and some special procedural protection was prescribed in the interest of the Government servants.
At the date of the commencement of the Constitution the railway servants were governed by a separate set 108 852 of rules collected in the two volumes of the Indian Railway Establishment Code.
The petitioner is a railway servant and as such is governed by the rules of the Indian Railway Code.
Chapter XVII, which is in Volume I, regulated the conduct and discipline of the railway servants and the Railway Fundamental Rules collected in Volume 11 regulated their conditions of service, pay and deputation.
These are similar to and are in pari materia with the 1930 Classification Rules.
Rule 1702 of Chapter XVII prescribes eleven distinct penalties which may for good and sufficient reasons be imposed upon railway servants, namely, (1) censure, (2) withholding of the privilege of passes and/or privilege ticket order, (3) fines, including forfeiture or reduction of running allowances in the case of train and running staff, (4) withholding of increments or promotion including stoppage at an efficiency bar, (5) reduction to a lower post or time scale or to a lower stage in a time scale, (6) recovery from pay of the whole or part of any pecuniary loss caused to Government by negligence or breach of orders, (7) suspension, (8) removal from the service, (9) dismissal from the service, (10) withholding of the whole or part of Provident Fund and Gratuity Rules (Chapters XIII and XV) and (11) reducing or withholding the maximum pension admissible in accordance with the provisions of the rules governing the grant of pensions.
There is a Note below this rule to the effect that the discharge (a) of a person appointed on probation, during the period of probation, (b) of a person engaged under contract for a specific period, on the expiration of such period in accordance with the terms of his contract, (c) of a person appointed in a temporary capacity otherwise than under a contract, in accordance with the general conditions of service applicable to temporary employment and of some other persons enumerated therein, do not amount to removal or dismissal within the meaning of r. 1702.
Rule 1703 states that while dismissal from service disqualifies a railway servant from future employment, removal from service is not to be considered an absolute disqualification.
Rule 1704 specifies the , authority 853 competent to impose penalties.
Rule 1706 enumerates the causes for which a railway servant may be dismissed from service, namely, (1) conviction by a criminal court or by a court martial, (2) serious misconduct, (3) neglect of duty resulting in or likely to result in loss to Government or to a Railway administration, or danger to the lives of persons using the railway, or (4) insolvency or habitual indebtedness, and (5) obtaining employment by the concealment of his antecedents, which would have prevented his employment in railway service had they been known before his appointment to the authority appointing him.
Procedure for dismissal is set out in r. 1707.
"Removal from Service" is dealt with by r. 1708 and the procedure for removal is regulated by r. 1709.
"Suspension" is the subject matter of r. 1711 and the procedure for imposing the other penalties is contained in r. 1712.
"Reduction to lower post" is governed by r. 1714 which enjoins that when a railway servant is reduced for inefficiency or misconduct to a lower post in timescale or to a lower grade or to a lower stage in a time scale the authority ordering the reduction must state the period for which it will be effective and whether, on the expiry of that period, it will operate to postpone future increments or to affect the railway servant 's seniority and, if so, to what extent.
Rule 2310 provides that no pension is to be granted to an officer dismissed or removed for misconduct, insolvency or inefficiency although compassionate allowances may be granted in deserving cases.
Thus the Indian Railway Establishment Code also, like the 1930 Classification Rules, provides for different punishments and the procedure to be followed for inflicting the same and the three graver punishments of dismissal, removal and reduction are dealt with separately, and special provisions are made regulating the procedure which must be followed before those graver forms of punishments can be inflicted.
In exercise of the powers conferred by sub section
(2) of section 241 of the 1935 Act, the Governor General made certain rules called the Central Civil Service (Temporary Service) Rules, 1949 (hereinafter referred to as 854 the 1949 Temporary Service Rules).
These rules applied to all persons who held a civil post under the Government of India and who were under the rulemaking control of the Governor General, but who did not hold a lien on any post under the Government of India or any Provincial Government, but they did not apply to several categories of persons, including the railway servants.
By those rules some protection had been given even to persons who did not substantively hold permanent posts.
Thus under r. 6 the services of those persons whose services had ripened into what was therein defined as quasi permanent service could only be terminated in the same circumstances and in the same manner as those of Government servants in permanent service could be terminated or when the appointing authority certified that reduction had occurred in the number of posts available to Government servants not in temporary service.
Further protection was given by the two provisos to that rule.
By r. 5, however, the employment of persons holding temporary service could be terminated at any time by a month 's notice.
Just to complete the history of the service rules reference may be made to the all India Service (Discipline and Appeal) Rules, 1955 which were promulgated by the Central Government in September, 1955, after consultation with the State Governments.
For our present purpose it is enough to say that rr. 49 and 55 of the 1930 Classification Rules were substantially reproduced in rr. 3 and 5 respectively of these 1955 Rules except that the Explanation to r. 49 has been elaborated and the results of the judicial decisions have been incorporated therein.
In exercise of powers conferred by article 309 and article 148 (5) of the Constitution the President, on February 28, 1957, made the Central Civil Services (Classification, Control and Appeal) Rules 1957.
Rule 13 of these Rules corresponds to r. 49 of the 1930 Classification Rules, and r. 3 of the 1955 Rules and r. 15 substantially reproduces r. 55 of the 1930 Classification Rules and r. 5 of the 1955 Rules.
The scheme of the Service Rules may now be broadly summarised as follows: They enumerated different 855 punishments which, for good and sufficient reason, might be inflicted on Government servants and they prescribed special procedure which had to be followed before the three major punishments, of dismissal, removal or reduction in rank could be meted out to the Government servants.
Thus rr.
X and XIII of the 1920 Classification Rules prescribed several kinds of punishments to which the different classes of Government servants could be subjected and r. XIV of those rules laid down certain special procedure for cases in which the three major punishments of dismissal, removal or reduction of an officer were contemplated.
Likewise r. 49 of the 1930 Classification Rules reproduced with some additions the punishments prescribed in rr.
X and XIII and r. 55 of the 1930 Classification Rules provided similar procedural protection as had been prescribed by r. XIV of the 1920 Classification Rules before the punishments of dis missal, removal or reduction in rank could be inflicted.
The scheme of the rules applicable to the railway servants was similar in substance.
Thus rr. 1702 to 1714 and 2310 of the Indian Railway Code substantially reproduce the provisions of rr. 49 and 55 of the 1930 Classification Rules.
In short, the service rules, out of the several categories of punishments, selected the three graver punishments of dismissal, removal and reduction in rank and laid down special procedure for giving protection to the Government servants against the infliction of those three major punishments.
It will be recalled that the opening words of section 96 B (1) of the 1915 Act were " Subject to the provisions of this Act and the Rules made thereunder " and subs.
(4) confirmed the service rules that were then in force.
In spite of this it was held in R. Venkata Rao vs Secretary of State for India (1) with reference to the rules made under section 96 B of the 1915 Act that, while that section assured that the tenure of office, though at pleasure, would not be subject to capricious or arbitrary action but would be regulated by the rules, it gave no right to the appellant, enforceable by action, to hold his office in accordance with those rules.
It (I) (1936) L.R. 64 I.A. 55.
856 was held that section 96 B of the 1915 Act and the rules made thereunder only made provision for the redress of grievances by administrative process.
As if to reinforce the effect of that decision, the opening words quoted above were, in section 240(1) of the 1935 Act, replaced by the words " Except as expressly otherwise provided by this Act".
The position of the Government servant was, therefore, rather insecure, for his office being held during the pleasure of His Majesty under the 1915 Act as well as under the 1935 Act the rules could not over ride or derogate from the statute and the protection of the rules could not be enforced by action so as to nullify the statute itself.
The only protection that the Government servant had was that, by virtue of section 96 B(1), they could not be dismissed by an authority subordinate to that by which they were appointed.
The position, however, improved to some extent under the 1935 Act which, by section 240(3), gave a further protection in addition to that provided in section 240(2) which reproduced the protection of section 96 B(1) of the 1915 Act.
In other words the substance of the protection provided by r. 55 of the 1930 Classification Rules which required a special procedure to be followed before the three major punishments of dismissal, removal or reduction in rank out of the several punishments enumerated in r. 49 was bodily lifted, as it were, out of the Rules and embodied in the statute itself so as to give a statutory protection to the Government servants.
These statutory protections have now become constitutional protections as a result of the reproduction of the provisions of section 240 in articles 310 and 311 of our Constitution.
It follows from the above discussion that both at the date of the commencement of the 1935 Act and of our Constitution the words " dismissed ", " removed " and " reduced in rank ", as used in the service rules, were well understood as signifying or denoting the three major punishments which could be inflicted on Government servants.
The protection given by the rules to the Government servants against dismissal, removal or reduction in rank, which could not be en.
forced by action, was incorporated in sub sections
(1) and 857 (2) of section 240 to give them a statutory protection by indicating a procedure which had to be followed before the punishments of dismissal, removal or reduction in rank could be imposed on them and which could be enforced in law.
These protections have now been incorporated in article 311 of our Constitution.
The effect of section 240 of the 1935 Act reproduced in articles 310 and 311, as explained by this Court in section A. Venkataraman vs The Union of India (1), has been to impose a fetter on the right of the Government to inflict the several punishments therein mentioned.
Thus under article 311(1) the punishments of dismissal, or removal cannot be inflicted by an authority subordinate to that by which the servant was appointed and under article 311(2) the punishments of dismissal, removal and reduction in rank cannot be meted out to the Government servant without giving him a reason.
able opportunity to defend himself.
The principle embodied in article 310(1) that the Government servants hold office during the pleasure of the President or the Governor, as the case may be, is qualified by the provisions of article 311 which give protection to the Government servants.
The net result is that it is only in those cases where the Government intends to inflict those three forms of punishments that the Government servant must be given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him.
It follows, therefore, that if the termination of service if; sought to be brought about otherwise than by way of punishment, then the Government servant whose service is so terminated cannot claim the protection of article 311(2) and the decisions cited before us and referred to above, in so far as they lay down that principle, must be held to be rightly decided.
The foregoing conclusion, however, does not solve the entire problem, for it has yet to be ascertained as to when an order for the termination of service is inflicted as and by way of punishment and when it is not.
It has already been said that where a person is appointed substantively to a permanent post in (1) ; I50 858 Government service, he normally acquires a right to hold the post until under the rules, he attains the age of superannuation or is compulsorily retired and in the absence of a contract, express or implied, or a service rule, he cannot be turned out of his post unless the post itself is abolished or unless he is guilty of misconduct, negligence, inefficiency or other disqualifications and appropriate proceedings are taken under the service rules read with article 311(2).
Termination of service of such a servant so appointed must per se be a punishment, for it operates as a forfeiture of the servant 's rights and brings about a premature end of his employment.
Again where a person is appointed to a temporary post for a fixed term of say five years his service cannot, in the absence of a contract or a service rule permitting its premature termination be terminated before the expiry of that period unless he has been guilty of some misconduct, negligence, in.
efficiency or other disqualifications and appropriate proceedings are taken under the rules read with article 311(2).
The premature termination of the service of a servant so appointed will prima facie be a dismissal or removal from service by way of punishment and so within the purview of article 311(2).
Further, take the case of a person who having been appointed temporarily to a post has been in continuous service for more than three years or has been certified by the appoint ing authority as fit for employment in a quasipermanent capacity, such person, under r. 3 of the 1949 Temporary Service Rules, is to be deemed to be in quasi permanent service which, under r. 6 of those Rules, can be terminated (i) in the circumstances and in the manner in which the employment of a Government servant in a permanent service can be terminated or (ii) when the appointing authority certifies that a reduction has occurred in the number of posts available for Government servants not in permanent service.
Thus when the service of a Government servant holding a post temporarily ripens into a quasi permanent service as defined in the 1949 Temporary Service Rules, he acquires a right to the post although his appointment was initially temporary and, therefore, 859 the termination of his employment otherwise than in accordance with r. 6 of those Rules will deprive him of his right to that post which he acquired under the rules and will prima facie be a punishment and regarded as a dismissal or removal from service so as to,.
attract the application of article 311.
Except in the three cases just mentioned a Government servant has no right to his post and the termination of service of a Government servant does not, except in those cases, amount to a dismissal or removal by way of punishment.
Thus where a person is appointed to a permanent post in a Government service on probation, the termination of his service during or at the end of the period of probation will not ordinarily and by itself be a punishment, for the Government servant, so appointed, has no right to continue to hold such a post any more than the servant employed on probation by a private employer is entitled to do.
Such a termination does not operate as a forfeiture of any right of the servant to hold the post, for he has no such right and obviously cannot be a dismissal, removal or reduction in rank by way of punishment.
This aspect of the matter is recognised in the Explanation to r. 49 of the 1930 Classification Rules which correspond to the Note to r. 1702 of the Indian Railway Code and r. 3 of the 1955 Rules and r. 13 of the 1957 Rules, for all those rules expressly say that the termination of such an appointment does not amount to the punishment of dismissal or removal within the meaning of those rules.
Likewise if the servant is appointed to officiate in a permanent post or to hold a temporary post other than one for a fixed term, whether substantively or_on probation or on an officiating basis, under the general law, the implied term of his employment is that his service may be terminated on reasonable notice and the termination of the service of such a servant will not per se amount to dismissal or removal from service.
This principle also has been recognised by the Explanations to r. 49 of the 1930 Classification Rules correspoding to the Note to r. 1702 of the Indian Railway Code and r. 5 of the 1949 Rules and r. 3 of 109 860 the 1955 Rules and r. 13 of the 1957 Rules.
Shortly put, the principle is that when a servant has right to a post or to a rank either under the terms of the contract of employment, express or implied, or under ,,the rules governing the conditions of his service, the termination of the service of such a servant or his reduction to a lower post is by itself and prima facie a punishment, for it operates as a forfeiture of his right to hold that post or that rank and to get the emoluments and other benefits attached thereto.
But if the servant has no right to the post as where be is appointed to a post, permanent or temporary either on probation or on an officiating basis and whose temporary service has not ripened into a quasi permanent service as defined in the Temporary Service Rules, the termination of his employment does not deprive him of any right and cannot, therefore, by itself be a punishment.
One test for determining whether the termination of the service of a Government servant is by way of punishment is to ascertain whether the servant, but for such termination, had the right to hold the post.
If he had a right to the post as in the three cases hereinbefore mentioned, the termination of his service will by itself be a punishment and he will be entitled to the protection of article 311.
In other words and broadly speaking, article 311 (2), will apply to those cases where the Government servant, had he been employed by a private employer, will be entitled to maintain an action for wrongful dismissal, removal or reduction in rank.
To put it in another way, if the Government has, by contract, express or implied, or, under the rules, the right to terminate the employment at any time, then such termination in the manner provided by the contract or the rules is, prima facie and per se, not a punishment and does not attract the provisions of article 311.
It does not, however, follow that, except in the three cases mentioned above,, in all other cases, termination of service of a Government servant who has no right to his post, e.g., where he was appointed to a post, temporary or permanent, either on probation or on an officiating basis and had not acquired a quasi.
861 permanent status, the termination cannot, in any circumstance, be a, dismissal or removal from service by way of punishment.
Cases may arise where the Government may find a servant unsuitable for the post on acconut of misconduct, negligence, inefficiency or, other disqualification.
If such a servant was appointed to a post, permanent or temporary, either on probation or on an officiating basis, then the very transitory character of the employment implies that the employment was terminable at any time on reasonable notice given by the Government.
Again if the servant was appointed to a post, permanent or temporary, on the express condition or term that the employment would be terminable on say a month 's notice as in the case of Satish Chander Anand vs The Union of India (1), then the Government might at any time serve the requisite notice.
In both cases the Government may proceed to take action against the servant in exercise of its powers under the terms of the contract of employment, express or implied, or under the rules regulating the conditions of service, if any be applicable, and ordinarily in such a situation the Government will take this course.
But the Government may take the view that a simple termination of service is not enough and that the conduct of the servant has been such that he deserves a punishment entailing penal consequences.
In such a case the Government may choose to proceed against the servant on the basis of his misconduct, negligence, inefficiency or the like and inflict on him the punishment of dismissal, removal or reduction carrying with it the penal consequences.
In such a case the servant will be entitled to the protection of article 311(2).
The position may, therefore, be summed up as follows: Any and every termination of service is not a dismissal, removal or reduction in rank.
A termination of service brought about by the exercise of a con '.
tractual right is not per se dismissal or removal, as has been held by this Court in Satish Chander Anand vs The Union of India (supra).
Likewise the termination of service by compulsory retirement in terms of a (1) ; 862 specific rule regulating the conditions of service is not tantamount to the infliction of a punishment and does not attract article; 311(2), as has also been held by this Court in Shyam Lal vs The State of Uttar Pradesh (I).
,In either of the two abovementioned cases the termination of the service did not carry with it the penal consequences of loss of pay, or allowances under r. 52 of the Fundamental Rules.
It is true that the misconduct, negligence, inefficiency or other disqualification may be the motive or the inducing factor which influences the Government to take action under the terms of the contract of employment or the specific service rule, nevertheless, if a right exists, under the contract or the rules, to terminate the service the motive, operating on the mind of the Government is, as Chagla C.J. has said in Shrinivas Ganesh vs Union of India (supra), wholly irrelevant.
In short, if the termination of service is founded on the right flowing from contract or the service rules then, prima facie, the termination is not a punishment and carries with it no evil consequences and so article 3 1 1 is not attracted.
But even if the Government has, by contract or under the rules, the right to terminate the employment without going through the procedure prescribed for inflicting the punishment of dismissal or removal or reduction in rank, the Government may, nevertheless, choose to punish the servant and if the termination of service is sought to be founded on misconduct, negligence, inefficiency or other disqualification, then it is a punishment and the requirements of article 311 must be complied with.
As already stated if the servant has got a right to continue in the post, then, unless the contract of employment or the rules provide to the contrary, his services cannot be terminated otherwise than for misconduct, negligence, inefficiency or other good and sufficient cause.
A termination of the service of such a servant on such grounds must be a punishment and, therefore, a dismissal or removal within article 311, for it operates as a forfeiture of his right and he is visited with the evil consequences of loss of pay and allowances.
It puts an indelible stigma on the officer (1) [1955] I S.C.R. 26. 863 affecting his future career.
A reduction in rank likewise may be by way of punishment or it may be an innocuous thing. ' If the Government servant has a right to a particular rank, then the very reduction from that rank will operate as a penalty, for he will then lose the emoluments and privileges of that rank.
If, however, he has no right to the particular rank, his reduction from an officiating higher rank to his sub : stantive lower rank will not ordinarily be a punishment.
But the mere fact that the servant has no title to the post or the rank and the Government has, by contract, express or implied, or under the rules, the right to reduce him to a lower post does not mean that an order of reduction of a servant to a lower post or rank cannot in any circumstances be a Punishment.
The real test for determining whether the reduction in such cases is or is not by way of punishment is to find out if the order for the reduction also visits the servant with any penal consequences.
Thus if the order entails or provides for the forfeiture of his pay or allowances or the loss of his seniority in his substantive rank or, the stoppage or postponement of his future chances of promotion, then that circumstance may indicate that although in form the Government bad purported to exercise its right to terminate the employment or to reduce the servant to a lower rank under the terms of the contract of employment or under the rules, in truth and reality the Government has terminated the employment as and by way of penalty.
The use of the expression " terminate " or " discharge " is not con, elusive.
In spite of the use of such innocuous expressions, the court has to apply the two tests mentioned above, namely, (1) whether the servant had a right to the post or the rank or (2) whether he has been visited with evil consequences of the kind hereinbefore referred to ? If the case satisfies either of the two tests then it must be held that the servant has been punished and the termination of his service must be taken as a dismissal or removal from service or the reversion to his substantive rank must be regarded as a reduction in rank and if the requirements of the rules and Art.311, which give protection to Government servant 864 have not been complied with, the termination of the service or the reduction in rank must be held to be wrongful and in violation of the constitutional right of the servant.
Applying the principles discussed above it is quite clear that the petitioner before us was appointed to the higher post on an officiating basis, that is to say, he was appointed to officiate in that post which, according to Indian Railway Code, r. 2003 (19) corresponding to F.R. 9 (19) means, that he was appointed only to perform the duties of that post.
He had no right to continue in that post and under the general law the implied term of such appointment was that it was terminable at any time on reasonable notice by the Government and, therefore, his reduction did not operate as a forfeiture of any right and could not be described as reduction in rank by way of punishment.
Nor did this reduction under Note 1 to r. 1702 amount to his dismissal or removal.
Further it is quite clear from the orders passed by the General Manager that it did not entail the forfeiture of his chances of future promotion or affect his seniority in his substantive post.
In these circumstances there is no escape from the conclusion that the petitioner was not reduced in rank by way of punishment and, therefore, the provisions of article 311 (2) do not come into play at all.
In this view of the matter the petitioner cannot complain that the requirements of article 311 (2) were not complied with, for those requirements never applied to him.
The result, therefore, is that we uphold the decision of the Division Bench, although on somewhat different grounds.
This appeal must, therefore, be dismissed with costs.
With great respect I cannot agree that article 311 is not attracted in this case.
I agree with my Lord that article 311 applies to all classes of Government servants mentioned in it and that it makes no difference whether they are permanent, quasi permanent, officiating, temporary or on probation.
There may be good reasons for having all these shades of difference in the civil services and 865 among those who bold civil posts in the Union and the States but I am clear that the protections afforded by article 311 and other parts of the Constitution cannot be nullified or whittled down by clever phrasing and subtle ingenuity.
I am also clear that " Except as expressly provided by this Constitu tion, every person etc. . holds office during the pleasure of the President. . . " These words are absolute and leave no room for inference or deduction.
The " pleasure " can only be controlled by some express provision in the Constitution.
One of them is in article 310(2), another in article 31 1.
There are also others, such as articles 124(4) and 217(1)(b), but it is not necessary to enumerate them because I am only concerned with the broad principle here.
I also agree with my Lord that the words, dismissal, removal and reduction in rank, used in article 311 have special meaning.
I would not have said this had it not been for ambiguities that arise otherwise.
We were faced with that in Satish Chandra Anand vs Union of India (1), where we had to construe the words " dismissal " and " removal " and to determine whether they were merely tautologous or bad been introduced to emphasise a difference in meaning.
According to the dictionary, they mean the same thing or, at any rate, have subtle shades of distinction that are meaningless in the context in which they are used.
It was therefore necessary to look to the surrounding circumstances and determine whether they had acquired special technical significance at the date of the Constitution.
For that purpose, it was necessary to examine the history of the conditions of service under the Crown and look to the various statutes and rules then in force.
Except for that, I do not think it would have been proper to look at the rules for I cannot agree that the Constitution can be construed by reference to Acts of the Legislature and rules framed by some lesser authority and, in particular, to rules made and Acts passed after the Constitution.
(1) ; 866 I agree with my Lord that article 311 applies when penal consequences ensue from the dismissal or removal or reduction in rank, though I prefer to phrase this in wider terms and say that the Article is attracted whenever a " right " is infringed in the way in which I shall proceed to explain, for a right can be infringed in that sort of way even when no penal consequences follow.
I have used the word " right" but must hasten to explain that I use it in a special sense.
The " right " need not necessarily be justiciable nor need it necessarily amount to a contract but, broadly speaking, it must be the sort of "right " which, even when not enforceable in the courts, would form a good foundation for a "Petition of Right" in England.
It is as difficult to speak of "rights " (except those expressly conferred by the Constitution) when one holds at " pleasure " as to speak of "contracts.
" But they are convenient expressions to convey a particular thought, provided the limitations imposed by the context are not forgotten.
The word " contract" is used in article 310(2), but as these " contracts " are as much subject to "pleasure" as any other engagement of service (except as otherwise provided by the Constitution) they are not contracts in the usual sense of the term; nor are the conditions of service that apply to Government servants who do not serve under a special "contract".
A contract that can be determined at will despite an express condition to the contrary (and that is what article 310(2) contemplates) is not a contract as usually understood; nor are conditions of service that can be unilaterally varied without the consent of the other it contracting party ", and even behind his back.
But they are convenient terms to convey a thought and that is the sense in which " contract " is used in article 310(2) and the sense in which it has been used in some Privy Council rulings.
Now these " conditions of service " (and of course special " contracts " as well) confer " rights " and though the conditions can be varied unilaterally because of the " pleasure ", they cannot be ignored so 867 long as they are in force ; and if a dismissal, or removal, or reduction in rank infringes one of these rights ", then, in my judgment, article 311 is attracted.
I said in Satish Chandra Anand 's case (1), that the President and Government are as free to enter into special contracts as any other person provided they are consistent with the Constitution.
That also applies to conditions of service where there are no special " contracts ".
Anything else would be anomalous especially as anyone who serves under the Union or under a State serves at " pleasure ".
It is, therefore, possible for the President to make " contracts " that are terminable in a particular way or at a particular time or on the happening of a given event, provided, they do not offend the Constitution ; and when they are so determined, they can, broadly speaking, be called contractual terminations".
Two such cases have already been before this court.
In Satish Chandra Anand 's case (supra), it was a special " contract " terminable with a month 's notice on either side.
In Shyam Lal vs State of Uttar Pradesh (2) it was a condition of service that permitted compulsory retirement at a particular age.
Any other variation that does not offend the Constitution would be equally permissible.
These conditions confer a " right" on one side and correspondingly reduce the ambit of the " rights " conferred by the " contract " on the other.
Therefore, when Government exercises one of their " rights " there is no infringement of the other party 's " rights " because to that extent he has none.
It follows that when, in a given case, Government has an option to adopt one of two courses as, for example, to " dismiss " or " reduce " for misconduct and at the same time to terminate or alter the service under a term of the " contract " or because of a condition of the service, then, if it chooses to act under the right conferred by the " contract ", article 311 is not attracted even though misconduct is also present and even though that is the real reason for the action taken.
But, if Government chooses to adopt such a course, it must be careful to see that no evil consequences (1) ; (2) ; 110 868 will ensue over and beyond those that would ordinarily follow from a normal termination or alteration when there is no misconduct or blame on the part of the person affected.
But I repeat that any such condition must be, consistent with the Constitution and that no clever artifice or juggling with words can destroy or whittle down the guarantees of article 311, or any other Article for that matter.
To my mind, the test must always be whether evil consequences over and above those that would ensue from a " contractual termination " are likely to follow.
Were it otherwise, the blameless man against whom no fault can be found would be at a disadvantage.
It would be anomalous to bold that a man who has been guilty of misconduct should have greater protection than a blameless individual.
But any man who is visited with evil consequences that would not ensue in the case of another similarly placed, but free from blame, can, in my opinion, claim the protection of Art.311.
Now what happened in this case? The appellant was appointed to an All India service of the Union in August, 1924.
He has not been removed or dismissed from service, so he is still a member of an All India service.
On July 2, 1951, he was appointed Assistant Superintendent of Railway Telegraphs in class II service.
On August 19, 1953, he was relieved of this appointment and reverted to his substantive post in a class III appointment.
There can be no doubt that this was a reduction in rank.
The only question is whether it was so within the meaning of article 311 for, as I said earlier, these words have special meaning and do not apply in every case where a person is removed from a higher to a lower post.
The argument on behalf of the Union of India is that the higher post to which the appellant was appointed was temporary and that the appellant was only officiating in it; and rules were cited to show that Government had the right, under those rules, to shift the appellant from a higher to a lower post.
I need not consider this argument because we are all 869 agreed that article 311 applies even when the appointment is temporary, or officiating and, on the view I take, it does not matter whether Government had what I might call a " contractual right " to reduce because even if it had, it exercised it in a way that evoked evil consequences over and above those that would have ensued in a similar case where there was neither misconduct nor blame.
Our attention was directed to remarks in the appellant 's confidential reports and to various administrative notings on his files.
All these are, in my opinion, irrelevant.
We are only concerned with the operative order made by the proper authority competent to make it and with the consequences that ensue from that order.
In this case, the order of reversion dated August 19, 1953, is non committal.
It merely says that Shri Bishambar Nath Chopra is appointed to officiate in the appellant 's place and that on relief the appellant will revert to a lower rank.
That in itself might be harmless but the order does not stand alone and though the various administrative notings are irrelevant, the General Manager 's remarks on them, which form the real foundation of the order, cannot be ignored because the sting lies there and the evil con sequences of which I speak flow from them.
They are really part and parcel of the order and the two must be read together.
I say this because, quite obviously, the constitutional guarantees of article 311 cannot be evaded by passing a non committal order that is innocuous and at the same time making another order in secret that would have attracted article 311 had it been made openly.
I am not suggesting that that was done here or that the object was to evade article 311 by a secret manoeuvre.
All I am pointing out is that the consequences of article 311 cannot be evaded by cleverly splitting up an order into two parts.
Now what were those remarks? They were endorsed on the appellant 's file on June 11, 1953.
The General Manager said: " I am disappointed to read these reports.
He 870 should revert as a subordinate till he makes good the ,short comings noticed in this chance of.
his as an officer.
" What does that mean ? In plain English it means that ,he is not to be promoted to a like post until some competent officer chooses to think he has made good his previous short comings.
That is an evil consequence over and above that which would ensue in the case of what I may call again a " contractual termination " of the engagement in.
the higher post.
It was virtually admitted in the arguments before us that a man who is reduced in rank for misconduct for a particular period, say, one year or two years, is being " punished " and therefore article 311 will apply.
What difference is there if the reduction is for an unspecified period instead of for one that is certain ? In both cases, the possibility of promotion is stayed and whether that is a " punishment" or a "penalty" it is, in my judgment, an evil consequence over and above that which would ensue in a case where the man "reduced" is faultless.
In view of the almost frivolous resort that is sometimes made to article 311 1 want to guard against too wide an interpretation of what I have said.
I do not mean to imply that the reasons that lead to an order of reduction are relevant when there is a "contractual right" to act in a particular way; nor do I mean to imply that a mere recording of disappointment or dissatisfaction would attract article 311 even if it is followed by a contractual termination of the engagement.
All that is not of the essence.
The real test is whether additional evil consequences are implicit in the order.
It is here that I venture to dissent, with the very greatest respect, from my Lord 's construction of article 311.
If I read his judgment aright, I gather that his view, and that of my learned brothers, is that article 311 is confined to the penalties prescribed by the various rules and that one must look to all the relevant rules to determine whether the order is intended to operate as a penalty or not.
With deep respect, I do not think that the gist of the matter is either the form 871 of the action or the procedure followed; nor do I think it is relevant to determine what operated in the mind of a particular officer.
The real hurt does not lie in any of those things but in the consequences that follow and, in my judgment, the protections of article 311 are not against harsh words but against hard blows.
It is the effect of the order alone that matters ; and in my judgment, article 311 applies whenever any substantial evil follows over and above a purely "contractual one".
I do not think the article can be evaded by saying in a set of rules that a particular consequence is not a punishment or that a particular kind of action is not intended to operate as a penalty.
In my judg ment, it does not matter whether the evil consequences are one of the "penalties" prescribed by the rules or not.
The real test is, do they in fact ensue as a consequence of the order made ? I would allow the appeal with costs.
BY THE COURT.
In accordance with the opinion of the majority, the appeal is dismissed with costs.
Appeal dismissed.
| The appellant, Parshotam Lal Dhingra, was appointed to the Indian Railway Service as a Signaller (Telegraphist) in 1924 and was promoted to the post of Chief Controller in 1950, both the posts being in class III Service.
On July 2, 1951, he was appointed to officiate in class II Service as Asst.
Superintendent Railway Telegraphs.
On certain adverse remarks made against him in his Confidential Report for the year ending March 31, 1953, the General Manager on June 21. 1953, remarked as follows "I am disappointed to read these reports.
He should revert as a subordinate till he makes good the short coming noticed in this chance of his as an officer.
Portions underlined to be communicated to him.
" Thereupon the appellant made a representation, but on (I) ; 829 August 19, 1953, the General Manager issued a notice as follows: "Shri Bishambar Nath Chopra, Instructor Railway Training School, Saharnpur, is transferred to Headquarters office and appointed to officiate in Class II service as Assistant Signal and Tele Communication Engineer (Telegraphs) vice Shri Parshotam Lal Dhingra who on relief reverts to Class III T appointment.
" Against this order the appellant moved the High Court under article 226 of the Constitution.
The single judge who heard the matter held that the order was invalid as the provisions of article 311(2) of the Constitution had not admittedly been complied with.
The Division Bench on appeal, however, set aside the order of the Single judge and dismissed the appellant 's writ application.
The question for decision was whether the order of the General Manager amounted to a reduction in rank within the meaning of article 311(2) of the Constitution and the appellant was entitled to a reasonable opportunity of showing cause against the order.
Held (per Das, C. J., Venkatarama Aiyar, section K. Das, A. K. Sarkar jj., Vivian Bose J., dissenting) that the order of reversion made against the petitioner did not amount to a reduction in rank within the meaning of article 311(2) Of the Constitution and he was not entitled to the protection of that Article.
Like article 31O of the Constitution, which makes no distinction between persons holding permanent or temporary posts in the matter of their tenure being dependent on the pleasure of the President or the Governor, article 311 which is in the nature of a proviso to article 310, also makes no distinction between permanent and temporary posts and extends its protection equally to all Government servants holding permanent or temporary posts or officiating in any of them.
Laxminarayan Chiranjilal Bhargava vs The Union of India, I.L.R. ; Engineer in Chief, Army Head Quarters vs C. A. Gupta Ram, A.I.R. (1957) Punj.
42 ; State of Punjab vs section Sukhbans Singh, A.I.R. (1957) Punj.
191 and Chironjilal vs Union of India, A.I.R. (1957) Raj. 81, overruled.
But the protection of article 31I can be available only where dismissal, removal or reduction in rank is sought to be inflicted by way of punishment and not otherwise.
These were the major punishments evolved by the Service Rules and Rules of the Railway Code, and well understood as such, against which protection was sought to be provided by the Rules.
These protections were in due course incorporated in section 240 of the Government of India Act, 1935, and reproduced in article 311 of the Constitution, thus qualifying the principle embodied in article 310(1).
Venkataraman vs The Union of India, ; , referred to.
jayanti Prasad vs The State of Uttar Pradesh, A.I.R. (1951) All.
793 ; Shrinvas Ganesh vs Union of India, A.I.R. (1956) Bom.
455; Jatindra Nath Biszwas vs R. Gupta, A.I.R. (1954) 830 Cal. 383 ; Rabindra Nath Das vs The General Manager, Eastern Railway, ; jatindra Nath Mukherjee vs The Government of the Union of India, ; Ahmad Sheikh vs Ghulam Hassan, A.I.R. (1957) J. & K. 11; Ganesh Balkrishna Deshmukh vs The State of Madhya Bharat, A.I.R. (1956) M.B. 172; D. P. Ragunath vs The State of Coorg, A.I.R. (1957) Mys. 8; M. V. Vichoray vs The State of Madhya Pradesh, A.I.R. (1952) Nag.
288; Kanta Charan Srivastava vs Post Master General, A.I.R. (1955) Pat.
381 and Sebastian vs State, A.I.R. (1955) Tr.
CO. 12, approved.
One test for determining whether the termination of service was by way of punishment or otherwise is to ascertain whether under the Service Rules, but for such termination, the servant has the right to hold the post.
In the three cases of (1) substantive appointment to a permanent post, (2) temporary appointment for a fixed term and (3) a temporary appointment which has ripened into a quasi permanent status under the Temporary Service Rules, where such a right exists, the servant will be entitled to the protection of article 311.
Conversely, where no such right can exist, as in the case of a probationary or officiating appointment to a permanent or temporary post or where the service has not ripened into a quasi permanent status, and under the general law the service can be terminated on reasonable notice, the termination of service cannot amount to a punishment and attract the Article.
Broadly speaking, article 311(2) can apply to those cases where the Government servant, if in private employment, could maintain an action for wrongful dismissal, removal or reduction in rank.
So where the Government has, by contract, express or implied, or under the Rules, the right to terminate the service at any time, such termination, in the manner provided in the contract or under the Rules, cannot attract the provisions of article 311.
That does not, however, mean that the termination of service of a servant who has no right to the post can never be a dismissal or removal by way of punishment.
Although in such a termination the actual motive of the Government must be wholly irrelevant, where it expressly chooses to penalise the servant for misconduct, negligence, inefficiency or the like by inflicting on him the punishment of dismissal, removal or reduction, the requirements of article 311 must be complied with.
Satish Chander Anand vs The Union of India, (1953) S.C.R. 655 Shyam Lal vs The State of Uttar Pradesh, (1955) 1 S.C.R. 26 and Shrinivas Ganesh vs Union of India, L.R. 58 Bom.
673, referred to.
A reduction in rank must, similarly, be a punishment if it carries penal consequences with it and the two tests to be applied are (1) whether the servant has a right to the post or the rank or (2) whether evil consequences such as forfeiture of pay or allowances, loss of seniority in his substantive rank, stoppage or postponement of future chances of promotion, follow as a result of the order.
Where either of these tests applies, the reduction in 831 rank mast be one within the meaning of article 311 (2) of the Constitution and attract its protection.
In the instant case, the appellant was holding an officiating post and had no right under the rules of the Railway Code to continue in it.
Under the general law such appointment was terminable at, any time on reasonable notice, and the reduction could not operate ' as a forfeiture of any right.
The order of the General Manager visited him with no evil consequences.
Consequently, he was not reduced in rank by way of punishment.
Per Bose J. While there can be no doubt that article 311 applies to all classes of Government Servants whether permanent, quasipermanent, officiating, temporary or on probation and that the words dismissal, removal and reduction in rank used therein have a special meaning, that Article, properly construed, cannot be confined to the penalties prescribed by the Service Rules.
The gist of it is neither the form of the action nor the procedure nor what operated in the mind of the competent authority.
The real test is whether evil consequences over and above those that would ensue from a "contractual termination" are likely to ensue.
If they are, article 311 is attracted even though such evil consequences are not prescribed as "penalties" under the Rules.
Though the conditions of service prescribed by the Rules can be varied unilaterally in some cases because of the "pleasure" of the President, they cannot be ignored as long as they stand, and if they are infringed while in force, article 311 will be attracted in an appropriate case.
Satish Chandya Anand vs Union of India, ; and Shyam Lal vs State of Uttar Pradesh, ; , referred to.
Nor can the protections afforded by article 311 be nullified by a splitting up of the order.
In the present case the General Manager 's remarks in the confidential file, which formed a part of the operative order and was its real foundation, clearly indicated the mischief, that the appellant was not to be promoted to a like post until in the opinion of some competent Officer he had made good his previous short comings.
That was an evil consequence, over and above that which would follow from a mere "contractual termination" of his engagement in the higher post, and so was sufficient to attract the protection of article 311.
|
Summarize this legal judgement text concisely | Civil Appeal No. 79 of 1954.
938 Appeal from the judgment and order dated March 10, 1953, of the former Pepsu High Court in Letters Patent Appeal No. 493 of Samvat 2005 arising out of the judgment and order dated January 18, 1949, of the said High Court in E. As.
78 96 of Samvat 2001.
Naunit Lal, for the appellants.
Mohan Behari Lal, for the respondents.
November 11.
The following Judgment of the Court was delivered by KAPUR J. This is an appeal brought pursuant to a certificate under article 133(1)(c) of the Constitution from the judgment and order of the Division Bench of the erstwhile Pepsu High Court pronounced on March 10, 1953, modifying in appeal the order of the Liquidation Judge.
The facts are fully recited in the judgments of the courts below and comparatively a brief recital will be sufficient for the purpose of this judgment.
The appellant company was incorporated in 1934 under the Companies Act of the erstwhile Patiala State.
It carried on the business of commission agency for dealing in forward transactions in various kinds of grain and other commodities.
The respondent firm Ganpat Rai Hira Lal of Narnaul besides being a shareholder of the appellant company had dealings with it and entered into several forward transactions of sale and purchase of grain and other commodities.
The appellant, acting as a commission agent of the respondent and its other constituents entered into several transactions of forward delivery at Hapur with Firm Pyarelal Musaddi Lai, who were carrying on commission agency business at Hapur (and will hereinafter be termed the Hapur firm).
The total profits of the transactions entered into by the appellant with the Hapur firm was Rs. 48,250 on which the Hapur firm paid Rs. 14,730 8 as income tax.
The profits accruing on the transactions entered into on behalf of the respondent amounted to Rs. 29,275 2 6 on which the proportionate income tax claimed to have been paid was 939 Rs. 9,314 13 4.
On May 20, 1943, the appellant was ordered to be wound up and Udmi Ram Aggarwal, a pleader of the old Patiala High Court was appointed its liquidator.
The list of contributories was settled on October 21, 1943, and the respondent was placed on that list.
Though this matter was challenged in the appeal before the High Court it is no longer in controversy between the parties.
The Official Liquidator on March 18, 1944, applied under section 186 of the Patiala Companies Act, for a payment order for Rs. 12,204 12 3 against the respondent and in support of his claim he filed, with this application, copies of the respondent 's account in the books of the appellant showing how the amount claimed was due from the respondent.
This amount included the sum of Rs. 9,476 13 0, on account of income tax paid by the Hapur firm for and on behalf of the respondent on the profits of the forward transactions at Hapur and the commission of the Hapur firm.
The respondent raised several objections and pleaded inter alia that the Hapur firm with whom the appellant had entered into forward transactions had no right to demand any income tax from the appellant as no profit had accrued to the appellant which was acting as a commission agent and " was only entitled to the commission ".
It was also pleaded that as on the total number of transactions entered into between the respondent and the appellant there was a loss, the respondent was not liable to pay any income tax and that the respondent had no taxable income in the year under dispute or in any other year.
On May 23, 1944, the respondent filed an application in which it was submitted that the Hapur firm, who were agents of the appellant at Hapur, had retained Rs. 14,730 8 0, " which was in trust with them under section 42 of the Income Tax Act " and prayed that the Official Liquidator be directed to apply to the Income Tax authorities for a refund of the amount retained and paid by the Hapur firm, as no tax was really due on the transactions entered into by the appellant with the Hapur firm and none was payable by the respondent.
940 After evidence was led by both parties the payment order was made by the learned Liquidation Judge on January 18, 1949, for a sum of Rs. 8,191 0 9 which included a sum of Rs. 6,867 9 6 the proportionate amount of income tax due on the profits accruing on the respondent 's transactions.
Against this order the respondent took an appeal to the Division Bench and canvassed two points: (1) that the respondent could not be settled on the list of contributories and (2) that it was not liable for the amount retained for payment of income tax from out of profits on the transactions entered into on its behalf by the appellant with the Hapur firm and subsequently paid by the latter.
The court negatived the former contention and held that the respondent had rightly been settled on the list of contributories and upheld the latter contention and held, following a judgment of the Judicial Committee of the Ijlas khas of Patiala in Panna Lal Mohar Singh vs Aggarwal Chamber (1), that the Official Liquidator of the appellant was riot entitled to claim the amount of income tax paid by the Hapur firm.
The Judicial Committee ljlas khas had held : " Before the liability of the contributory can be fixed it must be shown that his income was such on which income was assessable. .
It is not denied that the contributory was carrying on other transactions in India a, , it stood before partition through other person.
It was therefore his entire income that was to be taken into consideration to assess his liability to income tax." The appellant then applied for a certificate to appeal under article 133(1)(c) which was granted in the following terms: " The first question is whether a decision given by one Judge of the Judicial Committee can be regarded in law as a decision of the Committee.
The second is whether the principle laid down by the learned Judge of the Judicial Committee that the Aggarwal Chamber of Commerce was not entitled to recover from its clients the proportionate share of the income tax paid by it unless it was shown that the total amount (1) C. A. 60 Of 2005 section 941 of income of the clients was assessable to income tax, was sound.
Accordingly we allow the petition and grant the certificate.
" The first point has not been canvassed before us and in the view that we have taken it would be unnecessary to go into that matter.
The sole point for decision is whether the respondent is liable for income tax, which has been paid by the Hapur firm on the transactions, which were entered into by the appellant with the Hapur firm for and on behalf of the respondent? There is no finding by the High Court that the respondent had entered into any forward transactions in British India or at Hapur with any firm other than the Hapur firm and this matter was not agitated before us, nor is there any finding as to the total world income of the respondent and there is no material on the record from which it could be determined.
The appellant is a non resident company and the respondent is a non resident, residing at Narnaul in what was the Indian State of Patiala.
The appellant entered into forward transactions on behalf of the respondent at Hapur in which there was a considerable amount of profit.
The High Court has found that the Hapur firm paid Rs. 6,867 9 0 on account of income tax which was payable on the profits made on the transactions entered into with the Hapur firm for and on behalf of the respondent.
The respondent challenged its liability to pay income tax on the ground that it was liable: " only on his total earnings during the year under assessment and since, as is clear even from the books of the respondent, he had suffered heavy losses in his business at Narnaul, his total income was not assessable to any income tax.
" The learned Liquidation Judge held the respondent liable for the amount of the income tax by applying section 69 of the Contract Act.
The Division Bench on appeal disallowed this item on the ground that it had not been shown that the " total earnings" of the respondent were taxable under the Act.
Neither of the 942 courts below have discussed the relevant provisions of the Act, not even section 42 which was mentioned by the respondent in his application of May 23, 1944, nor have they given a finding as to the jural relationship of the Hapur firm with the respondent.
The agency of the Hapur firm was not seriously disputed before us nor repudiated.
The case seems to have proceeded on the basis of this agency in the courts below.
The Hapur firm was employed by the appellant for forward transaction business of the respondent who has accepted the transactions entered into as also the amount of the profit accruing on those transactions and is only disputing the amount of income tax deducted, retained and paid on those profits.
Under the law the Hapur firm would be an agent of the respondent for that part of the business of the agency as was entrusted to it and " privity of contract arises between the principal and the substitute ".
Section 194 of the Contract Act; De Bussche vs Alt (1).
It is now necessary to refer to the relevant provisions of the Income tax Act in force in the assessment year 1942 43 (hereinafter termed the Act).
It is not clear as to what was the signification of the words " total earnings " used by the High Court because it is not used in the Income Tax Act which uses two expressions ; " total income " and " total world income " in sub section 15 of section 2 of the Act.
The definition of " total income " comprises two things (i) the total amount of income, profits and gains referred to in section 4(1) and (ii) computation in the manner laid down in the Income Tax Act.
" Total world income " includes all income, profits and gains wherever accruing or arising except income to which under the provisions of section 4(3) the Act does not apply.
Thus in the case of the respondent who is a " nonresident" "total income" would comprise income, profits and gains received or accrued in British India or deemed to be received or to accrue in British India.
Section 17 of the Act which was relied upon by the respondent 's counsel occurs in Chapter III dealing with (1)(1878) , 311, 943 Taxable income ".
It provides for the determination of tax payable in certain special cases of which the, case of a non resident is one.
It provided: " Where a person is not resident in British India and is a British subject as defined in section 27 of the British Nationality and Status of Aliens Act, 1914 (4 & 5 Geo.
V. Ch.
17) or a subject of a State in India or Burma, or a native of a Tribal Area, the tax, including super tax, payable by him or on his behalf on his total income shall be an amount bearing to the total amount of the tax including super tax which would have been payable on his total world income had it been his total income the same proportion as his total income bears to his total world income. . .
Section 17 does not deal with or affect the rights and liabilities of persons required under the Act to make deductions of income tax from sums payable to non residents or the consequences of failure to make such deductions.
The very next chapter (Chapter IV) deals with deductions which the Act requires to be made in regard to different heads of income.
Section 18 provides for deduction at the source.
Sub section
3 A of this section was as under: S.18(3A) " Any person responsible for paying to a person not resident in British India any interest not being " interest on securities", or any other sum chargeable under the provisions of this Act, shall, at the time of payment, unless he is himself liable to pay income tax thereon as an agent, deduct income tax at the maximum rate.
" The proviso to this sub section made provision for payment of monies without deduction if there was a certificate of the Income Tax Officer to that effect.
Under section 18(7) of the Act a person making the deduction was required to pay the amounts so deducted to the Income Tax authorities.
In default of such deduction such person became an assessee in respect of the tax.
Chapter V of the Act deals with " Liability in Special Cases" which includes agents.
Section 40(2) 120 944 dealing with the case of trustees or agents of a person non resident in British India; provided S.40 (2) "Where the trustee or agent of any person not resident in British India and not being a minor, lunatic or idiot (such person being herein after in this such section referred to as a beneficiary).
is entitled to receive on behalf of such beneficiary, or is in receipt on behalf of such beneficiary of, any income, profits or gains chargeable under this Act, the tax, if not levied on the beneficiary direct, may be levied upon and recovered from such trustee or agent, as the case may be, in like manner and to the same amount as it would be leviable upon and recoverable from the beneficiary if in direct receipt of such income, profits or gains, and all the provisions of this Act shall apply accordingly.
" Thus under this section which is essentially a machinery and an enabling section the tax to be realised from a non resident could be levied upon the agent in the same manner as it could have been leviable upon and recoverable from a non resident.
Section 42(1) of the Act provided: " All income, profits or gains accruing or arising, whether directly or indirectly, through or from any business connection in British India, or through or from any property in British India, or through or from any asset or source of income in British India, or through or from any money lent at interest and brought into British India in cash or in kind, shall be deemed to be income accruing or arising within British India, and where the person entitled to the income, profits or gains is not resident in British India, shall be chargeable to income tax either in his name or in the name of his agent, and in the latter case such agent shall be deemed to be, for all the purposes of this Act, the assessee in respect of such income." In proviso 2 to this sub section any such agent who apprehended that he might be taxed as such agent could retain out of any money payable to such non.
resident a sum equal to the estimated liability under the sub ,section and in the event of any disagreement between the non resident and such agent a certificate 945 could be obtained from the Income Tax Officer as to the amount to be retained which shows that the Act had a provision for the determination of the question.
As was observed by Viscount Cave in Williams vs Singer (1): "The fact is that, if the Income Tax Acts are examined, it will be found that the person charged with tax is neither the trustee nor the beneficiary as such, but the person in actual receipt and control of the income which it is sought to reach.
The object of the Acts is to secure for the State a proportion of the profits chargeable, and this end is attained (speaking generally) by the simple and effective expedient of taxing the profits where they are found.
" See also Archer Shee vs Baker (2 ), Executors of Estate of Dubash vs Commissioner of Income Tax (3).
This has rightly been stated to be the underlying principle of the deduction under sections 40, 41 and 42.
Section 48 of the Act deals with refunds and if the respondent thought that it was not liable to the payment of any tax it could apply to the Income Tax Officer for refund.
Thus the Hapur firm being an agent could be held liable under sections 40(2) and 42(1) of the Act as an assessee for income tax on the profits made on the respondent 's transactions at Hapur and was therefore entitled under the proviso to section 42(1) to retain the estimated amount of income tax payable on the amount of the respondent 's profits which in this case was deducted, retained and actually paid.
This fact has not been challenged before us.
The ground on which this liability is attacked is that the total world income of the respondent was not taxable and therefore, on the profits made on the Hapur transactions, the British Indian Tax authorities could not levy any tax.
This contention disregards the provisions of and liability arising under sections 40(2) and 42(1) and the proviso thereto.
It also is contrary to the principle of taxing statutes that the profits are " taxed where they are found.
" In this case they were in the hands of the Hapur firm (I) , 411 (H.L.).
(2) (1927) i i T.C. 749, 770 (H.L.).
(3) , 189 (S.C.).
946 which was in receipt and control of the income.
The agent at Hapur, having lawfully and properly paid the tax under the Act that amount has been rightly deducted from the profits accruing on the Hapur transactions.
The Judgment of the Judicial Committee of the ljlas i khas on which the High Court has based its decision suffers from the infirmity that it ignores both the provisions of and principle underlying sections 40(2) and 42(1) of the Act and the proviso thereto relating to the liability of an agent under the Act and the law of Agency relating to employing of sub agents by agents.
If the Hapur firm rightly paid the tax on the profits, the respondent cannot be allowed to challenge the amount on the ground that his total world income was not taxable and he was entitled to his profits without deductions.
That is a question which ha,,; to be agitated by the non resident assessee at the time of his assessment.
Those persons who are bound under the Act to make deduction at the time of payment of any income, profits or gains are not concerned with the ultimate result of the assessment.
The scheme of the Act is that deductions are required to be made out of " salaries ", " interest on securities " and other heads of " income profits and gains " and adjustments are made finally at the time of assessment.
Whether in the ultimate result the amount of tax deducted or any lesser or bigger amount would be payable as income tax in accordance with the law in force would not affect the rights, liabilities and powers of a person under section 18 or of the agent under sections 40(2) and 42(1).
As to what would be the effect and result of the application of section 17 if and when any appropriate prceedings are taken is not a matter which arises in this appeal between the appellant and the respondent nor can that matter be adjudicated upon in these proceedings.
That is a matter which would be entirely between the respondent and the Income Tax authorities seized of the assessment.
Our attention was drawn to two cases (1) Commissioner of Income tax vs Currimbhoy Ebrahim & Sons(1) (1) 947 In that case the assessee company had been treated as an agent of the Nizam of Hyderabad who had lent to the assessee company a sum of Rs. 50 lakhs.
The assessee company had paid in the assessment year a, sum of Rs. 3 lakhs on account of interest and it was held that the interest earned by the Nizam did not accrue or arise to the Nizam through or from any business connection with the assessee company in British India or from any property within British India and there fore section 42 was not applicable.
No question of "business connection" was raised in the court below and the argument there proceeded on the basis that the respondent was not liable for this amount on account of income tax because the " entire income " was not assessable to income tax.
The argument of isolated transactions based on the Anglo French Textile Co. Ltd. vs Commissioner of Income tax, Madras(1) is not available to the respondent nor was the foundation for any such argument laid in the courts below or raised in the statement of the case filed by the respondent in this court.
Another case on which reliance was placed is Greenwood vs F. L. Smidth and Company(2 ).
That was a case of a Danish firm resident in Copenhagan.
It manufactured and dealt with cement making machinery which it exported to other countries.
It had an office in London in charge of a qualified engineer who received enquiries for machinery such as the firm could supply, sent to Denmark particulars of the work which the machinery was required to do and when the machinery was supplied he was avilable to give English purchaser the benefit of his experience in erecting it.
The contracts between the firm and their customers were made in Copenhagan and the goods were shipped F. 0.
B. Copenhagan.
It was held in that case that the firm did not exercise a trade within the United Kingdom within the meaning of Sch.
D of section 2 of the Income Tax Act 1853 and was therefore not assessable to income tax.
This decision is not relevant to the case now before us as the facts were different and the dicision was under a different statute.
(1) ; (2) 948 In our opinion the Judicial Committee of Ijlas i khas was in error in holding that before fixing the liability of a contributory to tax paid by an agent in British India for and on behalf of the non resident contributory, his liability to pay tax on his "entire income " really total world income had to be established.
Therefore the finding of the High Court that the Liquidator cannot claim from the respondent the amount of tax paid by the Hapur firm on transactions entered into by the appellant for and on behalf of the respondent unless it was shown that his total world income was taxable is unsustainable.
As between the parties the tax paid by the agent had to be taken into account irrespective of the ultimate result of the assessment on the non resident.
In the result this appeal is allowed and the judgment and order of the Division Bench of the Pepsu High Court set aside and the order of the learned Liquidation Judge restored but in the circumstances of this case the parties will bear their own costs in this court and in the courts below.
Appeal allowed.
| The appellant company and the respondent firm were carrying on business in the erstwhile patiala State, and were non residents in British India.
The appellant, acting as commission agent for the respondent, entered into several forward transactions with a Hapur firm of commission agents.
The profits accruing on these transactions amounted to Rs. 29,275 2 6 on which the Hapur firm paid a sum Of Rs. 9,314 13 4 as income.
In 1943 the appellant was ordered to be wound up and the respondent was placed on the list of contributories.
The Official Liquidator applied to the Liquidation judge for a payment order for a sum which included the amount of income tax paid by the Hapur firm for and on behalf of the respondent.
The main contention raised on behalf of the respondent was that it had no taxable income in the year in dispute and was not liable to pay any income tax and that, consequently, it was not liable for the income tax paid by the Hapur firm.
Held, that the Liquidator was entitled to claim from the respondent the amount of income tax paid by the Hapur firm irrespective of the consideration whether its world income was taxable or not.
Under the law the Hapur firm was an agent of the respondent for the business of the agency which was entrusted to it, and was as such liable under ss 40(2) and 42(1) Income tax Act, as an assessee for income tax on the profits made on the respondent 's transactions at Hapur and was entitled to retain the estimated amount of income tax payable on the amount of the respondent 's profits.
As the Hapur firm had rightly paid the tax on the profits, the respondent could not be allowed to challenge the liability on the ground that his total world income was not taxable and he was entitled to his profits without deductions.
That was a question which must be agitated by the non resident assessee at the time of his assessment.
As between the parties the tax paid by the agent had to be taken into account irrespective of the result of the assessment on the non resident.
|
Summarize this legal judgement text concisely | ON: Criminal Appeal No. 114 of 1954.
Appeal from the judgment and order dated July 21, 1954, of the Calcutta High Court in Reference No. 6 of 1954, under Section 307 of the Criminal Procedure Code made by the Additional Sessions Judge, 24 Parganas at Alipore on the June 7, 1954, in Sessions Trial No. 2 of May, 1954.
section C. Isaacs, and section N. Mukherjee, for the appellants.
A. C. Mitra, D. N. Mukherjee and P. K. Bose, for the respondent.
November 19.
The following Judgment of the Court was delivered by IMAM J.
In this appeal by special leave the substantial question for consideration is whether the reference made to the Calcutta High Court by the 962 Additional Sessions Judge of Alipur under section 307 of the Code of Criminal Procedure (hereinafter referred to as the Code) was competent and, if not, whether the High Court acted with jurisdiction in convicting or acquitting any of the accused who were tried by the Additional sessions Judge and a jury.
There were eight accused on trial in the Court of Session all of whom were charged under sections 147 and 304/149 of the Indian Penal Code.
Four of them, namely, accused No. 1, Sashi Mohan Debnath, accused No. 2, Rajendra Debnath, accused No. 3, Manindra Debnath and accused No. 6, Rohini Kumar Debnath were further charged under section 201, Indian Penal Code.
The trial Judge delivered a charge to the jury which was favourable to the accused.
The jury returned a unanimous verdict of not guilty under section 304/149 of the Indian Penal Code, which the learned Judge accepted.
He, accordingly, acquitted all the accused charged with this offence.
The jury, however, with respect to charges under sections 147 and 201 of the Indian Penal Code returned a unanimous verdict of guilty against the accused charged with these offences.
The trial Judge disagreed with this verdict and made a reference under section 307 of the Code to the High Court, being of the opinion that the accused were not guilty of these offences.
The High Court accepted the reference in part and in agreement with the jury 's verdict of guilty under sections 147 and 201 of the Indian Penal Code convicted the accused Sashi Mohan Debnath, Rajendra Debnath, Sudbanshu Kumar Debnath, Dinesh Chandra Debnath and Bonomali Das under section 147 of the Indian Penal Code and sentenced each of them to undergo one year 's rigorous imprisonment and the accused Sashi Mohan Debnath and Rajendra Debnath under section 201 of the Indian Penal Code and sentenced each of them to undergo rigorous imprisonment for three years.
The sentences with respect to the accused Sashi Mohan Debnath and Rajendra Debnath were ordered to run concurrently.
The High Court did not accept the verdict of the jury with respect to the accused Manindra Debnath and Gouranga Debnath under section 147 of the Indian Penal 963 Code and under section 201 against Manindra Debnath and Rohini Kumar Debnath and acquitted them.
The present appeal is by the accused Sashi Mohan, Debnath, Rajendra Debnath, Sudhanshu Kumar Debnath and Bonomali Das.
When the appeal came on for hearing on September 12, 1956, it was found necessary by this Court to have the appeal heard in the presence of the accused No. 3, Manindra Debnath, accused No. 6, Rohini Kumar Debnath and accused No. 8, Gouranga Debnath.
The reason for issuing notices upon them has been fully stated in the order passed that day.
Accordingly, notices were issued to these accused and they were served upon Manindra Debnath and Gouranga Debnath.
So far as Rohini Kumar Debnath was concerned, it was reported that he could not be traced and no one could say where he had gone after selling all his properties and that no relative of his could be found.
None of these three accused have entered appearances in this Court.
It is unnecessary to refer either to the facts concerning the occurrence or the case of the prosecution and the defence, as the only question for decision before us is a question of law.
Indeed, no submissions were made either on behalf of the appellants or on behalf of the respondent on the facts of the present case.
In order to determine whether the reference made under section 307 of the Code by the Additional Sessions Judge of Alipur was competent, it is necessary to examine the provisions of that section and consider some of the decisions of the High Courts in India in this connection.
But before we do this, some general considerations concerning trials by jury and interference with their verdict by the High Court may be stated.
The scheme of the Code clearly suggests that at a trial in the Court of Sessions the trial can be either with the aid of assessors or by a jury depending upon whether the offence for which the accused was,, being tried was triable with the aid of assessors or by a jury.
The Code even contemplates a trial of the accused for certain offences which were triable with the aid of assessors and other offences which were triable 964 by a jury at the same trial, in which case the jurors acted as assessors for the offences which were triable with the aid of assessors.
Although a trial by a jury was provided for by the Code, it did not compel the judge to accept the verdict.
It permitted him to disagree with it but did not permit him to record a judgment unlike the case of a trial with the aid of assessors where the Judge could disagree with their opinion and record a judgment.
The purpose of the Code was to regard the jury 's verdict as of sufficient importance to prevent the Judge in the Court of Session from recording a judgment if the Judge disagreed with it.
It was considered that if the verdict of the jury was to be displaced, it must be displaced, if at all, by the High Court which must give due weight to the opinion of the jury and the Judge and after considering the entire evidence.
In other words, the High Court could do what the jury did after giving due weight to the opinion of the Judge and considering the entire evidence.
Ordinarily, a jury 's verdict on questions of fact would not easily be disregarded by the High Court because the basic principle of a trial by jury is that the jury are masters of fact.
The verdict of the jury would not be reversed by the High Court merely because it disagreed with it.
If the High Court, after considering the entire evidence, came to the conclusion that no reasonable body of men could have reached the conclusion arrived at by the jury, then the High Court would be entitled to disregard the verdict.
At the time that the reference was made under section 307 by the Additional Sessions Judge, the provisions of section 307 were in the following terms: " 307.
(1) If in any such case the Judge disagrees ,with the verdict of the jurors, or of a majority of the jurors, on all or any of the charges on which (any accused person) has been tried, and is clearly of the opinion that it is necessary for the ends of justice to submit the case (in respect of such accused person) to the High Court, he shall submit the case accordingly, recording the grounds of his opinion, and, when the verdict is one of acquittal, stating the offence which he considers to have been committed (and in such 965 case, if the accused is further charged under the provisions of section 310, shall proceed to try him on such charge as if such verdict had been one of conviction).
(2) Whenever the Judge submits a case under this section, he shall not record judgment of acquittal or of conviction on any of the charges on which (such accused) has been tried, but he may either remand (such accused) to custody or admit him to bail.
(3)In dealing with the case so submitted the High Court may exercise any of the powers which it may exercise on an appeal, and subject thereto it shall.
, after considering the entire evidence and after giving due weight to the opinions of the Sessions Judge and the jury, acquit or convict (such accused) of any offence of which the jury could have convicted him upon the charge framed and placed before it; and, if it convicts him, may pass such sentence as might have been passed by the Court of Sessions ".
In construing section 307 we must consider first the words "if in any such case" at the very commencement of the section.
These words refer to the case mentioned in section 306(1).
That case is the case which is tried before the Court of Session by a jury and therefore obviously the whole case and not a part of it.
When the jury have given their verdict in the case, then the Judge has to consider whether he agrees with it and, if he does, then he must give judgment accordingly.
If, however, he disagrees and is clearly of the opinion that it was necessary for the ends of justice to submit the case to the High Court he must submit the case accordingly.
In our opinion, the case to be submitted to the High Court is the whole case against the accused and not a part of it.
This appears to us to be clearly the effect of the provisions of sections 306 and 307 when read together.
Section 307 (2) specifically prohibits the Judge, when be considers it necessary to submit the case by way of reference to the High Court, from recording any judgment of acquittal or of conviction on any of the charges on which the accused had been tried.
This prohibition is mandatory and a Judge, who records a judgment of acquittal or of conviction on an of the charges on which the accused had been 966 tried, contravenes the provisions of section 307(2) and the judgment so recorded is illegal.
We cannot accept the submission of the learned Counsel for the appellants that the action of the Judge in recording a judgment is a mere irregularity.
Section 307(3) provides for the powers which the High Court may exercise in dealing with the case so submitted and it enjoins that although the High Court may exercise any of the powers conferred on it, when hearing an appeal, it should consider the entire evidence and after giving due weight to the opinion of the Sessions Judge and the jury, either convict or acquit the accused of any offence for which he was tried, and if it convicted him of an offence for which the jury should have convicted him, pass such sentence as might have been passed by the Court of Session.
But before the High Court could exercise the powers conferred on it under section 307(3) it was necessary that the reference under section 307 should have been according to law.
This was, in our opinion, a condition precedent to the exercise of such power by the High Court.
The words "with the case so submitted" make it quite clear that a reference under section 307(1) must be of the whole case against the accused and not a part of it.
In order that the High Court may be in a position to properly exercise its powers under section 307(3), it was necessary for it to consider the entire evidence in the case, which obviously it could not do if the trial judge had already recorded a judgment.
By recording a judgment the trial Judge prevents the High Court from properly exercising its powers under section 307(3) as the reference made thereafter is not of the entire case with respect to the accused.
Indeed, in the present case the Judge having accepted the jury 's verdict and having recorded a judgment of acquittal under section 304/149, Indian Penal Code, in the case of each accused, took it out of the hands of the High Court to deal with the case of each accused with re ference to the other charges framed against him.
The effect of the amendments to section 307 of the Code made in 1923 and 1955 lend further support to the view that it is the whole case which must be referred and not a part of it, The provisions of section 307(1) before 967 the amendment of 1923 were so expressed as to make it possible to say that it was necessary for the trial Judge to refer the whole case concerning every accused on all the charges framed against them irrespective of the fact that the Judge was in agreement with the jury with respect to a particular accused on all the charges framed against him.
The amendment of 1923 introduced the words " any accused person " in place of the words " the accused " and " in respect of such accused person " in a. 307(1).
The amend ment, accordingly, enabled the Judge to accept the verdict of the jury on all the charges framed against any accused person and to record a judgment with reference to him while referring the case of another accused to the High Court where he disagreed with the verdict on any of the charges framed against him.
The amendment was made to remove the necessity of referring the whole case, including the case of an accused concerning whom the Judge was in agreement with the verdict on all the charges framed against him.
The amendment would have been unnecessary if section 307(1) contemplated a reference of only a part of the case and not the whole of it.
The amendment of 1955 completely recast section 282 of the Code.
This amendment provided for the continuance of the trial with the reduced number of jurors, in the circumstances mentioned in the section, instead of the trial re commencing with a newly selected jury.
Consequently, in section 307 sub section (1)A was introduced which directed that where the jurors were equally divided on all or any of the charges on which any accused person had been tried, the Judge must submit the case in respect of such accused to the High Court recording his opinion on such charge or charges and the grounds of his opinion.
This direction, in our opinion, makes it clear that the whole case had to be submitted to the High Court.
In our opinion, the amendments of 1923 and 1955 to section 307 clearly indicate that Parliament itself thought that it was the whole case and not a part of it which was to be submitted to the High Court.
Indeed, as already stated, section 307, even before its amend 123 968 ment in 1955, when properly construed, leads to no other reasonable conclusion.
It is now necessary to consider the cases decided by some of the High Courts in India in this connection.
The Patna High Court in Hazari Lal ' s case (1) expressed the opinion that having regard to the provisions of section 307 a reference made thereunder must be of the whole case against the accused and not a part of it.
If only a part of it is referred then the reference made under section 307 is incompetent.
That High Court reaffirmed the view taken in Hazari Lal 's case in the case of Ramjanam Tewari(2).
This was the view also taken by the three Judges of the Calcutta High Court in the case of The Emperor vs Bishnu Chandra Das(3), two of whom, however, in rejecting the reference directed that the accused be acquitted.
The third Judge, Mr. Justice McNair, however, confined himself to the observation that the Sessions Judge had disabled himself from making a valid reference under section 307 of the Code by accepting the verdict of the jury against the accused on some of the charges.
In our opinion, the view taken by the Patna High Court was correct and in accordance with the provisions of section 307.
It was, however, submitted on behalf of the appellants that in view of certain decisions of the Calcutta High Court and the Allahabad High Court, when a reference had in fact been made, it was open to the High Court to deal with it and record a judgment.
Reference was made to the case of King Emperor vs Ananda Charan Ray (4).
It is true that in this case the learned Judges did consider the evidence in order to ascertain whether the verdict of the jury was one which a body of reasonable men could have arrived at.
The learned Judges, however, observed before considering the evidence in the case, " If the learned Officiating Additional Sessions Judge considered that the interests of justice required a reference to this Court, I should say that he would have been better advised if he had referred the whole case leaving it to this Court to consider the whole of the evidence that (1) (2) (3) (4) , 437.
969 was placed before the jury.
As it is, this Court is precluded from considering whether the accused mis appropriated or had a hand in misappropriating any portion of these sums of Rs. 200 and Rs. 458.
" After referring to the evidence, the learned Judges expressed the following opinion: " The real truth of the matter is that, if the learned Judge considered that this was a case that ought to be referred under section 307, Cr. P. C., he never ought to have sent up the case in this way by tying the hands of the Crown or of the Court or even the defence by agreeing with the verdict of the jury on the charges framed under sees.
406 and 477A of the Indian penal Code.
As it is, he had precluded the Court from questioning or going behind that verdict and thus from considering the large body of evidence that was placed before the jury.
In the result, we find it impossible in this case to accept the reference made by the learned Officiating Additional Sessions Judge and we think, having regard to the fact that the accused has been acquitted on the charges framed under secs.
406 and 477A, Indian Penal Code, we ought to accept the verdict of not guilty on the charges framed under sec.
467 read with see.
471 and sec.
474 1. P. C., and direct that the accused be acquitted.
" This decision, in substance, takes the same view as that expressed by the Patna High Court in the cases of Hazari Lal and Ramjanam Tewari.
In the case of Emperor vs Nawal Behari(1), the learned Judges of the Allahabad High Court held that when a Sessions Judge refers a case under section 307 of the Code, he must refer the whole case against the particular accused and not merely those charges on which there happens to be a finding by the jury with which lie disagrees.
This view is substantially in keeping with the view taken by the Patna High Court in the cases mentioned above.
It is true that the learned Judges them proceeded to consider the evidence and set aside the conviction and sentence under section 193 passed by the Sessions Judge and substituted in its place a conviction by the High Court under section 193.
In our opinion, if the reference under section 307 of the Code had to be of (I)(1930) I.L.R. All.
970 the whole case against the accused and not merely those charges on which the trial Judge disagreed with the jury, then the reference was incompetent and the High Court could not proceed to exercise any of the powers conferred upon it under section 307(3), because the very foundation for the exercise of that power was lacking, the reference being incompetent.
In the case of Emperor vs Jagmohan(1), while the learned Judges held that the reference to the High Court only of a part of the case was irregular, the High Court could consider not Only the part of the case referred to it, but the whole case.
We are unable to accept this view.
Whatever support this decision may give to the submission made by the learned Counsel for the appellant, we are clearly of the opinion that the decision of the Allahabad High Court in this case was erroneous in law.
In Emperor vs Muktar(2) thelearned Judges were of the opinion that the reference was not in order when the trial Judge recorded a finding on some charges in respect of the very accused whose cases so far as other charges were concerned were referred, but the defect was not necessarily fatal to the reference and the High Court might entertain the same.
This view cannot be sustained, having regard to the provisions of section 307.
In our opinion, a reference made in the circumstances of the present case, was incompetent and the High Court should have rejected it and not proceeded to record any judgment of acquittal or conviction.
We, accordingly, allow the appeal, set aside the judgment of the High Court and hold that the reference under section 307 to the High Court was incompetent.
A question has arisen as to what consequential order should be passed by this Court as the result of our conclusion that the reference under section 307 to the High Court was incompetent and the appeal succeeding.
The High Court should have rejected the reference as incompetent and remitted the case to the Additional Sessions Judge for disposal according to law.
(1) I.L.R. (1947) All. 240.
(2) 971 We emphasise the absolute need for making a competent reference under section 307 of the Code and the case being remitted to the Court making the reference as soon as possible if an incompetent reference is made in order to avoid legal complications, unnecessary waste of time and money and harassment to the accused.
In this case the letter of reference is dated June 7, 1954, that is, more than three years ago.
The occurrence took place on October 21, 1953.
After such lapse of time we will not order that the case be returned to the Court of the Additional Sessions Judge of Alipur for disposal according to law, particularly as we are informed that the Judge who made the reference to the High Court has retired from service and it is doubtful whether, in law, his successor can at all deal with the case.
In the circumstances of this particular case, therefore, the only order which we pass is that the reference being incompetent is rejected.
Appeal allowed.
| Sections 306 and 307 of the Code of Criminal Procedure, read together clearly indicate that where the Sessions judge disagrees with the verdict of the jury and is of the opinion that the case should be submitted to the High Court, he must submit the whole case against the accused, not a part of it.
If the jury returns a verdict of guilty in respect of some charges and notguilty in 961 respect of others he cannot record his judgment of acquittal in respect of the latter charges in agreement with the jury in contravention of the mandatory provision Of section 307(2) of the Code.
Such recording must have the effect of preventing the High Court from considering the entire evidence against the accused and exercising its jurisdiction under section 307(3).
Hazari Lal 's case, (1932) 1.
L. R.//Pat. 395 and Ramjanam Tewari, , approved.
Emperor vs jagmohan, 1.
L. R. (1947) Allahabad 240, and Emperor vs Muktar, , disapproved.
The Emperor vs Bishnu Chandra Das, , King Emperor vs Ananda Charan Ray, , and Emperor vs Nawal Behari, , considered.
Consequently, in a case where eight persons were put up for trial in the Court of Session charged under sections I47 and 304/I49 Of the Indian Penal Code and four of them were further charged under section 201 of the Indian Penal Code and the jury returned a unanimous verdict of not guilty under section 304/I49 and guilty under sections 147 and 201 and the Judge accepting the former recorded a judgment of acquittal in the case of each accused but disagreeing with the latter referred the matter to the High Court, the reference was incompetent and the High Court was in error in acting upon it and its judgment must be set aside.
Held further, that although the proper order in such a case should be to remit the case to the trial court for disposal according to law, in view of the long lapse of time and peculiar circumstances of this case the reference must be rejected.
|
Summarize this legal judgement text concisely | Civil Appeal No. 137 of 1953.
Appeal from the judgment and decree dated the November 30, 1951, of the former Pepsu High Court in R. section Appeal No. 49 of 1948 against the judgment and decree dated the May 1, 1948, of the Court of the District Judge, Patiala, in Civil Appeal No. 22 of 1946 47, arising from the judgment and decree dated the April 4, 1947, of the Court of the Sub Judge 11 Class, Bassi in Suit No. 721 of 1945.
Achhru Ram and K. L. Mehta, for the appellant.
Raghbir Singh and section section Dhillon, for the respondent No. 1. 950 1957.
November 15.
The following Judgment of the Court was delivered by SARKAR J.
The only question for decision in this appeal is whether title had been acquired to certain lands by adverse possession.
Ram Ditta was a Hindu Jat of village Bhathal in District Bassi which was originally in Patiala but subsequently came to be included in Patiala & Eastern Punjab States Union.
He died in April or May 1920 leaving certain lands which were the subject matter of dispute in the suit out of which this appeal arises.
Ram Ditta had a son named Jeona who predeceased him leaving a widow, Harnam Kaur.
Harnam Kaur has a daughter, Kirpal Kaur and the latter is the appellant before us.
Kirpal Kaur has a son of the name of Satwant Singh.
Ram Ditta had certain collateral relations and the dispute was between them on the one hand and Harnam Kaur and Kirpal Kaur on the other.
These collaterals are the contesting respondents in this appeal.
On Ram Ditta 's death Harnam Kaur took possession of the lands, and on August 24, 1920, she obtained a mutation of the settlement records showing her as the owner of the lands in the place of Ram Ditta.
By a deed dated November 27, 1929, she purported to make a gift of half of the lands to Kirpal Kaur on the occasion of the latter 's marriage.
Thereafter an attempt was made to obtain a mutation of the settlement records showing Kirpal Kaur as the owner of the lands given to her but on the objection of the collaterals the mutation was refused on May 12, 1930.
This gift gave rise to various litigation both civil and criminal between Harnam Kaur and Kirpal Kaur on the one hand and the collaterals on the other.
Mutual friends intervened to put an end to this unhappy state of affairs and at their efforts a settlement of the disputes was arrived at.
On February 6, 1932, a document was executed by Harnam Kaur whereby she agreed that the lands would belong to her for her life and after her death to Kirpal Kaur for the latter 's life and that none of them would be entitled to sell or mortgage the lands.
The document further stated 951 that Harnam Kaur had previously created a mortgage on the lands and that she would have the right to create another mortgage on them to pay off certain specified debts due by her and such mortgage would be binding on the collaterals but after her death there would be no other burden on the collaterals.
This document was never registered.
In 1936, Harnam Kaur created another mortgage on the lands and this mortgage was subsequently transferred to Satwant Singh, son of Kirpal Kaur.
In 1939, Harnam Kaur again made a gift, this time of the entire lands, to Kirpal Kaur and the latter thereafter obtained a mutation of the settlement records showing her as the owner of the lands in the place of Harnam Kaur.
This eventually brought about the institution of the suit out of which the present appeal arises.
This suit was filed in March 1945, by some of the collaterals against Harnam Kaur, Kirpal Kaur and Satwant Singh impleading certain other collaterals who did not join as plaintiffs, as defendants.
It sought a declaration that the gift of the lands by Harnam Kaur to Kirpal Kaur and the mortgage of 1936 were illegal and were not binding on the collaterals who were the then reversionary heirs of Ram Ditta.
The suit was contested by Harnam Kaur, Kirpal Kaur and Satwant Singh.
The court of first instance framed the following issues for trial: 1. Are the plaintiffs the collaterals of Jeona ? 2.
Is the property in dispute ancestral ? 3.
Was the mortgage in dispute effected for legal necessity ? 4.
Is the gift in dispute valid according to custom ? 5.
Is the suit time barred ? 6.
Had Harnam Kaur acquired a right to the lands by adverse possession at the time of the gift to Kirpal Kaur ? The first five issues were decided in favour of the plaintiffs, and the sixth against them.
With regard to the sixth issue it appears to have been admitted 121 952 before the learned trial Judge by both parties that according to the general custom governing the parties a widow of a pre deceased son, as Harnam Kaur was, was entitled to maintenance only when there were collaterals of the degree that the collaterals in this case are.
The learned Judge held that the possession of Harnam Kaur was, therefore, adverse to the collaterals and that as she had admittedly been in possession since 1920 and as the relations between her and the collaterals had been unfriendly, she had acquired at the date of the gift an absolute title to the lands by adverse possession.
It was contended before him that the agreement of February 6, 1932, though not admissible in evidence in the absence of registration to prove that Harnam Kaur and Kirpal Kaur had only life estates in the lands, was admissible to show the nature of Harnam Kaur 's possession and that it showed that her possession was not adverse.
The learned Judge did not accept this contention.
In the above view of issue No. 6 he dismissed the suit.
The plaintiffs then took the matter up in appeal to the District Judge of Patiala.
Harnam Kaur and her side never took any exception to the issues found against them by the trial Judge.
The learned District Judge was therefore only concerned with the sixth issue.
It was contended before him on behalf of the plaintiffs that Harnam Kaur 's possession was not adverse to them as she had been in Possession claim ing only a right of maintenance and this was sought to be supported by the Patwari 's report in connection with the mutation of August 24, 1920.
The learned District Judge held that the report, a reference to which will be made later, did not show any assertion on the part of Harnam Kaur that she claimed to be the heir of Ram Ditta or that she was in possession in lieu of her maintenance.
With regard to the agreement of February 6, 1932, he held that it was of no assistance to the collaterals.
In the result he dismissed the appeal.
The collaterals then went up in appeal to the High Court of Patiala and Eastern Punjab States 953 Union.
The High Court took the view that in coming to the conclusion that Harnam Kaur 's possession was adverse to the collaterals the Courts below had proceeded on the basis that being the widow of Ram Ditta 's predeceased son she was not an heir to him and, therefore, her possession of Ram Ditta 's estate was necessarily adverse to his heirs, the collaterals.
The High Court felt that in doing so the Courts below were thinking of Hindu Law under which the widow of a pre deceased son was not an heir but was entitled to maintenance only, and had overlooked the fact that the parties being Punjabi Jats, were governed by custom.
The High Court then referred to paragraph 9 of Rattigan 's Digest of Customary Law which is a book of unquestioned authority on Punjab customswhere it is stated that " the widow of a sonless son who predeceases his father, is, in some tribes, permited to succeed to his share " and held that it appeared from the Patwari 's report mentioned earlier that Harnam Kaur was regarded as Ram Ditta 's heir and that was why mutation in her favour had been sanctioned.
The High Court then proceeded to hold that it was legitimate to presume from this that the tribe to which Ram Ditta belonged recognised the right of a widow of a predeceased son to succeed her father inlaw in the place of her husband in preference to the collaterals of the deceased.
The High Court thought that in view of this custom, which it found was proved in this case, Harnam Kaur was entitled to the possession of the lands and no presumption could therefore &rise that she was holding them adversely to the collaterals.
The High Court also held that the agreement of February 6, 1932, was admissible in evidence to prove the nature of Harnam Kaur 's possession of the lands though it was not admissible to prove title as it had not been registered.
The High Court was of the view that the agreement showed that since its execution the nature of Harnam Kaur 's possession was permissive and not adverse and as at the date of the agreement she had not been in possession for the requisite period, she never acquired title by adverse possession, whatever may have been the character of 954 her possession prior to it.
The High Court lastly held that in any event, Harnam Kaur had entered into possession as heir of her father in law and, therefore, adverse possession by her would be considered as creating only a widow 's estate in her and therefore she had not become an absolute owner and the nature of the estate acquired by her by adverse possession was that of a widow 's estate governed by the customary law with no power of alienation.
The High Court, therefore, allowed the appeal and decreed the suit.
From this judgment of the High Court the present appeal to us arises.
The appeal had been filed by Harnam Kaur and Kirpal Kaur, but later Harnam Kaur abandoned it and she was removed from the record as an appellant.
The appeal before us now, therefore, is only by Kirpal Kaur.
Learned counsel for the respondents, by which we mean the contesting respondents, contended that Kirpal Kaur alone was not competent to appeal because the alienations challenged had been made by Harnam Kaur.
We cannot accept this contention.
Kirpal Kaur as the alienee is certainly entitled to prosecute this appeal to protect her rights under the alienation.
Her rights in no way depend on whether the alienor chooses to stand by the alienation or not.
The points argued before us were the same as were canvassed in the High Court.
With regard to the special custom, which the High Court held governed the parties to this case, learned counsel for the appellant contended that no such custom had been pleaded and no issue about it framed, nor indeed any hint of it given at any earlier stage of the proceeding in any of the courts below.
We feel that these contentions are justified.
In the plaint no mention of the custom is to be found.
The plea as to adverse possession was raised by Harnam Kaur and Kirpal Kaur in an amended written statement that they filed.
The plaintiffs never filed any replication setting up the special custom alleged by them as they should have done if they wished to rely on it in answer to the case made by the defendants by the amendment.
Further.
more, as earlier stated, it was admitted by both, 955 parties before the trial Judge, that the custom governing the parties was that the widow of a predeceased son was only entitled to maintenance out of her fatherin law 's estate.
As learned counsel for the appellant pointed out, the passage in Rattigan 's Digest makes it clear that the general custom is that the widow of a predeceased son is not an heir of her father in law but that in some tribes a special custom prevails which makes her the heir, and that the onus of proving the special custom lies on those who assert it.
It was therefore in this case for the respondents to have pleaded and proved the special custom.
As already stated, they neither pleaded the special custom, nor proved it nor even made an attempt to do so.
After Harnam Kaur and Kirpal Kaur had closed their case, the respondents were given a chance to produce evidence in rebuttal but even then they did not make any attempt to establish the special custom.
In these circumstances, in our view, no question as to the special custom should have been permitted by the High Court to be raised.
Furthermore, we are unable to agree with the High Court that there is evidence in this case to prove the special custom.
As already stated, the High Court thought that it might be presumed from the Patwari 's report that the special custom governing the tribe to which the parties belonged prevailed.
This report of the Patwari is dated June 9, 1920, and was made in connection with the proceedings for the mutation of the name of Ram Ditta to that of Harnam Kaur soon after the former 's death.
That report reads as follows: "Sir, Ram Ditta S/o Begha Jat Bhathal died a month back.
Harnam Kaur widow of Jeona, who is the real daughter in law of the deceased, is the heir and is in possession of the property.
Hence the mutation having been entered is hereby submitted for orders.
" Upon this report the following order was made: " The factum was confirmed in the general gathering in presence of Bhana, Arjan Singh and Narain Singh, lambardars and of Mst.
Harnam Kaur, the daughter in law of the deceased.
Hence the mutation 956 of the holding of Ram Ditta deceased in favour of Mat.
Harnam Kaur, widow of Jeons Jat, is hereby sanctioned.
Dated. . 24th August, 1920, A.D." The report, no doubt, states that Harnam Kaur was Ram Ditta 's heir.
It is said that she could be an heir only under the special custom and hence the special custom must be deemed to have been proved in this case.
But the report of the Patwari shows that in his own opinion Harnam Kaur was the heir of Ram Ditta.
We do not know, how he came to have such an opinion or whether he had based it on the special custom.
The report was not evidence given in court and is not strictly admissible to prove the custom and, in fact, the report was not tendered as evidence of the custom.
It is said that the Patwari 's report indicated that there must have been an application by Hamam Kaur claiming the mutation on the basis that the had succeeded to the lands as the heir of Ram Ditta under the special custom.
No such application is, however, on the records.
We are unable to draw any presumption as to what statement might have been made in the application, if there was one.
We do not think that the order of August 24, 1920, carries the matter further.
It is said that when the order stated that " the factum was confirmed " it meant that the factum of the custom was confirmed.
We cannot accept this contention.
The factum referred to may well have been the death of Ram Ditta or that Harnam Kaur was the daughter in law of Ram Ditta.
Even if it could be said that the factum confirmed was the special custom, the same difficulty would arise again, namely, that the order would show that it is only the opinion of the lambardars as to the existence of the special custom.
Such opinion, for the reasons earlier stated, would not be evidence in this case to prove the custom.
Further in the operative part of the order the mutation is not stated to be based on the ground that Harnam Kaur was the "heir" of Ram Ditta.
We are, therefore, unable to hold that the Patwari 's report or the order thereon proves that Harnam,Kaur was the customary heir of Ram Ditta and had got into possession in 1920, as such heir and,, 957 therefore, could not have been in adverse possession.
It is then said that the agreement of February 6, 1932, showed that since its date her possession was permissive.
The High Court has held that the agreement was admissible to prove the nature of her possession.
In Varatha Pillai vs Jeevarathnammal (1) it was held that a document which should have been registered but was not, was admissible to explain the nature of the possession of a person.
What had happened there was that two widows who were in possession of a property in equal shares, presented a petition to the Collector on October 10, 1895, whereby after reciting that they had on October 8, 1895, given away the property as stridhan to one Duraisani, they prayed that orders might be passed for transferring the villages into her name.
On this petition the property was registered in the name of Duraisani and she was put in possession and thereafter continued in possession till her death in 1911.
The question was whether Duraisani had acquired title to the property by adverse possession.
It was held that though the petition in the absence of registration could not be admitted to prove a gift, it might be referred to for showing that the subsequent possession of Duraisani was as a donee and owner of the land and not as trustee or manager for the two donors and therefore to show that the nature of such possession was adverse to them.
We cannot agree that on the authority of Paratha Pillai 's case (1) the agreement of February 6, 1932, can be admitted in evidence in the case in hand to show the nature of Harnam Kaur 's possession of the lands subsequent to its date.
In Varatha Pillai 's case (1) Duraisani had got into possession only after the petition and claimed to retain possession only under the gift mentioned in it.
The petition was therefore admissible in evidence to show the nature of her possession.
In the present case Harnam Kaur had been in possession before the date of the document and to admit it in evidence to show the nature of her possession subsequent to it would be to treat it as operating to destroy the nature of the (1)(1918) 46 I.A. 285.
958 previous possession and to convert what had started as adverse possession into a permissive possession and, therefore, to give effect to the agreement contained in it which admittedly cannot be done for want of registration.
To admit it in evidence for the purpose sought would really amount to getting round the statutory bar imposed by section 49 of the .
Lastly, the High Court held that as Harnam Kaur had entered into possession as the heir of Ram Ditta she could, at most, be considered to have acquired by adverse possession a widow 's estate in the lands and could not therefore, make a gift of them.
The High Court had referred to Bura Mal vs Narain Das (1) as an authority for this proposition.
In our view, that case is of no assistance.
There a female who was not an heir of the last full owner but was only entitled to maintenance, took possession of the properties in lieu of her maintenance by an arrangement with the heirs of the owner, and in those circumstances it was held that her possession could not be adverse to the heirs.
There is no evidence of any such arrangement in this case, nor is it the case of the respondents that such an arrangement had ever been made.
The High Court also referred to the case of Pandappa Mahalingappa vs Shivalingappa This case was based on Lajwanti vs Safa Chand and it would be enough to refer to " It was then argued that the widows could only possess for themselves; that the last widow Devi would then acquire a personal title; and that the respondents and not the plaintiffs were the heirs of Devi.
This is quite to understand the nature of the widows ' possession.
The, Hindu widow ' as often pointed out, is not a life renter, but has a widow 's estate that is to say, a widow 's estate in her deceased husband 's estate.
If possessing as widow she possesses adversely to any one as to certain parcels.
, she does not acquire the parcels as stridhan, but she makes them good to her husband 's estate.
" (1) 102 P. R., 1907.
(2) A.I.R. 1946 Bom.
(3) (1924) 51 I.A. 71, 176.
959 In order that the authority of this case may apply to the case in hand, it has to be proved that Harnam Kaur entered into possession of lands claiming a widow 's estate therein as an heir of Ram Ditta.
We find no evidence to prove that such was her claim.
The Patwari 's report earlier referred to cannot be construed as such a claim.
It was only the Patwari 's opinion of the situation.
It cannot therefore be said in this case that Harnam Kaur was in possession claim ing a widow 's estate in the lands, as the customary heir of her father in law.
Furthermore, in Lajwanti 's Case the widows who were found to have acquired title by adverse possession were undoubtedly the heirs of their husband and would have succeeded to his properties if a posthumous son whose existence was assumed by the Judicial Committee, had not been born to him.
It was possible for these widows to bold property as heirs of their husband and make them good to his estate.
Lajwanti 's Case therefore was concerned with a female who was admittedly an heir.
That is not the case here.
As we have already stated, the special custom under which alone Harnam Kaur could have become an heir of Ram Ditta has not been proved.
On the case as made and the evidence before us, it must be held that Harnam Kaur could never have been the heir of Ram Ditta.
That being so, it was impossible for her to have acquired by adverse possession title to property as his heir or to make such observation of the Judicial Committee in sham Koer vs applies to this case " Assuming that Bhau Natli Singh was a member of an undivided Hindu family governed by the Mitakshara law, as the Lower Court found and the High Court assumed, neither his widow nor his son 's widow would be entitled to anything more than maintenance out of his estate.
Their possession, therefore, of the three villages in question would be adverse to the reversionary heirs unless it was the result of the arrangement with them.
If the possession was (1) (1902) 29 I.A. 132, 135, 136.
1 22 960 adverse, the rights of the reversionary heirs would of course be barred at the expiration of twelve years from the date of Bhau Nath Singh 's death, or the date of the widows ' taking possession, which seems to have been at or shortly after his death.
" As there is no evidence of any arrangement with the respondents under which Harnam Kaur can be said to have taken possession of the lands, her possession must be taken to have been adverse to the collaterals.
Admittedly such possession commenced in 1920 on the death of Ram Ditta and has continued ever since.
So at the date of the mortgage and gift, Harnam Kaur had acquired a title to the lands by adverse possession.
The respondents ' claim must fail.
We, therefore, allow the appeal with costs throughout.
Appeal allowed.
| On the death of R, a Hindu jat, in April or May, 1920, the widow of his pre deceased son, H, took possession of the properties and on August 24, 1920, obtained a mutation of the settlement records showing her as the owner of the lands in the place of R. A gift of half of the properties by H to her daughter K 949 gave rise to disputes between them and the collaterals but the matter was settled on H executing a document on February 6, 1932, whereby, inter alia, she agreed that the lands would belong to her for her life and after her death to her daughter for the latter 's life and that none of them would be entitled to sell or mortgage the lands.
The document, however, was not registered.
In 1939 H made a gift of the entire lands to K who obtained a mutation of the settlement records showing her as the owner of the lands, and in 1945 a suit was filed by the collaterals challenging the transaction as not binding on them as the reversionary heirs of R. Under the general custom governing the parties as admitted by them a widow of a pre deceased son was entitled only to maintenance when there were collaterals, and as H was in possession of the properties since 1920 it was said by her and K that she had, at the date of the gift, acquired an absolute title by adverse possession.
It was contended for the plaintiffs, interalia, that the agreement of February, 1932, though not admissible in evidence to prove that H and K had only life estates in the lands, was admissible to show the nature of H 's possession and that it showed that her possession was not adverse.
Held, that the document dated February 6, 1932, was in admissible in evidence, in view Of section 49 of the Indian , as H had been in possession before the date of the document and to admit it in evidence to show the nature of her possession subsequent to it would be to treat it as operating to destroy the nature of the previous possession and to convert what had started as adverse possession into a permissive possession, and therefore, to give effect to the agreement contained in it.
Varatha Pillai vs jeevarathnammal, (1918) L.R. 46 I. A. 285, distinguished,
|
Summarize this legal judgement text concisely | Civil Appeal No. 403 of 1956.
Appeal from the judgment and order dated April 11, 1956, of the Madras High Court in Appeal No. 145 of 1952, arising out of the judgment and decree dated March 31, 1951 of the Court of the Subordinate Judge, South Kanara in Original Suit No. 24 of 1949.
M.K. Nambiyar, M. L. Naik, J. B. Dadachanji, S.N. Andley, Rameshwar Nath and P. L. Vohra, for the appellant in C.A. No. 403 of 1956 and respondents in special leave Petition No. 327 of 57. 897 C. K. Daphtary, Solicitor General of India, B. B. L. Iyengar and T. M. Sen, for the respondents in SI No. 403 of 56 and petitioner in special leave petition No. 327 of 1957.
November 8.
The following Judgment of the Court was delivered by VENKATARAMA AIYAR J.
The substantial question of law, which arises for decision in this appeal, is whether the right of a religious denomination to manage its own affairs in matters of religion guaranteed under article 26(b), is subject to, and can be controlled by, a law protected by article 25(2)(b), throwing open a Hindu public temple to all classes and sections of Hindus.
In the District of South Kanara which formed until recently part of the State of Madras and is now comprised in the State of Mysore, there is a group of three villages, Mannampady, Bappanad and Karnad collectively known as Moolky Petah; and in the village of Mannampady, there is an ancient temple dedicated to Sri Venkataramana, renowned for its sanctity.
It is this institution and its trustees, who are the appellants before us.
The trustees are all of them members of a sect known as Gowda Saraswath Brahmins.
It is said that the home of this community in the distant past was Kashmir, that the members thereof migrated thence to Mithila and Bihar, and finally moved southwards and settled in the region around Goa in sixty villages.
They continued to retain their individuality in their new surroundings, spoke a language of their own called Konkani, married only amongst themselves, and worshipped idols which they had brought with them.
Subsequently, owing to persecution by the Portuguese, they migrated further south, some of them settling at Bhatkal and others in Cochin.
Later on, a chieftain who was ruling over the Moolky area brought five of these families from Bhatkal, settled them at Mannampady, erected a temple for their benefit and installed their idol therein, which came to be known as Tirumalaivaru or Venkataramana, and endowed lands therefor.
In course of time, other families of Gowda 398 saraswath Brahmins would appear to have settled in the three villages constituting Moolky, and the temple came to be managed by members of this community residing in those villages.
In 1915, a suit, 0. section No. 26 of 1915, was instituted in the Court of the Subordinate Judge of South Kanara under section 92 of the Code of Civil Procedure for framing a scheme for this temple.
Exhibit A 6 is the decree passed in that suit.
It begins by declaring that "Shri Venkataramana temple of Moolky situated in the village of Mannampadi, Nadisal Mangane, Mangalore taluk is an ancient institution belonging to the Gowda Saraswath Brahmin community, i.e., the Commudity to which the parties to the suit belong residing in the Moolky Petah, i.e., the villages of Bappanad, Karnad and Mannampadi according to the existing survey demarcation".
Clause 2 of the decree vests the general control and management of the affairs of the temple, both secular and religious, in the members of that community.
Clause 3 provides for the actual management being, carried on by a Board of Trustees to be elected by the members of the community aforesaid from among themselves.
Then follow elaborate provisions relating to preparation of register of electors, convening of meetings of the general body and holding of elections of trustees.
This decree was passed on March 9, 1921, and it is common ground that the temple has ever since been managed in accordance with the provisions of the scheme contained therein.
This was the position when the Madras Temple Entry Authorisation Act (Madras V of 1947), hereinafter referred to as the Act, was passed by the Legislature of the Province of Madras.
It will be useful at this stage to set out the relevant provisions of the Act, as it is the validity of section 3 thereof that is the main point for determination in this appeal.
The preamble to the Act recites that the policy of the Provincial Government was "to remove the disabilities imposed by custom or usage on certain classes of Hindus against entry into Hindu temples in the Province which are open to the general Hindu public".
899 Section 2(2) defines 'temple ' as "a place by whatever name known, which is dedicated to or for the benefit, of or used as of right by the Hindu community in" general as a place of public religious worship".
Section 3 (1) enacts that, "Notwithstanding any law, custom or usage to the contrary, persons belonging to the excluded classes shall be entitled to enter any Hindu temple and offer worship therein in the same manner and to the same extent as Hindus in general; and no member of any excluded class shall, by reason only of such entry or worship, whether before or after the commencement of this Act, be deemed to have committed any actionable wrong or offence or be sued or prosecuted therefor.
Section 6 of the Act provides that, "If any question arises as to whether a place is or is not a temple as defined in this Act, the question should be referred to the Provincial Government and their decision shall be final, subject however to any decree passed by a competent civil court in a spit filed before it within six months from the date of the decision of the Provincial Government".
It is the contention of the appellants and that, in our opinion, is well founded that the true intent of this enactment as manifest in the above provisions was to remove the disability imposed on Harijans from entering into temples, which were dedicated to the Hindu public generally.
Apprehending that action might be taken to put the provisions of this Act in operation with reference to the suit temple, the trustees thereof sent a memorial to the Government of Madras claiming that it was a private temple belonging exclusively to the Gowda Saraswath Brahmins, and that it therefore did not fall within the purview of the Act.
On this, the Government passed an order on June 25, 1948, Exhibit B 13, that the temple was one which was open to all Hindus generally, and that the Act would be applicable to it.
Thereupon, the trustees filed the suit, out of which the present appeal arises, for a declaration that the Sri Venkataramana temple at Moolky was not a 900 temple as defined in section 2(2) of the Act.
It was alleged in the plaint that the temple was founded for the benefit of the Gowda Saraswath Brahmins in Moolky Petah, that it had been at all times under their management, that they were the followers of the Kashi Mutt, and that it was the head of the Mutt that performed various religious ceremonies in the temple, and that the other communities had no rights to wor ship therein.
The plaint was filed on February 8, 1949.
On July 25, 1949, the Province of Madras filed a written statement contesting the claim.
Between these two dates, the Madras Legislature had enacted the Madras Temple Entry Authorisation (Amendment) Act (Madras XIII of 1949), amending the definition of ,temple ' in section 2(2) of Act V of 1947, and making consequential amendments in the preamble and in the other provisions of the Act.
According to the amended definition, a temple is "a place which is dedicated to or for the benefit of the Hindu community or any section thereof as a place of public religious worship".
This Amendment Act came into force on June 28, 1949.
In the written statement filed on July 25, 1949, the Government denied that the temple was founded exclusively for the benefit of the Gowda Saraswath Brahmins, and contended that the Hindu public generally had a right to worship therein, and that, therefore, it fell within the definition of temple as originally enacted.
It further pleaded that, at any rate, it was a temple within the definition as amended by Act XIII of 1949, even if it was dedicated for the benefit of the Gowda Saraswath Brahmins, inasmuch as they were a section of Hindu community, and that, in consequence, the suit was liable to be dismissed.
On January 26, 1950, the Constitution came into force, and thereafter, on February 11, 1950, the plaintiffs raised the further contention by way of amendment of the plaint that, in any event, as the temple was a denominational one, they were entitled to the protection of article 26, that it was a matter of religion as to who were entitled to take part in worship in a temple, and that section 3 of the Act, in so far as it provided for 901 the institution being thrown open to communities other than Gowda Saraswath Brahmins, was repugnant to article 26(b) of the Constitution and was, in consequence, ' void.
On these pleadings, the parties went to trial.
The Subordinate Judge of South Kanara, who tried the suit, held that though the temple had been originally founded for the benefit of certain immigrant families of Gowda Saraswath Brahmins, in course of time it came to be resorted to by all classes of Hindus for worship, and that accordingly it must be held to be a temple even according to the definition of temple ' in section 2(2) of the Act, as it originally stood.
Dealing with the contention that the plaintiffs had the right under article 26(b) to exclude all persons other than Gowda Saraswath Brahmins from worshipping in the temple, he held that " matters of religion " in that Article had reference to religious beliefs and doctrines, and did not include rituals and ceremonies, and that, in any event, articles 17 and 25(2) which had been enacted on grounds of high policy must prevail.
He accordingly dismissed the suit with costs.
Against this decision, the plaintiffs preferred an appeal to the High Court of Madras, A. section No. 145 of 1952.
It is now necessary to refer to another litigation inter partes, the result of which has a material bearing on the issues which arise for determination before us.
In 1951, the Madras Legislature enacted the Madras Hindu Religious and Charitable Endowments Act, (Madras XIX of 1951) vesting in the State the power of superintendence and control of temples and Mutts.
The Act created a hierarchy of officials to be appointed by the State, and conferred on them enormous powers of control and even management of institutions.
Consequent on this legislation, a number of writ applications were filed in the High Court of Madras challenging the validity of the provisions therein as repugnant to articles 19, 25 and 26 of the Constitution, and one of them was Writ Petition No. 668 of 1951 by the trustees of Sri Venkataramana Temple at Moolky.
They claimed that the institution being a denominational one, it had a right under 902 article 26(b) to manage its own affairs in matters of religion, without interference from any outside authority ' and that the provisions of the Act were bad as violative of that right.
By its judgment dated December 13, 1951, the High Court held that the Gowda Saraswath Brahmin community was a section of the Hindu public, that the Venkataramana Temple at Moolky was a denominational temple founded for its benefit, and that many of the provisions of the Act infringed the right granted by article 26(b) and were void.
Vide Devaraja Shenoy vs State of Madras (1).
Against this judgment, the State of Madras preferred an appeal to this Court, Civil Appeal No. 15 of 1953, but ultimately, it was withdrawn and dismissed on September 30, 1954.
It is the contention of the appellants that by reason of the decision given in the above proceedings, which were inter partes, the issue as to whether the temple is a denominational one must be held to have been concluded in their favour.
To resume the history of the present litigation: Subsequent to the dismissal of Civil Appeal No. 15 of 1953 by this Court, the appeal of the plaintiffs, A.S. No. 145 of 1952, was taken up for hearing, and on the application of the appellants, the proceedings in the writ petition were admitted as additional evidence.
On a review of the entire materials on record, including those relating to the proceedings in Writ Petition No. 668 of 1951, the learned Judges held it established that the Sri Venkataramana Temple was founded for the benefit of the Gowda Saraswath Brahmin community ' and that it was therefore a denominational one.
Then, dealing with the contention that section 3 of the Act was in contravention of article 26(b), they held that as a denominational institution would also be a public institution, article 25(2)(b) applied, and that, thereunder, all classes of Hindus were entitled to enter into the temple for worship.
But they also held that the evidence established that there were certain religious ceremonies and occasions during which the Gowda Saraswath Brahmins alone were entitled to participate, and that that right was protected by article 26(b).
(1) 903 They accordingly reserved the rights of the appellants to exclude all members of the public during those ceremonies and on those occasions, and these were specified in the decree.
Subject to this modification, they dismissed the appeal.
Against this judgment the plaintiffs have preferred Civil Appeal No. 403 of 1956 on a certificate granted by the High Court.
There is also before us Petition No. 327 of 1957 for leave to appeal under article 136.
That has reference to the modifications introduced by the decree of the High Court in favour of the appellants.
It must be mentioned that while the appeal was pending, there was a reorganisation of the States, and the District of South Kanara in which the temple is situated, was included in the State of Mysore.
The State of Mysore has accordingly come on record in the place of the State of Madras, and is contesting this appeal, and it is that State that has now applied for leave to appeal against the modifications.
The application is very much out of time, and Mr. M. K. Nambiar for the appellants vehemently opposes its being entertained at this stage.
It is pointed out that not merely had the State of Madras not filed any application for leave to appeal to this Court against the decision of the Madras High Court but that it accepted it as correct and actually opposed the grant of leave to the appellants on the ground that the points involved were pure questions of fact, that no substantial question of law was involved, and that the judgment of the High Court had recognised the rights of all sections of the Hindu public.
It is argued that when a party acquiesces in a judgment and deliberately allows the time for filing an appeal to lapse, it would not be a sufficient ground to condone the delay that he has subsequently changed his mind and desires to prefer an appeal.
The contention is clearly sound, and we should have given effect to it, were it not that the result of this litigation would affect the rights of members of the public, and we consider it just that the matter should be decided on the merits, so that the controversies involved might be finally settled.
We have accordingly condoned the delay, and have heard counsel on this application.
115 904 In view of this, it is unnecessary to consider the questions discussed at the Bar as to the scope of article 132, who are entitled to appeal on the strength of a certificate granted under that Article, and the ,forum in which the appeal should be lodged.
It is sufficient to say that in this case no appeal, was, in fact, filed by the respondent.
On the arguments addressed before us, the following questions fall to be decided : (1)Is the Sri Venkataramana Temple at Moolky, a temple as defined in section 2 (2) of Madras Act V of 1947 ? (2) If it is, is it a denominational temple ? (3) If it is a denominational temple, are the plain tiffs entitled to exclude all Hindus other than Gowda Saraswath Brahmins from entering into it for worship, on the ground that it is a matter of religion within the protection of article 26(b) of the Constitution ? (4) If so, is section 3 of the Act valid on the ground that it is a law protected by article 25 (2) (b), and that such a law prevails against the right conferred by article 26 (b); and (5)If section 3 of the Act is valid, are the modifications in favour of the appellants made by the High Court legal and proper ? On the first question, the contention of Mr. M. K. Nambiar for the appellants is that the temple in question is a private one, and therefore falls outside the purview of the Act.
This plea, however, was not taken anywhere in the pleadings.
The plaint merely alleges that the temple was founded for the benefit of the Gowda Saraswath Brahmins residing in Moolky Petah.
There is no averment that it is a private temple.
It is true that at the time when the suit was instituted, the definition of 'temple ' as it then stood, took in only institutions which were dedicated to or for the benefit of the Hindu public in 'general, and it was therefore sufficient for the plaintiffs to aver that the suit temple was not one of that character, and that it would have made no difference in the legal position whether the temple was a private one, or whether it was intended for the benefit of a section of the public.
But then, ,the Legislature amended the definition of 'temple ' 905 by Act XIII of 1949, and brought within it even institutions dedicated to or for the benefit of a section, of the public; and that would have comprehended a temple founded for the benefit of the Gowda Saraswath Brahmins but not a private temple.
In the written statement which was filed by the Government, the amended definition of 'temple ' was in terms relied on in answer to the claim of the plaintiffs.
In that situation, it was necessary for the plaintiffs to have raised the plea that the temple was a private one, if they intended to rely on it.
Par from putting forward such a plea, they accepted the stand taken by the Government in their written statement, and simply contended that as the temple was a denominational one, they were entitled to the protection of article 26 (b).
Indeed the Subordinate Judge states in para.
19 of the judgment that it was admitted by the plaintiffs that the temple came within the purview of the definition as amended by Act XIII of 1949.
Mr. M. K. Nambiar invited our attention to Exhibit A 2, which is a copy of an award dated November 28, 1847, wherein it is recited that the temple was originally founded for the benefit of five families of Gowda Saraswath Brabmins.
He also referred us to Exhibit A 6, the decree in the scheme suit, 0.
section No. 26 of 1915, wherein it was declared that the institution belonged to that community.
He contended on the basis of these documents and of other evidence in the case that whether the temple was a private or public institution was purely a matter of legal inference to be drawn from the above materials, and that, notwithstanding that the point was not taken in the pleadings, it could be allowed to be raised as a pure question of law.
We are unable to agree with this submission.
The object of requiring a party to put forward his pleas in the pleadings is to enable the opposite party to controvert them and to adduce evidence in support of his case.
And it would be neither legal nor just to refer to evidence adduced with reference to a matter which was actually in issue and on the basis of that evidence, to come to a finding on a matter which was not in issue, and decide the rights of parties on the 906 basis of that finding.
We have accordingly declined ;to entertain this contention.
We hold, agreeing with the Courts below, that the Sri Venkataramana Temple at Mookly is a public temple, and that it is within the operation of Act V of 1947.
(2)The next question is whether the suit temple is a denominational institution.
Both the Courts below have concurrently held that at the inception the temple was founded for the benefit of Gowda Saraswath Brahmins; but the Subordinate Judge hold that as in course of time public endowments came to be made to the temple and all classes of Hindus were taking part freely in worship therein, it might be presumed that they did so as a matter of right, and that, therefore, the temple must be held to have become dedicated to the Hindu public generally.
The learned Judges of the High Court, however, came to a different conclusion.
They followed the decision in Devaraja Shenoy vs State of Madras (supra), and hold that the temple was a denominational one.
The learned SolicitorGeneral attacks the correctness of this finding on two grounds.
He firstly contends that even though the temple might have been dedicated to the Gowda Saraswath Brahmins, that would make it only a communal and not a denominational institution, unless it was established that there were religious tenets and practices special to the community, and that that had not been done.
Now, the facts found are that the members of this community migrated from Gowda Desa first to the Goa region and then to the south, that they carried with them their idols, and that when they were first settled in Moolky, a temple was founded and these idols were installed therein.
We are there.
fore concerned with the Gowda Saraswath Brahmins not as a section of a community but as a sect associated with the foundation and maintenance of the Sri Venkataramana Temple, in other words, not as a mere denomination, but as a religious denomination.
From the evidence of P. W. 1, it appears that the Gowda Saraswath Brahmins have three Gurus, that those in Moolky Petah are followers of the head of the Kashi Mutt, and that it is he that performs some of the 907 important ceremonies in the temple.
Exhibit A is a document of the year 1826 27.
That shows that the head of the Kashi Mutt settled the disputes among the Archakas, and that they agreed to do the puja under his orders.
The uncontradicted evidence of P. W. I also shows that during certain religious ceremonies, persons other than Gowda Saraswath Brahmins have been wholly excluded.
This evidence leads irresistibly to the conclusion that the temple is a denominational one, as contended for by the appellants.
The second ground urged on behalf of the respondent is that the evidence discloses that all communities had been freely admitted into the temple, and that though P. W. I stated that persons other than Gowda Saraswath Brahmins could enter only with the permission of the trustees, there was no instance in which such permission was refused.
It was contended that the inference to be drawn from this was that the Hindu public generally had a right to worship in the temple.
The law on the subject is well settled.
When there is a question as to the nature and extent of a dedication of a temple, that has to be determined on the terms of the deed of endowment if that is available, and where it is not, on other materials legally admissible; and proof of long and uninterrupted user would be cogent evidence of the terms thereof.
Where, there.
fore, the original deed of endowment is not available and it is found that all persons are freely worshipping in the temple without let or hindrance, it would be a proper inference to make that they do so as a matter of right, and that the original foundation was for their benefit as well.
But where it is proved by production of the deed of endowment or otherwise that the original dedication was for the benefit of a particular community, the fact that members of other communities were allowed freely to worship cannot lead to the inference that the dedication was for their benefit as well.
For, as observed in Babu Bhagwan Din vs Gir Har Saroop (1), "it would not in general be consonant with Hindu sentiments or practice that worshippers should be turned away".
On the findings of the Court (1) (1939) L. R. 67 I. A. 1. 908 below that the foundation was originally for the benefit of the Gowda Saraswath Brahmin community, the fact that other classes of Hindus were admitted freely into the temple would not have the effect of enlarging the scope of the dedication into one for the public generally.
On a consideration of the evidence, we see no grounds for differing from the finding given by the learned Judges in the court below that the suit temple is a denominational temple founded for the benefit of the Gowda Saraswath Brahmins, supported as it is by the conclusion reached by another Bench of learned Judges in Devaraja Shenoy vs State of Madras (supra).
In this view, there is no need to discuss whether this issue is res judicata by reason of the, decision in Writ Petition No. 668 of 1951.
(3) On the finding that the Sri Venkataramana Temple at Moolky is a denominational institution founded for the benefit of the Gowda Saraswath Brahmins, the question arises whether the appellants are entitled to exclude other communities from entering into it for worship on the ground that it is a matter of religion within the protection of article 26 (b).
It is argued by the learned Solicitor General that exclusion of persons from entering into a temple cannot ipso facto be regarded as a matter of religion, that whether it is so must depend on the tenets of the particular religion which the institution in question represents, and that there was no such proof in the present case.
Now, the precise connotation of the expression "matters of religion " came up for consideration by this Court in The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (1), and it was held therein that it embraced not merely matters of doctrine and belief pertaining to the religion but also the practice of it, or to put, it in terms of Hindu theology, not merely its Gnana but also its Bakti and Karma Kandas.
The following observations of Mukherjea J., (as he then was) are particularly apposite to the present discussion : " in the first place, what constitutes the essential (1) ; 909 part of a religion is primarily to be ascertained with reference to the doctrines of that religion itself.
If the tenets of any religious sect of the Hindus prescribe ' that offerings of food should be given to the idol at particular hours of the day, that periodical ceremonies should be performed in a certain way at certain periods of the year or that there should be daily recital of sacred texts or oblations to the sacred fire, all these would be regarded as parts of religion and the mere fact that they involve expenditure of money or employment of priests and servants or the use of marketable commodities would not make them secular activities partaking of a commercial or economic character; all of them are religious practices and should be regarded as matters of religion within the meaning of article 26 (b).
" It being thus settled that matters of religion in article 26 (b) include even practices which are regarded by the community as part of its religion, we have now to consider whether exclusion of a person from entering into a temple for worship is a matter of religion according to Hindu Ceremonial Law.
There has been difference of opinion among the writers as to whether image worship had a place in the religion of the Hindus, as revealed in the Vedas.
On the one hand, we have hymns in praise of Gods, and on the other, we have highly philosophical passages in the Upanishads des cribing the Supreme Being as omnipotent, omnicient and omnipresent and transcending all names and forms.
When we come to the Puranas, we find a marked change.
The conception had become established of Trinity of Gods, Brahma, Vishnu and Siva as manifestations of the three aspects of creation, preservation and destruction attributed to the Supreme Being in the Upanishads, as, for example, in the following passage in the Taittiriya Upanishad, Brigu Valli, First Anuvaka: " That from which all beings are born, by which they live and into which they enter and merge.
" The Gods have distinct forms ascribed to them and their worship at home and in temples is ordained as certain means of attaining salvation.
These injunctions have had such a powerful hold over the minds of the 910 people that daily worship of the deity in temple came to be regarded as one of the obligatory duties of a Hindu. 'It was during this period that temples were constructed all over the country dedicated to Vishnu, Rudra, Devi, Skanda, Ganesha and so forth, and wor ship in the temple can be said to have become the practical religion of all sections of the Hindus ever since.
With the growth in importance of temples and of worship therein, more and more attention came to be devoted to the ceremonial law relating to the construction of temples, installation of idols therein and conduct of worship of the deity.
and numerous are the treatises that came to be written for its exposition.
These are known as Agamas, and there are as many as 28 of them relating to the Saiva temples, the most important of them being the Kamikagama, the Karanagama and the Suprubedagama, while the Vikhanasa and the Pancharatra are the chief Agamas of the Vaishnavas.
These Agamas, contain elaborate rules as to how the temple is to be constructed, where the principal deity is to be consecrated, and where the other Devatas are to be installed and where the several classes of worshippers are to stand and worship.
The following passage from the judgment of Sadasiva Aiyar J. in Gopala Muppanar vs Subramania Aiyar (1), gives a summary of the prescription contained in one of the Agamas: " In the Nirvachanapaddhathi it is said that Sivadwijas should worship in the Garbagriham, Brahmins from the ante chamber or Sabah Mantabam, Kshatriyas, Vysias and Sudras from the Mahamantabham, the dancer and the musician from the Nrithamantabham east of the Mahamantabham and that castes yet lower in scale should content themselves with the sight of the Gopuram.
" The other Agamas also contain similar rules.
According to the Agamas, an image becomes defiled if there is any departure or violation of any of the rules relating to worship, and purificatory ceremonies (known as Samprokshana) have to be performed for restoring the sanctity of the shrine.
Vide judgment of (1) 911 Sadasiva Aiyar J. in Gopala Muppanar vs Subramania Aiyar (supra).
In Sankaralinga Nadan vs Raja Rajeswara Dorai(1), it was held by the Privy Council ' affirming the judgment of the Madras High Court that a trustee who agreed to admit into the temple persons who were not entitled to worship therein, according to the Agamas and the custom of the temple was guilty of breach of trust.
Thus, under the ceremonial law pertaining to temples, who are entitled to enter into them for worship and where they are entitled to stand and worship and how the worship is to be conducted are all matters of religion.
The conclusion is also implicit in article 25 which after declaring that all persons are entitled freely to profess, practice and propagate religion, enacts that this should not affect the operation of any law throwing open Hindu religious institutions of a public character to all classes and sections of Hindus.
We have dealt with this question at some length in view of the argument of the learned Solicitor General that exclusion of persons from temple has not been shown to be a matter of religion with reference to the tenets of Hinduism.
We must accordingly hold that if the rights of the appellants have to be determined solely with reference to article 26 (b), then section 3.
of Act V of 1947, should be held to be bad as infringing it.
(4) That brings us on to the main question for deter mination in this appeal, whether the right guaranteed under article 26 (b) is subject to a law protected by article 25 (2) (b) throwing the suit temple open to all classes and sections of Hindus.
We must now examine closely the terms of the two articles.
article 25, omitting what is not material, is as follows: " (1) Subject to public, order, morality and health and to the other provisions of this Part, all persons are equally entitled to freedom of conscience and the right to freely profess, practise and propagate religion.
(2) Nothing in this article shall affect the operation of any existing law or prevent the State from making any law . . . . . . . . . . (1) (1908) L.R. 35 I.A. 176.
116 912 (b)providing for social welfare and reform or the throwing open of Hindu religious institutions of a public character to all classes and sections of Hindus".
Article 26 runs as follows: "Subject to public order, morality and health.
every religious denomination or any section thereof shall have the right (a)to establish and maintain institutions for religious and charitable purposes; (b) to manage its own affairs in matters of religion; (c) to own and acquire movable and immovable property; and (d) to administer such property in accordance with law.
" We have held that matters of religion in article 26(b) include the right to exclude persons who are not entitled to participate in the worship according to the tenets of the institution.
Under this Article, therefore, the appellants would be entitled to exclude all persons other than Gowda Saraswath Brahmins from entering into the temple for worship.
Article 25(2)(b) enacts that a law throwing open public temples to all classes of Hindus is valid.
The word `public 'includes, in its ordinary acceptation, any section of the public, and the suit temple would be a public institution within article 25(2)(b), and section 3 of the Act would therefore be within its protection.
Thus, the two Articles appear to be apparently in conflict.
Mr. M. K. Nambiar contends that this conflict could be avoided if the expression "religious institutions of a public character" is understood as meaning institutions dedicated to the Hindu community in general, though some sections thereof might be excluded by custom from entering into them, and that, in that view, denominational institutions founded for the benefit of a section of Hindus would fall outside the purview of article 25(2)(b) as not being dedicated for the Hindu community in general.
He sought support for this contention in the law relating to the entry of excluded classes into Hindu temples and in the history of legislation with reference thereto, in Madras.
According to the Agamas, a public temple enures, 913 where it is not proved to have been founded for the benefit of any particular community, for the benefit of all Hindus including the excluded classes.
But the extent to which a person might participate in the worship therein would vary with the community in which he was born.
In Venkatachalapathi vs Subbarayadu (1), the following statement of the law was quoted by the learned Judges with apparent approval:, "Temple, of course, is intended for all castes, but there are restrictions of entry.
Pariahs cannot go into the court of the temple even.
Sudras and Baniyas can go into the hall of the temple.
Brahmins can go into the holy of the holies.
" In Gopala Muppanar vs Subramania Aiyar (Supra), Sadasiva Aiyar J. observed as follows at p. 258: "It is clear from the above that temples were intended for the worship of people belonging to all the four castes without exception.
Even outcastes were not wholly left out of the benefits of temple worship, their mode of worship being however made subject to severe restrictions as they could not pass beyond the Dwajastambam (and some times not beyond the temple outer gate) and they could not have a sight of the images other than the procession images brought out at the times of festivals.
" The true Position, therefore, is that the excluded classes were all entitled to the benefit of the dedication, though their actual participation in the worship was insignificant.
It was to remove this anomaly that legislation in Madras was directed for near a decade.
First came the Malabar Temple Entry Act (Madras XX of 1938).
Its object was stated to be " to remove the disabilities imposed by custom and usage on certain classes of Hindus in respect of their entry into, and offering worship in, Hindu temples".
Section 2(4) defined 'temple ' as " a place which is used as a place of public worship by the Hindu community generally except excluded classes. .
Sections 4 and 5 of the Act authorised the trustees to throw such temples open to persons belonging to the excluded classes under (1) (1890) I.L.R.113 Mad.
914 certain conditions.
This Act extended only to the District of Malabar.
Next came the Madras Temple Entry Authorisation and Indemnity Act (Madras Act XXII of 1939).
The preamble to the Act states that " there has been a growing volume of public opinion demanding the removal of disabilities imposed by custom and usage on certain classes of Hindus in respect of their entry into and offering worship in Hindu temples ", and that " it is just and desirable to authorize the trustees in charge of such temples to throw them open to. the said classes ".
Section 3 of the Act authorised the trustees to throw open the temples to them.
This Act extended to the whole of the Province of Madras.
Then we come to the Act, which has given rise to this litigation, Act V of 1947.
It has been already mentioned that, as originally passed, its object was to lift the ban on the entry into temples of communities which are excluded by custom from entering into them, and I temple ' was also defined as a place dedicated to the Hindus generally.
Now, the contention of Mr. Nambiar is that article 25(2)(b) must be interpreted in the background of the law as laid down in Gopala Muppanar vs Subramania Aiyar (supra) and the definition of 'temple ' given in the statutes mentioned above, and that the expression " religious institutions of a public character " must be interpreted as meaning institutions which are dedicated for worship to the Hindu community in general, though certain sections thereof were prohibited by custom from entering into them, and that, in that view, denominational temples will fall outside article 25(2)(b).
There is considerable force in this argument.
One of the problems which had been exercising the minds of the Hindu social reformers during the period preceding the Constitution was the existence in their midst of communities which were classed as untouchables.
A custom which denied to large sections of Hindus the right to use public roads and institutions to which all the other Hindus had a right of access, purely on grounds of birth could not be considered reasonable and defended on any sound democratic 915 principle, and efforts were being made to secure its abolition by legislation.
This culminated in the enactment of article 17, which is as follows: " Untouchability ' is abolished and its practice in any form is forbidden.
The enforcement of any disability arising out of ' Untouchability ' shall be an offence punishable in accordance with law." Construing article 25(2)(b) in the light of article 17, it is arguable that its object was only to permit entry of the excluded classes into temples which were open to all other classes of Hindus, and that that would exclude its application to denominational temples.
Now, denominational temples are founded, ex hypothesis for the benefit of particular sections of Hindus, and so long as the law recognises them as valid and article 26 clearly does that what reason can there be for permitting entry into them of persons other than those for whose benefit they were founded ? If a trustee diverts trust funds for the benefit of persons who are not beneficiaries under the endowment, he would be committing a breach of trust, and though a provision of the Constitution is not open to attack on the ground that it authorises such an act, is it to be lightly inferred that article 25(2)(b) validates what would, but for it, be a breach of trust and for no obvious reasons of policy, as in the case of article 17 ? There is, it should be noted, a fundamental distinction between excluding persons from temples open for purposes of worship to the Hindu public in general on the ground that they belong to the excluded communities and excluding persons from denominational temples on the ground that they are not objects within the benefit of the foundation.
The former will be hit by article 17 and the latter protected by article 26, arid it is the contention of the appellants that article 25(2)(b) should not be interpreted as applicable to both these categories and that it should be limited to the former.
The argument was also advanced as further supporting this view, that while article 26 protects denominational institutions of not merely Hindus but of all communities such as Muslims and Christians, article 25(2)(b) is limited in its operation to Hindu temples, and that it could 916 not have been intended that there should be imported into article 26(b) a limitation which would apply to institutions of one community and not of others.
Article 26, it was contended, should therefore be construed as falling wholly outside article 25(2)(b), which should be limited to institutions other than denominational ones.
The answer to this contention is that it is impossible to read any such limitation into the language of article 25 (2) (b).
It applies in terms to all religious institutions of a public character without qualification or reserve.
As already stated, public institutions would mean not merely temples dedicated to the public as a whole but also those founded for the benefit of sections thereof, and denominational temples would be comprised therein.
The language of the Article being plain and unambiguous, it is not open to us to read into it limitations which are not there, based on a priori reasoning as to the probable intention of the Legislature.
Such intention can be gathered only from the words actually used in the statute; and in a Court of law, what is unexpressed has the same value as what is unintended.
We must therefore hold that denominational.
institutions are within article 25 (2) (b).
It is then said that if the expression " religious institutions of a public character" in article 25 (2) (b) is to be interpreted as including denominational institutions, it would clearly be in conflict with article 26 (b), and it is argued that in that situation, article 26 (b) must, on its true construction, be held to override article 25 (2) (b).
Three grounds were urged in support of this contention, and they must now be examined.
It was firstly argued that while article 25 was stated to be " subject to the other provisions of this Part" (Part 111), there was no such limitation on the operation of article 26, and that, therefore, article 26 (b) must be held to prevail over article 25 (2) (b).
But it has to be noticed that the limitation " subject to the other provisions of this Part" occurs only in cl.
(1) of article 25 and not in el.
Clause (1) declares the rights of all persons to freedom of conscience and the right freely to profess, practise and propagate religion.
It is t is right that 917 is subject to the other provisions in the Fundamental Rights Chapter.
One of the provisions to which the right declared in article 25 (1) is subject is article 25 (2), A law, therefore, which falls within article 25 (2) (b) will control the right conferred by article 25 (1), and the limitation in article 25 (1) does not apply to that law.
It is next contended that while the right conferred under article 26(d) is subject to any law which may be passed with reference thereto, there is no such restriction on the right conferred by article 26(b).
It is accordingly argued that any law which infringes the right under article 26 (b) is invalid, and that section 3 of Act V of 1947 must accordingly be held to have become void.
Reliance is placed on the observations of this Court in The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (supra) at page 1023, in support of this position.
It is undoubtedly true that the right conferred under article 26(b) cannot be abridged by any legislation, but the validity of section 3 of Act V of 1947 does not depend on its own force but on article 25(2)(b) of the Constitution.
The very Constitution which is claimed to have rendered section 3 of the Madras Act void as being repugnant to article 26(b) has, in article 25(2)(b), invested it with validity, and, therefore, the appellants can succeed only by establishing that article 25(2)(b) itself is inoperative as against article 26(b)).
And lastly, it is argued that whereas article 25 deals with the rights of individuals, article 26 protects the rights of denominations, and that as what the appellants claim is the right of the Gowda Saraswath Brahmins to exclude those who do not belong to that denomination, that would remain unaffected by article 25(2)(b).
This contention ignores the true nature of the right conferred by article 25(2)(b).
That is a right conferred on "all classes and sections of Hindus" to enter into a public temple, and on the unqualified terms of that Article, that right must be available, whether it is sought to be exercised against an individual under article 25(1) or against a denomination under article 26(b).
The fact is that though article 25(1) deals with rights of individuals, article 25(2) is much wider in 918 its contents and has reference to the rights of communities, and controls both article 25(1) and article 26(b).
The result then is that there are two provisions of equal authority, neither of them being subject to the other.
The question is how the apparent conflict between them is to be resolved.
The rule of construction is well settled that when there are in an enactment two provisions which cannot be reconciled with each other, they should be so interpreted that, if possible, effect could be given to both.
This is what is known as the rule of harmonious construction.
Applying this rule, if the contention of the appellants is to be accepted, then article 25(2)(b) will become wholly nugatory in its application to denominational temples, though, as stated above, the language of that Article includes them.
On the other hand, if the contention of the respondents is accepted, then full effect can be given to article 26(b) in all matters of religion, subject only to this that as regards one aspect of them, entry into a temple for worship, the rights declared under article 25(2)(b) will prevail.
While, in the former case, article 25(2)(b) will be put wholly out of operation, in the latter, effect can be given to both that provision and article 26(b).
We must accordingly hold that article 26(b) must be read subject to article 25(2)(b).
(5)It remains to deal with the question whether the modifications made in the decree of the High Court in favour of the appellants are valid.
Those modifications refer to various ceremonies relating to the worship of the deity at specified times each day and on specified occasions.
The evidence of P. W. I establishes that on those occasions, all persons other than Gowda Saraswath Brahmins were excluded from participation thereof.
That evidence, remains un contradicted, and has been accepted by the learned Judges, and the correctness of their finding on this point has not been challenged before us.
It is not in dispute that the modifications aforesaid relate, according to the view taken by this Court in The Commisssioners Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt 919 (supra), to matters of religion, being intimately connected with the worship of the deity.
On the finding that the suit temple is a denominational one, the modifications made in the High Court decree would be within the protection of article 26(b).
The learned Solicitor General for the respondents assails this portion of the decree on two grounds.
He firstly contends that the right to enter into a temple which is protected by article 25(2)(b) is a right to enter into it for purposes of worship, that that right should be liberally construed, and that the modifications in question constitute a serious invasion of that right, and should be set aside as unconstitutional.
We agree that the right protected by article 25(2)(b) is a right to enter into a temple for purposes of worship, and that further it should be construed liberally in favour of the public.
But it does not follow from this that that right is absolute and unlimited in character.
No member of the Hindu public could, for example, claim as part of the rights protected by article 25(2)(b) that a temple must be kept open for worship at all hours of the day and night, or that he should personally perform those services, which the Archakas alone could perform.
It is again a well known practice of religious institutions of all denominations to limit some of its services to persons who have been specially initiated, though at other times, the public in general are free to participate in the worship.
Thus, the right recognised by article 25(2)(b) must necessarily be subject to some limitations or regulations, and one such limitation or regulation must arise in the process of harmonising the right conferred by article 25(2)(b) with that protected by article 26(b).
We have held that the right of a denomination to wholly exclude members of the public from worshipping in the temple, though comprised in article 26(b), must yield to the overriding right declared by article 25(2)(b) in favour of the public to enter into a temple for worship.
But where the right claimed is not one of general and total exclusion of the public from worship in the temple at all times but of exclusion from certain religious services, they being limited by the rules of 117 920 the foundation to the members of the denomination, ,then the question is not whether article 25(2)(b) over rides that right so as to extinguish it, but whether it is possible so to regulate the rights of the persons protected by article 25(2)(b) as to give effect to both the rights.
If the denominational rights are such that to give effect to them would substantially reduce the right conferred by article 25(2)(b), then of course, on our conclusion that article 25(2)(b) prevails as against article 26(b), the denominational rights must vanish.
But where that is not the position, and after giving effect to the rights of the denomination what is left to the public of the right of worship is something substantial and not merely the husk of it, there is no reason why we should not so construe article 25(2)(b) as to give effect to article 26(b) and recognise the rights of the denomination in respect of matters which are strictly denominational, leaving the rights of the public in other respects unaffected.
The question then is one of fact as to whether the rights claimed by the appellants are strictly denominational in character, and whether after giving effect to them, what is left to the public of the right of worship is substantial, That the rights allowed by the High Court in favour of the appellants are purely denominational clearly appears from the evidence on record.
P.W. 1 put forward two distinct rights on behalf of the Gowda Saraswath Brahmins.
He firstly claimed that no one except members of his community had at any time the right to worship in the temple except with their permission; but he admitted that the members of the public were, in fact, worshipping and that permission had never been refused.
This right will be hit by article 25 (2) (b), and cannot be recognised.
P.W. I put forward another and distinct right, namely, that during certain ceremonies and on special occasions, it was only members of the Gowda Saraswath Brahmin community that had the right to take part therein, and that on those occasions, all other persons would be excluded.
This would clearly be a denomi national right.
Then, the question is whether if this right is recognised, what is left to the public of their 921 right under article 25(2)(b) is substantial.
The learned Solicitor General himself conceded that even apart from the special occasions reserved for the Gowda Saraswath Brahmins, the other occasions of worship were sufficiently numerous and substantial, and we are in agreement with him.
On the facts, therefore, it is possible to protect the rights of the appellants on those special occasions, without affecting the substance of the right declared by article 25( 2)(b); and, in our judgment, the decree passed by the High Court strikes a just balance between the rights of the Hindu public under article 25(2)(b) and those of the denomination of the appellants under article 26(b) and is not open to objection.
Then, it is said that the members of the public are not parties to the litigation, and that they may not be bound by the result of it, and that, therefore, the matter should be set at large.
Even if the members of the public are necessary parties to this litigation, that cannot stand in the way of the rights of the appellants being declared as against the parties to the action.
Moreover, the suit was one to challenge the order of the Government holding that all classes of Hindus are entitled to worship in the suit temple.
While the action was pending, the Constitution came into force, and as against the right claimed by the plaintiffs under article 26(b), the Government put forward the rights of the Hindu public under article 25 (2)(b).
There has been a full trial of the issues involved, and a decision has been given, declaring the rights of the appellants and of the public.
When the appellants applied for leave to appeal to this Court, that application was resisted by the Government inter alia on the ground that the decree of the High Court was a proper decree recognising the rights of all sections of the public.
In view of this, there is no force in the objection that the public are not, as such, parties to the suit.
It is their rights that have been agitated by the Government and not any of its rights.
In the result, both the appeal and the application for special leave to appeal must be dismissed.
922 The parties will bear their own costs throughout.
The appellants will take their costs out of the temple funds.
Appeals Dismissed.
| This was an appeal by the trustees of the ancient and renowned temple of Sri Venkataramana of Moolky Petta, who were managing the temple on behalf of the Gowda Saraswath Brahmins in accordance with a Scheme framed in a suit under section 92 of the Code of Civil Procedure.
After the passing of the Madras Temple Entry Authorisation Act (Madras V of 1947) which had for its object the removal of the disability of Harijans from entering into Hindu public temples, the trustees made a representation to the Government that the temple was a private one, and, therefore, outside the operation of the Act.
But the Government did not accept that position and held that the Act applied to the temple.
Thereupon the trustees brought the suit, out of which the appeal arises ' for a declaration that the temple was not one as defined by section 2(2) of the Act but was a denominational one having been founded exclusively for the Gowda Saraswath Brahmins.
It was contended that section 3 of the Act was void as being repugnant to article 26(b) of the Constitution which vouchsafed to a religious denomination the right to manage its own affairs in matters of religion.
The trial court found against the appellants.
It held that matters of religion did not include rituals and ceremonies.
But on appeal the High Court while holding that the public were entitled to worship in the temple, passed a limited decree in favour of the appellants by reserving to the latter the right to exclude the general public during certain ceremonies in which the members of the denomination alone were entitled to participate.
The question for decision was whether the rights of a religious denomination to manage its own affairs in matters of religion under article 26(b) can be subjected to, and controlled by, a law protected by article 25(2)(b) of the Constitution.
Held, that the expression " religious institutions of a public character " occurring in article 25(2) (b) of the Constitution contemplates not merely temples dedicated to the public as a whole but also those founded for the benefit of sections thereof and includes 114 896 denominational temples as well.
While article 25(1) deals with the rights of individuals and article 26(b) with those of religious 2 denominations, article 25(2) covers a much wider ground and controls both.
Article 26(b) must, therefore, be read subject to article 25(2) (b) of the Constitution.
Although the right to enter a temple for purposes of worship protected by article 25(2) (b) must be construed liberally in favour of the public, that does not mean that that right is absolute and unlimited in character.
It must necessarily be subject to such limitation or regulation as arises in the process of harmonising it with the right protected by article 26(b).
Where the denominational rights claimed are not such as can nullify or substantially reduce the right conferred by article 25(2) (b), that Article should be so construed as to give effect to them, leaving the rights of the public in other respects unaffected.
The expression 'matters of religion ' occurring in article 26(b) of the Constitution includes practices which are regarded by the community as part of its religion and under the ceremonial law pertaining to temples, who are entitled to enter into them for worship and where they are entitled to stand for worship and how the worship is to be conducted are all matters of religion.
The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshimindra Thirtha Swamiar of Sri Shirur Mutt, ; ; Gopala Muppanar vs Subramania Aiyar, (1094) and Sankaralinga Nadan vs Raja Rajeswara Dorai, (1908) L.R. 35 I.A. 176, referred to.
Held further, that it is well settled that where the original dedication is proved to have been for the benefit of a particular community the fact that members of other communities were allowed to worship cannot lead to the inference that the dedication was also for their benefit.
Babu Bhagwan Din vs Gir Hay Saroop, (1939) L.R. 67 I.A. referred to.
|
Summarize this legal judgement text concisely | Civil Appeal No. 217 of 1956.
Appeal by special leave from the decision date 880 December 7, 1953, of the Labour Appellate Tribunal of India, Madras, in Misc.
Case No. 111 C. 387 of 1953.
A. V. Vishwanatha Sastri and section Subramanian for the appellants.
M. section K. Sastri, for the respondents.
November 5.
The following Judgment of the Court was delivered by GAJENDRAGADKAR J. These three appeals arise out of two industrial disputes Nos. 24 and 26 of 1951 between the appellants and their workmen.
Dispute No. 24 of 1951 had arisen between the management and workers of the Sree Meenakshi Mills Ltd., Madurai, whereas dispute No. 26 of 1951, was between the management and workers of the Thiakesar Alai Manapparai.
Both the disputes were in respect of bonus claimed by the workmen for the year 1950 51.
The workmen claimed bonus for the year 1950 51 on the allegation that the two mills constituted one unit and had made profits during the relevant year.
On the other hand, the appellants contended that the two mills were two different units and the claims for bonus made by the workmen against them should not be considered together.
According to the appellants, during the relevant year there was a trading loss and as such no bonus was payable to the workers.
The Industrial Tribunal rejected the pleas raised by the appellants and held that the two mills formed part of the same unit.
It also came to the conclusion that for the year in question there was a surplus of Rs. 2,87,676 against which the workmen 's claim for bonus was justified.
That is why the tribunal awarded three months ' bonus to the workmen.
Against this decision the appellants preferred two appeals Nos. 133 and 134 of 1952 to the Labour Appellate Tribunal of India at Madras.
In these appeals the appellants challenged the findings made by the tribunal against them and urged that bonus was not payable during the relevant year.
The workmen also preferred an appeal, No. 168 of 1952, and in this appeal they claimed a larger bonus than what had been awarded by the tribunal below.
The 881 appellate tribunal confirmed the finding of the tribunal that the two mills formed part of the same unit.
According to the appellate tribunal, the net surplus available for distribution as bonus came to Rs. 2,57,496.
The claim made by the appellants in respect of various deductions was examined by the appellate tribunal and deductions were substantially, disallowed in respect of three items.
In respect of an amount of Rs. 8,43,927 claimed by the appellants as depreciation on machinery and buildings the appellate tribunal concurred with the industrial tribunal in holding that the claim only for a sum of Rs. 4,00,000 was admissible; in other words, a claim for deducting the balance of Rs. 4,43,927 was disallowed.
It is this finding in particular with which we are directly concerned in the present appeals.
it may be pointed out at this stage that in determining the amount of net surplus available for distribution as bonus, the appellate tribunal agreed with the industrial tribunal that the provision for taxation made by the appellants to the extent of Rs. 1,75,000 was adequate.
In the result, the appeals preferred by the appellants as well as the respondents failed and were dismissed by the appellate tribunal.
Against the order dismissing their appeals, the appellants have preferred to this Court by special leave the present Civil Appeals Nos. 218 and 219 of 1956.
The appellants had also preferred an application for review before the Labour Appellate Tribunal, Misc.
Case No. III C 387 of 1953 (Review) on the ground that the order passed by the Labour Appellate Tribunal was patently erroneous inasmuch as there was a mistake apparent on the face of the record which should be corrected under the appellate tribunal 's powers of review.
The appellate tribunal hold that it had no power of review and that, even if it bad such a power, no case had been made out for the exercise of such power because there was no mistake apparent on the face of the record which could not have been discovered whet) the order was made in the presence of the parties.
Against this decision, the appellants have preferred to this Court by special leave the present Civil A peal No. 217 of 1956.
882 In appeals Nos. 218 and 219 of 1956, the main point which has been urged before us on behalf of the appellants is that the appellate tribunal erred in law in disallowing the appellants ' claim in respect of depreciation debited by the appellants to the extent of Rs. 4,43,927.
In the appeal preferred against the order passed by the appellate tribunal refusing to review its decision, it has been urged before us by the learned counsel for the appellants that the appellate tribunal was in error in holding that it had no jurisdiction to review its decision under 0.
47 of the Code of Civil Procedure.
It has also been argued that on the merits it was wrong to have held that the appellants had failed to make out a case for the exercise of the said jurisdiction.
It may be relevant at this stage to set out the financial position of the appellants during the relevant year as summed up in the judgment of the appellate tribunal: "Net Profit as per exhibit M. 1 .
Rs. 2,40,302 Add the sum wrongly debited as cost of repairs etc.
(Rs. 2,57,793 minus Rs. 1,00,000) .
Rs.1,57,793 Add bonus for the year 1949 50 wrongly debited to 1950 51. .Rs.1,49,920
Add bonus paid to clerical staff for 1950 51 .
Rs.37,896 Add depreciation debited by the company: .
Rs.8,43,927 Add provision for taxation: . .Rs.1,75,000
Add donation to a College: . .Rs.40,000 Total .
Rs. 16,44,838 Thus the gross total profit comes to Rs. 16,44,838.
From this the following deductions have to be made: Depreciation allowed : Rs.4,00,000 Bonus for the year 1950 51 paid to clerical staff: Rs.37,896 Provision for taxation; Rs.1,75,000 883 Return on capital (preference and ordinary shares) :.
Rs. 2,94,500 Return on the reserve used as working capital at 4 per cent.
: Rs. 2,23,946 Provision for rehabilitation (Rs. 6,56,000 minus Rs. 4,00,000): Rs. 2,56,000 Total .
Rs 13,87,342 Thus the net surplus available fordistribution as bonus comes to Rs. 16,44,838 minusRs.
13,87,342.
Rs. 2,57,496.
" Since in the present appeals we areconcerned only with the amount of depreciation debited by the appellants, it would be useful to set out the depreciation analysis as explained by the representative of the appellants in the Court of the Industrial Tribunal.
The depreciation analysis, according to this statement, is made thus as per the Income tax Act: Normal.
Extra.
Initial. "(245 days) Madurai.
3,17,331 38,465 2,87,250 (250 days) Usil 2,23,206 Including ampatti extra.
16,077.
" It would be noticed that the total of these amounts comes to Rs. 8,82,329.
The true nature and character of the workmen 's claim for bonus against their employers is now well settled.
Bonus is not, as its etymological meaning would suggest, a mere matter of bounty gratuitously made by the employer to his employees ; nor is it a matter of deferred wages.
It has been held by this Court in Muir Mills Co. Ltd. vs Suti Mills Mazdoor Union, Kanpur (1) that " the term 'bonus ' is applied to a cash payment made in addition to wages.
It generally represents the cash incentive given conditionally on certain standards of attendance and efficiency being attained.
" This decision is based on the view that both labour and capital contribute to the earnings of the industrial concern and so it is but fair that labour should derive some benefit if there is (1) [1955] I S.C.R. 991.
112 884 surplus available for that purpose.
Even go, the claim for bonus cannot be effectively made unless two conditions are satisfied; the wages paid to workmen fall short of what can be properly described as living wages; and the industry must be shown to have made profits which are partly the result of the contribution made by the workmen in increasing production.
In determining the question as to whether the industry has made profit, and, if so, how much is the net surplus in a given year, provision has first to be made in respect of prior charges.
This principle has been recognized by what is often described as the Full Bench formula as laid down in the matter of The Mill Owners Association, Bombay vs The Rashtriya Mill Mazdoor Sangh, Bombay (1).
According to this formula, distributable surplus has to be ascertained after providing from the gross profits for (1) depreciation, (2) rehabilitation, (3) return at 6% on the paid up capital, (4) return on the working capital at a lesser but reasonable rate, and (5) for an estimated amount in respect of the payment of income tax.
It is common ground before us that the question as to whether the workmen 's claim for bonus is justified or not must be decided in the light of this Full Bench Formula.
The appellants concede that in determining the question as to whether they have made a trading profit during the relevant year the industrial tribunal is not required to adopt the same basis as under the Income tax Act.
It is, however, urged that in dealing with this question there is no justification for not giving effect to the relevant provisions of the Incometax Act in respect of depreciation.
Section 10 of the Income tax Act provides for three kinds of allowances in respect of depreciation.
Section 10 (vi) deals with allowances in respect of depreciation of buildings, machinery, plant or furniture used for the purposes of the business, being the property of the assessee, of a sum equivalent to such percentage on the original cost thereof to the assessee as may in any case or class of cases be prescribed and in any other cases, to such percentage on the written down value thereof as may in (1)(1950) 885 any case or class of cases be prescribed.
This allowance is in respect of what is described as normal depreciation.
Section 10 (vi) further provides for what is described as initial depreciation in cases where the buildings have been newly erected or the machinery or plant being new, (not being machinery or plant entitled to the development rebate under el.
(vi b)), has been( installed after March 31, 1945, a further sum (which shall however not be deductible in determining the written down value for the purpose of this clause) in respect of the year of erection or installation as prescribed by cls.
(a), (b) and (c) of section 10 (vi).
Then section 10 (vi a) provides for allowances of what is described as additional depreciation.
This is in respect of depreciation of buildings newly erected or of machinery or plant being new which has been installed after March 31, 1948.
Section 10 (vi b) also provides for allowance "in respect of machinery or plant being new, which has been installed after the 31st day of March, 1954, and which is wholly used for the purposes of the business carried on by the assessee, a sum by way of development rebate in respect of the year of installation equivalent to twenty five per cent.
of the actual cost of such machinery or plant to the assessee: Pro vided that no allowance under this clause shall be made unless the particulars prescribed for the purpose of clause (vi) have been furnished by the assessee in respect of such machinery or plant." The question which arises for decision is whether, in determining the question as to whether net surplus is available for distribution by way of bonus or not, it is obligatory on the industrial tribunals to allow the whole of the depreciation admissible under the said provisions of the Income tax Act.
Before dealing with this question, it may be relevant to mention one fact on which both the tribunals below have placed emphasis in the present case.
It appears that, when the proceedings were pending before the industrial tribunal, an application was made by the workmen requesting the tribunal to direct the appellants to allow the workmen inspection of accounts.
The Tribunal passed an order for inspection and inspection 886 was allowed.
Thereupon an application was made on behalf of the workmen on February 28, 1952, for particulars relating to the amount of Rs. 8,44,000 claimed by the appellants by way of depreciation.
The appellants promised to supply the information on March 8, 1952 ; but ultimately, on behalf of the appellants, it was stated to the tribunal that the appellants were not able to give the details called for.
The industrial tribunal and the appellate tribunal have both adversely commented on this conduct of the appellants and they were presumably disposed to draw an adverse inference against the appellants in respect of the amount of depreciation in question.
Mr. Viswanatha Sastri, for the appellants, however, contended before us that though the tribunals below may have been justified in commenting on the default of the appellants to supply the particulars, that itself would not justify a drastic reduction in the amount of depreciation claimed by the appellants.
He argues that the balancesheet of the appellants has been duly audited and it was not reasonable for the tribunals to have disallowed such a large amount as Rs. 4,43,927 under the claim of depreciation.
It is fairly conceded by him that if the tribunals below were not bouns to grant claims for depreciation on what is described as initial and additional depreciations, then he could not challenge the propriety or correctness of the decision of the tribunals in disallowing the items appearing in the depreciation account in respect of these depreciations.
It is in the light of these facts that the question raised by the appellants must be considered.
This question has been decided by a Full Bench of the Labour Appellate Tribunal in U.P. Electric Supply Co. Ltd. vs Their Workmen (1).
It is true that the question of bonus had to be considered in this case in the light of the provisions of the U. P.
Nevertheless the Full Bench has dealt with this matter on general considerations and has set at rest the divergence of views expressed by different Benches of the tribunal on this point.
According to this decision, the initial depreciation and additional depreciation (1) 887 are in a sense abnormal additions to the income tax depreciation and they are designed to meet particular contingencies 'and for a limited period.
It would, therefore, not be fair to the workmen that these two depreciations are rated as prior charges before the available surplus is ascertained.
It is likely that, in many cases, if these two depreciations are allowed as prior charges no surplus would be left even though workmen may have laboured during the year to the best of their ability and the concern was for all purposes prosperous.
In other words, according to this decision, considerations on which the grant of additional depreciation may be justified under the Income tax Act are different from considerations of social justice and fair apportionment on which the original Full Bench formula in regard to the payment of bonus to the workmen is based.
That is why, in the result, this subsequent Full Bench held that only normal depreciation including multiple shift depreciation, but not initial or additional depreciation, should rank as prior charge in applying the Full Bench formula as to the payment of bonus.
If it cannot be disputed that in industrial adjudication it is not obligatory to adopt the very same procedure as prescribed by the Income tax Act for ascertaining gross profits and then determining the amount of net surplus available, it is not easy to accept the appellants ' argument that in respect of depreciation alone industrial tribunals must necessarily and in every case follow the relevant provisions of the Income tax Act.
If that be the true position, then we see no reason why, in respect of one item of debit only the technical provisions of the Income tax Act must be followed in industrial adjudications in respect of workmen 's claim for bonus.
On the whole, the reasons given by the appellate tribunal in the case of The U.P. Electric Supply Co. Ltd. (1) appear to us to be satisfactory ; and so we are not prepared to accept the appellant 's argument that the appellate tribunal in the present case has erred in law in not allowing the appellant 's claim for initial and additional depreciations.
In our opinion, therefore, the main point urged by the appellants in Appeals Nos. 218 and 219 of 1956 (1) 888 cannot succeed.
That takes us to the two other points raised by the appellants in Appeal No. 217 of 1956.
The first point which has been raised in this appeal by the appellants about the jurisdiction of the appellate tribunal to review its own orders in appropriate cases under O. 47 of the Code of Civil Procedure.
This Court has recently had occasion to consider the question about the applicability of the Code of Civil Procedure to the proceedings before the Labour Appellate Tribunal in Mills.
Martin Burn Ltd. vs R. A. Banerjee (Civil Appeal No. 92 of 1957).
Section 9(1) and section 10 of the Industrial Disputes (Appellate Tribunal) Act, 1950, as well as the relevant rules and orders framed under the Act were considered and it was held that the Code of Civil Procedure applies to the proceedings before the appellate tribunal with the result that the appellate tribunal can exercise its powers under O. 41, r. 21 as well as under section 151 of the Code.
It is true that in this case there was no occasion to consider the applicability of the provisions of O. 47 of the Code but that does not make any difference.
If the Code of Civil Procedure applies to the proceedings before the Labour Appellate Tribunal, it is clear that the provisions of O. 47 would apply to these proceedings as much as s.151 of the Code or the provisions of O. 41.
We must accordingly hold that the appellate tribunal erred in law in coming to the conclusion that it bad no jurisdiction to review its own order under the provisions of O. 47 of the Code.
As we have already pointed out, the appellate tribunal has also held that even if it had jurisdiction to review its decision or judgment, in the present case it would not grant the appellants ' request because it had not been shown that the order or decision suffered from any mistake which could not have been known when the order was pronounced in open court in the presence of both the parties in the present proceedings.
Mr. Viswanatha Sastri, for the appellants, argues that this view is obviously wrong and should be reversed.
In support of his argument, the learned counsel has invited our attention to the fact that, when the appeal 889 was pending before the appellate tribunal, a statement had been filed by the appellants showing that the provision for income tax had to be revised in view of the findings recorded by the industrial tribunal.
According to this statement, no surplus was available for payment of bonus to workmen even on the assumption that the findings recorded by the tribunal were correct.
The appellants pointed out in this statement that if an amount of Rs. 4,43,927 was disallowed by way of depreciation that would necessarily add to the amount of gross profits and in consequence the provision for income tax would have to be proportionately increased.
The appellants 'case was that instead of Rs.1,75,000 which had been allowed by the industrial tribunal by way of provision for income tax, it would be necessary to allow an amount of Rs. 4,75,582 in that behalf.
The appellants ' grievance is that though this statement was filed before the appellate tribunal, the appellate tribunal has not considered it at all.
On the other hand, it appears from the judgment of the appellate tribunal that this point was not raised by the appellants before it in their arguments.
No grievance was made and no higher amount was claimed by them to be reserved for taxation.
The appellate tribunal has also observed that the point raised by the appellants in their review petition did not show that any new and important matter had been discovered which, after the exercise of due diligence, would not have been discovered by the parties at the time of the hearing of the appeal.
Besides, the appellate tribunal also held that there was no mistake apparent on the face of the record.
Technically there may be some force in the observations made by the appellate tribunal; but we cannot overlook the fact that a written statement had been filed before the appellate tribunal expressly and specifically raising this point.
That is why we propose to deal with the merits of the argument and not to reject it on the ground that this argument had not been urged at the proper stage.
On the merits, the argument is that, if out of the total amount of Rs. 8,43,927 debited by the appellants to depreciation, an amount of Rs. 4,43,927 is disallowed, 890 that must inevitably add to the total amount of gross profits and if the total amount of ' gross profits is increased, logically provision for a higher amount of income tax must be made.
Thus presented the argument is simple and at first blush appears to be attractive; but the difficulty in accepting the argument is that the total amount of gross profits determined by Industrial Tribunals in these proceedings is not and cannot necessarily be the taxable gross profits of the employer.
We have already observed that in determining the trading profits of the employer in such disputes, the method adopted by the industrial tribunals does not conform to all the requirements and provisions of the Income tax Act, and so it would be fallacious to assume that the gross profits determined by the industrial tribunal should be taken to be gross profits that would be necessarily taxable under the Income tax Act.
Besides, it would be relevant to remember that the provision for taxation in question has been made by the appellants themselves and presumably it is based on the appellants anticipation as to how much approximately they will have to pay by way of income tax.
But, apart from this consideration, there can be no doubt that the appellants would get exemption from the payment of income tax in respect of the amounts of initial and additional depreciation also as shown in their books of accounts.
That is a right which has been conferred on the appellants by the relevant provisions of section 10 of the Income tax Act; and the benefit which the appellants are entitled to get under the said section cannot be ignored in deciding whether or not the provision of the sum of Rs. 1,75,000 for taxation purposes is adequate or not.
We think it is not open to the appellants to contend that though for the amounts covered by the normal and additional depreciations they would not be required to pay income tax, nevertheless they should be allowed to provide for the payment of income tax in respect of these two items merely on the ground that they are disallowed by the industrial tribunal and have thus added to the total of gross profits as determined by the tribunal.
The adequacy 891 or otherwise of the provision for income tax must necessarily be judged in the light of the income tax Act since it is under the said Act that the liability to pay tax would ultimately be determined.
Besides, if the appellants ' argument is accepted and an amount notionally payable by way of income tax in respect of disallowed items of depreciation is added to the estimated amount of income tax provided by the appellants, the very object of disallowing the two items of depreciation would be substantially defeated.
On the other hand, the rejection of the appellants ' argument would not mean any hardship because the additional amount sought to be added by them in the provision for income tax would definitely not have to be paid by them.
We are, therefore, satisfied that the grievance made by the appellants against the order passed by the appellate tribunal on the ground that it suffers from a mistake apparent on the face of the record is not well founded.
It would now be necessary to refer briefly to the decisions of industrial courts to which our attention has been drawn by the learned counsel for the appellants.
In Model Mills, etc.
Textile Mills Nagpur vs Rashtriya Mill Mazdoor Sangh (1), the implications of the Full Bench formula for ascertainment of bonus have been explained.
It is observed that " the formula did not purport to direct what a concern should do or should not do with its own moneys.
In evolving the formula the rights and liabilities of the parties inter se in notional satisfaction of their legitimate claims as two co operating units in the venture were tried to be equated.
Opinions might differ as to the weightage to be attached to the various components constituting the formula.
But the formula has to be taken as a whole in order that an equitable balance between the rights of capital and labour might be achieved for the ascertainment of bonus.
" It may incidentally be pointed out that this decision recognizes that income tax calculated on the trading (I) (1955) I L. L. J. 534. 113 892 profits for the year must be deducted as a prior charge from the profits even though exemption under the Income tax Act is granted for the year in question taking into consideration the past year 's losses.
The same view has been expressed by the appellate tribunal in Mahalaxmi Wollen Mills Ltd. vs 'Their Work Workmen(1) In this case, it has been held that "even if a concern is allowed exemption from the levy of incometax because of prior losses or unabsorbed depreciation, etc., that by itself is no ground for preventing the concern from claiming the amount of income tax it would have been liable to pay if the profits made in the relevant year alone had been taken into account.
Hence, in calculating the amount of available surplus, the amount of income tax payable for that trading year is to be deducted irrespective of the fact whether the company in fact pays tax for the year or not ".
Similarly in Bennett Coleman and Company, Ltd. vs Their Workmen(2) the Labour Appellate Tribunal has held that " unabsorbed depreciation and loss incurred during prior years are allowed under section 24 (2) of the Income tax Act to be adjusted against the profits of a future year.
Where the company claim, , either to adjust this amount against gross profits or to deduct such amount of income tax as would be payable on the profits if the said two items are not to be adjusted, labour cannot be permitted to refuse relief resting on unabsorbed loss and depreciation and at the same time try to get benefit for itself by refusing provision for tax resting on those very items which are permitted to be adjusted by the income tax authorities which will result in reduced income tax or no tax at all.
" It would thus appear from the decisions cited before us that industrial tribunals have consistently taken the view that income tax calculated on the trading profits for the relevant year must be deducted as a prior charge from the gross profits even though the employer may be entitled to claim exemption under the Income tax Act in view of the fact that he had suffered losses during the previous year.
Prima (1)(1956) I L. L. J. 305.
(2)(1955) 893 facie it may be said that, if the essential basis for deciding the workmen 's claim for bonus in a given year is the existence of the net surplus available for that year, it may not be permissible to question the propriety for the provision for income tax made by the employer solely on the ground that in view of his previous year 's losses he may not be called upon to pay income tax during the year in question.
After all, in this connection the calculations are made by reference to the financial position of the employer during the particular year only and in these calculations considerations relevant under the Income tax Act in regard to the financial losses of the employer in the previous year would not be allowed to enter.
However, in the present appeals we are not called upon to consider the correctness of the view taken by the Appellate Tribunal in these oases and so we need not pursue the matter any further.
Mr. Viswanatha Sastri has strongly relied on two labour decisions reported in B. E. section T. Workers ' Union vs Bombay Suburban Electric Supply Ltd. (1), and Greaves Cotton and Crompton Parkinson, Ltd. vs Its Workmen (2).
These two decisions no doubt support the appellants ' arguments before us but, for the reasons which we have already given, we must hold that these decisions are not sound or correct.
The last case to which our attention has been drawn by Mr. Viswanatha Sastri is the decision of the Labour Appellate Tribunal in Bengal Chemical & Pharmaceutical Works, Ltd. vs Their Workmen (3).
This case decides that " in providing for income tax the tax payable by the concern on its income earned in the year for which bonus is claimed must be ascertained.
The amount of income tax actually paid during the year which is the tax of the income of the previous year should not be taken into account.
" In this case, the tribunal has observed that "for the purpose of ascertaining the income tax which may be payable by the employer for the year in question, the figures (1) (1957) 2L. J. II 2. (3) (2) 894 appearing on the expenditure side of the profit and loss account of that year have to be marshalled and examined.
" This case is not of much help in deciding the point with which we are concerned.
In the result, the appeals fail on the merits and must be dismissed with costs.
There will, however, be one set of costs in all these appeals.
Appeals dismissed.
| The workmen demanded bonus for the year 1950 5, on the allegation that the employers had made profits during the relevant year.
The employers resisted the demand on the ground that 879 there was a trading loss in the year and as such no bonus was payable.
To determine the available surplus out of which bonus was to be paid, the employers deducted out of their gross profits an amount for depreciation admissible under the Income tax Act.
The industrial tribunal disallowed a portion of the depreciation and found that there were profits in the relevant year and awarded three months bonus to the workmen.
The employers preferred appeals to the Labour Appellate Tribunal but they were dismissed.
The employers then applied to the Appellate Tribunal for a review and the Tribunal dismissed the application holding that it had no power to review its own decision and that even if it had the power it would not grant the review as no case for review had been made out.
Held, that the whole of the depreciation admissible under the Income tax Act is not allowable in determining the available surplus.
The initial depreciation and the additional depreciation are abnormal additions to the income tax depreciation and it would not be fair to the workmen if these depreciations are rated as prior charges before the available surplus is ascertained.
Considerations on which the grant of additional depreciation may be justified under the Income tax Act are different from considerations of social justice and fair apportionment on which the original Full Bench formila in regard to the payment of bonus to the workmen is based.
That is why only normal depreciation including multiple shift depreciation should rank as prior charges.
U.P. Electric Supply Co. Ltd. vs Their Workmen, , approved.
The Labour Appellate Tribunal had the power to review its own orders.
M/s. Martin Burn Ltd. vs R. N. Banerjee, [1958] S.C.R .5I4, followed.
The method adopted by the industrial tribunals in deter mining the trading profits of the employer is an industrial dispute, does not conform to the requirements and provisions of the Income tax Act, and it would, therefore, be fallacious to assume that gross profits determined by the industrial tribunal can be taken to be gross profits that would necessarily be taxable under the Income tax Act.
In determining the available surplus for payment of bonus provision for a higher amount of incometax cannot be made merely because the claim to initial and additional depreciation has been disallowed which increase the amount of gross profits.
|
Summarize this legal judgement text concisely | ions Nos. 126 and 127 of 1957.
(Under Article 32 of the Constitution of India for enforcement of Fundamental Rights).
N. C. Chatterjee and Nanak Chand, for the petitioners.
M. C. Setalvad, Attorney General for India, B. Sen and R. H. Dhebar, for the respondents.
October 31.
The following Order of the Court was delivered by DAS C.J.
In their respective separate petitions, the petitioners pray (1) for an order, direction or writ in the nature of certiorari and/or prohibition calling for the records in the case of the Assistant Collector of Land Customs & Central Excise, Amritsar, against the two petitioners and one Moshe Baruk, on the file of the Additional District Magistrate of Amritsar and for quashing the proceedings therein, and (2) for an order, direction or writ in the nature of habeas corpus for the production before this Court of the persons of the petitioners to be dealt with according to law.
The facts appearing from the records are shortly as follows: The petitioner, Leo Roy Frey, purchased a car No. C.D. from an officer of the American Embassy in Paris.
This car was sold by the petitioner Frey to the petitioner Thomas Dana, in May 1957.
On transfer, the car was registered in the name of the petitioner Dana on May 18, 1957.
Both the petitioners thereafter booked their passages through the, 824 American Express Company from Geneva to Bombay by s.s. ASIA.
The car was also shipped by the same vessel.
The two petitioners disembarked at Karachi Ion June 11, 1957, and after a brief halt at Karachi, they left together by plane for Bombay and reached Bombay on the same day.
petitioners stayed together at the Ambassador Hotel at Bombay from June 11, 1957, to the afternoon of June 19, 1957.
On the last mentioned date both of them left Bombay by plane and reached Delhi the same evening.
They occupied room No. I at Janpath Hotel and stayed there from June 19, to June 29, 1957.
After the car, which had been booked by rail from Bombay to Delhi, had arrived in Delhi, the two petitioners left Delhi and travelled together in the car from Delhi to Amritsar on June 22, 1957, and after staying the night there, they arrived at Attari Road Land Customs Station on their way out to Pakistan on June 23, 1957.
The Customs officers there required the petitioners to declare in Baggage Declaration Forms supplied to them the articles which they had in their possession, including any goods which were subject to Export Trade Control and/or Foreign Exchange restrictions and/or were dutiable.
Each of the petitioners completed his Baggage Declaration Form and handed it over to the Customs authorities duly signed by him.
On that very day the persons of each of the petitioners were also searched and certain currency and movable property which had not been included in the baggage declaration were recovered.
Amongst other things, a pocket radio and a time piece were recovered from the petitioner Dana and a pistol of 22 bore with 48 live cartridges of the same bore was recovered from the person of the petitioner Frey.
Both the petitioners were put under arrest on the same day, namely, June 23, 1957.
On June 30,1957, the petitioners were interrogated and the car was thoroughly searched.
As a result of such intensive search and minute inspection, a secret chamber above the petrol tank was discovered.
On opening the secret chamber, Indian currency to the tune of Rs. 8,50,000 and U.S. dollars amounting to 10,000 were discovered in the concealed recess and 825 seized by the police.
On July 7, 1957, notice was issued to the petitioner Dana under section 167(8) of the Sea Customs Act to show cause before the Collector why under that section penalty should not be imposed on, him and why the seized articles should not be confiscated.
A similar notice was served on the petitioner Frey, on July 9, 1957.
The petitioners made representations in writing and were also heard in person.
On July 24, 1957, the Collector of Central Excise and Land Customs made an order for the confiscation of the currency and also of the motor car with an option to the petitioner Dana to redeem the car on payment of Rs. 50,000 and also ordered confiscation of articles other than the currency recovered from the car subject to redemption on payment of Rs. 100.
The Collector was also satisfied that each of the two petitioners was equally guilty of an offence under section 167(8) of the Sea Customs Act and imposed a personal penalty of Rs. 25,00,000 on each of the petitioners, to be paid within two months from the date of the order or such extended period as the adjudicating officer might allow.
On August 12, 1957, the Assistant Collector of Customs and Central Excise, Amritsar, lodged a complaint against the two petitioners and one Moshe Baruk of Bombay before the Additional District Magistrate, Amritsar, under section 23 read with section 8 of the Foreign Exchange Regulations Act, 1947 and section 167 (81) of the , as amended by the Sea Customs (Amendment) Act, 1955.
Subsequently, a fresh complaint was filed by the same Assistant Collector of Land Customs and Central Excise against the two petitioners and the said Moshe Baruk before the Additional District Magistrate, Amritsar, ' under section 23 read with section 8 of the Foreign Exchange Regulations Act, 1947, and section 167(81) of the and s ' 120 B of the Indian Penal Code, read with section 23/23 B, Foreign Exchange Regulations Act and section 167(81), .
A case was also started against the petitioner Frey under the Indian Arms Act for being in possession of the pistol and the cartridges in contravention of the provisions of section 20 of 826 that Act.
He was ordered to be let out on bail in the sum of Rs. 10,000 with one surety in the Arms Act case, which he furnished.
The trial of the Arms Act case has concluded in the Court of the Additional District Magistrate but orders are pending.
The petitioners, Frey and Dana, were directed to be released on bail in the sum of rupees five lakhs and ten lakhs respectively, which were finally reduced by the High Court to rupees two lakhs and five lakhs respectively.
Neither of the petitioners could furnish the requisite security and they have, therefore, been in judicial custody.
They have now come forward with these applications for the reliefs already mentioned.
Their main contention, urged before us, is that they have been deprived of their liberty otherwise than in accordance with procedure established by law.
In ordinary circumstances the production of the order or warrant for the apprehension and detention of an undertrial prisoner would be a good return to a writ of habeas corpus.
But the petitioners contend that in this case there has been a violation of their fundamental right under article 20(2) of the Constitution.
Relying on the observations in the decision of the Calcutta High Court in Assistant Collector vs Soorajmal (1), and in the decision of the Madras High Court in Collector of Customs vs A. H. A. Rahiman (2), it is contended that in making the order of confiscation and penalty under section 167(8) of the , the Collector was acting judicially and therefore the petitioners have already been proceeded with and punished for the offence of importation and attempted exportation of goods, the importation or exoprtation of which is for the time being prohibited or restricted by or under chap.
IV of the , and consequently they cannot again be prosecuted and punished for the same offence.
The argument is that the pending proceedings before the Additional District Magistrate offend against the protection given to the petitioners by article 20(2) of Constitution.
That in imposing confiscation and penalties the Collector acts judicially has been held by this Court in its judgment (I) (2) A.I.R. 957 Mad.
827 pronounced on May 16, 1957, in F. N. Roy vs Collector of Customs (1).
No question has been raised as to the maximum amount of penalty that can be imposed under section 167(8) and we are not called upon to express any opinion on that point.
But the fact that the Collector of Customs acted judicially is not decisive and does not necessarily attract the protection guaranteed by article 20(2) and the question still remains whether the petitioners ' case comes within the provisions of article 20(2).
That article protects a person from being ,prosecuted and punished for the same offence more than once".
The question has to be answered as to whether the petitioners had previously been prosecuted and punished for the same offence for which they are now being prosecuted before the Additional District Magistrate.
The proceedings before the Customs authorities were under section 167(8) of the .
Under section 186 of that Act, the award of any confiscation, penalty or increased rate of duty under that Act by an officer of Customs does not prevent the infliction of any punishment to which the person affected thereby is liable under any other law.
The offences with which the petitioners are now charged include an offence under section 120B, Indian Penal Code.
Criminal conspiracy is an offence created and made punishable by the Indian Penal Code.
It is not an offence under the .
The offence of a conspiracy to commit a crime is a different offence from the crime that is the object of the conspiracy because the conspiracy precedes the commission of the crime and is complete before the crime is attempted or completed, equally the crime attempted or completed does not require the element of conspiracy as one of its ingredients.
They are, therefore, quite separate offences.
This is also the view expressed by the United States Supreme Court in United States vs Rabinowich (2).
The offence of criminal conspiracy was not the subject matter of the proceedings before the Collector of Customs and therefore it cannot be said that the petitioners have already been prosecuted and punished for the "same offence".
(1) Petition NO.
438 Of 1955.
105 (2) ; 828 It is true that the Collector of Customs has used the words " punishment " and " conspiracy ", but those words were used in order to bring out that each of the two petitioners was guilty of the offence under section 167(8) of the .
The petitioners were not and could never be charged with criminal conspiracy before the Collector of Customs and therefore article 20(2) cannot be invoked.
In this view of the matter it is not necessary for us, on the present occasion, to refer to the case of Maqbool Hussain vs The State of Bombay (1) and to discuss whether the words used in article 20 do or do not contemplate only proceedings of the nature of criminal proceedings before a court of law or a judicial tribunal as ordinarily understood.
In our opinion, article 20 has no application to the facts of the present case.
No other points having been urged before us, these applications must be dismissed.
Applications dismissed.
| The petitioners were found guilty under section 167(8) of the Sea Customs Act and the currency and other goods recovered from their possession were confiscated and heavy personal penalties imposed on them by the Collector of Central Excise and Land Customs.
Complaints were thereafter lodged against them by the Customs authorities before the Additional District Magistrate under section 120B of the Indian Penal Code, read with section 23/23B of the Foreign Exchange Regulations Act, 1947, and section i67(8i) of the Sea Customs Act, as also under other sections of the two latter Acts.
The Magistrate granted bail but they could not furnish the requisite security and were, therefore, kept in judicial custody.
By two petitions under article 32 Of the Constitution they prayed for the issue of writs of certiorari and/or prohibition for quashing the proceedings pending against them in the Court of the Magistrate as also for the issue of writs of habeas corpus.
It was contended on their behalf that in view of the provision of article 20(2) Of the Constitution they could not be prosecuted and punished twice over for the same offence and the proceedings pending before the Additional Magistrate violated the protection afforded by article 20(2) of the Constitution.
Held, that the contention was without substance and the petitions must be dismissed.
The fact that in imposing confiscation and penalties under section 167(8) of the Sea Customs Act, the Collector of Customs acts 823 judicially is not decisive and does not attract the protection of article 20(2) of the Constitution.
Section 186 of the Act does not prevent the infliction of any other punishment to which the person concerned may be liable under any other law.
F. N. Roy vs Collectoy of Customs, Petition NO.
438 Of 955, decided on May 16, 1957, referred to.
Criminal conspiracy is an offence under section 120B of the Indian Penal Code but not so under the Sea Customs Act, and the petitioners were not and could not be charged with it before the Collector of Customs.
It is an offence separate from the crime which it may have for its object and is complete even before the crime is attempted or completed, and even when attempted or completed, it forms no ingredient of such crime.
United States vs Rabinowith, ; , referred to.
|
Summarize this legal judgement text concisely | Civil Appeal No. 142 of 1956.
Appeal by special leave from the judgment and order dated September 13, 1954, of the Labour Appellate Tribunal of India (Calcutta Bench) in Appeal No. Cal 87 of 1953.
H. N. Sanyal, Additional Solicitor General of India, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellants.
P. K. Chatterjee, for the respondents.
November 5.
The Judgment of the Court was delivered by BHAGWATI J.
This appeal with special leave arises out of an application made by the appellant to the Industrial Tribunal, Bihar under section 33 of the (hereinafter referred to as " 'the Act"), seeking permission to discharge the respondents from its employ.
873 The respondents were in the employ of the appellant and were staying in a two storeyed house in the city of Patna which had been rented by the appellant for housing its workmen.
On November 20, 1952, an occurrence took place in the said house wherein the respondents were involved.
Written reports of the said occurrence were sent on November 21, 1952, to the appellant 's Chief Engineer and the respondents were placed under suspension the same day.
An industrial dispute was then pending between the parties i.e., the appellant and its workmen before the Industrial Tribunal, Bihar, and the appellant therefore made an application to the said Tribunal under section 33 of the Act for permission to dismiss the respondents on the ground of misconduct as per cl.
17(b)(viii) of the appellant 's Standing Orders.
On November 27, 1952, the respondents also made an application before the said Tribunal under section 33A of the Act inter alia on the ground that their suspension by the appellant as aforesaid was a breach of section 33 of the Act.
On December 6, 1952, the appellant made an application before the said Tribunal stating that on a reconsideration of the facts of the case of the respondents the original prayer for permission to dismiss the the respondents was not being pressed, and for the ends of justice it would be sufficient if the appellant was granted permission to discharge the respondents under cl.
14(a) of the Standing Orders instead of the original prayer for dismissal under cl.
17(b)(viii) thereof.
This application was resisted by the respondents.
The Industrial Tribunal, however, entertained the same and after hearing the parties duly made its award on May 14, 1953, dismissing the respondents ' application under section 33A of the Act and granting the appellant permission to discharge the respondents from its employ with effect from the date of the order on payment to the respondents of one month 's pay in lieu of notice within 15 days therefrom.
The respondents carried an appeal against the said order of the Industrial Tribunal granting the appellant 's application under section 33 of the Act before the Labour Appellate Tribunal of India, Calcutta.
A 874 preliminary objection was taken on behalf of the appellant before the Labour Appellate Tribunal that no substantial question of law was involved and as such the appeal was not maintainable.
The Labour Appellate Tribunal was of the opinion that the appellant had alleged misconduct against the respondents and could not be allowed to adopt the expedient of terminating their services by giving notice for the requisite period or payment of salary in lieu of notice and that the Industrial Tribunal, therefore, ought not to have entertained the application for amendment of the prayer of the original application in which the appellant wanted to dismiss the respondents for misconduct.
This according to the Labour Appellate Tribunal was a substantial question of law and it therefore entertained the appeal.
The Labour Appellate Tribunal thereafter considered whether the appel lant had made out a case under cl.
17(b)(viii) of the Standing Orders and came to the conclusion that the respondents had not been guilty of any misconduct within the meaning of that clause and that therefore the order made by the Industrial Tribunal granting permission to the appellant to terminate the services of the respondents was liable to be set aside.
In so far, however, as after obtaining the permission from the Industrial Tribunal the appellant had given notice of discharge to the respondents, the Labour Appellate Tribunal expressed its inability to give the respondents any substantial relief either in the shape of reinstatement or compensation.
The appellant has come up in appeal before us against this order of the Labour Appellate Tribunal.
Shri H. N. Sanyal, appearing for the appellant, has urged in the fore front the contention that no appeal from the order of the Industrial Tribunal lay to the Labour Appellate Tribunal under section 7 of the Industrial Disputes (Appellate Tribunal) Act, 1950.
He contended that the said order was not a "decision" within the meaning of that expression in section 7 and even assuming that it was so, the appeal neither involved any substantial question of law nor was it a decision in respect of any of the matters specified in sub section (1)(b) 875 of that section.
The answer of Shri P. K. Chatterjee on behalf of the respondents was that the action of the appellant in the matter of the termination of the services of the respondents was punitive in character, that the discharge of the respondents for which permission was sought by the appellant was a punitive discharge, that such discharge was by reason of the alleged misconduct of the respondents falling within cl.
17(b)(viii) of the Standing Orders and not within cl.
14(a) thereof and that the substantial question of law which arose in the appeal was whether the appellant could be allowed to adopt the expedient of terminating the services of the respondents, without going through the procedure of submitting a charge sheet to the respondents and holding a proper enquiry in the matter of those charges, by merely giving notice for the requisite period or payment of salary in lieu of notice and thus resorting to el.
14(a) of the Standing Orders instead of cl.
17(b)(viii) of the same.
The other answer made by Shri P. K. Chatterjee was that having regard to the definition of the term "retrenchment" to be found in section 2(oo) of the Act the discharge of the respondents by the appellant really amounted to retrenchment and retrenchment being one of the matters specified in sub section
(1)(b) of section 7 of the Industrial Disputes (Appellate Tribunal) Act, 1950, the respondents had a right of appeal to the Labour Appellate Tribunal.
It is necessary, therefore, to appreciate what was sought to be done by the appellant when it made the application before the Industrial Tribunal on December 6, 1952.
This application has been described by the Labour Appellate Tribunal as an application for amendment of the original application which had been filed by the appellant on November 21, 1952, for permission to dismiss the respondents from its employ as per el.
17(b)(viii) of the Standing Orders.
It must be noted, however, that what the appellant purported to do by its application of December 6, 1952, was, in effect, to substitute another application asking for permission to discharge the respondents from its 111 876 employ under el.
14(a) of the Standing Orders, thus abandoning the relief which it had prayed for in the original application.
The application dated December 6, 1952, was thus, in substance, a new application made by the appellant to the Industrial Tribunal, no doubt relying upon the facts and circumstances which were set out in the original application but asking for the permission of the Industrial Tribunal to discharge the respondents from its employ under cl.
14(a) of the Standing Orders instead of dismissing them from its employ under el.
17(b)(viii) thereof.
We do not see how it was not competent to the Industrial Tribunal to allow the appellant to do so.
If the appellant bad been actuated by any oblique motives and wanted to evade the consequences of its not having held a proper enquiry, after submitting a charge sheet to the respondents one could have understood the criticism made by the Labour Appellate Tribunal in regard to the same.
The Industrial Tribunal, however, expressly recorded the finding that the application for leave to discharge the respondents from its employ was bona fide and what the appellant did by making the application dated December 6, 1952, was actuated by an honest motive of exercising its right to discharge the respondents under el.
14(a) of the Standing Orders instead of visiting upon the respondents the penalty of dismissing them from its employ under el.
17(b)(viii) thereof.
The discharge of the respondents was a discharge simpliciter in exercise of the rights of the employer under el.
14(a) of the Standing Orders and was not a punitive discharge under el.
17(b)(viii) thereof and if it was merely a discharge simpliciter, then, no objection could be taken to the same and the appellant would be well within its rights to do so, provided, however, that it was not arbitrary or apricious but was bona fide.
The only question relevant to be considered by the Industrial Tribunal would be that in taking the step which it did the appellant was not guilty of any unfair labour practice or victimization.
If the Industrial Tribunal did not come to a conclusion adverse to the appellant on these counts, it would have no jurisdiction to refuse, 877 'the permission asked for by the appellant.
Once the Industrial Tribunal was of opinion that the application dated December 6, 1952, and the discharge of the respondents for which .
the permission of the Industrial Tribunal was sought were in the honest exercise of the appellant 's rights, no question of law, much less a substantial question of law could arise in the appeal filed by the respondents against the decision of the Industrial Tribunal and the Labour Appellate Tribunal was clearly in error when it entertained the appeal.
In view of the above finding, we do not propose to deal with the contention that the order passed by the Industrial Tribunal under section 33 of the Act is not a "decision" within the meaning of that term in section 7 of the Industrial Disputes (Appellate Tribunal) Act, 1950.
The argument that the discharge of the respondents though patently it was a discharge simpliciter was, in substance, retrenchment within the meaning of the definition contained in section 2(oo) of the Act is equally untenable, for the simple reason that the term "retrenchment" was for the first time defined in the manner in which it has been done by an Ordinance promulgated in October 1953 which was followed by Act 43 of 1953 which was published in the Gazette of India on December 23, 1953.
The Industrial Tribunal made its order granting the permission under section 33 of the Act on May 14, 1953, so that, this definition of the term "retrenchment" could not apply to the facts of the present case.
If, therefore, at the relevant period the discharge simpliciter could not be deemed to be retrenchment of the respondents by the appellant, the decision of the Industrial Tribunal could not be said to be one in respect of any of the matters specified in sub section
(1)(b) of section 7 of the Industrial Disputes (Appellate Tribunal) Act, 1950.
In that view also no appeal could lie from the decision of the Industrial Tribunal to the Labour Appellate Tribunal.
It must be observed that neither of these two points was taken by the respondents either in the proceedings before the Industrial Tribunal or the Labour 878 Appellate Tribunal nor was either of them mentioned in the statement of case filed by the respondents in this Court.
They were taken for the first time in the arguments advanced before us by Shri P. K. Chatterjee.
We have, however, dealt with the same because we thought that we should not deprive tile respondents of the benefit of any argument which could possibly be advanced in their favour.
We are, therefore, of opinion that no appeal lay from the decision of the Industrial Tribunal to the Labour Appellate Tribunal, that the Labour Appellate Tribunal had no jurisdiction to interfere with the order made by the Industrial Tribunal granting the appellant permission to discharge the respondents under section 33 of the Act and that the decision of the Labour Appellate Tribunal is liable to be set aside.
We accordingly allow the appeal, set aside the decision of the Labour Appellate Tribunal and restore the order made by the Industrial Tribunal, Bihar, on date May 14, 1953.
The appellant will be entitled to its costs of this appeal from the respondents.
Appeal allowed.
| The appellant made an application before the Industrial Tri bunal under section 33 Of the , for permission to dismiss the respondents, its employees, on the ground of misconduct under cl.
17 (b) (viii) of the appellant 's Standing 872 Orders, but subsequently, on a reconsideration of the facts, made another application praying instead for permission to discharge the respondents under cl.
14(a) of the Standing Orders.
The Industrial Tribunal found that the second application was bona fide made by the appellant with the honest motive of exercising its right to discharge the respondents instead of visiting upon them the penalty of dismissing them, and granted the appellant permission on payment to the respondents of one month 's pay in lieu of notice.
The Labour Appellate Tribunal, on appeal, was of the opinion that having once alleged misconduct against the respondents the appellant could not be allowed to adopt the expedient of terminating their services by giving notice for the requisite period, by means of a fresh application, and after considering whether the appellant had made out a case under cl.
I7(b)(viii) of the Standing Orders, came to the conclusion that the respondents had not been guilty of any misconduct, and held that the Industrial Tribunal erred in granting the permission to discharge the respondents.
On appeal to the Supreme Court: Held, that in an application under section 33 of the Industrial: Disputes Act, 1947, the relevant consideration was whether the employer was guilty of any unfair labour practice or victimisation, and unless the Tribunal came to a conclusion adverse to the applicant it would have no jurisdiction to refuse the permission asked for to discharge the employee.
Accordingly, in view of the finding of the Industrial Tribunal that the application was bona fide, no question of law arose out of its order, and the Labour Appellate Tribunal erred in entertaining the appeal.
|
Summarize this legal judgement text concisely | iminal Appeal No. 18 of 1955.
Appeal from the judgment and order dated December 1, 1954, of the Calcutta High Court in Criminal Appeal No. 322 of 1953, arising out of the judgment and order dated November 20, 1953, of the West Bengal First Special Court at Alipore in Case No. 3 of 1953.
N. C. Chatterjee and D. N. Mukherjee, for the appellant.
B. Sen and P. K. Ghosh (for P. K. Bose), for the respondent.
November 26.
The following Judgment of the Court was delivered by IMAM J. The High Court of Calcutta certified under article 134(1)(c) of the Constitution that the case before us was a fit one for appeal to this Court.
The 127 1000 ground for the granting of the certificate, as stated by the High Court, will be considered in due course.
The appellant was convicted under section 5(2) of the Prevention of Corruption Act, 1947 (II of 1947), hereinafter referred to as the Act, and under section 161 of the Indian Penal Code by a Special Judge who sentenced him under section 161, to undergo rigorous imprisonment for three months and to pay a fine of Rs. 500 in default to suffer further rigorous imprisonment for one month.
No separate sentence was passed under section 5(2) of the Act.
He unsuccessfully appealed to the High Court against his conviction and sentence.
The charge framed against the appellant under section 161 of the Indian Penal Code, in substance, stated that on or about May 12, 1952,he had accepted Rs. 100 as illegal gratification from V. section Doraiswamy as a motive or reward for doing an official act and showing in the exercise of his official functions favour to Doraiswamy in seeing that a speedy and favourable settlement of the claim cases preferred by him against the Bengal Nagpur Railway, subsequently the Eastern Railway.
The charge under section 5(2) of the Act which related to the same transaction stated that the appellant had accepted the aforesaid sum of Rs. 100 by corrupt or illegal means or by otherwise abusing his position as a public servant.
It is unnecessary to set out in any great detail the story of the prosecution as to how Doraiswamy and the appellant came into contact and how the process of giving bribe to the appellant began.
They met in 1950.
Rs. 10 was paid to the appellant in October, 1951, and Rs. 15 in January, 1952, as the result of the appellant asking Doraiswamy for some gratification for speedy and favourable disposal of his claim cases.
The appellant was at that time Assistant Supervisor of Claim Cases of the Bengal Nagpur Railway of the Vizianagram Section.
On some secret information, the Deputy Superintendent of Police, Special Police Establishment at Puri directed Inspector G. N. Brahma to contact Doraiswamy in connection with a report of alleged dishonesty by railway officials.
Brahma met Doraiswamy and asked him to meet him again at 1001 Calcutta on May 10, 1952, after the latter had filed a complaint along with some letters said to have been written by the appellant.
Permission was obtained from the Chief Presidency Magistrate, Calcutta to investigate the case.
Thereafter Doraiswamy met the appellant in Calcutta and it was settled that the former would pay the latter Rs. 100 on May 12, 1952, at 6 p. m. at the India Coffee House.
Doraiswamy informed the police of the arrangement.
Marked tenrupee currency notes were given to Doraiswamy.
The appellant and Doraiswamy met at the India Coffee House as arranged.
There was a talk between them about expediting the claim cases which were being dealt with by the appellant and a list of them was given to him.
This list and the bundle of marked currency notes which Doraiswamy gave him were put in the left upper pocket of his shirt by the appellant.
The Inspectors H. K. Mukherjee and section B. Mitra along with G. N. Gosh, an Assistant Director of Postal Ser vices and Brahma came up to the appellant.
He was accused by the police of having received 10 ten rupee currency notes as bribe from Doraiswamy and was asked to produce them.
After some hesitation the appellant produced the currency notes as well as the list given to him by Doraiswamy.
The number of the currency notes were checked and found to tally with the previously noted numbers of the currency notes given to Doraiswamy for handing them over to the appellant.
The case of the prosecution was found to have been proved by both the courts below and the appellant was convicted and sentenced as stated above.
It may be stated at the outset that the concurrent findings of fact arrived at by the courts below were not questioned before us.
The only question canvassed before us was whether there had been a valid sanction given under section 6 of the Act without which no court could take cognizance of the offences alleged to have been committed by the appellant.
In order to appreciate the submission made by Mr. Chatterjee in this connection, a few facts have to be stated and some reference to the evidence of 1002 Mr. Bokil, P.W. 5, Chief Commercial Superintendent of the Eastern Railway at Calcutta will be necessary.
The appellant as Assistant Supervisor of Claim Cases of the then Bengal Nagpur Railway (later the Eastern Railway) had the power to deal finally with claims up to Rs. 75 and for claims in excess of that sum to make a recommendation to his superior officer, the Assistant Commercial Superintendent.
Doraiswamy was working on behalf of several persons who had made claims against the Railway.
These cases were numerous.
All these cases had to be dealt with by the appellant either by passing final orders himself, if the value in each case was Rs. 75 or less, or by recommending to his superior officer the cases where the value of the claim, in each case, was more than Rs. 75.
The appellant, therefore, being incharge of all the claim cases played an important part in their disposal either by passing final orders himself or by making recommendations.
When the appellant was paid Rs. 100 at the India Coffee House on May 12, 1952, he was found in possession of the marked currency notes and the list of cases, in which claims had been made, which had been given to him by Doraiswamy.
Sanction for the prosecution of the appellant was sought from the Chief Commercial Superintendent Mr. Bokil, P.W. 5.
There is no dispute that Mr. Bokil was competent to grant the sanction.
He had stated in his evidence that before according the sanction he went through all the relevant papers and was satisfied that in the interests of justice the appellant should be prosecuted.
He, accordingly, gave the sanction in writing and this document was marked as exhibit 6.
Exhibit 6 clearly states that the appellant had demanded on May 12, 1952, as bribe the sum of Rs. 100 from Doraiswamy and had accepted the sum as a motive or reward for speedy and favourable settlement of the claim cases, that Mr. Bokil had applied his mind to the facts and the circumstances of the case and was satisfied that in the interests of justice, the appellant should be put on his trial in a Court of competent jurisdiction for offences under section 161 of the Indian Penal Code and section 5(2) of the Act alleged to have been 1003 committed by him.
He, accordingly, under the provisions of section 6 of the Act, accorded his sanction that the appellant be prosecuted in a competent court of law for the offence of having accepted illegal gratification as a motive or reward for showing favour to Doraiswamy in respect of the claim cases filed against the Vizianagram Section of the Railway.
Exhibit 6 on the face of it and the evidence of Mr. Bokil in examination in chief clearly establish that a valid sanction had been accorded by Mr. Bokil.
It was, however, urged before the Special Judge, as it was urged in the High Court, that certain statements made by Mr. Bokil in cross examination clearly showed that he had not applied his mind to the facts and circumstances of the case and the sanction accorded by him was not a valid one.
The Special Judge rejected this contention and was satisfied that exhibit 6 on the face of it disclosed a valid sanction for the prosecution of the appellant.
The learned Judges of the High Court who heard the appeal were also satisfied that Mr. Bokil had, in fact, applied his mind to the facts and circumstances of the case.
Regarding the statements made by Mr. Bokil in cross examination they were of the opinion that they did not show that he did not apply his mind to the facts of the case.
These statements merely showed that he did not investigate the truth of the case presented against the appellant.
An application was filed in the High Court under article 134 of the Constitution for the granting of a certificate that the case was a fit one for appeal to this Court.
The order granting the certificate shows that the learned Judges who heard the application were of the opinion that the sanction accorded in this case was not a valid sanction.
The learned Judges were of the opinion that the question whether or not there was a proper sanction in the case was a question serious enough to justify the granting of a certificate.
It is necessary therefore to decide whether the sanction accorded in this case was a valid sanction.
The substance of the sanction has already been stated but in order that there may be no misunderstanding we quote the very words of the sanction itself: 1004 " Whereas a complaint was made against Shri Indu Bhusan Chatterjee, Assistant Supervisor, Claims, of the B. N. Railway (now Eastern Railway) Garden Reach, Calcutta, who looked after the claims cases against the Railway of the Vizianagram Section, that the said Indu Bhusan Chatterjee had demanded and on 12th May, 1952, accepted a bribe of Rs. 100 (Rupees one hundred only) from Shri V. section Doraiswamy of the Commercial Claims Bureau, Vizianagram as a motive or reward for speedy and favourable settlement of the claims cases of the Commercial Claims Bureau and thereby having committed an offence punishable under Section 161 1.
P. C. and also the offence of criminal misconduct by the illegal and corrupt use of his official position as a public servant to obtain a pecuniary advantage for himself punishable under Section 5(2) read with Section 5(1), clause (d) of the Prevention of Corruption Act II of 1947, 1, R. K. Bokil, Chief Commercial Superintendent, Eastern Railway, Calcutta, having applied my mind to the facts and circumstances of the case, am satisfied, and am of the opinion that in the interests of justice, Shri Indu Bhusan Chatterjee, Assistant Supervisor, Claims, Eastern Railway, Garden Reach, Calcutta, be put on his trial in a Court of competent jurisdiction for the offences alleged against him.
That as Shri Indu Bhusan Chatterjee, Assistant Supervisor, Claims, Eastern Railway, Garden Reach, Calcutta, is removable from his office by me; I therefore by virtue of the powers vested in me by Section 6(c) of the Prevention of Corruption Act II of 1947, do hereby accord sanction that Shri Indu Bhusan Chatterjee be prosecuted in a competent Court of law for the offence of having accepted an illegal gratification as a motive or reward for showing favour to Shri V.S. Doraiswamy, in his official functions viz., the settlement of the cases of the Vizianagram Section of Eastern Railway, punishable under Section 161 I.P.C. and for the offence of criminal misconduct for the corrupt and illegal use of his official position to obtain a pecuniary advantage for himself punishable under Section 5(2) of the Prevention of Corruption Act (Act II of 1947)." 1005 In our opinion, this sanction clearly states all the facts which concern the prosecution case alleged against the the appellant with reference to his acceptance of Rs. 100 from Doraiswamy on May 12,1952, in circumstances which, if established, would constitute offences under section 161, Indian Penal Code and section 5(2) of the Act.
The sanction also clearly states that Mr. Bokil had applied his mind and was of the opinion that in the interests of justice the appellant should be prosecuted.
The charge framed against the appellant at his trial was with reference to this very incident and none other.
What more facts were required to be stated in the sanction itself we are unable to understand.
Mr. Bokil in his examination in chief stated " On the prayer of the police, I accorded sanction to the prosecution of one Shri I. B. Chatterjee who was the Assistant Supervisor of Claims.
Before according sanction I went through all relevant papers and was satisfied that in the interest of justice, Sri I.B. Chatterjee should be prosecuted.
This is the sanction marked exhibit 6 ".
In cross examination, however, he made the following statement: " This sanction exhibit 6 was prepared by the police and it was put before me by the personnel branch of my office.
I did not call for any record in connection with this matter from my office.
I did not call for the connected claim cases nor did I enquire about the position of those claim cases.
" The learned Judges in granting the certificate, apparently, were impressed by the statement of Mr. Bokil that exhibit 6 was prepared by the police and put before him by the personnel branch of his office, because the learned Chief Justice observed, "I can hardly imagine the duty of granting the proper sanction being properly discharged by merely putting one 's signature on a ready made sanction presented by the police.
" It seems to us that Mr. Bokil 's statement does not prove that he merely put his signature on a readymade sanction presented by the police.
It is true that he did not himself dictate or draft the sanction, but Mr. Bokil has stated in the clearest terms, in his examination in chief, that before be accorded sanction he went through all the relevant papers.
There is no 1006 reason to distrust this statement of Mr. Bokil, nor has the High Court, while granting the certificate of fitness, done so.
He was an officer of high rank in the Railway and must have been fully aware that the responsibility of according the sanction against an official of the Railway subordinate to him lay upon him.
It is inconceivable that an officer of the rank of Mr. Bokil would blindly sign a ready made sanc tion prepared by the police.
Apparently, the sanction already drafted contained all the material facts upon which the prosecution was to be launched, if at all, concerning the acceptance of the bribe by the appellant on May 12, 1952.
When exhibit 6 was placed before Mr. Bokil other relevant papers were also placed before him.
It is significant that Mr. Bokil was not crossexamined as to what the other relevant papers were and in the absence of any question being put to Mr. Bokil we must accept his statement that the papers placed before him were relevant to the only question before him whether he should or should not accord his sanction to the prosecution of the appellant.
Mr. Bokil said, and we see no reason to distrust his statement, that before he accorded his sanction lie went through all these papers and after being satisfied that sanction should be given he accorded his sanction.
It is true that he did not call for any record in connection with the matter from his office nor did he call for the connected claim cases or find out as to how they stood.
It was not for Mr. Bokil to judge the truth of the allegations made against the appellant by calling for the records of the connected claim cases or other records in connection with the matter from his office.
The papers which were placed before him apparently gave him the necessary material upon which he decided that it was necessary in the ends of justice to accord his sanction.
Reliance was placed on the case of Gokulchand Dwarkadas Morarka vs The King(1) and other cases, to which it is unnecessary to refer, in support of the submission on behalf of the appellant that the sanction accorded was not a valid sanction.
A careful reading, (1) (1948) L.R. 75 I.A. 30. 1007 however, of Morarka 's case (1) satisfies us that the sanction accorded in this case in no way conflicts with the observations of their Lordships of the Judicial Committee.
On the contrary, in our opinion, it is in keeping with them.
None of the other cases cited by the learned Counsel for the appellant assist us in the matter.
When the sanction itself and the evidence of Mr. Bokil are carefully scrutinized and read together there can be little doubt that the sanction accorded was a valid sanction.
The only point which had been argued before us and which was the expressed reason for the granting of the certificate having failed, the appeal must be dismissed and the decision of the High Court in upholding the conviction and sentence of the appellant must be upheld.
Appeal dismissed.
| The appellant, a public servant, was convicted under section 5(2) of the Prevention of Corruption Act, 1947, and under section 161 of the Indian Penal Code on a charge of accepting a sum of Rs. 100 as illegal gratification.
It was contended for the appellant that the conviction was bad on the ground that the sanction for his prosecution was not valid because the officer competent to sanction the prosecution (1) had not applied his mind to the facts and circumstances of the case but merely perused the draft prepared by the Police and (2) did not investigate the truth of the offence ' The evidence, however, showed that he went through all the papers placed before him which gave him the necessary material upon which he decided that it was necessary in the ends of justice to accord his sanction : Held, that the essentials of a valid sanction were present in the case and that the conviction was valid.
Gokulchand Dwarkadas Morarka vs The King, (1948) L.R. 75 I.A. 30, referred to.
|
Summarize this legal judgement text concisely | Appeal No. 99 of 1954.
Appeal from the judgment and order dated the 20th August, 1952, of the Bombay High Court in Appeal No. 43 of 1952 arising out of Original Suit No. 1262 of 1949.
N. C. Chatterjee, J. B. Dadachanji and Rameshwar Nath, for the appellant.
Porus A. Mehta and R. H. Dhebar, for the respondent.
November 27.
The following Judgment of the Court was delivered by VENKATARAMA AIYAR J.
On February 28,1934, the Appellant who is the religious head of the Dawoodi Bohra Community, passed an order excommunicating one Tyebbhai Moosaji Koicha.
On July 17, 1920, the appellant had excommunicated two persons, Tahirbhai and Hasan Ali, and the validity of the order was questioned in a suit instituted in the Court of the Subordinate Judge, Barhampur.
The litigation went up to the Privy Council, which held that the appellant as the religious head had the power to excommunicate a member of the community, but that that power could only be exercised after observing the requisite 1009 formalities, and as in that case that had not been done, the order of excommunication was invalid.
Vide Hasan Ali vs Mansoorali (1).
Apprehending that the order dated February 28, 1934, was open to challenge under the decision in Hasan Ali vs Mansoorali (supra) on the ground that it had not complied with the requisite formalities, the appellant started fresh proceedings, and on April 28, 1948, passed another order of excommunication.
Thereupon, Tyebbhai Moosaji filed the present suit for a declaration that both the orders of excommunication dated February 28, 1934, and April 28, 1948, were invalid and for other consequential reliefs.
While this action was pending, the Legislature of the Province of Bombay passed the Bombay Prevention of Excommunication Act (Bombay XLII of 1949) prohibiting excommunication, and that came into force on November 1, 1949.
The plaintiff contended that the effect of this legislation was to render the orders of excommunication illegal.
The answer of the appellant to this contention was, firstly, that the Act had no retrospective operation, and that, in consequence, the orders passed on February 28, 1934, and April 28, 1948, were valid, and remained unaffected by it; and secondly, that the Act was itself unconstitutional, because the subject matter of the impugned legislation was not covered by any of the entries in List 2 or 3 of Seventh Schedule to the Government of India Act, 1935, and the Legislature of the Province of Bombay had no competence to enact the law.
After the coming into force of the Constitution, the contention was also raised that the right of the defendant to excommunicate members of the com munity was protected by articles 25 and 26 of the Constitution, and that the impugned Act was void as infringing the same.
The issues in the action were then settled, and issue No. 19, which was raised with reference to the above contentions, was as follows: " Whether the orders of excommunication made in 1934 and/or 1948 are invalid by reason of the (1) A.I.R. 1948 P.C. 66.
1010 provisions of the Bombay Prevention of Excommunication Act of 1949?" This was tried as a preliminary issue, and as it raised the question of the vires of a statute, the State of Bombay was impleaded as the second defendant in the suit.
Shah J.who tried this issue, held that the impugned Act was retrospective in its operation, that it was within the competence of the Provincial Legislature, and further that it did not offend articles 25 and 26 of the Constitution.
Against this finding, the present appellant preferred an appeal to a Bench of the Bombay High Court, and that was heard by Chagla C. J. and Bhagwati J. who held that under the Act, excommunication meant the condition of being expelled, that it was a continuous state during which the person excommunicated was deprived of his rights and privileges, and that, therefore, the Act would operate to protect those rights from the date it came into operation.
They further held that the Act was within the competence of the Legislature, and they also repelled the contention that it infringed the rights guaranteed under articles 25 and 26 of the Constitution.
In the result, they concurred in the decision of Shah J. and dismissed the appeal but granted a certificate to appeal to this Court under articles 132 and 133 of the Constitution.
Hence this appeal.
Pending the appeal, the plaintiff died on March 11, 1953, and his daughter applied on May 22, 1953, to be substituted in his place.
But eventually she did not press the application, and that was dismissed on October 5, 1953.
In this Court by an order dated November 21, 1955, the cause title was amended by deleting the name of the plaintiff.
Thus, the only parties who are now before the Court are the defendant and the State of Bombay.
The question is whether in the events which have happened, the appeal can proceed.
We are of opinion that it cannot.
It should be remembered in this connection that no decree had been passed in the suit.
Only a finding has been given on a preliminary point, and it is that finding that has been the subject of 1011 appeal to the High Court of Bombay and thereafter to this Court.
There are other issues still to be tried, and the action is thus undetermined.
Now, the claim with which the plaintiff came to Court was that he was wrongly excommunicated, and that was an action personal to him.
On the principle, actio personalis moritur cum persona when he died the suit should abate.
As a matter of fact, his legal representative applied to be brought on record, but the application was not pressed.
The result is that the suit has abated.
This would ordinarily entail the dismissal of this appeal.
Mr. N. C. Chatterjee for the appellant argues that as the State of Bombay had been impleaded as a party, and that as the decision on the question of the vires of the Act had been given in its presence, the appellant is entitled to continue the appeal against the State without reference to the plaintiff and seek the decision of this Court on the validity of the Act ; and relies on the decision of the Federal Court in The United Provinces vs Mst.
Atiqa Begum and others (1).
There, a suit was filed by a landlord for recovery of rent.
While it was pending in appeal, an Act was passed by the Legislature of the United Provinces validating certain Government notifications requiring the landlords to give to the tenants remission of rent.
The landlord contended that the Act was ultra vires, and a Full Bench of the Allahabad High Court, for whose opinion the question was referred, agreed with this contention.
Thereafter, the Government of the United Provinces got itself impleaded as a party to the appeal of the landlord, and a decision having been given therein in accordance with the opinion of the Full Bench, it preferred an appeal to the Federal Court on a certificate granted under section 205 of the Government of India Act, 1935, and contended that the impugned Act was valid.
The judgment debtor himself did not file any appeal.
The question was whether the Government was entitled to file the appeal when the party had not chosen to contest the decree.
It was held by the Federal Court that the scope of (1) 1012 section 205 of the Government of India Act was wider than that of section 96 of the Civil Procedure Code, and that the Government was entitled to file the appeal for getting a decision on the validity of the Act, notwithstanding that it had no interest in the claim in the suit.
This ruling has, in our opinion, no application to the facts of the present case.
Here, the action itself has abated, and there can be no question of an appeal in relation thereto, as an appeal is only a continuation of the suit, and there can be no question of continuing what does not exist.
But apart from this, there is another formidable obstacle in the way of the appellant.
Under article 132, an appeal lies to this Court only against judgments, decrees or final orders.
That was also the position under section 205 of the Government of India Act.
Now, the order appealed against is only a decision on one of the issues, and it does not dispose of the suit.
In The United Provinces vs Mst.
Atiqa Begum and others (supra), there was a decree, and the requirements of section 205 were satisfied.
Here, there is only a finding on a preliminary issue, and there is no decree or final order.
The Explanation to article 132 provides that: "For the purposes of this Article, the expression 'final order ' includes an order deciding an issue which, if decided in favour of the appellant, would be sufficient for the final disposal of the case.
" Applying this test, even if we accept the contention of the appellant that the impugned Act is bad, that would not finally dispose of the suit, as there are other issues, which have to be tried.
We are clearly of opinion that the appeal is not competent under article 132, and the fact that a certificate has been given does not alter the position.
It is said that the certificate is also under article 133, but under that article also, an appeal lies Only against judgments, decrees or final orders, and no certificate could be granted in respect of an interlocutory finding.
The result is that this appeal must be dismissed, as not maintainable.
We should add by way of abundant caution that as we express no opinion on the 1013 correctness of the decision under appeal, this order will not preclude the appellant from claiming such rights as he may have, in appropriate proceedings which he may take.
In the circumstances, there will be no order as to costs.
Appeal dismissed.
| The appellant as the religious head of his community ex communicated T who thereupon filed a suit for a declaration that the order of excommunication was invalid.
When the suit was pending the Bombay Prevention of Excommunication Act, 1949, was passed and one of issues raised in the suit was whether the order of excommunication was invalid by reason of the provisions of the Act.
This issue was tried as a preliminary issue and (1) (1948) L.R. 75 I. A. 30.
128 1008 as it raised the question of the vires of the Act, the State of Bombay was impleaded as the second defendant in the suit.
The Bombay High Court decided the issue against the appellant, but granted a certificate to appeal to the Supreme Court under articles 132 and 133 Of the Constitution of India.
Pending the appeal the plaintiff died and the action which was personal to him consequently abated.
It was contended for the appellant that as the State of Bombay had been impleaded as a party and that as the decision on the question of the vires of the Act had been given in its presence, the appellant was entitled to continue the appeal against the State without reference to the plaintiff and seek the decision of the Court on the validity of the Act : Held, that the appeal must be dismissed as not maintainable, because (1) the appeal was only a continuation of the suit which, in the events, had abated, and (2) the certificate under articles 132 and I33 of the Constitution was incompetent, as it could not be granted in respect of an interlocutory finding.
The United Provinces vs Mst.
Atiqa Begum and Others, , distinguished.
|
Summarize this legal judgement text concisely | vil Appeals Nos. 46 to 48 of 1956.
Appeals from the judgment and order dated November 16, 1951, of the former Nagpur High Court in Misc.
Petitions Nos.
45,1568 and 1569 of 1951.
H. J. Umrigar, D. L. Jayawant and Naunit Lal, for the appellants in C. A. Nos. 46 and 47 of 56.
D. L. Jayawant and Naunit Lal, for the appellant in C. A. No. 48 of 56.
1054 R. Ganapathi Iyer and R. H. Dhebar, for the respon dent (In all the appeals).
December 3.
The following Judgment of the Court was delivered by VENKATARAMA AIYAR J.
These appeals are directed against the orders of the High Court of Nagpur dismissing the writ petitions filed by the appellants herein, and as they arise out of the same facts and raise the same points for determination, they were heard together, and will be disposed of by a common judgment.
The facts in Civil Appeal No. 46 of 1956 the facts in the connected appeals are similar and do not require to be stated are that the appellant was employed in 1939 in the Bengal Nagpur Railway as a clerk in the workshop at Nagpur.
In 1946 when the State took over the administration of the Railway, it gave option to the employees to continue in service on the terms set out in a document dated July 5, 1946.
The appellant accepted those terms and continued in service on the conditions mentioned in that document.
Acting in exercise of the powers conferred by sections 241(2), 247 and 266(3) of the Government of India Act, 1935, the Governor General promulgated certain rules called the Railway Services (Safeguarding of National Security) Rules, 1949, hereinafter referred to as the Security Rules, and they came into force on May 14, 1949.
It will be convenient at this stage to set out the Security Rules, in so far as they are material for the purpose of these appeals, as it is the validity of these rules that is the main point for determination by us.
Rules 3, 4, 5 and 7 are as follows: 3. " A member of the Railway Service who, in the opinion of the competent authority is engaged in or is reasonably suspected to be engaged in subversive activities, or is associated with others in subversive activities in such manner as to raise doubts about his reliability, may be compulsorily retired from service, or have his service terminated by the competent authority after he has been given due notice or pay in 1055 lieu of such notice in accordance with the terms of his service agreement: Provided that a member of the Railway Service shall not be so retired or have his service so terminated unless the competent authority is satisfied that his retention in public service is prejudicial to national security, and unless, where the competent authority is the Head of a Department, the prior approval of the Governor General has been obtained.
Where in the opinion of the competent authority, there are reasonable grounds for believing that a member of the Railway Service is liable to compulsory retirement from service or to have his service terminated under Rule 3, it shall (a) by an order in writing, require the said member of Railway service to proceed on such leave as may be admissible to him and from such date as may be specified in the order; (b) by a notice in writing inform him of the action proposed to be taken in regard to him under Rule 3; (c) give him a reasonable opportunity of showing cause against that action ; and (d) before passing a final order under Rule 3, take into consideration any representation made by him in this behalf.
Nothing contained in the Rules in Chapter XVII of the State Railway Establishment Code, Volume 1, shall apply to, or in respect of, any action taken or proposed to be taken under these rules.
Any person compulsorily retired from service or whose service is terminated under Rule 3 shall be entitled to such compensation, pension, gratuity and/ or Provident Fund benefits as would have been admissible to him under the Rules applicable to his service or post on the date of such retirement or termination of service if he had been discharged from service due to the abolition of his post without any alternative suitable employment being provided.
" On July 6, 1950, the General Manager of the Bengal Nagpur Railway issued a notice to the appellant 1056 under R. 3 of the Security Rules stating that in view of the facts recited therein, there was reason to believe that the appellant was engaged in subversive activities and calling upon him to show cause why his services should not be terminated.
He was also placed under suspension from that date.
On July 29, 1950, the appellant sent his explanation denying the allegations contained in the notice dated July 6, 1950.
The matter was then referred to the Committee of Advisers, who held an enquiry on September 8,1950, and after hearing the appellant found that the charges against him mentioned in the notice were true.
Acting on this report, the General Manager terminated the services of the appellant on April 3, 1951, giving him one month 's salary instead of notice.
Meantime, on February 3,1951, the appellant had filed the writ petition, out of which Civil Appeal No. 46 of 1956 arises, in the High Court of Nagpur challenging the validity of the notice dated July 6, 1950, and the order of suspension following thereon.
The order of dismissal dated April 3, 195 1, having been passed during the pendency of this Petition, the appellant had his petition amended by adding a prayer that that order also was bad.
The grounds urged in support of the petition were that the Security Rules under which action was taken were in contravention of articles 14, 19 (1)(c) and 311 of the Constitution, and that, in consequence, the orders passed in exercise of the powers conferred thereby were void.
The respondents resisted the application on the ground that the rules in question were valid, and that the orders passed thereunder were not open to attack.
The petition was heard along with others, in which the same questions were raised, and by their judgment dated November 16, 1951, the learned Judges held that it was unnecessary to decide whether the Security Rules were void as, assuming that they were, the orders terminating the services of the petitioners could be sustained under R. 148 of the Railway Establishment Code.
Sub rules (3) and (4) of R. 148 which bear on this point, are as follows: 1057 R. 148(3) Other (non pensionable) railway servants : "The service of other (non pensionable) railway servants shall be liable to termination on notice on.
either side for the periods shown below.
Such notice is not, however, required in cases of summary dismissal or discharge under the provisions of service agreements, retirement on attaining the age of superannuation, and termination of service due to mental or physical incapacity.
(4) In lieu of the notice prescribed in this rule, it shall be permissible on the part of the Railway Admi nistration to terminate the service of a Railway servant by paying him the pay for the period of notice." The learned Judges held that the appellants were non pensionable railway servants within sub r.(3), that they had been paid one month 's wages instead of notice under sub r.(4), and that, accordingly, the impugned orders were intra vires the powers of the respondents under R. 148, sub r.
In the result, the petitions were dismissed, and the present appeals have been preferred against these orders on a certificate under article 132 (1) and article 133(1)(c) of the Constitution.
The appellants complain that the ground on which the judgment proceeds was not put forward by the respondents in their pleadings and should not have been allowed to be taken by them, and that on the points actually in issue, it should have been held that the Security Rules were repugnant to articles 14, 19(1) (c) and 311 of the Constitution, and, therefore, void.
They further contend that even if the Security Rules were valid, the orders terminating the services were not justified by them, and that further, those orders were bad for the reason that they had not been made by the competent authorities.
The appellants also sought to raise the contention that the enquiry conducted by the authorities was defective, and that there was no proper hearing as provided by the rules, but we declined to hear them on that point, as that was not raised in their petitions.
1058 The points for decision in these appeals are: (I) Whether the orders terminating the services of the appellants can be upheld under R. 148 of the Railway Establishment Code; (II)Whether the Security Rules are bad as infringing (a) article 14, (b) article 19(1)(c) and (c) article 311 of the Constitution; (III)Whether the impugned orders are not valid, even according to the Security Rules; and (IV) Whether those orders were not passed by the competent authorities.
On the first question, it appears clearly from the record that the authorities purported to take action only under the Security Rules.
The notice dated July 6, 1950, was avowedly issued under R. 3 of those rules.
It was in the scrupulous observance of the procedure prescribed therein that the explanations of the appellants in answer to the charges were taken, and the matters were referred to the Committee of Advisers for enquiry.
And above all, the orders terminating the services of the appellants, in terms, recite that they were made under R. 3 of the rules, as for example, the notice dated April 3, 1951, given to the appellant in Civil Appeal No. 46 of 1956, which runs as follows: "I have considered your representation to me in reply to this office letter No. Con/T/2 I /MP/82 dated 6 7 1950 and am of the opinion that you are engaged and associated with others in subversive activities in such mariner as to raise doubts about your reliability and am satisfied that your retention in public service is prejudicial to national security.
I have decided with the prior approval of the President that your services should be terminated under Rule 3 of the Railway Services (Safeguarding of National Security) Rules, 1949.
" It should be added that while the appellants stated in their petitions that action had been taken against them under the Security Rules, and that those rules were ultra vires, the respondents did not plead that 1059 action was taken under R. 148 of the Railway Establishment Code.
They only contended that the Security Rules were valid.
In view of the above,the criticism of Mr. Umrigar for the appellants that the judgment under appeal proceeds on a ground which was, not merely, not in the contemplation of the authorities When they passed the orders in question, but was not even raised in the pleadings in Court, is not without substance.
It is argued that when an authority passes an order which is within its competence, it cannot fail merely because it purports to be made under a wrong pro.
vision if it can be shown to be within its powers under any other rule, and that the validity of an order should be judged on a consideration of its substance and not its form.
No exception can be taken to, this proposition, but it has not been the contention of the respondents at any stage that the orders in question were really made under R. 148(3) of the Railway Establishment Code, and that the reference to R. 3 of the Security Rules in the proceedings might be disregarded as due to mistake.
In the Court below, the learned Judges rested their conclusion on the ground that cl.
(10) of the service agreement dated July 5, 1946, provided that in respect of matters other than those specifically dealt with therein discharge is one of such other matters the Railway rules applicable to persons appointed on or after October 1, 1946 were applicable, that R. 148(3) was one of such rules, and that the appellants who were non pensionable railway servants were governed by that rule, and were liable to be discharged in accordance therewith.
But this reasoning ignores that under cl.
(10) of the service agreement, the Security Rules stand on the same footing as the rules in the Railway Establishment Code and constitute equally with R. 148 the conditions of service on which the appellants held the employment, and there must be convincing reasons why orders passed statedly under R. 3 should be held not to have been passed under that rule.
Before us, a different stand was taken by the respondents.
They did not 1135 1060 dispute that the action was really taken under R. 3 of the Security Rules, but they argued that the power to terminate the service under r. 3 was not something ;different from and independent of the power to discharge, conferred by R. 148, and that an order passed under R. 3 was, on its own terms, one made under R. 148(3).
The basis for this contention is the provision in R. 3 that the service may be terminated in accordance with the service agreement, after giving due notice or.
pay in lieu of such notice.
The appellants controvert this position.
They contend that the power to terminate the service under the Security Rules is altogether different from the power to discharge under R. 148, that the reference in R. 3 to the service agreement is only in respect of the notice to be given, there being different periods fixed under the rules in relation to different classes of employees, and that, in other respects, the Security Rules run on their own lines, and that action taken thereunder cannot be shunted on to R. 148.
We find 'considerable difficulty in acceding to the argument of the respondents.
The Security Rules apply to a special class of employees, those who are engaged or are likely to engage in subversive activities, and in conjunction with the instructions which were issued when they were promulgated, they form a self contained code prescribing a special and elaborate procedure to be followed, when action is to : be taken thereunder.
We see considerable force in the contention of the appellants that the of the service agreement in R. 3 has reference only to the nature of the notice to be given.
If the interpretation which the respondents seek to put on the Security Rules is correct, then it is difficult to see what purpose at all they serve.
Mr. Ganapathy Iyer for the respondents argues that they are intended to afford protection to persons who might be charged with being engaged in subversive activities.
If that is their purpose, then if action is taken thereunder but the procedure prescribed therein is not followed, the Order must be held to be bad, as the protection intended to be given has been denied to the employee, 1061 and R. 148 cannot be invoked to give validity to such order.
Indeed, that has been held in Sambandam vs General Manager, section I. Ry.
(1) and Prasadi vs Works Manager, Lillooah (2) ; and that is also conceded by .Mr.
Ganapathy Iyer.
If then the power to terminate the service under the Security Rules is different from the power to discharge under R. 148 when the procedure prescribed therein is not followed, it must be equally so when, as here, it has been followed, for the complexion of the rules cannot change according as they are complied with or not.
That means that the Security Rules have an independent operation of their own, quite apart from R. 148.
We do not, however, desire to express any final opinion on this question, as Mr. Ganapathy Iyer is willing that the validity of the orders in question might be determined on the footing that they were passed under R. 3 of the Security Rules, without reference to R. 148.
That renders it necessary to decide whether the Security Rules are unconstitutional, as contended by the appellants.
(Ila).
The first ground that is urged against the validity of the Security Rules is that they are repugnant to article 14.
It is said that these rules prescribe a special procedure where action is proposed to be taken against persons suspected of subversive activities, and that when the services of an employee are terminated under these rules, the consequence is to stamp him as unreliable and infamous, and there is thus discrimination, such as is hit by article 14.
It is admitted that if the persons dealt with under these rules form a distinct class having an intelligible differentia which bears a reasonable relation to the purposes of the rules, then there would be no infringement of Art.14.
But it is argued that the expression " subversive activities" which forms the basis of the classification is vague and undefined in that even lawful activities could be roped therein, and that such a classification cannot be said to be reasonable.
Reference was made to the charges which were served on the appellant in Civil Appeal No. 46 of 1956 as showing how even lawful activities (1) I.L.R. (2) A.I.R. 1957 Cal.
4. 1062 could be brought under the impugned rules.
The notice, so far as it is material, runs as follows: " Whereas in the opinion of the. .
General ,Manager, you are reasonably suspected to be a member and office secretary of the B. N. Rly.
Workers ' Union (Communist sponsored) and were thickly associated with communists such as Om Prakash Mehta, B.N. Mukherjee, R. L. Reddy, etc., in subversive activities in such manner as to raise doubts about your reliability and loyalty to the State in that, though a Government employee, you attended private meetings of the Communists, carried on agitation amongst the Railway workers for a general strike from November 1948 to January 1949 evidently to paralyse communication and movement of essential supplies and thereby create disorder and confusion in the country and that, consequently, you are liable to have your services terminated under rule 3 of the said Rules.
" It is argued that it is not unlawful to be a member of the Communist Party or to engage in trade union activities, and if this could form the basis of action under the rules, the classification must be held to be unreasonable.
Reliance was placed on the decision of this Court in The State of West Bengal vs Anwar Ali Sarkar (1), wherein it was held that a power conferred on the executive to select cases for trial by special courts under a procedure different from that of the ordinary courts with the object of ensuring " speedy trial " could not be upheld under article 14 as a valid classification, and on the decision of the Madras High Court in Ananthanarayanan vs Southern Railway(2), wherein it was hold that the words " subversive activities " in R. 3 lacked definiteness.
Now, the principles applicable for a determination whether there has been a proper and valid classification for purposes of article 14 have been the subject of consideration by this Court in a number of cases, and they were stated again quite recently in Budhan Choudhry and others vs The State of Bihar(3), and there is no need to repeat them.
The only point that (1) ; (2) A.I.R. 1956 Mad. 220.
(3) [1955]1 S.C.R. 1045, 1049.
1063 calls for decision in these appeals is whether the classi fication of persons on the basis of subversive activities is too vague to be the foundation of a valid classification.
Mr. Umrigar insists that it is, but his elaborate argument amounts to no more than this that the expression " subversive activities " may take in quite a variety of activities, and that its contents are therefore wide.
It may be that the connotation of that expression is wide, but that is not to say that it is vague or indefinite.
But whatever the position if the words "subversive activities " had stood by them selves, they are sufficiently qualified in the Security Rules to be definite.
Those rules have, for their object, the safeguarding of national security as recited in the short title.
That is again emphasised in R. 3, which provides that a member of the Railway service is not to be retired or his services terminated unless the authorities are satisfied " that his retention in public service is prejudicial to national security ".
In our judgment, the words " subversive activities " in the context of national security are sufficiently precise in their import to sustain a valid classification.
We are unable to agree with the opinion expressed in Ananthanarayanan vs Southern Railway (supra) at p. 223 that the language of R. 3 is indefinite, even when read with the words " national security".
We are also unable to agree with the argument of the appellants based on the charges made against the appellant in Civil Appeal No. 46 of 1956 in the notice dated July 6, 1950, that the expression "subversive activities " is wide enough to take in lawful activities as well, and must therefore be held to be unreasonable for purposes of classification under article 14.
The notice, it is true, refers to the appellant being a member of the Communist Party and to his activities in the trade union.
It is also true that it is not unlawful to be either a Communist or a trade unionist.
But it is not the necessary attribute either of a Communist or a trade unionist that he should indulge in subversive activities, and when action was taken against the appellant under the rules, it was not because he was a 1064 Communist or a trade unionist, but because he was engaged in subversive activities.
We hold that the Security Rules are not illegal as being repugnant to ,a article 14.
(IIb).
It is next contended that the impugned orders are in contravention of article 19(1)(c), and are therefore void.
The argument is that action has been taken against the appellants under the rules, because they are Communists and trade unionists, and the orders terminating their services under R. 3 amount, in substance, to a denial to them of the freedom to form associations, which is guaranted under article 19(1)(c).
We have already observed that that is not the true scope of the charges.
But apart from that, we do not see how any right of the appellants under article 19(1)(c) has been infringed.
The orders do not prevent them from continuing to be Communists or trade unionists.
Their rights in that behalf remain after the impugned orders precisely what they were before.
The real complaint of the appellants is that their services have been terminated; but that involves, apart from article 31 1, no infringement of any of their Constitutional rights.
The appellants have no doubt a fundamental right to form associations under article 19(1)(c), but they have no fundamental right to be continued in employment by the State, and when their services are terminated by the State they cannot complain of the infringement of any of their Constitutional rights, when no question of violation of article 311 arises.
This contention of the appellants must also be rejected.
(IIc).
'it is then contended that the procedure pres cribed by the Security Rules for the hearing of the charges does not satisfy the requirements of article 311, and that they are, in consequence, void.
But article 311 has application only when there is an order of dismissal or removal, and the question is whether an order terminating the services of the employees under R. 3 can be said to be an order dismissing or removing them.
Now, this Court has held in a series of decisions that it is not every termination of the services of an employee that falls within the operation of article 311, 1065 and that it is only when the order is by way of punishment that it is one of dismissal or removal under that Article.
Vide Satish Chandra Anand vs Union of India (1), Shyam Lal vs The State of Uttar Pradesh and the Union of India (2), State of Bombay vs Saubhagchand M. Doshi (3), and Parshotam Lal Dhingra vs Union of India (4).
The question as to what would amount to punishment for purposes of article 311 was also fully considered in Parshotam Lal Dhingra 's case (supra).
It was therein held that if a person had a right to continue in office either under the service rules or under a special agreement, a permature termination of his services would be a punishment.
And, likewise, if the order would result in loss of benefits already earned and accrued, that would also be punishment.
In the present case, the terms of employment provide for the services being terminated on a proper notice, and so, no question of permature termination arises.
Rule 7 of the Security Rules preserves the rights of the employee to all the benefits of pension, gratuities and the like, to which they would be entitled under the rules.
Thus, there is no forfeiture of benefits already acquired.
It was stated for the appellants that a person who was discharged under the rules was not eligible for re employment, and that that was punishment.
But the appellants are unable to point to any rule imposing that disability.
The order terminating the services under R. 3 of the Security Rules stands on the same footing as an order of discharge under R. 148, and it is neither one of dismissal nor of removal within the meaning of article 311.
This contention also must be overruled.
(111) It is next contended by Mr. Umrigar that the charges which were made against the appellant in Civil Appeal No. 46 of 1956 in the notice dated July 6, 1950, have reference to events which took place prior to the coming into force of the Security Rules, which was on May 14, 1949, and that the order terminating the services of the appellant based thereon is bad as giving retrospective operation to the rules, (I) ; (2) ; , (3) Civil Appeal No. 182 Of 1955.
(4) Civil Appeal No. 65 of 1957.
1066 and that the same is not warranted by the terms there of.
Now, the rules provide that action can be taken under them, if the employee is engaged or is reason;ably suspected to be engaged in subversive activities.
Where an authority has to form an opinion that an employee is likely to be engaged in subversive activities, it can only be as a matter of inference from the course of conduct of the employee, and his antecedents must furnish the best materials for the same.
The rules are clearly prospective in that action thereunder is to be taken in respect of subversive activities which either now exist or are likely to be indulged in, in future, that is to say, which are in esse or in posse.
That the materials for taking action in the latter case are drawn from the conduct of the employees prior to the enactment of the rules does not render their operation retrospective.
Vide the observations of Lord Denman C. J. in The Queen vs St. Mary, Whitechapel (1) and The Queen vs Christchurch (2).
This contention must also be rejected.
(IV) Lastly, it was contended that the impugned orders were not passed by the competent authorities under the Security Rules, and that they were, therefore, void.
This contention is based on the fact that the authority competent to pass the orders under R. 3 is, as regards the present appellants, the General Manager, and that the impugned orders were actually communicated to them by the Deputy Manager.
But it has been found as a fact that the orders had been actually passed by the General Manager, and that finding must be accepted.
In the result, the appeals fail, and are dismissed with costs.
The appellants who were permitted to file the appeals in forma pauperis will also pay the court fees payable to the Government.
Appeals dismissed.
(1) ; ; 116 E.R.811.
(2) ; ; , 825.
| The Services of the appellants who were Railway servants, were terminated for reasons of national security under section 3 of the Railway Services (Safeguarding of National Security) Rules, 1949.
Notices served on them under that section to show cause charged them as follows: "Whereas in the opinion of the.
General Manager, you are reasonably suspected to be a member and office secretary of the B. N. Rly., Workers ' Union (Communist sponsored) and were thickly associated with communists such as Om Prakash Mehta, B. N. Mukherjee, R. L. Reddi, etc., in subversive activities in such manner as to raise doubts about your reliability and loyalty to the State in that, though a Government employee, you attended private meetings of the Communists, carried on agitation amongst the Railway workers for a general strike from November 1948 to January 1949 evidently to paralyse communication and movement of essential supplies and thereby create disorder and confusion in the country and that, consequently, you are liable to have your services terminated under rule 3 Of the said Rules".
Orders of suspension were passed on them.
They made their representations.
The committee of Advisers on enquiry and after examining them found that the charges were true and the General Manager acting on its report terminated the services of the appellants, giving them a month 's salary in lieu of notice.
The appellants moved the High Court under article 226 of the Constitution and contended that the Security Rules contravened articles 14, 19(1)(c) and 311 of the Constitution and as such the orders terminating their services were void.
The High Court did not decide the Constitutional validity of the Security Rules and dismissed the petitions on other grounds.
Held, that the words 'subversive activities 'occurring in Rule 3 Of the Railway Services (Safeguarding of National Security) Rules, 1949, in the context of the objective of national security which they have in view, are sufficiently precise in import to 1053 sustain a valid classification and the Rules are not, therefore,invalid as being repugnant to article 14 of the Constitution.
Ananthanarayanan vs Southern Railway, A. I. R. 1956 Mad. 220, disapproved.
The charge shows that action was taken against the appellants not because they were Communists or trade unionists but because they were engaged in subversive activities.
The orders terminating their services could not,.
therefore, contravene article 19(1)(c) of the Constitution since they did not infringe any of the rights of the appellants guaranteed by that Article which remained precisely what they were before.
Article 311 of the Constitution can apply only when there is an order of dismissal or removal by way of punishment.
As the terms of employment of the appellants provided that their services could be terminated on a proper notice and R. 7 Of the Security Rules preserved such rights as benefits of pension, gratuities and the like to which an employee might be entitled under the service rules, there was neither premature termination nor forfeiture of benefits already acquired so as to amount to punishment.
The order ' terminating the services under R. 3 Of the Security Rules stood on the same footing as an order of discharge under R. 148 of the Railway Establishment Code and was neither one of dismissal nor removal within the meaning of article 311 of the Constitution.
Article 311 had, therefore, no application.
Parshotam Lal Dhingra vs Union of India, Civil Appeal No. 65 Of 1957, relied on.
Satish Chandra Anand vs Union of India, [1953] section C. R. 655, Shyam Lal vs The State of Uttar Pradesh and the Union of India, ; and State of Bombay vs Saubhagchand M. Doshi, Civil Appeal No. 182 Of 1955, referred to.
Although the Rules are clearly prospective in character, materials for taking action against an employee thereunder may be drawn from his conduct prior to the enactment of the Rules.
The Queen vs St. Mary, Whitechapel, ; and The Queen vs Christchurch, ; , referred to.
|
Summarize this legal judgement text concisely | ION: Criminal Appeal No. 60 of 1955.
Appeal from the judgment and order dated the 2nd February, 1955, of the Calcutta High Court in Criminal Revision No. 1113 of 1954, against the judgment and order dated the 14th November, 1953, of the Court of the Sessions Judge, Howrah in Criminal Appeal No. 185 of 1953, arising out of the judgment and order dated the 8th September, 1953, of the Municipal Magistrate, Second Class, Howrah, in Case No. 1407C/1952.
Sukumar Ghose, for the appellant.
B. Sen and P. K. Ghosh (for P. K. Bose), for the respondent 1957.
October 29.
The following Judgment of the Court was delivered by SINHA J.
This appeal on a certificate of fitness granted by the Calcutta High Court under article 134 (1) (c) of the Constitution, is directed against the judgment and order of a Single Judge of that Court in its criminal revisional jurisdiction, convicting the appellant under section 488/300 of the Calcutta Municipal Act, 1923 (which will hereinafter be referred to as the Act), and sentencing him to a fine of Rs. 50, in substitution of the order of conviction under section 488/299 of the Act, of a fine of Rs. 75, passed by the lower courts.
The facts found by the courts below which are necessary to be stated for the purpose of this appeal, are as follows: The appellant who is the owner of the premises No. 10/3, Swarnamoyee Road, Howrah, encroached upon an area of 57 ' x 3 ' of the road side land of the Howrah Municipality to which the 776 provisions of the Act have been extended.
A notice, the terms of which we shall set out hereinafter, was served on the appellant to remove the encroachment aforesaid, and as he failed to carry out the terms of the notice within the specified time, the prosecution leading up to this appeal, was instituted before the magistrate who, under section 531, is called 'Municipal Magistrate '.
The Municipal Magistrate who tried the appellant in the first instance, convicted him, but on appeal, the learned Sessions Judge acquitted him on the ground that the prosecution had been launched beyond three months which was the prescribed period of limitation under section 534 of the Act.
The Municipality moved the High Court of Calcutta in its revisional jurisdiction and a Division Bench of that Court (J. P. Mitter and section K. Sen JJ.), set aside the order of acquittal and directed the appeal to be re heard, after giving the Municipality an opportunity of formally bringing on record certain official documents showing the date of the institution of the complaint.
The relevant documents were proved and exhibited on behalf of the prosecution in the Sessions Court and the learned Additional Sessions Judge confirmed the conviction and the sentence, and dismissed the appeal.
Thereupon, the appellant moved the High Court in its revisional jurisdiction.
His application in revision was heard and disposed of by P.N. Mukherjee J. by his order dated February 2, 1955, which is the subject matter of this appeal.
Before him, the appellant as petitioner, urged at the forefront of the arguments, the question of limitation, and the learned Judge took the view that the matter was now concluded in view of what had taken place in the High Court and in the court of Session in pursuance of the order of remand passed by the High Court.
The learned Judge agreed with the appellate court that the complaint was not barred.
The High Court also agreed with the lower courts on their findings on the merits, that is to say, it affirmed the finding that the appellant had encroached upon the road side land of the Municipality.
The High Court accepted the argument raised on behalf of the appellant that on the facts found, namely, that the 777 offending structure was a compound wall and not something which was a part and parcel of the main building, the offence if any, would come under section 300, and not section 299, read with section 488 of the Act.
The High Court further took the view that as the accused was fully aware of the nature of the accusation against him, it would not cause any prejudice to him if the conviction and the sentence were altered into those under section 300, read with section 488 of the Act, the sentence being reduced to the statutory limit of 50 rupees.
The appellant moved the High Court and obtained the necessary certificate from the Bench presided over by the learned Chief Justice who observed, while granting the certificate: "It seems to me to be arguable and arguable with some force that such alteration of the conviction could not possibly be correct in law. .
It would therefore be arguable that a notice under section 299 to remove a compound wall unattached to any building could not be a notice 'lawfully given ' or a requisition 'lawfully made ' within the meaning of section 488(1)(c) of the Calcutta Municipal Act, 1923.
It appears to me that the alteration of the conviction by this Court does raise a question of law which makes the case a fit case for further appeal to the Supreme Court.
" In this Court, the learned counsel for the appellant has placed at the forefront of his arugments the points suggested in the portion of the learned Chief Justice 's order quoted above, but in our opinion, there is absolutely no substance in those contentions.
The alteration of the conviction from section 299 to section 300, read with section 488 of the Act, was no alteration in the substance of the accusation but only in the section more properly applicable to the facts found.
A similar question was raised before their Lordships of the Judicial Committee of the Privy Council in the case of Begu vs The King Emperor (1).
It was argued before their Lordships that the conviction of the appellants before the Judicial Committee under section 201, Indian Penal Code, without a charge under that section, was a serious departure from the procedure laid down in the Code of Criminal Procedure.
In that 778 case the initial conviction was for murder under section 302 of the Indian Penal Code, but the High Court had set aside that conviction and substituted a conviction under the lesser section 201.
After discussing the provisions of sections 236 and 237 of the Code of Criminal Procedure, their Lordships made the following observations which fully cover the present controversy " A man may be convicted of an offence, although there has been no charge in respect of it, if the evidence is such as to establish a charge that might have been made.
" It will be noticed that in the case before the Privy Council, the alteration was not only in respect of the section but also of the substance of the accusation, but as the lesser offence under section 201, had been made out by the evidence led on behalf of the prosecution which was primarily for an offence of murder, their Lordships ruled that sections 236 and 237 of the Code of Criminal Procedure authorize the Court to alter the conviction and the sentence to be passed in respect of the offence made out in the evidence.
In the case in hand, it is manifest that the facts sought to be proved and found by the courts below remained the same even after the alteration of the conviction from section 299 to section 300, read with section 488 of the Act.
There was, therefore, no illegality in the alteration of the conviction under one section to the other.
It was next argued that the notice served upon the appellant was not lawful within the meaning of section 488(1)(c) of the Act, which runs as follows: 488(1) Whoever commits any offence by (a). . . . . . . . . . (b). . . . . . . . . . (c) failing to comply with any direction lawfully given to him or any requisition lawfully made upon him under any of the said sections, sub sections, clauses, provisos or rules, shall be punished. . . . . . ." The substantive portion of the notice is in these terms: "Take notice that you are hereby required by the Municipal Commissioners of Howrah, within 779 thirty days from the date of service of this notice to remove the encroachment caused by a compound wall measuring 57 ' 0" x 3 ' 0" upon Swarnamoyee Road attached to premises No. 10/3 and that in default, the provisions of the above Act will be enforced.
" This notice is headed as under section 299 of the Act.
It is no more in controversy, as found by the courts below, that the offending part of the structure comes under section 300 which refers to a wall, etc., not being a portion of a building or fixture, as contemplated in section 299.
The contention now has narrowed down to this that the notice having been headed as under section 299 of the Act, the conviction under section 300 is illegal, because, it is further argued, the requisition had not been 'lawfully made '.
According to this argument, the requisition would have been 'lawfully made ', if the notice had been headed as under section 300.
Hence, the label given to the notice makes all the difference between a requisition 'lawfully made ' and a requisition not so made.
In our opinion, this argument has only to be stated to be rejected.
It is the substance and not the form of the notice that has to be regarded.
The effective part of the notice quoted above, leaves no doubt in the mind of the parties concerned that the requisition is to remove the encroachment caused by the compound wall.
As it has not been contended that the appellant had not received the notice, and it is common ground that the appellant had not carried out the terms of the notice, there cannot be the least doubt that the appellant has incurred the penalty under section 488(1)(c), read with section 300.
It must, therefore, be held that notwithstanding the label given to the notice, the requisition bad been lawfully made in the sense that the appellant had made the encroachment complained of, and that the Municipality was entitled to call upon him to remove the encroachment.
The appellant was bound to carry out the terms of the requisition, and as he admittedly failed therein, he had incurred the penalty of the law.
It was next sought to be contended that there was substantial prejudice to the appellant inasmuch as if 99 780 the conviction were under section 299 and not section 300, read with section 488, he may have been entitled to claim compensation.
There are several answers to this contention.
In the first instance, he himself invited the High Court to interfere with the order of conviction passed by the lower courts.
If the High Court has set right the technical defect, as it was bound to do when the matter had been brought to its notice, the appellant has no just grievance, keeping in view the fact that the amount of fine has been reduced as a result of the alteration in the section.
Secondly, if he has any rights to claim compensation in a civil court the judgment and order of the criminal court is wholly irrelevant; and thirdly, the prejudice must have reference to any irregularity in the trial of the case.
It has not been shown that the appellant had, in any way, been prejudiced in the trial of the case as a result of the alteration in the section, that is to say, that he was deprived of some opportunity to make a proper defence to the prosecution if the right section had been named in the notice or in the charge, if any.
Nor has he been able to show that he was misled as a result of any such technical error.
Lastly, it was sought to be made out that the prosecution itself was beyond time.
This contention was attempted to be made good with reference to the additional evidence adduced at the appellate stage as a result of the direction of the High Court when the case came before it on the first occasion, as mentioned above.
In our opinion, there is no substance in this contention because as pointed out by the learned Additional Sessions Judge, the additional evidence placed before the Court puts the matter beyond all reasonable doubt that the complaint had been lodged in time before the relevant authority.
In view of these considerations, it must be held that there is no merit in this appeal.
It is, accordingly, dismissed.
Appeal dismissed.
| The appellant was convicted by the Municipal Magistrate under section 488, read with section 299, of the Calcutta Municipal Act, 1923, and sentenced to pay a fine of Rs. 75, for failure to carry out within the specified time the terms of a notice served on him under section 299 of the Act to remove the encroachment caused by a compound wall upon the road side land of the Municipality.
Since the offending structure was a compound wall and not something which was part and parcel of the main building, the offence comes under section 300 and not section 299, read with section 488 Of the Act.
The High Court, in revision, found that the accused was fully aware of the nature of the accusation against him and that there was no prejudice caused to him by the wrong mention of section 299 in the notice in place Of section 300.
It accordingly altered the conviction into one under section 488, read with section 300, and reduced the amount of fine to Rs. 5o as required by the section.
On appeal to the Supreme Court it was contended for the appellant that the conviction was bad because (1) the notice having been headed as under section 299 of the Act, the conviction under section 300 was illegal, (2) the requisition had not been lawfully made within the meaning Of section 488(1)(c), and (3) there was substantial prejudice to the appellant inasmuch as if the conviction were under section 299 and 775 not section 300, read with section 488, he might have been entitled to claim compensation : Held, that the effective part of the notice made it clear that the requisition, which was to remove the encroachment caused by the compound wall, was lawfully made, that the alteration of the conviction under section 299 to one under section 300 would not make it illegal and that, on the facts, there was no prejudice.
Begu vs The King Emperor, L.R. 52 I.A. 191, relied on.
|
Summarize this legal judgement text concisely | minal Appeal No. 130 of 1956.
Appeal by special leave from the judgment and order dated May 12, 1955, of the Punjab High Court in Criminal Appeal No. 52 D of 1954, arising out of the judgment and order dated December 6, 1954, of the Court of the Special Judge at Delhi in Corruption Case No. 1 of 1954.
1038 N. C. Chatterjee and C. V. L. Narayan, for the appellant in Cr. A. No. 130 of 56.
Jai Gopal Sethi and Naunit Lal, for the appellant in Cr. A. No. 25 of 56.
C.K. Daphtary, Solicitor General of India, A.M. Chatterjee, H. R. Khanna and R. H. Dhebar, for the respondent in both the appeals.
December 3.
The following Judgment of the Court was delivered by IMAM J. A question of law, common ' to these appeals by special leave, requires determination; hence they were heard together.
Special leave in Criminal Appeal No. 130 of 1956 was limited to the question whether the trial court had jurisdiction to take cognizance of the offence for want of sanction under section 6 of the Prevention of Corruption Act, 1947 (11 of 1947), hereinafter referred to as the Act.
Criminal Appeal No. 25 of 1956 was not so limited and additional points were raised for our consideration, to which reference will be made when that appeal is specifically dealt with.
The question of law, common in both these appeals, is whether there was any necessity for a sanction under section 6 of the Act before a court could take cognizance of an offence under section 161 of the Indian Penal Code or section 5(2) of the Act or both, alleged to have been committed by a person who at the time the court was asked to take cognizance was not a public servant but was so at the time of the commission of the offence.
In Criminal Appeal No. 130 of 1956, the appellant was convicted under section 5(2) of the Act and sentenced to six months ' simple imprisonment by the Special Judge, Delhi.
He appealed against his conviction and sentence to the Punjab High Court.
That Court while admitting the appeal issued notice upon the appellant to show cause why his sentence should not be enhanced.
The High Court ultimately dismissed his appeal and enhanced the sentence of six months ' imprisonment to two years ' rigorous imprisonment.
As in this appeal special leave has been granted limited 1039 to the question already stated, it is unnecessary to set out the prosecution case against the appellant.
In Criminal Appeal No. 25 of 1956 the appellant had applied to the Allahabad High Court under section 561A of the Code of Criminal Procedure for the quashing of the proceedings pending against him before the Special Judge.
The application was dismissed.
It is against the order dismissing his application that this appeal has been filed by the appellant.
It is admitted that at the time the Special Judges concerned purported to take cognizance the appellants were not public servants and that no order of sanction under section 6 of the Act by a competent authority was on the record.
At the time that the appellants are alleged to have committed the offence they were public servants.
Section 6 of the Act states: "6.
Previous sanction necessary for prosecution (1) No court shall take cognizance of an offence punishable under section 161 or section 164 or section 165 of the Indian Penal Code (Act 45 of 1860), or under sub section (2) of section 5 of this Act, alleged to have been committed by a public servant, except with the previous sanction, (a)in the case of a person who is employed in connection with the affairs of the 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 132 1040 would have been competent to remove the public servant from his office at the time when the offence was alleged to have been committed.
" There is no dispute that if at the time when a court purports to take cognizance of offences punishable under section 161, 164 or section 165 of the Indian Penal Code or section 5(2) of the Act committed by a public servant and that person is a public servant, cognizance cannot be taken by a court unless a sanction by the competent authority has been previously accorded.
The real controversy in these appeals is whether such a sanction is required before a court can take cognizance in the case of a person who is not a public servant at the time the court is asked to take cognizance, although the offence alleged against him was committed by him as a public servant.
To determine this question section 6 of the Act requires to be interpreted.
In substance, it was urged on behalf of the appellants that on a proper interpretation of section 6 of the Act the status of the accused at the time of the commission of the offence alleged against him was the essence of the matter and not his status at the time the court was asked to take cognizance of the offence, in which case a sanction under section 6 of the Act was necessary before a court could take cognizance although at that stage the accused had ceased to be a public servant.
On the other band, the Solicitor General contended that on a proper interpretation of the provisions of section 6 of the Act not only an offence mentioned therein must be committed by a public servant but that that person is still a public servant removable from his office by a competent authority at the time a court was asked to take cognizance of the offence.
Before we proceed to construe the provisions of section 6 of the Act it is necessary to refer to some of the submissions made by the learned Counsel for the appellants.
It was said that in construing the provisions of a statute a court must attempt to ascertain the intention of the legislature and it must do this not only from the language of the statute, but also from the 1041 consideration of the social conditions which gave rise to it, and of the mischief which it was intended to remedy.
It must supplement the written word so as to give force and life to the intention of the legislature.
Reliance was also placed upon certain decisions construing the provisions of section 197 of the Code of Criminal Procedure.
Reference was also made to article 361 of the Constitution and section 197A of the Code of Criminal Procedure in aid of the construction which the learned Counsel contended for with reference to the words used in section 6 of the Act.
In construing the provisions of a statute it is essential for a court, in the first instance, to give effect to the natural meaning of the words used therein, if those words are clear enough.
It is only in the case of any ambiguity that a court is entitled to ascertain the intention of the legislature by construing the provisions of the statute as a whole and taking into consideration other matters and the circumstances which led to the enactment of the statute.
Observations of Denning L. J. as he then was, in the case of Seaford Court Estates Ltd. vs Asher (1) were relied upon by Mr. Chatterjee.
It is, however, clear that the observations of the learned Judge were made with reference to the provision of a statute which was ambiguous.
We cannot construe the observations to mean that where the language of a statute was free from ambiguity a duty was cast upon the court to do anything more than to give effect to the words used.
Although reference was made to article 361 of the Constitution and section 197A of the Code by Mr. Sethi, we are unable to see how the words used therein assist us in con struing the provisions of section 6 of the Act.
Reliance was placed on the decisions of the Nagpur High Court in the case of section Y. Patil vs Vyankatswami (2 ) and the decision of the Court of the Judicial Commissioner of Sind in the case of Suganchand vs Seth Naraindas (3), in support of the submission that even if a person had ceased to be a public servant before the prosecution started, such a person was (1)(1949) 2 K. B. 481, 498.
(2) I. L. R. (3)A. I. R. (1932) Sind.
1042 protected by the provisions of section 197 of the Code and a sanction was necessary before a court could take cognizance.
It is true that so far as section 197 of the Code is concerned these two decisions do lend support to the submission made by the learned Counsel for the appellants.
It is, however, to be noticed that the decision of the Nagpur High Court, which was of a single Judge, was overruled by a Division Bench of that Court in the case of The State vs Hifzul Rahman (1), where it was held that the person accused must be a public servant at the time of the accusation and section 197 of the Code afforded no protection to a public servant if he had ceased to hold office.
In the case of Prasad Chandra Banerji vs Emperor(2), the Calcutta High Court held that the protection given by section 197.
of the Code applied only to a person who is still a public servant at the time the prosecution is launched and does not extend to a person who is no longer a public servant at that time but was in office when the offence charged was alleged to have been committed.
Accordingly, no sanction under section 197 of the Code was necessary in order to prosecute a person who had ceased to be a public servant at the time of the launching of the prosecution.
A similar view was taken by the Bombay High Court in the case of Imperator vs Joshi (3), and by a single Judge of the Allahabad High Court in the case of Emperor vs Suraj Narain Chaube (4).
It would thus appear that the High Courts of Calcutta, Bombay, Allababad and Nagpur are agreed that section 197 of the Code affords no protection to a person who is not a public servant at the time he is accused of an offence before a court although at the time he committed the offence he was a public servant.
The decision of the Punjab High Court in the case of The State vs Gurcharan Singh (5), was brought to our notice wherein it was held that in view of the form of wording in the two sections, namely section 197 of the Code and a. 6 of the Act, the same principles would apply to them, having regard to the decisions of the Calcutta and Bombay High Courts and the protection afforded by section 197 of (1)I. L. R. (2) 1.
L. R. (3) I. L. R. (4) 1.
L. R. (1938) All.
(5) A. I. R. (1952) Pun.89.
1043 the Code was available to a person who was a public servant while still in office but was not available to him when he had already been discharged from service before he was prosecuted.
These cases may render assistance in understanding the reason why a public servant, while he is a public servant, cannot be prosecuted without a previous sanction for offences, committed by him as a public servant and thus may, be of some indirect help in construing the words used in section 6 of the Act.
Section 6, however, must be construed with reference to the words used therein independent of any construction which may have been placed by these decisions on the words used in section 197 of the Code.
Before an attempt is made to construe the words contained in section 6 of the Act some reference may be made to the power vested in a court to take cognizance of an offence.
Section 190 of the Code of Criminal Procedure confers a general power on a criminal court to take cognizance of offences, but the exercise of such power in certain cases is prohibited by the provisions of sections 195 to 199 of the Code unless the conditions mentioned therein are complied with.
Under the Criminal Law (Amendment) Act, 1952 (XLVI of 1952), Special Judges are appointed to try offences under section 161, 162, 163, 164, 165 or section 165A of the Indian, Penal Code or section 5(2) of the Act.
They are authorized to take cognizance of these offences without the accused person being committed to them for trial.
The exercise of this general power to take cognizance by them is prohibited with respect to offences committed under section 161, 164 or section 165 of Indian Penal Code or under section 5(2) of the Act by a public servant without the previous sanction of a competent authority.
In our opinion, if a general power to take cognizance of an offence is vested in a court, any prohibition to the exercise of that power, by any provision of law, must be confined to the terms of the prohibition.
In enacting a law prohibiting the taking of cognizance of an offence by a court, unless certain conditions were complied with, the legislature did not purport to condone the offence.
It was primarily concerned to 1044 see that prosecution for offences in cases coveted by the prohibition shall not commence without complying with the conditions contained therein, such as a previous sanction of a competent authority in the case of a public servant, and in other cases with the consent of the authority or the party interested in the prosecution or aggrieved by the offence.
There can be little doubt that in the case of a public servant the Central Government or the State Government or the authority competent to remove him from service is vitally interested in the matter of his prosecution.
Such authority is directly concerned in the matter as it has to decide whether to accord or not to accord its sanction for the prosecution of one of its servants.
The authority concerned may refuse to accord such sanction on the ground that the prosecution is frivolous or vexatious or on the ground that in the public ;Interest it would be inexpedient to do so.
Without some safeguard of this kind a public servant may find it impossible to carry on his official duties efficiently.
The object of the Act was to suppress bribery and corruption.
Its provisions are severe.
Certain presumptions of guilt of offences committed under sections 161 and 165A of the Indian Penal Code were enjoined by section 4 of the Act unless the contrary was proved by the accused.
Section 5 of the Act created the offence if criminal misconduct on the part of a public servant, an offence unknown to any of the provisions of the Indian Penal Code dealing with bribery or corruption.
Sub section (2) made such an offence punishable with imprisonment which may extend to a term of 7 years, or with fine, or with both.
Under sub section
(3) a court shall presume that the accused was guilty of misconduct if it was proved that he or any other person on his behalf was in possession, for which the accused person could not satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income.
These provisions of the Act indi cate that it was the intention of the legislature to treat more severely than hitherto corruption on the part of a public servant and not to condone it in any manner whatsoever.
If section 6 had Dot found a place in 1045 the Act it is clear that cognizance of an offence under s.161, 164 or section 165 of the Indian Penal Code or under s.5(2) of the Act committed by a public servant could be taken by a court even if he had ceased to be a public servant.
The mere fact that he had ceased to be a public servant after the commission of the offence would not absolve him from his crime.
Section 6 certainly does prohibit the taking of cognizance of his offence, without a previous sanction, while he is still a public servant but does that prohibition continue after he has ceased to be a public servant ? It is to determine that question which requires us to examine and construe the provisions of section 6 of the Act and to express our opinion thereon.
When the provisions of section 6 of the Act are examined it is manifest that two conditions must be fulfilled before its provisions become applicable.
One is that the offences mentioned therein must be committed by a public servant and the other is that that person is employed in connection with the affairs of the Union or a State and is not removable from his office save by or with the sanction of the Central Government or the State Government or is a public servant who is removable from his office by any other competent authority.
Both these conditions must be present to preventa court from taking cognizance of an offence mentioned in the section without the previous sanction of the Central Government or the State Government or the authority competent to remove the public servant from his office.
If either of these conditions is lacking, the essential requirements of the section are.
wanting and the provisions of the section do not stand in the way of a court taking cognizance without a previous sanction.
An offence under section 161 of the Indian Penal Code can be committed by a public servant or by a person expecting to be a public servant, but section 6 of the Act refers only to an offence committed by a publicservant under that section.
If, therefore, at the time a court was asked to take cognizance of an offence under section 161 of the Indian Penal Code, the accused is a public servant but was not so at the time that the offence was committed, but at which time he was 1046 merely expecting to be a public servant, a previous sanction would be unnecessary before a court could take cognizance.
as the provisions of the section would be inapplicable.
Conversely, if an offence under section 161 of the Indian Penal Code was committed by a public servant, but, at the time a court was asked to take cognizance of the offence, that person had ceased to be a public servant one of the two requirements to make section 6 of the Act applicable would be lacking and a previous sanction would be unnecessary.
The words in section 6(1) of the Act are clear enough and they must be given effect to.
There is nothing in the words used in section 6(1) to even remotely suggest that previous sanction was necessary before a court could take cognizance of the offences mentioned therein in the case of a person who had ceased to be a public servant at the time the court was asked to take cognizance, although he had been such a person at the time the offence was committed.
It was suggested that el.
(c) in section 6(1) refers to persons other than those mentioned in cls.
(a) and (b).
The words " is employed " are absent in this clause which would, therefore, apply to a person who had ceased to be a public servant though he was so at the time of the commission of the offence.
Clause (c) cannot be construed in this way.
The expressions " in the case of a person " and "in the case of any other person " must refer to a public servant having regard to the first paragraph of the sub section.
Clauses (a) and (b), therefore, would cover the case of a public servant who is employed in connection with the affairs of the Union or a State and is not removable from his office save by or with the sanction of the Central Government or the State Government and el.
(c) would cover the case of any other public servant whom a competent authority could remove from his office.
The more important words in cl.
(c) are "of the authority competent to remove him from his office".
A public servant who has ceased to be a public servant is not a person removable from any office by a competent authority.
Section 2 of the Act states that a public servant, for the purpose of the Act, means a public servant as defined in section 21 of the Indian Penal Code.
Under 1047 cl.
(c), therefore, any one who is a public servant at the time a court was asked to take cognizance, but does not come within the description of a public servant under cls.
(a) and (b), is accused of an offence committed by him as a public servant as specified in section 6 would be entitled to rely on the provisions of that section and object to the taking of cognizance without a previous sanction.
To read cl.
(c) in the way suggested on behalf of the appellants, would be to give a meaning to this clause which is not justified by the words employed therein.
It was further suggested that the provisions of sub section
(2) of section 6 indicate that it was the status of the accused at the time of the commission of the offence which was relevant rather than his status at the time a court was asked to take cognizance.
This sub section was inserted into the Act by the Prevention of Corruption (Second Amendment) Act, 1952, and it purported to finally settle any doubts which may arise as to which authority should grant the sanction in the case of a public servant who had committed an offence mentioned in section 6(1) and who at the time the court was asked to take cognizance is still a public servant.
For example, it is not difficult to imagine cases where a public servant employed by a State Government is subsequently employed by the Central Government and a question arises as to which of the two Governments is to grant the sanction for his prosecution.
This sub section resolves the difficulty by directing that where a doubt arises, the authority which was to grant the sanction was the one which was competent to remove him from his office at the time of the commission of the offence.
If the provisions of sub section
(1) bear the construction which we place upon them, there is nothing in sub section
(2) which is in conflict with that construction.
Besides, there is nothing in the language of sub section
(2) which carries the meaning suggested on behalf of the appellants or which assists us in construing the provisions of sub section
We cannot construe the words " is employed " and " is not removable" in cls.
(a) and (b) and "competent to remove him from his office" in cl.
(c) as "was employed" and " was not removable " and " would have been I33 1048 competent to remove him from his office ".
To do so would be to substitute our own words for the words of the statute as contained in these clauses.
In Criminal Appeal No. 122 of 1954, dealt with by another judgment, where a similar question bad been raised, the appellant had suggested that two defects appearing in section 197 of the Code of Criminal Procedure were intended to be remedied by the Act: (1) that section 197 did not apply to a public servant who had ceased to be a public servant at the time of the taking of cognizance of an offence and (2) that an offence under section 161 of the Indian Penal Code committed by a public servant was not covered by section 197 of the Code, as such offence could not be said to have been committed by him while acting or purporting to act in the discharge of his official duty, having regard to the decisions of the courts in India and of the Privy Council.
We cannot see how this assists us in construing s.6 of the Act.
Whatever the phraseology of s.197 of the Code may have been in the past, the decisions of the courts in India that section 197 of the Codedoes not apply to a person who had ceased to be a public servant at the time a court was asked to take cognizance were based upon the words used in that section at the time the judgments were pronounced.
These decisions laid emphasis on the words " when any person who is a judge within the meaning of section 19 of the Indian Penal Code. . . . or when any public servant who is not removable from his office . . . " It was held in these decisions that these words meant that the person must be a public servant at the time a court was asked to take cognizance, although be may have been a public servant at the time of the commission of the offence.
It is true that unlike section 197 of the Code, section 6 of the Act does not contain the words " while acting or purporting to act in the discharge of his official duty ".
We have to construe section 6 of the Act as we find it and the absence of these words from the section renders us no assistance in its construction.
In our opinion, in giving effect to the ordinary meaning of the words used in section 6 of the Act, the conclusion 1049 is inevitable that at the time a court is asked to take cognizance not only the offence must have been committed by a public servant but the person accused is still a public servant removable from his office by a competent authority before the provisions of section 6 can apply.
In the present appeals, admittedly, the appellants had ceased to be public servants at the time the court took cognizance of the offences alleged to have been committed by them as public servants.
Accordingly the provisions of section 6 of the Act did not apply and the prosecution against them was not vitiated by the lack of a previous sanction by a competent authority.
Criminal Appeal 25 of 1956.
In this appeal apart from the question that the court could not take cognizance of the offence alleged against the appellant without a previous sanction of a competent authority, additional points had been taken for quashing the prosecution pending against him.
The appellant was appointed Deputy Assistant Director Enforcement in the Ministry of Industry and Commerce on March 25, 1949 and was promoted to the office of Assistant Director on July 14, 1949.
It was alleged that he accepted on September 11, 1951, a sum Rs. 10,000 as bribe in part payment out of an agreed amount of Rs. 30,000.
An enquiry under r. 55 of the Civil Service Rules took place and thereafter he was dismissed from service on September 25, 1953.
In the meantime, it appears that correspondence bad ensued between the appellant and the Government.
On September 18, 1952, a final report was submitted to the court under section 173 of the Code of Criminal Procedure wherein it was stated that although a prosecution was recommended, the order of the Ministry of Commerce and Industry was that the appellant would be dealt with departmentally.
On September 19, 1952, the Magistrate, by his order, approved of the closing of the investigation, discharged the appellant from his bail and directed that the sum of Rs. 10,000 seized from him, was to be returned to the complainant.
The prosecution of the appellant was, 1050 however, recommenced on February II,, 1954, on the same materials and same allegations but on a fresh complaint.
It, was contended on behalf of the appellant, that once a sanction had been refused then that was the end of the prosecution for all times.
If once the sanction was refused it could not ever be granted later on.
If the prosecution had been dropped, then it could not be revived in a case where a. sanction was necessary prior to a prosecution, and a promise not to prosecute prevented a reconsideration of the matter.
Lastly, it was urged that in the circumstances of the case it was an abuse of the process of the court to allow a prosecution to be recommenced after it had been withdrawn.
We have examined the correspondence which has been referred to in the petition for special leave and which is to be found on the record of this case.
There is nothing in them to establish the allegation that a sanction for the prosecution of the appellant was positively refused.
All that is indicated is that the Government chose to proceed against the appellant departmentally.
It can hardly be said that in doing so the Government had positively refused to grant sanction for the prosecution of the appellant.
Indeed, it may be legitimately said that the Government preferred to &wait the result of a departmental enquiry.
If that enquiry exonerated the appellant the occasion for granting a sanction may not arise.
If, on the other band, the departmental enquiry established the allegation against the appellant, the Government might find itself in possession of more material than that disclosed by the police investigation on which to decide whether a sanction should or should not be granted.
We cannot read into the correspondence, as was suggested on behalf of the appellant, that there was a promise on the part of the Government not to prosecute the appellant.
It is true that there was a final report and a withdrawal of the case before a Magistrate.
At the stage when the withdrawal took place the appellant was still a public servant and the court could not take 1051 cognizance of the offence under s, 161 of the Indian Penal Code and under section 5(2) of the Act without a previous sanction.
The withdrawal of the case at that stage meant no more than this that the appellant was discharged.
A withdrawal of a case resulting merely in a discharge does not prevent the prosecution being recommenced on a fresh complaint.
On February 11, 1954, when the fresh complaint was filed the appellant was not a public servant and therefore the court could take cognizance without a previous sanction.
It is unnecessary for us to say whether once a sanction is positively refused a fresh sanction cannot be granted, because we are satisfied, on the materials before us, that, in fact, there was no positive refusal to sanction the prosecution of the appellant.
We are also satisfied that the circumstances do not establish that there had been any abuse of the process of the court and the provisions of section 561A of the Code of Criminal Procedure do not apply.
As the points urged in these appeals have failed, the appeals must, accordingly, be dismissed.
Appeals dismissed.
| The appellant who was a public servant was dismissed from service after departmental inquiry.
Thereafter he was charged with having committed the offence of criminal misconduct under section 5(2), Prevention of Corruption Act, 1947 and was convicted.
No sanction under section 6 of the Act was produced, before the trial Court.
It was contended that the Court could not take cognizance of the offence without there being a proper sanction to prosecute : Held, that no sanction under section 6 of the Act was necessary for the prosecution of the appellant as he was not a public servant at the time of the taking of cognizance of the offence.
In construing the provisions of a statute it is essential for a Court, in the first instance, to give effect to the natural meaning of the words used therein, if those words are clear enough.
It is only in the case of any ambiguity that a Court is entitled to ascertain the intention of the legislature.
Where a general power to take cognizance of an offence is vested in a Court, any prohibition to the exercise of that power, by any provision of law, must be confined to the terms of the prohibition.
The words in section 6(1) of the Act are clear enough and must be given effect to.
The more important words in cl.
(c) of section 6(1) are " of the authority competent to remove him from his office ".
A public servant who has ceased to be a public servant is not a person removable from any office by competent authority.
The conclusion is inevitable that at the time a Court is asked to take cognizance not only must the offence have been committed by a public servant but the person accused must still be a public servant removable from his office by a competent authority before the provisions of section 6 can apply.
|
Summarize this legal judgement text concisely | ivil Appeal No. 353 of 1957.
Appeal by special leave from the judgment and decree dated November 1, 1955, of the Punjab High Court (Circuit Bench) at Delhi in Regular Second Appeal No. 28 D of 1955, arising out of the judgment and decree dated December 31, 1954, of the Court of the Senior Subordinate Judge at Delhi in Regular Civil Appeal No. 685 of 1954, affirming the judgment and decree of Subordinate Judge Third Class Delhi in Suit No. 273/213 of 1953.
Janardhan Sharma, for the appellant.
C. K. Daphtary, Solicitor General of India, R. Gana pathy Iyer and R. H. Dhebar, for the respondents.
1082 1957.
December 13.
The following Judgment of the Court was delivered by DAS C. J.
This appeal by special leave granted by this Court to the plaintiff appellant is directed against the judgment and decree passed on November 1, 1955, by a single Judge of the Punjab High Court sitting in the Circuit Bench at Delhi in regular second appeal No. 28 D of 1955.
The facts leading up to the present appeal are shortly as follows: On April 6, 1943, the appellant was appointed a sub inspector under the Delhi Audit Fund.
In February 1947, he was transferred to the Co operative Societies Department and posted as subinspector in the Milk Scheme.
On July 3, 1947, the the appellant was confirmed by the then Deputy Commissioner of Delhi who was also the ex officio Registrar of Co operative Societies.
On August 1, 1948, the appellant was transferred to the Rehabilitation Department of the Co operative Societies and posted as sub inspector.
On July 1, 1949, the appellant was suspended by the then Deputy Commissioner, Delhi.
On July 9, 1949, the appellant was served with a charge sheet under r. 6(1) of the Rules which had been framed by the Chief Commissioner, Delhi to provide for the appointment to the subordinate services under his administrative control and the discipline and rights of appeal of members of those services.
After formulating eight several charges the document concluded as follows: " You are, therefore, called upon to show cause why you should not be dismissed from the service.
You should also state in your reply whether you wish to be heard in person or whether you will produce defence.
The reply should reach the Asst.
Registrar, Co operative Societies, Delhi, within ten days from the receipt of this charge sheet".
The chargesheet was signed by Shri Rameshwar Dayal who was at that time the Deputy Commissioner of Delhi and was admittedly the authority competent to dismiss the appellant.
The appellant duly submitted his explanation in writing.
One Shri Mahipal Singh, Inspector, Co. 1083 operative Societies was appointed by the Deputy Commissioner, Delhi the officer to hold the enquiry.
The appellant attended two sittings before the Enquiry Officer and then applied to the Deputy Commissioner to entrust the enquiry to some Gazetted Officer under him.
This request of the appellant was rejected and he was informed accordingly.
Indeed, the appellant was warned that the Enquiry Officer had been authorised to proceed with the enquiry ex parte if the appellant failed to attend the enquiry.
The appellant, however, did not, after October 20, 1949, attend any further sittings before the Enquiry Officer.
The Enquiry Officer thereupon framed four additional charges against the appellant, namely, (1) for his refusal to attend the enquiry, (2) for his refusal to accept the service of the order of the Enquiry Officer, (3) for his absence without permission and (4) for his misconduct in snatching away papers from one Mohd. Ishaq and using unparliamentary and threatening language.
It appears that at or about this time the appellant became involved in a criminal case on a charge under section 307 of the Indian Penal Code and on October 30, 1949, he was actually arrested but was released on bail two or three days later.
Eventually on May 20, 1950, the appellant was discharged from the criminal charge.
On November 14, 1951, the appellant was served with a notice signed by one Shri Vasudev Taneja, Superintendent.
The notice was in the following terms: "Please note that you are to appear before Shri J.B. Tandon, 1. A. section, Additional District Magis trate,on the 24th November, 1951, at 10 30 a.m., in his court room in connection with the departmental enquiry pending against you".
The language employed in the notice does lead some support to the conten tion that the Enquiry Officer, Shri Mahipal Singh, had not concluded the enquiry entrusted to him and that the departmental enquiry was still pending.
Pursuant to the notice the appellant appeared before Shri J. B. Tandon and urged two points, namely, (1) 138 1084 that the enquiry of the charges framed against him ought to have been held by a Gazetted Officer of the District Court and (2) that the enquiry should have been held in his presence.
It will be noticed that both the points related to the enquiry before Shri Mahipal Singh.
On December 13, 1951, Shri J. B. Tandon made a report.
After reciting the charge sheet containing the notice calling upon the appellant to show cause why he should not be dismissed from service and setting out the charges contained in the notice and summarising the explanation submitted by the appellant with regard to each of the charges and reciting the prayer of the appellant that the Enquiry Officer should be changed and the rejection thereof and the framing of additional charges and the appellant 's absence from the enquiry with effect from October 20, 1949, the report proceeded to set out the actual charges which Shri Mahipal Singh was appoint ed to enquire into.
The report then stated that the enquiry with regard to the first two charges had been held in the presence of the appellant and the rest were enquired into ex parte as the appellant had absented himself from the enquiry.
Then the report recited that twelve charges had been proved against the appellant and he was given the benefit of doubt in respect of charge No. (iii) and that no charge sheet had been given with regard to charges Nos.
(xiii) and (xiv) and that no enquiry had been held on those charges.
Out of the twelve charges said to have been proved against the appellant, Shri J. B. Tandon found that no charge had been actually framed in one case and, therefore, he reduced the number of proved charges to eleven and proceeded to base his recommendation on them.
After stating that the charges of embezzlemient, acceptance of illegal gratification and borrowing of money from societies were so serious that even one of them alone was sufficient to demand the appellant 's dismissal and that the entries made in his character roll disclosed that his work and conduct had not been satisfactory and explaining that the enquiry had been held up by reason of the appellant having been challaned under section 307, Indian Penal Code, Shri J. B. 1085 Tandon, in his report, formulated the following points for consideration: namely, (1) what penalty should be imposed on Shri Khem Chand for the eleven charges proved against him? (2) Whether his gun licence should be cancelled and (3) whether the dues of societies, which had been proved, might be realised out of the security deposit furnished by him? Then, after stating that a personal hearing was given to the appellant who raised the two points mentioned above and holding that there was no substance in either of them, paragraph 16 of the report ran as follows: " The charges of embezzlement, acceptance of illegal gratification, making wrong statement, misbehaviour at the time of enquiry and refusal to receive orders to attend enquiry which had been proved against him are so serious that, I am sorry, I cannot suggest lesser punishment than dismissal from service and he may be dismissed.
" The report also recommended that the appellant 's gun licence be cancelled and that he be directed to surrender his licence and deposit the gun in the district Malkhana and that the money, which had been proved to have been taken by the appellant from various societies, might also be recovered from the security deposit furnished by him.
There is no positive and definite statement in Shri J. B. Tandon 's report that Shri Mahipal Singh had concluded the enquiry or submitted a formal report.
The general tenor of Shri J. B. Tandon 's report, however suggests that Shri Mahipal Singh did arrive, at definite findings on twelve charges.
The appellant 's grievance is that he was not given a copy of the report of Shri Mahipal Singh, if any had been made, and no such report has been exhibited in this case.
At the foot of Shri J. B. Tandon 's report the following endorsement appears over the signature of the Deputy Commissioner, Delhi under date December 14, 1951: " The report is approved.
Action accordingly.
" Thereupon on December 17, 1951, a formal order was issued over the signature of the Deputy Commissioner, Delhi.
It was in the following terms: 1086 "I, the undersigned, do hereby dismiss Shri Khem Chand, sub inspector, Co operative Societies, Delhi, from the Government Service with effect from the date of this order.
He has been found guilty of the charges of embezzlement, acceptance of illegal gratification, making wrong statement,misbehaviour at the time of the enquiry and refusal to receive order to attend the enquiry.
I further order that money which has been proved to have been taken by Shri Khem Chand from various societies be recovered from the security deposit furnished by him.
On March 15, 1952, the appellant appealed to the Chief Commissioner, but his appeal was dismissed on December 8, 1952.
Thereafter the appellant served a notice of suit on the respondents under section 80 of the Code of Civil Procedure and on May 21, 1953, filed civil suit No. 213 of 1953 complaining, inter alia, that article 311(2) had not been complied with.
The suit was decreed by the subordinate judge, Delhi on May 31, 1954, declaring that the plaintiff 's dismissal was void and inoperative and that the plaintiff continued to be in the.
service of the State of Delhi at the date of the institution of the suit and awarding costs to the plaintiff.
The Union of India preferred an appeal against the judgment of the subordinate judge, Delhi, but the appeal was dismissed by the senior subordinate judge, Delhi on December 21, 1954, and the decree of the trial court was confirmed.
A second appeal was taken by the defendants to the Punjab High Court.
By his judgment dated November 1, 1955, the Single Judge held that there had been a substantial compliance with the provisions of article 311 and accordingly accepted the appeal, set aside the decree of the courts below and dismissed the plaintiff 's suit.
On September 6, 1956, the plaintiff obtained special leave from this Court and has preferred this appeal against the order of the learned Single Judge.
The appellant has also been allowed to prosecute the appeal in forma pauperis.
In the courts below a point was raised as to whether the appellant was a member of any of the services 1087 referred to in article 311.
But it was a conceded before the High Court and has also been admitted before us that the appellant was such a member and consequently that point does not arise.
The only point that has been canvassed before us, as it had been before the High Court, is: Was the appellant given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him ? There is no dispute that the appellant was served with a charge sheet on July 9, 1949, as required by r. 6 of the Rules which had been framed by the Chief Commissioner, Delhi and which governed the appellant 's conditions of service.
It is also conceded that the appellant actually appeared at two hearings before the Enquiry Officer, Shri Mahipal Singh, but that subsequently he wanted a transfer of the enquiry to some other officer and that that prayer having been refused he did not take any further part in the enquiry before that officer.
There is no grievance that no opportunity had been given to him to defend himself against the charges levelled against him in that enquiry.
It is also an admitted fact that some time after the appellant was discharged from the criminal case, be received a notice on November 14, 1951, requiring him to appear before Shri J. B. Tandon on November 25, 1951, in connection with the pending enquiry.
The appellant did appear on the appointed day, bad been given a personal hearing and in fact raised two several objections against the enquiry held by Shri Mahipal Singh.
His only grievance is that, after Shri J. B. Tandon had made his report on December 13, 1951, recommending the dismissal of the appellant and the Deputy Commissioner had on the very next day approved of the report and proposed to take action accordingly, the appellant was not given an opportunity to show cause against the action so pro.
posed to be taken in regard to him, as he was entitled to under article 311 of the Constitution.
In order to appreciate the arguments advanced by learned counsel for the parties, it is necessary at this stage to set out the provisions of the Constitution qearing on them.
The relevant portions of articles 310 1088 and 311 of the Constitution, which substantially reproduce sub sections
(1), (2) and (3) of section 240 of the Government of India Act, 1935, are as follows: " 310(1) Except as expressly provided by this Constitution, every person who is a member of a defence service or of a civil service of the Union or of an all India service or holds any post connected with defence or any civil post under the Union, holds office during the pleasure of the President, and every person who is a member of a civil service of a State or holds any civil post under a State holds office during the pleasure of the Governor of the State.
(2). . . . . . . . . 311(1) No person who is a member of a civil service of the Union or an all India service or a civil service of a State or holds a civil post under the Union or a State shall be dismissed or removed by an authority subordinate to that by which he was appointed.
(2)No such person as aforesaid shall be dismissed or removed or reduced in rank until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him: Provided. . . . . . . . . (3) If any question arises whether it is reasonably practicable to give to any person an opportunity of showing cause under clause (2), the decision thereon of the authority empowered to dismiss or remove such person or to reduce him in rank, as the case may be, shall be final.
" The answer to the question canvassed before us depends on a true construction of the aforesaid pro,visions and in particular on the view we take as to the meaning, scope and ambit of article 311(2).
In Parshotam Lal Dhingra 's case (1) it wag said that the word "removed " was not in section 240(3) but had been introduced in article 311(2).
It may be mentioned that although the word " removed " was not actually used in section 240(3), the reference to dismissal, according to section 277, included a reference to removal.
(1) Civil Appeal No. 65 Of 1957, decided on November 1, 1957.
1089 Article 310(1) no doubt provides that every person falling within it holds office during the pleasure of the President or the Governor, as the case may be.
The language of both cls.
(1) and (2) of article 311 are prohibitory in form and was held by the Judicial Committee in High Commissioner for India vs 1.
M. Lal (1) to be inconsistent with their being merely permissive and consequently those provisions have to be read as qualifications or provisos to article 310(1) as has been held by the Judicial Committee in that case and recently by this Court in Parshotam Lal Dhingra vs The Union of India(2) in a judgment pronounced on November 1, 1957.
The limitations thus imposed on the exercise of the pleasure of the President or the Governor in the matter of the dismissal, removal or reduction in rank of government servants constitute the measure of the constitutional protection afforded to the government servants by article 311(2).
Clause (1) of article 311 is quite explicit and protects government servants of the kinds referred to therein by providing that they cannot be dismissed, or re.
moved or reduced in rank by a lesser authority than that which appointed them.
Likewise cl.
(2) protects government servants against being dismissed, removed or reduced in rank without being given a reasonable opportunity to show cause against the action proposed to be taken in regard to them.
As has been explained by this Court in Parshotam Lal Dhingra 's case (2), the expressions 'dismissed ', 'removed ' and ,reduced in rank ' are technical words taken from the service rules where they are used to denote the three major categories of punishments.
In exercise of powers conferred by section 96 B(2) of the Government of India Act, 1915, the Secretary of State in Council framed Civil Service (Governors Provinces Classification) Rules.
Rules (x) and (xiii) of those rules provided that local government might, for good and ,sufficient reasons, inflict the several punishments therein mentioned on persons therein indicated.
Rule (xiv) prescribed the procedure for all cases in which dismissal, removal or reduction in rank of any officer was intended (1) L.R. (1948) 75 I.A. 225 at P. 241. 1090 to be ordered.
These rules were reproduced with some modifications in the Civil Services (Classification, Control and Appeal) Rules which were, on May 27, 1930, ,promulgated by the Secretary of State in Council in exercise of the same powers under section 96 B of the Government of India Act, 1915.
Rule 49 of those rules specified seven different kinds of punishments which could, for good and sufficient reasons, be imposed upon the members of the services therein specified.
Rule 55 reproduced old r. (xiv) with greater details.
It provided: " Without prejudice to the provisions of the , no order of dismissal, removal or reduction shall be passed on a member of a Service (other than an order based on facts which have led to his conviction in a criminal court or by a Court Martial) unless he has been informed in writing of the grounds on which it is proposed to take action, and has been afforded an adequate opportunity of defending himself The grounds on which it is proposed to take action shall be reduced to the form of a definite charge or charges which shall be communi cated to the person charged, together with a statement of the allegations on which each charge is based and of any other circumstances which it is proposed to take into consideration in passing orders on the case He shall be required, within a reasonable time, to put in a written statement of his defence and to state whether he desires to be heard in person.
If he so desires, or if the authority concerned so direct, an oral inquiry shall be held.
At that inquiry oral evidence shall be heard as to such of the allegations as are not admitted, and the person charged shall be entitled to crossexamine the witnesses, to give evidence in person and to have such witnesses called, as he may wish, provided that the officer conducting the inquiry may, for special and sufficient reason to be recorded in writing, refuse to call a witness.
The proceedings shall contain a sufficient record of the evidence and a statement of the findings and the grounds thereof.
This rule shall not apply where the person concerned has absconded, 1091 or where it is for other reasons impracticable to com municate with him.
All or any of the provisions of the rule may, in exceptional cases, for special and sufficient reasons to be recorded in writing, be waived, where there is a difficulty in observing exactly the requirements of the rule and those requirements can be waived without injustice to the person charged.
" Similar rules were framed and are to be found in the Indian Railway Establishment Code which governs the railway servants.
Rule 6 of the Rules framed by the Chief Commissioner, Delhi, referred to above, is more or less on the same lines.
In R. Venkata Rao vs Secretary of State for India it was held, with reference to the rules made under s.96 B of the Government of India Act, 1915, that while that section assured that the tenure of office, though at pleasure, would not be subject to capricious and arbitrary action, but would be regulated by the rules, it gave no right to the appellant, enforceable by action, to hold his office in accordance with those rules.
It was held that section 96 B and the rules made thereunder only made provisions for the redress of grievances by administrative process.
The position of the Government servant was, therefore, rather insecure, for his office being held during the pleasure of the Crown under the Government of India Act, 1915, the rules could not over ride or derogate from the statute and the protection of the rules could not be enforced by action so as to nullify the statute itself.
The only protection that the Government servants had was that, by virtue of section 96 B(1), they could not be dismissed by an authority subordinate to that by which they were appointed.
The position, however, improved to some extent under the 1935 Act which, by section 240(3), gave a further protection, in addition to that provided in section 240(2) which reproduced the protection of s 96 B(1) of the Government of India Act, 1915.
We have, therefore, to determine the true meaning, scope and ambit of this now protection given by section 240(3) of (1) L. R. (1936) 64 I.A. 55.
139 1092 the Government of India Act, 1935, which has been reproduced in article 311(2).
The majority of the Judges of the Federal Court (Spens, C.J., and Zafarulla Khan, J.) in I. M. Lall 's case (1) took the view that in sub section
(3) of section 240 there had been enacted provisions of a very limited scope in permanent statutory form as compared with the provisions under the rules considered in Venkata Rao 's case (2).
Further down, after referring to the fact that prior to 1935 a sort of protection for the servants of the Crown provided by sub section
(3) was merely to be found in the rules, many and various and liable to change, their Lordships proceeded to state that from those rules had been picked out and enacted in the section itself certain limited specific provisions only.
The majority of the Federal Court at page 138 construed section 240(3) as follows: "In our judgment the words "against the action proposed to be taken in regard to him " require that there should be a definite proposal by some authority either to dismiss a civil servant or to reduce him in rank or alternatively to dismiss or reduce him in rank as and when final action may be determined upon.
It should be noted that the sub section does not require any inquiry, any formulation of charges, or any opportunity of defence against those charges.
All that it expressly requires is that where it is proposed to dismiss or reduce in rank a civil servant he should be given reasonable opportunity of showing cause against the proposal to dismiss or reduce him.
It is also significant that there is no indication as to the authority by whom the action is to be proposed.
It does, however, seem to us that the sub section requires that as and when an authority is definitely proposing to dismiss or to reduce in rank a member of the civil service he shall be so told and he shall be given an opportunity of putting his case against the proposed action and as that opportunity has to be a reasonable opportunity, it seems to us that the section requires not only notification of the action proposed but of the grounds on which the authority is proposing that the (I) , 136.
(2) L.R. (1936) 64 I.A. 55 1093 action should be taken, and that the person concerned must then be given reasonable time to make his representations against the proposed action and the grounds on which it is proposed to be taken.
It is suggested that in some cases it will be sufficient to indicate the charges, the evidence on which those charges are put forward and to make it clear that unless the person can on that information show good cause against being dismissed or reduced if all or any of the charges are proved, dismissal or reduction in rank will follow.
This may indeed be sufficient in some cases.
In our judgment each case will have to turn on its own facts, but the real point of the sub section is in our judgment that the person who is to be dismissed or reduced must know that that punishment is proposed as the punishment for certain acts or omissions on his part and must be told the grounds on which it is proposed to take such action and must be given a reasonable opportunity of showing cause why such punishment should not be imposed.
That in our judgment involves in all cases where there is an enquiry and as a result thereof some authority definitely proposes dismissal or reduction in rank, that the person concerned shall be told in full, or adequately summarised form, the results of that enquiry, and the findings of the enquiring officer and be given an opportunity of showing cause with that information why he should not suffer the proposed dismissal or reduction of rank.
" The above passage indicates that in the view of the majority of the judges of the Federal Court section 240(3) corresponding now to article 311(2) does not " require any inquiry, any formulation of charges or any opportunity to defend against those charges ".
According to them " all that it expressly requires is that where it is proposed to dismiss or reduce in rank a civil servant he should be given reasonable opportunity of showing cause against the proposal to dismiss or reduce him ".Their
Lordships added that as that opportunity had to be a reasonable opportunity the section must be taken to require "not only notification of the action proposed but of the grounds on which the authority is proposing that the action should be 1094 taken and that the person concerned must then be given reasonable time to make his representations against the proposed action and the grounds on which sit is proposed to be taken ".
It is quite clear that the majority of the Federal Court put a somewhat narrow interpretation on the relevant provision in that they considered that the requirement of reasonable opportunity contemplated by it arose only at a later stage when the competent authority definitely proposed to take a particular action and that this opportunity did not cover the earlier stage where charges were formulated and enquired into.
Varadachariar, J. in his dissenting judgment took much the same view on this point as did the High Court.
The High Court observed as follows: "The plaintiff 's contention is that this opportunity should have been afforded to him after the finding of the enquiring officer had been considered and the punishment decided upon.
With this contention we are unable to agree.
Eight charges were served on the plaintiff and at the end he was asked to show cause why he should 'not be dismissed, removed or reduced or subjected to such other disciplinary action as the competent authority may think fit to enforce for breach of Government Rules and conduct unbecoming to the Indian Civil Service.
He was aware 'from the very start of the enquiry against him that removal from service was one of the various actions that could have been taken against him in the event of some or all the charges being established, and in this sense he was showing cause during the course of the inquiry against the action proposed.
The plaintiff 's contention that there should be two enquiries the first to establish that be had been guilty and the second to determine what should be the appropriate punishment, and that in each stage he should have reasonable and independent opportunities to defend and show cause does not appear to be correct or intended by the Legislature (1).
" In agreement with the High Court Varadachariar J. held that the requirements of sub section
(3) of section 240 (1) Lah.
325, 347, 348.
1095 demanded nothing beyond what was required for compliance with the provisions of r. 55 of the Civil Services (Classification, Control and Appeal) Rules.
His Lordship found nothing in the language of el.
(3) to indicate that anything more or anything different was contemplated or to suggest that a further opportunity was to be given after the enquiry had been completed in the presence of the officer charged and the enquiring officer had made his report.
The learned Judge was unable to accept the suggestion that the words of the statute were appropriate only to the stage when the authorities would be in a position to indicate definitely what action they intended to take, namely, whether it was to be one of dismissal or one of reduction and that this could be predicated only after the Enquiring Officer had made his report.
In our judgment neither of the two views can be accepted as a completely correct exposition of the intendment of the provisions of section 240(3) of the Government of India Act, 1935, now embodied in article 311(2) of the Constitution.
Indeed the learned Solicitor General does riot contend that this provision is confined to guaranteeing to the government servant an opportunity to be given to him only at the later stage of showing cause against the punishment proposed to be imposed on him.
We think that the learned Solicitor General is entirely right in not pressing for such a limited construction of the provisions under consideration.
It is true that the provision does not, in terms, refer to different stages at which opportunity is to be given to the officer concerned.
All that it says is that the government servant must be given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him.
He must not only be given an opportunity but such opportunity must be a reasonable one.
In order that the opportunity to show cause against the proposed action may be regarded as a reasonable one, it is quite obviously necessary that the government servant should have the opportunity, to say, if that be his case, that he has not been guilty of any misconduct to merit any punishment at all and also that the particular punish 1096 ment proposed to be given is much more drastic and severe than he deserves.
Both these pleas have a direct bearing on the question of punishment and may well be put forward in showing cause against the proposed punishment.
If this is the correct meaning of the clause, as we think it is, what consequences follow ? If it is open to the governmnet servant under this provision to contend, if that be the fact, that he is not guilty of any misconduct then how can he take that plea unless he is told what misconduct is alleged against him? If the opportunity to show cause is to be a reasonable one it is clear that he should be informed about the charge or charges levelled against him and the evidence by which it is sought to be established, for it is only then that he will be able to put forward his defence.
If the purpose of this provision is to give the government servant an opportunity to exonerate himself from the charge and if this opportunity is to be a reasonable one he should be allowed to show that the evidence against him is not worthy of credence or consideration and that he can only do if he is given a chance to cross examine the witnesses called against him and to examine himself or any other witness in support of his defence.
All this appears to us to be implict in the language used in the clause, but this does not exhaust his rights.
In addition to showing that he has not been guilty of any misconduct so as to merit any punishment, it is reasonable that he should also have an opportunity to contend that the charges proved against him do not necessarily require the particular punishment proposed to be meted out to him.
He may say, for instance, that although he has been guilty of some misconduct it is not of such a character as to merit the extreme punishment of dismissal or even of removal or reduction in rank and that any of the lesser punishments ought to be sufficient in his case.
To summarise: the reasonable opportunity envisaged by the provision under consideration includes (a) An opportunity to deny his guilt and establish his innocence, which he can only do if he is told what 1097 the charges levelled against him are and the allegations on which such charges are based; (b) an opportunity to defend himself by crossexamining the witnesses produced against him and by examining himself or any other witnesses in support of his defence; and finally (c) an opportunity to make his representation as to why the proposed punishment should not be inflicted on him, which he can only do if the competent authority, after the enquiry is over and after applying his mind to the gravity or otherwise of the charges proved against the government servant tentatively proposes to inflict one of the three punishments and communicates the same to the government servant.
In short the substance of the protection provided by rules, like r. 55 referred to above, was bodily lifted out of the rules and together with an additional opportunity embodied in section 240 (3) of the Government of India Act, 1935 so as to give astatutory protection to the government servants and has now been incorporated in article 311 (2) so as to convert the protection into a constitutional safeguard.
We find support for our above mentioned conclusion in the judgment of the Judicial Committee in I. M. Lall 's case (1).
It is true that after quoting a portion of the passage from the judgment of the majority of the Federal Court set out above their Lordships at page 242 stated that they agreed with the view taken by the majority of the Federal Court, but their Lordships did not stop there and went on to say: " In their opinion, sub section
3 of section 240 was not intended to be, and was not, a reproduction of r. 55, which was left unaffected as an administrative rule.
, Rule 55 is concerned that the civil servant shall be informed " of the grounds on which it is proposed to take action ", and to afford him an adequate opportunity of defending himself against charges which have to be reduced to writing; this is in marked contrast to the statutory provision of " a reasonable opportunity of showing cause against the action proposed to be taken in regard to him ".
In the (1) L.R. (1948) 75 I.A. 225 at 241.
1098 opinion of their Lordships, no action is proposed within the meaning of the sub section until a definite conclusion has been come to on the charges, and the actual punishment to follow is provisionally determined on.
Before that stage, the charges are unproved and the suggested punishments are merely hypothetical.
It is on that stage being reached that the statute gives the civil servant the opportunity for which sub section 3 makes provision.
Their Lordships would only add that they see no difficulty in the statutory opportunity being reasonably afforded at more than one stage.
If the civil servant has been through an inquiry under r. 55, it would not be reasonable that he should ask for a repetition of that stage, if duly carried out, but that would not exhaust his statutory right, and he would still be entitled to represent against the punishment proposed as the result of the findings of the inquiry.
" The above passage quite clearly explains that the point on which their Lordships of the Judicial Committee agreed with the majority of the Federal Court is that a further opportunity is to be given to the government servant after the charges have been established against him and a, particular punishment is proposed to be meted out to him.
The opening sentence in the above passage, namely, that section 240 (3) was not a reproduction of r. 55 and that r. 55 was left unaffected as an administrative rule does seem to suggest that section 240 (3) is not at all concerned with the enquiry into the charges which comes at the earlier stage, but a close reading of the rest of that passage will indicate that in their Lordships ' view the substance of the protection of r. 55 is also included in section 240 (3) and to that is superadded, by way of further protection, the neces sity of giving yet another opportunity to the government servant at the stage where the charges are proved against him and a particular punishment is tentatively proposed to be inflicted on him.
Their Lordships referred to " statutory opportunity being reasonably afforded at more than one stage ", that is to say, that the opportunities at more stages than one are comprised within the opportunity contemplated 1099 by the statute itself.
Of course if the government servant has been through the enquiry under r. 55, it would not be reasonable that he should ask for a repetition of that stage, if duly carried out, which implies that if no enquiry has been held under r. 55 or any analogous rule applicable to the particular servant then it will be quite reasonable for him to ask for an enquiry.
Therefore, in a case where there is no rule like r. 55 the necessity of an enquiry was implicit in section 240 (3) and is so in article 311(2) itself.
Further their Lordships say that an enquiry under r. 55 " would not exhaust his statutory right and he would still be entitled to make a representation against the punishment proposed as the result of the findings of the enquiry ".
This clearly proceeds on the basis that the right to defend himself in the enquiry and the right to make representation against the proposed punishment are all parts of his " statutory right " and are implicit in the reasonable opportunity provided by the statute itself for the protection of the government servant.
The learned Solicitor General appearing for the Union of India, then, contends that assuming that the government servant is entitled to have an opportunity not only to show cause against his guilt but also an opportunity to show cause against the punishment proposed to be inflicted on him, the appellant in the present case has had both such opportunities, for by the notice served on him on July 9, 1949, the appellant was called upon to show cause against the charges as well as against the punishment of dismissal in case the charges were established.
He points out that in I. M. Lall 's case (1) the notice given to I. M. Lall did not specify dismissal as the only and particular punishment proposed to be imposed on him, but called upon him to show cause why he should not be dismissed, removed or reduced or subjected to such other disciplinary action as the competent authority, might think fit to enforce, whereas in the present case the notice referred to above clearly indicated that the punishment of dismissal alone was proposed to be inflicted.
L.R. (1948) 75 1.
A. 225.
140 1100 The learned Solicitor General in support of his contention relies on the observations of the majority of the Federal Court quoted above and in particular on the passage where their Lordships stated " that in some cases it would be quite sufficient to indicate the charges, the evidence on which those charges are put forward and to make it clear that unless the person can on that information show good cause against being dismissed or reduced in rank if all or any of the charges are proved, dismissal or reduction in rank would follow and that this would be sufficient in some cases." He also strongly relies on the circumstance that their Lordships of the Judicial Committee, after quoting the above passage, stated that they agreed with the view taken by the majority of the Federal Court.
But as we have already explained, the other observations of their Lordships of the Judicial Committee, which follow immediately, quite clearly indicate that what they agreed with was that a second opportunity was to be given to the government servant concerned after the charges had been brought home to him as a result of the enquiry.
Their Lordships made it clear that no action could, in their view, be said to be proposed within the meaning of the section until a definite conclusion had been come to on the charges and the actual punishment to follow was provisionally determined on, for before that stage the charges remained unproved and the suggested punishments were merely hypothetical and that it was on that stage being reached that the statute gave the civil servant the opportunity for which sub section
(3) made provision.
A close perusal of the Judgment of the Judicial Committee in I. M. Lall 's case will, however, show that the decision in that case did not proceed on the ground that an opportunity had not been given to 1.
M. Lall against the proposed punishment merely because in the notice several punishments were included, but the decision proceeded really on the ground that this opportunity should have been given after a stage had been reached where the charges had been established and the competent authority had applied its mind to the gravity or otherwise of the 1101 proved charge tentatively and proposed a particular punishment.
There is as the Solicitor General fairly concedes, no practical difficulty in following this procedure of giving two notices at the two stages.
This procedure also has the merit of giving some assurance to the officer concerned that the competent authority maintains an open mind with regard to him.
If the competent authority were to determine, before the charges were proved, that a particular punishment would be meted out to the government servant concerned, the latter may well feel that the competent authority had formed an opinion against him, generally on the subject matter of the charge or, at any rate, as regards the punishment itself.
Considered from this aspect also the construction adopted by us appears to be consonant with the fundamental principle of jurisprudence that justice must not only be done but must also be seen to have been done.
It is on the facts quite clear that, when Shri J. B. Tandon concluded his enquiry and definitely found the appellant guilty of practically all the charges he for the first time suggested that the punishment of dismissal should be the proper form of punishment in this case.
Shri J. B. Tandon was not, however, the competent authority to dismiss the appellant and, therefore, he could only make a report to the Deputy Commissioner who was the person competent to dismiss the appellant.
When the Deputy Commissioner accept ed the report and confirmed the opinion that the punishment of dismissal should be inflicted on the appellant, it was on that stage being reached that the appellant was entitled to have a further opportunity given to him to show cause why that particular punishment should not be inflicted on him.
There is, therefore, no getting away from the fact that article 311(2) has not been fully complied with and the appellant has not had the benefit of all the constitutional protection and accordingly his dismissal cannot be supported.
We, therefore, accept this appeal and set ' aside the order of the Single Judge and decree the appellant 's suit by making a declaration that the order of dismissal passed by the Deputy Commissioner on 1102 December 17,1951, purporting to dismiss the appellant from service was inoperative and that the appellant was a member of the service at the date of the institution of the suit out of which this appeal has arisen.
The appellant will get costs throughout in all courts.
He must pay all court fees that may be due from him.
Under order XIV, Rule 7 of the Supreme Court Rules were direct that the appellants could be paid his fees which we assess at Rs. 250.
Appeal allowed.
| Reasonable opportunity to show cause ' in article 311(2) Of the Constitution contemplates not merely the opportunity to do so at the enquiry stage but also when the competent authority, as a result of the enquiry, proposes to inflict one of the three punishments mentioned in the Article on the delinquent servant.
Such reasonable opportunity must, therefore, include, (1) opportunity to deny his guilt and establish his innocence which means that he must be told what the charges against him 1081 are and the allegations on which such charges are based ; (2)opportunity to cross examine the witnesses produced against him and examine himself or other witnesses on his behalf and, (3)opportunity to show that the proposed punishment would not be the proper punishment to inflict, which means that the tentative determination of the competent authority to inflict one of the three punishments must be communicated to him.
High Commissioner for India vs I.M. Lall, L.R. (1948) 75 I.A. 225, explained and relied on.
Secretary of State for India vs I. M. Lall, (1945) F.C.R. I03, not followed.
Parshotam Lal Dhingra vs The Union of India, and Venkata Rao vs Secretary of State for India, L.R. (1936) 64 I.A. 55, referred to.
The procedure followed in such cases must, therefore, include the giving of two notices to the servant, one at the enquiry Stage and the other when the competent authority, as a result of the enquiry, tentatively determines to inflict a particular punishment on him.
Consequently, in a case where the Government Servant sought to be proceeded against for misconduct was served with a charge sheet and appeared before two officers conducting the enquiry, one after the other, but no notice was served upon him when the competent authority accepted the report and confirmed the opinion that the punishment of dismissal should be inflicted on him, and no cause could, therefore, be shown by him, the provision of article 311(2) had not been fully complied with and the order of dismissal passed against him must be declared void and inoperative.
|
Summarize this legal judgement text concisely | Appeal No. 146 of 1955.
Appeal from the judgment and decree dated February 10, 1953, of the Bombay High Court in Appeal No. 953 of 1951, arising out of the judgment and decree dated November 36,1951, of the Court of 73 Joint Civil Judge, Senior Division, Poona, in Special Suit No. 76 of 1950.
H. D. Banaji, R. A. Gagrat and G. Gopalakrishnan, for the appellant.
M. C. Setalvad, Attorney General for India, section N. Andley and J. B. Dadachanji, for the respondent.
January 16.
The Judgment of the Court was delivered by DAS, C. J.
The appellant is a public limited company registered under the Indian Companies Act, 1913.
It is a lessee of four cinema houses situate within the municipal limits of Poona City known respectively as " Minerva ", " The Globe ", " Sri Krishna " and " The Nishat ".
It exhibits cinematograph films, both foreign and Indian, in the said four houses.
The respondent, a body corporate, was governed by the Bombay District Municipal Act, 1901 (Bom.
III of 1901) up to June 8, 1926, and from then by the Bombay Municipal Boroughs Act, 1925 (Bom.
XVIII of 1925) up to December 29, 1949, and, thereafter, by the Bombay Provincial Municipal Corporation Act, 1949 (Bom.
LIX of 1949).
With effect from October 1, 1920, the respondent, with the sanction of the Government of Bombay levied on the owners and lessees of cinema houses within the limits of the erstwhile province of Bombay a tax of Rs. 2 per day as license fee.
Rules for the levy and collection of the said tax were framed by the respondent.
Those rules were amended on or about June 3, 1941, enhancing the tax from Rs. 2 per day to Re.
I per show.
The rules were again revised on or about June 9,1948, under which the tax was enhanced from Re.
I per show to Rs. 5 per show.
At all material times the tax was being collected at the last mentioned rate.
Section 59 of the Bombay District Municipal Act 1901 provided that subject to any general or special orders which the State Government might make in that behalf any municipality (a) after observing the preliminary procedure required by section 60, and (b) with the sanction of the authority therein mentioned, might 10 74 impose for the purposes of that Act any of the taxes mentioned in that section.
After enumerating ten specific heads of taxes, which a municipality could levy a residuary category was set forth in cl.
(xi) in the words following: "Any other tax to the nature and object of which he approval of the Governor in, Council shall have been obtained prior to the selection contemplated in sub clause (1) of clause (a) of section 60 ".
Ever since the appellant became a lessee of the said cinema houses, the appellant has been making payments of the said tax under protest.
After giving the necessary statutory notice to the respondent, the appellant, on or about March 31,1950, filed a suit in the Court of the Civil Judge, Senior Division, Poona, being Suit No. 76 of 1950, against the respondent for a declaration that the levy and imposition of the said tax with effect from October 1, 1920, were invalid and illegal; that the enhancement in the rates of the tax with effect first from June 3, 1941, and then June 9, 1948, was invalid and illegal and that the resolutions passed and rules framed in connection with the levy, imposition, enhancement and collection of the said impugned tax were invalid, illegal and ultra vires, for a permanent injunction restraining the defendants from levying or recovering and or increasing and enhancing the said tax and for refund to the appellant of the amounts of the tax collected from it and for costs of the suit and interest.
By its judgment dated November 30, 1951, the trial court held that the said tax was validly levied and imposed, but that the increase and enhancement thereof in 1941 and 1948 were illegal and ultra vires.
and that the suit was not barred under the Acts governing the respondent.
The trial court decreed the suit in part by issuing an injunction restraining the respondent from levying, recovering or collecting the tax at the enhanced rate and passing a decree against the respondent for refund of a sum of Rs. 27,072 with interest and costs.
The respondent preferred an appeal and the appellant filed cross objections.
But the High Court by its judgment and decree dated February 10, 1953, 75 reversed the judgment of the trial court and dismissed the suit of the appellant with costs throughout.
The appellant 's cross objections were also dismissed.
On December 10, 1953, the High Court granted leave to the appellant to appeal to this Court from the said judgment.
Hence this final appeal questioning the validity of the impugned tax.
The first point urged in this appeal is that the law imposing this tax is not covered by entry 50 in List II of the Seventh Schedule to the Government of India Act, 1935, but is really a tax on the appellant 's trade or calling referred to in entry 46 and that, therefore, the amount of tax cannot under section 142 A of the Government of India Act, 1935 exceed Rs. 100 per annum.
This point need not detain us long, for it is covered by us in the appellant 's other appeal No. 145 of 1955.
The second point urged before us in support of this appeal is that section 59(1) (xi) is unconstitutional in that the legislature had completely abdicated its functions and had delegated essential legislative power to the Municipality to determine the nature of the tax to be imposed on the rate payers.
Learned counsel for the appellant urges that the power thus delegated to the municipality is unguided, uncanalised and vagrant, for there is nothing in the Act to prevent the municipality from imposing any tax it likes, even, say, income tax.
Such omnibus delegation, he contends, cannot on the authorities be supported as constitutional.
We find ourselves in agreement with the High Court in rejecting this contention.
In the first place, the power of the municipality cannot exceed the power of the provincial legislature itself and the municipality cannot impose any tax, e.g., income tax which the provincial legislature could not itself impose.
In the next place, section 59 authorises the municipality to impose the taxes therein mentioned " for the purposes of this Act ".
The obligations and functions cast upon the municipalities are set forth in ch.
VII of the Act.
Taxes, therefore, can be levied by the municipality only for implementing those purposes and for no other purpose.
In other words it will be open to the municipality to levy a tax for giving any of the amenities therein mentioned.
76 The matter may be illustrated by reference to section 54 which enumerates the duties of municipalities.
The first duty mentioned in that section is that the Municipality should make provision for lighting public streets and nobody can object if it imposes alighting tax, which, indeed, is item (ix) in section 59(1).
Take another example: It is the duty of the Municipality to arrange for supply of drinking water and it may legitimately charge a water rate which, again, is item (viii) in section 59(1).
We do not for a moment suggest that the municipalities may only impose a tax directly in connection with the heads of duties cast upon it.
What we say is that the tax to be imposed must have some reasonable relation to the duties cast on it by the Act.
In the third place, although the rule of construction based on the principle of ejusdem generis cannot be invoked in this case, for items (i) to (x) do not, strictly speaking, belong to the same genus, but they do indicate, to our mind the kind and nature of tax which the municipalities are authorised to impose.
Finally, the provincial legislature had certainly not abdicated in favour of the municipality, for the taxing power of the municipality was quite definitely made subject to the approval of the Governor in Council.
Under the Indian Council Act, 1861 (24 & 25 Vic. c. 67) the Governor in Council might mean the Governor in Executive Council or the Governor in Legislative Council.
If the reference in section 59(1)(xi) is to the Governor 's Legislative Council, then there was no improper delegation at all, for it was subject to the legislative control of the Governor in Legislative Council.
The Governor 's Legislative Council was composed of all the members of the Governor 's Executive Council besides a few other persons.
Therefore if the reference was to the Governor in his Executive Council even then, from a practical point of view, the ultimate control was left with the Governor 's Legislative Council.
We need not labour this point any further, for on the first three grounds the delegation of legislative authority, if any, is not excessive so as to make the exercise of it unconstitutional.
In our opinion the impugned section did lay down a principle and fix a standard 77 which the municipalities had to follow in imposing a tax and the legislature cannot, in the circumstances, be said to have had abdicated itself and, therefore, the delegation of power to impose any other tax cannot be struck down as being in excess of the permissible limits of delegation of legislative functions.
The last point urged by learned counsel for the appellant is that, under el.
(xi) of section 59(1), the enhancements of the rates of the tax in 1941 and again in 1948 were illegal in that the municipality had no power to do so under the Bombay Municipal Boroughs Act, 1925.
According to learned counsel for the appellant the judgment under appeal upholding the validity of such enhancements cannot be supported under s.60 of that Act.
That section runs as follows: " Power to suspend 60(1)Subject to the requirements of cl reduce or abolish ause (a)of the proviso to section any existing tax 58 municipality may except as otherwise provide in clause provided in clause (b) of the proviso to section 103 at any time for any sufficient reason, suspend, modify or abolish any existing tax by suspending, altering or rescinding any rule prescribing such tax.
" (2) The provisions of Chapter VII relating to, the imposition of taxes shall apply so far as may be to the suspension, modification or abolition of any tax and to the suspension, alteration or rescission of any rule prescribing a tax.
" Reference is made to the marginal note where the words used are " power to suspend, reduce or abolish any existing tax ".
It is suggested that the word it modify " in the body of the section in between the words " suspend " and " abolish " should be construed in the sense of reduction.
The marginal note, according to him, shows that the several words were used in the section to indicate a progressive diminution in the quantum of tax until it was completely gone.
Reference is made to the root meaning of the word " modify " which is to reduce or make less but does not cover the idea of enhancement.
In the first place, the marginal note cannot affect the construction of the language used in the body of the section if it is otherwise clear and unambiguous (see Commissioner of 78 Income Tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay) (1).
In the next place, it should be borne in mind that section 67 of the Bombay District Municipal Act (Bom.
III of 1901) which was formerly applicable to municipalities used the word " reduce " in between the words " suspend " and " abolish " and that that section had been reproduced is section 60 of the Bombay Municipal Boroughs Act, 1925, but that in the process of such reproduction the word "reduce" was dropped ,and the word "modify" was introduced.
In the marginal note, however, the word " reduce " was not substituted by the word " modify ", apparently through inadvertence.
If the word " modify " is to be read as "reduce", then there could be no point in the provincial legislature substituting the word " reduce " by the word "modify".
This change must have been made with some purpose and the purpose could only have been to use an expression of wider connotation so as to include not only reduction but also other kinds of alteration.
Section 76 of this very Act also refers to " modification not involving an increase in, the amount to be imposed which makes the sense in which the word " modify has been used in this Act perfectly clear, namely, that there may be a modification involving an increase.
Reference may also be made to the decision of the Court of Appeal in England in the case of Stevens vs The General Steam Navigation Company, Ltd. (2).
" Modification ", according to Collins M. R. in his judgment at p. 893, implied an alteration and the word was equally applicable whether the effect of the alteration was to narrow or to enlarge the provisions.
In our opinion the dropping of the word " reduce " and the introduction of the word 'modify" in the body of section 60, of the Act under consideration clearly indicate an intention on the part of legislature to widen the scope of this section and the High Court was right in so construing the same.
No other point was urged in this appeal and for reasons stated above this appeal must be dismissed with costs.
Appeal dismissed.
(1) ; at P. 353.
(2) L.R. (1903) 1 K.B. 890.
| The appellant, a public limited company, was a lessee of four cinema houses situated within the municipal limits of Poona City where it used to exhibit cinematograph films.
The respondent, the Municipal Corporation of Poona, in exercise of its power under section 59(1) (XI) of the Bombay District Municipal Act, 1901, levied with effect from October 1, 1920 a tax of Rs. 2 per day as license fee on the owners and lessees of cinema houses.
That Act governed the Municipality till 1926 and thereafter it was governed by the Bombay Municipal Boroughs Act, 1925.
The tax was enhanced to Re. 1 per show on June 3, 1941, and to Rs. 5 per show on June 9, 1948.
By the suit, out of which the present appeal arose, the appellant sought for a declaration that the levy of the said tax, the rules framed in connection therewith and the enhancement of the tax as aforesaid were illegal and ultra vires.
The trial court decreed the suit in part but the High Court in appeal reversed the decision of the trial court 72 and dismissed the suit.
It was contended on behalf of the appellant that (1) the tax was not one covered by Entry 50 in List 11 of Seventh Schedule to the Government of India Act, 1935, but was one on trade or calling covered by Entry 46 thereof, and, was as such governed by section 142A of the said Act and that (2) section 59(1)(XI) Of the Bombay District Municipal Act, 1901, was unconstitutional in that the legislature had thereby delegated essential legislative power to the Municipality to determine the nature of the tax to be imposed on the rate payers and completely abdicated its function, leaving such power wholly unguided.
Held, that both the contentions must fail.
The first point was covered by the decision given in the appellant 's other appeal, Civil Appeal No. 145 Of 1955 which must also govern this case.
It was not correct to contend that the power delegated to the Municipality under section 59(1)(XI) Of the Bombay District Municipal Act, 1901, was unguided.
That section authorised the imposition of such taxes alone as were necessary for the purposes of the Act.
The obligations and functions cast upon the Municipalities by ch.
VII of the Act showed that taxes could be levied only for implementing those purposes and none others.
Nor could it be said that the Provincial Legislature had abdicated its function in favour of the Municipality.
The taxing power of the Municipality was made subject to the approval of the Governor in Council by the section itself.
The marginal note to a section could not affect the construction of the section if its language was otherwise clear and unambiguous and the word 'modify ' connoted not merely reduction but also other kinds of alteration including enlargement.
The substitution of the word I reduce ' by the word I modify ' in the body of section 6o of the Bombay Municipal Boroughs Act, 1925, notwithstanding the omission to do so in the marginal note, therefore, clearly indicated the intention of the Legislature to widen the scope of that section and, consequently, it could not be said that the enhancement of the tax was not sustainable thereunder.
Commissioner of Income Tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay, ; and Stevens vs The General Steam Navigation Company, Ltd., , referred to.
|
Summarize this legal judgement text concisely | Appeal No. 330 of 1956.
Appeal by special leave from the Judgment and decree dated September 5, 1955, of the Rajasthan High Court in Writ Petition No. 76 of 1954.
A. V. Viswanatha Sastri and Ratnaparkhi A. G., for the appellant.
R. Ganapathy Iyer, Ram Avtar Gupta and T. M. Sen, for the respondent.
November 28.
The following Judgment of the Court was delivered by BOSE J.
This appeal arises out of a writ petition for mandamus under article 226 of the Constitution.
The appellant was a District and Sessions Judge in the former Bikaner State.
He was appointed on January 29, 1948, in the grade of Rs. 500 40 700 and worked as such till April 7, 1949.
On that date a new State of Rajasthan was formed by the integration of a number of States (including the former State of Bikaner) by means of a Covenant signed by the High Contracting Parties.
Article XVI (1) of the Covenant ran thus: " The United State hereby guarantees either the continuance in service of the permanent members of 1015 the public services of the former Rajasthan State and of each of the new Covenanting States on conditions which will not be less advantageous than those on which they were serving on the 1st November 1948 or the payment of reasonable compensation or retirement on proportionate pension.
" The integration necessarily involved a reorganisation of the various services in the several integrating States.
On the judicial side it was found that there were as many as twenty eight Courts of District and Sessions Judges in the aggregate.
In the integrated State it was proposed to have only fifteen.
The reorganisation took time and in the interval certain interim arrangements had to be made.
These arrangements are set out in a Rajasthan Gazette Notification dated May 25, 1950.
We append the relevant extracts: " 4.
In Appendix F. have been indicated the provisional postings on an ad hoc basis of the posts specified in Appendices A to E. . . . . . . . . . . 6.
All the appointments mentioned in the different Appendices, attached to this Order, are provisional.
The emoluments of none of these officers appointed are being affected and they will continue to draw their existing salaries until further orders.
All the appointments are without prejudice to the creation of a Judicial Service in Rajasthan to be formed in accordance with the rules which may be made therefor.
" Appendix F is headed "Ad hoc postings of Judicial Officers to Civil and Sessions Courts.
" The appellant was appointed under this beading in Part 11 as a Civil and Additional Sessions Judge in the Jaipur Division.
But before this Notification was made, namely, on December 9, 1949, the appellant received the following order from the new Rajasthan Government: " Shri Amar Singh, District and Sessions Judge, Churu, is transferred to Ganganagar as District and Sessions Judge, Ganganagar.
" 129 1016 Among other contentions, the appellant relies on this as an election by the new Government to continue 'him in his original post and contends that it could not later change its mind and make his service provisional as it purported to do in the notification just cited.
Two months after the notification, namely on July 31, 1950, the appellant 's increment became due and Government sanctioned it in the following terms: " Sanction is accorded to the grant of a stipulated increment of Rs. 40 p.m. in the scale of Rs. 500 40 700 to Shri Rajvi Amarsingh, District and Sessions Judge in Bikaner Division, with effect from the 23rd March, 1950, thereby raising his salary from Rs. 540 to Rs. 580 p.m." When the final re organisation was brought into force and the twenty eight Courts of District and Sessions Judges reduced to fifteen, the appellant was posted as Civil and Additional Sessions Judge on an ad hoc basis on May 25, 1950.
On September 11, 1950, the appellant made a representation to the Government of Rajasthan against his posting of May 25, 1950, as an ad, hoc Civil and Additional Sessions Judge.
He says in his writ petition to the High Court that " he was given to understand that these ad hoc postings were without prejudice to the claims of the Government servants for a suitable position in the integrated set up on permanent basis.
" This allegation was admitted by the opposite party.
Later, he was appointed substantively as Civil Judge on April 23, 1951.
He was placed in Group C (Civil Judges and Munsiffs) and placed at No. 18 in the list of junior posts.
His pay and emoluments were as before and he retained the same grading, namely Rs. 500 40 700.
His earned increments were not affected and, except for the change in name, his conditions of service were not worse than when he was in the service of the Bikaner State.
We were given the last two facts by his counsel.
They do not appear in the paper book.
All that is to be found there are 1017 references to these orders but the orders themselves have not been included.
Being aggrieved by this, the appellant filed the writ petition out of which this appeal arises on April 3, 1954.
His contention was that under the guarantee given by 'the United State of Rajasthan, and also otherwise, he was entitled to be posted as a District and Sessions Judge in the new set up and that the posting of April 23, 1951, reduced him in rank.
As that was done without affording him an opportunity to show cause, article 311 of the Constitution was violated.
The High Court held that the posting of April 23, 1951, which purports to appoint the appellant substantively as a Civil Judge, is wrong and that it must be treated as an ad hoc appointment till proper appointments are made to the Judicial Service of Rajasthan according to the Constitution of India.
The learned Judges held that as there had been a clear declaration that a new Judicial Service was to be created in Rajasthan and that the existing officers from the various covenanting States were not to be taken into it as a matter of course, it followed that all appointments to it would be by way of fresh recruitment, and, as the Constitution of India was in force at that date, these recruitments must conform to its provisions.
It was admitted before the learned Judges that after the Constitution only the Rajpramukh had power to make rules regulating the recruitment and conditions of service of those appointed to public services and posts in connection with the affairs of the State until provision in that behalf is made by an Act of the Legislature, and it was also admitted that the State Public Service Commission must be consulted.
As this was not done, the learned Judges directed as follows: " The petition is allowed, the postings made by notification dated the 23rd April, 1951, including that of the petitioner as Civil Judge, are declared to be on an ad hoc basis, and a direction is made to the Government to provide a machinery according to the 1018 provisions of the Constitution for the first recruitment to the Rajasthan Judicial Service.
" The judgment was delivered on September 5, 1955, and the appellant thereupon came here and was granted special leave to appeal on April 16, 1956.
In the meanwhile, according to the facts set out in the respondent 's statement of the case, the Rajasthan Government complied with the orders of the High Court, reframed their rules and made fresh appointments in accordance with them.
These were duly published in the Rajasthan Gazette and the appellant was finally selected to the Rajasthan Judicial Service.
He was appointed a Civil Judge.
The Appellant 's contention is that the order of April 23, 1951, reduced him in rank and as he was not afforded an opportunity of showing cause, article 311 of the Constitution was violated.
If this contention is sound, it will follow that the fresh appointment as Civil Judge after the High Court 's order will also be bad for the same reasons.
Now it is well established that when one State is absorbed in another, whether by accession, conquest, merger or integration, all contracts of service between the prior Government and its servants automatically terminate and thereafter those who elect to serve in the new State, and are taken on by it, serve on such terms and conditions as the new State may choose to impose.
This is nothing more, (though on a more exalted scale), than an application of the principle that underlies the law of Master and Servant when there is a change of masters.
So far as this Court is concerned, the law is settled by the decision in The, State of Madras vs K. M. Rajagopalan (1), which follows the decisions of the Privy Council and the House of Lords in Reilly vs The King (2), and Nokes vs Doncaster Amalgamated Collieries Ltd. (3).
The distinction between rights to property and contractual rights when there is a change of sovereignty was pointed out in Virendra Singh & others vs The State of Uttar Pradesh (4).
(1) ; , 562.
(2) (3) (4) ; , 427.
1019 The appellant founds on article XVI(1) of the Covenant.
It was contended that he cannot rely on this because he was not a party to it but we need not decide this because, even if this be assumed to be the law of the new State settling the conditions of service of those who continue in service, all that it says is that the conditions of their service will not be less advantageous than those on which they were serving on November 1, 1948.
We have shown above that this condition is fulfilled.
But that apart, Article XVI(1) indicates that the old contracts terminate just as they did in The State Of Madras vs K. M. Rajagopalan (1).
In the first place, there were three options: (1) continuance in service, (2) payment of reasonable compensation, and (3) retirement on proportionate pension.
That shows that the old contracts terminated and that those who continued in service did so on the basis of fresh contracts, the conditions of which had yet to be determined.
The only guarantee (assuming that the appellant can avail himself of it) was that the new conditions were not to be less advantageous than those on which the appellant was serving on November 1, 1948.
There was no guarantee that they would be the same or better.
This was emphasised in the Rajasthan Gazette Extraordinary dated June 4, 1949.
It first referred to the broad outlines of the programme of integration that had already been published and then outlined the procedure and principles to be observed in carrying it out.
Paragraph 6 is as follows: "After final orders have been passed by the Government on the Departmental re organisation schemes and cadres and strength for different kinds of establishments in each department are fixed, the heads of departments will prepare gradation lists according to prescribed rules and put up proposals for fixation of each individual Government servant in the posts on permanent, officiating or deputation basis.
(1) ; , 562. 1020 They will also determine the revised rates of pay admissible to each, Gazetted and non Gazetted officer under the new scales etc." and then paragraph 15 " It is not the intention of Government to throw any Government servant out of employ as far as .practicable.
If necessary, services of efficient and deserving staff will be retained temporarily on supernumerary basis in the prospect of finding work for them in connection with new development schemes.
" The order of December 9,1949, on which the appellant relies, transferring him as District and Sessions Judge to the District Court at Ganganagar, must be read subject to the above and, if Article XVI(1) of the Covenant applies, then subject to that as well.
An order of transfer cannot be equated to an order of appointment; and in any case, the new cadres had not been established and the new Courts under the proposed scheme of re organisation had not been constituted, so, anything done at that stage could only have been part and parcel of the temporary transitional arrangements pending the final settlement by the new State of the schemes and conditions of service.
The next set of orders published in the Gazette of May 25, 1950, brings this out clearly.
We have already set out its terms.
The orders of March 25, 1950, and July 31, 1950, sanctioning the increment do not help the appellant.
He is described there as " Shri Rajvi Amarsingh, District and Sessions Judge in Bikaner Division.
" This is merely descriptive as the endorsement on the letter indicates.
It runs " Copy forwarded to (1) Shri Amarsingh, Civil and Addl.
Sessions Judge, Jhunjhunu.
" No determination to post the appellant permanently in a particular cadre and post can be spelled out of these accidental descriptions in orders dealing with a different matter.
Postings to a cadre and engagements of service are not made in this incidental way.
1021 The substantive appointment gazetted on April 23, 1951, after the new cadres and Courts had been fixed, was struck down by the High Court, and the Government of Rajasthan was directed to treat that as an ad hoc appointment.
According to the respondent in its statement of the case, the matter was regularised after the High Court 's decision and the appellant was again appointed a Civil Judge.
If that is so, then this must be regarded as his first substantive appointment in the new State.
But whether this is his first substantive appointment after the integration, or the one of April 23, 1951, no question of reduction in rank can arise and so article 311 is not attracted.
All his previous postings in the new State were purely transitional and temporary; and so far as article XVI(1) of the Covenant is concerned, its guarantee has been fulfilled.
The appeal is dismissed with costs.
Appeal dismissed.
| The appellant was a District and Session judge in the State of Bikaner and after its merger in the new State of Rajasthan, on August 7, 1949, continued to serve in the new State.
The covenant of intergration provided, inter alia, that the conditions of such service were to be no less advantageous than those under which he was working on November 1, 1948.
By a Gazette Notification the appellant was appointed as an ad hoc Civil and Additional Sessions judge.
After the reorganisation of the Services he was substantively appointed as a Civil judge and placed in grade C (Civil judges and Munsiffs) and placed at No. 18 in the list of juniors, but his old pay and emoluments remained as guaranteed.
Before such appointment he was, however, described in certain orders of transfer and increments of pay as District and Sessions judge.
The appellant moved the High Court under article 226 of the Constitution and contended that he had been reduced in rank without being afforded an opportunity to show cause under article 311 of the Constitution.
The High Court held that the appointment must be treated as an ad hoc appointment till it was regularised under the Constitution.
This was done by the Government after the decision of the High Court and the appellant was again appointed as a Civil Judge 1014 Held, that it is well settled that when a State is by merger integrated to form a new State, all contracts of service between the prior Government and its servants automatically came to an end and those who elect to serve in the new State, or are taken in by it, serve on such terms and conditions as the new State may choose to impose.
The State of Madras vs K. M. Rajagopalan, [1955] 2 S.C.R. 541, relied on.
Virendra Singh & Others vs The State of Uttar Pradesh, ; , referred to.
As the appellant 's postings in the new State previous to his substantive appointment were all transitional and temporary in character and the guarantee given by the covenant was fulfilled, no question of reduction in rank arose so as to attract Art 311 Of the Constitution.
No inference of any determination by the new Government to appoint the appellant in his old post could follow from the descriptions made in the orders of transfer and increments of pay as appointments are not made in that casual way.
|
Summarize this legal judgement text concisely | ivil Appeal No. 167 of 1954.
Appeal from the Judgment and decree dated September 14, 1953, of the Bombay High Court in Misc.
Application No. 267 of 1953.
R. J. Kolah, B. Narayanaswamy and J. B. Dadachanji, for the appellants.
H. M. Seervai, Advocate General for the State of Bombay and R. H. Dhebar, for the respondents.
December 20.
The following Judgment of the Court was delivered by VENKATARAMA AIYAR J.
The appellant is a limited Company incorporated under the Indian Companies Act, 1879.
It is carrying on business in the manufacture of textiles, and owns three factories called Spring Mills,, Textile Mills and Bombay Dye Works, all of, which are situate in Bombay.
In its balance sheet for the year 1951, it has shown as one of its liabilities a sum of Rs. 1,65,731 1 0 under the heading "Unclaimed wages ".
This amount is made up of wages earned by the workmen in the factories but remaining undrawn by them, and represents accumulations from year to year ever since the formation of the Company which, it is stated, was about the year 1880. ' The dispute in this appeal mainly relates to this amount.
In 1953, the Legislature of the State of Bombay enacted the Bombay Labour Welfare Fund Act (Bum.
XL of 1953) (hereinafter referred to as the Act), and it came into force on June 4, 1953.
We may, at this 1125 stage, refer to the relevant provisions of the Act, as it is their validity that is the main point for our determination in this appeal.
The preamble to the Act recites that " It is expedient to constitute a Fund for the financing of activities to promote welfare of labour in the State of Bombay and for conducting such activities ".
Section 2 is the definition section; sub section
(2) defines an " employee " as meaning " any person who, is employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in an establishment".
Employer " is defined in sub section
(3) as meaning " any person who employs either directly or through another person either on behalf of himself or any other person, one or more employees in an establishment and includes in a factory any person named under section 7(i)(f) of the , as the manager ".
Sub section (10) defines " Unpaid accumulations " as meaning " all payments due to the employees but not made to them within a period of three years from the date on which they became due whether before or after the commencement of this Act including the wages and gratuity legally payable".
"Wages "is defined in sub section
(11) as meaning " all remuneration capable of being expressed in terms of money which would) if the terms of the contract of employment, express or implied were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment. .
Then, there is section 3, which runs as follows: (1).
"There shall be constituted a fund called the Bombay Labour Welfare fund and, notwithstanding anything contained in any other law for the time being in force, the sums specified in sub section (2) ,shall be paid into the Fund.
The Fund shall consist of (a) all fines realised from the employees; (b) all unpaid accumulations; (c) any voluntary donations; (d) any fund transferred under sub section (5) of section 7; and (e) any sum borrowed under section 1126 (3).
The sums specified in sub section (2) shall be collected by such agencies and in such manner and the accounts of the Fund shall be maintained and audited in such manner as may be prescribed." Section 7(1) provides that "the Fund shall vest in and ,be held and applied by the Board as Trustees subject 'to the provisions and for the purposes of this Act.
" Sub section (2) of section 7 is very material, and is as follows: "Without prejudice to the generality of sub section (1) the moneys in the Fund may be utilized by the Board to defray expenditure on the following: (a) community and social education centres including reading rooms and libraries; (b) community necessities; (c) games and sports; (d) excursions, tours and holiday homes; (e) entertainment and other forms of recreations; (f) home industries and subsidiary occupations for women and unemployed persons; (g) corporate activities of a social nature; (h) cost of administering the Act including the salaries and allowances of the staff appointed for the purposes of the Act; and (i) such other objects as would in the opinion of the State Government improve the standard of living and ameliorate the social conditions of labour: Provided that the Fund shall not be utilized in financing any measure which the employer is required under any law for the time being in force to carry out; Provided further that unpaid accumulations and ,fines shall be paid to the Board and be expended by it under this Act notwithstanding anything contained in the (IV of 1936), or any other law for the time being in force ".
Section 11 provides for the appointment of an officer called the Welfare Commissioner, and defines his ,powers and duties.
Section.17 enacts that, " Any sum payable into the Fund under this Act shall without prejudice to any other mode of recovery, 1127 be recoverable on behalf of the Board as an arrear of land revenue.
" Section 19 authorises the State Government to make rules to carry out the purposes of this Act.
Section 23 provides that, "In section 8 of the (IV of 1936), to sub section (8) the following shall be added, before the Explanation namely: " but in the case of any factory or establishment to which the Bombay Labour Welfare Fund Act, 1953 (Bom.
XL of 1953), applies all such realisations shall be paid into the Fund constituted under the said Act.
" Rules were framed by the State of Bombay in exercise of the powers conferred by section 19, and they were published on June 30, 1953.
The material rules are Nos. 3 and 4, which are as follows: 3.
" Payment of fines and of unpaid accumulations by employer (I) Within fifteen days from the date on which the Act shall come into force in any area, every employer in such area shall pay by cheque, money order or cash to the Welfare Commissioner (a)all fines realised from the employees before the said date and remaining unutilized on that date; ,and (b)all unpaid accumulations held by the employer on the aforesaid date.
(2)The employer shall along with such payment submit a statement to the Welfare Commissioner giving full particulars of the amounts so paid.
(3) Thereafter, all fines realised from the employees and all unpaid accumulations during the quarters ending 31st March, 30th June, 30th September and 31st December shall be paid by the employer in the manner aforesaid to the Welfare Commissioner on or before the 15th of April, 15th of July , 15th of October and 15th of January succeeding such quarter and a statement giving particulars of the amounts so paid shall be submitted by him along with such payment to the Welfare Commissioner, 1128 4.
Notice for payment of fines and unpaid accumu lations by Welfare Commissioner: The Welfare Commissioner may, after making such enquiries as he may deem fit, and after calling for a report from the Inspector, if necessary, serve a notice on any employer to pay any portion of fines realised from the employees or unpaid accumulations held by him which the employer has not paid in accordance with rule 3.
The employer shall comply with the notice within 14 days of the receipt thereof." On July 7, 1953, the Welfare Commissioner, Bombay appointed under section 1 1 of the impugned Act, sent a notice to the appellant and other companies similarly situate, inviting their attention to the relevant provisions of the Act and of the rules and calling upon them to remit the fines and unpaid accumulations remaining with, them, in accordance with the directions contained therein.
To this, the appellant sent a reply on the same date impugning the validity of the Act as being in violation of the provisions of article 31 (2), and followed it up by filing the writ petition out of which the present appeal arises, it being treated by consent of parties as a test case.
The application was heard by Chagla C. J. and Tendolkar J. who held that the impugned Act was intra vires but on different grounds.
The learned Chief Justice was of the opinion that, on its true construction, the Act merely substituted the Board as a creditor in the place of the employees, that there was no taking of property, and that, in consequence, there was no contravention of article 31 (2).
Tendolkar J. hold that " unpaid wages " were unquestionably moneys which belonged to the employer and that he was being deprived of them, but there was no taking of possession or acquisition of property within .Art.
31 (2) of the Constitution but a deprivation of moneys, and as it was done under the authority of law, it fell within the protection of article 31 (1).
In the result, the petition was dismissed.
The learned Judges,however, granted a certificate under article 132, and that is how the appeal comes before us, 1129 The sole point for determination in this appeal is whether section 3 (1) and sub cls.
(a) and (b) of section 3(2) of the Act are void as contravening the provisions of the Constitution; but to decide it, we have to consider quite a number of questions which have been raised and discussed in the arguments before us.
It will be convenient to deal with the two items, fines realised ' from the employees, section 3 (2) (a) and unpaid accumulations, section 3 (2) (b) separately, as the issues involved in the determination of their validity are different.
Taking first unpaid accumulations, section 3 (2) (b), the contention of Mr. Kolah for the appellant is that s 3 (1) is repugnant to article 31 (2) inasmuch as it deprives the employers of moneys belonging to them without payment of any compensation merely on the ground that they represent wages due to the employees.
Now, money is undoubtedly property, and it cannot be disputed that a person who has money does not cease to be its owner merely by reason of the fact that he owes debts in satisfaction of which it may have to be applied.
Until the creditor takes appropriate proceedings under the law for the realisation of his debt and the title of the debtor is extinguished in those proceedings, the title to the property continues in the debtor.
Mr. Kolah is therefore clearly right in his contention that the liability of the appellant to pay wages to the employees does not ipso facto extinguish its title to the moneys belonging to it even pro tanto, and that the effect, therefore, of section 3 (1) is to take away money belonging to it.
Then, the question is whether such a provision is hit by article 31 (2) on the ground that it is acquisition or taking possession of property for a public purpose without payment of compensation.
It is common ground that the taking is for a public purpose.
The point in dispute is whether what is sought to be done under section 3 is acquisition or taking possession of property within article 31 (2).
Tendolkar, J., answered this question against the appellant, because, in his view, article 31 (2) would apply only if there was a transfer of title to or beneficial interest in the amounts to the State, that section 3 (1) effected neither, that it did deprive the employers of 1130 oheir moneys, but that fell under article 31 (1) and not article 31 (2), and that as that was done under the authority of law, it could not be questioned.
Subsequent to this decision, this Court had occasion to consider the true scope of article 31 (2) in relation to article 31 (1) in The State of West Bengal vs Subodh Gopal Bose (1) and in Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co. Ltd (2).
In The State Of West Bengal vs Subodh Gopal Bose(1), the majority of the learned Judges took the view that.
articles 31 (1) and 31 (2) were not mutually exclusive, that it was not an essential requisite of acquisition under article 31 (2) that there should be a transfer of title to the State, that deprivation of property and substantial abridgement of the rights of the owner were also within article 31 (2), and that a law which produced those results must, in order to be valid, satisfy the conditions laid down in that Article.
Das, J., (as he then was) differed from this view, and held that the contents of the two provisions were distinct, that while article 31 (1) had reference to the " police power" of the State, article 31 (2) dealt with the power of " eminent domain ".
In Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co.(2) the majority of the Judges again reiterated the view expressed in The State of West Bengal vs Subodh Gopal Bose(1) that articles 31 (1) and 31 (2) covered the same ground, and that substantial interference with rights to property would be within the operation of Art ' 31 (2).
On these decisions, it should follow that section 3 of the impugned Act is bad as infringing article 31 (2), in that it deprives the appellant of its moneys without giving any compensation.
Mr. Seervai, however, resists this contention on the strength of article 31 (2A), which was introduced by the Constitution (Fourth Amendment) Act, 1955.
It is as follows: " Where a law does not provide for the transfer of the ownership or right to possession of any property to the State or to a corporation owned or controlled by the State, it shall not be deemed to provide for the (1) ; (2) ; 1131 compulsory acquisition or requisitioning of property,: notwithstanding that it deprives any person of his property.
" The argument is that the theory that acquisition in article 31 (2) is not confined to cases of transfer of ownership to the State, and that even deprivation of property would fall within it, which is the basis of ' the decisions in The State of West Bengal vs Subodh Gopal Bose (1) and in Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co. Ltd. (2) can, in view of the above amendment, no longer be accepted as correct, and that those decisions therefore require to be reconsidered in the light of the new article 31 (2A).
But it is not disputed that this provision has no retrospective operation, and that the rights of the parties must be decided in accordance with the law as on the date of the writ application, and that on the provisions of the Constitution as they stood on that date and as interpreted in The State of West Bengal vs Subodh Gopal Bose (1) and Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co. Ltd. (2), section 3 (1) of the impugned Act would be obnoxious to article 31 (2).
This should be sufficient to conclude this, question in favour of the appellant, but the respondents contend that section 3 (1) is not within the prohibi tion of article 31 (2), because it operates only on money, and money is not property for purposes of that Article.
There is considerable authority in America that the power of eminent domain does not extend to the taking of money, the reason being that compensation which is to be paid in respect of money can only be money, and that, therefore, in substance it is a forced loan.
In The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga(3 ), this view was adopted by Mahajan J. at pages 943 944, by Mukherjea J. at page 961 and by Chandrasekhara Aiyar J. at pages 1015 to 1018.
It is argued for the respondents that the position under article 31(2) is the same as in America, as the provision therein that either the (1) ; (2) ; (3) 144 1132 amount of the compensation should be fixed or the principles on which and the manner in which compensation is to be determined should be specified, involves that what is taken is not money.
It is argued, on the other hand, for the appellant that the latest trends in American law show, as was observed by Das J. (as he then was), at pages 984 985 in The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga (1), a departure from the view held in earlier authorities that moneys and choses inaction could not be the subject of " eminent domain "; and that, in any case, the principles of American law should not be applied in the interpretation of the provisions of our Constitution.
If the contention of the respondents is to be accepted, the question naturally arises what protection a person has in respect of moneys belonging to him if he can be deprived of them by process of legislation.
The answer of Mr. Seervai is that that protection is to be sought in article 19(1)(f), that the word " property" therein has a wider connotation than what it bears in article 31(2) and includes money, and that the citizens have the right to hold money subject only to law such as is saved by article 19(5).
In support of this position, he relied on the decision in Bijay Cotton Mills Ltd. vs
The State of Ajmer (2) in which this Court applied article 19(6) in pronouncing on the validity of the Minimum Wages Act (XI of 1948) requiring the employers to pay wages at a rate not less than that to be fixed by the Government.
Assuming that the correct position is what the res pondents contend it is, the question that has still to be determined is whether the impugned Act could be supported under article 19(5).
There was some discussion before us as to the scope of this provision, the point of the debate being whether the words "imposing reasonable restriction" would cover a legislation, which not merely regulated the exercise of the rights guaranteed by article 19(1)(f) but totally extinguished them, and whether a law like the present one which deprived the owner of his properties could be held to fall within that provision.
It was argued that a law authorising (1) (2) ; 1133 the State to seize and destroy diseased cattle, noxious drugs and the like, could not be brought within article 19(5) if the word 'restriction ' was to be narrowly construed, and that accordingly the power to restrict must be held to include, in appropriate cases, the power to prohibit the exercise of the right.
That view does find support in the observations of Lord Porter in Commonwealth of Australia vs Bank of New South Wales (1); but the present legislation cannot be sustained even on the above interpretation of the word 'restriction ', as section 3(1) of the Act deals with moneys and money cannot be likened to diseased cattle or noxious drugs so as to attract the exercise of police power under article 19(5).
It appears to us that whether we apply article 31(2) or article 19(5), the impugned Act cannot be upheld, and it must be struck down, unless we accept the other contentions which have been urged for the respondents in support of its validity.
Those contentions are firstly, that the Act merely substitutes the Board as the creditor in the place of the employees, and that sections 3 and 17 merely prescribe the mode in which the obligation is to be enforced and that was the ground on which Chagla C. J. based his judgment; and secondly, that the impugned legislation is one in respect of abandoned property, and it is not open to attack as contravening either article 19 (1)(f) or article 31(2).
It is those contentions that now fall to be considered.
As regards the first contention, the question is whether on a fair construction of the provisions of the impugned Act, it is possible to spell out a substitution of creditors.
When an employee has done his work, the amount of wages earned by him becomes a debt due to him from the employer, and it is property which could be assigned under the law.
If the employee had assigned the debt to the Board constituted under the Act, the latter would be entitled to recover it from the employer.
And what could be done by act of parties can also be done by legislation.
What we have to see, therefore, is whether on the provisions of the statute it could be held that there is a statutory (1) [1950] A C. 235, 311.
1134 transfer of the wages earned by the workman to the Board.
Section 5 of the Act vests the amounts mentioned in section 3(2) in the Board, and section 3(1) directs that those amounts should be paid by the employer to the Board.
Counsel for the appellant contends that there are in the Act no words of transfer of the debts to the ;Board, and that there is only a provision for payment of the amounts.
But this is taking too narrow a view of the true scope of those provisions.
Looking at the substance of the matter, we are of opinion that section 3(1) and section 5(1) do operate to transfer the debts due to the employees, to the Board.
It will be observed that the definition of "unpaid accumulations " takes in only payments due to the employees remaining unpaid within a period of three years after they become due.
The intention of the Legislature obviously was that claims of the employees which are within time should be left to be enforced by them in the ordinary course of law, and that it is only when they become time barred and useless to them that the State should step in and take them over.
On this, the question arises for consideration whether a debt which is time barred can be the subject of transfer, and if it can be, how it can benefit the Board to take it over if it cannot be realised by process of law.
Now, it is the settled law of this country that the statute of Limitation only bars the remedy but does not extinguish the debt.
Section 28 of the Limitation Act provides that when the period limited to a person for instituting a suit for possession of any property has expired, his right to such property is extinguished.
And the authorities have held and rightly, that when the property is incapable of possession, as for example, a debt, the section has no application, and lapse of time does not extinguish the right of a person thereto.
Under section 25(3) of the Contract Act, a barred debt is good consideration for a fresh promise to pay the amount.
When a debtor makes a payment without any direction as to how it is to be appropriated, the creditor has the right to appropriate it towards a barred debt.
(Vide section 60 of the Contract Act).
It has also been held that a creditor is entitled 1135 to recover the debt from the surety, even though a suit on it is barred against the principal debtor.
Vide Mahant Singh vs U Ba Yi (1), Subramania Aiyar vs Gopala Aiyar (2), and Dil Muhammad vs Sain Das (3).
And when a creditor has a lien over goods by way of security for a loan, he can enforce the lien for obtaining satisfaction of the debt, even though an action ' thereon would be time barred.
Vide Narendra Lal Khan vs Tarubala Dasi (4).
That is also the law in England.
Vide Halsbury 's Laws of England (Hailsham 's Edition), Vol. 20, page 602, para.
756 and the observations of Lindley L. J. in Carter vs White (5) and of Cotton L. J. in Curwen vs Milburn (6).
In American Jurisprudence, Vol.
34, page 314, the law is thus stated : " A majority of the courts adhere to the view that a statute of limitations, as distinguished from a statute which prescribes conditions precedent to a right of action, does not go to the substance of a right, but only to the remedy.
It does not extinguish the debt or preclude its enforcement, unless the debtor chooses to avail himself of the defence and specially pleads it.
An indebtedness does not lose its character as such merely because it is barred; it still affords sufficient consideration to support a promise to pay, and gives a creditor an insurable interest." In Corpus Juris Secundum, Vol.
53, page 922, we have the following statement of the law : " The general rule, at least with respect to debts or money demands, is that a statute of limitation bars, or runs "against, the remedy and does not discharge the debt or extinguish or impair the right, obligation, or cause of action.
" The position then is that under the law a debt subsists notwithstanding that its recovery is barred by limitation, and no argument has been addressed to us by the appellant that the transfer of such a debt is invalid; and indeed it could not be, in view of the provisions in the impugned Act, which release the debts (1) (1939) L. R. 66 1.
A. 198.
(2) Mad.
(3) A.I.R. 1927 Lah.
(4) Cal. 817, 823.
(5) , 672.
(6) 24, 434.
1136 due to the employees from the bar of limitation.
Section 3(1) provides that payment shall be made of the amounts specified in sub cl.
(2) "notwithstanding anything contained in any other law for the time being in force.
" A similar provision is again enacted in the second proviso to sub section
(2) of section 5 that "unpaid accumulations " and fines shall be paid to the Board "notwithstanding anything contained in the , or any other law for the time being in force.
" One of those laws is the law of limitation, and the effect of these provisions is to suspend limitation in respect of the claims to which section 3(2) relates.
To dispel any doubt as to whether it was competent to the Legislature of the Bombay State to modify the provisions of the Limitation Act, it should be stated that limitation is a topic enumerated in the Concurrent List, being Entry 13 in List III in Seventh Schedule to the Constitution, and under article 254(2), the State Legislature can enact a law modifying the Central Act, provided it is reserved for consideration by the President and assented to by him, and that has been done in the present case.
Coming to the impugned Act, there is one other provision therein to which reference must be made.
Section 17 provides that without prejudice to other modes of recovery, the sums payable to the fund under section 3 may be recovered as arrears of land revenue.
This is a provision which is generally made when amounts are due and payable to the State, and Mr. Kolah concedes, that if the impugned law is otherwise valid, it cannot be said to be bad by reason of this section.
On the above analysis, there cannot be any doubt that the effect of the relevant provisions of the Act is to transfer to the Board the debts due by the appellant to its employees free from the bar of limitation.
The question still remains whether there has been a substitution of creditors, and that can only be, if the debt due to the employee is discharged and in its place there is substituted the debt in favour of the Board.
If, however, the employer is not released from his liability to the employee, then the effect of section 3(1) is only to create in the Board a statutory creditor in 1137 addition to the creditor under the contract of employment, and there can be no question of substitution.
Mr. Seervai agrees that if the Act does not operate to ' discharge the employer from his obligations to the employees in respect of the wages due to them, then it must be held to be unconstitutional as infringing article 19(1)(f), because his contention that the effect of ' the Act was only to take the property of the employer in discharge of its obligations could not then be maintained.
The real point for determination, therefore, is whether on payment of the amounts in accordance with section 3(1) of the Act, the appellant gets a discharge of his obligations to the employees in respect of wages due to them.
The Act does not contain any provision to that effect, and the absence thereof has been strongly relied on by the appellant as showing that no substitution of creditors was intended.
In answer to this contention, Mr. Seervai urges firstly that though the Act does not, in terms, provide for the discharge of the appellant on payment of the amount under section 3(1), that is the result of the provisions of the (Act IV of 1936), hereinafter referred to as the Wages Act, and secondly, that the effect of section 3(1) of the Act is to render the contract of employment void under section 56 of the Contract Act, and the appellant is thereby discharged from his obligations thereunder.
We shall now examine both these contentions.
To appreciate the first contention, it is necessary to refer to the relevant provisions of the Wages Act.
Section 2(vi) defines "wages" in terms which comprehend whatever falls within the definition of that word in section 2(11) of the impugned Act.
Section 3 casts on the employer the responsibility for payment of wages to persons employed by him.
Section 4 provides for the fixing of wage periods, which, however, are not to exceed one month.
Under section 5, the wages have to be paid before the expiry of ten days after the last day of the wage period in case of employees who continue in service and in the case of those whose employment has been terminated, within the second 1138 working day of such termination.
Section 15 provides that where an unauthorised deduction has been made from the wages of an employed person or payment of wages has been delayed, such person may apply to the authority appointed under the Act for a direction for payment of the amount deducted or the delayed ;wages, as the case may be, together with payment of compensation.
Such application has to be made within six months from the date on which the deductions were made or the date on which the payment of wages became due, and by Act No. 62 of 1953 of the Bombay Legislature, the period of six months has been enlarged to one year.
There is a proviso to this section that an application thereunder can be made after the period prescribed therein "when the applicant satisfies the authority that he had sufficient cause for not making the application within such period.
" Section 22(d) of the Act provides that, "No Court shall entertain any suit for the recovery of wage or of any deduction from wages in so far as the sum so claimed could have been recovered by an application under section 15. .
Now, the argument of the respondents is that under the provisions aforesaid, an employee has to prosecute his claim for unpaid wages before the authority within the time limited by section 15 of the Wages Act, which is one year in the State of Bombay, that if he fails to do so it becomes unenforceable, and a suit with respect thereto under the general law is also barred.
The result is, it is contended, that having regard to the definition of "unpaid accumulations" as meaning all payments due to the employees but not made to them within a period of three years, the employer runs no risk of being called upon to pay to the employee what has been paid by him to the Board under section 3(1), and that therefore a payment under the impugned Act gives him what is, for all practical purposes, a good discharge.
This argument rests on the supposition that so far as unpaid wages are concerned, the operation of the Wages Act is co extensive with that of the impugned Act.
But that clearly is erroneous.
It is true that wages as defined in the Wages Act 1139 would include whatever are wages under the impugned Act.
But section 1(6) limits the application of the Wages Act to wages which are below Rs. 200 for a wage period.
In respect of wages of Rs. 200 or more, it is the general law that would apply, and the period of limitation is not one year under section 15 of the Wages Act but three years under article 102 of the Limitation ' Act, which period is capable of extension under the provisions of the Limitation Act beyond the three years mentioned in section 2(10) of the impugned Act.
Then, it is to be noted that under the proviso to section 15(1), the authority has the power to admit a petition even beyond the period mentioned there, if sufficient cause is shown therefor.
To this, the reply of the respondents is that as on the terms of section 3(1) and the second proviso to section 5(2) they are to take effect notwithstanding anything contained in the Wages Act or any other law, they override the power conferred by the proviso to section 15(1) of the Wages Act or the provisions of the Limitation Act.
Even as regards section 22 of the Wages Act, there is divergence of judicial opinion as to its true scope.
In Simpalax Manufacturing Co. Ltd. vs Alla Ud Din (1), it was held that if there was any bona fide dispute as to the amount payable, the jurisdiction of the Civil Court was not barred by section 22.
On the other hand, it was held in Bhagwat Rai vs Union of India (2) that the jurisdiction of the Civil Court would be barred, even if there was a bona fide dispute, and that the bar under section 22(d) was absolute, and certain observations in Modern Mills Ltd. vs Mangalvedhekar (3) and A. B. Sarin vs B. C. Patil (4) were relied on, as supporting this contention.
Even if Mr. Seervai is right in his contention that the law is correctly laid down in Bhagwat Rai vs Union of India (2) and that the decision in Simpalax Manufacturing Co. Ltd. vs Alla Ud Din(1) is wrong, the fact remains that claims in respect of unpaid wages to which the impugned Act applies must, in view of section 1(6) of the Wages Act, fall at least (1) A.I.R. 1945 Lah.
(2) I.L.R. (4) A.I.R. 1951 BOM.
(3) A.I.R. 1950 Bom.
145 1140 in part outside the purview of that Act, and the protection afforded by section 15 of that Act will not be available with reference thereto.
It is next contended that even if the impugned Act does not protect the employer in respect of unpaid wages which fall outside the Wages Act, it should be upheld in so far as it relates to those claims which fall within the purview of that Act, as the bar of limitation under section 15 of that Act is sufficient safeguard to the employer against being made liable at the instance of the employees for wages which had been paid to the Board.
And it is also contended that even with reference to claims for unpaid wages which fall outside the Wages Act, the impugned Act should be held to be valid if such claims are barred under the provisions of the Limitation Act.
In other words, the contention is that the impugned Act should be upheld in respect of that portion of the unpaid wages the recovery of which by the employees is barred by limitation whether under section 15 of the Wages Act or the Limitation Act.
The impugned Act, it should be noted, merely enacts that all unpaid accumulations should be paid to the Board.
It makes no distinction between claims for unpaid wages which are barred by limitation and those which are not so barred.
It is contended for the respondents that when the subject matter of a law comprehends distinct matters as to some of which it is unconstitutional and bad, it should nevertheless be upheld as regards the others, if those others form a distinct category, and that this principle applies not only when a classification into distinct categories appears on the face of the law but also when it exists in fact.
Now, the doctrine of severability in application is well established in our law (vide The State of Bombay vs F. N. Balsara (1), The State of Bombay vs
The United Motors (India) Ltd.and R. M. D. Chamarbaugwalla vs Union of Indiaand the principles applicable have been stated fullyin Chamarbaugwalla 's Case (3).
But assuming on the basis of the above autho (1) ; (2) [1953] S.C.R.1069.
(3)[1957] S.C.R. 930.
1141 rities that we can confine the operation of the impugned Act to those claims of unpaid wages which are barred by limitation, the question still is whether the impugned Act gives a discharge to the employer even in respect of those claims; for, as already stated, the operation of article 19(1)(f) can be avoided only if it is established that there has been a substitution of creditors, which can only be if and when the employer gets a discharge from those obligations to the employees.
The point to be decided therefore is whether the effect of the bar of limitation is to discharge the employer from liability to the employees.
It has been already mentioned that when a debt becomes time barred, it does not become extinguished but only unenforceable in a court of law.
Indeed, it is on that footing that there can be a statutory transfer of the debts due to the employees, and that is how the Board gets title to them.
If then a debt subsists even after it is barred by limitation, the employer does not get, in law, a discharge therefrom.
The modes in which an obligation under a contract becomes discharged are well defined, and the bar of limitation is not one of them.
The following passages in Anson 's Law of Contract, 19th Edition, page 383, are directly in point: " At Common Law lapse of time does not affect contractual rights.
Such a right is of a permanent and indestructible character, unless either from the nature of the contract, or from its terms, it be limited in point of duration.
"But though the right possesses this permanent character, the remedies arising from its violation are withdrawn after a certain lapse of time; interest reipub licae ut sit finis litium.
The remedies are barred, though the right is not extinguished." And if the law requires that a debtor should get a dis charge before he can be compelled to pay, that requirement is not satisfied if he is merely told that in the normal course he is not likely to be exposed to action by the creditor.
That this distinction is not purely academical but.
1142 is of practical importance will be seen, when regard is had to the provisions of the Industrial Disputes Act.
Under that Act, there is no period of limitation prescribed for referring a dispute for adjudication by a tribunal.
Even when a claim for wages falls within the purview of the Wages Act and an application under section 15 of that Act would be barred, it can nevertheless give rise to an industrial dispute in respect of which action can be taken under the provisions of the Industrial Disputes Act.
It was held by the Federal Court in Shamnagore Jute Factory Co. Ld.
vs section M. Modak (1) that section 22(d) of the Wages Act did not take away the power of the authorities to refer to a tribunal set up under the Industrial Disputes Act a claim which could be made under the Wages Act, as that section had application only to suits and did not exclude other proceedings permitted by law for the enforcement of payment.
If a tribunal appointed under that Act can direct an employer to make payment of wages, it follows that the bar under section 15 of the Wages Act does not give an absolute protection to the employer, and the same consequence must follow when the bar of limitation arises under the Limitation Act.
The result therefore is that when an employer makes a payment under section 3(1) of the Act he gets no discharge from his obligation to the employees, even when the enforcement thereof is barred by limitation.
The contention based on the provisions of the Wages Act failing, Mr. Seervai falls back on section 56 of the Contract Act as furnishing a ground for holding that the employer is discharged.
(2) of section 56 provides that, " a contract to do an act which, after the contract is made, becomes impossible, or by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.
" It is argued that by operation of section 3 of the impugned Act, the performance of the contract by the employer has become impossible, and the contract has thereby (1) 1143 become void.
Section 56 of the Contract Act embodies the law relating to frustration of contracts, and the true scope of that section was considered by this Court in Satyabrata Ghose vs Mugneeram Bangur and Co. The position was thus stated by Mukherjea J.: " In the large majority of cases however the doctrine of frustration is applied not on the ground that the parties themselves agreed to an implied term which operated to release them from the performance of the contract.
The relief is given by the court on the ground of subsequent impossibility when it finds that the whole purpose or basis of a contract was frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which was beyond what was contemplated by the parties at the time when they entered into the agreement.
Here there is no question of finding out an implied term agreed to by the parties embodying a provision for discharge, because the parties did not think about the matter at all nor could possibly have any intention regarding it.
When such an event or change of circumstances occurs which is so fundamental as to be regarded by law as striking at the root of the contract as a whole, it is the court which can pronounce the contract to be frustrated and at an end.
The court undoubtedly has to examine the contract and the circumstances under which it was made.
The belief, knowledge and intention of the parties are evidence, but evidence only on which the court has to form its own conclusion whether the changed circumstances destroyed altogether the basis of the adventure and its underlying object.
This may be called a rule of construction by English Judges but it is certainly not a principle of giving effect to the intention of the parties which underlies all rules of construction.
This is really a rule of positive law and as such comes within the purview of section 56 of the Indian Contract Act.
" Counsel for the respondents relies on these obser vations, and contends that when the contract of service was entered into between the employer and the employees, they could not have contemplated (I) ; ,323. 1144 that the Legislature would have intervened and required the employer to pay the arrears of wages to the Board, and that that is a supervening impossibility which brings section 56 into play and renders the contract void.
We are not satisfied that the performance of the contract of service has been rendered impossible by reason of section 3(1) of the impugned Act.
But assuming that that is the position, what follows ? The matter would then be governed by section 65 of the Contract Act, which provides that when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it or to make compensation for it to the person from whom he received it.
Under this section, the employer is liable to make compensation to the employee for the work done by him, and that liability can be enforced against him in spite of the fact that he has paid the unclaimed wages to the Board under section 3 (1) of the Act.
We are therefore of opinion that even if the matter is governed by section 56 of the Contract Act, the employer is no more discharged than by the operation of the bar of limitation under section 15 of the Wages Act, or the provisions of the Limitation Act.
In this view, it must be held that the provisions of the impugned Act are unconstitutional, in that they take away the property of the appellant in violation of either article 19 (1) (f) or article 31 (2) of the Constitution.
A contention was also raised on behalf of the appellant that even if the impugned Act did not encroach on any of the Constitutional rights of the appellant, it clearly violated the rights of the employees in that it deprives them of their right to wages earned by them , that it was therefore void as against them as being in contravention of article 31 (2), and being void against them, it was void against the appellant as well.
For the respondents, it is contended that the Act cannot be held to infringe article 31 (2) even as regards the employees, as choses in action equally with money are outside the operation of that Article, and reliance is placed on the observations already referred to in The State of Bihar vs Maharajadhiraja 1145 Sir Kameshwar Singh of Darbhanga (supra) at pages 942, 960 961 and 1015 to 1018.
Now, as the Act takes over the rights of the employees in respect of wages due to them even when they are not barred without making any provision for compensation of the same to them, it must at least to that extent be held to be unconstitutional, whether as contravening article 19 (1) (f) or article 31 (2) it is unnecessary to decide.
It is then argued that this is an objection open only to the employees, and that the appellant can make no grievance of it.
It is no doubt true that a question as to the constitutionality of a statute can be raised only by a person who is aggrieved by it; but here, the statute deals with rights arising out of contract, and that presupposes the existence of at least two parties with mutual rights and obligations, and it is difficult to see how when the rights of one party to it are interfered with, those of the other can remain unaffected by it.
Let us assume that the appellant makes a payment to the Board under section 3 (1) of the impugned Act on the footing that the law is not unconstitutional as against him.
What is there to prevent the employee from suing to recover the same amount from the appellant on the ground that the Act is unconstitutional ? It will be no answer to that claim to plead that the appellant has already paid the amount to the Board.
The fact is that a statute which operates on a contract must affect the rights of all the parties to the contract, and if it is bad as regards one of them, it should be held to be bad as regards the others as well.
It is unnecessary to pursue this question further, as we have held that the Act is unconstitutional even as regards the appellant.
It remains to deal with the contention of the res pondents that the impugned legislation is, in substance, one in respect of abandoned property, and that, by its very nature, it cannot be held to violate the rights of any person either under article 19 (1) (f) or article 31 (2).
That would be the correct position if the character of the legislation is what the respondents claim it to be, for it is only a person who has some interest in property that can complain that the 1146 impugned legislation invades that right whether it be under article 19 (1) (f) or article 31 (2), and if it is abandoned property, ex hypothesi there is no one who has any interest in it.
But can the impugned Act be held to be legislation with respect to abandoned property ? To answer this question, it is necessary to examine the basic principles underlying such a legislation, and ascertain whether those are the principles oil which the Act is framed.
The expression " abandoned property " or to use the more familiar term "bona vacantia " comprises properties of two different kinds, those which come in by escheat and those over which no one has a claim.
In Halsbury 's Laws of England, Third Edition, Vol. 7, page 536, para.
1152, it is stated that " the term bona vacantia is applied to things in which no one can claim a property and includes the residuary estate of persons dying intestate ".
There is, however, this distinction between the two classes of property that while the State becomes the owner of the properties of a person who dies intestate as his ultimate heir, it merely takes possession of property which is abandoned.
At common law, abandoned personal property could not be the subject of escheat.
It could only be appropriated by the Sovereign as bona vacantia.
Vide Holdsworth 's History of English Law, Second Edition, Vol. 7, pages 495 496.
In Connecticut Mutual Life Insurance Company vs Moore(1), the principle behind the law was stated to be that " the State may, more properly, be custodian and beneficiary of abandoned property than any other person." Consistently with the principle stated above, a law relating to abandoned property enacts firstly provisions for the State conserving and safeguarding for the benefit of the true owners property in respect of which no claim is made for a specified and reasonable period, and secondly, for those properties vesting in the State absolutely when no claim is made with reference thereto by the true owners within a time limited.
There has been quite a number of laws on abandoned property in the American States, and their validity (I) ; , 546; ; , 869.
1147 has been the subject of numerous decisions in the Supreme Court of United States.
In Anderson National Bank vs Luckett (1), the law related to Bank deposits.
It provided that if moneys in deposit had not been demanded or operated on, for a period of 10 years in the case of demand deposits and 25 years in the case of non demand deposits, they might be presumed to have been abandoned and the Banks were to transfer them to the State.
Claims to the deposits might be made to the Commissioner of Revenue, who was to determine on their validity, his decision being open to review by the Courts.
The validity of this law was questioned on the ground that sufficient opportunity had not been given to the depositors to claim the deposits, and that as they could attack the law as unconstitutional, the Bank got no protection by payment to the State.
In repelling this contention, the Supreme Court observed that the Act did not deprive the depositors of any of their rights, they being given ample opportunity to establish their rights, and that it merely substituted the State in the place of the Bank as their debtor.
The Court also held that it was " within the Constitutional power of the State to protect the interests of depositors from the risks which attend long neglected accounts, by taking them into custody when they have been inactive so long as to be presumptively abandoned ".
In Connecticut Mutual Life Insurance Co. vs Moore (supra), the law was with reference to moneys payable on life insurance policies, which had matured.
It provided that if those amounts had remained unclaimed for a period of seven years, then it had to be advertised by the companies in the manner provided therein, and if no claims were preferred thereafter, the amounts were to be paid to the State Comptroller for care and custody.
In holding that the law was valid, the Court observed : " There is ample provision for notice to beneficiaries and for administrative and judicial hearing of their claims and payment of same.
There is no possible injury to any beneficiary." (1) ; , 241; ; , 701 146 1148 In Standard Oil Company vs New Jersey (1), the law related to shares and unpaid dividends, and provided for the State taking them over, if they remained unclaimed for a period of 14 years.
There was a provision for notice to the unknown owners by advertisement.
It was held following Connecticut Mutual Life Insurance Company vs Moore (supra) that the law was valid.
In the light of the above discussion, there cannot be any reasonable doubt that the impugned Act cannot be regarded as one relating to abandoned property.
The period of three years mentioned in section 2 (10) of the Act is merely the period of limitation mentioned in article 102 of the Limitation Act, and even taking into account the class of persons whose claims are dealt with in the Act, as counsel for respondents would have us do, the period cannot be regarded as adequate for raising a presumption as to abandoment.
A more serious objection to viewing the legislation as one relating to abandoned claims is that there is no provision made in the Act for investigating the claims of the employees or for payment of the amounts due to them, if they established their claims.
The purpose of a legislation with respect to abandoned property being, in the first instance, to safeguard the property for the benefit of the true owner and the State taking it over only in the absence of such claims, a law which vests the property absolutely in the State without regard to the claims of the true owners cannot be considered as one relating to abandoned property.
This contention of the respondents must also be rejected.
In the result, we are of opinion that section 3(1) in so far as it relates to unpaid accumulations in section 3(2)(b) is unconstitutional and void.
We have now to deal with the question as to the validity of section 3(1) and section 3(2)(a) of the Act, which require the employers to hand over to the Board the fines realised from the employees.
So far as this item is concerned, the position of the employers is wholly (1) ; ; , 1149 different from what it is as regards unpaid accumulations.
Section 8 of the Wages Act deals with the question of fines which could be imposed by the employer, and it provides that they should be entered in a separate register, and applied for the benefit of his employees.
It is not denied by the appellant that under this provision the fines are constituted a trust ' fund, and that the employers are bare trustees in respect of such fund.
Now, the grievance of the appellant is that the Act deprives it of its rights as trustees, and vests them in the Board, and that, further, while the beneficiaries under section 8 of the Wages Act are its own employees, under section 5(2) of the impugned Act they include otherpersons as well.
There might have been substance in the complaint that the appellant had been deprived of its rights as trustee if it bad any beneficial interest in the fund.
But admittedly, it has none, and it is therefore difficult to hold that there has been such substantial deprivation of property, as will offend article 31(2) according to the decisions in The State of West Bengal vs Subodh Gopal Bose and Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co. Ltd. (supra) or such unreasonable interference with rights to property, as will infringe article 19(1)(f).
It is argued with some emphasis that in enlarging the circle of beneficiaries, the Act has encroached on the rights of the employees of the appellant.
But then, the trust is the creation not of the appellant but of the Legislature, which gave the employees certain rights which they did not have before, and what it can give, it can also take away or modify, and we do not see how the employers are aggrieved by it.
We are of opinion that no valid grounds exist on which section 3(1) and section 3(2)(a) of the impugned Act could be attacked as unconstitutional, and they must accordingly be held to be valid.
In the result, we hold, in modification of the order of the Court below, that the provisions of the impugned Act are unconstitutional and void in so far as they relate to " unpaid accumulations", but that they are valid as regards " fines "; and an appropriate writ will 1150 issue against the respondents in the terms stated above.
The appeal succeeds in part, but as it is stated that " unpaid accumulations " form by far the most substantial portion of the claim, we direct the respondents to pay half the costs of the appellant here and in the Court below.
Appeal allowed in part.
| The Bombay Labour Welfare Fund Act (Bom.
XL of 1953) was enacted by the State Legislature with the object of constituting a fund for the financing of activities for the welfare of labour and section 3(1) of the Act provided as follows: "There shall be constituted a fund called the Bombay Labour Welfare Fund and, notwithstanding anything contained in any other law for the time being in force, the sums specified in subsection (2) shall be paid into the Fund.
" Section 3(2) provided, inter alia, as follows "The Fund shall consist of : (a) all fines realised from the employees; (b) all unpaid accumulation;" Notices were served on the appellant 's company as also on other companies similarly situated, by the Welfare Commissioner, appointed under the Act, calling upon them to remit to him the fines and unpaid accumulations in their custody.
The appellant in reply questioned the validity of the Act on the ground that it contravened article 31(2) Of the Constitution and, thereafter, filed a Writ petition, out of which the present appeal arises, which was treated by consent of parties as a test case.
The Judges of the Division Bench who heard the matter field that the impugned Act was intra vires, though on different grounds, and dismissed the petition.
The sole point for determination in the appeal was whether section 3(I) and sub cls.
(a) and (b) Of section 3(2) Of the Act were void as being violative of article 31(2) Of the Constitution: Held, that the unpaid accumulation of wages remaining with the appellant company was its own property and section 3(1) of the impugned Act in so far as it directs the payment of it tinder 3(2)(b) of the Act contravenes article 31(2) Of the Constitution and must be invalid.
Article 31(2A) of the Constitution has no retrospective effect and cannot apply and the matter must be decided on the law as it stood at the date of the Writ petition.
1123 The State of West Bengal vs Subodh Gopal Bose, ; and Dwarkadas Shrinivas of, Bombay vs Sholapur Spinning and Weaving Co. Ltd., ; , applied.
Assuming that money was not property within the meaning of article 31(2) and article 19(1)(f) applied that Article also would be of no help to the respondent as the Act could not be supported under article 19(5) Of the Constitution.
Commonwealth of Australia vs Bank of New South Wales, , held inapplicable.
The State of Bihar vs Mahayajadhiraja Sir Kameshwar Singh of Darbhanga, , considered.
The impugned Act had not the effect of substituting the Board as the creditor in place of the employee nor could it be said to be a legislation in respect of abandoned property.
Although by defining 'unpaid accumulation ' in the way it did the Legislature obviously intended that only such wages of the employees as were time barred should be taken by the State, it being well settled that the law of limitation only bars the remedy but does not extinguish the debt, sections 3(I), 5(2) and 17 of the Act must be held to have the effect of transferring to the Board the debts due by the appellant to its employees free from the bar of limitation.
Such a transfer can be valid only if it gives a complete discharge to the employer from the debts.
If it does not, the Act must be held to infringe article 19(1)(f) of the Constitution.
The Act contains no provision granting a discharge to the debtor.
The bar of limitation prescribed either by section 15 Of the Payment of Wages Act (Act IV Of 1936) or article 102 of the Limitation Act or the provisions of section 56 of the Contract Act, assuming they applied, could not give such a discharge.
Where the Statute deals with rights arising out of a contract and interferes with the rights of one of the parties to it, it must affect those of the other parties to it as well.
Consequently, the impugned Act which takes over the rights of the employees in respect of wages due to them without compensation and is, therefore unconstitutional, as contravening article 19(1)(f) or Art 31(2) of the Constitution, would be unconstitutional as regards the appellant as well.
The purpose of a legislation relating to abandoned property must be, in the first instance, to safeguard the property in the interest of the true owner and thereafter, in absence of any claim, the taking over of it by the State.
The impugned Act which vests the property absolutely in the State without any regard for the claims of the true owner cannot be said to be a law relating to abandoned property.
I43 1124 Connecticut Mutul Life Insurance Company vs Moore, ; , Anderson National Bank vs Luckett, ; and Standard oil Company vs New Jersey, ; , referred to.
As regards the fines mentioned in section 3(2)(a) of the Act the appellant must be held to be a bare trustee under section 8 of the Wages Act having no beneficial interest in fund created by that Act, and, consequently, sections 3(I) and 3(2)(a) of the Act cannot contravene article 31(2) Or article 19(1)(f) of the Constitution.
Nor could it be said that the Act by extending the circle of beneficiaries had encroached on the rights of the employees of the appellant.
These sections must, therefore, be held to be constitutionally valid.
|
Summarize this legal judgement text concisely | Appeal No. 203 of 1956.
Appeal by special leave from the orders dated January 25, 1955, of the Madras High Court in C.M.P. No. 9335 of 1954 and section R. No. 55247 of 1953.
K. section Krishnaswamy Iyengar, R. Ganapathy Iyer and G. Gopalakrishnan, for the appellant.
C. K. Daphtary, Solicitor General of India and M. section K. Sastri, for the respondent.
Venkatakrishnan and T. M. Sen, for the intervener.
November 28.
The following Judgment of the Court was delivered by GAJENDRAGADKAR J.
This is a plaintiff 's appeal by special leave against the order passed by a Division Bench of the Madras High Court on January 25, 1955, 1023 calling upon him to pay court fees on the valuation of Rs. 15,00,000 both on his plaint and on his memorandum of appeal and it raises some interesting questions of law under the provisions of the Court Fees Act (which will be described hereafter as the Act).
The appellant bad filed Civil Suit No. 311 of 1951 on the Original Side of the Madras High Court.
In this suit be had claimed partition of the joint family, properties and an account in respect of the joint family assets managed by the respondent.
The appellant is the son of Subbiah Chettiar.
His case was that Subbiah had been adopted by Lakshmi Achi in 1922.
Lakshmi Achi was the widow of the undivided paternal uncle of the respondent.
As a result of his adoption Subbiah became a coparcener in his adoptive family and, as Subbiah 's son, the appellant claimed to have a share in the joint family properties and in the assets of the joint family and that was the basis on which a claim for partition and accounts was made by the appellant in his suit.
In the plaint it had been alleged that Subbiah had filed a suit for partition of his share and had obtained a decree in the trial court.
The respondent had taken an appeal against the said decree in the High Court.
Pending the appeal the dispute was settled amicably between the parties and in consideration of payment of a specified sum and delivery of possession of certain sites Subbiah agreed to release all his claims and those of his son, the present appellant, in respect of the properties then in suit.
According to the appellant, this compromise transaction did not bind the appellant and so he claimed to recover his share ignoring the said transaction between his father and the respondent.
The plaint filed by the appellant valued the claim for accounts at Rs. 1,000 under section 7(iv)(f) of the Act and a court fee of Rs. 112 7 0 was paid on the said amount on an ad valorem basis.
In regard to the relief for partition the fixed court fee of Rs. 100 was paid by the appellant under article 17 B (Madras) of Schedule II of the Act.
For the purposes of jurisdiction, however, the appel lant gave Rs. 15,00,000 as the value of his share.
130 1024 It appears that the Registry, on examining the plaint, was inclined to take the view that the plaint should have borne court fee under section 7(v) in respect of the claim for partition.
Since the appellant did not accept this view the matter was referred to the Master of the Court who was the taxing officer under the Madras High Court Fees Rules, 1933.
The Master felt that the issue raised by the Registry was of some importance and so, in his turn, he referred the dispute to the Judge sitting on the Original Side under section 5 of the Act.
This reference was decided by the Chamber Judge Krishnaswamy Naidu J. on October 18, 1951.
The learned judge held that the appellant was not bound to set aside the prior compromise decree between his father and the respondent and that the plaint was governed by article 17 B of Schedule 11.
Accordingly the court fee paid by the appellant in respect of his claim for partition was held to be in order.
In due course the respondent was served and he filed a written statement raising several contentions against the appellant 's claim for partition and accounts.
One of the points raised by the respondent was that the compromise and the release deed executed by the appellant 's father and the decree that was subsequently passed between the parties were fair and bona fide transactions and, since they amounted to a settlement of the disputed claim by the appellant 's father, the plaintiff was bound by them.
Ramaswamy Gounder J. who heard the suit tried the respondent 's contention about the binding character of the compromise decree as a preliminary issue.
The learned judge held that there was a fair and bona fide settlement of the dispute by the appellant 's father acting as the manager of his branch and so the appellant was bound by the compromise decree.
In the result, the appellant 's suit was dismissed on September 22, 1953.
Against this decree the appellant presented his memorandum of appeal on December 1, 1953.
This memorandum bore the same court fees as the plaint.
On examining the memorandum of appeal the Registry again raised the question about the sufficiency of 1025 fees paid by the appellant.
The Registry took the view that the appellant should have paid court fees under section 7(v) of the Act in respect of his claim for partition as the appellant 's claim in substance was a claim for recovery of possession based on title within the meaning of section 7(v).
The matter was then referred to the Master; but, in his turn, the Master again made a reference to the Taxation Judge under section 12(2) of the Act.
Thereupon the learned Chief Justice constituted a Bench of two judges to deal with this reference.
The learned judges who heard the reference did not think it necessary to consider whether section 12 of the Act was applicable to the present appeal.
They dealt with the reference as made under section 5 of the Act.
The appellant urged before the Division Bench that the order passed by Krishnaswami Naidu J. was final since it was an order passed under section 5 of the Act.
The learned judges did not accept this contention.
They held that the record did not show that Krishnaswamy Naidu J. had been nominated by the Chief Justice to.
hear the reference under section 5 either by a general or a special order and so no finality could be claimed for the said order under section 5 of the Act.
On the merits the learned judges agreed with the view taken by Krishnaswamy Naidu J., and held that section 7(v) of the Act was not applicable to the appellant 's claim for partition.
According to the learned judges, neither was article 17 B of Schedule II applicable.
They held that the provisions of section 7(iv)(b) of the Act applied.
That is why the appellant was directed to mention his value for the relief of partition under the said section.
It may be mentioned at this stage that this order became necessary because in the plaint the plaintiff had not specifically mentioned the value for the relief of partition claimed by him.
He had merely stated that for the relief of partition claimed by him he was paying a court fee of Rs. 100 in accordance with Schedule II, article 17 B. All that he had done in the plaint was to value his total claim for jurisdiction at Rs. 15,00,000.
In compliance with this order the appellant valued 1026 his relief to enforce his right to share in the joint family properties in suit at Rs. 50,000, paid the deficit court fee Rs. 1,662 7 0 and re presented his memorandum of appeal in court on May 7, 1954.
That, however, was not the end of the present dispute in respect of court fees.
The Registry raised another objection this time.
According to the Registry, since the appellant had valued his relief in the suit for purposes of jurisdiction at Rs. 15,00,000, it was not open to him to value his relief on the memorandum of appeal under section 7(iv)(b) without an amendment of the valuation made in the plaint.
Since the appellant did not accept this view of the Registry, the matter was again placed before the court for orders.
The appellant then offered to file an application for formal amendment of his plaint by substituting Rs. 50,000, in place of Rs. 15,00,000, for the jurisdictional value of his relief Accordingly the appellant made an application on October 18,1954.
This application was opposed both by the respondent and the Assistant Government Pleader on behalf of the State.
The learned judges who heard this application took the view that if the appellant had given the value in the first instance for purposes of jurisdiction he was precluded from giving a different value at a later stage.
Accordingly it was held that Rs. 15,00,000, which had been mentioned in the plaint as the value of the appellant 's claim for jurisdictional purposes should be treated as the value given by the appellant also for the purposes of court fees under section 7(iv)(b) of the Act.
The result was that the application made by the appellant for a formal amendment of the valuation made in the plaint was rejected.
The learned judges also purported to exercise their jurisdiction under section 12(2) of the Act and directed that the appellant should pay deficit court fees on the basis of Rs. 15,00,000 not only on his memorandum of appeal but also on his plaint.
It is this order which has given rise to the present appeal.
The first point which Shri Krishnaswamy Ayyangar has raised before us on behalf of the appellant is that the order passed by the learned Chamber Judge on 1027 October 18, 1951, is final under section 5 of the Act.
By this order the learned Chamber Judge had held that the plaint filed in the present suit did not attract the provisions of section 7(v) of the Act and that the proper court fee to be paid was determined by article 17 B of Schedule II of the Act.
Since the appellant had paid the fixed court fee of Rs. 100, under this latter provision, no objection could be taken on the ground that sufficient court fee had not been paid.
If this order bad really been passed under section 5 of the Act it would undoubtedly be final.
Section 5 of the Act provides for procedure in case of difference as to necessity of court fee.
In cases where a difference arises between an officer whose duty it is to see that any fee is paid under Chapter III and a suitor as to the necessity of paying the fee or the amount thereof, it has to be referred to the taxing officer whose decision thereon shall be final.
This section further provides that if the taxing officer, to whom such difference is referred by the office, is of opinion that the point raised is one of general importance, he can refer the said point to the final decision of the Chief Justice of the High Court or such judge of the High Court as the Chief Justice shall appoint either generally or specially in this behalf; and it is clear that if the Chief Justice or any other judge appointed in that behalf by the Chief Justice decides the matter in question, his decision shall be final.
Unfortunately, however, in the present.
case it has been found by the Division Bench that dealt with this matter subsequently that a search of the record did not show any general or special order which would have justified the exercise of jurisdiction under section 5 by Krishnaswamy Naidu J.
No doubt Shri Krishnaswamy Ayyangar stated before us that the practice in the Madras High Court always was to refer disputes as to proper court fees arising between suitors on the Original Side and the Registry to the Chamber Judge and it was always assumed, says Shri Ayyangar, that the Chamber Judge on the Original Side was appointed generally to deal with such disputes.
It is difficult for us to make any such assumption in dealing with the present suit.
Unless we are satisfied 1028 from the record that Krishnaswamy Naidu J., bad, at the material time, been appointed either generally or specially to act under section 5, it would be difficult to accede to the argument that the order passed by him in the present proceedings is final.
It is frankly conceded that the record does not show any general or special order as contemplated by section 5.
That is why we must hold that the learned judges of the Division Bench were right in refusing to attach finality to the order passed by Krishnaswamy Naidu J.
It is then urged by Shri Krishnaswamy Ayyangar that the learned judges were in error in purporting to exercise their jurisdiction under section 12(2) of the Act when they directed the appellant to pay additional court fees on the plaint on the basis of the valuation of Rs. 15,00,000.
His contention is that section 12 does not apply to the appeals arising from judgments and decrees passed in suits on the Original Side of the Madras High Court.
It is perfectly true that the question about the levy of fees in High Courts on their Original Sides is governed by section 3 of the Act and, if the matter had to be decided solely by reference to the Act, it would not be possible to apply any of the provisions contained in Chapter III of the Act either to the suits filed on the Original Side of the Madras High Court or to the appeals arising from judgments and decrees in such suits.
But it is common ground that, on the plaints filed on the Original Side of the Madras High Court, court fees are leviable under the relevant provisions contained in Chapter III of the Act and the levy of these fees is authorised by O. 11, r.
I of the High Court Fees Rules, 1933.
It is, therefore, necessary to inquire what provisions of the Act have been extended to the suits filed on the Original Side.
The authority and jurisdiction of the Madras High Court in enacting r. I of O. 11 are not in dispute.
What is in dispute before us is the effect of the said rule.
The appellant 's case is that the said rule merely contemplates the levy of certain specified court fees as indicated in the provisions of the Act which are expressly made applicable to the Original Side.
No other provision of the Act, according to the appellant, 1029 can be said to have been extended and so the learned judges were in error in purporting to exercise their jurisdiction under section 12(2).
We are not satisfied that this argument is well founded.
Order II, r.
I reads thus: " O. II, r. 1 of Madras High Court Fees Rules, 1933: Order II.
The fees and commissions set out in Appendix II hereto shall be charged by the Registrar, Sheriff, The Reserve Bank of India and the Imperial Bank of India, as the case may be, upon the several documents, matters and transactions therein specified as chargeable.
The commission chargeable to Government shall be charged by the Reserve Bank of India and credited to Government.
*(To other documents including Memoranda of appeals the Registrar shall apply so far as may be the law for the time being in force relating to court fees, as regards the scale of such fees, the manner of levy of such fees, the refund of such fees and in every other respect, in the manner and to the extent that it is applicable to similar documents filed in original proceedings in a District Court and in appeals from decrees and orders of a District Court).
*Added by R. 0.
C. No. 2219 of 1949.
" It cannot be disputed that as a result of this rule, section 7(iv) (a), (b), (c), (d), (e) and (f) of the Act along with the proviso as well as article 17 B of Schedule II of the Act applied to suits filed on the Original Side of the High Court.
The latter portion of the order which has been added in 1949 obviously makes applicable to the suits and appeals on the Original Side of the High Court provisions of the Act as regards the scale of fees, the manner of their levy and the refund of fees.
It also makes the relevant provisions of the Act applicable in "every other respect".
The words "in every other respect" in the context clearly indicate that section 12 which confers upon the appellate court authority or jurisdiction to examine the question about the 1030 sufficiency or otherwise of the court fees paid not only on the memorandum of appellant but also on the plaint in the suit which comes before the court of appeal is obviously intended to apply.
It would indeed be illogical to apply the relevant provisions of the Act for the levy of court fees on plaints and memoranda of appeal and not to confer jurisdiction on the appropriate court to examine the sufficiency or otherwise of the court fees paid in that behalf.
The power to entertain claims for refund of court fees has been specifically mentioned.
A claim for refund can be validly made, for instance in a case where excess court fee has been paid.
That is why the provisions of sections 13, 14 and 15 had to be applied in terms.
If a litigant is entitled to make a claim for refund of court fees in cases governed by the relevant provisions of the Act, there appears to be no reason why it should not be open to the court to entertain the question about inadequate payment of court fees.
Logically, if excess court fees paid should and can be refunded in these proceedings, inadequate or insufficient court fees paid can and should be dealt with on that footing and orders passed to pay the deficit court fees in such cases.
It is matters of this kind that are clearly covered by the expression "in every other respect" to which we have just referred.
We, therefore, hold that the learned judges below were justified in assuming jurisdiction under sub sections
(1) and (2) of section 12.
Section 12 consists of two parts.
Sub section (1) provides that the question about the proper payment of court fees on the plaint or memorandum of appeal shall be decided by the court in which such plaint or memorandum of appeal is filed.
It also lays down that such decision is final between the parties to the suit.
Sub section (2) confers upon the court of appeal, reference, or revision, jurisdiction to deal with the question of adequacy of court fee paid on the plaint whenever the suit in which such plaint has been filed comes before it and if the court is satisfied that proper court fees have not been paid then it can pass an order requiring the party to pay so much additional fee as would have been payable if the question had been rightly decided 1031 in the first instance.
Since the decision of Krishnaswamy Naidu J. cannot attract the finality mentioned in, section 5 of the Act, it was open to the Division Bench to consider the correctness of the view taken by the learned Chamber Judge; and as they were satisfied that the plaint did not fall under article 17 B of Schedule II, they were entitled to pass appropriate orders under section 12(1) and (2).
The appellant, however, contends that the learned judges were in error in directing him to pay court fees on the basis of the value of Rs. 15,00,000 both on his plaint and on his memorandum of appeal because he argues that this decision is inconsistent with the earlier order that the proper court fees to be paid on the memorandum of appeal had to be determined under section 7(iv)(b) of the Act.
This order has been passed by the Division Bench under section 5 of the Act and it is final between the parties.
This order gives the appellant leave to value his claim for the relief of partition and be exercised his option by valuing it at Rs. 50,000.
The valuation thus made by the appellant in respect of the value of his relief of partition for the payment of court fees should and must be taken to be the valuation even for the purposes of jurisdiction and it is on this valuation alone that the appellant can be justly called upon to pay court fees both on the plaint and on the memorandum of appeal.
The learned judges were, therefore, in error in not allowing the appellant leave to make amendment in the plaint so as to bring the plaint in conformity with the provisions of section 7, sub section
(iv) of the Act.
That in brief is the appellant 's case.
On the other hand, on behalf of the IntervenerAdvocate General of Madras as well as on behalf of the respondent, it was sought to be urged before us that both the plaint and the memorandum of appeal ought to be valued for the purposes of payment of court fees under section 7(v) of the Act.
It is conceded that the question of court fees must be considered in the light of the allegations made in the plaint and its decision cannot be influenced either by the pleas in the 131 1032 written statement or by the final decision of the suit on the merits.
The argument, however, is that if all the material allegations contained in the plaint are fairly construed and taken as a whole it would appear that the plaintiff has been ousted from the enjoyment of the properties in suit and his claim for partition in substance is a claim for possession of . the suit properties and as such falls within the provisions of a. 7, sub section
(v) of the Act.
The question about proper court fees leviable on plaints in which Hindu plaintiffs make claims for partition under varying circumstances has given rise to several conflicting decisions in the High Courts of India.
We are, however, not called upon to consider the point as to whether section 7(v) would apply to the present suit or whether the present suit would fall under section 7(iv)(b).
In our opinion, the decision of the Division Bench of the Madras High Court that the memorandum of appeal should be taxed for the purposes of court fee under section 7(iv)(b) of the Act is final under the provisions of s.5 of the Act and it cannot be reopened at this stage.
It may be that when the Division Bench of the Madras High Court considered this matter under reference made by the Master under section 5, the respondent was not heard.
Normally the dispute between the litigant and the Registry in respect of court fees arises at the initial stage of the presentation of the plaint or the appeal and the defendant or the respondent is usually not interested in such a dispute unless the question of payment of court fees involves also the question of jurisdiction of the court either to try the suit or to entertain the appeal.
There is no doubt that the question about the adequacy of the court fees leviable on the appellant 's memorandum of appeal was properly referred by the Master to the learned Chief Justice of the Madras High Court and has been decided by the Division Bench of the said High Court in pursuance of the requisite order made by the Chief Justice in that behalf.
In such a case, the decision reached by the Division Bench must be held to be final under section 5 of the Act.
That is why we have not allowed the merits of this order to be questioned in the present 1033 appeal.
We must, therefore, deal with the appellant 's contention on the basis that the court fees on his memorandum of appeal must be levied under section 7(iv) (b) of the Act.
The question which still remains to be considered is whether the Division Bench was justified in directing the appellant to pay court fees both on the plaint and on the memorandum of appeal on the basis of the( valuation for Rs. 15,00,000.
In our opinion, the appellant is justified in contending that this order is erroneous in law.
Section 7, sub section
(iv)(b) deals with suits to enforce the right to share in any property on the ground that it is joint family property and the amount of fees payable on plaints in such suits is "according to the amount at which the relief sought is valued in the plaint or memorandum of appeal.
" Section 7 further provides that in all suits falling under section 7(iv) the plaintiff shall state the amount at which the value of the relief is sought.
If the scheme laid down for the computation of fees payable in suits covered by the several sub sections of section 7 is considered, it would be clear that, in respect of suits falling under sub section
(iv), a departure has been made and liberty has been given to the plaintiff to value his claim for the purposes of court fees.
The theoretical basis of this provision appears to be that in cases in which the plaintiff is given the option to value his claim, it is really difficult to value the claim with any precision or definiteness.
Take for instance the claim for partition where the plaintiff seeks to enforce his right to share in any property on the ground that it is joint family property.
The basis of the claim is that the property in respect of which a share is claimed is joint family property.
In other words, it is property in which the plaintiff has an undivided share.
What the plaintiff purports to do by making a claim for partition is to ask the court to give him certain specified properties separately and absolutely on his own account for his share in lieu of his undivided share in the whole property.
Now it would be clear that the conversion of the plaintiff 's alleged undivided share in the joint family property into his separate 1034 share cannot be easily valued in terms of rupees with any precision or definiteness.
That is why legislature has left it to the option of the plaintiff to value his claim for the payment of court fees.
It really means that in suits falling under section 7 (iv)(b) the amount stated by the plaintiff as the value of his claim for partition has ordinarily to be accepted by the court in computing the court fees payable in respect of the said relief.
In the circumstances of this case it is unnecessary to consider whether, under the provisions of this section, the plaintiff has been given an absolute right or option to place any valuation whatever on his relief.
What would be the value for the purpose of jurisdiction in such suits is another question which often arises for decision.
This question has to be decided by reading section 7 (iv) of the Act along with section 8 of the Suits Valuation Act.
This latter section provides that, where in any suits other than those referred to in Court Fees Act section 7, para. 5, 6 and 9 and para.
10 cl.
(d), court fees are payable ad valorem under the Act, the value determinable for the computation of court fees and the value for the purposes of jurisdiction shall be the same.
In other words, so far as suits falling under section 7, sub section
(iv) of the Act are concerned, section 8 of the Suits Valuation Act provides that the value as determinable for the computation of court fees and the value for the purposes of jurisdiction shall be the same.
There can be little doubt that the effect of the provisions of section 8 is to make the value for the purpose of jurisdiction dependent upon the value as determinable for computation of court fees and that is natural enough.
The computation of court fees in suits falling under section 7 (iv) of the Act depends upon the valuation that the plaintiff makes in respect of his claim.
Once the plaintiff exercises his option and values his claim for the purpose of court fees, that determines the value for jurisdiction.
The value for court fees and the value for jurisdiction must no doubt be the same in such cases; but it is the value for court fees stated by the plaintiff that is of primary importance.
It is from this value that the value for jurisdication must be determined.
The result is that it is the amount at 1035 which the plaintiff has valued the relief sought for the purposes of court fees that determines the value for jurisdiction in the suit and not vice versa.
Incidentally we may point out that according to the appellant it was really not necessary in the present case to mention Rs. 15,00,000 as the valuation for the purposes of jurisdiction since on plaints filed on the Original Side of the Madras High Court prior to 1953 there was no need to make any jurisdictional valuation.
The plaintiffs failure to state the amount at which he values the relief sought is often due to the fact that in suits for partition the plaintiff attempts to obtain the benefit of article 17 B of Schedule II in the matter of payment of court fees.
Where the plaintiff seeks to pay the fixed court fee as required by the said article, he and his advisers are apt to take the view that it is unnecessary to state the amount for which relief is sought to be claimed for the purposes of court fees and the valuation for jurisdiction purposes alone is, therefore, mentioned.
Often enough, it turns out that the plaint does not strictly attract the provisions of article 17 B of Schedule II and that the court fee has to be paid either under section 7(iv)(b) or under section 7(v) of the Act.
If the court comes to the conclusion that the case falls under section 7(iv)(b) or section 7(iv)(c) ordinarily liberty should be given to the plaintiff to amend his plaint and set out specifically the amount at which he seeks to value his claim for the payment of court fees.
It would not be reasonable or proper in such a case to hold the plaintiff bound by the valuation made by him for the purposes of jurisdiction and to infer that the said valuation should be also taken as the valuation for the payment of court fees.
In this connection we may point out that this is the view taken by the Full Bench decision of the Lahore High Court in Karam Ilahi vs Muhammad Bashir (1).
As we have already indicated section 8 of the Suits Valuation Act postulates that the plaintiff should first value his claim for the purpose of court fee and it provides for the determination of the value for jurisdiction on the basis of such claim.
In our opinion, therefore, the learned judges (1) A.I.R. (1949) Lah.
1036 of the Madras High Court were in error in holding that the valuation for jurisdiction showed in the plaint should be taken to be the valuation for the payment of court fees on the plaint as well as the memorandum of appeal.
In view of their prior decision that the present case fell under section 7(iv)(b), they should have allowed the appellant to amend his valuation for the payment of court fees not only on the memorandum of appeal but also on the plaint.
We must accordingly set aside the order under appeal and direct that the plaintiff should be allowed to state the amount of Rs. 50,000 at which he values the relief sought by him for the purpose of section 7(iv)(b) of the Act.
Shri Krishnaswamy Ayyangar has orally requested us to give him liberty to make the appropriate amendment in his plaint and we have granted his request.
In the result the appeal would be allowed and the appellant directed to pay additional court fees on his plaint on the basis of the valuation of Rs. 50,000 within two months from today.
Since the appellant has already paid adequate court fees on his memorandum of appeal, no further order need be passed in that behalf.
There will be no order as to costs.
Appeal allowed.
| The computation of Court fees in suits falling under section 7(IV) of the Court Fees Act depends upon the valuation which the plaintiff in his option puts on his claim and once he exercises his option and values his claim, such value must also be the value for purposes of jurisdiction under section 8 of the Suits Valuation Act.
The value for purposes of Court fee, therefore, determines the value for purposes of jurisdiction in such a suit and not vice versa.
1022 Where, therefore, the Court finds that the case falls under section 7(IV)(b) of the Court Fees Act, and the plaintiff has omitted to specifically value his claim, liberty should ordinarily be given to him to amend his plaint and set out the amount at which he wants to value his claim.
The value put for purposes of jurisdiction which cannot be binding for purposes of Court fee, and must be altered accordingly Karam Ilahi vs Muhammad Bashir, A.I.R. (1949) Lah.
116, referred to.
Consequently, in the present case where the Division Bench of the Madras High Court was of the opinion that section 7(IV)(b) of the Court Fees Act applied but nevertheless held that the valuation given in the plaint for purposes of jurisdiction should be taken to be the valuation for purposes of court fee and directed the appellant to pay court fees both on the plaint and the memorandum of appeal on that basis, its order was set aside and the appellant allowed to pay court fees on the amount at which he valued his relief.
Held further, that 0. 11, r. 1 of the High Court Fees Rules, 1933, framed by the Madras High Court clearly indicates, that section 12 of the Court Fees Act applies to the Original Side of the Madras High Court and it was, therefore, open to the Division Bench in a reference to assume jurisdiction and pass appropriate orders thereunder.
In the absence of any evidence on the record to show that he had either generally or specially been empowered by the Chief justice in this behalf, the Chamber judge sitting on the Original Side of the Madras High Court has no jurisdiction under section 5 Of the Court Fees Act to pass a final order thereunder.
|
Summarize this legal judgement text concisely | Appeal No. 96 of 1957.
Appeal by special leave from the judgment and order dated December 17, 1956, of the Punjab High Court (Circuit Bench) at Delhi in Civil Misc.
No. 896 D of 1956, arising out of the judgment and order dated November 1, 1956, of the Court of Commercial Subordinate Judge, Delhi in Suit No. 264 of 1956 under Order XXXVII, C.P.C. ]A. V. Vishwanatha Sastri 'and Naunit Lal, for the appellant.
Bakhshi Gurcharan Singh and Sardar Singh, for the respondent.
February 5.
The following Judgment of the Court was delivered by BOSE J. The defendants, Santosh Kumar and the Northern General Agencies, were granted special leave to appeal.
The plaintiff filed the suit out of which the 1213 appeal arises on the basis of a cheque for Rs. 60,000 drawn by the defendants in favour of the plaintiff and which, on presentation to the Bank, was dishonoured.
The suit was filed in the Court of the Commercial Subordinate Judge, Delhi, under 0.
XXXVII of the Code of Civil Procedure.
The defendants applied for leave to defend the suit under r. 3 of that Order.
The learned trial Judge held that " the defence raised by the defendants raises a triable issue," but he went on to hold that the defendants " have not placed anything on the file to show that the defence was a bona fide one." Accordingly, he permitted the defendants to appear and defend the suit on the condition of their giving security to the extent of the suit amount and the costs of the suit.
" The defendants applied for a review but failed.
They then applied under article 227 of the Constitution to the Delhi Circuit Bench of the Punjab High Court and failed again.
As a result, they applied here under article 136 and were granted special leave.
At first blush, 0.
XXXVII, r. 2(2), appears drastically to curtail a litigant 's normal rights in a Court of justice, namely to appear and defend himself as of right, if and when sued, because it says that when a suit is instituted on a bill of exchange, hundi or a promissory note under the provisions of sub rule (1) ". . the defendant shall not appear or defend the suit unless he obtains leave from a judge as hereinafter provided so to appear and defend." But the rigour of that is softened by r. 3(1) which makes it obligatory on the Court to grant leave when the conditions set out there are fulfilled.
Clause (1) runs " The Court shall, upon application by the defendant, give leave to appear and to defend the suit, upon affidavits which disclose such facts as would make it incumbent on the holder to prove consideration, or such other facts as the Court may deem sufficient to support the application.
" 1214 But no sooner is the wide discretion given to the Court in r. 2(2) narrowed down by r. 3(1) than it is again enlarged in another direction by r. 3(2) which says that " Leave to defend may be given unconditionally or subject to such terms as to payment into Court, giving security, framing and recording issues or otherwise as the Court thinks fit.
" The learned counsel for the plaintiff argues that the discretion so conferred by r. 3(2) is unfettered and that as the discretion has been exercised by the learned trial Judge, no appeal can lie against it unless there is a " grave miscarriage of justice or flagrant violation of law" and he quotes D. N. Banerji vs P.R. Mukherjee (1) and Waryam Singh vs Amarnath (2).
Now what we are examining here are laws of procedure.
The spirit in which questions about procedure are to be approached and the manner in which rules relating to them are to be interpreted are laid down in Sangrayn Singh vs Election Tribunal, Kotah, Bhurey Lal Baya (1).
" 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 interpretation 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 (1) ; , 305.
(2) ; (3)[1955] 2 S.C.R. 1, 8 9. 1215 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.
" Applied to the present case, these observations mean that though the Court is given a discretion it must be exercised along judicial lines, and that in turn means, in consonance with the principles of natural justice that form the foundations of our laws.
Those principles, so far as they touch the present matter, are well known and have been laid down and followed in numerous cases.
The decision most frequently referred to is a decision of the House of Lords in England where a similar rule prevails.
It is Jacobs vs Booth 's Distillery Company (1).
Judgment was delivered in 1901.
Their Lordships said that whenever the deferce raises a " triable issue", leave must be given, and later cases say that when that is the case it must be given unconditionally, otherwise the leave may be illusory.
See, for example, Powszechny Bank Zwiazkowy W. Polsce vs Paros (2), in England and Sundaram Chettiar vs Valli Ammal (3) in India.
Among other cases that adopt the " triable issue " test are Kiranmoyee Dassi vs J. Chatterjee and Gopala Rao vs Subba Rao (5).
The learned counsel for the plaintiff respondent relied on Gopala Rao vs Subba Rao (5), Manohar Lal vs Nanhe Mal (6), and Shib Karan Das vs Mohammed Sadiq (7).
All that we need say about them is that if the Court is of opinion that the defence is not bona fide, then it can impose conditions and is not tied down to refusing leave to defend.
We agree with Varadachariar J. in the Madras case that the Court has this third course open to it in a suitable case.
But it cannot reach the conclusion that the defence is not bona fide arbitrarily.
It is as much bound by judicial rules and judicial procedure in reaching a conclusion of this kind as in any other matter.
It is unnecessary (1) (2) (3) (1935) 1 (4) (5) A.I.R. (1936) Mad.246.
(6) A.I.R. 1938 Lah.
(7) A.I.R. 1936 Lah.
12l6 no examine the facts of those cases because they are not in appeal before us.
We are only concerned with the principle.
It is always undesirable, and indeed impossible, to lay down hard and fast rules in matters that affect discretion.
But it is necessary to understand the reason for a special procedure of this kind in order that the discretion may be properly exercised.
The object is explained in Kesavan vs South Indian Bank Ltd. (1), and is examined in greater detail in Sundaram Chettiar vs Valli Ammal (supra), to which we have just referred.
Taken by and large, the object is to see that the defendant does not unnecessarily prolong the litigation and prevent the plaintiff from obtaining an early decree by raising untenable and frivolous defences in a class of cases where speedy decisions are desirable in the interests of trade and commerce.
In general, therefore, the test is to see whether the defence raises a real issue and not a sham one, in the sense that, if the facts alleged by the defendant are established, there would be a good, or even a plausible, defence on those facts.
Now, what is the position here? The defendants admitted execution of the cheque but pleaded that it was only given as collateral security for the price of goods which the plaintiff supplied to the defendants.
They said that those goods were paid for by cash payments made from time to time and by other cheques and that therefore the cheque in suit had served its end and should now be returned.
They set out the exact dates on which, according to them, the payments had been made and gave the numbers of the cheques.
This at once raised an issue of fact, the truth and good faith of which could only be tested by going into the evidence and, as we have pointed out, the learned trial Judge held that this defence did raise a triable issue.
But he held that it was not enough for the defendants to back up their assertions with an affidavit; they should also have produced writings and documents which they said were in their possession (1) I.L.R. 1217 and which they asserted would prove that the cheques and payments referred to in their defence were given in payment of the cheque in suit; and he said " In the absence of those documents, the defence of the defendants seems to be vague consisting of indefinite assertions. . . .
This is a surprising conclusion.
The facts given in the affidavit are clear and precise, the defence could hardly have been clearer.
We find it difficult to see how a defence that, on the face of it, is clear becomes vague simply because the evidence by which it is to be proved is not brought on file at the time the defence is put in.
The learned Judge has failed to see that the stage of proof can only come after the defendant has been allowed to enter an appearance and defend the suit, and that the nature of the defence has to be determined at the time when the affidavit is put in.
At that stage all that the Court has to determine is whether " if the facts alleged by the defendant are duly proved " they will afford a good, or even a plausible, answer to the plaintiff 's claim.
Once the Court is satisfied about that, leave cannot be withheld and no question about imposing conditions can arise; and once leave is granted, the normal procedure of a suit, so far as evidence and proof go, obtains.
The learned High Court Judge is also in error in thinking that even when the defence is a good and valid one, conditions can be imposed.
As we have explained, the power to impose conditions is only there to ensure that there will be a speedy trial.
If there is reason to believe that the defendant is trying to prolong the litigation and evade a speedy trial, then conditions can be imposed.
But that conclusion cannot be reached simply because the defendant does not adduce his evidence even before he is told that he may defend the action.
We do not wish to throw doubt on those decisions which decide that ordinarily an appeal will not be entertained against an exercise of discretion that has been exercised along sound judicial lines.
But if the 1218 discretion is exercised arbitrarily, or is based on a mis understanding of the principles that govern its exercise, then interference is called for if there has been a resultant failure of justice.
As we have said, the only ground given for concluding that the defence is not bona flde is that the defendant did not prove his assertions before he was allowed to put in his defence ; and there is an obvious failure of justice if judgment is entered against a man who, if he is allowed to prove his case, cannot but succeed.
Accordingly, interference is called for here.
The appeal is allowed.
We set aside the orders of the High Court and the learned trial Judge and remand the case to the first Court for trial of the issues raised by the defendants.
The costs of the appellants in this Court will be paid by the respondent who has failed here.
Appeal allowed.
| The respondent filed a suit against the appellant under 0.
xxxvII of the Code of Civil Procedure on the basis of a cheque for Rs. 60,000 drawn by the appellant in favour of the respondent which, on presentation to the Bank, had been dishonoured.
The appellant applied under r. 3 Of 0.
XXXVII for leave to appear and defend the suit on the ground that the cheque had been given only as a collateral security for the price of goods supplied, that the goods had been paid for by cash payments and by other cheques and that therefore the cheque in question had served its I54 1212 end and was without consideration.
The Court held that the defence raised a triable issue but that the defence was vague and was not bona fide as the appellant had produced no evidence to prove his assertions and consequently granted leave to defend the suit on the condition of the appellant giving security for the suit amount and the costs of the suit : Held, that the imposition of the condition was illegal and the appellant was entitled to defend the suit without giving the security.
The object of the special procedure under 0.
XXXVII of the Code is to see that a defendant does not unnecessarily prolong the litigation by raising untenable and frivolous defences.
The test is to see whether the defence raises a real issue and not a sham one, in the sense that, if the facts alleged by the defendant are established, there would be a good, or even a plausible, defence on those facts.
If the Court is satisfied about that, leave must be given and given unconditionally.
Held, further, that the Court was wrong in imposing the condition about giving security on the ground that for want of production of documentary evidence the defence was vague and not bona fide as the stage of proof can only arise after leave to appeal and defend has been granted.
Though the Court is given a discretion about imposing conditions it must be exercised judicially and in consonance with principles of natural justice.
If the discretion is exercised arbitrarily, or is based on a misunderstanding of the principles that govern 'its exercise, then interference is called for if there has been a resultant failure of justice.
|
Summarize this legal judgement text concisely | ivil Appeal No. 119 of 1953.
Appeal by special leave from the order dated September 11, 1950, of the Nagpur High Court in Miscellaneous Civil Case No. 77 of 1946.
C.K. Daphtary, Solicitor General of India and M.S. K. Sastri, for the appellants.
A.V. Vishwanatha Sastri, G. J. Ghate and Naunit Lal, for the respondent.
December 18.
The following Judgment of the Court was delivered by KAPUR J. This is an appeal by Special Leave against a Judgment and order of the High Court of Judicature at Nagpur dated February 14, 1950 and the question for decision turns upon the construction of section 66(1)(0) of the C. P. & Berar Municipalities Act (Act II of 1922) which in this judgment will be termed the Act.
A short recital of the facts of the case will suffice for its decision.
The appellant is a company which has its spinning and weaving mills at Yeotmal.
The appellant 's bales of cotton are transported from Yeotmal to Nagpur by road and vehicles carrying them pass through the limits of Wardha Municipality.
The goods being in transit, the vehicles carrying them do no more than use the road which traverses the municipal limits of Wardha and is a P.W.D. road.
The goods are neither unloaded nor reloaded at 1104 Wardha but are merely carried across through the municipal area.
The Municipal Committee purporting to act under section 66(1)(0) of the Act and r. I of the rules made thereunder collected Rs. 240 as terminal tax on these goods on the ground that they were ex ported by the appellant from the limits of the Municipality of Wardha.
The appellant thereupon claimed a refund of this sum.
On refusal by the Municipality the appellant took an appeal to the Deputy Commissioner, Wardha which was sent for disposal to the Sub Divisional Officer, who, on March 11, 1946, referred the following two questions under section 83(2) of the Act to the High Court for its opinion: (1)Whether goods passing through the limits of Wardha Municipality by road despatched from Yeotmal to their destination at Nagpur without being unloaded or reloaded at Wardha are liable for an export terminal tax ? (2)Whether the respondent Municipal Committee is not liable to refund the export terminal tax collect ed on such goods ? The reference in the first instance came up for hearing before Sheode, J., who referred the matter to a Division Bench and the Division Bench in turn referred it to a Full Bench.
The High Court after referring to a number of decided cases was of the opinion that the tax had been validly imposed and the appellant was therefore not entitled to a refund.
The powers of the Municipality to impose, assess and collect taxes are set out in chapter 9 of the Act and section 66(1) enumerates the taxes which may be imposed.
Clause (d) of sub section (1) deals, with tolls; cl.
(e) with octroi and cl.
(o) with terminal tax.
The sub section provides: " 66(1) A committee may, from time to time, and subject to the provisions of this Chapter, impose in the whole or in any part of the municipality any of the following taxes for the purposes of this Act, namely: (a) a tax payable by the owners of buildings or lands situate within the limits of the municipality, 1105 with reference to the gross annual letting value of the buildings or lands; (b) a tax on persons exercising any profession or art, or carrying on any trade or calling, within the limits of the municipality; (c) a tax, payable by the owner, on all or any( vehicles or animals used for riding, driving, draught or burden, or on dogs, where such vehicles, animals or dogs are kept within the limits of the municipality ; (d) a toll on vehicles and animals used as aforesaid entering the limits of the municipality, and on boats moored within those limits: Provided that a toll under this clause shall not be payable on any vehicle or animal on which a tax under clause (c) has been imposed.
(e) an octroi on animals or goods brought within the limits of the municipality for sale, consumption or use within those limits; (f)market dues on persons exposing goods for sale in market or in any place belonging to or under the control of the Government or of the committee ; (g) fees on the registration of cattle sold within the limits of the municipality; (h) a latrine or conservancy tax payable by the occupier (or owner) upon private latrines, privies or cesspools, or upon premises or compounds cleansed by municipal agency; (j) a tax for the construction and maintenance of public latrines; (k) a water rate, where water is supplied by the committee ; (l) a lighting rate where the lighting of public streets,places and buildings is undertaken by the committee ; (m) a drainage tax, where a system of drainage has been introduced; (n) a tax payable by the occupiers of buildings or lands within the limits of the municipality, according to their circumstances and property within those imits; 1106 (o) a terminal tax on goods or animals imported into or exported from the limits of a municipality : Provided that a terminal tax under this clause and an octroi under clause (e) shall not be in force in any municipality at the same time; and (p) a tax on (i) persons travelling by railway to or from a municipality to which pilgrims resort, or (ii) pilgrims visiting a shrine within the limits 'of a municipality Rule I of the Terminal Tax Rules made under the Act relates to exports and r. 2 to imports.
They provide: (1) On the following goods exported by rail or road a terminal tax shall be levied at the rate noted against each ; at 2 as.
per maund of 40 seers; Cotton. . . (2) On the following goods imported by rail or road a terminal tax shall be levied at the rate noted against each.
Then follows the schedule.
The High Court was of the opinion that "The words ' export ' and I import ' have no special meaning.
They bear the ordinary dictionary meaning, which has been the foundation for the decisions to which I have referred in the opening portion of my opinion.
These words mean only 'taking out of and bringing into '.
" The appellant 's contention is that the words 'imported into or exported from ' do not merely mean 'to bring into ' or to carry out of or away from but also have reference to and imply the termination or the commencement of the journey of the goods sought to be taxed and therefore goods in transit which are transported across the limits of a Municipal Committee are neither imported into the municipal limits nor exported therefrom.
It is also contended that even if the words ,imported into or exported from ' are used merely to mean "to bring into" or "to carry out of or away from" the qualifying of the tax by the adjective "terminal" 1107 is indicative of the terminus ad quem or terminus a quo of the journey of the goods and excludes the goods in transit.
The respondent on the other hand submits that the tax is leviable merely on the entry of the goods into the municipal limits or on their exit there.
from and the word "terminal" has reference to the termini of the jurisdictional limits of the municipality and not to the journey of the goods.
The efficacy of the relative contentions of the parties therefore requires the determination of the construction to be placed on the really important words of which are "terminal tax", "imported into or exported from" and " the limits of the Municipality".
In construing these words of the statute if there are two possible interpretations then effect is to be given to the one that favours the citizen and not the one that imposes a burden on him. 'Import ' is derived from the Latin word importare which means 'to bring in ' and 'export ' from the Latin word exportare which means to carry out but these words are not to be interpreted only according to their literal derivations.
Lexico logically they do not have any reference to goods in 'transit 'a word derived from transire bearing a meaning similar to transport, i.e., to go across.
The dictionary meaning of the words 'import ' and 'export ' is not restricted to their derivative meaning but bear other connotations also.
According to Webster 's International Dictionary the word "import" means to bring in from a foreign or external source; to introduce from without; especially to bring (wares or merchandise) into a place or country from a foreign country in the transactions of commerce; opposed to export.
Similarly "export" according to Webster 's International Dictionary means "to carry away; to remove; to carry or send abroad especially to foreign countries as merchandise or commodities in the way of commerce; the opposite of import ".
The Oxford Dictionary gives a similar meaning to both these words.
The word "transit" in the Oxford Dictionary means the action or fact of passing across or through; passage 141 1108 or journey from one place or point to another; the passage or carriage of persons or goods from one place to another ; it also means to pass across or through (something) to traverse, to cross.
Even according to the ordinary meaning of the words which is relied upon by the respondent, goods which are in transit or are being transported can hardly be called goods 'imported into or exported from ' because they are neither being exported nor imported but are merely goods carried across a particular stretch of territory or across a particular area with the object of being transported to their ultimate destination which in the instant case was Nagpur.
The respondent 's counsel sought to support his argument by referring to the following cases decided by various Indian High Courts where the words ,import ' and 'export ' were construed as meaning 'bring in ' or 'take out of or away from ' and it was also held that goods in transit are also covered by the words 'imported into 'or 'exported from '.
In Re Rahimu Bhanji (1) which was a case of a criminal prosecution for refusal to pay octroi on the ground that octroi was not due on goods in transit, the court gave a literal meaning to the word "import" and held that as the goods had been brought within the limits of the Municipality they were liable to octroi under the Rules which provided for a refund, which could be applied for.
The definition of octroi seems to have been ignored in that case.
In Narottamdas Harjivandas & Co. vs Bulsar Town Municipality (2) the tax was imposed on goods in transit and the argument raised was that the municipality had no power to impose a terminal tax upon such goods as were not meant for consumption within the limits of the Municipality.
The court held: "In our opinion there is no force in this contention.
The Municipal Rules and Bye laws dealing with the terminal tax define it as 'an octroi levied on the import into the said Municipality of goods specified in the Terminal Tax Schedule, such octroi not (I) Bom.
(2) I.L.R. , 103.
1109 being liable to be refunded. ' 'Import ' is defined in the Rules as meaning 'conveying goods by Railway or by Ship or otherwise into Municipal limits '.
It is clear therefore that the tax is leviable on all goods entering Municipal limits whether they are intended for consumption within the city or whether they are ', merely in transit through the city to some other place ".
This decision rested on the definition of the words " import " and " terminal tax " without taking into consideration the meaning of 'octroi ' which implies consumption, use or sale.
Besides these observations were really obiter because the court held that the goods never entered the limits of the Municipality and consequently no tax was chargeable.
Dalvadi Maganlal Bhagwandas vs Ahmedabad Municipality (1) was a case in which bricks manufactured within the limits of the Ahmedabad Municipality had in order to be carried to the place of business of the manufacturer, which was in another part of the town, to be temporarily taken out of the limits of the Municipality and re entered at another point.
The re entry was held to be " import " on the basis of the dictionary meaning of the word and because " import" had no reference to and was not qualified by any consideration of the place of manufacture or place of consumption.
Rajadhyaksha J., said at p. 137: " There is no such limitation on the meaning of the word import " which must be given its ordinary meaning and at p. 140 the learned Judge observed: " We are of the opinion that the word " import in r. 380, Ahmedabad Municipal Code must be given its ordinary meaning, and that is " to bring something within the Municipal limits from a place without its boundaries ", irrespective of the consideration as to whether the goods were manufactured within the Municipal limits, how long they were outside those limits and for what purpose".
(1) I.L.R. 1110 The two Nagpur cases relied upon were Bhagwandas Harikishandas vs Municipal Committee, Yeotmal (1) and Kashiram Jhabarmal Firm vs Municipal Committee, Nagpur (2).
In the former case the decision was again based solely on the literal dictionary meaning of the words " imported into or exported from ", and a further argument relying on the existence of the word " or " between "imported and exported " instead of "and. . as an argument against the ,imposition of the tax on goods in transit was also repelled.
In the latter case where the goods were brought into the municipal limits for being despatched by rail the court again relied on the " plain meaning of the words "imported into or exported from " and also on certain government instructions which were in favour of the imposition of tax on goods in transit.
There are also some unreported judgments of the Nagpur High Court taking a different view of the words" imported into or exported from" and those have been referred to in the judgment of Grille C. J. in Kashiram 's case (2) and in the referring order of Sheode J., in the present case.
Emperor vs Har Dutt (3) was a case of payment of toll tax in respect of a lorry brought within the limits of the Municipality through the toll barrier.
The word used in Rule I in that case was " bring " and it was held that bringing has no element of pause or repose.
This case is hardly relevant to the facts of the case now before us.
In an earlier case Nek Mohammad vs Emperor (4) to the words " bring " and " import " an element of pause and repose was attached, but this case was not approved of in Hardwarimal Harnath Das vs Municipal Board, Dehradun (5) which also was a case of goods in transit.
The word " import " was there given the meaning " carried into ".
But the decision was based on the definitions given in the Statutory Rules to the word " import " which was " bringing into the terminal tax limits from outside those limits ".
(1) A.I.R (1945) Nag.
(2) I.L.R. (1946) Nag.
(4) A. I. R. (1936) All.
(3)A.I.R. (1936) All. 743.
(5) I. L. R. (1940) All.
1111 In none of these cases was the argument as to the qualification stemming from the use of the words "terminal tax" considered nor was the signification of the word "terminal " as a prefix to the word tax discussed.
The respondent also relied on Muller vs Baldwin (1) where it was held that " coals exported from the Port" must be taken to have been used in its ordinary meaning of " carried out of the Port " and therefore included coals taken out of the port in a steamer as " bunker coals " that is, coals taken on board for the purpose of consumption on the voyage.
The argument that the term " exported " must receive a qualified interpretation and that it means taken for the.
purpose of trade only was rejected.
Lush J. said at p. 461 : " There is nothing in the language of the Act to shew that the word "exported " was used in any other than its ordinary sense. . .
Construing the words of the Act upon this principle, we feel bound to hold that coals carried away from the port, not on a temporary excursion, as in a tug or pleasure boat, which intends to return with more or less of the coals on board, and which may be regarded as always constructively within the port, but taken away for the purpose of being wholly consumed beyond the limits of the port, are coals " exported " within the meaning of the Act ".
Now three things clearly emerge from that (Muller 's) case; (1) that the word "export " was not applied to coals in transit because the coals were taken from the port and started journey from there and would be included in the phrase "taken out" of the port and (2) that temporary taking out was not " export " as was held in Maganlal Bhagwandas vs Ahmedabad Municipality (2); (3) that the test is the intention with which the goods were brought in or taken out.
It was urged that in accordance with the current authority of the different courts of India, a different interpretation should not be placed on the words of the section but this argument is of little avail in a case (1) (1874) 9 Q B 457.
(2) I.L.R. 1112 where the decision has not been acquiesced in for long or the authorities are not absolutely unanimous.
Moreover it is not a case of disturbing the course of construction which has continued unchallenged for such a length of time as to acquire the sanction of continued decisions over a very long period and there is therefore no principle which will preclude this court from correcting the error.
See William Hamilton and John Hamilton vs William Baker (1).
The Lancashire and Yorkshire Railway Company vs The Mayor, Alderman, and Burgesses of the Borough of Bury (2).
Pate vs Pate (3).
In another case Wilson vs Robertson (4) under the statute the duty was imposed on all goods "imported into or exported from Berwick harbour" which extended down the Tweed to the sea but no part of it extended above the bridge.
Goods were brought up the river in a sea going vessel which having first used rings and posts put up by the Harbour Commissioners in order to moor while lowering the masts, passed through Berwick Bridge, and unloaded her cargo about two hundred yards above the bridge and beyond the limits of the harbour.
It was held that goods were not " imported into " the harbour so as to make any dues payable in respect of them.
The argument raised there was that as there was no harbour down the Tweed except Berwick and though the goods were actually unloaded above the Berwick bridge and out of the limits of the harbour it was substantially imported into the harbour.
The vessel in that case was obliged to stop before passing the bridge and avail herself of the benefits of the machinery and works provided by the Commissioners and that was part of the means used towards the unloading of the vessel and it was argued that this would amount to import.
Lord Cambell C. J. said: " The argument on behalf of the plaintiff would be very pertinent if addressed to a Committee of the House of Commons in favour of making the harbour dues payable in such a case as the present.
We can, (1) , 220, 222.
(2) , 420.
(3) , 1108.
(4) (1855) 24 L. J. Q. B. 185.
1113 however, look only to what the legislature has enacted, in order to see whether this burthen is cast upon the defendants.
The dues are only to be paid upon goods imported into the harbour of Berwick, the limits of which are defined by the Act, and which does not extend above the bridge.
Now, has this iron been so imported ? It is admitted that, if it had been carried through the bridge to a port higher up the river, no dues would have been payable; and the plaintiff 's counsel by that admits himself out of court. . .
These observations support the submissions against the meaning of " export " or " import " being merely taking out of or bringing into.
Mersey Docks and Harbour Board vs Twigge (1) was a case of goods shipped from a foreign port under a through bill of lading to Liverpool, landed in London and sent from there to Liverpool in another ship and it was held that such goods were imported into Liverpool ports beyond the seas and not from London.
The transit began at Singapore and ended at Liverpool and was not broken by the transhipment in London.
By giving to the words " imported into or exported from " their derivative meaning without any reference to the ordinary connotation of these words as used in the commercial sense, the decided cases in India have ascribed too general a meaning to these words which it appears from the setting, context and history of the clause was not intended.
The effect of the construction of " import " or " export " in the manner insisted upon by the respondent would make railborne goods passing through a railway station within the limits of a Municipality liable to the imposition of the tax on their arrival at the railway station or departure therefrom or both which would not only lead to inconvenience but confusion, and would also result in inordinate delays and unbearable burden on trade both inter State and intra State.
It is hardly likely that that was the intention of the legislature.
Such an interpretation would lead to absurdity which has, according to the rules of interpretation, to be avoided.
(1) 1114 Chief Justice Marshall dealing with the word " im portation " said in Brown vs State of Maryland (1): The practice of most commercial nations conforms to this idea.
Duties, according to that practice, are charged on those articles only which are intended for sale or consumption in the country.
Thus seastores, goods imported and re exported in the same vessel, goods landed and carried over land for the purpose of being re exported from some other port, goods forced in by stress of weather, and landed, but not for sale are exempted from the payment of duties.
The whole course of legislation on the subject shows that in the opinion of the legislature the right to sell is connected with the payment of the duties ".
Continuing the learned Chief Justice at p. 447 observed: "Sale is the object of importation, and is an essential ingredient of that intercourse, of which importation constitutes a part.
It is as essential an ingredient, as indispensable to the existence of the entire thing, then, as importation itself. . . " This supports the contention raised that " import " is not merely the bringing into but comprises something more i.e. " incorporating and mixing up of the goods imported with the mass of the property " in the local area.
The concept of " import " as implying some.
thing brought for the purpose of sale or being kept is supported by the observations of Kelly C. B. in Harvey vs The, Mayor and Corporation of Lyme Regis (2).
There the claim for a toll was made under the Harbour Act and the words for construction were " goods landed or shipped within the same cobb or harbour Construing these words Kelly C. B. said: " The ordinary meaning and purport of the words is perfectly clear, namely, that tolls are to be paid on goods substantially imported; that is, in fact, carried into the port for the purpose of the town and neigh bourhood." Similarly the word " export " has reference to taking out of goods which had become part and parcel of the mass of the property of the local area and will not (1) ; , 442; ; , 686.
(2) ; , 262.
1115 apply to goods in transit i.e. brought into the area for the purpose of being transported out of it.
If the intention was to tax such goods then the word used should have been " re exported " which means to export (imported goods) again; Re exportation means the exportation of imported goods.
Even assuming that the words "imported into or " exported from " could be restricted only to their derivative meaning and thus construed to mean only "brought into or taken out or away from" this general meaning it was submitted by the appellant is qualified by the use of the prefix "terminal" used adjectively with the word " tax", which makes it necessary to determine the meaning of the term terminal tax ".
And the question then arises does it have reference to the jurisdictional limits of the Municipality or to the ultimate termination or the commencement of the journey of the goods as the case may be.
In dealing with this the High Court said: " It remains to consider what is signified by the word " terminal ".
It is obvious that it could refer either to the termini of the goods or the termini of the Municipality.
It is clear to me that the word " terminal " refers not to the destination or origin of the goods but to the termini of the Municipal limits.
Digby, J., pointed out that it refers to the traffic rather than the origin of the goods ".
According to the Oxford Dictionary " terminal means end, boundary ; situated at or forming the end or extremity of something; situated at the end of a line of railway; forming or belonging to, a railway terminus.
" Terminus " means the point to which motion or action tends, goal, end, finishing point; sometimes that from which it starts; starting point.
An end; extremity; the point at which something comes to an end.
In Corpus Juris Vol.
62 it is stated at p. 729 that terminal " in connection with transportation means inter alia " the fixed beginning or ending point of a given run 142 1116 if " terminal " besides the above meaning has an additional meaning also and that meaning signifies the termini or the jurisdictional limits of the municipal area even then the construction to be placed on the term should be the one that favours the tax payer, in accordance with the principle of construction of taxing statutes, which must be strictly construed and in case of doubt must be construed against the taxing authorities and doubt resolved in favour of the taxpayer.
In Crawford on Statutory Constructions in para.
257 at p. 504 the following passage pertaining to construction of taxing statutes taken from Bedford vs Johnson (1) is quoted: " Statutes levying taxes or duties upon citizens will not be extended by implication beyond the clear import of the language used, nor will their operation be enlarged so as to embrace matters not specifically pointed out, although standing upon a close analogy, and all questions of doubt will be resolved against the government and in favour of the citizen, and because burdens are not to be, imposed beyond what the statute expressly imparts".
In that case the court refused to regard automobile parking lots as falling within the scope of a statute which imposed a tax on general warehouse storage establishments.
On this principle the word " terminal " must in the context be construed as having reference to terminus and has to be read to connote the idea of the end of something connected with motion and not that of an intermediate stage of a journey.
It would be quite legitimate to examine the legislative history of these " terminal taxes " which would be a useful aid to construction of clause (o) of section 66(1).
In the last century a tax known as Octroi payable on the entry of goods in a local area for consumption, use or sale therein was introduced.
In 1920 an optional substitute called "terminal tax " came into existence by virtue of item 8 of Schedule 11 of the Scheduled Tax Rules framed under section 80 A (3)(a) of the Government (1) I02 COIO 203, 78 Pac (2) 373.
1117 of India Act, 1915 as amended in 1919.Item 8 was as follows: Item 8 "A terminal tax on goods imported into or exported from, a local area, save where such tax is first imposed in a local area in which a octroi was not levied on or before the 6th July, 1917.
" In the Government of India Act, 1935 this item was replaced by two items one dealing with " terminal tax " and the other with the right of a local area to impose tax on entry of goods into a local area.
The former was put in the Central List (List 1) and the latter in the Provincial List (List II).
(1) Item No. 58 in List I of Schedule 7 of the Constitution Act was: " Terminal taxes on goods or passengers carried by railway or air ; taxes on railway fares and freights" and (2) in the Provincial List another item was introduced item No. 49 which was as follows: " Cesses on the entry of goods into a local area for consumption, use or sale therein.
" The Constitution of India maintains this distinction in the Seventh Schedule and item No. 89 in List I corresponding to the above mentioned item No. 58 is "terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freights.
" In the State List the item No. 52 which is as follows : "Taxes on the entry of goods into a local area for consumption, use or sale therein and Item No. 56 is: " Taxes on goods and passengers carried by road or on inland waterways ".
The legislative history of this tax thus shows that octroi was leviable on the entry of goods in a local area when the goods were for consumption, use or sale therein.
The substituted tax was terminal tax on goods imported into or exported from a local area and by rules this tax in the case of Wardha Municipal Committee was imposed on certain class of goods imported and on others exported by railway or road.
In 1935 the terminal tax was made leviable on goods 1118 carried by railway or air but the tax on entry of goods was imposable on goods for consumption, use or sale in a local area.
Both these taxes have been continued by the Constitution.
If the pre 1920 octroi and the post 1935 cess or tax on entry of goods is payable on goods for consumption, use or sale, can it be said that the Constitution Act of 1915 as amended in 1919 or the Rules made thereunder intended to vary the nature of the tax by the introduction of item 8 in Sch.
II ,under the Scheduled Tax Rules i.e. the tax became leviable on entry of goods or on their being taken out without their acquiring the qualification of incorporation with the mass of property of the local area.
The presumption is against the imposition of new burdens.
In the absence of clear intention to the contrary the incidence of the tax leviable under item 8 of Sch.
II of the Schedule Tax Rules is incapable of having a different complexion from that which it had before 1920 or that which was clearly given after 1935.
It was said in U. section vs Fisher (1): "that it is in the last degree improbable that the legislature would overthrow fundamental principles, infringe rights, or depart from the general system of law., without expressing its intention with irrestible clearness. . . .
It is also a recognised principle of construction that general words and phrases however wide and comprehensive they may be in their literal sense must usually be construed as being limited to the actual objects of the Act.
There is no evidence that the actual object of the Act in the present case was to extend the powers of the Municipalities to imposing the tax on articles which were in the course of transit.
That by the substitution of terminal tax on goods imported into a local area the nature of the tax had not been altered from what it was when octroi was in force or when instead of " terminal tax " octroi (without refund, was substituted is clear from the decision of the Federal Court in Punjab Flour and General Mills ' case (2) which is discussed in a later part of (1) ; , 390; ; (2) 1119 this judgment.
Therefore terminal tax on goods imported or exported is similar in its incidence and is payable on goods on their journey ending within the municipal limits or commencing therefrom and not where the goods were merely in transit through the municipal limits and had their terminus elswhere.
The vires of the tax has not been assailed but the difference in the language of the two items in List I and II has been pressed before us for the purpose of showing that the word " terminal " implies the terminus of a journey and not the end of the jurisdictional limits of a Municipality.
Terminal in item No. 58 of List I of the 1935 Constitution Act has reference to the terminus of carriage of goods.
There is no reason to give to this word a different meaning in item No. 8 of Scheduled Tax Rules under the Government of India Act of 1915 or in clause (o) of section 66(1) of the Act.
The two sets of taxes in Lists I and 11 have different qualities.
The "terminal tax" under item No. 58 of List I arises at the end of journey by railway wherever the end may be in relation to particular goods ' and under item No. 49 of List 11 the tax or cess on entry of goods whatever the nomenclature is imposable when the goods enter a local area for consumption, use or sale therein.
The two sets of taxes are so distinct that they may be imposed simultaneously, one when they reach their destination at the end of a railway journey and the other when they enter the limits of a local area for the object above mentioned.
But in both cases the activity in regard to the motion of the goods ends, in the one case as the goods are carried no further by railway and in the other as their entry is for consumption, use or sale.
Keeping in view the terms and language and the legislative history of the section 66(1) we are unable to enlarge the terms of the section by mere construction so as to include within its operation goods which are in transit and are being transported across the jurisdictional limits of the Municipality.
The Federal Court in Punjab Flour and General Mills Co. Ltd. vs Chief Officer, Corporation of City of Lahore (1) considered the meaning of the word (1) 1120 " terminal" in a case which was brought from Lahore.
There the Municipality of Lahore imposed a terminal tax in 1926 calculated on the gross weight Of Consignments or per tail as the case might be, at the rates and on the articles specified in the schedule, imported into the Municipality by rail or by road.
By a notification of 1938 the Municipality in supersession of that tax imposed a new tax called "Octroi (without refund)" which was to be similarly calculated on the gross weightage of the consignments imported into the limits of the Municipality.
This in turn was replaced by the imposition of a new tax also called "Octroi (without refund)" on consignments imported into the limits of the Municipality.
The appellant 's contention in that case was that the tax imposed was a " terminal tax " on goods carried by railway and as such not imposable.
The Municipality argued on the other hand that it was a tax within the provisions of Entry No. 49 of List 11 and as such could be imposed with the previous sanction of the Provincial Government under section 61(2) of the Punjab Municipalities Act.
The following passage from the judgment of Spens C. J. shows the meaning to be attached to the word " terminal ": " There appears to us a definite distinction between the type of taxes referred to as terminal taxes in Entry No. 58 of List I of Sch. 7 and the type of taxes referred to as cesses on the entry of goods into a local area in Entry No. 49 of List II.
The former taxes must be (a) terminal (b) confined to goods and passengers carried by railway or air.
They must be chargeable at a rail or air terminus and be referrable to services (whether of carriage or otherwise) rendered or to be rendered by some rail or air transport Organisation.
The essential features of the cesses referred to in Entry No. 49 of List II are on the other hand simply (a) the entry of goods into a definite local area and (b) the requirement that the goods should enter for the purpose of consumption, use or sale therein. . . . . . . . . .
In our judgment there is no limitation to be implied in Entry No. 49, List II, in regard to the manner in which goods may be transported into a local area.
It follows 1121 that so far as rail borne goods are concerned the same goods may well be subjected to taxation under Entry No. 58 of List I as well to local taxation under Entry No. 49 of List II.
The grounds of taxation under the two entries are, as indicated above, radically different, and there is no case for suggesting that taxation under the one entry limits or interferes in any way with taxation under the other." Therefore according to the Federal Court " terminal" has reference to the terminus of the railway or air i.e., the end of journey.
The tax imposed in that case was held not to be a terminal tax but merely a cess on entry of goods into the local area within Entry No. 49 of List II even though it was imposed on railborne goods entering the municipal area.
It is a noticeable feature of section 66(1) that apart from the terminal tax there are 14 other heads of taxation imposable by the Municipality and in the case of each one of these 14 heads the tax is on some activity which takes place within the jurisdictional limits of the Municipality.
This supports the contention of the appellant that the terminal tax leviable under cl.
(o) properly construed must have reference to some activity within the municipal area i.e., the entry for the purpose of remaining within that area or commencement of journey from that area.
We are, therefore, of the opinion that the terminal tax under section 66(1)(o) is not leviable on goods which are in transit and are only carried across the limits of the Municipality, and would therefore allow this appeal, reverse the decision of the Nagpur High Court.
The appellant will have its costs in this court and in the High Court.
Appeal allowed.
| Section 66(1)(0) of the C. P. and Berar Municipalities Act, 1922, empowered the municipalities to impose "a terminal tax on goods or animals imported into or exported from the limits of a municipality".
The respondent framed rules for the imposition of terminal tax.
The appellant transported bales of cotton from Yeotmal to Nagpur by road and the vehicles carrying the goods passed through the limits of respondent municipality.
The goods were neither unloaded nor reloaded at Wardha bat were merely carried across through the municipal area.
The respondent collected terminal tax on these goods on the ground that they were exported by the appellant from the limits of the respondent municipality.
The appellant disputed his liability to pay terminal tax, and claimed a refund : Held, that the goods which were in transit and were merely carried across the limits of the municipality were not liable to terminal tax.
Terminal tax on goods imported into or exported 1103 from the limits of a municipality was payable on goods on their journey ending within the municipal limits or commencing therefrom and not where the goods were merely in transit and had their terminus elsewhere.
Terminal tax leviable under section 66(1)(o) must have reference to some activity within the municipal area i.e., the entry for the purpose of remaining within that area or the commencement of the journey from that area.
The words "imported into" do not merely mean "bringing into"but comprise something more i.e., incorporating and mixing up of the goods with the mass of the property in the local area.
Similarly, the words "exported from" do not merely indicate, "taking out" but have reference to the taking out of goods which ' had become part and parcel of the mass of the property of the local area and will not apply to goods in transit i.e. brought into the area for the purpose of being transported out of it.
|
Summarize this legal judgement text concisely | iminal Appeals Nos. 43 and 44 of 1954.
Appeals by special leave from the judgment and order dated the 23rd October 1953 of the Circuit Bench of the Punjab High Court at Delhi in Criminal Appeal No. 24 D of 1953 arising out of the judgment and order dated the 26th August 1953 of the Court of Special Judge, Delhi in Corruption Case No. 10 of 1953.
Jai Gopal Sethi and Naunit Lal for the Appellants in Cr. A. No. 43 of 1954.
Pritam Singh Safeer, for the Appellant in Cr. A. No. 44 of 1954.
K. Daphtary, Solicitor General of India, Porus A. Mehta, H. R. Khanna and P. G. Gokhale, for the respondent in both appeals.
March 9.
The Judgment of the Court was delivered by CHANDRASEKHARA AIYAR J.
Ram Kishan, the first appellant in Criminal Appeal No. 43, is a partnerproprietor in the firm of Kundan Lal Raja Ram of Saharanpur.
Prem Chand, the second appellant, is a partner in the firm of Narain Prasad and Prem Chand in the same place.
The appellant, Gian Chand, is the munim of a firm called Lekh Raj Shambhu Nath.
Some of the Saharanpur merchants, including 184 the three firms, were suspected of exporting potatoes at concessional rates on false declarations or certificates that they were seed potatoes.
Police investigation was proceeding in this connection at Saharanpur in October, 1951.
Madan La], Railway Section Officer, examined as P. W. 4 in the case, was deputed by the Railway Department to assist the Special Police Establishment in the investigation.
Labhu Ram, Railway Parcels clerk in the Railway at Saharanpur, was deputed by the Station Master to help the Police party.
It is alleged by the prosecution that during the progress of the investigation, and after the houses and shops of the accused persons had been searched, Ram Kishan took Labhu Ram aside and proposed that the three firms would be prepared to pay Rs. 2,000 if the case was hushed up and that Madan Lal was to be sounded.
Madan Lal refused to have anything to do with such a proposal, but as the accused persisted in their offer, it was ultimately decided that a trap should be laid for them at Delhi in Madan Lal 's house.
It is unnecessary to narrate in detail the steps taken in connection with this plan.
The trap succeeded.
The three accused and Labhu Ram were at Delhi on the morning of the 29th December and an increased sum of Rs. 5,000 was paid in the shape of currency notes to Madan Lal by Ram Kishan while two police officers and a Magistrate were hearing the conversation from an adjoining room and saw the payment through a hole in the door.
The appellants were charged under section 120 B of the Indian Penal Code for criminal conspiracy to cause the offence of criminal misconduct punishable under section 5(2) of the Prevention of Corruption Act (II of 1947), to 'be committed by Madan Lal, one of the prosecution witnesses.
They also stood charged with an offence under the same section read with section 116 of the Indian Penal Code for abetting the commission of criminal misconduct by the said Madan Lal by paying him a sum of Rs. 5,000 by way of illegal gratification, which offence was, however, not committed by him.
185 The Special Judge, Delhi, who tried the case, found the appellants guilty under both heads of charges.
He sentenced Ram Kishan to three months ' rigorous imprisonment and a fine of Rs. 5,000; Prem Chand and Gian Chand to two months ' rigorous imprisonment and a fine of Rs. 1,000 each.
He did not separately convict or sentence the accused under the head of criminal conspiracy.
The High Court reduced the sentence on Gian Chand to the term of imprisonment already undergone and a fine of Rs. 500.
There is no dispute that the amount was actually paid to Madan Lal even though he said he could do nothing to help the appellants, who begged him somehow to help them out of the impending prosecution.
Evidence has also been given by the Magistrate and the police officers about the talk and the lower courts have found on the evidence of Madan Lal and Labhu Ram and the eavesdroppers that Rs. 5,000 was offered as a bribe and not as compensation money in settlement of the amounts legitimately due to the Railway.
An attack against the concurrent findings of fact being wholly futile in the circumstances, Mr. Sethi, for the appellants in Criminal Appeal No. 43 of 1954, raised some questions of law on their behalf.
His first point was that section 5(2) of the Prevention of Corruption Act (II of 1947), under which the accused were charged and convicted was inapplicable to the facts.
His second point was that Madan Lal was not a " public servant" within the meaning of the Act and hence the charge was unsustainable.
He urged as his third point that trap cases of this kind must be sternly discouraged and deprecated by the courts, inasmuch as opportunities for the commission of offences should not be deliberately created so that people who yield to the temptations of ordinary human nature might be punished as criminaIs; in other words, crimes committed under such circumstances should be regarded only as venial and not heinous.
To appreciate the first contention it is necessary to pay attention to the language of section 5 of the 186 Prevention of Corruption Act, which is in these terms: "section 5(1) A public servant is said to commit the offence of criminal misconduct in the discharge of his duty, (a)if he habitually accepts or obtains or agrees to accept or attempts to obtain from any person for himself or for any other person, any gratification (other than legal remuneration) as a motive of reward such as is mentioned in section 161 of the Indian Penal Code, or (b)if he habitually accepts or obtains or agrees to accept or attempts to obtain for himself or for any other person, any valuable thing without consideration or for a consideration which he knows to be inadequate, from any person whom he knows to have been, or to be, or to be likely to be concerned in any proceeding or business transacted or about to be transacted by him, or having any connection with the official functions of himself or of any public servant to whom he is subordinate, or from any person whom he knows to be interested in or related to the person so concerned, or (c)if he dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or under his control as a public servant or allows any other person so to do, or (d)if he, by corrupt or illegal means or by otherwise abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage.
(2)Any public servant who commits criminal misconduct in the discharge of his duty shall be punishable with imprisonment for a term which may extend to seven years, or with fine, or with both.
(3) In any trial of an offence punishable under sub section (2) the fact that the accused person or any other person on his behalf is in possession, for which the accused person cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income may be 187 proved, and on such proof the Court shall presume, unless the contrary is proved, that the accused person is guilty of criminal misconduct in the discharge of his official duty and his conviction therefor shall not be invalid by reason only that it is based solely on such presumption.
(4)The provisions of this section shall be in addition to, and not in derogation of any other law for the time being in force, and nothing contained herein shall exempt any public servant from any proceeding which might, apart from this section, be instituted against him".
The object of the Act as set out in the preamble is to make more effective provision for the prevention of bribery and corruption.
A new offence of criminal misconduct by a public servant is created by section 5 and under sub section (2) it is made punishable with imprisonment for a term which may extend to seven years or with fine or with both.
The offence is of four kinds or categories.
Bribery as defined in section 161 of the Indian Penal Code, if it is habitual, falls within clause (a).
Bribery of the kind specified in section 165, if it is habitual, is comprised in clause (b).
Clause (c) contemplates criminal breach of trust by a public servant and the wording takes us to section 405 of the Code.
It is with clause (d) that we are really concerned in the present case.
It was argued that the intention of the Act was to create by means of clause (d) an offence different from a single act of bribery and that it can come into play only when there is no offer to give an d acceptance of a bribe by a public servant.
Before it can be made applicable there must be proof, it was said, that the public servant adopted corrupt or illegal means and thereby obtained for himself or for any other person any valuable thing or pecuniary advantage.
To force a bribe out of an unwilling person is different from the acceptance of a bribe from a voluntary giver and that before a charge under section 5(1), sub clause (d) could be sustained, there must be threat or inducement, or promise proceeding from the public servant or duress or extortion practised by 188 him to obtain the pecuniary advantage.
This argument proceeds upon the footing that the Act seeks to create and creates an independent offence distinct from simple bribery.
In one sense, this is no doubt true but it does not follow that there is no overlapping of offences.
We have primarily to look at the language employed and give effect to it.
One class of cases might arise where corrupt or illegal means are adopted or pursued by the public servant to gain for himself a pecuniary advantage.
The word "obtains", on which much stress was laid does not eliminate the idea of acceptance of what is given or offered to be given, though it connotes also an element of effort on the part of the receiver.
One may accept money that is offered, or solicit payment of a bribe, or extort the bribe by threat or coercion; in each case, he obtains a pecuniary advantage by abusing his position as a public servant.
The word 'obtains ' is used in sections 161 and 165 of the Penal Code.
The other words "corrupt or illegal means" find place in section162.
Apart from "corrupt and illegal means", we have also the words "or by otherwise abusing his position as a public servant".
If a man obtains a pecuniary advantage by the abuse of his position, he will be guilty under sub clause (d).
Sections 161, 162 and 163 refer to a motive or a reward for doing or forbearing to do something, showing favour or disfavour to any person, or for inducing such con duct by the exercise of personal influence.
It is not necessary for an offence under clause (d) to prove all this.
It is enough if by abusing his position as a public servant a man obtains for himself any pecuniary advantage, entirely irrespective of motive or reward for showing favour or disfavour.
To a certain extent the ingredients of the two offences are common, no doubt.
But to go further and contend that the offence as defined in clause (d) does not come with.
in the meaning of bribery is to place too narrow a construction on the sub clause.
A speedy disposal of corruption cases by special courts, the benefit of in vestigation by higher police authorities are some of the provisions intended for the protection of public 189 servants prosecuted under the Act while they are subjected also to increased disabilities, namely, a longer term of imprisonment as punishment and the application of the presumption referred to in subclause (3.).
In support of the contention that Madan Lal was not a "public servant", reference was made to section 137 of the Indian Railways Act.
Under the Act as it stood before it was amended by Act XVII of 1955, every railway servant was deemed, to be a public servant only for the purposes of Chapter IX of the Indian Penal Code and it was provided by sub clause (4) that "notwithstanding anything 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 those mentioned in Chapter IX".
The amended sub clause (1) is in these terms: "Every railway servant, not 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 Chapter IX and section 409 of that Code".
Sub section (4) has now been omitted.
The Prevention of Corruption Act provides by section 2 that "For the purposes of this Act, 'public servant ' means a public servant as defined in section 21 of the Indian Penal Code".
The result is that before the amendment, railway servants were treated as public servants only for the purposes of Chapter 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 purposes but generally under the Prevention of Corruption Act.
It has been stated already that a trap was laid for catching the appellants and this circumstance, according to the learned counsel for the appellants, should be taken into account in the matter of sentence.
In this connection, our attention was invited to the well known and weighty observations of Lord Goddard, C.J. in Brennan vs peek(1) where his Lord 25 (1) 190 ship expressed the hope that "the day is far distant when it will become a common practice in this country for police officers to be told to commit an offence themselves for the purpose of getting evidence against someone; if they do commit offences they ought also to be convicted and punished, for the order of their superior would afford no defence".
While there is much to be said in support of the opinion expressed by the learned Chief Justice, it cannot be laid down as an absolute rule that the laying of traps must be prohibited on the ground that by so doing we hold out an invitation for the commission of offences.
The detection of crime may become difficult if intending offenders, especially in cases of corruption are not furnished opportunities for the display of their inclinations and activities.
Where matters go further and the police authorities themselves supply the money to be given as a bribe, severe condemnation of the method is merited, as in Rao Shiv Bahadur Singh and another vs The State of Vindhya Pradesh(1).See also Ramjanam Singh vs The State, of Bihar(2).
But whatever the ethics of the question 'might be, there is no warrant for the view that the offences committed in the course of traps are less grave and call only for lenient or nominal sentences.
For the appellant in the connected Appeal No. 44 it was urged by his learned counsel that he was only a munim of a firm and not a partner or a proprietor as the other appellants and that it could not be stated of him that he was interested in giving or attempting to give any bribe for hushing up the case.
There is, however, the clear and definite evidence of Labhu Ram that Gian Chand came along with the appellants to him when the talk about the bribe took place.
He says that on the morning of the 29th December, 1951, the three accused who were staying at the Coronation Hotel, Delhi, told him that they had amongst themselves collected Rs. 5,000 to be paid to Madan Lal and that in the of Madan Lal all the three accused one by one made request to Madan Lal to hush up the potato case pending against them.
This (1) (2) Cr.
Appeal No. 81 of 1953.
191 is corroborated by Madan Lal who states that all the three accused said that the money had been subscribed by them jointly and requested him to accept the same and get the case withdrawn.
The case of Gian Chand does not stand on any different footing from that of the other appellants.
The convictions and sentences are confirmed and the appeal will stand rejected.
| The appellants were suspected of exporting potatoes at concessional rates on false declarations and Madan Lal, a Railway Officer, was deputed to assist the Police in the investigation.
In course of that investigation the appellants offered a bribe to Madan Lal for hushing up the case but he refused to accept it.
As they persisted in their offer a trap was laid in Madan Lal 's house and it succeeded.
Two Police Officers and a Magistrate heard the conversation from the adjoining room and saw the payment of the bribe through a hole.
The appellants were charged under section 120 B of the Indian Penal Code for criminal conspiracy to cause the offence of criminal misconduct punishable under section 5(2) of Prevention of Corruption Act of 1947 to be committed by Madan Lal as also under that section read with section 116 of the Indian Penal Code.
They were convicted by the Special Judge on both the counts and their convictions were upheld by the High Court.
The contentions on their behalf were that section 5(2) of the Prevention of Corruption Act had no application to the facts of the case, that Madan Lal was not a public servant within the meaning of the Act and, lastly, that the laying of the trap was an invitation to commit the crime and afforded a good reason for reduction of the sentences.
Held, that the contentions were untenable and must be rejected.
That the word "obtains" occurring in clause (d) to sub section (1) of section 5 of the Prevention of Corruption Act does not exclude the idea of acceptance of a bribe on offer, and a public servant, whether he simply accepts a bribe, or solicits or extorts it, thereby obtains a pecuniary advantage by abusing his position as a public servant and commits an offence under that section, any consideration as to motive or reward for showing favour or disfavour being altogether irrelevant.
That as a result of the amendment of section 137 of the Indian Railways Act by the Amendment Act of 1955 all railway servants have become public servants not only for the limited purposes of Ch.
IX 183 of the Indian Penal Code but generally under the Prevention of Corruption Act.
That it cannot be laid down as an absolute rule that the laying of traps, especially in cases of this nature, should be deprecated as constituting an invitation to commit an offence and an offence thus detected does not lose its gravity thereby so as to call for a lenient sentence.
Where, however, proper limits are exceeded and the money to be given as bribe is supplied by the Police, it must be severely condemned.
Brennan vs Peek ([1947] 2 All E.R. 572), considered.
Rao Shiv Bahadur Singh and another vs The State of Vindhya Pradesh ([1954] S.C.R. 1098) and Bamjanam Singh vs The State of Bihar, (Cr.
Appeal No. 81 of 1953), referred to.
|
Summarize this legal judgement text concisely | ivil Appeal No. 297 of 1956.
Appeal by special leave from the judgment and order dated August 30, 1955, of the Labour Appellate Tribunal of India, Calcutta in Appeal No. Cal.
220 of 1954.
C. B. Aggarwala and K. P. Gupta, for the appellants.
Purshottam Tricumdas for N. C. Chatterjee, P. K. Goswami, section N. Mukheree and B. N. Ghosh, for the respondent.
February 4.
The Judgment of Das, C. J., and section K. Das J., was delivered by section K. Das, J. Sarkar, J., delivered a separate Judgment.
section K. DAS J.
This appeal by special leave raises a question of some nicety and of considerable importance in the matter of industrial relations in this country.
The question is the true scope and effect of the definition clause in section 2 (k) of the (hereinafter referred to as the Act).
The question has arisen in the following circumstances.
1158 The appellants before us are the workmen of the Dimakuchi tea estate represented by the Assam Chah Karmachari Sangha, Dibrugarh.
The respondent is the management of the Dimakuchi tea estate, district Darrang in Assam.
One Dr. K. P. Banerjee was appointed assistant medical officer of the Dimakuchi tea estate with effect from November 1, 1950.
He was appointed subject to a satisfactory medical report and on probation for three months.
It was stated in his letter of appointment: " While you are on probation or trial, your suitability for permanent employment will be considered.
If during the period of probation you are considered unsuitable for employment, you ",ill receive seven days ' notice in writing terminating your appointment.
If you are guilty of misconduct, you are liable to instant dismissal.
At the end of the period of probation, if you are considered suitable, you will be confirmed in the garden 's service." In February 1951 Dr. Banerjee was given an increment of Rs. 5 per mensem, but on April 21, Dr. Banerjee received a letter from one Mr. Booth, manager of the tea estate, in which it was stated : " It has been found necessary to terminate your services with effect from the 22nd instant.
You will of ' course receive one month 's salary in lieu of notice." As no reasons were given in the notice of termination, Dr. Banerjee wrote to the manager to find out why his services were being terminated.
To this Dr. Banerjee received a reply to this effect The reasons for 'your discharge are on the medical side, which are outside my jurisdiction, best known to Dr. Cox but a main reason is because of the deceitful manner in which you added figures to the requirements of the last medical indent after it had been signed by Dr, Cox, evidence of which is in my hands.
" The cause of Dr. Banerjee was then espoused by the Mangaldai Circle of the Assam Chah Karmachari Sangha and the secretary of that Sangha wrote to the manager of the Dimakuchi tea estate, enquiring about the reasons for Dr. Banerjee 's discharge.
The manager wrote back to say that Dr. K. P. Banerjee was discharged on the ground 1159 of incompetence in his medical duties and the chief medical officer (Dr. Cox) had found that Dr. Banerjee was incompetent and did not have sufficient " knowledge of simple everyday microscopical and laboratory work which befalls the lot of every assistant medical officer in tea garden practice.
" It was further stated that Dr. Banerjee gave a faulty, inexpert and clumsy quinine injection to one Mr. Peacock, and assistant in the Dimakuchi tea estate, which produced an extremely acute and severe illness very nearly causing a paralysis of the patient 's leg.
The reasons given by the manager for the termination of the services of Dr. K. P. Banerjee did not satisfy the appellants herein and certain conciliation proceedings, details whereof are not necessary for our purpose, were unsuccessfully held over the question of the termination of the service of Dr. Banerjee.
The matter was then referred to a Board known as the tripartite Appellate Board consisting of the Labour Commissioner, Assam, and two representatives of the Assam branch of the Indian Tea Association and the Assam Chah Karmachari Sangha respectively.
This Board recommended that Dr. Banerjee should be reinstated with effect from the date of his discharge.
After the recommendation of the Board, the respondent herein appears to have offered a sum equal to 28 month 's salary and allowances in lieu of re instatement; to this, however, the appellants did not agree.
In the meantime, Dr. K. P. Banerjee received a sum of Rs. 306 1 0 on May 22, 1951 and left the tea garden in question.
Then, on December 23, 1953, the Government of Assam published a notification in which it was stated that whereas an industrial dispute had arisen between the appellants and the respondent herein and whereas it was expedient that the dispute should be referred for adjudication to a Tribunal constituted under section 7 of the Act, the Governor of Assam was pleased to refer the dispute to Shri U. K. Gohain, Additional District and Sessions Judge, under cl.
(c) of sub section
(1) of section 10 of the Act.
The dispute which was thus referred to the Tribunal was described in these terms: 1160 " (i) Whether the management of Dimakuchi Tea Estate was justified in dismissing Dr. K. P. Banerjee, A. M. O.? (ii) If not, is he entitled to reinstatement or any other relief in lieu thereof ?" Both parties filed written statements before Mr. ohain and the respondent took the plea that Dr. K. P. Banerjee was not a "workman" within the meaning of the Act; therefore, there was no industrial dispute in the sense in which that expression was defined in the Act and the Tribunal had no jurisdiction to make an adjudication on merits.
Mr. Gohain took up as a preliminary point the question if Dr. Banerjee was a " workman " within the meaning of the Act and came to a conclusion which may be best expressed in his own words: "Dr. Banerjee being not a ' workman ', his case is not one of an " industrial dispute " under the and his case is therefore beyond the jurisdiction of this Tribunal and the Tribunal has therefore no jurisdiction to give any relief to him.
" There was then an appeal to the Labour Appellate Tribunal of India, Calcutta.
That Tribunal affirmed the finding of Mr. Gohain to the effect that Dr. Banerjee was not a workman within the meaning of the Act.
The Appellate Tribunal then said: " A dispute between the employers and employees to be an industrial dispute within the meaning of section 2 (k) of the , must be between the employers and the workmen.
There cannot be any industrial dispute between the employers and the employees who are not workmen.
" The appeal was accordingly dismissed by the Labour Appellate Tribunal.
The appellants herein then moved this Court for special leave and by an order dated March 14, 1956, special leave was granted, but was " limited to the question whether a dispute in relation to a person who is not a workman falls within the scope of the definition of industrial dispute contained in section 2 (k) of the .
" It is clear from what has been stated above that the 1161 question whether Dr. K. P. Banerjee is or is not a workman within the meaning of the Act is no longer open to the parties and we must proceed on the footing that Dr. K. P. Banerjee was not a workman within the meaning of the Act and then decide the question if the dispute in relation to the termination of his service still fell within the scope of the definition of the expression " industrial dispute " in the Act.
We proceed now to read the definition clause the interpretation of which is the only question before us.
That definition clause is in these terms: " section 2 (k) : " Industrial dispute" means any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen, which is connected with the employment or non employment or the terms of employment or with the conditions of labour, of any person;" It must be stated here that the expression " workman is also defined in the Act, and the definition which is relevant for our purpose is the one previous to the amendments of 1956; therefore, in reading the various sections of the Act, we shall read them as they stood prior to the amendments of 1956 and refer to the amendments only when they have a bearing on the question before us.
The definition of 'workman ' as it stood at the relevant time stated : " section 2 (s): " Workman " means any person employed (including an apprentice) in any industry to do any skilled or unskilled manual or clerical work for hire or reward and includes, for the purposes of any proceedings under this Act in relation to an industrial dispute, a workman discharged during that dispute, but does not include any person employed in the naval, military or air service of the Government. " Now, the question is whether a dispute in relation to a person who is not a workman within the meaning of the Act still falls within the scope of the definition clause in section 2 (k).
If we analyse the definition clause it falls easily and naturally into three parts: first, there must be a dispute or difference; second, the dispute or difference must be between employers and employers, or between employers and workmen or 1162 between workmen and workmen; third, the dispute or difference must be connected with the employment or non employment or the terms of employment or with the conditions of labour, of any person.
The first part obviously refers to the factum of a real or substantial dispute; the second part to the parties to the dispute; and the third to the subject matter of that dispute.
That subject matter may relate to any of two matters (i) employment or non employment, and (ii) terms of employment or conditions of labour, of any person.
On behalf of the appellants it is contended that the conditions referred to in the first and second parts of the definition clause are clearly fulfilled in the present case, because there is a dispute or difference over the termination of service of Dr. K. P. Banerjee and the dispute or difference is between the employer, namely, the management of the Dimakuchi tea estate on one side, and its workmen on the other, even taking the expression " workmen " in the restricted sense in which that expression is defined in the Act.
The real difficulty arises when we come to the third part of the definition clause.
Learned counsel for the appellants has submitted that the expression " of any person " occurring in the third part of the definition clause is an expression of very wide import and there are no reasons why the words "any person" should be equated with " any workman ", as the Tribunals below have done.
The argument is that inasmuch as the dispute or difference between the employer and the workmen is connected with the non employment of a person called Dr. K. P. Banerjee (even though he was not a workman), the dispute is an industrial dispute within the meaning of the definition clause.
At first sight, it does appear that there is considerable force in the argument advanced on behalf of the appellants.
It is rightly pointed out that the definition clause does not contain any words of qualification or restriction in respect of the expression " any person " occurring in the third part, and if any limita tions as to its scope are to be imposed, they must be such as can be reasonably inferred from the definition clause itself or other provisions of the Act.
1163 A little careful consideration will show, however, that the expression " any person " occuring in the third part of the definition clause cannot mean anybody and everybody in this wide world.
First of all, the subject matter of dispute must relate to (i) employment or non employment or (ii) terms of employment or conditions of labour of any person; these necessarily import a limitation in the sense that a person in respect of whom the employer employee relation never existed or can never possibly exist cannot be the subject matter of a dispute between employers and workmen.
Secondly, the definition clause must be read in the context of the subject matter and scheme of the Act, and consistently with the objects and other provision 's of the Act.
It is well settled that " the words of a statute, when there is a doubt about their meaning are to be understood in the sense in which they best harmonise with the subject of the enactment and the object which the Legislature has in view.
Their meaning is found not so much in a strictly grammatical or etymological propriety of language, nor even in its popular use, as in the subject or in the occasion on which they are used, and the object to be attained." (Maxwell, Interpretation of Statutes, 9th Edition, p. 55).
It is necessary, therefore, to take the Act as a whole and examine its salient provisions.
The long title shows that the object of the Act is " to make provision for the investigation and settlement of industrial disputes, and for certain other purposes.
" The preamble states the same object and section 2 of the Act which contains definitions states that unless there is anything repugnant in the subject or context, certain expressions will have certain meanings.
Chapter 11 refers to the authorities set up under the Act, such as, Works Committees, Conciliation officers, Boards of Conciliation, Courts of Enquiry, and Industrial Tribunals.
The primary duty of a Works Committee is to promote measures for securing and preserving amity and good relations between the employer and his workmen and, to that end, to comment upon matters of their common 148 1164 interest or concern and endeavour to compose any material difference of opinion in respect of such matters.
Conciliation Officers are charged with the duty of mediating in and promoting the settlement of industrial disputes.
A Board of Conciliation may also be constituted for the same purpose, namely, for promoting the settlement of an industrial dispute.
A Court of Enquiry may be appointed for enquiring into any matter which appears to be connected with or relevant to an industrial dispute.
Section 7 of the Act empowers the appropiate Government to constitute one or more Tribunals for the adjudication of industrial disputes in accordance with the provisions of the Act.
Chapter III contains provisions relating to the reference of industrial disputes to Boards of Conciliation, Courts of Enquiry or Industrial Tribunals, and the reference in the present case was made under section 10 of that Chapter.
Under section 10(c) of the Act where an appropriate Government is of opinion that any industrial disputes exist or are apprehended, it may, at any time, by order in writing, refer the dispute or any matter appearing to be connected with or relevant to the dispute to a Tribunal for adjudication.
Chapter IV of the Act deals with procedure, powers and duties of the authorities set up under the Act.
Where an industrial dispute has been referred to a Tribunal for adjudication, section 15 requires that the Tribunal shall hold its proceedings expeditiously and shall as soon as practicable on the conclusion thereof submit its award to the appropriate Government.
Section 17 lays down inter alia that the award of a Tribunal shall within a period of one month from the date of its receipt by the appropriate Government be published in such manner as it thinks fit.
Section 17 A lays down that the award of a Tribunal shall become enforceable on the expiry of thirty days from the date of its publication under section 17; it also contains certain other provisions which empower the appropriate Government to modify or reject the award.
Section 18 is important for our purpose, and in so far as it relates to awards it states that an award which has become enforceable ,shall be binding on 1165 (a) all parties to the industrial dispute; (b) all other parties summoned to appear in the proceedings as parties to the dispute, unless the Tribunal records the opinion that they were so summoned without proper cause; (c) where a party referred to under clause (a) or clause (b) is an employer, his heirs, successors or assigns in respect of the establishment to which the dispute relates; and (d) where a party referred to in clause (a) or clause (b) is composed of workmen, all persons who are employed in the establishment or part of establishment as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part.
Section 19 lays down the period of operation of settlements and awards and states inter alia that an award shall, subject to the provisions of the section, remain in operation for a period of one year.
Chapter V of the Act deals with strikes and lock outs, Chapter V A with lay off and retrenchment, Chapter VI with penalties and Chapter VII with miscellaneous matters.
It is important to note that though in the definition of "lock out", section 2 (1) of the Act, and "strike", section 2 (q) of the Act, the expression any person ' has been used, in sections 22 (2) and 23 of the Act which deal with "lock out" and "strike", only the word 'workmen ' has been used.
Section 33 provides that during the pendency of any conciliation proceedings or any proceedings before a tribunal of any industrial dispute, no employer shall (a) alter to the prejudice of the workmen concerned, the conditions of their service etc.
or (b) discharge or punish by dismissal or otherwise any workman concerned in the dispute.
Section 33 A, however, uses the word 'employee ', but read with section 33, the word employee must mean there a workman.
Section 36 which deals with representation of parties has some bearing on the question before us.
It layns down that a workman who is a party to a dispute shall be entitled to be represented in any proceeding under the Act by 1166 (a) an officer of a registered trade union of which he is a member; (b) an officer of a federation of trade unions to which the trade union referred to in clause (a) is affiliated; and (c) where the worker is not a member of any trade union, by an officer of any trade union connected with, or by any other workman employed in the industry in which the worker is employed and authorised in such manner as may be prescribed.
An employer who is a party to a dispute shall be entitled to be represented in any proceedings under the Act by (a) an officer of an association of employers of which he is a member; (b) an officer of a federation of associations of employers to which the association referred to in clause (a) is affiliated; and (c) where the employer is not a member of any association of employers, by an officer of any association of employers connected with, or by any other employer engaged in, the industry in which the employer is engaged and authorised in such manner as may be prescribed.
Sub section (3) of section 36 states that no party to a dispute shall be entitled to be represented by a legal practitioner in any conciliation proceedings under the Act or in any proceedings before a court.
Sub section (4) states that in any proceeding before a Tribunal a party to a dispute may be represented by a legal practitioner with the consent of the other parties to the proceeding and with the leave of the Tribunal.
The point to note is that there is no particular provision for the representation of a party other than a workman or an employer, presumably because under the second part of the definition clause the parties to an industrial dispute can only be employers and employers, employers and workmen, or workmen and workmen.
Thus, an examination of the salient provisions of the Act shows that the principal objects of the Act are 1167 (1) the promotion of measures for securing and preserving amity and good relations between the employer and workmen; (2) an investigation and settlement of industrial disputes, between employers and employers, employers and workmen, or workmen and workmen, with a right of representation by a registered trade union or federation of trade unions or association of employers or a federation of associations of employers; (3) prevention of illegal strikes and lock outs; (4) relief to workmen in the matter of lay off and retrenchment; and (5) collective bargaining.
The Act is primarily meant for regulating the relations of employers and workmen past, present and future.
It draws a distinction between 'workmen ' as such and the managerial or supervisory staff, and confers benefit on the former only.
It is in the context of all these provisions of the Act that the definition clause in section 2(k) has to be interpreted.
It seems fairly obvious to us that if the expression "any person" is given its ordinary meaning, then the definition clause will be so wide as to become inconsistent not merely with the objects and other provisions of the Act, but also with the other parts of that very clause.
Let us see how the definition clause works if the expression " any person " occurring therein is given its ordinary meaning.
The workmen may then raise a dispute about a person with whom they have no possible community of interest; they may raise a dispute about the employment of a person in another industry or a different establishments dispute in which their own employer is not in a position to give any relief, in the matter of employment or non employment or the terms of employment or conditions of labour of such a person.
In order to make our meaning clear we may take a more obvious example.
Let us assume that for some reason or other the workmen of a particular industry raise a dispute with their employer about the employment or terms of employment of the District Magistrate or District 1168 Judge of the district in which the industry is situate.
It seems clear to us that though the District Magistrate or District Judge undoubtedly comes within the expression " any person " occurring in the definition clause, a dispute about his employment or terms of employment is not an industrial dispute; firstly, because such a dispute does not come within the scope of the Act, having regard to the definition of the words " employer" industry ", and " workman and also to other provisions of the Act; secondly, there is no possible community of interest between the District Magistrate or District Judge on the one hand and the disputants, employer and workmen, on the other.
The absurd results that will follow such an interpretation have been forcefully expressed by Chagla C. J., in his decision in Narendra Kumar Sen vs All India Industrial Disputes (Labour Appellate) Tribunal (1): " If "any person " were to be read as an expression without any limitation and qualification whatsoever, then we must not put even any territorial restriction on that expression.
In other words, it would be open to the workmen not only to raise a dispute with regard to the terms of employment of persons employed in the same industry as themselves, not only to raise a dispute with regard to the terms of employment in corresponding or similar industries, not only a dispute with regard to the terms of employment of people employed in our country, but the terms of employment of any workman or any labourer anywhere in the world The proposition has only to be stated in order to make one realise how entirely untenable it is.
Take, for example, another case where the workmen raise an objection to the salary or remuneration paid to a Manager or Chief Medical Officer by the employer but without claiming any benefit for themselves, and let us assume that a dispute or difference arises between the workmen on one side and the employer on the other over such an objection.
If such a dispute comes within the definition clause and is referred to an industrial tribunal for adjudication, the parties to the (1) ,129, 130.
1169 dispute will be the employer on one side and his workmen on the other.
The Manager or the Chief Medical Officer cannot obviously be a party to the dispute, because he is riot a 'workman 'within the meaning of the Act and there is no dispute between him and his employer.
That being the position, the award, if any, 7 given by the Tribunal will be binding, under cl.
(a) of section 18, on the parties to the dispute and not on the Manager or the Chief Medical Officer.
It is extremely doubtful if in the circumstances stated the Tribunal can summon the Manager or the Chief Medical Officer as a party to the dispute, because there is no dispute between the Manager or Chief Medical Officer on one side and his employer oil the other.
Furthermore, section 36 of the Act does not provide for representation of a person who is not a party to the dispute.
If, therefore, an award is made by the Tribunal in the case which we have taken by way of illustration, that award, though binding on the employer, will not be binding on the Manager or Chief Medical Officer.
It should be obvious that the Act could not have contem plated an eventuality of this kind, which does not promote any of the objects of the Act, but rather goes against them.
When these difficulties were pointed out to learned counsel for the appellants, he conceded that some limitations must be put on the width of the expression " any person " occurring in the definition clause.
He formulated four such limitations: (1) The dispute must be a real and substantial one in respect of which one of the parties to the dispute can give relief to the other; e. g., when the dispute is between workmen and employer, the employer must be in a position to give relief to the workmen.
This, according to learned counsel for the appellants, will exclude those cases in which the workmen ask for something which their employer is not in a position to give.
It would also exclude mere ideological differences or controversies.
(2) The industrial dispute if raised by workmen must relate to the particular establishment or part of establishment in which the workmen are employed so 1170 that the definition clause may be consistent with section 18 of the Act.
(3) The dispute must relate to the employment, non employment or the terms of employment or with the conditions of labour of any person, but such person must be an employee discharged or in service or a candidate for employment.
According to learned counsel for the appellants, the person about whom the dispute has arisen need not be a workman within the meaning of the Act, but he must answer to the description of an employee, discharged or in service, or a candidate for employment.
(4) The workmen raising the dispute must have a nexus with the dispute, either because they are personally interested or because they have taken up the cause of another person in the general interest of labour welfare.
The further argument of learned counsel for the appellants is that even imposing the aforesaid four limitations on the width of the expression " any person " occurring in the definition clause, the dispute in the present case is an industrial dispute within the meaning of section 2 (k) of the Act, because (1) the employer could give relief in the matter of the termination of service of Dr. K. P. Banerjee, (2) Dr. K. P. Banerjee belonged to the same establishment, namely, the same tea garden, (3) the dispute related to a discharged employee (though not a workman) and (4) the workmen raising the dispute were vitally interested in it by reason of the fact that Dr. Banerjee (it is stated) belonged to their trade union and the dismissal of an employee without the formulation of a charge and without giving him an opportunity to meet any charge was a matter of general interest to all workmen in the same establishment.
We now propose to examine the question whether the limitations formulated by learned counsel for the appellants are the only true limitations to be imposed with regard to the definition clause.
In doing so we shall also consider what is the true scope and effect of the definition clause and what are the correct tests to be applied with regard to it.
We think that there is no real difficulty with regard to the first two limitations.
1171 They are, we think, implicit in the definition clause itself.
It is obvious that a dispute between employers and employers, employers and workmen, or between workmen and workmen must be a real dispute capable of settlement or adjudication by directing one of the parties to the dispute to give ' necessary relief to the other.
It is also obvious that the parties to the dispute must be directly or substan tially interested therein, so that if workmen raise a dispute, it must relate to the establishment or part of establishment in which they are employed.
With regard to limitation (3), while we agree that the expression I any person ' cannot be completely equated with 'any workman ' as defined in the Act, we think that the limitation formulated by learned counsel for the appellants is much too widely stated and is not quite correct.
We recognise that if the expression ' any person ' means 'any workman ' within the meaning of the Act, then it is difficult to understand why the Legislature instead of using the expression 'any workman ' used the much wider expression 'any person ' in the third part of the definition clause.
The very circumstance that in the second part of the definition clause the expression used is " between employers and workmen or between workmen and workmen " while in the third part the expression used is "any person" indicates that the expression "any person cannot be completely equated with 'any workman '.
The reason for the use of the expression " any person" in the definition clause is, however, not far to seek.
The word 'workman ' as defined in the Act (before the amendments of 1956) included, for the purposes of any proceedings under the Act in relation to an industrial dispute, a. workman discharged during the dispute.
This definition corresponded to section 2.(j) of the old Trade Disputes Act, 1929 except that the words ,,including an apprentice " were inserted and the words " industrial dispute " were substituted for the words " trade dispute ".
It is worthy of note that in the Trade Disputes Act, 1929, the word 'workman ' meant any person employed in any trade or industry to do I49 1172 any skilled or unskilled manual or clerical work for hire or reward.
It is clear enough that prior to 1956 when the definition of ' workman ' in the Act was further widened to include a person dismissed, discharged or retrenched in connection with, or as a consequence of the dispute or whose dismissal, discharge or retrenchment led to the dispute, a workman who had been discharged earlier and not during the dispute was not a workman within the meaning of the Act.
If the expression " any person " in the third part of the definition clause were to be strictly equated with 'any workman ', then there could be no industrial dispute, prior to 1956, with regard to a workman who had been discharged earlier than the dispute, even though the discharge itself had led to the dispute.
That seems to be the reason why the Legislature used the expression 'any person ' in the third part of the definition clause so as to put it beyond any doubt that the non employment of such a dismissed workman was also within the ambit of an industrial dispute.
There was a wide gap between a 'workman ' and an 'employee ' under the definition of the word 'workman ' in section 2 (s) as it stood prior to 1956; all existing workmen were no doubt employees; but all employees were not workmen.
The supervisory staff did not come within the definition.
The gap has been reduced to some extent by the amendments of 1956; part of the supervisory staff (who draw wages not exceeding five hundred rupees per mensem) and those who were otherwise workmen but were discharged or dismissed earlier have also come within the definition.
If and when the gap is completely bridged, I workmen will be synonymous with 'employees ', whether engaged in any skilled or unskilled manual, supervisory, technical or clerical work, etc.
But till the gap is completely obliterated, there is a distinction between workmen and non workmen and that distinction has an important bearing on the question before us.
Limitation No. (3) as formulated by learned counsel for the appellants ignores the distinction altogether and equates 'any person ' with any employee ' past, 1173 present or future: this we do not think is quite correct or consistent with the other provisions of the Act.
The Act avowedly gives a restricted meaning to the word I workman ' and almost all the provisions of the Act are intended to confer benefits on that class of persons who generally answer to the description of workmen.
The expression 'any person ' in the definition clause means, in our opinion, a person in whose employment, or non employment, or terms of employment, or conditions of labour the workmen as a class have a direct or substantial interest with whom they have, under the scheme of the Act, a community of interest.
Our reason for so holding is not merely that the Act makes a distinction between workmen and non workmen, but because a dispute to be a real dispute must be one in which the parties to the dispute have a direct or substantial interest.
Can it be said that workmen as a class are directly or substantially interested in the employment, non employment, terms of employment or conditions of lab our of persons who belong to the supervisory staff and are, under the provisions of the Act, non workmen on whom the Act has conferred no benefit, who cannot by themselves be parties to an industrial dispute and for whose representation the Act makes no particular provision ? We venture to think that the answer must be in the negative.
Limitation (4) formulated by learned counsel for the appellants is also too generally stated.
We recognise that solidarity of labour or general interest of tabour welfare may furnish, in some cases, the necessary nexus of direct or substantial interest in a dispute between employers and workmen, but the principle of solidarity of the labour movement or general welfare of labour must be based on or correlated to the principle of community of interest; the workmen can raise a dispute in respect of those persons only in the employment or non employment or the terms of employment or the conditions or labour of whom they have a direct or substantial interest.
We think that Chagla C. J., correctly put the crucial test when he said in Narendra Kumar Sen vs All India Industrial Disputes (Labour Appellate) Tribunal (1).
(1) ,129, 130.
1174 " Therefore, when section 2 (k) speaks of the employment or non employment or the terms of employment or the conditions of labour of any person, it can only mean the employment or non employment or the terms of employment or the conditions of labour of only .those persons in the employment or non employment or the terms of employment or with the conditions of labour of whom the workmen themselves are directly and substantially interested.
If the workmen have no direct or substantial interest in the employment or non employment of a person or in his terms of employment or his conditions of labour, then an industrial dispute cannot arise with regard to such person.
" We reach the same conclusion by approaching the question from a somewhat different standpoint.
Ordinarily, it is only the aggrieved party who can raise a dispute; but an industrial dispute ' is put on a collective basis, because it is now settled that an individual dispute, not espoused by others of the class to which the aggrieved party may belong, is not an industrial dispute within the meaning of a. 2 (k).
As Isaacs J. observed in the Australian case of George Hudson Ltd. vs Australian Timber Workers ' Union(1): "The very nature of, an I industrial dispute ' as distinguished from an individual dispute, is to obtain new industrial conditions, not merely for the specific individuals then working from the specific individuals then employing them, and not for the moment only, but for the class of employees from the class of em ployers. . . .
It is a battle by the claimants, not for themselves alone.
" Section 18 of the Act supports the aforesaid observations, in so far as it makes the award binding not merely on the parties to the dispute, but where the party is an employer, on his heirs, successors or assigns and where the party is composed of workmen, on all persons employed in the establishment and all persons who subsequently become employed therein.
If, therefore, the dispute is a collective dispute, the party raising the dispute must have either a direct interest in the subject matter of dispute or a substantial interest therein in the sense that the class to which the (I) ,441.
1175 aggrieved party belongs is substantially affected there.
It is the community of interest of the class as a whole class of employers or class of workmen which furnishes the real nexus between the dispute and the parties to the dispute.
We see no insuperable difficulty in the practical application of this test.
In a case where the party to the dispute is composed of aggrieved workmen themselves and the subject matter of dispute relates to them or any of them, they clearly have a direct interest in the dispute.
Where, however, the party to the dispute also composed of workmen, espouse the cause of another person whose employment, or non employment, etc., may prejudicially affect their interest, the workmen have a substantial interest in the subject matter of dispute.
In both such bases, the dispute is an industrial dispute.
Learned counsel for the appellants has also drawn our attention to the definition of a ' trade dispute ' in the Indian .
That definition is also in the same terms, but with this vital difference that the word ' workmen ' means there "all persons employed in trade or industry whether or not in the employment of the employer with whom the trade dispute arises.
" It is obvious that the very wide definition of the word 'workmen ' determines the ambit of the definition, of a 'trade dispute ' in the .
The provisions of that Act have different objects in view, one of which is the expenditure of the funds of a registered Trade Union I on the conduct of trade disputes on behalf of the Trade Union or any member thereof.
We do not think that that definition for the purposes of an Act like the is of any assistance in construing the definition in the Act with which we are now concerned, even though the words employed are the same; for one thing, the meaning of the word `workman ' completely changes the ambit of the definition clause, and for another, the objects, scheme and purpose of the two Acts are not the same.
For the same reasons, we do not think that with regard to the precise problem before us much assistance can be obtained by a detailed examination of English, 1176 American or Australian decisions given with regard to the terms of the statutes in force in those countries.
Each Act must be interpreted on its own terms particularly when the definition of a 'workman ' varies from statute to statute and, with changing conditions, from time to time, and country to country.
The interpretation of section 2 (k) of the Act has been the subject of consideration in various Indian decisions from different points of view.
Two recent decisions of this Court considered the question if an individual dispute of a workman was within the definition of an industrial dispute.
The decision in C. P. Transport Services Ltd. vs Raghunath (1), related to the C. P. and Berar Industrial Disputes Settlement Act (No. XXIII of 1947) and the decision in Newspapers Ltd. vs State Industrial Tribunal, U. P.(2), to the U. P. Industrial Disputes Act (No. XXVIII of 1947).
Both these decisions considered section 2 (k) of the Act, but with reference to a different problem.
The definition clause in section 2 (k) was considered at some length by the Federal Court in Western India Automobile Association vs The Industrial Tribunal, Bombay (3), and learned counsel for the appellants has placed great reliance on some of the obervations made therein.
The question which fell for decision in that case was whether " industrial dispute" included within its ambit a dispute with regard to reinstatement of certain dismissed workmen.
It was held that reinstatement was connected with non employment and, therefore, fell within the words of the definition.
It appears that the finding of the Court from which the appeal was preferred to the Federal Court was that the workmen whose reinstatement was in question were discharged during the dispute and were, therefore, workmen within the meaning of the Act, Therefore, the problem of interpretation with which we are faced in this case was not the problem before their Lordships of the Federal Court.
The observations on which learned counsel for the appellants has relied are these: " The question for determination is whether the (1) ; (2) A. 1.
R. (1957) section C. 532.
(3) [1949] F. C. R 321, 329 330 346 347.
1177 definition of the expression "industrial dispute" given in the Act includes within its ambit, a dispute in regard to reinstatement of dismissed employees. .
The words of the definition may be paraphrased thus: " any dispute which has connection with the workmen being in, or out of service or employment ".
" Non employment " is the negative of " employment" and would mean that disputes of workmen out of service with their employers are within the ambit of the definition.
It is the positive or the negative act of an employer that leads to employment or to non employment.
It may relate to an existing employment or to a contemplated employment, or it may relate to an existing fact of non employment or a contemplated non employment.
The following four illustrations elucidate this point: (1) An employer has already employed a person and a trade union says " Please do not employ him ".
Such a dispute is a dispute as to employment or in connection with employment.
(2) An employer gives notice to a union saying that he wishes to employ two particular persons.
The union says " no ".
This is a dispute as to employment.
It arises out of the desire of the employer to employ certain persons.
(3) An employer may dismiss a man, or decline to employ him.
This matter raises a dispute as to non employment.
(4) An employer contemplates turning out a number of people who are already in his employment.
It is a dispute as to contemplated non employment.
" Employment or non employment " constitutes the subject matter of one class of industrial disputes, the other two classes of disputes being those connected with the terms of employment and the conditions of labour.
The failure to employ or the refusal to employ are actions on the part of the employer which would be covered by the terms " employment or non employment ".
Re instatement is connected with non employment and is therefore within the words of the definition." " It was contended that the re instatment of the discharged workmen was not an industrial dispute 1178 because if the union represented the discharged employees, they were not workmen within the definition of that word in the .
This argument is unsound.
We see no difficulty in the respondents (union) taking up the cause of the discharged workmen and the dispute being still an industrial dispute between the employer and the workmen.
The non employment " of any person " can amount to an industrial dispute between the employer and the workmen, falling under the definition of that word in the .
It was argued that if ' the respondents represented the undischarged employees, there was no dispute between them and the employer.
That again is fallacious, because under the definition of industrial dispute, it is not necessary that the parties to the proceedings can be the discharged workmen only.
The last words in the definition of industrial dispute, viz., " any person " are a complete answer to this argument of the appellants.
" It is true that two of the illustrations Nos.
(2) and (3) given in the aforesaid observations seem to indicate that there can be an industrial dispute relating to persons who are not strictly speaking "workmen"; but whether those persons would answer to such description or what community of interest the workmen had with them is not stated and in any view we do not think that illustrations given to elucidate a different problem can be taken as determinative of a problem which was not before the court in that case.
A reference was also made to the decision of this Court in D. N. Banerji vs P. R. Mukherjee (1).
The question there was whether the expression " industrial dispute " included disputes between municipalities and their employees in branches of work analogous to the carrying on of a trade or business.
More in point is the decision of the Full Bench of the Labour Appellate Tribunal in a number of appeals reported in 1952 Labour Appeal Cases, p. 198, where the question now before us, arose directly for decision.
The same question arose for decision before the All India.
Industrial Tribunal (Bank Disputes) and the majority of members (Messrs. K. C. Sen and (1) ; 1179 J. N. Majumdar) expressed the view that a dispute between employers and workmen might relate to employment or non employment or the terms of employment or conditions of labour of persons who were not workmen, and the words any person ' used in the definition clause were elastic enough to include an officer, that is, a member of the supervisory staff.
The majority view will be found in Chap.
X of the Report.
The minority view was expressed by Mr. N. Chandra sekhara Aiyar, who said: " It is fairly clear to my mind that "any person ') in the Act means any one whe belongs to the employer class or the workmen class and the cases in whose favour or against whom can be said to be adequately presented by the group or category of persons to which he belongs.
As stated already it should be remembered that the cases relied upon for the view that 'any person ' may mean others also besides the workmen were all cases relating to workmen.
They were discharged or dismissed workmen and when their cases were taken up by the Tribunal the point was raised that they had ceased to be workmen and were therefore outside the scope of the Act.
This argument was repelled.
In my opinion, there is no justification for treating such cases as authorities for the wider proposition that a valid industrial dispute can be raised by workmen about the employment or non employment of someone else who does not belong and never belonged to their class or category.
My view therefore is that the Act does not apply to cases of non workmen, or officers, if they may be so called.
" Both these views as also other decisions of High Courts and awards of Industrial Tribunals, were considered by the Full Bench of the Labour Appellate Tribunal and the Chairman of the Tribunal (Mr. J. N. Majamdar) acknowledged that his earlier view was not correct and expressed his opinion, concurred in by all the other members of the Tribunal, at p. 210 150 1180 " I am, therefore, of opinion that the expression 'any person ' has to be interpreted in terms of 'workmen. ' The words 'any person ' cannot have, in my opinion, their widest amplitude, as that would create incongruity and repugnancy in the provisions of the Act.
They are to be interpreted in a manner that persons, who would come within that expression, can at some stage or other, answer the description of workman as defined in the Act.
" It is necessary to state here that earlier a contrary view had been taken by the Calcutta High Court in Birla Brothers, Ltd. vs Modak (1), by Banerjee J. in The Dalhousie Jute Co. Ltd. vs section N. Modak (2), and by the Industrial Tribunal, Madras, in East India Industries (Madras) Ltd. vs Their Workmen (3).
It is necessary to emphasise here two considerations which have generally weighed with some of the learned Judges in support of the view expressed by them: these two Considerations are that (1) normally workmen will not raise a dispute in which they are not directly or substantially interested and (2) Government will not make a reference unless the dispute is a real or substantial one.
We think that these two considerations instead of leading to a strictly grammatical or etymological interpretation of the expression " any person " occurring in the definition clause should lead, on the contrary, to an interpretation which, to use the words of Maxwell, is to be found in the subject or in the occasion on which the words are used and the object to be attained by the statute.
We are aware that anybody may be a potential workman and the concept of "a potential workman" introduces an element of indefiniteness and uncertainty.
We also agree that the expression " any person " is not co extensive with any workman, potential or otherwise.
We think, however, that the crucial test is one of community of interest and the person regarding whom the dispute is raised must be one in whose employment, non employment, terms of employment or conditions of labour (as the case may be) the parties (1) I.L.R. (2) (3) 1181 to the dispute have a direct or substantial interest.
Whether such direct or substantial interest has been established in a particular case will depend on its facts and circumstances.
Two other later decisions have also been brought to our notice : Prahlad Rai Oil Mills vs State of Uttar Pradesh (1) in which Bhargava J. expressed the view that the expression 'any person ' in the definition clause did not mean a workman and the decision in Narendra Kumar Sen vs All India Industrial Disputes (Labour Appellate) Tribunal (2), being the decision of Chagla C. J. and Shah J. from which we have already quoted some extracts.
An examination of the decisions referred to above undoubtedly discloses a divergence of opinion : two views have been expressed, one based on the ordinary meaning of the expression 'any person ' and the other based on the context, with reference to the subject of the enactment and the objects which the legislature has in view.
For the reasons which we have already given, we think that the latter view is correct.
To summarise.
Having regard to the scheme and objects of the Act, and its other provisions, the expression 'any person ' in section 2 (k) of the Act must be read subject to such limitations and qualifications as arise from the context; the two crucial limitations are (1) the dispute must be a real dispute between the parties to the dispute (as indicated in the first two parts of the definition clause) so as to be capable of settlement or adjudication by one party to the dispute giving necessary relief to the other, and (2) the person regarding whom the dispute is raised must be One in whose employment, non employment, terms of employment, or conditions of labour (as the case may be) the parties to the dipute have a direct or substantial interest.
In the absence of such interest the dispute cannot be said to be a real dispute between the parties.
Where the workmen raise a dispute as against their employer, the person regarding whose employment, non employment, terms of employment or conditions of labour the dispute is raised need not be, strictly (1) A.I.R. (1955) NUC (Allahabad) 2664.
(2) (1953) 55 Bo .
L.R. 125.
1182 speaking, a 'workman ' within the meaning of the Act but must be one in whose employment, non employment, terms of employment or conditions of labour the workmen as a class have a direct or substantial interest.
In the case before us, Dr. K.P. Banerjee was not a workman '.
He belonged to the medical or technical staff a different category altogether from workmen.
The appellants had no direct, nor substantial interest in his employment or non employment, and even assuming that he was a member of the same Trade Union, it cannot be said, on the tests laid down by us, that the dispute regarding his termination of service was an industrial dispute within the meaning of section 2(k) of the Act.
The result, therefore, is that the appeal fails and is dismissed.
In the circumstances of this case there will be no order for costs.
SARKAR J.
On November 1, 1950, Dr. K. P. Banerjee was appointed the Assistant Medical Officer of the Dimakuchi Tea Estate, whose management is the respondent in this appeal.
On April 21, 1951, the respondent terminated Dr. Banerjee 's service with effect from the next day and he was offered one month 's salary in lieu of notice.
He accepted this salary and later left the Tea Estate.
The workmen of the Tea Estate raised a dispute concerning the dismissal of Dr. Banerjee.
On December 23, 1953, the Government of Assam made an order of reference for adjudication of that dispute by the Industrial Tribunal under the provisions of section 10 of the .
The order of reference was in the following terms: Whereas an industrial dispute has arisen in the matters specified in the schedule below between: (1) The workmen of Dimakuchi Tea Estate, P. O. Dimakuchi, District Darrang, Assam represented by the Secretary, Assam Chah Karmachari Sangha, I.N.T.U.C. Office, P.O. Dibrugarh, Assam and, (2) The management of Dimakuchi Tea Estate, P.O. Dimakuchi, District Darrang, Assam whose agents are Messrs. Williamson Magor and Company Limited, Calcutta.
1183 And whereas it is considered expedient by the Govt.
of Assam to refer the said dispute for adjudication to a Tribunal constituted under section 7 of the (Act XIV of 1947).
Now, therefore, in exercise of the powers conferred by clause (e) of sub section (1) of section 10, as amended, of the (XIV of 1947), the Governor of Assam is pleased to refer the said dispute to Sri Uma Kanta Gohain, Additional District and Sessions Judge (retired) who has been appointed to constitute a Tribunal under the provisions of the said Act.
SCHEDULE.
(i) Whether the management of Dimakuchi Tea Estate was justified in dismissing Dr. K. P. Banerjee, A. M. 0. ? (ii)If not, is he entitled to reinstatement or any other relief in lieu thereof ? The Tribunal held that Dr. Banerjee was not a workman as defined in the Act and, therefore, the dispute referred was not an industrial dispute and consequently it had no jurisdiction to adjudicate upon such a dispute.
The workmen preferred an appeal to the Labour Appellate Tribunal.
That Tribunal dismissed the appeal holding that Dr. Banerjee was not a workman within the definition of that term in the Act and as the dispute was connected with his employment or non employment, it was not an industrial dispute, and was therefore beyond the jurisdiction of the Industrial Tribunal.
From that decision the present appeal by the workmen of the Tea Estate arises with leave granted by this Court under article 136 of the Constitution.
In granting the leave this Court limited it to the question whether a dispute in relation to a person who is not a workman, falls within the scope of the definition of " Industrial Dispute " contained in section 2(k) of the Act.
That, therefore, is the only question before us.
Section 2(k) is in these terms: " Industrial dispute means any dispute or difference between employers and employers or 1184 between employers and workmen, or between workmen and workmen, which is connected with the employment or non employment or the terms of employment or with the conditions of labour, of any person.
" The dispute that was raised was between an employer, the respondent in this appeal and its workmen, the appellants before us and concerned the employment or non employment of Dr. Banerjee, a person employed by the same employer but who was not a workman.
The question that we have to decide has arisen because of the use of the words " any person " in the definition.
These words are quite general and very wide and according to their ordinary meaning include a person who is not a workman.
If this meaning is given to these words, then the dispute that arose concerning Dr. Banerjee 's dismissal would be an industrial dispute because the dispute would then be clearly within section 2(k).
This indeed is not disputed.
Unless there are reasons to the contrary these words have to be given their ordinary meaning.
In Birla Brothers Ltd. vs Modak (1) and in Western India Automobile Association vs Industrial Tribunal of Bombay (2) it was held that the words " any person " were not meant to refer only to workmen as defined in the Act but were wide and general and would include others who were not such workmen.
In The Dalhousie Jute Co. Ltd. vs section N. Modak (3), Banerjee J. said, " Any person means whatever individual is chosen.
I see no reason to restrict the meaning of the word 'Person '".
The same view was expressed in East India Industries (Madras) Ltd. vs Their Workmen (4), which was the decision of an Industrial Tribunal.
There is then some support for the view that the words I any person ' should have no restriction put upon them.
It is pointed out on behalf of the respondent that it is not its contention that the words 'any person ' should be understood as referring only to a " workman " as defined in the Act but that those words, should include all persons of the workman class and (1) I.L.R. (2) (3) (4) 1185 so they would include discharged workmen.
It is then stated that the first two of the cases mentioned above were concerned with a dispute regarding discharged workmen and did not therefore decide that the words (I any person ' included all.
It is no doubt true that these cases were concerned with a dispute regarding discharged workmen but I do not understand the decision to have proceeded on that basis.
Sen J. said in Birla Brothers case (1) (p. 213) that, " It cannot be argued that workmen dismissed prior to the Act are not 'persons" '.
And in the Western India Automobile Association case (2), it was said (p. 346 7), " It was contended that the reinstatement of the discharged workmen was not an industrial dispute because if the union represented the discharged employees, they were not workmen within the definition of that word in the .
This argument is unsound.
We see no difficulty in the respondents (union) taking up the cause of the discharged workmen and the dispute being still an industrial dispute between the employer and the workmen.
The non employment " of any person " can amount to an industrial dispute between the employer and the workmen, falling under the definition of that word in the .
It was argued that if the respondents represented the undischarged employees, there was no dispute between them and the employer.
That again is fallacious, because under the definition of industrial dispute, it is not necessary that the parties to the proceedings can be the discharged workmen only.
The last words in the definition of industrial dispute, viz., " any person ", are a complete answer to this argument of the appellants.
" The last two of the cases mentioned earlier were not however concerned with any dispute regarding discharged workmen.
In The Dalhousie Jute Co. case (3) the dispute was with regard to the employment of persons who sought employment as workmen and in the East India Industries (Madras) Ltd. case (4) the (1) I.L.R. (2) (3) [1951] 1 L.L.J. I45.
(4)[1952] 1186 dispute concerned the dismissal of a member of the supervisory staff, that is, another employee of the same employer who was not a workman.
It is however said that in none of these cases the arguments that are now advanced appear to have been advanced and they were not considered in the judgments.
This comment is justified.
I shall therefore lay these cases aside in deciding the question that has arisen.
Are there then good reasons for not giving to the words " any persons " their plain meaning ? Several have been advanced and I shall examine them a little later.
I wish now to discuss how it is proposed to restrict the meaning of these words.
I have already stated that the contention is that the words are not confined to a workman but refer only to a person of the workman class.
This, I confess, I do not follow.
The word " workman " is a term defined in the Act.
Outside the definition it, is impossible to say who is a workman and who is not.
That being so, the words " workman class " would be meaningless unless they meant all persons who were workmen as defined in the Act.
So read the words " any person " would mean only a workman.
But it is conceded that this is not so.
And, of course, it cannot be so, for, if that was intended, there was no reason for the legislature not to have used the words " any workman " instead of the words it any person ".
Again if this was the intention, then a dispute concerning the dismissal of a workman would not be an industrial dispute for a dismissed workman was not a workman within the definition of that word in the Act as it stood in 1953, that being the Act with which we are concerned.
Such a result is against all conceptions of industrial disputes laws.
It is indeed not contended that a dispute concerning the dismissal of a workman would not be an industrial dispute.
It therefore seems to me that the words " any personal cannot be said to refer only to persons of the workman class.
If they cannot be restricted as being understood to refer only to a person of the workman class, it is not suggested that they can be restricted in any other manner.
It is then said that the words refer to "workmen 1187 dismissed as well as in employment as also those, who in future, become "workmen".
Again I am in difficulty.
So understood the words would not include a person who seeks employment as a workman because he has not become a workman till he is employed.
That being so, it would have to be said that a dispute raised by workmen in employment when new workmen are to be appointed, that only those of the candidates as agree to join their union should be appointed and others should not be, would not be an industrial dispute.
That again seems to me to be against all con ceptions of industrial dispute laws.
Furthermore, I am wholly unable to appreciate what is meant by a dispute concerning a person, who is not at the time the dispute arises, a workman but in future becomes one.
When is such a person to become a workman ? I find no answer.
Again, is it to be said that whether a dispute is an industrial dispute or not may have to depend on future circumstances for there is no knowing whether the person concerning whom the dispute arises will later become a workman or not ? If he becomes one, there can be no dispute concerning him referable to a point of time before he became one, and, if he does not, he cannot be one who in future becomes a workman.
It is said that the words "any person " were used instead of the word workman because it was intended to include within them persons who had been dismissed before the dispute arose and who were not within the definition of workmen in the Act as it stood in 1953.
If that was the reason, why could not the legislature use the words " workmen and dismissed workmen ?" There was nothing to prevent that being done.
In fact the definition of "workman" has been amended in 1956 to include workmen discharged in consequence of an industrial dispute or whose discharge has led to that dispute.
So, as the definition now stands, it includes persons dismissed before the dispute arose.
Yet the words " any person " have been left untouch ed in section 2 (k) and not been replaced by the word workman.
This, to my mind, shows that it was not the 1151 1188 intention to confine the words " any person to workmen in employment or discharged.
But it is said that the words " any person were left in the Act because it was intended to include not only workmen in employment and dismissed workmen bat also persons who in future become workmen.
It is said that, that this is so appears from section 18 of the Act.
I shall presently consider this section but I desire to observe now that this argument much weakens the argument noticed in the preceding paragraph for if the words " any person " were used so that persons who in future become workmen might be included in them, they could not have been used to avoid such dismissed workmen as were not workmen as defined in the Act being excluded from them.
It seems to me that if it is argued that the words " any person " were used so that persons who in future become workmen may be included in them,; it cannot be argued that those words were used instead of the word "workman" because it was intended to include within them certain dismissed workmen who were not workmen within the definition of that term in the Act as it stood in 1953.
Coming now to section 18 it is in these terms: A settlement arrived at in the course of conciliation proceedings under this Act or an award which has become enforceable shall be binding on (a) all parties to the industrial dispute; (b) all other parties summoned to appear in the proceedings as parties to the dispute, unless the Board or Tribunal, as the case may be, records the opinion that they were so summoned without proper cause; (c) where a party referred to in clause (a) or clause (b)is an employer, his heirs, successors or assigns in respect of the establishment to which the dispute relates; (d) where a party referred to in clause (a) or clause (b)is composed of workmen, all persons who were employed in the establishment or part of the establishment, as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part.
1189 1 entirely fail to see how that section assists at all in finding out who were meant to be included in the words any person ".
Is it to be said that section 18(d) by, making the award binding on those who become in future employed in the establishment as workmen, indicates that such persons are treated in the same way as workmen in actual employment and therefore it must have been intended to include them within the words " any person " along with present and dismissed workmen.
I am wholly unable to agree.
The object of section 18(d) is quite clear.
The Act is intended to compose a dispute between an employer and his workmen by a settlement or an award brought about by the machinery provided in it and the period during which an award or a settlement is to remain in force is also provided.
The idea behind section 18 is that whoever takes up appointment as a workman in the establishment to which the dispute relates during the time when the award or settlement is in force, would be bound by it.
If it were not so, the award or settlement would have little effect in settling a dispute, for any newly recruited workmen could again raise the dispute.
Any one having any experience of industries knows that workmen are largely a shifting population and that the need for replacement of the workmen leaving and for addition to the strength of the workmen employed, is not infrequent.
To meet the exigency arising from this need and to make the award or settlement effective it was necessary to enact section 18(d).
Its object was not to place workmen in employment and workmen recruited in future in the same position for all purposes of the Act.
On the same reasoning, in view of section 18(a), it has to be said that it was the intention of the Act to give the heirs, successors or assignees of an employer the same position for all purposes of the Act as that of the employer.
But that would be absurd.
Section 18(d) deals with a person who in future becomes employed.
The section does not say employed as a workman but I will assume that that is what is meant.
I do not understand what is meant by saying that such a person is within the words " any person " in section 2(k).
What is the point of time that has to be considered ? 1190 If it is after he has become employed, then he is a workman and admittedly within the words "any person ".
Is it to be said that before such employment also he is within the meaning of those words.
But it is difficult to follow this.
It is conceivable that any person whatsoever may in future be employed as a workman for there is nothing in the quality of a human being that marks him out as a workman.
In this way the words " any person " would include all.
That, however, is not meant, for it will defeat the very argument based on section 18(d).
Is it to be said then, only such future workmen are meant as apply for jobs as such ? But the section makes no reference to such people at all and cannot therefore be of any assistance in showing that it was intended that such applicants would be included within the words " any person ".
I am therefore wholly unable to accept the argument that section 18(d)shows that future workmen were intended to be included within the words "any person".
I wish also to say this.
Assume that section 18(d) shows that it was intended to include within the words ,any person " one who in future becomes a workman.
But where is the reason for saying that the words do not also include others ? Section 18 provides none.
I proceed now to discuss the reasons advanced for restricting the generality of the words " any person They were put as follows: 1.
In certain sections of the Act the words " any person " have been used but there the reference is to workmen, and therefore in section 2(k) the words " any person " should mean persons of the workman class. 2.
The scheme and the purpose of the Act generally and the object of the Act specially being to benefit workmen, the words "any person " should be confined to people of the workman class.
The word "dispute" in section 2(k) itself indicates that the person raising the dispute must be interested in the dispute and therefore since the dispute must concern the employment, non employment, terms of employment or the conditions of labour of a person, that person must be of the workman class.
1191 The first reason, then, is that in certain sections, the Act uses the words " any person".
I will assume that by the use of these words only workmen are intended to be referred to in these sections.
But the question arises why is such intention to be inferred? Clearly, because the context requires it.
I will refer to some of these sections to make my point clear.
Section 2(1) defines a lock out as " the closing of a place of employment, or the suspension of work, or the refusal by the employer to continue to employ any number of persons employed by him." Section 2(q) defines a strike as " a cessation of work by a body of persons employed in any industry acting in combination, or a concerted refusal, or a refusal under a common understanding, of any number of persons who are or have been so employed to continue to work or to accept employment.
" Lock outs and strikes are dealt with in sections 22, 23 and 24 of the Act.
Section 22(2) says that no employer carrying on any public utility service shall lock out any of his workmen except on certain conditions mentioned in the section.
Section 23 says that no employer of any workman employed in any industrial establishment shall declare a lock out during the periods mentioned in the section.
Section 24 states that a strike or a lock out shall be illegal if commenced or declared in contravention of section 22 or section 23.
The definitions of lock outs and strikes are for the purposes of sections 22, 23 and 24.
There are other sections in which lock outs and strikes are mentioned but they make no difference for our present purpose.
The lock outs and strikes dealt with in sections 22(2), 23 and 24 are lock outs of and strikes by, workmen.
It may hence be said that in section 2(1) and (q) by the word person a workman is meant.
Therefore, it is these sections, viz., 22(2), 23 and 24, which show what the meaning of the word 'person ' in the definitions is.
I would like to point out in passing that section 22(1) says that no person employed in a public utility service shall go on strike except on certain conditions and there is nothing in the Act to show that the word "person" in section 22(1) means only a workman.
Proceeding however with the point we are 1192 concerned with, the question is, is there any provision in the Act which would show that the words " any person" in section 2(k) were meant only to refer to persons of the workman class.
I have not been able to find any and none has been pointed out.
Therefore the fact that in section 2, sub sections
(1) and (q) the word " persons " means workmen is no reason for concluding that the same word must be given the same restricted meaning in section 2(k).
The position with regard to section 33A, in which the word employee has to be read as meaning a workman because of section 33, is the same and does not require to be dealt with specially.
I may add that if it has to be said that because in certain other sections the word "person" has to be understood as referring to a workman only, in section 2(k) also the same word must have the same meaning, then we have to read the words " any person" in section 2(k) as meaning only a workman as defined in the Act.
This however is not the contention of the learned counsel for the respondent.
I may further say that it was not contended that the word " person" in section 2, sub sections (1) and (q) and the word employee in section 33A has to be read as including not only a workman in employment but also a discharged workman and a person who in future becomes a workman, and it seems to me that such a contention would not have been possible.
I proceed now to deal with the second group of reasons based on the object and scheme of the Act.
It is said that the Act makes a distinction between employees who are workmen and all other employees, and that the focus of the Act is on workmen and it was intended mainly for them.
This was the view taken in United Commercial Bank Ltd. vs Kedar Nath Gupta (1).
I will assume all this.
It may also be true that the Act is not much concerned with employees other than workmen.
But I am unable to see that all this is any reason for holding that the words " any person " must mean a person of the workman class.
The definition in section 2(k) would be fully concerned with workmen however the words " any person " in it may (1) 1193 be understood because the dispute will be one to which a workman is a partyl Is it to be said that the Act would cease to be intended for workmen or the focus of it displaced from workmen or that the distinction between workmen and other employees would vanish if a dispute relating to the dismissal of one who is not a workman is held to be an industrial dispute, even though the dispute is one to which workmen are parties ? I am unable to subscribe to such an argument.
But it is said that in such a case the workmen would not be interested in the dispute, the dispute would not really be with them and they would not be in any real sense of the word parties to it.
So put the argument comes under the last of the three reasons earlier stated, ,namely, that in order that there may be an industrial dispute the workmen must be interested in that dispute.
This contention I will consider later.
It is also said in the United Commercial Bank Case (1) that the main purpose of the Act is to adjust the relations between employers and workmen by securing for the latter the benefit provided by the Act.
It is really another way of saying that the workmen must be interested in the dispute, for if they are not interested no benefit can accrue to them from an adjustment of it.
This, as I have said, I will discuss later.
It is also said that the Act is for the benefit of workmen and therefore if a dispute concerning a person who is not a workman, is an industrial dispute capable of being resolved by adjudication under the Act, then, if the award goes in favour of the workmen raising it, a benefit would result to a person whom the Act did not intend to benefit.
So it is said, an industrial dispute cannot be a dispute concerning one who is not a workman.
But the benefit resulting to the person in such a case would only be incidental.
The workmen themselves would also be benefited by it at the same time.
To adopt this argument would be to deprive the workmen of this benefit and there is no justification for doing so.
How the workmen would be benefited would appear later when I discuss the question of the workmen 's interest in the dispute.
I will show later (1) [1952] 1 L. L. J .
1194 that if the workmen were not interested in the dispute so that they could get no benefit under it, there would be no reference by the Government and there would be no benefit to a person who was not a workman.
Further, I am unable to agree that the Act is intended to confer benefit on workmen.
Its object is admitted by all to preserve industrial peace.
It may confer some benefit on workmen but at the same time it takes away their power and right to strike and puts them under a disadvantage.
We were referred to the note of dissent to the award of the majority of the All India Industrial Tribunal (Bank Disputes), dated July 31, 1950.
This note was by Mr. Chandra Sekhar Aiyer who later became a Judge of this Court.
In that note he expressed the view that " any person " in section 2(k) means any one who belongs to the employer class or the workmen class and the cases in whose favour or against whom, can be said to be adequately represented by the group or category of persons to which he belongs.
I have already stated my difficulties in agreeing that the words "any person " mean only persons of the work.
man class.
I will presently deal with the reasoning on which Mr. Aiyer bases his view but I wish to say now that it seems to me that the words "any person" cannot refer to anyone belonging to the employer class because the dispute must be in connection with the employment, non employment, or terms of employment or the conditions of labour of any person and it is not possible to conceive of any such thing in connection with a person in his capacity as an employer.
Mr. Aiyar first stated that a necessary limitation to be put on the words " any person " is that the person should have something to do with the particular establishment where the dispute has cropped up.
He said that it could not be that the workmen in Bank A could raise a valid and legitimate industrial dispute with their employer because some one in Bank B had not been treated well by his employer.
Assume this is so.
But it does not follow that an industrial dispute must be one concerning a person of the workman class alone, for, a person having something to do with an 1195 establishment need not necessarily belong to the workman class.
An officer in an establishment where the dispute crops up would be as much a person having something to do with that establishment as a workman there and, therefore, even assuming that the limitation suggested by Mr. Aiyar applies, there would be nothing in it to prevent an industrial dispute concerning him arising.
The question is not whether the person concerning whom an industrial dispute may arise, has to be employed in the establishment where the dispute arises, but whether he must belong to what has been called the workman class.
The decision of the former question which has not arisen in this case, is of no help in deciding the question that has arisen and I do not therefore feel called upon to express any opinion with regard to it.
Mr. Aiyar next referred to a case where workmen of a Bank raise a dispute with that Bank, about an employee of the Bank who was not a workman, for example an officer who had been dismissed.
He assumed that the Bank and the officer had no dispute as between themselves.
In his view, if in such a case the dispute was an industrial dispute and could be made the subject matter of an award by an Industrial Tribunal, the award would not be binding on the officer because he had no concern with the dispute.
According to him, it would be absurd to suggest that the Bank was under an obligation to give effect to the award.
Therefore, in his view, such a dispute would not be an industrial dispute.
Now, whether the award would be binding on the officer or not, would depend on whether he could be made a party to the dispute under section 18(b).
It is not necessary to discuss that question now.
But assume that the award was not binding on the officer.
Why should not the bank be under an obligation to give effect to the award in so far as it lay in its power to do so ? If the dispute was an industrial dispute, the award would be binding on the Bank and it must give effect to it.
Then the argument comes to this that the dispute is not an industrial dispute because the award would not, as 152 1196 assumed, be binding on the officer concerning whom the dispute arose.
I cannot accept this view.
Take this case.
An employer dismisses five of his workmen.
The workmen dismissed make no grievance.
Three months later the employer dismisses twenty five more and again neither the dismissed workmen nor the workmen in employment raise any dispute.
Two months after the second dismissal the employer dismisses fifty workmen.
These workmen make no complaint and leave.
The workmen in employment now begin to take notice of the dismissals and think that the employer is acting on a set policy and raise a dispute about all the dismissals.
The dispute is then referred for adjudication and an award is made in favour of the workmen.
Assume that all the dismissed workmen could be made parties to the adjudication proceedings but for one reason or another, were not made parties.
This award would not be binding on the dismissed workmen and certainly not on those who had been dismissed on the two earlier occasions.
They would not be covered by any of the provisions of section 18.
Is it to be said that for that reason the dispute is not an industrial dispute? I am wholly unable to agree.
Such a dispute would be entirely within the definition even on the assumption that the words "any person" mean only persons of the workman class.
It follows, therefore, that in order to decide whether a dispute is or is not an industrial dispute, the question whether the award would be binding on the person concerning whose employment the dispute was raised, is no test.
I therefore find nothing in the minute of dissent of Mr. Aiyar to justify the putting of any restriction on the plain meaning of the words "any person" in section 2(k).
As I shall show later, if certain disputes concerning foremen who are not workmen and who I will assume would not be bound by the award, are not to be industrial disputes, the object of the Act would clearly be defeated.
I cannot therefore agree that the fact that an award is not binding on one affords a reason for holding that there cannot be an industrial dispute concerning him.
The matter was put from another point of view.
It 1197 is said that if workmen could raise an industrial dispute with their employer concerning the salary of a manager, who was not a workman, and an award was made directing the employer to pay a smaller salary to the manager, the employer would be bound by the award but not the manager.
Then it is said, suppose, the employer had made a contract with the manager to employ him at the higher salary for a number of years.
It is pointed out that in such a case the award being binding on the employer, he would be compelled to commit a breach of his contract and be liable to the manager in damages.
It is said that it could not have been the intention of the Act to produce a result whereby an employer would become liable in damages and therefore such a dispute cannot be an industrial dispute.
But I do not agree that the employer would be liable in damages.
The award being binding on him under the Act, the performance of his contract with the manager would become unlawful after the award and therefore void under section 56 of the Contract Act.
The employer would not, by carrying out the award, be committing any breach of contract nor would he be liable in damages.
To hold that the dispute contemplated is an industrial dispute, would not produce the absurd result suggested.
The reason suggested for not holding that dispute to be an industrial dispute, therefore, fails.
Take another case.
Suppose there was a dispute between two employers A and B concerning the wage to be paid by B to his workmen, A complaining that B was paying too high wages, and the dispute was referred for adjudication by a Tribunal and an award was made that B should reduce the wages of his workmen.
Assume the workmen were not parties to the dispute and were not made parties even if it was possible to do so.
The award would not be binding on the workmen concerned under section 18.
None the less it cannot be said that the dispute was not an industrial dispute.
It completely satisfies the definition of an industrial dispute even on the basis that the words SC any person " mean only workmen.
So again it would appear that the words may include one on 1198 whom the award would not be binding.
I may add here, though I do not propose to decide the question it being wholly unnecessary for the case before us, that it seems to me that when a dispute concerns a person whether a workman or not, who is riot a party to the dispute, he can, under section 18(b), be properly made a party to appear in the proceedings arising out of that dispute.
I find nothing in that section to prevent such a course being adopted.
If he is made a party, there is no doubt that the decision, whichever way it went, would be most satisfactory to all concerned.
If this is the right view, then all argu ments based on the fact that the words " any person " can only include one on whom the award would be binding would disappear, for on being made a party the award would be binding on that person.
It would on the contrary show that it was intended that the words " any person " should include one who is not a party to the dispute, and therefore not in the workman class.
An argument based on section 33 was also advanced.
That is this.
The section provides that during the pendency of conciliation proceedings or proceedings before a Tribunal in respect of an industrial dispute the conditions of service of workmen concerned in the dispute cannot be changed by the employer, nor such workmen dismissed or otherwise punished by him except with the permission of the Board or Tribunal.
It is said that this section shows that it was intended to protect only workmen and therefore the words " any person " in section 2(k) should be understood as meaning workmen only.
I do not follow this argument at all.
Section 33 gives protection to workmen concerned in the dispute which can only mean workmen who are parties to the dispute.
A workman concerning whom a dispute arises may or may not be a party to the dispute.
The object of the section is clear.
If workmen could be punished during the pendency of the proceedings, then no workman would raise a dispute or want to take part in the proceedings under the Act concerned with its adjudication.
Further, such punishment would surely give rise to 1199 another dispute.
All this would defeat the entire object of the Act which is to compose disputes by settlement or adjudication.
Section 33 gives protection to workmen who are parties to the dispute and does not purport to concern itself with the person concerning whom the dispute arises.
Such being the position, the section can throw no light on the meaning of the words "any person " in section 2(k).
Suppose a workman was dismissed and thereupon a dispute arose between the employer and the other workmen in employment concerning such dismissal.
Such a dispute would be undoubtedly an industrial dispute.
And it is none the less so, though no protection can be given to the dismissed workman under section 33 for he is already dismissed.
Reference was also made to section 36 which provides for the representation of the parties to a dispute in a proceeding arising under the Act out of such dispute.
Sub section (1) of section 36 provides how a workman, who is a party, shall be represented and sub section (2) provides how an employer who is likewise a party, shall be represented.
The section does not provide for representation of any other person.
It is said that this shows that the words " any person " must mean only a workman, because they must mean an employee, past, present or future and only such employees as are workmen can be parties to the dispute under the definition.
I am unable to agree.
Section 36 provides for the representation of workmen besides employers and of no one else, because no one but a party need be represented in the proceedings and under the definition, a party to an industrial dispute must either be an employer or a workman.
This section has nothing to do with the person concerning whom the dispute arises.
If, however, he is also a party to the dispute, then the section makes a provision for his representation in the proceedings arising out of that dispute as such a party and not as one concerning whom the dispute has arisen.
I have earlier said that there may be a case in which though the person concerning whom the dispute arises is a workman, still he may not be a party to it.
The fact that besides an em 1200 ployer, the Act makes provision for the representation in the proceedings arising out of an industrial dispute of workmen alone does not show that an industrial dispute can only arise concerning a workman.
In my view, therefore section 36 is of no assistance in finding out the meaning of the words " any person ".
I come now to the last of the reasons advanced for restricting the natural meaning of the words " any person ".
It is said that the word dispute in the definition shows that the person raising it must have an interest in it and therefore since the dispute must concern the employment, non employment, terms of employment or conditions of labour of a person that person must be a workman.
I confess I do not follow the reasoning.
It is said that this is the view expressed by a Bench of the Bombay High Court consisting of Chagla C. J. and Shah J. in Narendra Kumar Sen vs The All India Industrial Disputes (Labour Appellate) Tribunal (1).
I have some difficulty in seeing that this is the view expressed in that case.
What happened there was that certain workmen raised a dispute against their employer which included a demand for fixing scales of pay and for bonus not only for themselves but also for the foremen and divisional heads under the same employers who were not work men and this dispute had been referred by the Government for adjudication by the Industrial Tribunal.
The Tribunal refused to adjudicate the dispute in so far as it concerned the pay and bonus of persons who were not workmen as, according to it, to this extent it was not an industrial dispute.
The workmen then applied to the High Court for a writ directing the Tribunal to decide the dispute relating to the claims made for the pay and bonus of the persons who were not workmen.
The High Court held that the dispute was not an industrial dispute and refused the writ.
Chagla C. J. expressed himself in these words (p. 130): "A controversy which is connected with the employment or non employment or the terms of employment or with the conditions of labour is an industrial controversy.
But it is not enough that it (1) 1201 should be an industrial controversy; it must be a dispute; and in my opinion it is not every controversy or every difference of opinion between workmen and employers which is constituted a dispute or difference within the meaning of section 2(k).
A workman may have ideological differences with his employer; a workman may feel sympathetic consideration for an employee in his own industry or in other industry; a workman may feel seriously agitated about the conditions of labour outside our own country; but it is absurd to suggest that any of these factors would entitle a workman to raise an industrial dispute within the meaning of section 2(k).
The dispute contemplated by section 2(k) is a controversy in which the workman is directly and substantially interested.
It must also be a grievance felt by the workman which the employer is in a position to remedy.
Both the conditions must be present; it must be a grievance of the workman himself; it must be a grievance which the employer as an employer is in a position to remedy or set right.
" Then he said (p. 131): " It is only primarily in their own employment, in their own terms of employment, in their own conditions of labour that workmen are interested and it is with regard these that, they are entitled to agitate by means of raising an industrial dispute and getting it referred to a Tribunal by the Government under section 10.
" I find some difficulty in accepting all that the learned Chief Justice said.
But assume he is right.
How does it follow that because an industrial dispute is one in which workmen must be interested it must be concerning themselves ? I do not see that it does.
Neither do I find Chagla C. J. saying so.
In the case before him the dispute concerned persons who were not workmen and he found on the facts before him that the workmen were not interested in that dispute and thereupon held that the dispute was not an industrial dispute.
But that is not saying that an industrial dispute can only be a dispute concerning workmen.
Even the observations that I have read from p. 131 of the report would not support this view.
It is not 1202 difficult to conceive of a dispute concerning the employment of a person who is not a workman which at the same time is one which affects the conditions of labour or terms of employment of the workmen themselves.
I shall give examples of such disputes later.
What I wish now to point out is that even if an industrial dispute has to be one in which workmen are interested, that would be no reason for saying that it can only be a dispute concerning workmen and that therefore the words " any person " in section 2(k) must mean only workmen.
I also think it right to say now that this argument is not really open to the respondent, for the contention of the learned counsel for the respondent is, as I have earlier stated, that the words " any person" do not mean a workman only but mean all persons of the workman class, or past, present and future workmen.
Now I find nothing in the judgment of Chagla, C. J. to show that workmen can be interested in the workman class or in past or future workmen.
On the contrary be says that workmen are interested primarily and by the word " primarily " I think he means, directly and substantially only in their own employment, terms of employment or conditions of labour.
Reliance on the judgment of the Bombay High Court will therefore land the respondent in contradiction.
I find great difficulty in saying that it is a condition of the existence of an industrial, dispute that workmen must be interested in it.
The Act does not say so.
But it is said that the word dispute in the definition implies it.
No doubt, one does not raise a dispute unless he is interested in it, and as the Act must be taken to have in contemplation normal men it must have assumed that workmen will not raise a dispute unless they are interested in it.
But that is not to my mind saying that it is a condition of an industrial dispute as contemplated by the Act that workmen must be interested in it.
So to hold would, in my opinion, lead to grave difficulties and might even result in defeating the object of the Act.
This I will endeavour to show presently.
What I have to say will also show that even assuming that an industrial 1203 dispute is one in which workmen have to be interested, the dispute that we have in this case concerning Dr. Banerjee 's dismissal is an industrial dispute for the appellant workmen are directly and substantially interested in it.
The question that first strikes me, is what is the 2 interest which workmen must have? I find it impossible to define that interest.
If it cannot be defined, it cannot of course be made a condition of the existence of an industrial dispute, for we would then never know what an industrial dispute is.
Now, " interest ", as we understand that word in courts of law, means the well known concepts of proprietary interest or interest in other recognised civil rights.
Outside these the matter becomes completely at large.and well nigh impossible of definition.
To say that the interest that the workmen must have is one of the well known kinds of interest mentioned above is, to my mind, to make the Act largely infructuous.
We cannot lose sight of the fact that the Act is not dealing with interest as ordinarily understood.
It cannot be kept in mind too well that the Act is dealing with a new concept, namely, that of the relation between employer and employed or to put it more significantly, between capital and labour, a concept which is undergoing a, fast and elemental change from day to day.
The numerous and radical amendments made in the Act since it came on the Statute book not so long ago, testify to the fast changing nature of the concept.
Bearing all these things in mind, I find it almost impossible to define adequately or with any usefulness an interest which will serve the purposes of the Act.
I feel that an attempt to do so will introduce a rigidity which will work harm and no good.
Nor does it, to my mind, in any manner help to define such interest by calling it direct and substantial.
I will illustrate the difficulty that I feel by an example or two.
Suppose a workman was dismissed by the employer and the other workmen raised a dispute about it.
Such a dispute comes completely within the definition even assuming that the words 153 1204 "any person " only refer to persons of the workman class, as the respondent contends.
There is therefore no doubt that such a dispute is an industrial dispute.
The question then is what interest have the disputing workmen in the reinstatement of the dismissed work man if they must have an interest ? The reinstatement would not in any way improve their financial condition or otherwise enhance any interest of theirs in any sense of the term, in common use.
The only interest that I can think of the workmen having for themselves in such a dispute is the solidarity of labour.
It is only this that if the same thing happens to any one of them, the others would rally round and by taking up his cause prevent the dismissal.
Apart from the Act how would the workmen have prevented the dismissal from taking effect ? They would have, if they wanted to prevent the dismissal, gone on strike and thereby tried to force the employer 's hands not to give effect to the dismissal.
That would have destroyed the industrial peace which the object of the Act is to preserve.
It is in order to achieve this object that the Act recognises this dispute as an industrial dispute and provides for its settlement by the methods of conciliation or adjudication contained in it and preserves the industrial peace by preventing the parties being left to their own devices.
If what I have described as solidarity of labour is to be considered as direct and substantial interest for the purposes of an industrial dispute, as I conceive is not disputed by any one, then it will appear that we have embarked on a new concept of interest.
I will now take another case which in regard to interest is the same as the previous one.
Suppose the employer engages some workmen at a low rate of wages and the other workmen raise a dispute demanding that the wages of these low paid workmen be increased.
This case would be completely within the definition of an industrial dispute even according to the most restricted meaning that may be put upon the words "any person ", namely that they refer only to work.
men as defined in the Act, because the dispute concerns the terms of employment of such a workman.
1205 So this has admittedly to be held to be an industrial dispute.
What then is the interest of the workmen in this dispute ? The increase in the wages claimed would not in any manner improve the financial condition of the disputing workmen, nor serve any of their interests as ordinarily understood.
It would however help the workmen in seeing that their own wages were not reduced by preventing the employer from being able to engage any low paid workman at all.
Apart from this I can think of no other interest that the disputing workmen may have in the dispute.
If therefore it is essential that the disputing workmen must have an interest in the dispute, this must be that interest, for, as already stated, the dispute is undoubtedly an industrial dispute.
If this is sufficient interest to constitute an industrial dispute I fail to see why the workmen have no sufficient interest in a dispute in which they claim that a foreman who is particularly rude and brutal in his behaviour should be removed and they should have a more human foreman.
This is surely a matter in which the workmen raising the dispute have a personal and immediate interest and not, as in the last case, an interest in the prevention of something happening in future, which conceivably may never happen at all.
Such an interest is plainly nearer to the ordinary kinds of interest than the interest in solidarity of labour or in the prevention of future harm which in the preceding paragraphs have been found to be sufficient to sustain an industrial dispute.
The dispute last imagined would undoubtedly be an industrial dispute if the foreman was a workman for then it would be entirely within the definition of an industrial dispute.
Now suppose the foreman was not a workman.
Can it be said that then the dispute would not be an industrial dispute ? Would the interest of the workmen in the dispute be any the less or in any way different because the foreman whose dismissal was demanded was not a workman ? I conceive it impossible to say so.
Therefore if interest is the test, the dispute that I have imagined would have to be held to be an industrial dispute whether or not 1206 the foreman concerned was a workman.
Now assume that the dispute did not arise out of a demand for the dismissal of a foreman but against his dismissal on the ground that he was a particularly kind and sympathetic man and the workmen were happy to work under him.
In such a case the interest of the workmen in the dispute would be the same as their interest in the dispute demanding the foreman 's dismissal.
They would be demanding his reinstate ment in their own interest; they would be demanding it to make sure that their work would be easy and smooth and that they would be happy in the discharge of it.
Such a dispute therefore also has to be held to be an industrial dispute and as in the last case, it would make no difference for this purpose that the foreman concerned was not a workman.
If this is right, as I think it is, then similarly the dispute concerning the dismissal of Dr. Banerjee would be an industrial dispute for the workmen have sufficient personal and immediate interest in seeing that they have a doctor of their liking to look after them.
It is indeed the case of the workmen that by his devotion to duty and good behaviour Dr. Banerjee became very popular with the workmen.
Whether the contention of the workmen is justified or not and whether it would be upheld by the Tribunal or not, are wholly different matters and do not affect the question whether in an industrial dispute the work.
men must be interested.
It is enough to say that I find no reason to think that the appellant had no interest in the dispute concerning the dismissal of Dr. Banerjee.
Therefore, I would hold that even if it is necessary to constitute an industrial dispute that workmen must have an interest in it, the dispute before us is one in which the appellants ' have a direct and substantial interest and it is an industrial dispute.
For myself however I would not make the interest of the workmen in the dispute a condition of the existence of an industrial dispute.
The Act does not do so.
I repeat that it would be impossible to de no 1207 such interest.
In my view, such a condition would defeat the object of the Act.
It is said that otherwise the workmen would be able to raise disputes in which they were not interested.
Supposing they did, the Government is not bound to refer such disputes for adjudication.
Take a concrete case.
Suppose the workmen raise a dispute that the manager of the concern should have a higher pay.
It would be for the Government to decide whether, the dispute should be referred for adjudication or not.
The Government is not bound to refer.
Now, how is the Government to decide ? That must depend on the Government 's evaluation of the situation.
That this is the intention is clear from the object that the Act has in view.
I will here read from the judgment of the Federal Courtin Western India Automobile Association case(1) what the object of the Act is.
It was said at PP.
331 332.
" We shall next examine the Act to determine its scope.
The Act is stated in the preamble to be one providing for the investigation and settlement of industrial disputes.
Any industrial dispute as defined by the Act may be reported to Government who may take such steps as seem to it expedient for promoting conciliation or settlement.
It may refer it to an Industrial Court for advice or it may refer it to an Industrial Tribunal for adjudication.
The legislation substitutes for free bargaining between the parties a binding award by an impartial tribunal.
Now, in many cases an industrial dispute starts with the making of number of demands by workmen.
If the demandsare not acceptable to the employer and that is what often happens it results in a dismissal of the leaders and eventually in a strike.
No machinery for reconciliation and settlement of such disputes can be considered effective unless it provides within its scope a solution for cases of employees who are dismissed in such conditions and who are usually the first victims in an industrial dispute.
If reinstatement of such persons cannot be brought about by (1) [1949] F.C.R 321.
1208 conciliation or adjudication, it is difficult, if not im possible, in many cases to restore industrial peace which is the object of the legislation ".
This is the view of the object of the Act that is accepted by all including the decisions in Narendra Kumar Sen 's case(2) and United Commercial Bank case (2).
In Narendra Kumar Sen 's case (1) Chagla C. J. said at p. 130: "The was enacted, as Mr. Desai rightly says, to bring about industrial peace in the country, to avoid conflicts between employers and labourers, to prevent strikes and lock outs, to see that the production in our country does not suffer by reason of constant and continuous labour troubles ".
Therefore in deciding whether to refer or not, the Government is to be guided by the question whether the dispute is such as to disturb the industrial peace and hamper production.
I find no difficulty in thinking that the Government would realise that there was no risk of the peace being disturbed or production being hampered by the dispute raised by the work men demanding a higher salary for the manager, for being normal men the workmen were not likely to suffer the privations of a strike to enforce their demand for a cause of this nature.
The Government must be left to decide this primary question for itself, and therefore the Government must be left to decide in each case whether the workmen had sufficient interest in the dispute.
If Government thought that the workmen had no such interest as would lead them to disturb industrial peace by strike or otherwise if the dispute was not ended, the Government might not in its discretion refer the dispute for adjudication by a tribunal.
It must be left free to decide as it thinks best in the interest of the country.
It is not for the Court to lay down rigid principles of interest which interfere with the Government 's discretion, for that might defeat the object of the Act.
If the Government feels that the dispute is such that it might lead to the disruption of industrial peace, it is the policy of the Act that it should exercise its powers under it (1) (2) 1209 to prevent that.
Assume a case in which the workmen raised a dispute without having what the court considers sufficient interest to make it an industrial dispute and therefore, on the matter coming to the court the dispute was held not to be an industrial dispute.
Upon that the Government 's hands would be tied and it would not be able to have that dispute resolved by the processes contemplated in the Act.
Suppose now that, the workmen then go on strike and industrial peace is disturbed and production hamper.
The object of the Act would then have been defeated.
And why ? Because it was said that it was not a dispute in which the workmen were interested and therefore not a dispute which was capable of being adjusted under the provisions of the Act.
It would be no answer to say that the workmen would not go on strike in such a case.
If they would not, neither would the Government refer the dispute for adjudication under the Act and it would not be necessary for the court to decide whether the workmen were interested in the dispute or not or whether the dispute was an industrial dispute or not.
Therefore, I think that it is not necessary to say that a dispute is an industrial dispute within the meaning of the Act only when workmen are interested in it.
Such a test of an industrial dispute would make it justiciable by courts and also introduce a rigidity in the application of the Act which is incompatible with the fast changing concepts it has in view and so defeat the object of the Act.
It is enough to assume that as normal men, workmen would not raise a dispute or threaten industrial peace on account of it unless they are interested in it.
I wish however to make it clear, should any, doubt exist as to this, that I do not intend to be understood as saying that the question whether a dispute is an industrial dispute or not is never justiciable by courts of law and that a dispute is an industrial dispute only if the Government says so.
Such a larger question does not arise in this case.
All that I say is that it is not a condition of an industrial dispute that workmen must be interested in it and no question of interest 1210 falls for decision by a court if it can be called upon to decide whether a dispute is an industrial dispute or not.
The question of interest can only be of practical value in that it helps the Government to decide whether a dispute should be referred for adjudication or not.
Then it is said that if workmen were allowed to raise a dispute concerning a person who was not a workman, then it would be possible for such a person to have his dispute with the employer adjudicated through the workmen.
This case was put.
Suppose the manager wanted his salary to be increased but could not make the employer agree to his demand, he could then instigate the workmen and make them raise a dispute that his salary should be increased and if such a dispute is an industrial dispute and the award goes in favour of the workmen then the result would be that the Act could be used for settling disputes between the manager and his employer, a dispute which the Act did not intend to concern itself with.
So it is said that the words " any person" in section :2 (k) cannot include an employee who is not a work.
I am unable to agree.
First, in interpreting an Act, the Court is not entitled to assume that persons would use its provisions dishonestly.
The words in the Act cannot have a different meaning than their natural meaning because otherwise there would be a possibility of the Act being used for a purpose for which it was not meant.
The remedy against this possibility is provided in the Act, in that it has given complete freedom to the Government not to refer such a dispute.
It is not necessary to meet a somewhat remote apprehension that the Act may be used for purposes other than those for which it was meant, to construe its language in a manner different from that which it plainly bears,.
Lastly, in doing this many cases like Chose earlier mentioned including the present, which are clearly cases of industrial disputes would have to be excluded in the attempt to prevent by interpretation a remote apprehension of a misuse of the Act.
This would do more harm than good.
1211 1 have therefore come to the conclusion that a dispute concerning a person who is not a workman may be an industrial dispute within section 2 (k).
As it has not been said that the dispute with which we are concerned is for any other reason not an industrial dispute, I hold that the Industrial Tribunal had full jurisdiction to adjudicate that dispute and should have done so.
I would therefore allow the appeal and send the case back to the Industrial Tribunal for adjudication in accordance with law.
ORDER OF THE COURT.
In view of the opinion of the majority, the appeal is dismissed.
But there will be no order as to costs.
Appeal dismissed.
| The question for decision in this appeal was whether a dispute raised by the workmen ' relating to a person who was not a workman could be an industrial dispute as defined by section 2(k) of the , as it stood before the amendments Of 1956.
The appellants, who were the workmen of Dimakuchi Tea Estate, espoused the cause of one Dr. K. P. Banerjee, Assistant Medical Officer, who had been dismissed unheard with a month 's salary in lieu of notice but who had accepted such payment and left the garden and the dispute raised was ultimately referred by the Government for adjudication under section 10 of the Act.
Both the Tribunal and the Appellate Industrial Tribunal took the view that as Dr. Banerjee was not an workman within the meaning of the Act, the, dispute was not an industrial dispute as defined by section 2(k): Held, (per Das, C. J., and section K. Das, J., Sarkar, J., dissenting), that the expression 'any person ' occurring in section 2(k) of the , cannot be given its ordinary meaning and must be read and understood in the context of the Act and the object the Legislature had in view.
Nor can it be equated either with the word 'workman ' or 'employee '.
The two tests of an industrial dispute as defined by the section must, therefore, be, (1) the dispute must be a real dispute, capable of being settled by relief given by one party to the other, and (2) the person in respect of whom the dispute is raised must be one in whose employment, non employment, terms of employment, or conditions of labour (as the case may be), the parties to the dispute have a direct or substantial interest, and this must depend on the facts and circumstances of each particular case.
Applying these tests, the dispute in the present case which was in respect of a person who was not a workman and belonged to a different category altogether, could not be said to be a dispute within the meaning of section 2(k) of the Act and the appeal must fail.
Narendra Kumar Sen vs All India Industrial Disputes (Labour Appellate) Tribunal, , approved.
Western India Automobile Association vs The Industrial Tribunal, Bombay, , distinguished 1157 Case law discussed.
Per Sarkar, J. There is no reason why the words 'any person ' in section 2(k) of the Act should not be given their natural meaning so as to include an employee who is not a workman within the meaning of the Act.
Consequently, a dispute concerning a person who is not a workman may be an industrial dispute within that section.
The primary object which the Act has in view is the preservation of the industrial peace.
The Act does not make the interest of the workmen in the dispute a condition of the existence of an industrial dispute.
Such interest is incapable of definition and to make it a condition of an industrial dispute would defeat the object of the Act.
Western India Automobile Association vs The Industrial Tribunal of Bombay, ; Narendra Kumar Sen vs The All India Industrial Disputes (Labour Appellate) Tribunal, and United Commercial Bank Ltd. vs Kedar Nath Gupta, , referred to.
Even assuming that the workmen must be interested in order that there can be an industrial dispute, the present case satisfies that test and falls within the purview of section 2(k) of the Act.
|
Summarize this legal judgement text concisely | iminal Appeal No. 16 of 1958.
Appeal by special leave from the Judgment and order dated January 14, 1958, of the Bombay High Court in Criminal Application No. 60 of 1958 arising out of the judgment and order dated January 9, 1958, of the Court of Chief Presidency Magistrate at Bombay in an application for cancellation of bail in Case No. 608/W of 1957.
1227 Purshottam Tricumdas, Rajni Patel and I. N. Shroff, for the appellant.
K. J. Khandalwala and R. H. Dhebar, for respondent No. 1. 1958.
February 7.
The Judgment of the Court was delivered by GAJENDRAGADKAR J.
The appellant, along with( others, has been charged under section 120B of the Indian Penal Code and section 167(81) of the Sea Customs Act (8 of 1878).
There is no doubt that the offences charged against the appellant are bailable offences.
Under section 496 of the Code of Criminal Procedure the appellant was released on bail of Rs. 75,000 with one surety for like amount on December 9, 1957, by the learned Chief Presidency Magistrate at Bombay.
On January 4, 1958, an application was made by the complainant before the learned Magistrate for cancellation of the bail; the learned Magistrate, however, dismissed the application on the ground that under section 496 be had no jurisdiction to cancel the bail.
Against this order, the complainant preferred a revisional application before the High Court of Bombay.
Another application was preferred by the complainant before the same Court invoking its inherent power under section 561 A of the Code of Criminal Procedure.
Chagla C. J. and Datar J. who heard these applications took the view that, under section 561A of the Code of Criminal Procedure the High Court had inherent power to cancel the bail granted to a person accused of a bailable offence and that, in a proper case, such power can and must be exercised in the interests of justice.
The learned Judges then considered the material produced before the Court and came to the conclusion that, in the present case, it would not be safe to permit the appellant to be at large.
That is why the application made by the complainant invoking the High Court 's inherent power under section 561 A of the Code of Criminal Procedure was allowed, the bail bond executed by the appellant was cancelled and an order was passed directing that the appellant be arrested forthwith and committed to 156 1228 custody.
It is against this order that the appellant has come to this Court in appeal by special leave.
Special leave granted to the appellant has, however, been limited to the question of the construction of section 496 read with section 561A of the Code of Criminal Procedure.
Thus the point of law which falls to be considered in the present appeal is whether, in the case of a person accused of a bailable offence where bail has been granted to him under section 496 of the Code of Criminal Procedure, it can be cancelled in a proper case by the High Court in exercise of its inherent power under section 561A of the Code of Criminal Procedure? This question is no doubt of considerable importance and its decision would depend upon the construction of the relevant sections of the Code.
The material provisions on the subject of bail are contained in sections 496 to 498 of the Code of Criminal Procedure.
Section 496 deals with persons accused of bailable offences.
It provides that " when a person charged with the commission of a bailable offence is arrested or detained without warrant by an officer in charge of a police station or is brought before a court and is prepared at any time, while in the custody of such officer or at any stage of the proceedings before such court, to give bail, such person shall be released on bail.
" The section further leaves it to the discretion of the police officer or the court if he or it thinks fit to discharge the accused person on his executing a bond without sureties for his appearance and not to take bail from him.
Section 497 deals with the question of granting bail in the case of non bailable offences.
A person accused of a non bailable offence may be released on bail but he shall not be so released if there appear reasonable grounds for believing that he has been guilty of an offence punishable with death or imprisonment for life.
This is the effect of section 497(1).
Sub section (2) deals with cases where it appears to the officer or the court that there are not reasonable grounds for believing that the accused has committed a non bailable offence but there are sufficient grounds for further enquiry into his guilt and it lays down that in such cases the accused shall, pending such 1229 enquiry, be released, on bail or at the discretion of the officer or court, on the execution by him of a bond without sureties for his appearance as hereinafter provided.
Sub section (3) requires that, when jurisdiction under sub section
(2) is exercised in favour of an accused person, reasons for exercising such jurisdiction shall be recorded in writing.
Sub section (3A) which has been added in 1955 deals with cases where the ' trial of a person accused of any non bailable offence is not concluded within a period of sixty days from the first day fixed for taking evidence in the case and it provides that such person shall, if he is in custody during the whole of the aid period, be released on bail unless for reasons to be recorded in writing the magistrate otherwise directs.
The last sub section confers oil the High Court and the Court of Session, and on any other court in the case of a person released by itself, power to direct that a person who hap, been released on bail under any of the provisions of this section should be arrested and committed to custody.
Section 498(1) confers on the High Court or the Court of Session power to direct admission to bail or reduction of bail in all cases where bail is admissible under sections 496 and 497 whether in such cases there be an appeal against conviction or not.
Sub section (2) of section 498 empowers the High Court or the Court of Session to cause any person who has been admitted to bail under sub section
(1) to be arrested and committed to custody.
There is one more section to which reference must be made in this connection and that is section 426 of the Code.
This section incidentally deals with the power to grant bail to persons who have been convicted of non bailable offences when such convicted persons satisfy the court that they intend to present appeals against their orders of conviction.
That is the effect of section 426(2A) which has been added in 1955.
A similar power has been conferred on the High Court under sub section
(2B) of section 426 where the High Court is satisfied that the convicted person has been granted special leave to appeal to the Supreme Court against any sentence which the High Court has imposed or maintained.
Sub section (3) provides that, if the appellant 1230 who is released on bail under said sub section
(2) or (2B) is ultimately sentenced to imprisonment, the time during which he is so released shall be excluded in computing the term for which he is so sentenced.
That briefly is the scheme of the Code on the subject of bail.
There is no doubt that under section 496 a person accused of a bailable offence is entitled to be released on bail pending his trial.
As soon as it appears that the accused person is prepared to give bail, the police officer or the court, before whom he offers to give bail, is bound to release him on such terms as to bail as may appear to the officer or the court to be reasonable.
It would even be open to the officer or the court to discharge such person on executing his bond as provided in the section instead of taking bail from him.
The position of persons accused of non bailable offences is entirely different.
Though the recent amendments made in the provisions of section 497 have made definite improvement in favour of persons accused of non bailable offences, it would nevertheless be correct to say that the grant of bail in such cases is generally a matter in the discretion of the authorities in question.
The classification of offences into the two categories of bailable and non bailable offences may perhaps be explained on the basis that bailable offences are generally regarded as less grave and serious than non bailable offences.
On this basis it may not be easy to explain why, for instance offences under sections 477, 477A, 475 and 506 of the Indian Penal Code should be regarded as bailable whereas offences under section 379 should be non bailable.
ever, it cannot be disputed that section 496 recognizes that a person accused of a bailable offence has a right to be enlarged on bail and that is a consideration on which Shri Purushottam, for the appellant, has very strongly relied.
Shri Purushottam has also emphasized the fact that, whereas legislature has specifically conferred power on the specified courts to cancel the bail granted to a person accused of a non bailable offence by the provisions of section 497 (5), no such power has been conferred on any court in regard to persons accused 1231 of bailable offences.
If legislature had intended to confer such a power it would have been very easy for it to add an appropriate sub section under section 496.
The omission to make such a provision is, according to Shri Parushottam, not the result of inadvertence but, is deliberate; and if that is so, it would not be legitimate or reasonable to clothe the High Courts with the power to cancel bails in such cases under section 561 A.
It is this aspect of the matter which needs careful examination in the present case.
Section 561A was added to the Code in 1923 and it purports to save the inherent power of the High Courts.
It provides that nothing in the Code shall be deemed to limit or affect the inherent power of the High Court to make such orders as may be necessary to give effect to any order under the Code or to prevent abuse of the process of any court or otherwise to secure the ends of justice.
It appears that doubts were expressed in some judicial decisions about the existence of such inherent power in the High Courts prior to 1923.
That is why legislature enacted this section to clarify the position that the provisions of the Code were not intended to limit or affect the inherent power of the High Courts as mentioned in section 561A.
It is obvious that this inherent power can be exercised only for either of the three purposes specifically mentioned in the section.
This inherent power cannot naturally be invoked in respect of any matter covered by the specific provisions of the Code.
It cannot also be invoked if its exercise would be inconsistent with any of the specific provisions of the Code.
It is only if the matter in question is not covered by any specific provisions of the Code that section 561A can come into operation, subject further to the requirement that the exercise of such power must serve either of the three purposes mentioned in the said section.
In prescribing rules of procedure legislature undoubtedly attempts to provide for all cases that are likely to arise; but it is not possible that any legislative enactment dealing with procedure, however carefully it may be drafted, would succeed in providing for all cases that may possibly 1232 arise in future.
Lacunae are sometimes discovered in procedural law and it is to cover such lacunae and to deal with cases where such lacunae are discovered that procedural law invariably recognizes the existence of inherent power in courts.
It would be noticed that it is only the High Courts whose inherent power is recognized by section 561A; and even in regard to the High Courts ' inherent power definite salutary safeguards have been laid down as to its exercise.
It is only where the High Court is satisfied either that an order passed under the Code would be rendered ineffective or that the process of any court would be abused or that the ends of justice would riot be secured that the High Court can and must exercise its inherent power under section 561A.
There can thus be no dispute about the scope and nature of the inherent power of the High Courts and the extent of its exercise.
Now it is obvious that the primary object of criminal procedure is to ensure a fair trial of accused persons.
Every criminal trial begins with the presumption of innocence in favour of the accused ; and provisions of the Code are so framed that a criminal trial should begin with and be throughout governed by this essential presumption ; but a fair trial has naturally two objects in view; it must be fair to the accused and must also be fair to the prosecution.
The test of fairness in a criminal trial must be judged from this dual point of view.
It is therefore of the utmost importance that, in a criminal trial, witnesses should be able to give evidence without any inducement or threat either from the prosecution or the defence.
A criminal trial must never be so conducted by the prosecution as would lead to the conviction of an innocent person; similarly the progress of a criminal trial must not be obstructed by the accused so as to lead to the acquittal of a really guilty offender.
The acquittal of the innocent and the conviction of the guilty are the objects of a criminal trial and so there can be no possible doubt that, if any conduct on the part of an accused person is likely to obstruct a fair trial, there is occasion for the exercise of the inherent 1233 power of the High Courts to secure the ends of justice.
There can be no more important requirement of the ends of justice than the uninterrupted progress of a fair trial; and it is for the continuance of such a fair trial that the inherent powers of the High Courts are sought to be invoked by the prosecution in cases where it is alleged that accused persons, either by suborning or intimidating witnesses, are obstructing the smooth progress of a fair trial.
Similarly, if an accused person who is released on bail jumps bail and attempts to run to a foreign country to escape the trial, that again would be a case where the exercise of the inherent power would be justified in order to compel the accused to submit to a fair trial and not to escape its consequences by taking advantage of the fact that he has been released on bail and by absconding to another country.
In other words, if the conduct of the accused person subsequent to his release on bail puts in jeopardy the progress of a fair trial itself and if there is no other remedy which can be effectively used against the accused person, in such a case the inherent power of the High Court can be legitimately invoked.
In regard to non bailable offences there is no need to invoke such power because section 497 (5) specifically deals with such cases.
The question which we have to decide in this case is whether exercise of inherent power under section 561A against persons accused of bailable offences, who have been released on bail, is contrary to or inconsistent with the provisions of section 496 of the Code of Criminal Procedure.
Shri Purushottam contends that the provisions of section 496 are plainly inconsistent with the exercise of inherent power under section 561A against the appellant in the present case and; he argues that, despite the order which has been passed by the High (Court, he would be entitled to move the trial court for bail again and the trial court would be bound to release him on bail because the right to be released on bail recognized by section 496 is an absolute and an indefeasible right; and despite the order of the High Court, that right would still be available to the appellant.
If that be the true position, the order passed under 1234 section 561A would be rendered ineffective and that itself would show that there is a conflict between the exercise of the said power and the provisions of section 496.
Thus presented, the argument no doubt is prima facie attractive; but a close examination of the provisions of section 496 would show that there is no conflict between its provisions and the exercise of the jurisdiction under section 561A.
In dealing with this argument it is necessary to remember that, if the power under section 561 A is exercised by the High Court, the bail offered by the accused and accepted by the trial court would be cancelled and the accused would be ordered to be arrested forthwith and committed to custody.
In other words, the effect of the order passed under section 561A, just like the effect of an order passed under section 497 (5) and section 498 (2), would be not only that the bail is cancelled but that the accused is ordered to be arrested and committed to custody.
The order committing the accused to custody is a judicial order passed by a criminal court of competent jurisdiction.
His commitment to custody thereafter is not by reason of the fact that he is alleged to have committed a bailable offence at all; his commitment to custody is the result of a judicial order passed on the ground that he has forfeited his bail and that his subsequent conduct showed that, pending the trial, he cannot be allowed to be at large.
Now, where a person is committed to custody under such an order, it would not be open to him to fall back upon his rights under section 496, for section 496 would in such circumstances be inapplicable to his case.
It may be that there is no specific provision for the cancellation of the bond and the re arrest of a person accused of a bailable offence; but that does not mean that section 496 entitles such an accused person to be released on bail, even though it may be shown that he is guilty of conduct entirely subversive of a fair trial in the court.
We do not read section 496 as conferring on a person accused of a bailable offence such an unqualified, absolute and an indefeasible right to be released on bail, 1235 In this connection, it would be relevant to consider the effect of the provisions of section 498.
Under section 498(1), the High Court or the Court of Sessions may, even in the case of persons accused of bailable offences, admit such accused persons to bail or reduce the amount of A bail demanded by the prescribed authorities under section 496.
Shri Purushottam no doubt ' attempted to, argue that the operative part of the provisions of section 498(1) does not apply to persons accused of bailable offences; but in our opinion, there can be no doubt that this sub section deals with cases of persons accused of bailable as well as non bailable offences.
We have no doubt that, even in regard to persons accused of bailable offences, if the amount of bail fixed under section 496 is unreasonably high the accused person can move the High Court or the Court of Sessions for reduction of that amount.
Similarly, a person accused of a bailable offence may move the High Court or the Court of Sessions to be released on bail and the High Court or the Court of Sessions may direct either that the amount should be reduced or that the person may be admitted to bail.
If a person accused of a bailable offence is admitted to bail by an order passed by the High Court or the Court of Sessions, the provisions of sub section
(2) become applicable to his case; and under these provisions the High Court or the Court of Sessions is expressly empowered to cancel the bail granted by it and to arrest the accused and commit him to custody.
This sub section, as we have already pointed out, has been added in 1955 and now there is no doubt that legislature has conferred upon the High Court or the Court of Sessions power to cancel bail in regard to cases of persons accused of bailable offences where such persons have been admitted to bail by the High Court or the Court of Sessions under section 498(1).
The result is that with regard to a class of cases of bailable offences failing under section 498(1), even after the accused persons are admitted to bail, express power has been conferred on the High Court or the Court of Sessions to arrest them and commit them to custody.
Clearly then it cannot be said that the right of a 157 1236 person accused of a bailable offence to be released on bail cannot be forfeited even if his conduct subsequent to the grant of bail is found to be prejudicial to a fair trial.
It would also be interesting to notice that, even before section 498(2) was enacted, there was consensus of judicial opinion in favour of the view that, if accused persons were released on bail under section 498(1), their bail bond could be cancelled and they could be ordered to be arrested and committed to custody under the provisions of section 561 A of the Code [Mirza Mohammad Ibrahim vs Emperor (1), Seoti vs Rex (2 ), Bachchu Lal vs State (3), Muunshi Singh vs State (4) and The Crown Prosecutor, Madras vs Krishnan (5) ].
These decisions would show that the exercise of inherent power to cancel bail under section 561A was not regarded as inconsistent with the provisions of section 498(1) of the Code.
It is true that all these decisions referred to cases of persons charged with non bailable offences; but it is significant that the provisions of section 497(5) did not apply to these cases and the appropriate orders were passed under the purported exercise of inherent power under section 561A.
On principle then these decisions proceed on the assumption, and we think rightly, that the exercise of inherent power in that behalf was not inconsistent with the provisions of section 498 as it then stood.
It would now be relevant to enquire whether, on principle, a distinction can be made between bailable and non bailable offences in regard to the effect of the prejudicial conduct of accused persons subsequent to their release on bail.
As we have already observed, if a fair trial is the main objective of the criminal procedure, any threat to the continuance of a fair trial must be immediately arrested and the smooth progress of a fair trial must be ensured; and this can be done, if necessary, by the exercise of inherent power.
The classification of offences into bailable and non bailable on which are based the different provisions as to the grant of bail would not, in our opinion, have any (1) A.I.R. 1932All.534.
(2) A.I. R. 1948 All.
(3) A.I.R. 1951 All.
(4) A.I.R. 1952 All. 39.
(5)I.L.R. 1237 material bearing in dealing with the effect of the sub sequent conduct of accused persons on the continuance of a fair trial itself.
If an accused person, by his conduct, puts the fair trial into jeopardy, it would be the primary and paramount duty of criminal courts to ensure that the risk to the fair trial is removed and criminal courts are allowed to proceed with the trial, smoothly and without any interruption or obstruction ; and this would be equally true in cases of both bailable as well as non bailable offences.
We, therefore, feel no difficulty in holding that, if, by his subsequent conduct, a person accused of a bailable offence forfeits his right to be released on bail, that forfeiture must be made effective by invoking the inherent power of the High Court under section 561A. Omission of legislature to make a specific provision in that behalf is clearly due to oversight or inadvertence and cannot be regarded as deliberate.
If the appellant 's contention is sound, it would lead to fantastic results.
The argument is that a person accused of a bailable offence has such an unqualified right to be released on bail that even if he does his worst to obstruct or to defeat a fair trial, his bail bond cannot be cancelled and a threat to a fair trial cannot be arrested or prevented.
Indeed Shree Purushottam went the length of suggesting that in such a case the impugned subsequent conduct of the accused may give rise to some other charges under the Indian Penal Code, but it cannot justify his re arrest.
Fortunately that does not appear to be the true legal position if the relevant provisions of the Code in regard to the grant of bail are considered as a whole along with the provisions of section 561A of the Code.
It now remains to consider the decision of the Privy Council in Lala Jairam Das & Others vs King Emperor (1), because Shri Purushottam ' has very strongly relied on some of the observations made in that case.
According to that decision, the provisions of the Code of Criminal Procedure confer no power on High Courts to grant bail to a person who has been convicted and sentenced to imprisonment and to whom His Majesty (1) (1945) L.R. 72 I.A. 120,132.
1238 in Council has given special leave to appeal against his sentence and conviction.
Divergent views had been expressed by the High Courts in this country on the question as to the High Courts ' power to grant bail to convicted persons who had been given special leave to appeal to the Privy Council; these views and the scheme of the Code in regard to the grant of bail were examined by Lord Russel of Killowen who delivered the judgment of the Board in Lala Jairam Das 's case (1).
The decision has thus no application to the facts before us; but Shri Purushottam relies on certain observations made in the judgment.
It has been observed in that judgment that " their Lordships take the view that Ch.
XXXIX of the Code together with section 426 is, and was intend to contain, a complete and exhaustive statement of the powers of a High Court in India to grant bail, and excludes the existence of any additional inherent power in a High Court relating to the subject of bail ".
The judgment further shows their Lordships ' opinion, like the High Court of Justice in England, High Courts in India would not have inherent power to grant bail to a convicted person.
It would be clear from the judgment that their Lordships were not called upon to consider the question about the inherent power of the High Courts to cancel bail under section 561A.
That point did not obviously arise in the case before them.
Even so, in dealing with the question as to whether inherent power could be exercised for granting bail to a convicted person, their Lordships did refer to section 561A of the Code and they pointed out that such a power ,,cannot be properly Attributed to the High Courts because it would, if exercised, interrupt the serving of the sentence; and, besides it would, in the event of the appeal being unsuccessful, result in defeating the ends of justice.
It was also pointed out that if the bail was allowed in such a case, the exercise of the inherent power would result in an alteration by the High Court of its judgment which is prohibited by section 369 of the Code.
In other words, their Lordships examined the provisions of section 561A and came to the (1) (1945) L.R. 72 I.A. 120, 132, 1239 conclusion that the power to grant bail to a convicted person would not fit in :with the scheme of Chapter XXXIX of the Code read with section 561A.
In our opinion, neither this decision nor even the observations on which Shri Purushottam relied can afford any assistance in deciding the point which this appeal has raised before us.
Incidentally we may add that it was as a result of the observations made by the Privy Council in that case that section 426 of the Code was amended in 1945 and power has been conferred on appropriate courts either to suspend the sentence or to grant bail as mentioned in the several subsections of section 426.
That is how section 426(2A) and (2B) now deal with the subject of bail even though the main section is a part of Chapter XXXI which deals with appeals, references and revisions.
We must accordingly hold that the view taken by the Bombay High Court about its inherent power to act in this case under section 561 A is right and must be confirmed.
It is hardly necessary to add that the inherent power conferred on High Courts under section 561A has to be exercised sparingly., carefully and with caution and only where such exercise is justified "by the tests specifically laid down in the section itself.
After all, procedure, whether criminal or civil, must serve the higher purpose of justice; and it is only when the ends of justice are put in jeopardy by the conduct of the accused that the inherent power can and should be exercised in cases like the present.
The result is that the appeal fails and must be dismissed.
Appeal dismissed.
| The appellant was charged under section 120 B of the Indian Penal Code and section 167(8i) of the Sea Customs Act, i878, which were bailable offences, and was released on bail by the Chief Presidency Magistrate under section 496 of the Code of Criminal Procedure.
An application made subsequently by the complainant for cancellation of the bail was dismissed by the Magistrate on the ground that under section 496 he had no jurisdiction to cancel the bail.
The complainant invoked the inherent power of the High Court under section 561A of the Code and the High Court took the view that under that section it had inherent power to cancel the bail,and finding that on the material produced before the Court it would not be safe to permit the appellant to be at large, it cancelled the bail.
On appeal to the Supreme Court: Held, that though under section 496 of the Code of Criminal Procedure a person accused of a bailable offence is entitled to be released on bail pending his trial, if his conduct subsequent to his release is found to be prejudicial to a fair trial, he forfeits his right to be released on bail and such forfeiture can be made effective by invoking the inherent power of the High Court under section 561A of the Code.
But the inherent power has to be exercised sparingly, carefully and with caution and only where such exercise is justified by the tests specifically laid down in the section itself.
Lala jairam Das & Others vs King Emperor, (1945) L.R. 72 I.A. 120, distinguished.
|
Summarize this legal judgement text concisely | minal Appeal No. 128 of 1955.
Appeal from the judgment and order dated February 8, 1955, of the Allahabad High Court in Government Appeal No. 165 of 1954, arising out of the judgment and order dated July 24, 1953, of the Court of the Civil and Sessions Judge at Gorakhpur in Sessions Trial No. 5 of 1953.
G. C. Mathur and C. P. Lal, for the appellant.
section N. Andley, for the respondents.
February 14.
The following Judgment of the Court was delivered by DAS C. J.
The respondents before us were put up for trial for offences under sections 147, 302, 325 and 326, Indian Penal Code read with section 149 of the same Code.
On July 24, 1953, the temporary Civil Sessions Judge, Gorakhpur, acquitted them, The State of Uttar Pra 162 1276 desh apparently felt aggrieved by this acquittal and intended to appeal to the High Court under section 417 of the Code of Criminal Procedure.
Under article 157 of the Indian Limitation Act an appeal under the Code of Criminal Procedure from an order of acquittal is required to be filed within six months from the date of the order appealed from.
The period of limitation for appealing from the order of acquittal passed by the Sessions Judge on July 24,1953, therefore, expired on January 24, 1954.
That day being a Sunday the Deputy Government Advocate on January 25, 1954, filed a. petition of appeal on behalf of that State.
A plain copy of the judgment sought to be appealed from was filed with that petition.
The High Court office immediately made a note that the copy of the judgment filed along with the petition of appeal did not appear to be a certified copy.
After the judicial records of the case had been received by the High Court, an application for a certified copy of the judgment of the trial court was made on behalf of the State on February 12, 1954.
The certified copy was received by the Deputy Government Advocate on February 23,1954 and he presented it before the High Court (in February 25, 1954, when Harish Chandra J. made an order that the certified copy be accepted and that three days ' further time be granted to the appellant for making an application under section 5 of the Indian Limitation Act for condoning the delay in the filing of the certified copy.
Accordingly an application for the condonation of delay was made by the appellant on the same day and that application was directed to be laid before a Division Bench for necessary orders.
The application came up for hearing before a Division Bench consisting of M. C. Desai and N. U. Beg JJ.
Ai the hearing of that application learned counsel appearing for the appellant urged that as there was, in the circumstances of this case, sufficient cause for not filing the certified copy along with the petition of appeal the delay should be condoned and that, in any event, the filing of the plain copy of the judgment of the trial court along with the petition of appeal constituted a sufficient compliance with the requirements 1277 of section 419 of the Code of Criminal Procedure.
By their judgment delivered on December 7, 1954, both the learned Judges took the view that no case had been made out for extending the period of limitation under section 5 of the Indian Limitation Act and dismissed the application and nothing further need be said on that point.
The learned judges, however, differed on the question as to whether the filing of a plain copy of the judgment appealed from was a sufficient compliance with the law, M. C. Desai J. holding that it was and N. U. Beg J. taking the contrary view.
The two Judges having differed they directed the case to be laid before the Chief Justice for obtaining a third Judge 's opinion on that question.
Raghubar Dayal J. to whom the matter was referred, by his judgment dated January 31, 1955, expressed the opinion that the word " copy " in section 419 meant a certified copy, and directed his opinion to be laid before the Division Bench.
In view of the opinion of the third Judge, the Division Bench held that the memorandum of appeal had not been accompanied by " a copy " within the meaning of section 419 and that on February 25, 1954, when a certified copy came to be filed the period of limitation for appealing against the order of acquittal passed on July 24, 1953, had already expired and that as the application for extension of the period of limitation had been dismissed the appeal was time barred and they accordingly dismissed the appeal.
The learned Judges, however, by the same order gave the appellant a certificate that the case was a fit one for appeal to this Court.
Hence this appeal.
Section 419 of the Code of Criminal Procedure, under which the appeal was filed, provides as follows: " 419.
Every appeal shall be made in the form of a petition in writing presented by the appellant or his pleader, and every such petition shall (unless the Court to which it is presented otherwise directs) be accompanied by a copy of the judgment or order appealed against, and, in cases tried by a jury, a copy of the heads of the charge recorded under section 367.
1278 The sole question raised in this appeal is whether this section requires a petition of appeal to be accompanied by a certified copy of the judgment or order appealed from.
It will be noticed that the section requires " a copy " of the judgment to be filed along with the petition of appeal.
There can be no doubt that the ordinary dictionary meaning of the word " copy " is a reproduction or transcription of an original writing.
As the section does not, in terms, require a certified copy, it is urged on behalf of the appellant that the word " copy " with reference to a document has only one ordinary meaning namely: a transcript or reproduction of the original document and that there being nothing uncertain or ambiguous about the word " copy ", no question of construction or interpretation of the section can at all arise.
It is contended that it is the duty of the court to apply its aforesaid ordinary and grammatical meaning to the word " copy " appearing in section 419 and that it should be held that the filing of a plain copy of the judgment along with the petition of appeal was a sufficient compliance with the requirements of that section.
The matter, however, does not appear to us to be quite so simple.
A " copy " may be a plain copy, i. e., an un official copy, or a certified copy, i. e., an official copy.
If a certified copy of the judgment is annexed to the petition of appeal nobody can say that the requirements of section 419 have not been complied with, for a certified copy is none the less a " copy ".
That being the position a question of construction does arise as to whether the word " copy " used in section 419 refers to a plain copy or to a certified copy or covers both varieties of copy.
It is well settled that " the words of a statute, when there is doubt about their meaning, are to be understood in the sense in which they beat harmonise with the subject of the enactment and the object which the Legislature has in view.
Their meaning is found not so much in a strictly grammatical or etymological propriety of language, nor even in its popular use, as in the subject or in the occasion on which they are used, and the object to be attained. " (Maxwell 's Interpretation of Statutes, 10th Edition, 1279 page 52).
In order, therefore, to come to a decision as to the true meaning of a word used in a Statute one has to enquire as to the subject matter of the enactment and the object which the Legislature had in view.
This leads us to a consideration of some of the relevant sections of the Code of Criminal Procedure and other enactments having a material bearing on the question before us.
Section 366 of the Code of Criminal Procedure, which is in Chapter XXVI headed "Of the Judgment ", requires that the judgment in every trial in any criminal court of original jurisdiction shall be pronounced in open court and in the language of the court.
Section 367 requires every such judgment to be written by the presiding officer (or from his dictationtion ) in the language of the court or in English, containing the point or points for determination, the decision thereon and the reasons for the decision.
The judgement has to be dated land signed by the presiding officer in open court.
Except as otherwise provided by law, section 369 forbids the court, after it has signed its judgment, from altering or reviewing the same except to correct mere clerical errors.
After the judgment is pronounced and signed it has, under section 372, to be filed with the record of proceedings and becomes a part of the record and remains in the custody of the officer who is in charge of the records.
Under section 371, when an accused is sentenced to death and an appeal lies from such judgment as of right, the court is to inform him of the period within which he may, if he so wishes, prefer his appeal and when he is sentenced to imprisonment a copy of the findings and sentence must as soon as may be after the delivery of the judgment be given to him free of cost without any application.
This, however, is without prejudice to his right to obtain free of cost on an application made by him, a " copy " of the judgment or order and in trials by jury a " copy " of the heads of charge to the jury.
The copy that is supplied to the accused under sub section
(4) of section 371 is not a full copy of the entire judgment, but the copies supplied to him under sub sections (1) and (2) of section 371 on application made by 1280 him are full copies of the judgment or the heads of the charge to the jury as the case may be.
The copy of the findings ' and the sentence which is supplied to the accused under sub section
(4) without his asking for the same is presumably to enable him to decide for himself whether he would appeal against his conviction and the sentence.
The copies, which are supplied to the accused under sub sections
(1) and (2) on his application for such copies, are obviously full copies of the entire judgment or the heads of charges as the case may be and are intended to enable him to prepare his grounds of appeal should he decide to prefer one and to file the same along with his petition of appeal as required by section 419 of the Code of Criminal Procedure.
There are no provisions corresponding to section 371 for giving any copy of the judgment to the State or the public prosecutor representing the State in case of an act uittal.
If, therefore, the State desires to file an appeal against acquittal under section 417 of the Code of Criminal Procedure the State will have to procure a copy of the judgment or the heads of charge in order to enable it to file the same along with its petition of appeal and thereby to comply with the requirements of section 419.
According to section 74 of the Indian Evidence Act a judgment, being the Act or record of the act of a judicial officer, would be included in the category of public documents.
Under section 548 of the Code of Criminal Procedure if a person affected by a judgment desires to have a copy of the judge 's charge to the jury or of any order or deposition or other part of the record he has the right, on applying for such copy, to be furnished therewith.
A person desirous of such a copy has to apply for it to the public officer having the custody of it and, under section 76 of the Indian Evidence Act, such public officer is bound to.
give that person, on demand, a copy of it on payment of the legal fees thereof together with a certificate written at the foot of such copy that it is a true copy of such document, that is to say, to supply to the applicant what is known as a certified copy.
Therefore, whether it is the accused person who applies for a copy under section 371 , 1281 sub sections
(1) and (2) or it is the State which applies for a copy, the copy supplied by the public officer must be a certified copy.
Then when section 419 requires that a copy of the judgment or of the heads of charge be filed along with the petition of appeal, it is not unreasonable to hold that it is the certified copy so obtained that must be filed.
Under articles 154, 155 and 157 of the Indian Limitation Act the petition of appeal has to be filed within the time specified in those articles.
Obviously it may take a little time to apply for and procure a certified copy.
In order that the full period of limitation be available to the intending appellant section 12 of the Limitation Act permits the deduction of the time requisite for obtaining the copy of the judgment or the heads of charge in ascertaining whether the appeal is filed within time.
A certified copy of the judgment will on the face of it show when the copy was applied for, when it was ready for delivery and when it was actually delivered and the court may at a glance ascertain what time was requisite for obtaining the copy so as to deduct the same from the computation of the period of limitation.
Taking all relevant facts into consideration, namely, that a St copy " of the judgment has to be filed along with the petition of appeal, that the copies of the judgment which the accused gets free of cost under section 371 (1) and (2) read with section 76 of the Indian Evidence Act and which the State can obtain on an application made by it under section 76 of the last mentioned Act can only be certified copies, that the time requisite for obtaining such copies is to be excluded from the computation of the period of limitation all quite clearly indicate that the copy to be filed with the petition of appeal must be a certified copy.
Section 419 requires a copy of the judgment or order appealed against to be filed not without some purpose.
That purpose becomes clear when we pass on to section 421 of the Code of Criminal Procedure.
That section enjoins the court, on receiving the petition of appeal and copy of the judgment or order appealed from under section 419, to peruse the same and after 1282 perusing the same to do one of the two things, namely, if it finds that there is no sufficient ground for interfering, to dismiss the appeal summarily or when the court does not dismiss the appeal summarily, then under section 422 to cause notice to be given to the appellant or his pleader and to such officer as the Provincial Cxovernment may appoint in this behalf, of the time and place at which such appeal will be heard and furnish such officer with a copy of the grounds of appeal and in a case of appeal under section 417, as in the present case, to cause a like notice to be given to the accused.
The act of summarily rejecting the appeal or admitting it and issuing notice is necessarily a judicial act and obviously it must be founded on proper materials.
The authenticity or correctness of the copy of a judgment is also essential in order to enable the appellate court to make interlocutory orders which may have serious consequences.
In the case of an appeal by the accused he may ask for the stay of the execution of the order, e.g., of the realisation of the fine or he may move the court for bail.
Likewise in the case of an appeal by the State, the State may ask for the accused to be apprehended and brought before the court under warrant of arrest.
Orders made on these applications are all judicial acts and accordingly it is essential that the appellate court in order to take these judicial decisions have proper materials before it.
Therefore, it is of the utmost importance that the copy to be filed with the petition of appeal is a full and correct copy of the judgment or order appealed against.
Under section 76 of the Indian Evidence Act the public officer who is to supply a copy is required to append a certificate in writing at the foot of such copy that it is a true copy and then to put, the date and to subscribe the same with his name and official title.
Therefore, the production of a certified copy ipso facto and without anything more will show ex facie that it is a correct copy on which the appellate court may safely act.
The fact that the appellate court is by law enjoined to peruse the copy of the judgment and take judicial decision on it indicates that it must have before it a correct copy of the judgment 1283 and this further indicates that the copy required to be filed with the petition of appeal under section 419 should be a certified copy which will ipso facto assure the appellate court of its correctness.
It is said that the appellate court may not summarily reject or admit the appeal or make an inter ' locutory order until the record is produced or until a certified copy of the judgment or order is presented before it.
There is no doubt that the court can under section 421 of the Code of Criminal Procedure call for the record of the case, but the court is not bound to do so.
The calling for the records in every case or keeping the proceedings in abeyance until a certified copy is presented before the court is bound to involve delay and there is no apparent reason why there should be any delay in disposing of criminal matters involving the personal liberty of the convicted accused.
All this inconvenience may easily be obviated if section 419 be read and understood to require a certified copy to be filed along with the petition of appeal.
Learned counsel for the appellant urges that in case of urgency the court need not wait until the record or the certified copy is received, but may call upon the appellant to adduce evidence to prove the correctness of the judgment in order to induce the court to act upon it and take a judicial decision thereon.
In the first place there is no such procedure envisaged in the Code of Criminal Procedure.
In the next place adoption of such a procedure may cause much delay and in the third place no question ordinarily arises under section 419 of proving the correctness of the judgment under appeal in the way in which a document is to be proved in order to tender it in evidence in the case.
But assuming that the correctness of the judgment under appeal is to be established then as soon as the appellant is out to " prove" by oral evidence of witnesses the contents of the original judgment so as to establish the correctness of the plain copy filed along with his petition of appeal the question will immediately arise whether such evidence is admissible under the law.
As already stated section 367 of the Code of Criminal Procedure requires the judgment to be 163 1284 reduced to writing.
Section 91 of the Indian Evidence Act provides, inter alia, that in all cases in which any matter is required by law to be reduced to the form of a document and a judgment is so required,,no evidence shall be given for the proof of the terms of such matter except the document itself or secondary evidence of its contents in cases in which secondary evidence is admissible under the earlier provisions of that Act.
In the absence of the production of, the original judgment if a witness is put into a witness box and is asked to say whether the copy produced before the appellate court is a correct copy of the original judgment filed of record in the trial court he will necessarily have to say that he read the original judgment and from his memory he can say that the copy correctly reproduces the text of the original judgment.
This means that he will give secondary evidence as to the contents of the original judgment which under the law is required to be reduced to the form of a document.
A further question will, therefore, arise if such evidence, which at best is secondary evidence, is admissible under the Indian Evidence Act.
As already stated the judgment, which under section 367 of the Code of Criminal Procedure has to be in writing and under section 372 has to be filed with the record of the proceedings, becomes, under section 74 of the Indian Evidence Act, a public document. ' As the original judgment is a public document within the meaning of section 74, only a certified copy of such document and no other kind of secondary evidence is admissible under section 65.
This circumstance also indicates that the word " copy " in section 419 means, in the context, a certified copy and so it was held in Ram Lat vs Ghanasham Das (1).
The decision in Firm Chhota LalAmba Parshad vs Firm Basdeo Mal Hira Lal (2), proceeded on its peculiar facts, namely , that no certified copy could be obtained as the original judgment could not be traced in the record and the decision can be supported on the ground that the court had, in the circumstances, dispensed with the production of a certified copy.
(i) A.I.R. (1923)Lab.
(2) A.I.R. (1926) Lah.
1285 Learned counsel for the appellant next urges that the fact that the appellate court to which the petition of appeal is presented is given power to dispense with the filing of a copy of the judgment appealed against indicates that the Legislature did not consider the c. filing of the copy to be essential and that if the filing of the copy is not essential and copy can be wholly dispensed with, a plain copy should be sufficient for the purpose of section 419.
This power of dispensation had to be given to the court for very good reasons.
In certain cases an order staying the operation of the order sought to be appealed from may be immediately necessary and the matter may be so urgent that it cannot brook the delay which will inevitably occur if a certified copy of the judgment or order has to be obtained.
In some cases it may be that a certified copy of the same judgment is already before the same court in an analogous or connected appeal and the filing of another certified copy of that very judgment may be an unnecessary formality.
The circumstance that the court may, in urgent cases, dispense with the filing of a copy does not imply that in a case where the court does not think fit to do so it should be content with a plain copy of the document which ex facie contains no guarantee as to its correctness.
Reference has been made to a number of sections of the Code of Criminal Procedure where the word " copy " has been used and to sections 425, 428, 442 and 511 which, it is said, talk about certified copy and on this circumstance is founded the argument that where the Legislature insists on the production of a certified copy it says so expressly and that as the word "copy" used in section 419 is not qualified by the word " certified " the inference is irresistible that the filing of a plain copy was intended to be sufficient for the purpose of that section.
Turning to the four last mentioned sections, it will be noticed that the first three sections 425, 428 and 442 do not really refer to any certified copy of any document at all.
Section 425 requires that whenever a case is decided on appeal by the High Court under Chapter XXXI it shall certify its judgment or order to the court by which the finding, sentence or 1286 order appealed against was recorded or passed.
It really means that the High Court is to formally communicate its decision on the appeal to the court against whose decision the appeal had been taken.
Likewise section 428 requires the court taking additional evidence to certify such evidence to the appellate court.
Section 442 requires the High Court to certify its decision on revision to the court by which the finding, sentence or order revised was recorded or passed.
Lastly section 511 lays down the mode of proof of a previous conviction or acquittal, namely, by the production of an extract certified under the hand of the officer having the custody of the records of the court to be a copy of the sentence or order.
Therefore, the four sections relied on do not in reality refer to certified copy of a judgment or order supplied to a party on his application for such copy and consosuently no argument such as has been sought to be raised is maintainable.
The question whether a copy in a particular section means a plain copy or a certified copy must depend on the subject or context in which the word " copy " is used in such section.
In many sections relied on, the " copy " is intended to serve only as a notice to the person concerned or the public and is not intended to be acted upon by a court for the purpose of making a judicial order thereon.
We think that N. U. Beg J. rightly pointed out that the object and purpose of such sections are distinguishable from those of section 419 where the copy is intended to be acted upon by the appellate court for the purpose of founding its judicial decision on it.
We do not consider it desirable on the present occasion to express any opinion as to whether any of those sections relied on requires a plain copy or a certified copy.
It will suffice for us to hold that so far as section 419 is concerned, having regard to the context and the purpose of that section, the copy to be filed along with the petition of appeal must be a certified copy.
We have also been referred to several sections of the Code of Civil Procedure where the word " copy " is used.
We do not consider it right to enter upon a 1287 discussion as to the true interpretation of the word " copy" occurring in any of those sections for we think that each section in each Act must, for its true meaning and effect, depend on its own language, context and setting.
In the result, for reasons stated above, we agree that the order passed by the Allahabad High Court on February 8, 1955 was correct and this appeal should be dismissed.
Appeal dismissed.
| The word 'Copy ' occurring in section 419 Of the Code of Criminal Procedure means a certified copy and a petition of appeal filed under that section must, therefore, be accompanied by a certified copy of the judgment or order appealed against.
Ram Lal vs Ghanasham Das, A.I.R. (1923) Lah.
150, referred to.
Firm Chota Lal Amba Parshad vs Firm Basdeo Mal Hira Lal, A.I.R. (1926) Lah.
404, distinguished.
Consequently, where a State Government filed an appeal against an order of acquittal under section 417 of the Code of Criminal Procedure with a plain copy of the judgment appealed against and put in a certified copy of it after the period of limitation prescribed for the appeal had expired and the High Court dismissed the appeal as time barred, that order was correct and must be affirmed.
|
Summarize this legal judgement text concisely | ivil Appeal No.309 of 1955.
Appeal from the judgment and order dated October 7, 1953, of the Orissa High Court in O.J.C. No. 37 of 1952.
C.K.Daphtary, Solicitor General of India and B.Sen (B. M. Patnik, Advocate, Orissa High Court with Special Permission of the Court and R. H. Dhebar), for the appellants, Nos. 1, 3 to 9 and 11 to 16 and the intervener.
H. Mahapatra and Gyan Chand Mathur, for the respondent.
December 6.
The following Judgment of the Court was delivered by BHAGWATI J.
This appeal with a certificate under articles 132 and 133(1)(c) of the Constitution arises out of a writ petition filed by the respondent in the High Court of Orissa under article 226 seeking to quash the proceedings taken by certain tenants of his private lands under the provisions of the Orissa Tenants ' Protection Act, 1948 (Orissa III of 1948), hereinafter referred to as the 1948 Act.
The respondent was the ruler of the erstwhile Khandapara State which merged with the Province of Orissa under the States ' Merger (Governor 's Provinces) Order, 1949 with effect from August 1, 1949.
The respondent had on December 14, 1947 entered into an agreement with the Governor General of India art, 3 Whereof provided that: 1069 " The Raja shall be entitled to full ownership, use, and enjoyment of all private properties (as distinct from State Properties) belonging to him on the date of the agreement.
" That article further provided that if any dispute arose as to whether any item of property was the private property of the Raja or State property, it shall be referred to such officer with judicial experience as the Dominion Government might nominate and the decision of that officer shall be final and binding on both parties.
The respondent claimed a number of properties and the matter was referred to the Adviser for Orissa States for determining whether all the items claimed by him could be regarded as his private pro perties.
On June 10, 1949, the Adviser communicated his decision that the respondent was entitled to 1,643 acres as his Khamar lands and 29 and odd acres as lands settled with his tenants.
The lands comprised in the present proceedings taken under the 1948 Act as aforesaid were declared to be the private properties of the respondent.
On March 3, 1950, the Orissa Legislature passed the Orissa Merged States ' (Laws) Act, 1950 (Orissa IV of 1950) hereinafter referred to as " the 1950 Act ".
Section 4 of that Act extended inter alia the 1948 Act to the areas merged in the absorbing Province of Orissa.
Section 7 provided for the modification of tenancy laws in force in the merged States.
The relevant provisions of that section so far as they are material for the purposes of this appeal may be set out herein: " Notwithstanding anything contained in the tenancy laws of the merged States as continued in force by virtue of article 4 of the States Merger (Governor 's Provinces) Order, 1949: (a)all suits and.
proceedings between landlord and tenant as such shall be instituted and tried in revenue courts.
Explanation:In this clause the expression " landlord" shall mean a person immediately under whom a tenant holds land, and the expression " tenant " shall mean a person who holds land under another 1070 person and is or, but for a special contract, would be liable to pay rent for that land to that person: (h) when a person holds Khamar, nij jote or any other private lands of a Ruler, which has been recognised as such by the Provincial Government, he shall not be liable to ejectment but shall be liable to pay such fair and equitable rent as may be fixed by any competent authority appointed in this behalf by the Revenue Commissioner or the Commissioner, Northern Division, as the case may be and thereupon he shall acquire right of occupancy in respect of such lands: " On April 14, 1951, the State Legislature passed the Orissa Tenants Protection (Amendment) Act, 1951 (Orissa XVII of 1951) whereby the date the " 1st day of September, 1947 " wherever it was used in the 1950 Act, was substituted by the "I st day of August, 1949" for the purposes of the merged States areas and it was further provided that in such areas where neither the Madras Estates Land Act, 1908, nor the Orissa Tenancy Act, 1913 was in force the special laws or customs prevailing therein shall be taken into consideration for the application of that Act.
It appears that certain tenants who were in occupation of the private lands of the respondent were evicted by him during the year 1951 and other tenants were inducted by him and put in possession of the lands.
The tenants who were thus evicted applied to the Revenue Officer some time in 1952 for being restored to possession of their tenancy lands under the provisions of the 1948 Act, alleging that the respondent was their landlord and that he had unlawfully evicted them from their lands.
These were numbered as O.T.P. Act Cases Nos.
21 to 25 of 1952, 26 to 28 of 1952, 29 to 32 of 1952 and 33 to 41 of 1952.
Notice was issued to the respondent but it appears that be did not care to enter appearance before the Revenue Officer or to contest the applications.
On the ex parte evidence of the Applicants the Revenue Officer directed restoration of possession to them holding that they 1071 were in possession of the lands as tenants on the 1st day of August, 1949, and as such were entitled to the benefits conferred by the 1948 Act, as amended in its application to the merged States.
The respondent thereupon filed a writ petition under article 226 of the Constitution in the High Court seeking to quash the entire proceedings on the ground that in respect of the disputed lands he was not a " landlord " within the meaning of the 1948 Act.
The petition as filed averred that the fundamental right conferred upon the respondent by article 19 of the Constitution was infringed, that the provisions of the 1948 Act which were inconsistent with that article were void as being ultra vires the Constitution and the orders passed thereunder by the Revenue Officer were illegal and liable to be set aside.
This petition was filed by the respondent on August 11, 1952, A further petition was thereafter filed on February 26, 1953 invoking article 3 of the said Agreement and it was contended that by the application of the provisions of the 1948 Act, to the said private properties of the respondent, the respondent was deprived of the " full ownership, use and enjoyment " of the properties to which he was entitled under the said Agreement, and that under article 363 of the Constitu tion, no Court had jurisdiction to deal with any dispute arising out of any provisions of the said Agreement.
The decision of the Revenue Officer was thus called in question and it was contended that he had no jurisdiction to decide the dispute as to whether the tenants had any right to the personal properties of the respondent and as such the proceedings were liable to be quashed as being without jurisdiction.
The High Court accepted these contentions of the respondent and allowed the writ petition.
It accordingly directed the issue of a writ declaring that the proceedings under the 1948 Act taken by the Revenue Officer were void as being without jurisdiction and that they should be quashed.
The tenants then filed an application before the High Court asking for a certificate under articles 132 and 1072 133(1)(c) of the Constitution which was granted by the High Court.
The State of Orissa asked for leave to intervene in the appeal which leave was granted by this Court and the learned Solicitor General has appeared before us in support of the appeal, both on behalf of the tenants who are the appellants herein, and the State of Orissa, the Intervener.
It may be noted at the outset that no question has been raised in regard to the vires of the 1950 Act, which extended inter alia the 1948 Act to the areas merged in the absorbing Province of orissa.
That being so, section 7(h) of the 1950 Act in terms would apply to the appellants before us and they would not be liable to ejectment.
The answer of the respondent, however, is that (1) the Revenue Court had by virtue of article 363 of the Constitution no jurisdiction in the disputes between the appellants and him arising out of the provisions of the said Agreement dated December 14, 1947, (2) that the full ownership, use and enjoyment of the properties which was guaranteed to him under article 3 of the said Agreement was affected by the application of the provisions of the 1948 Act, to the said lands and (3) that, he was not a " landlord " and the appellants were not the " tenants " within the meaning of the terms as defined in the 1948 Act, and, that in any event, these lands were not recognised as such by the Provincial Government which recognition was a condition precedent to the application of section 7(h) of the 1950 Act to these lands and that therefore the appellants were not entitled to the protection thereof.
The first two contentions are inter related and can be disposed of together.
The lands in question were declared to be the private properties of the respondent and he was guaranteed under article 3 of the said Agreement full ownership, use and enjoyment thereof.
Article 363 only ousted the jurisdiction of the courts in regard to the disputes arising out of any provisions of the Agreement entered into by the Rulers of Indian States with the Government of India.
The dispute which had arisen between the appellants and the respondent in the present case could hardly be said to 1073 be a dispute arising out of any provisions of the said Agreement.
The full Ownership, use and enjoyment of the properties which were declared to be the private properties of the respondent was not sought to be affected by extending the 1948 Act, to the merged State of Khandapara.
The properties which had been declared to be the private properties of the respondent were not claimed as State properties but the whole legislation proceeded on the basis that the respondent was the owner of these properties wherein he had inducted tenants and what was sought to be done was to enact a measure for the protection of those tenants.
A measure for the protection of the tenants inducted by the respondent could hardly be said to affect the full ownership, use and enjoyment of these properties by the respondent.
It no doubt imposed certain restrictions on the absolute rights which the respondent claimed in regard to the user and enjoyment of the said properties; but these measures were imposed upon him in common with all the citizens of the Union and the justification for the same could be sought under cl. 5 of article 19 of the Constitution.
Similar contentions which had been raised on behalf of the erstwhile Rulers, whose States had merged with the Provinces, were answered by this Court in The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga (1) and in Visweshwar Rao vs The State of Madhya Pradesh (2).
PatanjaliSastri C. J.observed in the former case at page 915: "But a short and obvious answer is that there was no contravention of any guarantee or assurance given by the Government under the covenant of merger, as the estates in question are sought to be acquired only as the " private property " of the Rulers and not otherwise.
The compensation provided for, such as it is, is in recognition of their private proprietorship, as in the case of any other owner.
" Mahajan J. (as he then was) observed in the latter case at page 1041 : " It is true that by the covenant of merger the , 915.
(2) , 1041, I054.
1074 properties of the petitioner became his private properties as distinguished from properties of the State but in respect of them he is in no better position than any other owner possessing private property.
Article 362 does not prohibit the acquisition of properties declared as private properties by the covenant of merger and does not guarantee their perpetual existence.
The guarantee contained in the article is of a limited extent only.
It assures that the Rulers ' properties declared as their private properties will not be claimed as State properties.
The guarantee has no greater scope than this.
That guarantee has been fully respected by the impugned statute, as it treats those properties as their private properties and seeks to acquire them on that assumption.
Moreover, it seems to me that in view of the comprehensive language of article 363 this issue is not justiciable.
" Das J. (as he then was) also observed in that case at page 1054: " The guarantee or assurance to which due regard is to be had is limited to personal rights, privileges and dignities of the Ruler qua a Ruler.
It does not extend to personal property which is different from personal rights.
Further, this article does not import any legal obligation but is an assurance only.
All that the covenant does is to recognise the title of the Ruler as owner of certain properties.
To say that the Ruler is the owner of certain properties is not to say that those properties shall in no circumstances be acquired by the State.
The fact that his personal properties are sought to be acquired on payment of compensation clearly recognises his title just as the titles of other proprietors are recognised.
" It is clear therefore that neither article 363 nor article 362 of the Constitution would avail the respondent and the courts would have jurisdiction to entertain the dispute between the appellants and him which arose out of his action in ejecting them from his private lands.
The provisions of the said Agreement only protected his rights in the properties declared to be his private properties so that they could not be claimed at any time thereafter as State properties.
The did not dispute his ownership over the same but proceeded on the basis that they were his private properties and sought to impose upon him certain obligations in order to protect the rights of the tenants whom he had inducted therein and there was no infringement of the guarantee or assurances which had been given to him under article 3 of the said Agreement.
It could not also be urged that by imposing reasonable restrictions in the interests of the tenants on his right to acquire, hold and dispose of properties under cl. 5 of article 19 of the Constitution, the 1948 Act affected his rights of full ownership, use and enjoyment of those properties.
If anything was done by extending the 1948 Act to the merged State of Khandapara, it was done in the interests of the tenants and it was done for the protection of the tenants who were inducted by him and such restrictions did not affect the full ownership, use and enjoyment of his private properties, any more than they did in the case of other owners of lands.
As a matter of fact, under the terms of the 1950 Act which extended the 1948 Act to the merged State of Khandapara, he was entitled to the payment by "he tenants of such fair and equitable rent as may be fixed by any competent authority appointed in this behalf by the Revenue Commissioner or the Commissioner of the Northern Division as the case may be and so long as the tenants continued to pay such rent he was no worse off than were other proprietors of lands.
The tenants would no doubt acquire rights of occupancy in respect of such lands but the acquisition of the occupancy rights by the tenants would not be calculated to affect his right to full ownership, use and enjoyment of his lands, because he would be entitled to eject the occupancy tenants also if the tenants used the lands comprised in their holdings in any manner which rendered them unfit for the purposes of the tenancy or committed a breach of conditions consistent with the provisions of the tenancy laws in force in the merged State concerned on breach whereof they were under the terms of the contract between themselves and the landlord liable to be ejected.
As already stated I37 1076 these restrictions were for the protection of the tenants who were inducted on the lands by the erstwhile Rulers themselves and by the extension of the 1948 Act to the merged State of Khandapara, the respondent was treated in the same manner as any other citizen of the Union.
If at all there was any infringement of his rights to full ownership, use and enjoyment of his properties that was also in accordance with the provisions of the Constitution itself and whatever may have been the guarantee or assurance given to him under the terms of the said Agreement, it could not be absolute but would only be co extensive with the right to acquire, hold and dispose of property which is guaranteed to all the citizens of the Union under article 19(1)(f) of the Constitution.
These contentions of the respondent therefore are of no avail.
If, then, the provisions of the 1950 Act could be validly applied to the merged State of Khandapara in spite of article 3 of the said Agreement thus attracting the operation of the 1948 Act to his private lands it remains to consider whether the respondent was a landlord and the appellants were his tenants within the meaning of the terms as defined in that Act.
The contention of the respondent, in the first instance, is that under the terms of section 2(ii) of the Orissa Tenants Protection (Amendment) Act, 1951 (Orissa XVII of 1951) which added sub section
5 to section I of the 1948 Act, in such areas where neither the Madras Estates Lands Act, 1908, nor the Orissa Tenancy Act, 1913, was in force and the State of Khandapara was such an area the special laws or customs prevailing therein shall be taken into consideration for the application of that Act.
It is urged that the relationship between the respondent and the tenants whom he had inducted on his private properties was governed by special laws and customs and that therefore the application of the Act was excluded .
It is, however, to be observed that no such contention was ever taken in the proceedings before the Revenue Officer or before the High Court and it was urged for the first time in the course of the arguments before us.
The question is one of fact, 1077 whether any such special laws or customs were prevailing in the merged State of Khandapara, and we cannot allow the respondent to urge this contention for the first time before us.
We shall, therefore, proceed on the basis that the 1948 Act was quite properly extended to the merged State of Khandapara.
It is next contended that the definition of landlord and tenant given in section 2(c) and (g) of the 1948 Act did not apply to the relationship between the parties.
The definitions of these terms are as under: Section 2 (c). "landlord" means a person, whether a proprietor, sub proprietor, tenure holder or raiyat or under raiyat, either in the raiyatwari area or in the zamindari area or land holder or permanent undertenure holder, whose land a person, whether immediately, or mediately cultivates as a tenant; Section 2 (g). "tenant" means a person who, under the system generally known as Bhag, Sanja, Kata or such similar expression, cultivates the land of another person on condition of delivering to that person (i) either a share of the produce of such land, or (ii) the estimated value of a portion of the cropraised on the land, or (iii) a fixed quantity of produce irrespective of the yield from the land, or (iv) produce or its estimated value partly in any one of the ways described above and partly in another; but shall not include. . . . " It is urged that the tenants who were inducted by the respondent on these lands did not fulfil the terms of this definition and they were therefore not tenants and, as a logical corollary to that, the respondent could not be a landlord qua them.
It is also contended that even though these lands were declared to be the private properties of the Respondent under the decision of the Adviser for the Orissa States, that was a recognition of the lands as such by the Dominion Government and not by the Provincial Government; which recognition was a condition precedent of the application of section 7(h) of the 1950 Act to these lands.
Here 1078 also, the respondent is confronted with this difficulty that these questions were not mooted either before the Revenue Officer or the High Court in the manner in which it was sought to be done before us.
It was all along assumed that the appellants had been the tenants of the respondent but had been ejected by him in the year 1951 and other tenants were inducted in their place some time in 1952.
The lands in question were also assumed to have been recognised as the private lands of the respondent by the Government without making any distinction between the Dominion Government and the Provincial Government as was sought to be done before us.
Reliance was mainly placed by the respondent in the High Court on his plea that the jurisdiction of the Revenue Officer was barred under article 363 of the Constitution and it was nowhere urged that the appellants were not the tenants and be was not the landlord within the terms of the definitions contained in the 1948 Act or that in the absence of recognition of these private lands of his as such by the Provincial Government, the condition precedent to the application of section 7(b) of the 1950 Act was not fulfilled and that section has no application at all to these lands.
The determination of these questions also requires evidence in regard to the same and it would not be legitimate to allow these questions to be agitated for the first time at this late stage.
The matter is, however, concluded by the provisions of section 7(a) of the 1950 Act.
That section enacts a statutory extension of the definition of the terms landlord and tenant and provides that the expression 'Jandlord 'shall mean a person immediately under whom a tenant holds land, and the expression 'tenant ' shall mean a person who holds land under another person and is or, but for a special contract, would be liable to pay rent for that land to that person.
Whatever may have been the definitions of the terms landlord and tenant in section 2(c) and (g) of the 1948 Act, this definition contained in the explanation to section 7(a) of the 1950 Act makes the appellants 'the tenants 'and the respondents ' a landlord ' in regard to the lands in question.
This statutory extension of the definition of the terms 1079 'landlord ' and ' tenant ' therefore is sufficient, in our opinion, to repel the last contention urged on behalf of the respondent before us.
The respondent further contends that in spite of section 7 of the 1950 Act, enacting that all suits and proceedings between landlord and tenant as such shall be instituted and tried in revenue courts, the provisions of the 1948 Act in regard to the hierarchy of revenue courts and the procedure and the penalties provided therein are not attracted to the merged State of Khandapara.
The contention is that the provisions contained in the 1950 Act are special provisions which eliminate the operation of the general provisions contained in the 1948 Act, and in so far as nothing more is stated in regard to how the revenue courts are to act in the matter of the institution and trial of all suits and pro ceedings between landlord and tenant, there is a lacuna and the revenue courts as envisaged by the 1948 Act, have no jurisdiction to entertain the proceedings in question.
The simple answer to this contention of the respondent is that both these Acts have to be read together.
The 1950 Act is an Act to extend certain Acts and regulations to certain areas administered as part of the Province of Orissa.
The merged State of Khandapara is one of such areas.
By virtue of section 4 of this Act the 1948 Act is inter alia extended to the merged State of Khandapara and the provisions thereof are made applicable in that area.
The other sections of this Act enact further provisions which are applicable to these merged States including the merged State of Khandapara and section 7, in particular, enacts the modification of the tenancy laws in force in those merged States.
These provisions are therefore supplementary to those contained in the 1948 Act, and it follows that not only the provisions of the 1948 Act but also the provisions of the 1950 Act are applicable to the merged State of Khandapara.
If both these Acts are thus read together, as they should be, there is no inconsistency between the provisions of these Acts and it is clear that the provisions of sub section
(a) and (h) of section 7 of the which applied to the dispute which arose between the appellants and the respondent read together with the relevant provisions in regard to the procedure, penalties, etc., contained in the 1948 Act did give jurisdiction to the Revenue Officer to entertain the dispute between the parties.
This contention of the respondent also therefore fails.
We are therefore, of opinion that the judgment of the High Court was clearly wrong and is liable to be set aside.
We accordingly allow the appeal, set aside the order made by the High Court, and restore the orders passed by the Revenue Officer in the O.T.P. Act Cases Nos.
21 to 25 of 1952, 26 to 28 of 1952, 29 to 32 of 1952 and 33 to 41 of 1952.
The respondent will pay the appellants ' costs of this appeal as also of the writ petition in the High Court.
The State of Orissa will, of course, bear and pay its own costs.
Appeal allowed.
| The respondent was the Ruler of the erstwhile State of Khandapara which merged in the State of Orissa on August 1, 1949.
Article 3 of the Agreement of Merger guaranteed that "the Raja shall be entitled to full ownership, use and enjoyment of all his private properties".
The Orissa Merged States ' (Laws) Act, 1950 extended the Orissa Tenant 's Protection Act, 1948 to the merged areas.
In 1951 the respondents evicted certain tenants.
The tenants applied to the Revenue Officer under the 1948 Act for being restored to possession on the allegations that the respondent was their landlord and that he had unlawfully evicted them.
The Revenue Officer allowed the applications and directed restoration of possession.
The respondent filed a petition under article 226 of the Constitution in the High Court for quashing the orders of the Revenue Officer contending, (1) that the application of the provisions of the 1948 Act to his private properties violated the guarantee given under the Agreement, (2) that article 363 Of the Constitution barred the Court from dealing with any dispute arising out of the Agreement, and (3) that the 1948 Act did not apply to him as he was not a landlord.
The High Court accepted these contentions and quashed the proceedings taken under the 1948 Act: Held, that the extension of the 1948 Act did not affect the full ownership, use and enjoyment of his properties guaranteed to the respondent under the Agreement.
The provisions of the Agreement only protected his rights to the properties declared to be his private properties so that they could not be claimed at anytime thereafter as State properties.
The guarantee given under the Agreement could not be absolute but could only be co extensive with the right to acquire, hold and dispose of property which is guaranteed to all citizens under article 19(1)(f) of the Constitution.
State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of 136 1068 Darbhanga, and Visheshwar Rao vs The State of Madhya Pradesh, , followed.
Held, that the jurisdiction of the Courts to entertain the applications under the 1948 Act, was not barred by article 363 Of the Constitution.
The dispute between the appellants and respondent was not a dispute which arose out of the Agreement of Merger, and so was not covered by article 363.
Held further, that the respondent was a landlord to whom the provisions of the 1948 Act applied.
Whatever may have been the definition of the terms landlord and tenant in SS.
2(C) and (g) of the 1948 Act the definitions contained in section 7(a) of the 1950 Act, made the appellants 'the tenants ' and the respondent 'the landlord ' in regard to the lands in question.
|
Summarize this legal judgement text concisely | Appeals Nos. 668, 669, 670 and 672 of 1957.
Appeal by special leave from the judgment and order dated August 6, 1957, of the Assam High Court in Civil Rule No. 65 of 1957.
A. V. Viswanatha Sastri and Dipak Datta Choudhury, for the appellants in C. As.
Nos. 668 and 669 of 1957 and respondent No. 2 in C.A. No. 670 of 1957.
section M. Lahiri, Advocate General for the State of Assam and Naunit Lai, for the appellants in C.A. No. 670 of 1957 and respondent No. 2 in C.A. No. 669 of 1957.
February 7.
The following Judgment of the Court was delivered by 1342 SINHA J.
These appeals by special leave are directed against the judgments and orders of the Assam High Court, exercising its powers under articles 226 and 227 of the Constitution, in respect of orders passed by the Revenue Authorities under the provisions of the Eastern Bengal and Assam Excise Act, 1910 (E. B. and Assam Act I of 1910) (hereinafter referred to as the Act).
They raise certain common questions of constitutional law, and have, therefore, been heard together, and will be disposed of by this Judgment.
Though there are certain common features in the pattern of the proceedings relating to the settlement of certain country spirit shops, when they passed through the hierarchy of the authorities under the Act, the facts of each case are different, and have to be stated separately in so far as it is necessary to state them.
(1) Civil Appeal No. 668 of 1957.
The two appellants Nagendra Nath Bora and Ridananda Dutt are partners, the partnership having been formed in view of the Government notification dated November 30, 1956, amending rule 232 of the Assam Excise Rules, to the effect that the settlement of the country spirit shops which may be declared by the Government to be 'big shops ', shall be made with two or more partners who shall not belong to the same family nor should be related to one another (vide correction slip at p. 106 of the Assam Excise Manual, 1946).
In accordance with the rules framed under the Act, tenders were invited by the Deputy Commissioner of Sibsagar, for the settlement of Jorhat country spirit shop for the financial year 1957 58, in December, 1956.
The appellants as members of the partnership aforesaid, submitted a tender in the prescribed form.
Respondents 3 and 4, Dharmeshwar Kalita and Someswar Neog, respectively, also were amongst the tenderors.
The Commissioner of Hills Division and Appeals,, Assam, and the Commissioner of Excise, Assam, are the first and the second respondents in this case It is necessary to state at this stage that in respect of the financial year 1956 57, the shop in 1243 question was ordered by the first respondent as the Excise Appellate Authority to be settled with the first appellant Nagendra Nath as an individual, setting aside the orders of the Deputy Commissioner and the Excise Commissioner.
The other competitors for the settlement of the said shop being dissatisfied with the orders of the first respondent, moved the Assam High, Court and challenged the validity of the settlement made in the first appellant 's favour.
Similar writ cases challenging orders of settlement by the first respondent as the Excise Appellate Authority, had been instituted in the High Court.
All those cases were heard together, and the High Court, by its judgment dated May 22, 1956, quashed the orders passed by the first respondent, chiefly on the ground that the Appellate Authority had been illegally constituted.
The matter was brought by way of special leave to this Court, and was heard by the Constitution Bench which, by its judgment dated January 31, 1957, decided that the constitution of the Commissioner of Hills Division and Appeals as the ultimate appellate Authority under the Act, was not unconstitutional.
The judgment of this Court is reported in the case of The State of Assam vs A. N. Kidwai (1).
It will be necessary, in the course of this judgment, to make several references to that decision which, for the sake of brevity, we shall call the ruling of this Court '.
The result of the ruling of this Court, was that the determination by the Assam High Court that the orders passed by the first respondent, were void, was set aside, and the settlement made by that Authority, consequently, stood restored.
But in the meantime, as the orders of the first respondent stood quashed as a result of the judgment of the High Court, the direction of the Excise Commissioner that the shop in question be resettled, was carried out, and the settlement was made with the third respondent aforesaid as an individual.
He continued in possession of the shop until February 26, 1957, on which date, the first appellant was put in possession as a result of the ruling (1) [1957] S.C.R. 295.
158 1244 of this Court.
Even so, the first appellant could exercise his rights as a lessee of the shop only for a few months during the financial year ending March 31, 1957.
For the financial year 1957 58, the Deputy Commissioner, in consultation with the local Advisory Committee, settled the shop in question with the third and the, fourth respondents aforesaid.
The tender submitted by the appellants, was not considered by the licensing authority on the erroneous ground that the orders passed by the first respondent as the ultimate Revenue Authority in the matter of settlement of excise shops, had been rendered null and void as a result of the decision of the High Court, referred to above.
The appellants, as also others who were competitors for the settlement aforesaid, preferred appeals to the Excise Commissioner who set aside the settlement made in favour of the respondents 3 and 4, and ordered settlement of the shop with the appellants.
The Excise Commissioner took into consideration the fact that the order of the High Court, nullifying the proceedings before the first respondent, had been set aside by the ruling of this Court.
The consequence of the order of this Court, was, as the Commissioner of Excise pointed out, that a supposed disqualification of the appellants as competent tenderers, stood vacated as a result of the first respondent 's order.
The third and the fourth respondents, as also other dissatisfied tenderers preferred appeals to the first respondent against the order of the second respondent (the Excise Commissioner).
The first respondent dismissed those appeals and confirmed the order settling the shop with the appellants, by his order dated June 10, 1957.
The respondents 3 and 4, then, moved the High Court under articles 226 and 227 of the Constitution, for an appropriate writ for quashing the order passed by the first respondent.
The High Court, by its order dated August 6, 1957, quashed the aforesaid order of settlement in favour of the appellants by the first respondent.
The High Court further directed that all the tenders be reconsidered in the light of the observation made by it.
The main ground of decision in the 1245 High Court, was that the Excise Appellate Authority had acted in excess of its jurisdiction, and that its order was vitiated by errors apparent on the face of the record.
The prayer for a certificate that the case was a fit one for appeal to this Court, having been refused by the High Court, the appellants obtained special leave to appeal.
(11) Civil Appeal No. 669 of 1957.
This appeal relates to the settlement of the Murmuria country spirit shop in the district of Sibsagar, for the financial year 1957 58.
The appellant Lakhiram Kalita and the first respondent Bhanurani Pegu, amongst others, had submitted their tenders for the settlement of the shop.
The Deputy Commissioner, after consulting the Advisory Committee, settled the shop with the first respondent aforesaid.
The appeals filed by the appellant and other disappointed tenderers, were dismissed by the Excise Commissioner by his order dated March 25, 1957.
Against the said order, the appellant and another party filed further appeals to the Commissioner of Hills Division and Appeals, who, by his order dated May 30, 1957, set aside the settlement in favour of the first respondent, and ordered settlement with the appellant.
In pursuance of that order, the appellant took possession of the shop with effect from June 5, 1957.
The first respondent 's application for review of the order aforesaid, stood dismissed on June 11, 1957.
Against the aforesaid orders of the Commissioner of Hills Division and Appeals, the first respondent moved the High Court under articles 226 and 227 of the Constitution, for a proper writ for quashing them.
On June 17, 1957, the writ petition was heard ex parte, and the High Court issued a rule to show cause why a writ as prayed for, should not be issued.
The rule was made returnable within three weeks.
The High Court also made the further order in these terms: "Meanwhile, the status quo ante will be maintained.
" This last order was misinterpreted by the first respondent and his advisers as entitling them to be put in 1246 possession of the shop, and it is stated that the first respondent threatened the appellant to oust him from the shop on the basis of the order of the High Court quoted above.
The appellant moved the High Court for a clarification of its order aforesaid.
The High Court naturally observed that by I maintaining status quo ante ', the High Court meant that whoever was in possession of the shop on June 17, 1957, will continue to be in possession during the pendency of the case in the High Court.
But, curiously enough, the Deputy Commissioner, by an ex parte order, on June 21, 1957, directed that the first respondent be put in charge of the shop forthwith, and the order was carried out.
When the Deputy Commissioner was approached by the appellant to restore him to possession in view of the observation of the High Court, he asked the appellant to obtain further order from the High Court.
Thereafter, the appellant again moved the High Court on June 28, 1957, stating all the facts leading to his wrongful dispossession, and seeking relief in the High Court.
No order was passed on that petition.
Ultimatey, the High Court, by its order dated July 31, 1957, set aside the order of the Commissioner of Hills Division and Appeals.
The appellant 's prayer for a certificate that the case was a fit one for appeal to this Court, having been refused by the High Court, he moved this Court and obtained special leave to appeal.
(III) Civil Appeal No. 670 of 1957.
This appeal is on behalf of the Commissioner of Hills Division and Appeals, Assam, against the judgment and order of the High Court relating to the Murmuria shop which is the subject matter of Civil Appeal No. 669 referred to in the previous paragraph.
The first respondent to this appeal is Bhanuram Pegu who is also the first respondent in Civil Appeal No. 669 of 1957.
The second respondent is Lakhiram Kalita who is the appellant in Civil Appeal No. 669 of 1957.
Both these respondents, as already indicated, are the competing tenderers for the shop in question.
The facts of this case have already been stated in relation 1247 to Civil Appeal No. 669 of 1957.
This appeal has been brought with a view to getting the legal position clarified in view of the frequent appeals made to the appellant in the matter of settlement of excise shops.
(IV) Civil Appeal No. 672 of 1957.
This appeal relates to the Tinsukia country spirit shop in the district of Lakhimpur.
The appellants, Rafiulla Khan and Mahibuddin Ahmad, are partners, and as such, are interested in the settlement of the shop for the financial year 1957 58.
This shop had been jointly settled with the first appellant and his father for a number of years.
For the year 1956 57 also, the lease had been granted to them by the Deputy Commissioner, after consultation with the Advisory Committee.
A number of unsuccessful tenderers filed appeals before the Commissioner of Excise questining the settlement with the first appellant and his father in respect of the year 1956 57.
The Excise Commissioner set aside the settlement, and ordered a resettlement.
The first appellant and his father filed an appeal before the Excise Appellate Authority, against the order of the Commissioner of Excise.
The Appellate Authority allowed the appeal, and set aside the orders of the Commissioner and the Deputy Commissioner.
One Rafiqul Hussain, one of the competitors for the shop, filed a writ petition before the High Court under articles 226 and 227 of the Constitution.
This writ application, along with other similar applications, was heard and decided by the High Court, as afore.
said, by its judgment dated May 23, 1956.
Against the judgment of the High Court, the first appellant and his father appealed to this Court by special leave, with the result indicated above.
During the pendency of the appeal in this Court in the absence of a stay order, the direction of the Commissioner for a resettlement, was carried out.
The Deputy Commissioner, with the unanimous advice of the Advisory Committee settled the shop with the first appellant on July 25, 1956.
The first respondent and some others preferred appeals before the Commissioner of Excise, against the order aforesaid of the Deputy Commissioner.
As the 1248 special leave appeals to this Court were pending at that time, the Excise Commissioner, under a misapprehension of the effect of this Court 's order refusing interim stay, set aside the Deputy Commissioner 's order, and directed the settlement to be made with the first respondent.
As there was no Excise Appellate Authority functioning at the time as a result of the decision, aforesaid, of the High Court, declaring the constitution of such an Authority to be void, the first appellant moved the High Court under articles 226 and 227 of the Constitution, on the ground that the order of the Excise Commissioner was vitiated by an error apparent on the face of the record in so far as he had misunderstood the order of the Supreme Court passed on the stay petition.
The High Court admitted the application but rejected the prayer for maintenance of status quo in the sense that the first appellant 's possession be maintained.
On the stay petition being rejected by the High Court, the first respondent took possession of the shop from the first appellant as a result of the Excise Commissioner 's order in his favour.
The High Court ultimately dismissed the writ application by its order dated December 6, 1.956.
The appeal filed by the appellant and his father, already pending in this Court, was heard and determined as aforesaid, in January, 1957.
This Court reversed the decision of the High Court, and restored the status of the Excise Appellate Authority.
As a result of the ruling of this Court, the Excise Appellate Authority, by its order dated February 25, 1957, directed delivery of possession back to the first appellant and his father, holding that the order of resettlement and the resettlement, itself, in pursuance of that order, were all wiped out.
Against the said order, the first respondent moved the High Court under articles 226 and 227 of the Constitution for quashing the order for delivery of possession, on the ground of want of jurisdiction, and for ad interim stay.
The High Court issued a rule and passed an order for interim stay on February 26, 1957.
The High Court made the rule absolute by its order dated March 26, 1957, taking the view that the attention of this Court had not been drawn to the interim 1249 settlement of the shop in the absence of an order of stay.
It appears further that during the pendency of the appeal in this Court, fresh settlement for the financial year 1957 58, took place towards the end of 1956, and the beginning of 1957.
The Tinsukia shop was settled with respondents I and 2 though the appellants also had jointly submitted a tender for the same.
The appellants and other parties preferred appeals against the said order of settlement made by the Deputy Commissioner.
The Excise Commissioner set aside the settlement by the Deputy Commissioner, and directed settlement in favour of the appellants by his order dated April 16, 1957.
Against that order, respondents I and 2 and others preferred appeals before the Excise Appellate Authority who, by an order dated June 3, 1957, dismissed the appeals.
Accordingly, the appellants were given possession of the shop on June 7, 1957.
The respondents I and 2 again moved the High Court for quashing the order of the Excise Appellate Authority, affirming that of the Excise Commissioner, and also prayed for the status quo being maintained.
The High Court admitted the petition and ordered " meanwhile, status quo ante be maintained.
" This took place on June 10, 1957.
In pursuance of the aforesaid order of the High Court, the appellants were dispossessed of the shop even though they had been put in possession only three days earlier.
This was done on a complete misapprehension of the true effect of the order of the High Court maintaining status quo ante.
If the High Court had passed its order in a less sophisticated and more easily understood language in that part of the country, perhaps, the party in possession, would not have been dispossessed of the shop settled with it.
The appellants moved the High Court against the Commissioner 's order directing possession to be given to the respondents 1 and 2.
The High Court issued a rule but refused to grant stay of the operation of the order directing possession to be given.
During the final hearing of the rule before the High Court, the appellants again moved a petition on July 5, 1957, for vacating the 1250 order of possession which was based on a misapprehension of the order of the High Court maintaining status quo ante, but apparently, no order was passed because possession had already been given to the respondents I and 2.
During the hearing of the rule by the High Court, an unfortunate incident occurred, for which the appellants cannot altogether be absolved of some responsibility, as a result of which, one of the learned judges constituting the Bench, namely, Deka J. expressed his unwillingness to proceed with the hearing of the case.
The hearing had, therefore, to be adjourned on July 15, 1957, until a new Bench could be constituted.
The appellants renewed their application already made on July 5, as aforesaid, for undoing the unintended effect of the order of the High Court, that the status quo ante was to continue.
But on July 30, the Chief Justice directed that the matter be placed before a Division Bench.
As there was no third judge at the time, the disposal of the case, naturally had to stand over until the third judge was available.
The matter of delivery of possession was again mentioned before the Division Bench of the Chief Justice and Deka J.
The High Court rejected the application on grounds which cannot bear a close scrutiny.
The petitioners also approached the Excise Appellate Authority, but it refused to reconsider the matter as the case was then pending before the High Court.
Again on August 14, 1957, a fresh application was made to the High Court, along with a copy of the orders passed by the Excise Appellate Authority and the Deputy Commissioner, Lakhimpur, giving delivery of possession to respondents 1 and 2.
But, this time, Deka J. refused to hear the matter, and naturally, the Chief Justice directed the matter to be placed before him, sitting singly.
on August 19, 1957, the matter was placed before the Chief Justice sitting singly, and he directed a rule to issue on the opposite party cited before that Court, to show cause.
Apparently, the learned Chief Justice treated the matter as a new case and not as an off shoot of the case already pending before the High Court.
The High Court closed for the long vacation on September 2, and was to reopen on 1251 November 3, 1957.
The vacancy of the third judge had not been filled till then, and as the appellants felt that they had been wrongfully deprived of their right to hold their shop, as a result of an erroneous interpretation of the order of the High Court, passed on June 10, as aforesaid, and as there was no prospect of the case being disposed of quickly, the appellants moved this Court and obtained special leave to appeal.
As is evident from the statement of facts in connection with each one of the appeals, set out above, these cases have followed a common pattern.
They come from the 'non prohibited areas in the State of Assam where sale of 'country spirit ' is regulated by licences issued by the authorities under the provisions of the Act.
Settlement of shops for the sale of such liquor is made for one year April I to March 31.
According to the present practice contained in Executive lnstructions, intending candidates for licences, have to submit tenders to the Deputy Commissioner for the Sadar Division and to Sub Divisional officers for Sub Divisions, in accordance with the terms of notices published for the purpose.
Such tenders are treated as strictly confidential.
Settlement is made by the Deputy Commissioner or the Sub Divisional Officer concerned, as the case may be, in consultation with an Advisory Committee consisting of 5 local members or less.
The selection of a particular tenderer is more or less a matter of administrative discretion with the officer making the settlement.
Under the Act, an appeal from an order of settlement made by a Deputy Commissioner or Sub Divisional officer, lies to the Commissioner of Excise, and from an order of the Commissioner of Excise to the Excise Appellate Authority whose decision becomes final.
Section 9 of the Act, dealing with appeal and revision, has undergone a series of amendments, and the section as it has emerged out of the latest amendment by the Amending Act The Assam Act 23 of 1955 which received the assent of the Governor of Assam on December 22, 1955, and was published in the Assam Gazette dated 159 1252 December 28, 1955, is in these terms: "9.
(1) Orders passed under this Act or under any rule made hereunder shall be appealable as follows in the manner prescribed by such rules as the State Government may make in this behalf (a) to the Excise Commissioner, any order passed by the District Collector or a Collector other than the District Collector, (b) to the Appellate Authority appointed by the State Government for the purpose, any order passed by the Excise Commissioner.
(2) In cases not provided for by clauses (a) and (b) of sub section (1), orders passed under this Act or under any rules made hereunder shall be appealable to such authorities as the State Government may prescribe.
(3) The Appellate Authority, the Excise Commissioner 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.
" Rules 339, 340, 341 and 345 of the Assam Excise Manual, have, thus, become obsolete and have been deleted as a result of the latest amendment aforesaid.
The power of hearing appeals and revisions under the Act, has been vested successively in the Board, the Assam Revenue Tribunal, the Commissioner for Hills Division and Appeals; and ultimately, under the amended section, in the Appellate Authority.
The history of the legislation relating to the highest Revenue Authority under the Act, has been traced in the judgment of this Court in the State of Assam vs A.N. Kidwai (supra), and need not be repeated here.
It is convenient, first, to deal with the general questions of public importance raised on behalf of the appellant in Civil Appeal No. 670 of 1957.
At the forefront of the arguments advanced on behalf of the Appellate Authority, was the plea that the several authorities already indicated, concerned with the settlement of excise shops like those in question in these appeals, are merely administrative bodies, and, 1253 therefore, their orders whether passed in the first instance or on appeal, should not be amenable to the writ jurisdiction or supervisory jurisdiction of the High Court under articles 226 and 227 of the Constitution.
If the matter had rested only with the provisions of the Act, apart from the rules made under section 36 of the Act, much could have been said in support ' of this contention.
As observed by this Court in the case of Cooverjee B. Bharucha vs The Excise Commissioner and the Chief Commissioner, Ajmer and others(1) there is no inherent right in a citizen to sell liquor.
It has further been observed by this Court in the recent case of the State of Assam vs A. N. Kidwai, (supra), at page 301 as follows: " A perusal of the Act and rules will make it clear that DO 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.
" It is true that no one has an inherent right to settlement of liquor shops, but when the State, by public notice, invites candidates for settlement to make their tenders, and in pursuance of such a notice, a number of persons make such tenders each one makes a claim for himself in opposition to the claims of the others, and the public authorities concerned with the settlement, have to choose from amongst them.
If the choice had rested in the hands of only one authority like the District Collector on his subjective satisfaction as to the fitness of a particular candidate without his orders being amenable to an appeal or appeals or revision, the position may have been different.
But section 9 of the Act has laid down a regular hierarchy of authorities, one above the other, with the right of hearing appeals or revisions.
Though the Act and the rules do not, in express terms, require reasoned orders to be recorded, yet, in the context of the subject matter of the rules, it becomes necessary for the (I) ; , 880.
1254 several authorities to pass what are called I speaking orders '.
Where there is a right vested in an authority created by statute, be it administrative or quasijudicial, to hear appeals and revisions, it becomes its duty to hear judicially, that is to say, in an objective manner, impartially and after giving reasonable opportunity to the parties concerned in the dispute, to place their respective cases before it.
In this connection, the observations of Lord Haldane at p. 132, and of Lord Moulton at p. 150, in Local Government Board vs Arlidge (1), to the following effect are very apposite: 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." Lord Moulton: " In the present case, however, the Legislature has provided an appeal, but it is an appeal to an administrative department of State and not to a judicial body.
It is said, truthfully, that on such an appeal the Local Government Board must act judicially, but this, in my opinion, only means that it must preserve a judicial temper and perform its duties conscientiously, with a proper feeling of responsibility, in view of the fact that its acts affect the property and rights of individuals.
Parliament has wisely laid down certain rules to be observed in the performance of its functions in these matters, and those rules must be observed because they are imposed by statute, and for no other reason, and whether they give much or little opportunity for what I may call quasi litigious procedure depends solely on what Parliament has thought right.
These rules are beyond the criticism of the Courts, and it is not their business to add to or (1) 1255 take away from them, or even to discuss whether in the opinion of the individual members of the Court they are adequate or not.
" The legal position has been very succinctly put in Halsbury 's Laws of England(1), as follows: "Moreover an administrative body, whose decision is actuated in whole or in part by questions of policy, may be under a duty to act judicially in the course of arriving at that decision.
Thus, if in order to arrive at the decision, the body concerned had to consider proposals and objections and consider evidence, if at some stage of the proceedings leading up to the decision there was something in the nature of a lis before it, then in the course of such consideration and at that stage the body would be under a duty to act judicially.
If, on the other hand, an administrative body in arriving at its decision has before it at no stage any form of lis and throughout has to consider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any time to act judicially.
Even where the body is at some stage of the proceedings leading up to the decision under a duty to act judicially, the supervisory jurisdiction of the Court does not extend to considering the sufficiency of the grounds for, or otherwise challenging, the decision itself.
" The provisions of the Act are intended to safeguard the interest of the State on the one band, by stopping, or at any rate, checking illicit distillation, and on the other band, by raising the maximum revenue consistently with the observance of the rules of temperance.
The authorities under the Act, with Sub divisional Officers at the bottom and the Appellate Authority at the apex of the 'hierarchy, are charged with those duties.
The rules under the Act and the executive instructions which have no statutory force but which are meant for the guidance of the officers concerned, enjoin upon those officers, the duty of seeing to it that shops are settled with persons of character and experience in the line, subject to certain reservations in (1) Vol.
3rd Edn., PP.
56 57.
1256 favour of tribal population.
Except those general con siderations, there are no specific rules governing the grant of leases or licences in respect of liquor shops, and in a certain contingency, even drawing of lots, is provided for, vide Executive Instructions 110 at p. 174 of the Manual.
The words of sub section
(3) of section 9 as amended, set out above, vest complete discretion in the Appellate Authority, the Excise Commissioner or the District Collector, to 'pass such orders thereon as it or he may think fit. ' The sections of the Act do not make any reference to the recording of evidence or hearing of parties or even recording reasons for orders passed by the authorities aforesaid.
But we have been informed at the bar that as a matter of practice, the authorities under the Act, hear counsel for the parties, and give reasoned judgments, so as to enable the higher authorities to know why a particular choice has been made.
That is also apparent from the several orders passed by them in course of these few cases that are before us.
But when we come to the rules relating to appeals and revisions, we find that the widest scope for going up in appeal or revision, has been given to persons interested, because r. 344 only lays down that no appeal shall lie against the orders of composition, thus, leaving all other kinds of orders open to appeal or revision.
Rule 343 provides that every memorandum of appeal shall be presented within one month from the date of the order appealed against, subject to the requisite time for obtaining a certified copy of the order being excluded.
Rule 344 requires the memorandum of appeal to be accompanied by a certified copy of the order appealed against.
The memorandum of appeal has to be stamped with a requisite court fee stamp.
Rule 343 was further amended by the Notification dated March 14, 1957, by adding the following proviso and explanations to that rule: " Provided further that the competent Appellate Authority shall have the power to admit the appeal after the prescribed period of limitation when the appellant satisfies the Appellate Authority that he had sufficient cause for not preferring the appeal 1257 within such period.
Explanation (1).
The fact that the appellant was misled by any order, practice or judgment of any Appellate Authority in ascertaining or computing the prescribed period of limitation may be sufficient cause within the meaning of this Rule.
Explanation (2).
The fact that the Appellate Authority was unable to function for any period by reason of any judicial pronouncement shall be sufficient cause within the meaning of this Rule.
The amendment shall be deemed to have been made on 23rd May, 1956, and shall have retrospective effect since that date.
" These rules, read along with the recent amendments, set out above, approximate the procedure to be followed by the Appellate Authorities, to the regular procedure observed by courts of justice in entertaining appeals.
As would appear from the ruling of this Court at p. 304, where the provisions and effect of the Assam Revenue Tribunal (Transfer of Powers) Act, 1948, (Assam IV of 1948) have been set out, the ultimate jurisdiction to hear appeals and revisions, was divided between the Assam High Court and the Authority referred to in section 3(3) of that Act.
Appeals and revisions arising out of cases covered by the provisions of the enactments specified in Schedule 'A ' to that Act, were to lie in and to be heard by the Assam High Court, and the jurisdiction to entertain appeals and revisions in matters arising under the provisions of the enactments specified in Schedule 'B ' to that Act, was vested in the Authority to be set up under section 3(3), that is to say, for the purposes of the present appeals before us, the Excise Appellate Authority.
Thus, the Excise Appellate Authority, for the purposes of cases arising under the Act, was vested with the power of the highest appellate Tribunal, even as the High Court was, in respect of the other group of cases.
That does not necessarily mean that the Excise Appellate Authority was a Tribunal of co ordinate jurisdiction with the High Court, or that that Authority was not amenable to the supervisory jurisdiction of the 1258 High Court under articles 226 and 227 of the Constitution.
But the juxtaposition of the two parallel highest Tribunals, one in respect of predominantly civil cases, and the other, in respect of predominantly revenue cases (without attempting any clear cut line of demarcation), would show that the Excise Appellate Authority was not altogether an administrative body which had no judicial or quasi judicial functions.
Neither the Act nor the rules made thereunder, indicate the grounds on which the first Appellate Authority, namely, the Excise Commissioner, or the second Appellate Authority (the Excise Appellate Authority), has to exercise his or its appellate or revisional powers.
There is no indication that they make any distinction between the grounds of interference on appeal and in revision.
That being so, the powers of the Appellate Authorities in the matter of settle ment, would be co extensive with the powers of the primary authority, namely, the District Collector or the Sub Divisional Officer.
See in this connection, the observations of the Federal Court in Lachmeshwar Prasad Shukul and others vs Keshwar Lal Chaudhuri and others (1), and of this Court in Ebrahim Aboobakar and another vs Custodian General of Evacuee Property(2).
In the latter case, this Court, dealing with the powers of the Tribunal (Custodian General of the Evacuee Property), under section 24 of Ordinance No. 27 of 1949, observed: " Like all courts of appeal exercising general jurisdiction in civil cases, the respondent has been constituted an appellate court in words of the widest amplitude and the legislature has not limited his jurisdiction by providing that such exercise will depend on the existence of any particular state of facts.
Thus, on a review of the provisions of the Act and the rules framed thereunder, it cannot be said that the authorities mentioned in section 9 of the Act, pass purely administrative orders which are beyond the ambit of the High Court 's power of supervision and control.
Whether or not an administrative body or (1) , 102.
(2) ; , 704.
1259 authority functions as a purely administrative one or in a quasi judicial capacity, must be determined in each case, on an examination of the relevant statute and the rule,,; framed thereunder.
The first contention raised on behalf of the appellant must, therefore, be overruled.
Now, turning to the merits of the High Court 's order, it was contended on behalf of the appellant that the High Court had misdirected itself in holding that the Appellate Authority had exceeded its jurisdiction in passing the order it did.
There is no doubt that if the Appellate Authority whose duty it is to determine questions affecting the right to settlement of a liquor shop, in a judicial or quasi judicial manner, acts in excess of its authority vested by law, that is to say, the Act and the rules thereunder, its order is subject to the controlling authority of the High Court.
The question, therefore, is whether the High Court was right in holding that the Appellate Authority had exceeded its legal power.
In this connection, it is best to reproduce, in the words of the High Court itself, what it conceived to be the limits of the appellate jurisdiction: "In other words, it is not for the Appellate Authority to make the choice, since the choice has already been made by the officers below; and it is not only where the choice is perverse or illegal and not in accordance with the Rules that the Appellate Authority can interfere with the order and make its own selected (sic.) out of the persons offering tenders.
If the Appellate bodies chose to act differently and consider themselves free to make their own choice of the person to be offered settlement irrespective of the recommendations of the Deputy Commissioner or the Officer conducting the settlement, the Appellate bodies will be obviously exceeding the jurisdiction, which they possess under the law or going beyond the scope of their authority as contemplated by the Rules.
" In our opinion, in so circumscribing the powers of the Appellate Authority, the High Court has erred.
See in this connection, the decision of this Court in Raman 160 1260 and Raman Ltd. vs The State of Madras(1).
In that case, this Court dealt with the powers of the State Government, which had been vested with the final authority in the matter of grant of stage carriage permits.
This Court held that as the State Government had been constituted the final authority under the "Motor Vehicles Act, to decide as between the rival claimants for permits, its decision could not be interfered with under article 226 of the Constitution, merely because the Government 's view may have been erro neous.
In the instant cases, the Appellate Authority is contemplated by section 9 of the Act, to be the highest authority for deciding questions of settlement of liquor shops, as between rival claimants.
The appeal or revision being undefined and unlimited in its scope, the highest authority under the Act, could not be deprived of the plenitude of its powers by introducing considerations which are not within the Act or the rules.
It is true that the Appellate Authority should not lightly set aside the selection made by the primary Authority, that is to say, a selection made by a Subdivisions Officer or by a District Collector, should be given due weight in view of the fact that they have much greater opportunity to know local conditions and local business people than the Appellate Authority, even as the appeal courts are enjoined not to interfere lightly with findings of fact recorded by the original courts which had the opportunity of seeing witnesses depose in court, and their demeanour while deposing in court.
But it is not correct to hold that because the Appellate Authority, in the opinion of the High Court, has not observed that caution, the choice made by it, is in excess of its power or without jurisdiction.
The next ground of attack against the order of the High Court, under appeal, was that the High Court had erred in coming to the conclusion that there had been a failure of natural justice.
In this connection, the High Court has made reference to the several affidavits filed on either side, and the order in which they (1) ; 1261 had been filed, and the use made of those affidavits or counter affidavits.
As already indicated, the rules make no provisions for the reception of evidence oral or documentary, or the hearing of oral arguments, or even for the issue of notice of the hearing to the parties concerned.
The entire proceedings are marked by a complete lack of formality.
The several authorities have been left to their own resources to make the best selection.
In this connection, reference may be made to the observations of this Court in the case of New Prakash Transport Co., Ltd. vs New Suwarna Transport Co., Ltd. (1).
In that case, this Court has laid down that the rules of natural justice vary with the varying constitutions of statutory bodies and the rules prescribed by the Act under which they function ; and the question whether or not any rules of natural justice had been contravened, should be decided not under any pre conceived notions, but in the light of the statutory rules and provisions.
In the instant case, no such rules have been brought to our notice, which could be said to have been contravened by the Appellate Authority.
Simply because it viewed a case in a particular light which may not be acceptable to another independent tribunal, is no ground for interference either under article 226 or article 227 of the Constitution.
It remains to consider the last contention raised on behalf of the appellants in these cases, namely, whether there has been any error apparent on the face of the record, in the order of the Appellate Authority, which would attract the supervisory jurisdiction of the High Court.
In this connection, the following observations of the High Court are relevant: " But the most glaring error on face of the order of the Appellate Authority is that it does not even refer to the report of the Deputy Commissioner on which the Excise Commissioner had so strongly relied.
In my opinion, it was under the Rules obligatory on the Appellate Authority to consider that report before disposing of the appeal, and in failing to do so, the officer (1) 1262 acted arbitrarily and in excess of his powers as an Appellate Authority.
" It may be that durinly the prolonged hearing of these cases before the High Court where, counsel for the different parties placed their respective view points after making copious references to the documents, the ', High Court was greatly impressed that the order of settlement in one case (Murmuria shop), made by the Deputy Commissioner, as confirmed by the Excise Commissioner, was the right one and that the choice made by the Appellate Authority did not commend itself to the High Court.
It may further be that the conclusions of fact of the High Court were more in consonance with the entire record of the proceedings, and that the choice made by the ultimate Revenue Authority, was wrong.
But, under the law as it stands, the High Court exceeded its powers in pronouncing upon the merits of a controversy which the Legislature has left to the discretion of the Appellate Authority.
But is that a mistake apparent on the face of the record, as understood in the context of article 226 of the Constitution ? That leads us to a consideration of the nature of the error which can be said to be an error apparent on the face of the record which would be one of the grounds to attract the supervisory jurisdiction of the High Court under article 226 of the Constitution.
The ancient writ of certiorari which now in England is known as the order of certiorari, could be issued on very limited grounds.
These grounds have been discussed by this Court in the cases of: Parry & Co. vs Commercial Employee 's Association, Madras (1), Veerappa Pillai vs Raman and Raman Ltd., and others (2), Ibrahim Aboobaker vs Custodian General of Evacuee Property (3), T. C. Basappa vs T. Nagappa All these cases have been considered by this Court in (1) ; (2) ; (3) ; (4) ; 1263 the case of Hari Vishnu Kamath vs Syed Ahmad Ishaque and others (1).
Venkatarama Ayyar J., speaking for the full Court, laid down four propositions bearing on the character and scope of the writ of certiorari as established upon the authorities.
The third proposition out of those four, may be stated in the words of that learned Judge, as follows: " The Court issuing a writ of certiorari acts in exercise of a supervisory and not appellate jurisdiction.
One consequence of this is that the Court will not review findings of fact reached by the inferior Court or Tribunal, even if they be erroneous.
" While considering the fourth proposition whether the writ can be issued in the case of a decision which was erroneous in law, after considering the recent Authorities, the same learned Judge, in the course of his judgment, at p. 1123, has observed as follows: " It may therefore be taken as settled that a writ of certiorari could be issued to correct an error of law.
But it is essential that it should be something more than a mere error: it must be one which must be manifest on the face of the record.
" The High Court appears to have been under the impression that the expression "error apparent on the face of the record" may also be in respect of findings of fact.
For example, in Civil Appeal No. 668 of 1957, relating to Jorhat shop, the High Court has observed as follows: " The Appellate Authority further reinforced its suspicion by mentioning that Dharmeswar, his father and brother are summoned in connection with some complaint, but that was a matter purely extraneous, ,to speak the least and it could have found that the complaint was filed after the settlement.
The complaint had no reference to any offence of smuggling or the like as has been conceded.
These were errors ap.
parent on the face of the record.
" Later, in the course of the same judgment, it has been observed as follows: " This is another instance where I find that the Excise Appellate Authority has misconceived its (1) ; , 1121.
1264 powers as such and purported to decide the appeal either on errors of record, speculations or on irrelevant considerations, irrespective of all that happened in the earlier stages of the matter.
It starts with an apparent error of record when it says that in the judgment of the Excise Commissioner it finds 'a clear admission that Shri Garela Kalita, father of Shri Dharmeswar Kalita, is a suspected smuggler. ' In fact, there was no such admission.
It was held by the Commissioner on the contrary that 'the learned Deputy Commissioner and members of the Advisory Committee thought that the major son who bears an excellent character should not be punished for the alleged sin of his father '.
" These excerpts from the judgment of the High Court are not exhaustive, but only illustrative of the observation that the High Court appears to have treated an error of fact on the same footing as an error of law apparent on the face of the record.
The question, naturally, arises whether an error of fact can be invoked in aid of the power of the High Court to quash an order of a subordinate court or Tribunal.
The High Court would appear to have approximated it to an 'error apparent on the face of the record ' as used in r. 1 of 0.
47 of the Civil Procedure Code, as one of the grounds for review of a judgment or order; but that is clearly not the correct position.
Ordinarily, a mistake of law in a judgment or an order of a court, would not be a ground for review.
It is a mistake or an error of fact apparent on the face of the record, which may attract the power of review as contemplated by r. I of 0.
But is the power of a High Court under article 226 of the Constitution, to interfere on certiorari, attracted by such a mistake, and not the reverse of it, in the sense that it is only an error of law apparent on the face of the record, which can attract the supervisory jurisdiction of a High Court ? This question, so far as we know, has not been raised in this form in this Court in any one of the previous decisions bearing on the scope and character of the writ of certiorari.
It is, therefore, necessary to examine this question directly raised in this batch of appeals, 1265 because, in each case, the High Court has been invited to exercise its powers under article 226, to issue a writ of certiorari on the specific ground that the orders impugned before it, had been vitiated by errors apparent on the face of the record errors not of law but of fact.
The ancient case of the Queen vs James Bolton(1), is treated as a landmark on the question of the power to issue a writ or order of certiorari.
That was a case in which an order of justices for delivering up a house to parish officers, under a statute, was called up on certiorari.
Lord Denman C. J. while discharging the rule, made the following observations in the course of his judgment, which have been treated as authoritative and good law even now: " The first of these is a point of much importance, because of very general application ; but the principle upon which it turns is very simple: the difficulty is always found in applying it.
The case to be supposed is one like the present, in which the Legislature has trusted the original, it may be (as here) the final, jurisdiction on the merits to the magistrates below; in which this Court has no jurisdiction as to the merits either originally or on appeal.
All that we can then do, when their decision is complained of, is to see that the case was one within their jurisdiction, and that their proceedings on the face of them are regular and according to law.
Even if their decision should upon the merits be unwise or unjust, on these grounds we cannot reverse it.
" While dealing with the argument at the Bar, complaining of the unsoundness of the conclusions reached by the magistrates and the hardships to be caused by their erroneous order, the Court made the following observations which are very apposite to the facts and circumstances disclosed in the instant appeals, and which all courts entrusted with the duty of administering law, should bear in mind, so that they may not be deflected from the straight path of enforcing the law, by considerations based on hardship or on vague (1) [1841] (I) Queen 's Bench p. 66, 72, 76; 113 English Reports I054,1057,1058.
1266 ideas of what is sometimes described as justice of the cause: " Beyond this we cannot go.
The affidavits, being before us, were used OD the argument; and much was said of the unreasonableness of the conclusion drawn by the magistrates, and of the hardship on the defendant if we would not review it, there being no appeal to the sessions.
We forbear to express any opinion on that which is not before us, the propriety of the conclusion drawn from the evidence by the magistrates: they and they alone were the competent authority to draw it; and we must not constitute ourselves into a Court of Appeal where the statute does not make us such, because it has constituted no other.
It is of much more importance to hold the rule of law straight than, from a feeling of the supposed hardship of any particular decision, to. interpose relief at the expense of introducing a precedent full of inconvenience and uncertainty in the decision of future cases" The case of Reg vs Bolton (supra) was approved and followed by the Privy Council in the case of the King vs Nat B 11 Liqutors, Limited (1).
In that case their Lordships of the Judicial Committee held that a conviction by a magistrate for a non indictable offence, cannot be quashed on certiorari on the ground that the record showed that there was no evidence to support the conviction, or that the magistrate had misdirected himself in considering the evidence.
It was further laid down that the absence of evidence did not affect the jurisdiction of the magistrate to try the charge.
In the course of their judgment, their Lord.
ships further observed that the law laid down in Reg vs Bolton (supra) has never been seriously questioned in England, and that the same rules were Applicable to other parts of the Commonwealth, except in so far as they may have been modified by statute.
They also observed that the decision in Reg vs Bolton (supra) undoubtedly is a landmark in the history of certiorari, for it summarises in an impeccable form the principles of its application. .
But latterly, the rule (1) 1267 laid down in Bolton 's case, appears to have been slurred over in some decided cases, in England, which purported to lay down that a writ or order of certiorari could be obtained only if the order impugned disclosed an error of jurisdiction, that is to say, complete lack of jurisdiction or excess of jurisdiction or the refusal to exercise jurisdiction, and not to correct an error of law, even though apparent on the face of the record.
The question was brought to a head in the case of Rex vs Northumberland Compensation Appeal Tribunal (1).
It arose out of an application for an order of certiorari for quashing a decision reached by the respondent Northumberland Compensation Appeal Tribunal.
Lord Goddard C. J. began his judgment by observing that the point involved in the case was " of the very greatest importance " which had " necessitated the examination of a large number of cases and consideration of the principles which apply to the doctrine of certiorari ".
He further observed that certiorari is a remedy of a very special character.
He, then, discussed the object and scope of the writ of certiorari and the history of the jurisdiction as exercised in the English courts.
He then dealt with the contention directly raised for the determination of the court that an order of certiorari, can issue only to remove a defect of jurisdiction and that it does not extend to removing an order out of the way of the parties on account of a mistake of law apparent on the face of the record.
The court then considered the relevant authorities, and came to the conclusion that it was wrong to hold that the ground of interference on certiorari, was only an error or excess of jurisdiction, and that it did not extend to correction of an error of law apparent on the face of the record.
The Lord Chief Justice then pointed out that the examination of the authorities bearing on the exercise of the power of certiorari, yielded the result that it was open to the High Court to examine the record and to see whether or not there was an error of law apparent on the face of the record.
The Lord Chief Justice concluded his observations with these remarks: (1) 161 1268 " The tribunal have told us what they have taken into account, what they have disregarded, and the contentions which they accepted.
They have told us their view of the law, and we are of opinion that the construction which they placed on this very complicated set of regulations was wrong.
" This decision was challenged, and on appeal, the Court of Appeal dealt with this point in Rex vs Northumberland, Compensation Appeal Tribunal(1).
The Court of Appeal affirmed the proposition laid down by the High Court that an order for certiorari, can be granted and the decision of an inferior court such as a statutory tribunal, quashed on the ground of an error of law apparent on the face of the record.
Singleton L. J. in the course of his judgment, observed that an error on the face of the proceedings, which in that case was an error of law, has always been re. cognized as one of the grounds for the issue of an order of certiorari.
Denning L. J. also, in the course of his judgment, examined the question whether the High Court could intervene to correct the decision of a statutory tribunal which is erroneous in point of law.
On an examination of the authorities from ancient times, the Lord Justice made the following observations: " Of recent years the scope of certiorari seems to have been somewhat forgotten.
It has been supposed to be confined to the correction of excess of jurisdiction, and not to extend to the correction of errors of law ; and several judges have said as much.
But the Lord Chief Justice has, in the present case, restored certiorari to its rightful position and shown that it can be used to correct errors of law which appear on the face of the record even though they do not go to jurisdiction.
I have looked into the history of the matter, and find that the old cases fully support all that the Lord Chief Justice said.
Until about 100 years ago, certiorari was regularly used to correct errors of law on the face of the record.
It is only within the last century that it has fallen into disuse, and that is only because there has, until recently, been little occasion for its exercise.
(I) ; 1269 Now, with the advent of many new tribunals, and the plain need for supervision over them, recourse must once again be had to this well tried means of control.
" The other Lord Justice who took part in the hearing of the appeal, Morris L. J. also examined that question and concluded as follows: " It is plain that certiorari will not issue as the, cloak of an appeal in disguise.
It does not lie in order to bring up an order or decision for rehearing of the issue raised in the proceedings.
It exists to correct error of law where revealed on the face of an order or decision, or irregularity, or absence of, or excess of, jurisdiction where shown.
" I It is clear from an examination of the authorities of this Court as also of the courts in England, that one of the grounds on which the jurisdiction of the High Court on certiorari may be invoked, is an error of law apparent on the face of the record and not every error either of law or fact, which can be corrected by a superior court, in exercise of its statutory powers as a court of appeal or revision.
So far as we know, it has never been contended be.
fore this Court that an error of fact, even though apparent on the face of the record, could be a ground for interference by the court exercising its writ jurisdiction.
No ruling was brought to our notice in support ,of the proposition that the court exercising its powers under article 226 of the Constitution, could quash an order of an inferior tribunal, on the ground of a mistake of fact apparent on the face of the record.
But the question still remains as to what is the legal import of the expression 'error of law apparent on the face of the record. ' Is it every error of law that can attract the supervisory jurisdiction of the High Court, to quash the order impugned ? This court, as observed above, has settled the law in this respect by laying down that in order to attract such jurisdiction, it is essential that the error should be something more than a mere error of law; that it must be one which is manifest on the face of the record.
In this respect, the law in India and the law in England, are, therefore, the same.
It is also clear, on an examination of all 1270 the authorities of this Court and of those in England, referred to above, as also those considered in the several judgments of this Court, that the Common Law writ, now called order of certiorari, which was also adopted by our Constitution, is not meant to take the place of an appeal where the statute does not confer a right of appeal.
Its purpose is only to determine, on an examination of the record, whether the inferior tribunal has exceeded its jurisdiction or has not proceeded in accordance with the essential requirements of the law which it was meant to administer.
,Mere formal or technical errors, even though of law, will not be sufficient to attract this extraordinary jurisdiction.
The principle underlying the jurisdiction to issue a writ or order of certiorari, is no more in doubt, but the real difficulty arises, as it often does, in applying the principle to the particular facts of a given case.
In the judgments and orders impugned in these appeals, the High Court has exercised its supervisory jurisdic note in respect of errors which cannot be said to be errors of law apparent on the face of the record.
If at all they are errors, they are errors in appreciation of documentary evidence or affidavits, errors in drawing inferences or omission to draw inferences.
In other words, those are errors which a court sitting as a court of appeal only, could have examined and, if necessary, corrected.
As already indicated, the Appellate Authority had unlimited jurisdiction to examine and appreciate the evidence in the exercise of its appellate or revisional jurisdiction.
Section 9(3) of the Act, gives it the power to pass such orders as it thought fit.
These are words of very great amplitude.
The jurisdiction of the Appellate Authority, to entertain the appeals, has never been in doubt or dispute.
Only the manner of the exercise of its appellate jurisdiction was in controversy, It has not been shown that in exercising its powers, the Appellate Authority disregarded any mandatory provisions of the law.
The utmost that has been suggested, is that it has not carried out certain Executive Instructions.
For example, it has been said that the Appellate Authority did not observe the 1271 instructions that tribal people have to be given certain preferences, or, that persons on the debarred list, like ,smugglers, should be kept out (see p. 175 of the Manual).
But all these are only Executive Instructions which have no statutory force.
Hence, even assuming, though it is by no means clear, that those instructions have been disregarded, the non observance of those instructions cannot affect the power of the Appellate Authority to make its own selection, or affect the validity of the order passed by it.
The High Court, in its several judgments and orders, has scrutinized, in great detail, the orders passed by the Excise Authorities under the Act.
We have not thought it fit to examine the record or the orders below in any detail, because, in our opinion, it is not the function of the High Court or of this Court to do so.
The jurisdiction under article 226 of the Constitution is limited to seeing that the judicial or quasi judicial tribunals or administrative bodies exercising quasijudicial powers, do not exercise their powers in excess of their statutory jurisdiction, but correctly administer the law within the ambit of the statute creating them or entrusting those functions to them.
The Act has created its own hierarchy of officers and Appellate authorities, as indicated above, to administer the law.
So long as those Authorities function within the letter and spirit of the law, the High Court has no concern with the manner in which those powers have been exercised.
In the instant cases, the High Court appears to have gone beyond the limits of its powers under articles 226 and 227 of the Constitution.
In one of the cases, the High Court has observed that though it could have interfered by issuing a writ under article 226 of the Constitution, they would be content to utilize their powers of judicial superintendence under article 227 of the Constitution vide its judgment dated July 31, 1957, in appeals relating to Murmuria shop (Civil Appeals Nos. 669 and 670 of 1957).
In exercise of that power, the High Court set aside the order of the Appellate Authority, and directed it to re hear the appeal 'according to law in the light of the principles indicated in this judgment '.
1272 A Constitution Bench of this Court examined the scope of article 227 of the Constitution in the case of Waryam Singh and another vs Amarnath a rid another (1).
This Court, in the course of its judgment, made the following observations at p. 571 : " This power of superintendence conferred by article 227 is, as pointed out by Harries C. J. in Dalmia Jain Airways Ltd. vs Sukumar Mukherjee (2), to be exercised most sparingly and only in appropriate cases in order to keep the Subordinate Courts within the bounds of their authority and not for correcting mere errors.
" It is, thus, clear that the powers of judicial interference under article 227 of the Constitution with orders of judicial or quasi judicial nature, are not greater than the powers under article 226 of the Constitution.
Under article 226, the power of interference may extend to quashing an impugned order on the ground of a mistake apparent on the face of the record.
But under article 227 of the Constitution, the power of interference is limited to seeing that the tribunal functions within the limits of its authority.
Hence, interference by the High Court, in these cases, either under article 226 or 227 of the Constitution, was not justified.
After having dealt with the common arguments more or less applicable to all the cases, it remains to consider the special points raised on behalf of the respondents in Civil Appeal No. 672 of 1957, relating to the Tinsukia country spirit shop.
It was strenuously argued that the appeal was incompetent in view of the fact that the rule issued by the High Court, was still pending, and that this Court does not ordinarily, entertain an appeal against an interlocutory order.
It is true that this Court does not interfere in cases which have not been decided by the High Court, but this case has some extraordinary features which attracted the notice of this Court when special leave to appeal was granted.
As already stated, the shop in question was settled with the appellants by the Excise Commissioner, and his order was upheld by the Appellate Authority.
Accordingly, the appellants, (1) ; (2) A.I. R. (195i) Cal.
1273 had been put in possession of the shop on June 7, 1957.
The High Court, while issuing the rule, passed an order on the stay application, which, as already indicated, had been misunderstood by the District Excise authorities, and the appellants were dispossessed and the respondents I and 2 put back in possession, without any authority of law.
This was a flagrant interference with the appellants ' rights arising out of the settlement made in their favour by the highest revenue authorities.
The High Court had not and could not have authorized the dispossession of the persons rightfully in possession of the shop.
The appellants brought this flagrant abuse of power to the notice of the High Court several times, but the High Court felt unduly constrained to permit the wrong to continue.
We heard the learned counsel for the respondents at great length as to whether he could justify the continuance of this undesirable and unfortunate state of affairs.
It has to be remembered that the appellants, as a result of fortuitous circumstances, had been deprived of the possession of the shop during the best part of the financial year 1956 57 The appellants had been deprived of the fruits of their hard won victory in the revenue courts, without any authority of law, and the High Court failed to right the wrong in time, though moved several times.
In these circumstances, we found it necessary to hear both the parties on the merits of the orders passed by the Commissioner of Excise and the Appellate Authority, in favour of the appellants, against which, the respondents had obtained a rule.
After having heard both sides, we have come to the conclusion that no grounds have been made out for interference by the High Court, under its powers under articles 226 and 227 of the Constitution.
This case shares the common fate of the other cases before us, of having run through the entire gamut of the hierarchy created under the Act, read along with the amending Act and the rules thereunder.
We do not find any grounds in the orders of the Excise Authorities which could attract the supervisory jurisdiction of the High Court, there being no error of law apparent on the face of the record, 1274 or a defect of jurisdiction in the Authorities whose orders have been impugned in the High Court.
We would, however, like to make it clear that we are interfering with the interlocutory order passed by the High Court in this case because of its unusual and exceptional features.
It is clear that our decision on the main points urged in the other appeals necessarily leads to the inference that, even if all the allegations made by the respondents in their petition before the Assam High Court are accepted as true, there would be no case whatever for issuing a rule.
Indeed, the respondent found it difficult to resist the appellant 's argument that, if the other appeals were allowed on the general contentions raised by the appellants, the dismissal of his petition before the Assam High Court would be a foregone conclusion.
It is because of these special circumstances that we have decided to interfere with the interlocutory order in this case in the interests of justice.
As a result of these considerations, the appeals must be allowed and the orders passed by the High Court in the several cases, set aside.
On the question of costs, we direct that the appellants in each case, should get their costs here and in the High Court, except the appellant in Civil Appeal No. 670, who has failed on the main point raised on his behalf, and who, therefore, must bear his own costs.
Appeals allowed.
| The High Court has no power under article 226 of the Constitu tion to issue a writ of certiorari in order to quash an error of fact, even though it may be apparent on the face of the record.
It can do so only where the error is one of law and that is apparent on the face of the record.
Any error of law or fact which it can correct as a court of appeal or revision cannot be a ground for the exercise of its power under that Article.
Hari Vishnu Kamath vs Syed Ahmed Ishaque and others, [1955] I S.C.R. 1104, relied on.
Queen vs James Bolton, (1841) (1) Queen 's Bench 66, King vs Nat Bell Liquors, Limited, , Rex vs Northumberland Compensation Appeal Tribunal, (1951) 1 K.B. 711 and Rex vs Northumberland Compensation Appeal Tribunal, ; , referred to.
The jurisdiction of the High Court under article 226 of the Constitution is limited to seeing that the judicial or quasi judicial tribunals or administrative bodies exercising quasi judicial powers, do not exceed their statutory jurisdiction and correctly administer the law laid down by the statute under which they act.
So long as the hierarchy of officers and Appellate authorities created by a statute function within their ambit, the manner in which they do so can be no ground for interference.
The powers of judicial supervision of the High Court under article 227 Of the Constitution are not greater than those under article 226 and must be limited to seeing that the tribunal functions within the limits of its authority.
Waryam Singh and another vs Amarnath and another; , , referred to.
Consequently, where the High Court in exercise of its powers under articles 226 and 227 Of the Constitution interfered with 1241 certain orders made by the Excise Appellate Authority under the Assam Excise Act as being in excess of its jurisdiction on the ground that they were vitiated by errors of fact apparent on the face of the record, such interference was without jurisdiction and the orders passed by the High Court must be set aside.
Held further, that where an appellate Authority, as in the instant case, is constituted the highest authority by the statute for deciding as between the claims of rival parties, its powers cannot be circumscribed nor can it be held to have acted in excess of its powers or without jurisdiction on considerations foreign to the statute or the rules.
Raman and Raman Ltd. vs The State of Madyas, [1956] S.C.R. 256, referred to.
In the absence of anything to show that the appellate Authority had contravened any rules of natural justice, which must be understood in the context of the ' rules laid down by the statute itself, it would be wrong to say that there has been a failure of natural justice simply because the view it took of the matter might not be acceptable to another tribunal.
New Prakask Transport Co. Ltd. vs New Suwarna Transport Co. Ltd., , relied on.
The question whether an administrative authority functions merely in an administrative or quasi judicial capacity must be determined on an examination of the statute and its rules under which it acts, and there can be no doubt on such examination that the Authorities mentioned in section 9 of the Eastern Bengal and Assam Excise Act, 1910, as amended by Assam Act 23 Of 1953, are no mere administrative bodies and their orders are, therefore, amenable to the powers of control and supervision vested in the High Court by articles 226 and 227 Of the Constitution.
|
Summarize this legal judgement text concisely | minal Appeals Nos. 202 and 203 of 1957.
Appeals by special leave from the judgment and order dated November 16, 1956, of the Punjab High Court (Circuit Bench) at Delhi in Criminal, Appeals Nos.
31 D and 506 C of 1956, arising out of the judgment and order dated August 31, 1956, of the Court of the Special Judge at Delhi, in Corruption Case No. 8 of 1956.
D. R. Kalia and K. L. Arora, for the appellant in Criminal Appeal No. 202 of 1957.
D. R. Kalia and Raghu Nath, for the appellant in Criminal Appeal No. 203 of 1957.
H. J. Umrigar and R. H. Dhebar, for the respondent in both the appeals.
February 6.
The Judgment of the Court was delivered by IMAM J.
The appellants, who were police constables at the time of the occurrence, were convicted by the Special Judge of Delhi under section 120B and section 224/109 of the Indian Penal Code and section 5(2) of the Prevention of Corruption Act (2 of 1947).
They were sentenced to two years ' rigorous imprisonment under section 5(2) of the Prevention of Corruption Act, 1947 and to nine months ' rigorous imprisonment under each of the sections 120B and 224/109 of the Indian Penal Code.
155 1220 The sentences of imprisonment were directed to run concurrently.
Their appeals to the Punjab High Court were dismissed and the present appeals are by special leave.
The case of the prosecution, as stated in the charge, was that the appellants had conspired at Delhi with Ram Saran Das, the approver, M. P. Khare, Nand Parkash Kapur and Murari between the 6th and 16th of November, 1955, to bring about the escape from lawful custody of M. P. Khare, an undertrial prisoner, and that they had also agreed to accept Rs. 1,000 each and other pecuniary advantages as illegal gratification for rendering the escape of M. P. Khare from lawful custody and that in pursuance of the said conspiracy they had abetted the escape of M. P. Khare and that they had accepted the illegal gratification from Nand Parkash Kapur.
It is clear from the findings of the courts below that M.P. Khare escaped from lawful custody and the appellants had enabled him to do so and that they had received money as illegal gratification for the part they had played in enabling M.P. Khare to escape from lawful custody.
The learned Advocate for the appellants had submitted five points for our consideration in support of his contention that the conviction of the appellants must be set aside (1) the pardon tendered to the approver Ram Saran Das by the District Magistrate of Delhi under section 337 of the Code of Criminal Procedure was without jurisdiction and authority.
Consequently, the evidence of the approver was not admis sible (2) on the case of the prosecution, the offence of conspiracy to commit an offence under section 224 of the Indian Penal Code had not been committed but that offence, if at all, was one under section 222 of the Indian Penal Code.
As an offence under section 222 of the Indian Penal Code is a non cognizable offence no conviction under section 120B of the Indian Penal Code could be had in the absence of a sanction under section 196A of the Code of Criminal Procedure (3) Prosecution witnesses Mela Ram, P.W. 6, and Shiv Parshad, P.W. 7, were accomplices on their own showing and as such their testimony could not be taken into consideration (4) no test 1221 identification parade of the appellants had been held (5) the charge, as framed, contravened the mandatory provisions of section 233 of the Code of Criminal Procedure.
Points 3, 4 and 5 may be disposed of at the outset.
We have examined the evidence of Mela Ram and Shiv Parshad and find nothing in their evidence which establishes them as accomplices.
It does not appear that before the High Court it had ever been urged that these witnesses were accomplices and their evidence could not be taken into consideration to corroborate the approver.
It was, however, urged that these witnesses were unreliable because they had knowledge that an attempt would be made to enable M.P. Khare to escape from lawful custody and yet they informed no authority about it.
As to the reliability of these witnesses the courts below were entitled to believe them and nothing of any consequence has been placed before us to convince us to take a different view from that taken by the courts below.
As for the test identification parade, it is true that no test identification parade was held.
The appellants were known to the police officials who had deposed against the appellants and the only persons who did not know them before were the persons who gave evidence of association, to which the High Court did not attach much importance.
It would no doubt have been prudent to hold a test identification parade with respect to witnesses who did not know the accused before the occurrence, but failure to hold such a parade would not make inadmissible the evidence of identification in court.
The weight to be attached to such identification would be a matter for the courts of fact and it is not for this Court to reassess the evidence unless exceptional grounds were established necessitating such a course.
It is true that no separate charges were framed under sections 120B, 224/109 of the Indian Penal Code and section 5(2) of the Prevention of Corruption Act, 1947.
Separate charges should have been framed as required by section 233 of the Code of Criminal Procedure.
In our opinion, the irregularity committed, in this case, was 1222 cured by the provisions of section 537 of the Code.
It is to be noticed that it was urged before the Special Judge that separate charges should have been framed and that a single charge should not have been framed but the objection had been abandoned by the Advocate for the accused when the Special Judge told him that if it was his contention that the accused had been prejudiced by this form of the charge, he would frame separate charges under separate heads and then proceed with the trial.
Furthermore, when the charge was framed, the public prosecutor had urged that charges under separate heads for each offence should be framed and that they should not be joined together under one head.
The Advocate for the accused, however, had urged that the charge, as framed, was correct.
It seems to us that when the charge was being framed the Advocate for the appellants desired.
that the charge as framed should stand and the public prosecutor 's objection should be overruled.
It cannot be now urged that the appellants were prejudiced by the charge as framed.
Indeed, the Advocate for the appellants abandoned this objection and there is nothing in the High Court 's judgment to show that this contention was again raised.
We cannot permit such a question to be raised at this stage.
It seems to us, therefore, that there is no substance in the submissions made on behalf of the appellants with reference to the above mentioned points 3, 4 and 5.
With reference to the second point, even if it is assumed that the offence alleged against the appellants does not come under section 224 of the Indian Penal Code, but under section 222 of the Indian Penal Code, it has to be remembered that this would be of academic interest in this case, if the appellants have been rightly convicted under section 5(2) of the Prevention of Corruption Act, 1947.
It also does not appear from the judgments of the Special Judge and the High Court that it had been contended that there was no sanction under section 196A of the Code of Criminal Procedure and consequently the court could not take cognizance of the offence under section 120B of the Indian Penal Code.
Whether a sanction had been granted under section 196A 1223 was a question of fact which ought to have been urged at the trial and before the High Court.
It is impossible at this stage to go into this question of fact.
Furthermore, this question also is one of academic interest if the conviction and sentence of the appellants under section 5(2) of the Prevention of Corruption Act, 1947, are affirmed.
Coming now to the first point urged on behalf of the appellants, it would appear that the District Magistrate of Delhi granted a pardon under section 337 of the Code of Criminal Procedure to Ram Saran Das, the approver, in consequence of which Ram Saran Das was examined as a witness by the Special Judge.
It was urged that the District Magistrate could not grant a pardon when the case was triable by the Court of Special Judge constituted under the Criminal Law (Amendment) Act, 1952.
The offence under section 5(2) of the Prevention of Corruption Act, 1947, is punishable with imprisonment for a term which may extend to seven years, or with fine, or with both.
It was not an offence which was punishable with imprisonment which may extend to ten years.
The provisions of section 337 enabled a District Magistrate to tender a pardon in the case of any offence triable exclusively by the High Court or a Court of Session, or any offence punishable with imprisonment which may extend to ten years, or any offence punishable under section 211 of the Indian Penal Code with imprisonment which may extend to seven years, or any offence under sections 216A, 369, 401, 435 and 477A of the Indian Penal Code.
These provisions of section 337 at the time that the pardon was tendered were inapplicable as the present case was not covered by its terms.
It is pointed out that the High Court erred in supposing that the District Magistrate could grant pardon in a case where the offence was punishable with imprisonment which may extend to seven years or more and which was triable exclusively by the Court of Session.
The Code of Criminal Procedure at the time that the pardon was granted spoke of an offence punishable with imprisonment for a term which may extend to ten years and not seven years.
The amendment to section 337 of the 1224 Code, which came into effect in January, 1956, spoke of an offence punishable with imprisonment which may extend to seven years, but this amendment could have no application to a pardon tendered on 1 12 55.
It seems to us, however, that the District Magistrate had authority to tender a pardon under section 337 of the Code of Criminal Procedure with reference to a case concerning an offence triable exclusively by the Special Judge and, therefore, we need not consider whether the offence was punishable with imprisonment which may extend to seven years.
Under section 8(3) of the Criminal Law (Amendment) Act of 1952 it is expressly stated that for the purposes of the provisions of the Code of Criminal Procedure, 1898, the Court of Special Judge shall be deemed to be a Court of Session trying cases without a jury or without the aid of assessors.
Section 9 of that Act provides for an appeal from the Court of the Special Judge to the High Court and states that the High Court may exercise, as far as they may be applicable, all the powers conferred by Chapters XXXI and XXXII of the Code of Criminal Procedure, 1898, as if the Court of the Special Judge were a Court of Session trying cases without a jury.
It would seem, therefore, that although a Special Judge is a court constituted under the Criminal Law (Amendment) Act yet, for the purposes of the Code of Criminal Procedure and that Act, it is a Court of Session.
Accordingly, we are of the opinion that although the offence was triable exclusively by the Court of the Special Judge the District Magistrate had authority to tender a pardon under section 337 of the Code of Criminal Procedure as the court of the Special Judge was, in law, a Court of Session.
It was, however, suggested that the proper authority to grant the pardon was the Special Judge and not the District Magistrate, but it seems to us that the position of the Special Judge in this matter was similar to that of a Judge of a Court of Session.
The proviso to section 337 of the Code of Criminal Procedure contemplates concurrent jurisdiction in the District Magistrate and the Magistrate making an enquiry or holding the trial to tender a pardon.
According to the 1225 provisions of section 338 of the Code, even after commitment but before judgment is passed, the Court to which the commitment is made may tender a pardon or order the committing Magistrate or the District Magistrate to tender a pardon.
It would seem, therefore, that the District Magistrate is empowered to tender a pardon even after a commitment if the Court so directs.
Under section 8(2) of the Criminal Law (Amend ment) Act, 1952, the Special Judge has also been granted power to tender pardon.
The conferment of this power on the Special Judge in no way deprives the District Magistrate of his power to grant a pardon under section 337 of the Code.
At the date the District Magistrate tendered the pardon the case was not before the Special Judge.
There seems to us, therefore, no substance in the submission made that the District Magistrate had not authority to tender a pardon to Ram Saran Das, the approver, and consequently the approver 's evidence was inadmissible.
The findings of the High Court establish the offence of the appellants under section 5(2) of the Prevention of Corruption Act, 1947, and we can find no sufficient reason to think that the appellants were wrongly convicted thereunder.
The appeals are accordingly dismissed.
Appeals dismissed.
| The appellants were convicted under section 120B and section 224/109 of the Indian Penal Code and section 5(2) Of the Prevention of Corruption Act, 1947, by the Court of Special judge constituted under the Criminal Law (Amendment) Act, 1952.
it was contended for them that the conviction was bad on the ground inter alia that the pardon tendered to the approver by the District Magistrate under section 337 of the Code of Criminal Procedure by virtue of which he was examined as a witness by the Special judge was without 1219 jurisdiction.
The contention was that the provisions Of section 337 were not applicable to the case, as the offence under section 5(2) Of the Prevention of Corruption Act, 1947, was punishable with imprisonment which may extend to ten years, while section 337 Of the Code of Criminal Procedure enabled a District Magistrate to tender a pardon "in the case of any offence triable exclusively by the High Court or a Court of Session or any offence punishable with imprisonment which may extend to ten years. .
But under sections 8(3) and 9 of the Criminal Law (Amendment) Act, 1952, for the purposes of the Code of Criminal Procedure, the Court of Special judge is deemed to be a Court of Session trying cases without jury : Held, that although the offence was triable exclusively by the Court of Special judge, the District Magistrate had authority to tender a pardon under section 337 of the Code of Criminal Procedure, as the Court of Special judge was, in law, a Court of Session.
|
Summarize this legal judgement text concisely | Appeal No. 77 of 1954.
Appeal from the judgment and decree dated August 25, 1949, of the former Nagpur High Court in First Appeal No. 91 of 1945 arising out of the judgment and decree dated July 31, 1945, of the Court of Second Additional District Judge, Akola in Civil Suit No. 7 B of 1944.
C. B. Agarwala and Ratnaparkhi A. G. for the appellant.
Veda Vyasa and Ganpat Rai, for the respondent.
February 18.
The following Judgment of the Court was delivered by BHAGWATI J.
This appeal with a certificate under section 109(a) read with section 110 of the Code of Civil Procedure (Act V of 1908) is directed against the judgment and decree passed by the Nagpur High Court dismissing the appeal of the appellant and confirming the dismissal of his suit by the learned Second Additional District Judge, Akola.
The appellant, who was the plaintiff in the trial court filed in the Court of the First Additional District Judge, Akola, Civil Suit No. 2 B of 1944 against the 7 B respondent, a limited company incorporated under the Indian Companies Act of 1882, which owned a 1333 Ginning and Pressing Factory and carried on business of ginning and pressing cotton at Akot in District Akola.
The appellant alleged that he was one of the creditors of the company which used to borrow money, from him for about 35 years past.
He claimed to have acted as Banker of the company and the sums borrowed from him were entered in the account books of the company in two khatas, one known as current account or " chalu khata " and the other described as ,,fixed deposit khata ".
An account used to be made up at the end of ' every year and the amount found due at the foot of the account was entered in the balance sheet of the company which was adopted at the Annual General Meeting of the company.
Deposit receipts also used to be passed for the amounts standing in the fixed deposit khata from time to time and at the end of the year ending July 1939, a sum of Rs. 79,519 12 9 was found due by the company to him on both these accounts.
On January 15, 1940, the company passed a deposit receipt in his favour for this amount which he demanded from the company by his letters dated May 10, 1941 and May 17, 1941.
The company failed and neglected to pay the said amount with the result that he filed on June 16,1944, a suit against the company for recovery of a sum of Rs. 1,03,988 made up of Rs. 79,519 12 9 for principal and Rs. 24,468 as interest from August 1, 1939, to January 15, 1944.
The claim as laid in the plaint was that all these amounts which had been borrowed by the company from him were payable on demand to be made by him as creditor and they were deposits with the company, but in order that the company may not be compelled to pay a big sum, on demand, items in the current account were being transferred to the fixed deposit account from time to time.
The amounts of these deposits being thus payable on demand the cause of action accrued to him on May 17, 1941, and limitation for the suit expired on May 17, 1944.
But, as the courts were closed on that day, the suit was filed on 1334 the first opening day i. e., June 16, 1944, and limitation was therefore saved by section 4 of the Limitation Act.
He also relied upon the acknowledgments of his debt made by the company in (a) the resolution passed by the Board of Directors on May 20, 1941, (b) the balance sheet of the company for the year 1940 41 dated October 10, 1941, and for the years 1941 42 and 1942 43, and (c) the entry in the khata of the plaintiff in the books of the company made on or about July 31, 1941, and signed by the Chairman of the company.
He further relied upon an application made under section 162 of the Companies Act to liquidate the company on June 16, 1941, which application was however dismissed by the court on June 16, 1944, stating that as he was bona fide prosecuting this application for the same relief as claimed in the suit and as the court was unable to entertain the application because the debt was disputed by the company, he was entitled to deduct from the period of limitation, the time spent by him under section 14 of the Limitation Act.
This claim of the appellant was contested by the respondent mainly on the ground that the suit was barred by the law of limitation.
Both the courts below negatived his claim.
The trial court dismissed his suit and the High Court, on appeal, dismissed his appeal and confirmed the dismissal of his suit by the trial court; hence this appeal.
The only question which arises for our consideration in this appeal is whether the appellant 's suit was barred by limitation.
The appellant, in the first instance, relied upon the deposit receipt which was passed by the company in his favour on January 15, 1940.
This receipt (exhibit P 1) evidenced a deposit of Rs. 79,519 12 9 for 12 months from August 1, 1939, to July 31, 1940, and the amount at the foot thereof became due and payable by the respondent to him on July 31, 1940.
The appellant, however, sought to extend the commencement of the period of limitation to May 17, 1941, on the ground that the monies, the subject matter of that deposit receipt, were payable to him on demand, that such demand was made by him 1335 on May 17, 1941, and that therefore that was the date for the commencement of the period of limitation.
No express agreement in this behalf could be proved by him nor could an agreement be implied from the course of dealings between him and the company for the period of 25 years during which the dealings continued between the parties.
As a matter of fact, such an agreement, either express or implied, was negatived by the very terms of the deposit receipt which, apart from mentioning that the monies were received by the company as deposit for 12 months from August 1, 1939, to July 31, 1940, contained on the reverse a note that interest would cease on due date.
This was sufficient to establish that the amount due at the foot of the deposit receipt became due and payable on the due date mentioned therein and that there was no question of the amount being payable at any time thereafter on demand being made in this behalf by the creditor.
The course of dealings between the parties also negatived any such agreement because it appears from the record that such deposit receipts were passed by the company in his favour from time to time, each of such receipts being for a fixed period in the same terms as the deposit receipt in question and the receipts containing similar notes on the reverse that interest would cease on due date.
Both the courts below were therefore right in coming to the conclusion that there was no agreement of the kind put forward by the appellant that the monies due at the foot of the deposit receipt in question were repayable on demand and that monies due at the foot thereof became due and payable by the company to him on July 31, 1940.
The next question to consider is whether the bar of limitation which set in on July 31, 1943, was saved by reason of the circumstances set out in the plaint for avoidance of the same.
Out of the three acknowledgments of debt pleaded by the appellant the third was abandoned by him in the course of the hearing and the only two acknowledgments which were pressed were (a) the resolution passed by the Board of Directors on May 20, 194 1, and (b) the balance sheet of the company for the year 1940 41 dated October 10, 1336 1941.
It may be noted that he made no attempt at all to prove the balance sheets of the company for the years 1941 42 and 194 2 43.
In regard to the resolution passed by the Board of Directors on May 20, 1941, the position is that at that meeting one Pandurang Narsaji Hadole, who was one of the Directors of the company.
made a reference to a:proposed settlement of the claim of the appellant for a sum of RIB.
67,939 as found due at the end of July 1936, which had been resolved upon by the Board of Directors on December 22,1936, but had not been accepted by the appellant.
The resolution then requested the appellant to inform the company again if even then he was prepared to abide by the terms of that proposed settlement which would be placed before the general meeting of all the share holders of the company if a reply was received from him in the affirmative.
This resolution of the Board of Directors was alleged by the appellant to be an acknowledgment of a subsisting liability in regard to the debt due by the company to him at the foot of the deposit receipt in question '.
We do not see how it could ever be spelt out as such acknowledgment.
The contents of the resolution only referred to a past liability of the company to the appellant and there was nothing therein which could by any stretch be construed as referring to the liability of the company, to him at the foot of the deposit receipt dated January 15, 1940.
Our attention was drawn to the deposit receipts which had been passed by the company in favour of the appellant on May 30, 1935, October 18, 1936, and November 30,1938, each of which was for a sum of Rs. 47,500.
No connection was, however, established between the sum of Rs. 47,500, the subject matter of these receipts, and the sum of Rs. 79,519 12 9, the subject matter of the deposit receipt in question and in the absence of any such connection 'having been established the appellant could not avail himself of the alleged acknowledgment of liability contained in the resolution of the Board of Directors dated May 20, 1941, 1337 even if it could perchance be construed as an acknowledgment of a subsisting liability.
This resolution of the Board of Directors dated May 20, 1941, could not, therefore, avail the appellant as an acknowledgment of his debt.
In regard to the balance sheet of the company for ' the year 1940 41 dated October 10, 1941, it is to be noted that, even though the appellant applied before the trial court for filing the balance sheet of 1940 41 on April 28, 1945, he expressly stated that he did not want to adduce any oral evidence to prove it.
He was, however, allowed to file the same.
But it was realised later that the balance sheet did not prove itself and he therefore made another application on July 11, 1945, for permission to file a copy from the Registrar of Companies and contended that this proved itself.
This document was, however, rejected by the trial court as filed too late.
When the appeal came up for hearing before the High Court, it was contended on behalf of the appellant that the copy which was adduced from the office of the Registrar was admissible in evidence but that evidence was rejected by the High Court on a consideration of sections 65 and 74(2) of the Evidence Act.
The attention of the High Court was evidently not drawn to the Commercial Documents Evidence Act (XXX of 1939) which has amended the Law of Evidence with respect to certain commercial documents.
Section 3 of that Act enacts that " for the purposes of the , and notwithstanding anything contained therein, a Court: (a). . . . . . . . . . (b) may presume, within the meaning of that Act, in relation to documents included in Pt.
11 of the Schedule : That any document purporting to be a document included in or of the Schedule, as the case may be, and to have been duly made by or under the appropriate authority, was so made and that the statements contained therein are accurate.
" Item No. 21 in Pt.
11 of the Schedule mentions: 1338 " Copy, certified by the Registrar of Companies of the Balance Sheet, Profit and Loss Account, and audit i report of a company, filed with the said Registrar under the Indian Companies Act, 1913 and the rules made thereunder.
If the attention of the High Court had been drawn to this provision of law, we are sure, it would not have rejected the copy of the balance sheet obtained by the appellant from the office of the Registrar of Companies.
We are of the opinion that the copy should have been admitted in evidence and we do hereby admit the same.
The appellant contends that that balance sheet which was signed by the Directors contained an acknowledgment of the debt due by the company to the appellant for the sum of Rs. 67,939 as and by way of fixed deposit and that was sufficient to save the bar of limitation.
The question therefore arises whether any presumption can be raised as regards the balance sheet having been duly made by or under the appropriate authority or in regard to the accuracy of the statement contained therein under section 3(b) of the Commer cial Docuinents Evidence Act (XXX of 1939).
It is to be noted that this presumption is not compulsory as in the case of section 3(a) of the Act; it is discretionary with the court.
The difficulty in the way of the appellant here is however insuperable because we find that there were factions in the company at or about the relevant time.
A Directors ' meeting was held on April 27, 1941, and the resignation of the appellant as the Chairman was accepted and another person was appointed in his place.
A second meeting was called for May 17, 1941, but it had to be adjourned for want of a quorum.
The adjourned meeting was held on May 20,1941, but no balance sheet was passed at that meeting.
There is nothing on the record to show that there was another meeting of the Board of Directors for passing the balance sheet of the company for the year 1940 41.
A general meeting of the Shareholders was called for November 16, 1941, to pass the balance sheet.
This also had to be adjourned to the following day for want of a quorum.
At the 1339 adjourned meeting the shareholders then present refused to pass the accounts and it was not till some five weeks later, namely on December 30, 1941, that the rival faction met and passed the accounts.
But this meeting only purported to be a continuation of the meeting which bad to be adjourned for want of a quorum and that clearly was irregular because the adjourned meeting had to be called within twentyfour hours.
It did not purport to be a fresh meetino, convened after due notice, etc.
Under the circumstances,it could not be urged that the balance sheet was duly passed.
Even if the attention of the High Court had been drawn to the provisions of section 3 (b) of the Commercial Documents Evidence Act, (XXX of 1939) it would have been perfectly justified in not, raising the presumption in regard to the balance sheet having been duly made by or under the appropriate authority and in regard to the accuracy of the statement contained therein.
We are, therefore, of the opinion that this alleged acknowledgment also is of no avail to the appellant.
In regard to section 14 of the Indian Limitation Act which was sought to be relied upon by the appellant, it may be shortly stated that the liquidation proceedings had not been filed in the courts below and there is nothing to show that the requirements of section 14 were at all satisfied.
No cogent argument has been advanced before us on behalf of the appellant which would induce us to hold that the conclusion reached by the High Courtin this behalf was incorrect in any manner whatever.
On all the above grounds we have come to the conclusion that the appellant 's claim was clearly timebarred and the dismissal of his suit by the trial court as well as the dismissal of his appeal by the High Court were in order.
This appeal will therefore stand dismissed with costs.
Appeal dismissed.
| The appellant advanced various sums of money to the res pondent, in lieu of which the respondent passed a deposit receipt for 12 months from August 1, 1939 to July 31, 1940 On June 16, 1944 the appellant filed a suit to recover the amount with interest on the allegation that the amount became due on May 17, 1941 when the demand for the amount was made and limitation for the suit expired on May 17, 1944 and the suit was filed on the reopening day of the Court thereafter.
The appellant also relied upon the acknowledgments of his debt by the respondent in the resolu tion passed by the Board of Directors on May 2o, 1941 and in the balance sheet of the respondent for the year 1940 41 dated October 10, 1941 : Held, that the suit was barred by limitation as the monies due under the deposit receipt became payable on July 31, 1941 and as no agreement had been proved that the monies due under the deposit receipt were re payable on demand.
Held further, that limitation was not saved by the alleged acknowledgments.
The resolution of the Board of Directors merely proposed a settlement of a claim of the appellant, which, if accepted by the appellant, was to be placed before a general meeting of the shareholders.
The resolution only referred to a past liability of the respondent to the appellant and it could.
not be construed as an 169 1332 acknowledgment of the liability of the respondent under the deposit receipt in question.
A copy of the balance sheet of 1940 41 obtained from the Registrar of Companies which was filed in the case was wrongly rejected by the High Court as inadmissible on the ground that no evidence was adduced to prove it.
This copy was admissible under section 3(b) of the Commercial Documents Evidence Act.
Under that section the Court could also raise a presumption as regards the balance sheet having been duly made by or under the appropriate authority or in rggard to the statements contained therein.
The presumption was not compulsory but was discretionary with the Court.
In the circumstances of this case, where there were factions in the Company and the regularity of the meeting at which the balance sheet was passed was in dispute, the High Court would have been perfectly justified in not raising the presumption.
Consequently, the acknowledgment in the balance sheet was of no avail to the appellant.
|
Summarize this legal judgement text concisely | 91, 99, 100, 101, 103 Petitions under Article 32 of the Constitution of India for the enforcement of Fundamental Rights.
AND & CIVIL APPELLATE JURISDICTION: Civil Appeals Nos.699 703 of 1957.
Appeals by special leave from the decision of the Wage Board for Working Journalists published in the Gazette of India Extraordinary (Part IT, Section 3) dated May 11, 1957.
Dec. 3, 4, 5, 6, 10, 11, 12, 13, 17, 18, 19, 20. 1958.
Jan. 8, 9, 10, 14, 15, 16, 17, 21, 22, 23, 24, 28.
M. K. Nambiar and G. Gopalakrishnan, for the petitioners in Petition No. 91 of 1957.
The Working Journalists Act, 1955, is ultra vires as it infringes the fundamental rights of the Petitioners guaranteed by the Constitution under articles 19 (1) (a), 19 (1) (g), 14 and 32.
Article 19 (1) (a) which guarantees freedom of speech and expression includes the freedom of the employment of means to exercise those rights and consequently comprehends the freedom of the Press.
The guarantee of an abstract freedom of expression would be meaningless unless it contemplated and included in its ambit all the means necessary for the practical application of the freedom.
(Freedom of the Press A Framework of Principles Report of the Commission on Freedom of Press in the United States of America, 1947; Report of the Royal Commission for the Press in the United Kingdom 1949; Ramesh Thapar vs The State of Madras, [1950] section C. R. 594; Brij Bhusan vs State of Delhi, ; ; Ex parte Jackson, ; ; Lovell v, City of Griffin; , ; Orosjean vs American Press Co., ; ; Schneider vs Irvington, ; 17 Constitution of the United States of America, Revised and Annotated (1952), U. section Govt.Printing Office pp. 792, 988).
If the impugned Act is viewed as a whole it will appear that it authorised the fixation of salary of working journalists at a level which disables the running of the press.
The impugned Act thus, impedes, controls and prohibits the free employment of the agencies of expression on that section of the Press which form its vocal chord and therefore the Act infringes the freedom contemplated under article 19 (1) (a) and is not saved by article 19 (2).
In judging the validity of the enactment it must be tested by its operation and effect (Dwarkadas Srinivas of Bombay vs The Sholapur Spinning and Weaving Co. Ltd., ; , 683; Minnesota Ex Rel.
Olson, ; The Act also violates the right guaranteed by article 19 (1) (g) of the Constitution as it places unreasonable restraint on the petitioners ' freedom to carry on business (Chintaman Rao vs The State of Madhya Pradesh, ; ; cited with approval in Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh, ; and Ch.
Tika Ramjidas vs State of U. P. ; ; The State of Madras vs V. G. Row, ; , 606 607; The State of West Bengal vs Subodh Gopal Bose, [1954] section (C. R. 587; Virendra vs State of Punjab, A. 1.R. 1957 section C. 896).
The law imposing restrictions on fundamental rights must be reasonable not only in its substantive content but in its procedural content as well (Dr. N. B. Khare vs State of Delhi, ; ; Ourbachan vs State of Punjab, ; The relevant criteria for the fixation of wages were not laid down in section 9 (1) of the Act.
The criteria for the fixation of wages laid down in the Act were only relevant for fixing minimum rates of wages, though the word " minimum" used in the Bill 13 of 1955 as introduced in the Rajya Sabha was subsequently dropped before the Bill became the Act.
It was not made incumbent on the Wage Board to consider the capacity of industry to pay as an essential criterion or a major factor in 3 18 fixing wages.
The other circumstances, viz., " any other circumstances which to the Board may seem relevant " mentioned in section 9 (1) of the Act was left to be determined by the Board on its subjective satisfaction which could not be controlled by any higher authority.
The Act thus enables the Board to exercise arbitrary powers in regard to the same and that is unreasonable by itself (Thakur Raghbir Singh vs Court of Wards, Ajmer; , ; R. M. Seshadri vs District Magistrate, Tanjore, ; The procedure to be followed by the Wage Board was not laid down in the Act (c. f. The Bombay Industrial Relations Act, 1946, as amended) and it Was open to the Board to follow any arbitrary procedure disregarding the principle of audi alteration parted and as such the Act is unreasonable.
The Wage Board was not exercising legislative functions but functions, which were quasi judicial in character.
The intention of the Legislature was to assimilate the Wage Board as much as possible to an Industrial Tribunal constituted under the .
If it is held that section 11 of the Act is an enabling provision, and gave the Board the arbitrary discretion whether to exercise the same powers and follow the same procedure of an Industrial Tribunal or any procedure it liked, it is unreasonable.
The provisions of sections 2 (f), 3, 4, 5, 8 to 11, 12, 14, 15 and 17 place restraints on newspaper establishments which would have the effect of destroying the business of the petitioners.
The right to impose restrictions on the right to carry on business under article 19 (6) conferred no power on the Legislature to destroy the business itself (Stone vs Farmers Loan and Trust Co., ; ; Municipal Corporation of the City of Toronto, vs Virgo, ; A. G.,for Ontario vs A. G. for the Dominion, [1896] A. C. 348).
The Act is discriminatory in character and violates article 14 of the Constitution.
It is restricted in its scope to a selected section of newspaper employees.
it gives them the benefit of the wage fixation by devising machinery in the form of a Pay Commission without the existence of any industrial dispute, without prescribing the major criterion of capacity to pay to be taken into consideration; (Britannia Bldg.
and Iron Co. Ltd., , 654; Union Drug Co. Ltd., , 767; Report of the Committee on Fair Wages, pp.
13 15, paras.
21, 23 and 24); or following the procedure prescribed by the , even in disregard of principles of audi alteram partem.
The employers of the newspaper establishments are subjected to discriminatory treatment by the Act in that (1) they are singled out from all other industrial employers who are covered by the ordinary law regulating industrial relations under the ; (ii) they have been saddled with new burdens in regard to a section of their workers in matters of gratuity, compensation, hours of work and wages; (iii) section 12 of the Act makes the decision of the Wage Board binding only on the employers and not on the employees and(iv) section 17 provides for recovery of money from employers only and not from employees in the same manner as an arrear of land revenue.
The classification made by the impugned Act is arbitrary and unreasonable in so far as it removes the newspaper employers vis a vis the working journalists from the general operation of the .
The right to apply to Supreme Court for enforcement of a fundamental right under article 32 is itself a fundamental right guaranteed by the Constitution (Ramesh Thapar V. The State of Madras, ; , 597).
The right to claim a writ of certiorari against a decision is dependent on the fact that the impugned decision on its face is a " speaking order ".
(Rex vs Northumberland Compensation Appeal Tribunal, Ex parte Shaw, 1, affirmed by the Court of Appeal in ; ; A. K. Gopalan vs The State of Madras; , , 243).
The Act 20 contravenes article 32 of the Constitution because it does not provide for giving any reasons for the decision to be made by the Wage Board.
Decision of the Wage Board is illegal and void because (1) the Act under which it is made was ultra vires (Mohd Yasin vs Town Area Committee of Jalalabad, ; ; Himatalal Harilal Mehta vs State of U. P., [1954] section C.R. 1122); (ii) the decision itself infringes the fundamental rights of the petitioners (Bidi Supply Co. vs Union of India, ; and (iii) the decision is ultra vires the Act) Pandit Ram Narain vs State of U. P., ; The reconstitution of the Board oil the retirement of one of its members was ultra vires and unauthorised by the Act as it stood at the time, the Rules having been published on July 10, 1956.
The procedure followed by the Board offended the principles of natural justice and is therefore invalid.
It did not follow the procedure of ail Industrial Tribunal even though on two occasions, viz., when the questionnaire was issued and when a number of newspapers failed to reply to the questionnaire, the Board asserted that it had the powers of an Industrial Tribunal.
Neither in the questionnaire nor at any time thereafter were concrete proposals submitted by the Board to the newspaper establishments.
The classification of newspapers on the basis of gross revenue is contrary to the provisions of the Act.
In the gross revenue which is earned by newspaper establishments advertisement revenue ordinarily forms a large bulk of such revenue and unless the proportion of advertisement revenue to the gross revenue were taken into consideration it would not be possible to form a correct estimate of the financial status of a newspaper establishment with a view to its classification.
Profit and loss of newspaper establishment should be the proper test and if that 21 test were adopted it would give an altogether different picture.
The wages which are normally fixed after a general inquiry ' applicable to the whole industry have always been minimum wages.
Assessment of a wage level and scale only by reference to gross revenue was erroneous.
The decision suffers from another major defect in computing gross revenue not for each newspaper but collectively for the Organization which might be running a number of papers.
The result of this mode of calculation was that an organisation publishing a large number of papers might well fall within the top class by virtue of its gross revenue although each one of the papers taken individually might be running at a loss.
This process of considering the multiple units or a chain of newspapers as one establishment has affected the petitioners adversely and is unauthorised by the Act.
The Wage Board was not authorised by the Act to fix the wages of working journalists in relation to the whole industry but could do so only in respect of individual establishments as will appear from the definition of a " newspaper establishment " given in section 2(d) of the Act.
An establishment can only mean " an establishment " and not a group of them, even though such an individual establishment may produce or publish one or more newspapers.
(Pravat Kumar vs W. T. C. Parker, A. 1.
R. , 118; section R. V. Service Co. Ltd. vs State of Madras,A. 1.
R. , 121 122).
The decision of the Wage Board is illegal as it does not disclose that the capacity to pay of the individual establishment was ever taken into consideration.
There is nothing on record to suggest that both as regard rates of wages and the scales of pay the Wage Board ever took into account as to what the impact of its decision would be on the capacity of the industry to pay either as a whole or region wise.
Even as regards the fixation of wages the Wage Board does 22 not seem to have taken into account the other provisions of the Act which conferred upon the working journalists other benefits which would affect the paying capacity of the newspaper establishments.
Furthermore the working Journalists constitute only 1/5 of the total staff employed by various newspaper establishments.
If the conditions of service of working journalists were to be improved by the Wage Board the other employees who form 85% were bound to be restive and likely to raise industrial disputes for betterment of their conditions of service.
This would impose an additional financial burden on the newspaper establishments and would substantially affect their capacity to pay.
The Wage Board exceeded its power in giving retrospective operation to its decision.
The Wage Board had acted illegally in fixing scales of pay for a period of three years when the Act does not give it such authority.
Further the Wage Board was handicapped for want of Cost of Living Index.
K. M. Munshi, L. K. Jha, section section Shukla, Balbhadra Prasad Sinha and R. J. Joshi, for the petitioners in Petitions Nos.99 to 101 of 1957.
The freedom of the Press is a fundamental personal right of the petitioners.
It rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public.
This is a " preferred right ".
The purpose of the constitutional guarantee of free speech is to prevent public authority from assuming the guardianship of the public mind (Thomas vs Collins, 89 L. Ed. 430; The Supreme Court and the right of Free Speech and Press Annotation in ; Beauhairnais vs Illinois; , , 943dissenting opinion of Douglas, J.).
While the Press enjoys no immunity from the application of the general laws relating to industrial relations, an Act or any 23 of its provision would violate the right of free speech and expression if it lays a direct and preferential burden on the freedom of the Press ; if it has a tendency to curtail circulation and thereby narrow the scope of disseminating information; if it fetters the petitioners ' freedom to choose the means of exercising ' their right to freedom of expression and if it is likely to undermine the independence of the Press by having to seek Government aid.
The Act singles out the Press for levying upon it a direct burden which is excessive and so restrictive as to be prohibitive.
It begets a class of workers whose benefits and rights are given a preferential enforceability parallel to that of a public debt.
The impugned Act by section 9 leaves, in violation of the Constitution, the fixation of wages to an agency invested with arbitrary and uncannily power to impose an indeterminate burden on the wage structure of the Press, such employer and employee relations at its discretion as it thinks fit, and such burden and restrictions for such time as it thinks fit.
The Act and the decision of the Wage Board, which under the Act becomes enforceable as a part of it, have imposed an excessive and prohibitive burden which will have a tendency to curtail the revenue and restrict circulation which is the means of imparting information and giving free expression to speech, impose a penality on the petitioners ' right to choose the instruments for its exercise or to seek alternative media of expression, drive the Press to seek Government aid in order to survive and prevent newspapers from being started.
The Act has created an impossible situation in which the petitioner could only say " I cannot live, I cannot die and I cannot commit suicide ".
Even if the petitioners were to close down their business and dispose of all their assets they would not be in a position to meet all the liabilities.
The Constitution does not permit any abridgment of the fundamental right of freedom of speech and expression unless it falls within the categories of restrictions mentioned in article 19(2).
When the permitted restrictions were incorporated special care was taken by the framers of the Constitution to see that 24 freedom of speech was protected and that the right should not be at the mercy of the legislature which might want to impose excessive burden on the Press.
It is for this reason that the " Public interest " restriction in article 19(6) appearing against the fundamental right in article 19(1)(g) is not to be found in article 19(2).A distinction has to be drawn between the Constitution of U. section A. and India.
What is known as the " due process of law " in America has been specifically omitted from the Constitution of India.
In U. section A. the " due process " clause enabled the Supreme Court to read into the Constitution any doctrine restrictive of the fundamental right, e. g., in the 1930 's the U. section Supreme Court had held that statutory fixation of minimum wage in the newspaper industry was violation of fundamental rights of free speech, but after some years the same Court acting under the discretion given by the due process clause took cognizance of altered circumstances in labour relations and held that the imposition of a minimum wage on the Press did not violate the fundamental right (Constitution of the United States of America, Revised and Annotated (1952), U. section Govt.
Printing Office, pp. 792, 988).
The Indian Constitution does not permit restriction of freedom of speech except under the limitation set by article 19(2).
Restrictions that could be held intra vires in respect of other industries would still be ultra vires under article 19(1)(a) of the Constitution in respect of the Press industry because of the special privilege of right of free speech.
Any direct restriction placed by Government on the Press would be violation of article 19(1)(a), and therefore even if the Government had sought to impose a minimum wage for the Press by direct legislation it would have been equally unconstitutional.
This illegality, however, would not attach to the finding of an adjudicatory machinery such as was contemplated under the .
Where Government provided a media for the settlement of disputes and claims between citizen,,, and citizens there was no question of any contravention of fundamental rights which were protected against governmental encroachment.
25 The various sections of the Act have the effect of placing restrictions on the press which would in evitably have the effect of restricting the freedom of speech and expression in contravention of article 19 (1) (a).
The Act has created a privileged class of working journalists above the other workers either in this country or anywhere also, above contract and above the law of the land.
The Wage Board has exceeded its authority and has arrived at conclusions and findings which restricts the fundamental rights of the petitioners.
The Act authorizes the Central Government to constitute a Wage Board for fixing rates of wages.
This does not authorize the Board to enter into the wider question of determination of scales of pay.
Fixing could only mean fixing with reference to a point of time.
The Legislature did not contemplate that single wage should determine the wage scales, for all time to come The whole framework of the Act was based on minimum wage and the sudden removal of the word " minimum " has caused all these difficulties.
" Rates of wages " and not " scales of wages", the Wage Board was to consider.
The term " rates of wages applies only to a particular point of time.
[Sinha, J. Section 9 (2) of the Act says that the Board may fix "rates of wages for time work and for piece work ".
They cannot have any reference to scales.
The same words in the statute mean the same thing.
They cannot mean different things in different sections.] Yes.
These words are used again and again in the Act.
In the Minimun Wages Act, the Payment of Wages Act, etc., where the same expression " rates of wages " is used to indicate a wage fixed in time and amount.
The Wage Board has exceeded its power in fixing the scales of wages and increments and thereby places a fetter on the Press, not contemplated by the Act.
The Act and the Wage Board have disregarded all considerations which according to authority and law were germane to the proper fixation of wages without 4 26 placing restrictions on fundamental rights.
Even the Minimum Wages Act provides for periodical reviews, and proposals for minimum wages should be notified for inviting the opinions.
The decision of the Wage Board has been arrived at in violation of the procedure prescribed by section 11 of the impugned Act and in violation of the rules of natural justice and is thus illegal.
The Wage Board has been unreasonable in basing wages on revenue from all sources rather than on the revenue which the working journalists contributed by their labour.
Classification of newspapers on the basis of the gross revenue of all papers run by an Organisation and fixation of wages on such classification has led to results which are absurd and discriminatory in effect and ignore the principle enunciated by the Act itself.
As an example, take the case of a paper with small circulation in Kutch which is placed in a higher category than a paper in Bombay simply because the former is part of a larger Organisation.
The Wage Board has not taken care to remain within the terms of the impugned Act, namely, that the wages should be based on regional consideration.
The Wage Board has given its decision in complete disregard of the newspapers ' capacity to pay.
it did not take proper care in framing its decision.
Lack of such care in framing its decision makes it unreasonable and hence restrictive of fundamental rights.
The Wage Board has exceeded its authority by giving retrospective effect to the wage structure devised by it.
This is invalid and ultra vires the Act.
Section 12 of the Act creates one sided obligation by making decision of the Board binding only on the employers.
Such one sided obligation can be appropriate when a minimum subsistence wage is fixed but cannot attach to payment of wages at luxury levels.
This unilateral obligation on the employer leaves it open to the journalists to agitate for an increase in wages before an industrial tribunal, but it precludes the employer from seeking any alteration under any circumstances.
The Act has provided no machinery 27 for a review or revision of the wage structure even if circumstances changed.
Restrictions on fundamental right to do business arise because the Act and the decision of the Wage Board have the effect, firstly, of considerably increasing the operating cost and, secondly, of fettering the conditions of service or the terms of the contract of service between the employer and the employee.
By disregarding the disparity in regional conditions the Wage Board has discriminated between paper and paper, employer and employer and employee and employee.
section P. Sinha, Gurbachan Singh, Harbans Singh and R. Patnaik, for the petitioners in Petition No. 103 of 1957.
section section Shukla, for the petitioners in Petitions Nos.
116 to 118 of 1957.
M. C. Setalvad, Attorney General for India, B. Sen and R. H. Dhebar, for respondent No. I (The Union of India) in all the Petitions.
Before going into the merits of the case it is necessary to examine the background and the perspective in which the Act was enacted, the careful inquiry which preceded its enactment and the conditions which the Act was designed to meet.
(Report of the Press Commission, dated July 14, 1954; Report of the Inquiry Committee constituted in 1947; Report of the C. P. and Berar Press Inquiry Committee constituted on March 27, 1948).
The Act does not infringe any of the fundamental rights of the petitioners guaranteed under articles 19(J) (a), 19(1)(g), 14 and 32 of the Constitution.
The functions of the Wage Board constituted tinder section 8 of the Act were not judicial or quasi judicial in character; the fixation of the rates of wages by the Wage Board was a legislative act and not a judicial one; the Wage Board arrived at its decision on a consideration of all the criteria laid down in section 9(1) of the Act for fixation of wages and the material as well as the evidence placed before it; a large number of the decisions of the Wage Board was unanimous; under the Act the Wage Board has the power and authority to fix the 28 scales of wages also and to give retrospective operation to its decision.
The financial position of the petitioners was not such as to lead to their collapse as a sequel to the enactment of the provisions of the Act and the decision of the Wage Board.
Regarding alleged infringement of article 19(1)(a), I submit that the legislation should be examined in order to determine whether it is legislation directly in respect to the fundamental rights mentioned in the Constitution.
The principle enunciated by the Supreme Courtney several decisions is that when a legislation is attacked on the round of contravention of a fundamental right, the Court must first examine whether it directly deals with the fundamental right.
If the legislation is not one directly with respect to a fundamental right no further question arises, (A. K. Gopalan vs The State of Madras, [1950] section C. R. 88, per Kania, C. J., Ram Singh vs State of Delhi, ; , 455).
The Supreme Court has also in this connection invoked the doctrine of "pith and substance ".
The fact that a legislation, directed in its path and substance to regulate gambling, incidentally placed certain restrictions on business was held not to make the law violative of the fundamental right to carry on business.
(State of Bombay vs R. M. D. Chamarbaugwala, [1957] section C. R. 874).
The provisions of the Act are clearly designed to regulate the conditions of service of journalists and not the freedom of expression or speech, and therefore no question of the infringement of fundamental right under article 19(1)(a) arises.
The contention of the petitioners based on American decisions, e. g., Minnesota Ex Rel.
Olson (75 L. Ed. 1357) cannot be sustained.
First, the provisions of the American Constitution are substantially different; secondly, the American Courts have adopted the same view as our Supreme Court in A. K. Gopalan vs The State of Madras, ; , and other cases.
(The Associated Press vs The National Labour Relations Board, ; ,960 966; Mabee vs White Plains Publishing Co., ; , 613 where application of U. section Fair Labour Standards Act, 1938, to newspaper undertakings was held not to 29 infringe freedom of speech; Oklahoma Press Publishing Co. vs Walling; , , 621; Murdock vs Pennsylvania, 87 L. Ed. 1292).
The restrictions under article 19(6) on the freedom to carry oil business under article 19(1)(g) will not cease to be reasonable even if such restrictions resulted in prohibition of carrying on business in certain cases.
Such restrictions can be imposed if they are in the interest of the general public.
The Act follows the recommendations of the Press Commission for the most part.
The only important deviation it has made is that whereas the Press Commission had recommended fixation of a minimum wage, the Act provides for fixation of all wages.
Under the directive principles of State Policy (article 43 of the Constitution) the goal was not merely a minimum wage but a fair wage and a living wage.
We have to march to that goal.
[Gajendragadkar, J. True, but in marching to that goal we have to consider the capacity to pay.] Yes, capacity to pay region wise and capacity to pay country wise but not capacity to pay unit wise, that is, according to each newspaper 's capacity.
The Court has to consider what the Legislature intended.
The term " minimum wage" has been understood in two different senses, the first being an " industrial minimum wage " and the second a " statutory minimum wage ".
Is it an " industrial minimum ", or is it a " statutory minimum " ? An " industrial minimum " is a subsistence wage that has to be paid by any unit if it wishes to exist; a " statutory minimum " is someting more than a subsistence level wage and may be any level which the Legislature thinks fit to impose.
" Wages " has been defined 30 very comprehensively in section 2(rr) of the , and in the Third and Fourth Schedule to that Act wages are stated to include the period and mode of payment.
[Sinha, J. Does it refer to scales ?] Wages include in its ambit the scales.
It was on this basis that various Industrial Tribunals have fixed scales.
Even the Supreme Court decided that way.
[Sinha, J. My point is whether the question has been raised and decided or has it been only assumed ?] The matter, so far as I know, has not been raised and decided.
It has only been assumed.
" Wages " in sections 9 and 8 of the Act has been used in a comprehensive sense.
The correct approach is to see what the term " wages " means and to see whether the word " rates " cuts down that meaning.
In order to construe the section.
One of the criteria specified in section 9(1) of the Act is the prevalent rates of wages for comparable employments.
This has no reference to minimum wage (Nellimarla Jute Mills, It shows that section 9(1) contemplates fixation of rates of wages which are higher than the bare subsistence or industrial minimum wage.
The criterion " the circumstances relating to newspaper industry in different regions of the country " in section 9(1) can have no other meaning than the capacity to pay region wise.
It is the Board which has to decide what is relevant and what is not.
Such power is neither unreasonable nor arbitrary.
The general policy with regard to the Wage Board was that they were given the widest discretion and there was no question of their discretion being fettered.
Even if the Legislature left the fixation of wage to the Board without laying down any criteria it would have been a competent legislative Act because of the nature of the 31 Board.
In fact, three criteria have been laid down in section 9(1) of the Act.
Having regard to the variety and complexity of the matters involved it was not possible for the Legislature itself to visualise or indicate the various circumstances which might be relevant.
There is nothing unusual or arbitrary in leaving to the Wage Board a wide discretion in the matter of its procedure.
In U. K. the Central Co ordinating Committee under the Wage Councils Act, 1945, and the Agricultural Wages Board under the Agricultural Wages Regulation Act, 1924, are authorised to regulate their own proceedings.
No formal procedure has been prescribed for Wage Boards in Australia.
The inclusion of proofreaders in the definition of "Working Journalist" in section 2(1) of the Act is not unreasonable.
Proof readers occupy a very important position in the editorial staff of a newspaper (Kemsley Manual of Journalism, p. 337, B. Sen Gupta Journalism as a Career (1955 Edn.).
There is nothing unreasonable in the period of notice for retrenchment in section 3(2) of the Act.
(Halsbury 's Laws of England, 2nd Edn., Vol. 22, p. 150, para.
249 foot note (e)).
The retrospective operation of compensation in certain cases given by section 4 of the Act is designed to meet the few cases of retrenchment by the management anticipating the implementation of the recommendation of the Press Commission and cannot be said to be unreasonable.
There is nothing unusual in section 5 of the Act which provides for a gratuity.
Under the law of various countries payment of indemnity to an employee who voluntarily resigns is provided for (Legislation for Press, Film and Radio in the World Today (1957) UNESCO publication at p. 404 ; Collective Agreement between the Geneva Press Association and the Geneva Union of Newspaper Publishers dated April 1, 1948).
Even in India Labour Courts have awarded gratuity on voluntary resignation (Cipla Ltd., , 358; Indian Oxygen and Acetylene Co. Ltd., (1956) 1 L. L. J. 435).
The hours of work provided in section 6 of 32 the Act cannot be said to be unreasonable having regard to the nature of work to be done by a working journalist.
Such hours of work are fixed by section 54 of the , (See also, ; Shops and Establishments Acts of different States in India).
Sections 8 to II deal with the constitution of the Wage Board and the fixation of rates of wages by the Board.
The Wage Board was to consist of an equal number of representatives of employers and employees and an independent chairman.
There is nothing unreasonable in the constitution of the Board.
The principles for the guidance of the Wage Board in the matter of fixation of wages have been laid down by the Act.
It cannot, therefore, be said that these provisions are unreasonable.
Section 17 of the Act relates only to the mode of recovery of money from an employer and does not impose any financial burden; therefore it could not be said that it infringes article 19(1)(g).
Article 14 of the Constitution does not forbid reasonable classification for the purpose of legislation (Budhan Choudhry vs The State of Bihar, ; , 1048).
The work of a journalist is peculiar and demands a high degree of general education and some kind of specialised training (Report of the Press Commission, para.
512; Legislation for Press, Film and Radio in the World Today (1951) UNESCO publication at p. 403).
The working journalists are a class by themselves apart from the other employees of the newspaper establishments and also employees in other industries.
They can be singled out for the purpose of ameliorating their conditions of service.
There would be no discrimination if special.
legislation is enacted for the benefit of this class and a special machinery is created for fixing the rates of its wages different from the machinery for other workmen.
Even if the Act be considered as a social welfare measure the State c an only make a beginning somewhere.
Such a measure need not be all embracing.
There is nothing unreasonable in section 12 of the Act which makes the decision of the Board binding on the employers only.
A provision which has for its object the protection of 33 employees cannot be said to be repugnant to article 14 on the ground that it discriminates against the employers (South Bank Ltd. vs Pichuthayappan, A. 1.R. 1954 Madras 377).
Similar provision is to be found in section 33C of the .
There is nothing discriminatory in a provision which governs employees in other industries being extended to working journalists.
The object sought to be achieved by the Act is the amelioration of the conditions of service of working journalists.
The classification is based on intelligible differentiate which distinguish them from other employees of the newspaper establishments and also in other industries.
These differentiae have a rational basis.
The legislation amply fulfils the conditions of permissible classification.
It is " fantastic " to contend that the Act infringes article 32 of the Constitution.
The Act does not prohibit the Wage Board from giving a reason for its decision.
No question therefore arises of the infringement of the fundamental right of the petitioners under article 32.
Assuming any provision of the Act is void then the question will be whether it is severable.
If it is severable then the whole Act will not be void but only the section.
Similarly, if the court finds that the Act is constitutional but a decision of the Wage Board is ultra vires the Act or unconstitutional the Court will strike down such decision.
That will not affect the validity of the Act.
(State of Bombay vs F. N. Balsara, ; ; State of Bombay vs The United Motors (India) Ltd., [1953] section C. R. 1069 and R. M.,D. Chamarbaugwala vs The Union of India, ; In regard to the decisions of the Wage Board the Court has to consider first, whether the decisions are intra vires the Act since an authority to whom the power of subordinate legislation is delegated cannot act contrary to the statute, and secondly, do the decisions being a part of the Act in any way contravene the Constitution.
These are the only questions which 34 arise in regard to the decisions of the Wage Board.
[Bhagwati, J. They say it is contrary to the principles of natural justice audi alteram partem.] That is a maxim about which we have heard so much.
It has, no application to this case of delegated legislation.
[Bhagwati, J. Can it not be urged, having regard to section 11, that the Legislature did not contemplate that the Wage Board was to function as delegated authority because it gives the choice of the provisions of the being followed by the Board ?] No, even for a subordinate legislative authority there are procedures to be followed for arriving at certain conclusions.
[Kapur, J. Is it not necessary to hear everybody who may be affected by the decisions of the Board ?] No question of hearing arises.
It is a question of a subordinate legislative authority gathering such information as it wants and it is obliged to take into consideration all the relevant circumstances.
Certiorari and prohibition lie only in respect of judicial or quasi judicial acts.
(Halsbury 's Laws of England, 3rd Edn.
11, p. 55, para.
The principle audi alteram partem also applies only to judicial or quasi judicial proceedings.
(Patterson vs Dist.
Commr.
of Accrator, For a distinction between judicial and legislative functions, See Cooley 's Constitutional Limitations, 8th Edn.
Vol. 1, p. 185; Prentis vs Atlantic Coast Co. Ltd., ; , 226 227, Per Holmes J.; Mitchell Coal Co. vs Pennsylvania, 57 L. Ed. 1479, 1482; Louisville and Nashville Railroad Co. vs Green Garrett, ; , 239).
The functions of the Wage Board in the United Kingdom have been characterised by writers as legislative in character.
(Robson 's Justice and Administrative Law, 3rd Edn.
p. 608; Griffith 's Principles of Administrative Law, p. 39; Barbara Wootton, Social Foundations of Wage Policy, Modern methods of 35 Wage determination, p. 88).
This is also the case in Australia.
(Federated Saw Mills Case; , ; Australian Boot Trade Employees Federation vs Whybrow and Co., ; , 289, 317, per Isaacs, J.).
The Labour and Industry Act, 1953, of Victoria (Australia) in section 39 (2) gives statutory recognition to the decisions in 8 C. L. R. 365 and ; , by providing that every determination shall have force, validity and effect as if enacted in the Act.
The very constitution of the Wage Board under the impugned Act, with an equal number of representatives of employers and employees with an independent chairman is against its being judicial or quasi judicial in character, for, no man should be judge in his own cause.
(Franklin vs Minister of Town and Country Planning, ; , 103).
It is incorrect to infer that once the Wage Board is constituted under section 8 of the Act the power of the Government under the Act is exhausted and nothing more can be done.
The power to constitute the Board can by virtue of section 14 of the , be used from time to time as the occasion demands.
There was nothing wrong in the Central Government reconstituting the Board on the resignation of Shri K. P. Keshava Menon.
The decision by majority is provided by Rules framed by the Central Government under section 20 of the Act which became a part of the Act.
Hence a decision by a majority in conformity with the Rules under the Act cannot be impeached.
(Pacific States Box and Basketing Co. vs White, ; ; Under section II of the Act the Wage Board "may" exercise the powers and follow the procedure laid down under the .
There is nothing to warrant the provision being read as obligatory or mandatory.
The provisions of the are basically enacted for the adjudication of disputes between two parties and they are on 36 their face inapplicable to the Wage Board.
That is precisely why the Board was given the option to exercise some of the powers conferred by the or to follow procedures prescribed in that Act.
It is not incumbent under the Act on the Wage Board to give any reasons for its decisons.
The Board would be perfectly within its right if it chose not to give any reasons.
While judging the reasonableness of the wage structure for the whole industry it would be entirely fallacious to see how it hit a particular newspaper or a unit.
Multiple units or chains could be classified on the basis of the total gross revenues of all the constituent units because economies would be possible in group operations resulting in the reduction of the cost of production.
There is nothing in the Act which prohibits the Wage Board from grouping into chains or multiple units.
Further, there is nothing in the Act to prohibit the treating of several newspaper establish ments publishing one or more newspapers though in different parts of the country as one establishment for fixing rates of wages.
Some sort of classification was inevitable when the newspaper establishments all over the country had to be considered for fixing the rates of wages.
If the Wage Board adopted gross revenue as a workable basis for classification there was nothing wrong and that fact could not vitiate its decision.
Profits of newspaper establishments were vague and difficult to ascertain as many things are mixed up in calculating profit.
It would be dangerous to go by the profit and loss of individual concerns to ascertain their capacity to pay.
Even the Bank Award has taken the "turnover" or the aggregate resources as the basis of the classification.
The basis of gross revenue was the only proper and convenient method of ascertaining the actual status of a newspaper establishment for fixing a wage structure.
Wage structure recommended by the Board would show that compared with the scales and salaries obtaining now in many of the newspaper
establishments the scales given by the Board were not exorbitant or 37 unreasonable.
What is to be considered is the industry region wise and not individual units.
It may be that individual units may suffer hardship or even go out of existence but that would not be a relevant consideration.
[Gajendragadkar, J. If the decisions are to be attacked effectively under article 19(1)(g), petitioners have to show that A or B or C class of paper will cease to exist, or, taken as a class they cannot bear the burden.] That is the way the matter should be approached.
The figures in individual statements of the petitioners furnish no evidence whatsoever of the unreasonableness of the wage fixation.
The decision is given retrospective effect from the date of constitution of the Board.
The Act itself in section 13 contemplates interim relief.
Instead of granting any interim relief the Board decided to give retrospective effect to its decision.
A.V. Viswanatha Sastri, section Viswanathan, B. R. L. lyengar, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for respondent No. 3 in Petition No. 91 of 1957.
The balance sheets and profit and loss accounts of the petitioner company for several years when analysed show that with normally prudent management the earnings of the Indian Express group of newspapers admit of payment to working journalists on the scale fixed by the Wage Board and the decision of the Wage Board was legally valid and just having regard to the several factors to be taken into consideration in fixing a fair wage.
N. C. Chatterjee, A. section R. Chari, section Viswanathan,A. N. Sinha, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the Indian Federation of Working Journalists in all the Petitions, and for the ]Delhi Union of Journalists in Petition No. 103 of 1957.
It is open to Parliament to delegate to the Wage Board the power to legislate with regard to certain subjects.
The so called decision of the Wage Board was a valid exercise of such power by a subordinate legislative body functioning under specified conditions under Parliamentary mandate with the limits prescribed by the Constitution.
38 Even if the Wage Board is held to be a quasijudicial body, it acted according to the principle of audi alteram partem and no prerogative writ should be issued to disturb findings arrived at by such a body.
M. K. Nambiar, in reply.
The Wage Board was not intended to exercise powers of legislation but those of a judicial nature.
Under section 10 of the Working Journalist, , Act the Board has to make a "decision", and this term has been used in several enactments to indicate a determination by a judicial tribunal.
Under section 8 the decision of the Board has to be made in accordance with the provisions of the Act and therefore the Board had the function of applying the law and not making a law.
The Wage 'Board is required under section 11 to adopt the law procedure as is adopted by Industrial Tribunal. ,.
The decision of the Board is declared to be binding only on some persons and not all.
It can be executed in the same manner as the award of an Industrial Tribunal.
Its character is identical to that of an award made by an industrial tribunal and the Supreme Court has held that a tribunal does not exercise legislative functions.
Parliament did not intend to confer any powers of subordinate legislation on the Board.
This is clear from the rules of business of the Lok Sabha read with the Statement of Objects and Reasons to the Bill.
In, the memorandum regarding delegated legislation appended to the Bill the constitution of the Wage Board in the matter of fixation of wages had not been shown as a piece of delegated legislation.
(The Rules of Procedure and Conduct of Business in Lok Sabha (1957) Rule 70).
The decision of the Wage Board was not to be laid before both the Houses of Parliament.
This would have been so had the fixation of wages by the Board was a delegated legislation (laid Rule 317).
The Wage Board was not constituted as sub legislative authority.
The question is not what the legislature could have enacted but whether by virtue of powers of the Wage Board under the Act as enacted, it is a legislative body or a tribunal with adjudicators functions The Board does not possess any powers of delegated legislation, It has been given all the trappings which 39 were necessary to characterize it as a judicial body.
In interpreting the Act the Court is entitled to take into consideration the surrounding circumstances, the object of the legislation and also whether a particular term used in legislation was considered by the legislature at the time of enactment.
The court ought to take into consideration the entire background and the effect of dropping of the term "minimum" from the enactment.
The Press Commission had directed its attention exclusively to the question of fixing minimum wage and the Act in section 9 followed the pattern and purported to implement the recommendations of the Press Commission.
The Press Commission in considering minimum wage ignored the capacity to pay.
The Act, similarly, being based on the Report of the Press Commission has made no provision for considering the capacity to pay.
This omission which was appropriate with regard to minimum wages rendered the fixation of wages at a different level unreasonable and therefore void.
The content of the term "minimum wage" would not be changed by merely calling it a "statutory" minimum.
Section 14 of the , can apply if the enactment does not rule it out by necessary implication.
The entire scheme of the impugned Act shows that only one Wage Board and one decision is contemplated.
It is not open to the Government to reconstitute the Wage Board as and when they desire.
Munshi, in reply.
Whether or not the Act imposes a direct burden, the Court should see if the Act is a special law singling out an industry for laying the burden on it.
If it does so, as in the present Act, it will amount to a direct burden.
If it is a general law it would not be a direct burden.
The Act stands alone in being arbitrary and excessive and is without parallel in any other country.
The Act is unique in that (1) it provides for gratuity even on voluntary resignation.
(2) it gives power to the Wage Board to fix indeterminate wages investing them with attributes of minimum wages, and (3) it confers on the Board power to fix wages (i) without specifying 40 essential standards, (ii) without casting a duty to follow a reasonable procedure, (iii) without any control by an appellate tribunal or court, and (iv) without providing any opportunity to the parties concerned to be heard on the merits of the proposal it makes.
In other countries there are various safeguards and checks against arbitrary wage decisions.
(U. K. Wage Councils Act, 1945; U. section Fair Labour Standards Act, 1938; Factories and Shops Act, 1905, new Act of 1928 of Victoria, Australia).
If the mechanism of the Act itself is such that it is unreasonably restrictive of rights to trade then the Act has to be struck down as void under article 19 (1)(g).
Even if it is held that there was no excessive delegation, it is still open to the Court to see whether the restrictions impinged on the Constitutional safeguards tinder article 19 (1)(g).
Fixation of scales of wages on the basis of grossrevenue without taking into account the liability of newspapers is a devastating doctrine in industrial relations.
The Wage Board is not a sub legislative body; but even if it is, it has to act judicially and is subject to writs of certiorari.
Even if its decisions become assimilated in the Act it must be considered to be a quasi judicial body, since it is expected to carry out a preliminary investigation before recording its findings.
The functions of the Wage Board cannot be characterised either exclusively legislative or exclusively judicial.
The functions performed by administrative agencies do not fall in water tight compartments.
They may be partly legislative, partly judicial and partly administrative (Stason and Cooper, Cases and other Materials on Administrative Tribunals).
The Court has to consider whether the administrative agency performs a predominantly legislative or judicial function and determine its character accordingly (Village of Saratoga Springs vs Saratoga Gas Electric Light and Power Co., (1908) 191 New York 123 People 41 ex rel.
Central Park North and East River Co. vs Willcox, (1909) 194 New York 383).
In the United Kingdom the decisions of the Wage Councils in the shape of wage regulations proposal acquires legislative character from the order made by the Minister giving effect to the proposals.
In Australia the Factories and Shops Act, 1905, and the Labour and Industry Act, 1953, Section 39(2) of Victoria by express provision invests the determination of the Special Board with the characteristics of a legislative act.
Under the Fair Labour Standards Act, 1938, of U. section A. the Wage orders ultimately approved by the Administrator are subject to judicial review.
In India under the , the recommendations of the Committees are forwarded to the appropriate Government who by notification as a token of approval, in the official Gazette, fix minimum wages in respect of each scheduled employment.
Under the recent amendment of the Bombay Industrial Relations Act, 1946, the Wage Boards constituted under the Act are to follow the procedure of the Industrial Court in respect of arbitration proceedings and it cannot be said that they perform any legislative function.
The Wage Board under the impugned Act, in spite of its being an administrative body or sub legislative body may nevertheless be exercising quasi judicial functions if certain conditions are fulfilled (Halsbury 's Laws of England, 3rd Edn., Vol.
11, pp.
55 56; Rex vs Manchester Legal Aid Committee, Ex parte R. A. Brand and Co. Ltd., , 428; Rex vs The London County Council, Ex parte the Entertainments Protection Association Ltd., , 233 234; Board of Edu cation vs Rice, ,182; Allen C. K. Law and Order 1956 Edn., pp. 102, 256, 257).
The Wage Board has not given any attention to the paramount consideration of capacity to pay as it should, in reason, have done.
At no time was any question asked as to the wage burden the Wage Board 's scales would impose on the industry as a ,whole or on a particular unit.
The specific burden which the Board proposed to impose has never been 6 42 put even indirectly.
At no time has it been considered what would be the potential burden on the industry if the non journalists in newspaper establishments made similar demands.
No consideration has ever been given about the effect on the industry or on a unit of the retrospective operation of the wage scales.
A. section R. Chari, section Viswanathan, B. R. L. Iyengar,J. B. Dadachanji and section N. Andley, for the Federation of Press Trust of India Employees ' Union, Bombay Union of Journalists and Gujrat Working Journalists Union.
R. Ganapathy Iyer and G. Gopalakrishnan, for the ' appellants in C. A. No. 699 of 1957.
L. K. Jha, section section Shukla and R. J. Joshi, for the appellants in C. A. Nos. 700 to 702 of 1957.
section P. Sinha, Harbans Singh and R. Patnaik, for the appellants in C. A. No. 703 of 1957.
B. Sen and R. H. Dhebar, for respondent No. I in all the appeals.
N. C. Chatterjee, J. B. Dadachanji and section N. Andley, for the Indian Federation of Working Journalists in all appeals, respondent No. 2 in C. A. No. 700 of 1957 and respondent No. 3 in C. A. No. 703 of 1957.
B. R. L. Iyengar, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for respondent No. 3 in C. A. 699 of 1957.
March 19.
The Judgment of the Court was delivered by BHAGWATI J.
As they raise common questions of law and fact they can be dealt with under one common judgment.
In order to appreciate the rival contentions of the parties it will be helpful to trace the history of the events which led to the enactment of the impugned Act.
The newspaper industry in India did not originally start as an industry, but started as individual 43 newspapers founded by leaders in the national, political, social and economic fields.
During the last half a century, however, it developed characteristics of a profit making industry in which big industrialists invested money and combines controlling several newspapers all over the country also became the special feature of this development.
The working journalists except for the comparatively large number that were found concentrated in the big metropolitan cities, were scattered all over the country and for the last ten years and more agitated that some means should be found by which those working in the newspaper industry were enabled to have their wages and salaries, their dearness allowance and other allowances, their retirement benefits, their rules of leave and conditions of service, enquired into by some impartial agency or authority, who would be empowered to fix just and reasonable terms and conditions of service for working journalists as a whole.
Isolated attempts were made by the Uttar Pradesh and Madhya Pradesh Governments in this behalf.
On June 18, 1947, the Government of Uttar Pradesh appointed a committee to enquire into the conditions of work of the employees of the newspaper industry in the Uttar Pradesh.
On March 27, 1948, the Government of Central Provinces & Berar also appointed an Inquiry Committee to examine and report on certain questions relating to the general working of the newspaper industry in the province, including the general conditions of work affecting the editorial and other staff of newspapers, their emoluments including dearness allowance, leave, provident fund, pensionary benefits, etc.
The Committees aforesaid made their reports on the respective dates March 31, 1949, and March 27, 1948, making certain recommendations.
The All India problem, however, remained to be tackled and during the debate in Parliament on the Constitution (First Amendment) Bill, 1951, the Prime Minister said that he was prepared to appoint a committee or a commission, including representatives of the Press, to examine 44 the state of the Press and its content.
He elaborated the idea further on June 1, 1951, when he indicated that an enquiry covering the larger issue of the Press, such as had been carried out in the United Kingdom by the Royal Commission, might be productive of good for the Press and the development of this very important aspect of public affairs.
The idea was further discussed during the debate in Parliament on the Press (Incitement to Crimes) Bill, later named the Press (Objectionable Matter) Act, 1952.
At its session held in April, 1952, at Calcutta, the Indian Federation of Working Journalists adopted a resolution for the appointment of a Commission to enquire into the condi tions of the Press in India with a view to improving its place, status and functioning in the new democratic set up.
The appointment of the Press Commission was thereafter announced in a Communique issued by the Govt.
The terms of reference inter alia were: "2.The Press Commission shall enquire into the state of the Press in India, its present and future lines of development and shall in particular examine:. . . (iv) the method of recruitment, training, scales of remuneration, benefits and other conditions of employment of working journalists settlement of disputes affecting them and factors which influence the establishment and maintenance of high professional standards The Commission completed its enquiry and submitted its report on July 14, 1954.
The Press Commission shall enquire into the state of the Press in India, its present and future lines of development and shall in particular examine:. . . (iv) the method of recruitment, training, scales of remuneration, benefits and other conditions of employment of working journalists settlement of disputes affecting them and factors which influence the establishment and maintenance of high professional standards The Commission completed its enquiry and submitted its report on July 14, 1954.
The industry taken as a whole had returned a profit of about 6 lakhs of rupees on a capital investment of about 7 crores, or less than I per cent.
per annum.
It found that proof readers as a class could not be regarded as working journalists, for there were proof readers even in presses doing job work.
It came to the conclusion that if a person had been 45 employed as a proof reader only for the purpose of making him a more efficient sub editor, then it was obvious that even while he was a proof reader, he should be regarded as a working journalist but in all other instances, he would not be counted as a journalist but as a member of the press staff coming within the purview of the .
to the capacity of the paper to make adequate payment. .
In this connection it may be stated that the Federation of Working Journalists also agreed, when it was put to them, that apart from suggesting a minimum wage it would not be possible for the Commission to undertake standardisation of designations or to fix scales of pay or other conditions of service for the different categories of employees for different papers in different regions.
They have stated that these details must be left to be settled by collective bargaining or where an agreement is not possible the dispute could be settled by reference to an industrial court or an adjudicator with the assistance of a Wage Board, if necessary.
The All India Newspaper Editors ' Conference and Indian Language Newspapers ' Association have also stated that it would not be possible to standardise designations and that any uniformity of salaries as between one newspaper and another would be impossible.
The resources of different newspapers vary and the conditions of service are not the same.
We agree in principle that there should be uniformity as far as possible, in the conditions of service in respect of working journalists serving in the same area or locality.
But this can be achieved only by a settlement or an adjudication to which the employers, and the employees collectively are parties.
" 46 539: DEARNESS ALLOWANCE:. .
This again, is a matter which would require very detailed study of the rise in the index numbers of the cost of living for various places where the newspapers are published.
We do not know of any case where a uniform rate has been prescribed for dearness allowance applicable all over the country irrespective of the economic conditions at different centres and the paying capacity of the various units.
This must be a matter for mutual adjustment between the employers and the employees and if there is no agreement, some machinery must be provided by which disputes between the parties could be resolved.
" The position of a journalist was thus characterised by the Commission: " A journalist occupies a responsible position in life and has powers which he can wield for good or evil.
It is he who reflects and moulds public opinion.
He has to possess a certain amount of intellectual equipment and should have attained a certain educational standard without which it would be impossible for him to perform his duties efficiently.
His wage and his conditions of service should therefore be such as to attract talent.
This must involve constant study, contact with personalities and a general acquaintance with world 's problems.
" It considered therefore that there should be a certain minimum wage paid to a journalist.
The possible impact of such a minimum wage was also considered by it and it was considered not unlikely that the fixation of such a minimum wage may make it impossible for small papers to continue to exist as such but it thought that if a newspaper could not afford to pay the minimum wage to the employee which would enable him to live decently and with dignity, that newspaper had no business to exist.
It recommended division of localities for taking into account the differential cost of living in different parts of India, and determining what should be the reasonable 47 minimum wage in respect of each area.
It endorsed the concept of a minimum wage which has been adopted.
In India, however, the level of the national income is so low at present that it is generally accepted that the country cannot afford to prescribe a minimum wage corresponding to the concept of a living wage.
However, a minimum wage even here must provide not merely for the bare subsistence of living, but for the efficiency of the worker.
For this purpose, it must also provide for some measure of education, medical requirements and amenities." and suggested that the basic minimum wage all over India for a working journalist should be Rs. 125 with Rs. 25 as dearness allowance making a total of Rs. 150.
It also suggested certain dearness allowance and City allowance in accordance with the location of the areas in which the working journalists were employed.
It compared the minimum wage recommended by it with the recommendations of the Uttar Pradesh and Madhya Pradesh Committees and stated that its recommendations were fairly in line with the recommendations of those Committees particularly having regard to the rise in the cost of living which bad taken place since those reports were made.
It then considered the applicability of the to the working journalists and after referring to the award of the Industrial Tribunal at Bombay in connection with the dispute between " Jam e Jamshed " and their workman and the decision of the Patna High Court in the case of V. N. N. Sinha vs Bihar Journals Limited (1), it came to the conclusion that the working journalists did not come within the definition of workman as it stood at that time in the nor could a question with regard to them be raised by others who were admittedly governed by the Act.
It thereafter con (1) (1953) 1.
L. R. 32 Pat.
48 sidered the questions as to the tenure of appointment and the minimum period of notice for termination of the employment of the working journalists, hours of work, provision for leave, retirement benefits and gratuity, made certain recommendations and suggested legislation for the regulation of the newspaper industry which should embody its recommendations with regard to (i) notice period; (ii) bonus; (iii) minimum wages; (iv) Sunday rest; (v) leave, and (vi) provident fund and gratuity.
Almost immediately after the Report of the Press Commission, Parliament passed the Working Journalists (Industrial ]Disputes) Act, 1955 (I of 1955) which received the assent of the President on March 12, 1955.
It was an Act to apply the , to working journalists.
" Working Journalist " was defined in section 2 (b) of the Act to mean " a person whose principal avocation is that of a journalist and who is employed as such in, or in relation to, any establishment for the production or publication of a newspaper or in, or in relation to, any news agency or syndicate supplying material for publication in any newspaper, and includes an editor, a letter writer, news editor, sub editor, feature writer, copy taster, reporter, correspondent, cartoonist, news photographer and proof reader but does not include any such person who: (i)is employed mainly in a managerial or admini strative capacity, or (ii)being employed in a supervisory capacity,exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.
Section 3 of that Act provided that the provisions of the , shall apply to, or in relation to, working journalists as they apply to or in relation to workmen within the meaning of that Act.
The application of the , to the working journalists was not, however, deemed sufficient to meet the requirements of the situation.
There was considerable agitation in Parliament for the implementation of the recommendations 49 of the Press Commission, and on November 30, 1955, the Union Government introduced a Bill in the Rajya, Sabha, being Bill No. 13 of 1955.
It was a Bill to regulate conditions of service of working journalists and other persons employed in newspaper establishments.
The recommendations of the Press Commission in regard to minimum period of notice, bonus, Sunday rest, leave, and provident fund and gratuity, etc., were all incorporated in the Bill; the fixation of the minimum rates of Wages however was left to a minimum wage Board to be constituted for the purpose by the Central Government.
The provisions of the (20 of 1946) and the Employees ' Provident Funds Act, 1952 (19 of 1952) were also sought to be applied in respect of establishments exceeding certain minimum size as recommended by the Commission.
It appears that during the course of discussion in the Rajya Sabha, the word " minimum " was dropped from the Bill wherever it occurred, the Minister for Labour having been responsible for the suggested amendment.
The reason for dropping the same was stated by him as under: " Let the word " minimum " be dropped and let it be a proper wage board which will look into this question in all its aspects.
Now, if that is done, I believe, from my own experience of the industrial disputes with regard to wages, in a way it will solve the question of wages to the working journalists for all time to come.
" The Act as finally passed was entituled " The Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955 (45 of 1955) and received the assent of the President on December 20, 1955.
The relevant provisions of the Act may now be referred to.
It was an Act to regulate certain conditions of service of working journalists and other persons employed in newspaper
Newspaper establishment " was defined in section 2 (d) to mean " an establishment under the control of any person or body of persons, whether incorporated or not, for the production or publication of one or more 50 newspapers or for conducting any news agency or syndicate ".
The definition of " working journalist " was almost in the same terms as that in the Working Journalists (Industrial Disputes) Act, 1955, and included a proof reader.
All words and expressions used but not defined in this Act and defined in the , were under section 2 (g) to have the meanings respectively assigned to them in that Act.
Section 3 applied the provisions of the , as it was in force for the time being, to working journalists as they applied to, or in relation to workmen within the meaning of that Act subject to the modification that section 25 (F) of that Act in its application to working journalists in regard to the period of notice in relation to the retrenchment of a workman was to be construed as substituting six months in the case of the retrenchment of an editor and three months, in the case of any other working journalist.
The period which lapsed between the publication of the report and the enactment of the Working Journalists (Industrial Disputes) Act, 1955, viz., from July 14, 1954, to March 12, 1955, was sought to be bridged over by section 4 enacting special provisions in respect of certain cases of retrenchment during that period.
Section 5 provided for the payment of gratuity, inter alia, to a working journalist who had been in continuous service, whether before or after the commencement of the Act, for not less than three years in any newspaper establishment even when he voluntarily resigned from service of that newspaper establishment.
Section 6 laid down that no working journalist shall be required or allowed to work in any newspaper establishment for more than one hundred and forty four hours during any period of four consecutive weeks, exclusive of the time for meals.
Every working journalist was under section 7 entitled to earned leave and leave on medical certificate on the terms therein specified without prejudice to such holidays, casual leave or other kinds of leave as might be prescribed.
After thus providing for retrenchment compensation, payment of gratuity, hours of work, and leave, sections 8 to 1 1 of the Act provided 51 for fixation of the rates of wages in respect of working journalists.
Section 8 authorised the Central Government by notification in the Official Gazette to constitute a Wage Board for fixing rates of wages in respect of the working journalists in accordance with the provisions of the Act, which Board was to consist of an equal number of persons nominated by the Central Government to represent employers in relation to the newspaper establishments and working journa lists, and an independent person appointed by the Central Government as the Chairman thereof.
Section 9 laid down the circumstances which the Wage Board was to have regard to in fixing rates of wages and these circumstances were the cost of living, the prevalent rates of wages for comparable employments, the circumstances relating to the newspaper industry in different regions of the country and to any other circumstance which to the Board may seem relevant.
The decision of the Board fixing rates of wages was to be communicated as soon as practicable to the Central Government and this decision was under section 10 to be published by the Central Government in such manner as it thought fit within a period of one month from the date of its receipt by the Central Government and the decision so published was to come into operation with effect from such date as may be specified, and where no date was so specified on the date of its publication.
Section 11 prescribed the powers and procedure of the Board and stated that subject to any rules of procedure which might be prescribed the Board may, for the purpose of fixing rates of wages, exercise the same powers and follow the same procedure as an Industrial Tribunal constituted under the , exercised or followed for the purpose of adjudicating an industrial dispute referred to it.
The decision of the Board under section 12 was declared to be binding on all employers in relation to newspaper establishments and every working journalist was entitled to be paid wages at a rate which was to be in no case less than the rate of wages fixed by the Board.
Sections 14 and 15 applied the provisions of the Industrial Employment (Standing Orders) , as it was in force for the time being and also the provisions of the Employees ' Provident Funds Act, 1952, as it was in force for the time being, to every newspaper establishment in which twenty or more persons were employed.
Section 17 provided for the recovery of money due from an employer and enacted that where any money was due to a newspaper employee from an employer under any of the provisions of the Act, whether by way of compensation, gratuity or wages, the newspaper employee might, without prejudice to any other mode of recovery, make an application to the State Government for the recovery of the money due to him, and if the State Government or such authority as the State Government might specify in this behalf was satisfied that any money was so due, it shall issue a certificate for that amount to the collector and the collector shall proceed to recover that amount in the same manner as an arrear of land revenue.
Section 20 empowered the Central Government by.
notification in the Official Gazette to make rules to carry out the purposes of the Act and in particular and without prejudice to the generality of the foregoing power, such rules were to provide inter alia for the procedure to be followed by the Board in fixing rates of wages.
All rules made under this section, as soon as practicable after they were made were to be laid before both Houses of Parliament.
The Working Journalists (Industrial Disputes) Act, 1955, was repealed by section 21 of the Act.
In pursuance of the power given under section 20 of the Act the Central Government published by a notification in the Gazette of India Part II Section 3, dated July 30,1956, The Working Journalists Wage Board Rules, 1956 Rule 8 provided that every question considered at a meeting of the Board was to be decided by a majority of the votes of the members present and voting.
In the event of equality of votes the Chairman was to have a casting vote.
Rule 13 provided for the resignation of the Chairman or any member from his office or membership, as the case may be.
The seat held by them was to be deemed to have fallen vacant with effect from the date the 53 resignation of the Chairman or the member was accepted by the Central Government.
When a vacancy thus arose in the office of the Chairman or in the membership of the Board, the Central Government was to take immediate steps to fill the vacancy in accordance with the Act and the proceedings might ' be continued before the Board so reconstituted from the stage at which the vacancy was so filled.
By a notification dated May 2, 1956, the Central Government constituted a Wage Board under section 8 of the Act for fixing rates of wages in respect of working journalists in accordance with the provisions of the Act, consisting of equal representatives of employers in relation to newspaper establishments and working journalists and appointed Shri H. V. Divatia, Retired Judge of the High Court of Judicature, Bombay, as the Chairman of the Board.
The three members of the Board who were nominated to represent employers in relation to newspaper establishments were (1) Shri G. Narasimhan, Manager, The Hindu, Madras and President, Indian and Eastern Newspaper Society; (2) Shri A. R. Bhat, M.L.C., who had been a member of the Press Commission and was the President of the Indian Language Newspapers Association, as also the Chairman of the Minimum Wages Inquiry Committee for the Printing Industry in Bombay and, (3) Shri K. P. Kesava Menon, Editor, Mathrubhumi, Calicut.
The other three members of the Board who were nominated to represent working journalists were: (1) Shri G. Venkataraman, M. P., (2) Shri C. Raghavan, Secretary General, Indian Federation of Working Journalists, and (3) Shri G. N. Acharya, Assistant Editor, Bombay Chronicle.
Shri H. V. Divatia, the Chairman of the Board, had wide and considerable experience as Chairman of the Textile Labour Enquiry Committee, Bombay, had been the President of the First Industrial Court to be set up in India in 1938, and had worked as an Industrial Tribunal dealing with several disputes as between several banks and employees, as well as between several insurance companies and their employees.
54 The first meeting of the Board was held on May 26, 1956, in the Bharatiya Vidya Bhavan at Bombay.
Sri Kesava Menon and Shri G. Narasimhan were not present at this meeting.
It was a preliminary meeting at which the Board set up a sub committee consisting Of Shri A. R. Bhat and Shri G. N. Acharya to draft a questionnaire for issue to the various journals and organisations concerned, with a view to eliciting factual data and other relevant information required for the fixation of wages for the working journalists.
The sub committee was requested to hear in mind, while framing the questionnaire the need for: (1) obtaining detailed accounts of newspaper establishments; (2) proper evaluation of the nature of and the work of various categories of working journalists; and (3) proper classification of the country into different areas on the basis of certain criteria like population, cost of living, etc.
The questionnaire drafted by the sub committee was to be finalised by the chairman and circulated to all concerned by the end of June, 1956.
The questionnaire was accordingly drawn up and was sent to Universities and Governments, etc., and several other organisations and individuals interested in the inquiry of the Board, and to all newspapers individually.
It was divided into three parts.
Part " A" was intended to be answered by newspapers, news agencies, organisations of employers and of workinly Journalists and any individuals who might wish to do so.
Part " B " was meant to be answered by all newspapers and Part " C " by all news agencies.
At the outset the Board pointed out that except where the question itself indicated a different period or point of time, the reporting period for purposes of parts " B " and " C " of the questionnaire was the financial years (April I to March 31)1952 53, 1953 54, and 1954 55, or in any establishments which followed a different accounting year, a period of three years as near thereto as possible.
It further pointed out that tinder section 11 of the Act the Board had the powers of an Industrial Tribunal constituted under the .
In Part "A" of the questionnaire under the heading " Cost of Living cost of living 55 index for the respective centres were called for and a special question was addressed whether the basic minimum wage, dearness allowance and metropolitan allowance in the table attached to paragraph 546 of the Press Commission was acceptable to the party questioned and, if not, what variations would the: party suggest.
and why.
Comparable employment suggested included (a) Higher secondary school teachers; (b) College and university teachers; (c) Journalists employed as publicity and public relations officers in the information departments of the Central and State Governments; (d) Journalistic employees of the news service division of All India Radio and (e) Research personnel of the economic and social research departments of Central Government ministries like finance, labour and commerce.
Under the heading " Special Circumstances", the only question addressed was question No. 7: " Are there in your region any special conditions in respect of the newspaper industry which affect the fixing of rates of wages of working journalists ? If so, specify the conditions and indicate how they affect the question of wages.
" As regards the principles of wage fixation the party questioned was to categorise the different newspaper establishments and in doing so consider the following factors, among others: (a) Invested capital; (b) Gross revenue; (c) Advertisement revenue; (d) Circulation; (e) Periodicity of publication; (f) The existence of chains, multiple units and combines; and (g) Location.
In part B " which was to be answered by newspapers were included under the heading Accounts : (1)Balance sheets and (2) Trading and profit and loss accounts of the newspapers as in the specimen forms attached thereto for the reporting period.
Questions were also addressed in regard to the revenue of the newspapers inter alia from the press, a process studio, outside work, foundry, etc., and subscriptions as also the expenditure incurred on postage, distribution/sale, commission and rebate to advertisers, etc., and other items.
56 All information which was considered necessary by the Wage Board for the purposes of fixation of the rates of wages was thus sought to be elicited by the questionnaire.
It appears that Shri K. P. Kesava Mellon sent in his resignation on or about June 21, 1956, and by a notification dated July 14, 1956, the Central Government accepted the said resignation and appointed in his place Shri K. M. Cherian, member of the executive committee of the Indian and Eastern Newspapers Association, one of the directors of the Press Trust of India and the Chief Editor, Malayala Manorama, Kottayam, as a member of the Board.
Out of 5,465 newspapers, journals, etc., to whom the questionnaire was sent only 381 answered the same; and out of 502 dailies only 138 answered it.
The Board had an analysis made of those who had replied to the questionnaire and also of their replies thereto in regard to each of the questions contained in the questionnaire.
Further meetings of the Board were held oil August 17, and August 26, 1956, in Bombay.
Tile Chairman informed the members that response from journals, organisations, etc., to whom 'questionnaire was sent was unsatisfactory and it was decided to issue a Press Note requesting the papers and journals to send their replies, particularly to Part " B " of the questionnaire, as soon as possible, inviting their attention to the fact that the Board had powers of an Industrial Tribunal under the Act, and if newspapers failed to send their replies, the Board would be compelled to take further steps in the matter.
It was decided that for purposes 57 of taking oral evidence, the country be divided into 5 zones, namely, Trivandrum, Madras, Delhi, Calcutta and Bombay and the Secretary was asked to summon witnesses to the nearest and convenient centre.
It was further decided that one hour should normally be allotted to each newspaper, 3 hours for regional units and 2 hours for smaller units for oral evidence.
The Board also discussed the question as to the number of persons who might ordinarily be called for oral evidence from each newspaper or Organisation.
It thought that one of the important factors Governing the findings of the Board would be the circulation of each newspaper, and as such it was decided that the figures with the Audit Bureau of Circulation Ltd., might be obtained at once.
The Board also decided to ask witnesses, if necessary, to produce books of accounts, income tax assessment orders or any other document which in its opinion was essential.
Meetings of the Board were held at Trivandrum from September 7, to September 10, 1956, in Madras from September 15, to September 20, 1956, in New Delhi from October 19, to October 26, 1956, in Calcutta from November 25, to December 4,1956, and in Bombay from January 4, to January 10, 1957, from January 20, to February 6, 1957, from March 25 to March 31, 1957 and finally from April 22 to April 24, 1957.
Evidence of several journalists and persons connected with the newspaper industry was recorded at the respective places and at its meeting in Bombay from March 25, to March 31, 1957, the Board entered upon its final deliberations.
At this meeting the chairman impressed upon the members the desirability of arriving at unanimous decisions with regard to the fixation of wages, etc.
Members welcomed this suggestion and decided to 58 discuss various issues among themselves in the afternoon and on the following days.
After considerable discussion on March 25, 1957, and March 26, 1957, in which the representatives of the newspapers and of working journalists had joint Sittings, unanimous decisions were arrived at on (i) classification of newspapers, (ii) classification of centres and (iii) classification of employees, except on one point, namely, classification of group, multiple units and chains on the basis of their total gross revenue.
This was agreed to by a majority decision.
The chairman and the representatives of the working journalists voted in favour while the representatives of the employers voted against.
Regarding scales of pay, the chairman suggested at the meeting of March 27, 1957, that pending final settlement of the issue the parties should submit figures of scales based on both assumptions, namely, consolidated wages and basic scales with separate dearness allowance.
At the Board 's meeting on March 28, 1957, the representatives of the employers stated that the term CC rates of pay " did not include scales of pay ; there fore, the Board was not competent to fix scales of working journalists and they submitted a written statement signed by all of them to the chairman in support of their contention.
The representatives of the working journalists argued that the Board was competent to fix scales of pay.
The chairman adjourned the sitting of the Board to study this issue.
A copy of the written statement submitted by the representatives of the employers was given to the representatives of the working journalists and they submitted a written reply the same afternoon contending that the Board was competent to fix scales of pay of various categories of working journalists. ' At its meeting on March 29, 1957, the Board discussed its own competency to fix scales of pay.
The chairman expressed his opinion in writing, whereby he held that the Board was competent to fix scales of pay.
Thereafter, several suggestions were made on this question, but since there was no possibility of any agreement on this issue, the chairman suggested that members should submit their specific scales to him for his study to which the mem bers agreed.
It was also decided that the chairman would have separate discussions with representatives of working journalists in the morning and with representatives of employers in the afternoon of March 30, 1957.
It was also decided that the Board should meet again on March 31, 1957, for further discussions.
No final decision was however arrived at in the meeting of the Board held on March 31, 1957, on scales of pay, allowances, date of operation of the decision, etc.
It was decided that the Board should meet again on April 22, 1957, to take final decisions.
A meeting of the Board was accordingly held from April 22 to 24, 1957, in the office of the Wage Board at Bombay.
It was unanimously agreed that the word "decision" should be used wherever the word " report" occurred.
The question of the nature of the decisions which should be submitted to the Government was then considered.
It was agreed that reasons need not be given for each of the decisions, and that it would be sufficient only to record the decisions.
The members then requested the chairman to study the proposals regarding scales of pay, etc., submitted by, both the parties and to give his own proposals so that they may take a final decision.
Accordingly, the chairman circulated to all the members his proposals regarding pay scales, dearness allowance, location allowance and retainer allowance.
The following were the decisions arrived at by the Board on the various points under consideration and they were unanimous except where otherwise stated.
The same may be set out here so far as they are relevant for the purposes of the inquiry before US.
For the purpose of fixation of wages of working 60 journalists, newspaper, establishments should be grouped under different classes.
Except in the case of weeklies and other periodicals expressly provided for hereinafter, newspaper establishments should be classified on the basis of their gross revenue.
For purposes of classification, revenue from all sources of a newspaper establishment, should be taken for ascertaining gross revenue.
Classification of Newspaper Establishments: Dailies Newspaper Establishments should be classified under the following five classes: Class Gross Revenue " A" over Rs. 25 lakhs " B" over Rs. 12 1/2 to 25 lakhs " C" over Rs. 5 to 12 1/2 lakhs " D" over Rs. 2 1/2 to 5 lakhs " E" Rs. 2 1/2 lakhs and below 5.
It shall be open to the parties to seek re classifi cation of the newspaper establishments on the basis of the average of every three years commencing from the year 1955.
Groups, multiple units and chains should be classified on the basis of the total gross revenue of all the constituent units.
(This was a majority decision, the chairman and the representatives of the working journalists voting for and the representatives of the employers voting against).
61 20.
Working journalists employed in newspaper establishments should be grouped as follows: (a) Full time employees: Group I: Editor Group II: Assistant Editor, Leader Writer, News Editor, Commercial Editor, Sports Editor, Film or Art Editor, Feature Editor, Literary Editor, Special Correspondent, Chief Reporter, Chief Sub Editor and Cartoonist.
Group III: Sub Editors and Reporters of all kind and full time correspondents not included in Group(II); news photographers and other journalists not covered in the groups.
Group IV: Proof Reader (b) Part time employees: Correspondents who are part time employees of a newspaper establishment and whose principal avocation is that of journalism.
An employee should be deemed to be a full time employee if under the conditions of service such employee is not allowed to work for any other newspaper establishments.
23.The wage scales and grades recommended by the chairman were agreed to by a majority decision.
The chairman and the representatives of the working journalists voted for and the representatives of the employers voted against.
Shri That suggested that wage scales should be conditional on a newspaper establishment making profits in any particular year and also that time should be given to the newspaper establishments for bringing the scales into operation.
These suggestions, however, were not acceptable to the majority.
Wages, scales and grades: (as agreed to by the majority) were as under: Working journalists of different groups employed in different classes of newspaper establishments should be paid the following basic wages per mensem.
Dailies.
Class of Group of Starting Scale News Employees Pay papers E IV 90 No Scale III II 150 No Scale I D IV 100100 5 165 (13 Yrs.) EB 7 200 (5 Yrs.) III 115115 7 1/2 205 (12 Yrs.) EB 15 295 (6 Yrs.) II 200200 20 400 (10 Yrs.) I C IV 100100 5 165 (13 Yrs.) EB 7 200 (5 Yrs.) III 125125 10 245 (12 Yrs.) EB 12J 320 (6 Yrs.) II 225225 20 385 (8 Yrs.) EB 30 445 (2 Yrs.) I 350350 25 550 (8 Yrs.) 40 630 (2 Yrs.) B IV 100100 5 165 (13 Yrs.) EB 7 200 (5 Yrs.) III 150150 12J 300 (12 Yrs.) EB 20 420 (6 Yrs.) II 350350 20 510 (8 Yrs.) EB 30 570 (2 Yrs.) I 500500 30 740 (8 YrS.) 40 820 (2 Yrs.) A IV 125125 7 1/2 215 (12 Yrs.) EB 10 275 (6 Yrs.) III 175175 20 415 (12 Yrs.) EB 25 515 (4 Yrs.) II 500500 40 820 (8 Yrs.) EB 50 920 (2 Yrs.) I 10001000 50 1300 (6 Yrs.) 75 1600 (4 Yrs.) Dearness allowance, location allowance and part time employees remuneration were also majority decisions.
The chairman and the representatives of the working 63 journalists voting for and the representatives of the employers voting against.
Other allowances: In view of the paucity of evidence on the subject, the Board decided that the fixation of conveyance and other allowances should be left to collective bargaining between the working journalists and the newspaper establishments concerned.
Fitment of employees: For fitment of the present employees into the new scales, service in a particular grade and category and in the particular newspaper establishment alone should be taken into account.
In no case should the present emoluments of the employees be reduced as a; result of the operation of this decision.
When a newspaper establishment is re classified as per para.
6 supra, the existing pay of the staff should be protected.
But future increments and scales should be those applicable to the class of paper into which it falls.
Date of operation: The Board 's decision should be operative from the date of constitution of the Board (i.e., 2 5 1956) in respect of newspaper eseablishments coming under Class " A ", " B " and " C " and from a date six months from the date of appointment of the Board (i.e., 1 11 1956) in the case of newspaper establishments under Class " D " & " E" (This was also a majority decision.
The chairman and the representatives of the working journalists voted for and the representatives of the employers voted against).
The Government of India should constitute a Wage Board under the Act, to review the effect of the decisions of the Board on the newspaper establishments and the working journalists, after the expiry of 3 years but not later than 5 years from the date of the publication of the decisions of the Board.
These decisions were recorded on April 30, 1957, but the representatives of the employers thought fit to append a minute of dissent and the chairman also put on record a note on the same day explaining the 64 reasons for the decisions thus recorded.
These documents are of vital importance in the determination of the issues before us.
In the minute of dissent recorded by the representatives of the employers they started with an expression of regret that the conditions in the newspaper industry did not Permit them to accept the majority view.
They pointed out that: (a) The newspaper industry was a class by itself.
The selling price of its product was ordinarily below its cost of production.
Further, the cost of production specially that of newsprint, went on varying and the frequent rises in newsprint price made it difficult to plan and undertake any long term commitment of an increasing expenditure.
(b) The income of the newspaper industry was principally derived from two main sources: sales of copies and advertisement.
While sales depended on public acceptance, income from advertisement depended upon circulation, prestige and purchasing power of readers.
All those factors made publishing of newspapers a hazardous undertaking and the hazard continued throughout it , existence with the result that it was obligatory that the rates of wages or scales ,should be fixed at the minimum level, leaving it to the employees to share the prosperity of the units through bonuses.
(c) It was not ordinarily easy for newspapers to increase the selling price and it had been the experience of some established newspapers that such a course, when adopted, had invariably brought about a reduction in circulation.
The fall in circulation had in turn an adverse effect on the advertisement revenue.
The sales or advertisement income of a newspaper was not responsive to a progressive increase in expenditure.
65 (d) In any fixation of wages of a section of employees, its effect on other sections had to be taken into consideration.
Editorial employees were one section of a newspaper establishment and any increase in their emoluments would have its inevitable repercussions on the wages of other sections.
The salaries of working Journalists would roughly be one fifth of the total wage bill.
The factory staff had a great bargaining power and as such any increase in the salaries and introduction of scales in the editorial department would have to be followed by an increase in the wages and introduction of time scales in the factory side.
(e) It was the advertisement revenue that principally decided the capacity to pay of a newspaper industry.
This meant that minimum salaries and scales to be fixed on an All India basis would perforce have to be low if the newpapers in language of regions with a low purchasing power such as Kerala and Orissa were not to be handicapped.
It would therefore be fair both to the industry and employees if wages were fixed regionwise.
(f) The proposals, which the majority had made, clearly showed that, according to it the dominating principle of wage fixation wag the need of the worker as conceived by them, irrespective of its effect on the industry.
The Board had not before it sufficient data needed for the proper assessment of the paying capacity of the industry.
The profit and loss statements of the daily newspaper establishments for the year 19.54 55 as submitted to the Board revealed that while 43 of them had shown profits 40 had incurred losses.
condition of the newspaper industry in the country as a whole could not be considered satisfactory.
The proposals embodied in the decision made by the majority were therefore unduly high.
They would immediately throw a huge burden on many papers, a burden which would progressively grow for some 66 years, and would be still bigger when its impact takes place on the wages of employees of its other sections.
All this will in its turn add to the burden of provident fund, gratuity, etc., when the full impact of the burden took place and the wages of the entire newspaper establishments went up, it would throw out of gear the economy of most of the newspapers.
It might be that there may not be many closures immediately, because many of the newspapers would not be in a position to meet the liability of retrenchment compensation, gratuity, etc., resulting from such a step, newspapers would try to meet the liability by borrowing to the extent possible and when their credit was exhausted, they must close down.
So far as new newspaper promotions were concerned, they would be few and far between, with the result that after a few years it would be found that the number of daily newspapers in the country had not increased but had gone down.
(g)As regards chains and groups the criterion for classification adopted by the majority was unfair and unnatural.
The total gross revenue of all the units in a chain or a group gave an unreal picture of its capacity to pay.
(h)Giving of retrospective effect, would help only to aggravate the troubles of the newspaper industry which had been already called upon to devise ways and means of meeting the burden of retrospective gratuity.
(i) As regards the prevalent rates of wages for comparable employments the nature of work of the working journalists in newspaper establishments could not be compared with other avocations or professions and the rates of wages of working journalists should be fixed only in the context of the financial condition of the newspaper industry.
Comparison, could, however, be made within limits, namely with respect to alternative employments available to persons with similar educational qualifications in particular regions or localities.
From that point of view the salaries paid to secondary school teachers, college and university 67 teachers and employees in commercial firms and banks should be taken into consideration, but the majority had rejected this view.
The note of the chairman was meant to explain the reasons of the decisions which he stated he at least had in view and some of which were accepted unanimously and others were accepted by some members and thereby became majority decisions.
At the outset the chairman explained that most of the recommendations of the Press Commission were intended for the betterment of the economic condition of small and medium newspapers, such as price page schedule, telescopic rates for Government advertisements and their fair distribution among newspapers, statutory restrictions on malpractices so as to eliminate cutthroat competition and fixation of news agency tariff, , which still remained to be implemented and there had been no stability in the prices of newsprint which constituted a considerable proportion of the expenditure of a newspaper.
These circumstances had necessitated the fixing of a minimum wage lower than that recommended by the Press Commission.
As regards fixation of the rates of wages, the chairman observed: "In fixing the rates of wages, we have based them on the condition of the newspaper industry as a whole and not on the effect which they will produce on a particular newspaper.
We can only proceed on the average gross income of a newspaper falling under the same class and not on the lowest unit in that class.
Otherwise, there will be no improvement in any unit of the same class, and the status quo might remain.
With the extremely divergent conditions obtaining in both English as well as Indian language newspapers, it is impossible to try to avoid any small or medium newspaper being adversely affected.
When the tone and condition of journalism in India has to be brought on a higher level it is inevitable that in doing so, more or less burden will fall on several newspapers ; I realise that in cases where wages are very low and dearness allowance is also low or even non existent and there are no scales 68 at all, the reaction to our wage schedule will be one of resentment by the proprietors.
Some anomalies may also be pointed out; but it must be remembered that we had no data of all the newspapers before us and where we had, it was in many cases not satisfactory.
Under these circumstances, we cannot satisfy all newspapers as well as journalists.
However, wehave tried to proceed on the basis of accepted principles also keeping in view the recommendations of the Press Commission and not on the editorial expenditure of each newspaper.
I am also of the opinion that by rational management there is great scope for increasing the income of newspapers and we have evidence before us that the future of the Indian language newspapers is bright, having regard to increasing literacy and the growth of political consciousness of the reading public.
When there are wide disparities, there cannot be any adjustment which might satisfy all persons interested.
We hope no newspaper is forced to close down as a result of our decision.
But if there is a good paper and it deserves to exist, we hope the Government and the public will help it to continue.
" The chairman then proceeded to observe: " We do not consider it a matter of regret if our decisions discourage the entry into this industry of persons without the necessary resources required for the payment of a reasonable minimum wage.
While we are anxious to promote and encourage the growth of small newspapers, we also feel strongly that it should not be at the expense of the working journalists.
The same applies, in our view, to newspapers started for political, religious or any other propaganda.
" The reason for grouping all the constituent units of the same group or chain in the same class in which they would fall on the basis of the total gross income of the entire establishment was given by the chairman as under: " One of the difficult tasks before us was to fix the wages of Journalists working in newspapers which have recently come to exist in our country.
All the 69 accounts of the constituent units in the same group or chain are merged together with the result that the losses of the weaker units are borne from the high income of prosperous units.
There is considerable disparity in the wages of journalists doing the same kind of work in the various constituent units situated in different centres.
The Press Commission has strongly criticised the methods of such chains and groups and their adverse effects on the employees.
We have decided to group all the constituent units of the same group or chain in the same class in which they would fall on the basis of the total gross income of the entire establishment.
We are conscious that as a result of this decision, some of the journalists in the weak units of the same group or chain may get much more than those working in its highest income units.
If however, our principle is good and scientific, the inevitable result of its application should be judged from the stand point of Indian Journalism as a whole and not on the burden it casts on a particular establishment.
It may be added that in our view, the principle on which we have proceeded is one of the main steps to give effect to the views expressed by the The chairman then referred to the points which the representatives of the newspaper employers had urged as to the burden which might be cast as a result of the decisions and expressed himself as under: " I sympathise with their view point and in my opinion, looking to all the circumstances, especially the fact that this is the first attempt to fix rates of wages for journalists, it is probable that some anomalies may result from the implementation of our decisions.
We are, therefore, averse to imposing a wage schedule of all classes of newspapers on a permanent basis.
It is, thus important that the wage rates fixed by us should be open to review and revision in the light of experience gained within a period of 3 to 5 years.
This becomes necessary especially in view of the fact that the data available to us have not been as complete as we would have wished them to be, and also because it is difficult for us at this stage to 70 work out with any degree of precision, the economic and other effects of our decisions on the newspaper industry as a whole.
" The chairman suggested as a palliative the creation by the Government of India immediately of a standsing administrative machinery "which could also combine in itself the functions of implementing and administering our decisions and that of preparing the ground for the review and revision envisaged after 3 to 5 years.
This machinery should collect from all newspaper establishments in the country on systematic basis detailed information and data such as those on employment, wage rates, and earnings, financial condition of papers, figures of circulation, etc., which may be required for the assessment of the effects of our decisions at the time of the review.
The Commissioner of Labour, Madras, issued a circular on May 30, 1957, calling upon the managements of all newspaper establishments in the State to send to him the report of the gross revenue for the three years, i. e., 1952, 1953 and 1954, within a period of one month from the date of the publication of the Board 's decision, i. e., not later than June 10, 1957.
Writ Petition No. 91 of 1957 was thereupon filed on June 13, 1957, by the Express Newspapers (Private) Ltd., against the Union of India & others and this petition was followed up by similar petitions filed on August 9, 1957, by the Press Trust of India Ltd., the Indian National Press (Bombay) Private Ltd., and the Saurashtra Trust, being Petitions Nos.
99, 100, and 101 of 1957 respectively.
The Hindustan Times Ltd., New Delhi filed on August 23, 1957, a similar petition, being Petition No. 103 of 1957, and three more petitions, being Petitions Nos.
116, 117 and 118 of 1957, were filed by the Loksatta Karyalaya, Baroda, Sandesh Ltd. ' Ahmedabad and Jan Satta Karyalaya, Ahmedabad, respectively, on September 18, 1957.
The Express Newspapers (Private) Ltd., the petitioners in Petition No. 91 of 1957, otherwise termed 71 the " Express Group ", are the biggest chain in the newspaper world in India.
They publish (i) Indian Express, an English Daily, from Madras, Bombay, Delhi and Madurai, (ii) Sunday Standard, an English Weekly, from three centres Madras, Bombay and Delhi, (iii) Dinmani, a Tamil Daily from Madras and Madurai, (iv) Dinmani Kadir, a Tamil Weekly from Madras, (v) Lokasatta, a Maratha Daily, and Sunday Lokasatta, a Maratha Weekly, from Bombay, (vi) Screen, an English Weekly from Bombay and (vii) Andhra Prabha, a Telugu Daily and Weekly.
The total number of working journalists employed by them are 331, out of whom there are 123 proof readers, as against 1570 who form the other members of the staff.
The present emoluments of the working journalists in their employ amount to Rs. 9,77,892, whereas if the decision of the Wage Board were given effect to they would go up to Rs. 15,21,282 12 thus increasing the wage bill of the working journalists annually by Rs. 5,43,390 12.
They would also have to pay remuneration to the part time correspondents on the basis of retainer as well as payment for news items on column basis.
That would involve an additional burden of about Rs. 1 lakh a year.
The retrospective operation of the Wage Board 's decision with effect from May 2, 1956, in their case would further involve a payment of Rs. 5,16,337 20.
This would be the extra burden not taking account the liability for past gratuity and the recurring gratuity as awarded under the provisions of the Act and also the increased burden which would have to be borne by reason of the impact of the provisions in regard to reduced hours of working, increase in leave, etc., provided therein.
The Press Trust of India Ltd., the petitioners in Petition No. 99 of 1957, are a non profit making cooperative organization of newspaper proprietors.
They 72 employ 820 employees in all, out of whom 170 are working journalists and 650 do not come within that definition.
The ,increase in their wage bill due to increase in the salary of the working journalists as per the decision of the.
Wage Board would come to Rs. 4,05,600 and they would have to pay by way of arrears by reason of the retrospective operation of the decision another sum of Rs. 4,05,600 to the working journalists.
There would also be an additional financial burden of Rs. 60,000 every year by reason of the recurring increments in the monthly salaries of the working journalists employed by them.
If the benefits of the Wage Board decision were extended to the other members of the staff who are not working journalists within the definition of that term but who have also made similar demands on them, a further annual burden would be imposed on the petitioners which is estimated at Rs. 3,90,000.
If perchance the petitioners not being able to run their concern except at a loss intended to close down the same, the amount which they would have to pay to the working journalists under the pro visions of the Act and the decision of the Wage Board would be Rs. 23,68,500 as against the old scale liability of Rs. 11,62,500 and the other members of the staff who do not fall within the category of working journalists would have to be paid a further sum of Rs. 15,50,000.
The total liability of the petitioners in such an event would amount to Rs. 39,18,000 as against the old liability of Rs. 27,12,500.
The Indian National Press (Bombay) Private Ltd., otherwise known as the Free Press Group, are petitioners in Petition No. 100 of 1957.
They publish (i) Free Press Journal, a morning English Daily (ii) Free Press Bulletin, an evening English Daily (iii) Bharat Jyoti, an English Weekly (iv) Janashakti, a morning Gujarati Daily and (v) Navashakthi, a Marathi Dailyall from Bombay.
They employ 442 employees including part time correspondents out of whom 65 are working journalists and 21 are proof readers and the 73 rest form members of the other staff not falling within the category of working journalists.
The effect of the decision of the Wage Board would be that there would have to be an immediate payment of Rs. 1,73,811 by reason of the retrospective operation of the decision and there will also be an annual 'increase in the wage bill to the same extent, i. e., Rs. 1,73,811.
There will also be a yearly recurring increase to the extent of Rs. 22,470 and also corresponding increase for contribution to the provident fund on account of increase in salary.
Under the provisions of the Act in regard to reduced hours of work, and increase in leave, moreover, there will be an increase in liability to pay Rs. 90,669 and Rs. 29,806 respectively, in the case of working journalists, besides the liability for past gratuity in another sum of Rs. 1,08,534 and recurring annual liability for gratuity in a sum of Rs. 17,995.
If similar benefits would have to be given to the other members of the staff who do not fall within the definition of working journalists the annual burden would be increased by a sum of Rs. 1,80,000.
This would be the position by reason of the petitioners being classified and treated as a chain of newspapers and having been classified as " A " class newspaper establishment on a total computation of the gross revenue of all their units.
If they were not so treated and the component units were classified on their individual gross revenue the result would be that the Free Press Journal, the Free Press Bulletin and the Bharat Jyoti would fall within class " A ", and Navashakti would fall within class " C " and Janashakti would fall within class "D" thus minimising the burden imposed upon them by the impact of the Wage Board decision.
The Saurashtra Trust, the petitioners in Petition No. 101 of 1957, are another chain of newspapers and they publish (i) Janmabhoomi, a Gujrati Daily from Bombay, (ii) Janmabhoomi and Pravasi, a Gujrati Weekly from Bombay, (iii) Lokmanya, a Marathi Daily from Bombay, (iv) Vyapar, a Gujrati Weekly commercial paper from Bombay, (v) Fulchhab, a Gujrati Daily from Rajkot, (vi) Pratap, a Gujrati 10 74 Daily from Surat, (vii) Cuttccha Mitra, a Gujrati Daily from Bhuj (Cutch) and, (viii) Nav Bharat, a Gujrati Daily from Baroda.
The effect of the Wage Board decision on them would be to impose on them a burden of Rs. 1,59,528 by reason of the retrospective operation of the decision and an annual increase in the wage bill of Rs. 1,59,528 for the first year and an annual recur ring increase of Rs. 22,000.
The operation of sections 6 and 7 of the Act in regard to reduced hours of work and provision for increased leave would impose an additional burden of Rs. 42,000 per year.
The liability for pastgratuity would be Rs. 93,376 and the recurring annual increase in gratuity would be Rs. 11,000.
The total cost of closing down the concern, if perchance 75 the petitioners have to so close down owing to their inability to carry on the business except at a loss, is worked out at Rs. 6,13,921 for the working journalists as against the old basis of Rs. 1,00,890.
The figure for the rest of the staff who are not working journalists is computed at Rs. 3,08,112 with the result that the total cost of closing down on the new basis under the provisions of the Act and the decision of the Wage Board would be Rs. 9,22,033 as against what otherwise would have been a sum of Rs. 4,09,002.
The Hindustan Times Ltd., New Delhi, the petitioners in Petition No. 103 of 1957, otherwise called "the Hindustan Times Group", publish (i) Hindustan Times, an English (morning) Daily, (ii) Hindustan Times (Evening News) an English (evening) Daily, (iii) Overseas Hindustan Times, an English Weekly, (iv) Hindustan, a Hindi Daily, and (v) Saptahik Hindustan, a Hindi Weekly all from Delhi.
They employ a total number of 695 employees out of whom 79 are working journalists, 14 are proof readers and the rest, viz., 602 are other members of the staff.
The wages paid to the working journalists absorb about one third of the total wage bill as against 602 other members of the staff whose wage bill constitutes the remaining two thirds.
If the decision of the Wage Board is given effect to the petitioners would be subjected to the following additional liabilities in respect of working journalists alone : (i) Increase in the annual wage bill Rs. 2,16,000 (Approx.) (ii) Arrears of payments from May 2, 1956, to April 30,1957, Rs. 1,89,000 (iii) Past liability in respect of gratuity as on March 31, 1957, Rs. 2,65,000 (iv) Recurring annual liability of gratuity Rs. 28,000.
The total liability thus comes to Rs. 6,98,000.
The above figures do not include increased liability on account of the petitioners ' contribution towards provident fund, leave rules and payment to part time correspondents.
There would also be a further recurring increase in the wage bill by reason of the increments which would have to be given to the various categories of working journalists on the scales of wages prescribed by the Wage Board.
If other members of the staff (who are not working journalists") were to be considered for 76 increase in their emoluments, etc.
, there will be a further burden on the petitioners computed as under: (a)Increase in the annual wage bill, Rs. 5,02,000 (Approx.), (b) arrears of payments from May 2, 1956, to April 30, 1957, Rs. 4,51,000 (Approx.), (c) Past liability in respect of gratuity as on March 31, 1957, Rs. 5,50,000 (Approx.), (d) Recurring annual liability for gratuity Rs. 60,000 (Approx.).
The total comes to Rs. 15,63,000.
They employ 15 working journalists.
The annual wage bill of working journalists would have to be increased by reason of the decision of the Wage Board by Rs. 10,800; the burden of payment of retrospective liability being Rs. 9,600.
Moreover, there will be a recurring annual burden of Rs. 6,340 inclusive of the expenditure involved by reason of the provisions as to (i) Notice pay, (ii) Gratuity, (iii) Retrenchment compensation and (iv) Extra burden of reduced hours of work and increased leave.
The Sandesh Ltd., the petitioners in Petition No. 117 of 1957, otherwise styled, the Sandesh Group, Ahmeda bad, publish (i) Sandesh, a morning Gujarati Daily, (ii) Sevak, an evening Gujarati Daily, (iii) Bal Sandesh, a Gujarati Weekly, and (iv) Aram, and (v) Sat Sandesh, Gujarati Monthlies all from Ahmedabad.
They employ a total staff of 205 employees out of whom there are 11 working journalists, 7 proof readers and the rest 187 constitute the other members of the staff.
The increase in the wage bill of the working journalists under the provisions of the Act would be Rs. 24,807 per year besides a similar liability for Rs. 24,807 by reason of the retrospective operation of the decision.
There will be an increase in expenditure to the tune of Rs. 30,900 by reason of the reduced working hours and increase in leave and holidays, a liability of Rs. 31, 597 for past gratuity and Rs. 24,807 every year for recurring gratuity as also Rs. 1,530 for recurring increase in wages of the working journalists.
The financial burden in the case of proof readers who 77 are included in the definition of working journalists tinder the terms of the Act would be Rs. 5,724 per year.
If similar benefits were to be given to the other members of the staff who are not working journalists the annual increase in the burden will be Rs. 1,89,816.
The total costs of closing down if such an eventuality ' were contemplated would be Rs. 1,08,997 for the working journalists only as against a liability of Rs. 22,755 on the old basis.
The other members of the staff would have to be paid Rs. 1,46,351 and the total cost of closing down the whole concern would thus conic to Rs. 2,55,349 under the new dispensation as against Rs. 1,69,106 as of old.
The Jansatta Karyalaya, Ahmedabad, petitioners in Petition No. 118 of 1957 bring out (i) Jansatta, a Gujarati Daily and (ii) Chandni a Gujarati Monthly from Ahmedabad.
The increase in the wage bill of the working journalists would come to Rs. 29,808.
The liability for past gratuity would be Rs. 6,624 and the recurring annual gratuity would be Rs. 2,303 and the annual recurring increase in wages would come to Rs. 2,280.
The financial burden in case of proof readers would be Rs. 6,480 per year as per the decision of the Wage Board.
If similar benefits had to be given to the other members of the staff who are non working journalists the annual burden will increase by Rs. 48,720.
The total cost of closing down, if such a contingency ever arose, would come to Rs. 1,00,798 under the provisions of the Act and the Wage Board decision as against Rs. 45,206 on the old basis.
All these petitions filed by the several petitioners as above followed a common pattern.
After succinctly reciting the history of the events narrated above which led to the enactment of the impugned Act and the decision of the Wage Board, they challenged the vires of the Act and the decision of the Wage Board.
The vires of the Act was challenged on the ground that the provisions thereof were violative of the fundamental rights guaranteed by the Constitution under article 19(1)(a), 78 article 19(1)(g), and article 14 ; but in the course of the argu ments before us another Article, viz., article 32 was also added as having been infringed by the Act.
The decision of the Wage Board was challenged on various grounds which were in pari materia with the objections that had been urged by the representatives of the employers in the Wage Board in their minute of dissent above referred to.
It was also contended that the implementation of the decision would be beyond the capacity of the petitioners and would result in their titter collapse.
The reply made by the respondents was that none of the fundamental rights guaranteed under article 19(1)(a), article 19(1)(g), article 14 and/or article 32 were infringed by the impugned Act, that the functions of the Wage Board were not judicial or quasijudicial in character, that the fixation of the rates of wages was a legislative act and not a judicial one, that the decision of the Wage Board bad been arrived at after taking into consideration all the criteria for fixation of wages under section 9(1) of the Act and the material as well as the evidence led before it, that a considerable portion of the decisions recorded by the Wage Board were unanimous, that the Wage Board had the power and authority also to fix the scales of wages and to give retrospective operation to its decision, and that the financial position of the petitioners was not such as to lead to their collapse as a result of the impact of the provisions of the impugned Act and the decision of the Wage Board.
The petitioners in Petitions Nos. 91 of ' 1957, 99 of 1957, 100 of 1957, 101 of 1957 and 103 of 1957 also filed petitions for special leave to appeal against the decision of the Wage Board being Petitions Nos. 323, 346, 347, 348 and 359 of 1957 respectively and this Court granted the special leave in all these petitions under article 136 of the Constitution subject to the question of the maintainability of the appeals being open to be urged at the hearing.
Civil Appeals arising out of these special leave petitions were ordered to be placed along with the Writ Petitions aforesaid for hearing and final disposal and Civil Appeals Nos.
699 of 1957, 700 of 1957, 701 of 1957, 702 of 1957 and 703 of 1957 79 arising therefrom thus came up for hearing and final disposal before us along with the Writ Petitions under article 32 mentioned above.
We took up the hearing of the Writ Petitions first as they were more comprehensive in scope than the Civil Appeals filed by the respective parties and heard counsel at considerable length on the questions arising for our determination therein.
Before we discuss the vires of the impugned Act and the decision of the Wage Board, it will be appropriate at this juncture to clear the ground by considering the principles of wage fixation and the machinery employed for the purpose in various countries.
The concept of the living wage: "The concept of the living wage which has influenced the fixation of wages, statutorily or otherwise, in all economically advanced countries is an old and well established one, but most of the current definitions are of recent origin.
The most expressive definition of the living wage is that of Justice Higgins of the Australian Commonwealth Court of Conciliation in the Harvester case.
He defined the living wage as one appropriate for " the normal needs of the average employee, regarded as a human being living in a civilized community ".
Justice Higgins has, at other places, explained what he meant by this cryptic pronouncement.
The living wage must provide not merely for absolute essentials such as food, shelter and clothing but for " a condition of frugal comfort estimated by current human standards.
" He explained himself further by saying that it was a wage " sufficient to insure the workmen food, shelter, clothing frugal comfort, provision for evil days, etc., as well as regard for the special skill of an artisan if he is one ".
In a subsequent case he observed that " treating marriage as the usual fate of adult men, a wage which does not allow of the matrimonial condition and the maintenance of about five persons in a home would not be treated as a living wage".
According to the South Australian Act of 1912, the living wage means " a sum 80 sufficient for the normal and reasonable needs of the average employee living in a locality where work under consideration is done or is to be done." The Queensland Industrial Conciliation and Arbitration Act provides that the basic wage paid to an adult male employee shall not be less than is " sufficient to maintain a well conducted employee of average health, strength and competence and his wife and a family of three children in a fair and average standard of comfort, having regard to the conditions of living prevailing among employees in the calling in respect of which such basic wage is fixed, and provided that in fixing such basic wage the earnings of the children or wife of such employee shall not be taken into account ".
In a Tentative Budget Inquiry conducted in the United States of America in 1919 the Commissioner of the Bureau of Labour Statistics analysed the budgets with reference to three concepts, viz., (i) the pauper and poverty level, (ii) the minimum of subsistence level, and, (iii) the minimum of health and comfort level,and adopted the last for the determination of the living wage.
The Royal Commission on the Basic Wage for the Commonwealth of Australia approved of this course and proceeded through norms and budget enquiries to ascertain what the minimum of health and comfort level should be.
The commission quoted with approval the description of the minimum of health and comfort level in the following terms: " This represents a slightly higher level than that of subsistence, providing not only for the material needs of food, shelter, and body covering but also for certain comforts, such as clothing sufficient for bodily comfort, and to maintain the wearer 's instinct of selfrespect and decency, some insurance against the more important misfortunes death, disability and fire good education for the children, some amusement, and some expenditure for self development.
" Writing practically in the same language, the United Provinces Labour Enquiry Committee classified level of living standard in four categories, viz., (i) the poverty level,81 (ii) the minimum subsistence level, (iii)the subsistence plus level and (iv) the comfort level, and chose the subsistence plus level as the basis of what it called the "minimum living wage".
Any definition of a standard of living is necessarily descriptive rather than logical.
Any minimum, after all, is arbitrary and relative.
No completely objective and absolute meaning can be attached to a term like the living wage standard " and it has necessarily to be judged in the light of the circumstances of the particular time and country.
" The Committee then proceeded through the use of norms and standard budgets to lay down what the basic wage should be, so that it might approximate to the living, wage standard " in the light of the circumstances of the particular time and country.
" The Minimum Wage Fixing Machinery published by the 1. L. O. has summarised these views as follows: " In different countries estimates have been made of the amount of a living wage, but the estimates vary according to the point of view of the investigator.
Estimates may be classified into at least three groups: (1) the amount necessary for mere subsistence, (2) the amount necessary for health and decency,and (3) the amount necessary to provide a standard of comfort.
" It will be seen from this summary of the concepts of the living wage held in various parts of the world that there is general argument that the living wage should enable the male earlier to provide for himself and his family not merely the bare essentials of food, clothing and shelter but a measure of frugal comfort including education for the children, protection against ill health, 11 82 requirements of essential social needs, and a measure of insurance against the more important misfortunes including old age. " (1) Article 43 of our Constitution has also adopted as one of the Directive Principles of State Policy that: The State shall endeavour to secure, by suitable legislation or economic Organisation or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities. . . " This is the ideal to which our social welfare State has to approximate in an attempt to ameliorate the living conditions of the workers.
The concept of the minimum wage: " The International Convention of 1928 prescribes the setting up of minimum wage fixing machinery in industries in which " no arrangements exist for the effective regulation of wages by collective agreement or otherwise and wages are exceptionally low". . " As a rule, though the living wage is the target, it has to be tempered, even in advanced countries, by other considerations, particularly the general level of wages in other industries and the capacity of industry to pay.
This view has been accepted by the Bombay Textile Labour Inquiry Committee which says that " the living wage basis affords an absolute external standard for the determination of the minimum " and that " where a living wage criterion has been used in the giving of ail award or the fixing of a wage, the decision has always been tempered by other considerations of a practical character." " In India, however, the level of the national income is so low at present that it is generally accepted that the country cannot afford to prescribe by law a minimum wage which would correspond to the concept of the living wage as described in the preceding paragraphs.
(1) Report of the Committee on Fair Wagss (1947 to 1949), pp 5 7,paras.
83 Provincial Governments consider that the minimum wage can at present be only a bare subsistence wage.
In fact, even one important All India Organisation of employees has suggested that " a minimum wage is that wage which is sufficient to cover the bare physical needs of a worker and his family." Many others, '; however. . consider that a minimum wage should also provide for some other essential requirements such as a minimum of education, medical facilities and other amenities.
For this purpose, the minimum wage must also provide for some measure of education, medical requirements, and amenities.
This is the concept of the " minimum wage " adopted by the Committee on Fair Wages.
There are however variations of that concept and a distinction has been drawn, for instance, in Australian industrial terminology between the basic wage and the minimum wage. " The basic wage there approximates to a bare minimum subsistence wage and no normal adult male covered by an award is permitted to work a full standard hours week at less than the assessed basic wage rate.
The basic wage is expressed as the minimum at which normal adult male unskilled workers may legally be employed, differing from the amounts fixed as legal minima for skilled and semi skilled workers, piece workers and casual workers respectively. . . . . . .
The minimum wage is the lowest rate at which members of a specified grade of workers may legally be employed. " (2) There is also a distinction between a bare subsistence or minimum wage and a statutory minimum wage.
The former is a wage which would be sufficient to cover the bare physical needs of a worker and his family, that is, a rate which has got to be paid to the worker irrespective of the capacity of the industry to (i) Report of the Committee on Fair Wages, PP.
7 9, paras, 8 10.
(2) O.D.R. Feenander Industrial Regulation in Australia (1947), Ch.
XVII, P. 155.
84 pay.
If an industry is unable to pay to its workmen at least a bare minimum wage it has no right to exist.
As was observed by us in Messrs. Crown Aluminium Works vs Their Workmen (1): " It is quite likely that in underdeveloped countries, where unemployment prevails on a very arge scale, unorganised labour may be available on starvation wages, but the employment of labour on Starvation wages cannot be encouraged or favored in a modern democratic welfare state.
If an employer cannot maintain his enterprise without cutting down the wages of his employees below even a bar(, subsistence or minimum wage, he would have no right to conduct his enterprise on such terms.
" The statutory minimum wage however is the minimum which is prescribed by the statute and it may be higher than the bare subsistence or minimum wage, providing for some measure of education, medical requirements and amenities, as contemplated above.
also the connotation of " minimum rate of wages " in section 4 of the (XI of 1948)).
tasks in other trades which are of equal difficulty and disagreeableness, which require equally rare natural abilities and an equally expensive training.
A wage rate, in his opinion, is "fair in the narrower sense" when it is equal to the rate current for similar workmen in the same trade and neighborhood and "fair in the wider sense" when it is equal to the predominant rate for similar work throughout the country and in the generality of trades. " " The Indian National Trade Union Congress. (1) ; 85 agreements, arbitrators, and adjudicators could at best be treated, like the minimum wage, as the starting point and that wherever the capacity of an industry to pay a higher wage is established, such a higher wage should be deemed to be the fair wage.
The minimum a wage should have no regard to the capacity of an industry to pay and should be based solely on the requirements of the worker and his family.
Several employers while they are inclined to the view that fair wages would, in the initial stages, be closely related to current wages, are prepared to agree that the prevailing rates could suitably be enhanced according to the capacity of an industry to pay and that the fair" age would in time progressively approach the living wage.
It is necessary to quote one other opinion, viz., that of the Government of Bombay, which has had considerable experience in the matter of wage regulation.
The opinion of that Government is as follows: " Nothing short of a living wage can be a fair wage if under competitive conditions an industry can be shown to be capable of paying a full living wage.
The minimum wage standards set up the irreducible level, the lowest limit or the floor below which no workers shall be paid. .
A fair wage is settled above the minimum wage and goes through the process of approximating towards a living wage.
" While the lower limit of the fair wage must obviously be the minimum wage, the upper limit is equally set by what may broadly be called the capacity of industry to pay.
This will depend not only on the present economic position of the industry but on its future prospects.
Between these two limits the actual ", ages will depend on a consideration of the following factors and in the light of the comments given below: (i) the productivity of labour; (ii) the prevailing rates of wages in the same or 86 similar occupations in the same or neighbouring localities; (iii) the level of the national income and its distribution ;and (iv) the place of the industry in the economy of the country. . . (1).
It will be noticed that the " fair wage " is thus a mean between the living wage and the minimum wage and even the minimum wage contemplated above is something more than the bare minimum or subsistence wage which would be sufficient to cover the bare physical needs of the worker and his family, a wage which would provide also for the preservation of the efficiency of the worker and for some measure of education, medical requirements and amenities.
This concept of minimum wage is in harmony with the advance of thought in all civilised countries and approximates to the statutory minimum wage which the State should strive to achieve having regard to the Directive Principle of State Policy mentioned above.
The enactment of the , affords an illustration of an attempt to provide a statutory minimum.
It was an Act to provide for fixing minimum rates of wages in certain employments and the appropriate Government was thereby empowered to fix different minimum rates of wages for (i) different scheduled employments; (ii) different classes of work in the same scheduled employment; (iii) adult ,, adolescents, children and apprentices; and (iv) different localities; and (v) such minimum rates of wages could be fixed by the hour, by the day or by any larger period as may be prescribed It will also be noticed that the content of the expressions minimum wage fair wage " and " living wage is not fixed and static.
It varies and is bound to vary from time to time.
With the growth and Development of national economy, living standards Would improve and so would our notions about the respective categories of wages expand and be more progressive.
(1) Report of the Committee on Fair Wages, PP.
4, 9 11, paras, 11 15. 87 It must however be remembered that whereas the bare minimum or subsistence wage would have to be fixed irrespective of the capacity of the industry to pay, the minimum wagg thus contemplated postulates the capacity of the industry to pay and no fixation of wages which ignores this essential factor of the capacity of the industry to pav could ever be supported.
The rates of wages and scales of wages are two different expressions with two different connotations.
" Similar definition of " wages " is to be found in the , also.
They would therefore include all payments made from time to time to a workman during the course of his employment as such and not merely the starting amount of wages at the beginning of his employment.
The dictionary meaning of the term in the Concise Oxford ]Dictionary is also the same, viz., " Amount paid periodically, especially by the day or week or month, for time during which workman or servant is at employer 's disposal ".
The use of the word " rate " in the expression " rates of wages" has not the effect of limiting the connotation of the term.
"Rate" is described in the Concise Oxford Dictionary as " a statement of numerial proportion prevailing or to prevail between two sets of things either or both of which may be unspecified amount, etc., mentioned in one case for application to all similar ones, standard or way of reckoning (measure of) value, etc." In Chambers ' Twentieth Century Dictionary its meaning is given as: estimated amount or value (Shakespeare), and also " amount 88 determined according to a rule or basis; a standard; a class or rank; manner or mode". "Rates of wages" therefore mean the manner, mode or standard of the payments of remuneration for work done whether at the start or in the subsequent stages.
Rates of wages would thus include the scales of wages and there is no antithesis between the, two expressions, the expression being applicable both to the initial as well as subsequent amounts of wages.
It is true that in references made to Industrial Tribunals fixing of scales of pay has been specifically men tioned, e. g., in the Industrial dispute between certain banking companies and their workers.
But that is not sufficient to exclude the " scales of wages " from being comprised within the larger connotation of the expression "rates of wages " which is capable of including the scales of wages also within its ambit.
Even without the specific mention of the scales of wages it would be open to fix the same in an inquiry directed towards the fixation of the rates of wages.
It is also true that Industrial Tribunals have laid down that the increments of wages or scales of remuneration could only be fixed having due regard to the capacity of the industry to pay.
In the case of the Britannia Building & Iron Co. Ltd.(1): " As time scales increase the wage bill year after year which is reflected in the cost of production, such Scales should not, in our opinion, be forced upon the employer of industrial labour unless it is established that the employer has the present capacity to pay and its financial capacity can be counted upon in future.
Thus, both financial ability and stability are requisite conditions.
" Similar observations were made in the case of the Union Drug Co. Ltd.(1): " For before incremental scales can be imposed by adjudication, it is essential to see whether employer would be able to bear its burden.
The financial condition of the Company must be such as to lead to the conclusion that it would be able to pay the increments year by year for an appreciable number of (1) (1954] , 654(2) , 767.
89 years, for wage scales when settled are intended to be long term schemes.
" This consideration however of the capacity of the industry to pay does not militate against the construction adopted above that rates of wages do comprise within their scope the scales of wages also and it therefore follows that the fixation of rates of wages would also include the fixation of scales of wages.
As a matter of fact, the provisions in regard to the statutory minimum wages in Queensland, Western Australia, and Tasmania prescribe scales of wages which are graduated according to age and experience.
The capacity of the industry to pay being thus one of the essential ingredients in the fixation of wages, it is relevant to consider the different methods of measuring such capacity.
The capacity of the industry to pay: The capacity of industry to pay can mean one of three things, viz : (i)the capacity of a particular unit (marginal, representative or average) to pay, (ii)the capacity of a particular industry as a whole to pay or (iii)the capacity of all industries in the country to pay. " Ideas on this subject have varied from country to country.
In New Zealand and Australia, the capacity to pay is calculated with reference to all industries in the country and no special concessions are shown to depressed industries.
In Australia the Arbitration Court considered that " in view of the absence of clear means of measuring the general wage paying capacity of total industry, the actual wage upon which well situated labourers were at the time maintaining the average family unit could justifiably be taken as the criterion of what industry could probably pay to all labourers ".
This is at best a secondary definition of capacity, for it could only serve to show that certain industries or units could afford to pay as much as certain others.
" The Bombay Textile Labour Inquiry Committee 12 90 came to the conclusion that it was not possible to define the term "capacity to pay" in a precise manner and observed as follows: "The capacity to pay a wage cannot obviously be determined merely by the value of production.
The determination of each of a large number of charges involves difficulties, both theoretical and practical.
Interest charges, remuneration to salaried staffs and managing agents, sales commissions, profits, all these cannot for any large organised industry be taken as pre determined in a fixed manner.
Neither is it to be expected that representatives of Labour would accept without challenge the current levels of expenditure on these items apart from the consideration whether the industry has been reasonably wellmanaged or not." " That Committee was, however, of the opinion that capacity should not be measured in terms of the individual establishment and that " the main criterion should be the profit making capacity of the industry in the whole province. . . . . . . . " In determining the capacity of an industry to pay it would be wrong to take the capacity of a particular unit or the capacity of all industries in the country.
The relevant criterion should be the capacity of a particular industry in a specified region and, as far as possible, the same wages should be prescribed for all units of that industry in that region.
It will obviously not be possible for the wage fixing board to measure the capacity of each of the units of an industry in a region and the only practicable method is to take a fair cross section of that industry.
"(1) It is clear therefore that the capacity of an industry to pay should be gauged on an industry cum region basis after taking a fair cross section of that industry.
In a given case it may be even permissible to divide the industry into appropriate classes and then deal with the capacity of the industry to pay classwise.
(1) Report of the Committee on Fair Wages, pp. 13 15, paras.
21& 23.
91 As regards the measure of the capacity again there are two points of view in regard to the same: " One view is that the wage fixing machinery should, in determining the capacity of industry to pay, have regard to (i) a fair return on capital and remuneration to management; and (ii)a fair allocation to reserves and depreciation so as to keep the industry in a healthy condition.
The other view is that the fair wage must be paid at any cost and that industry must go on paying such wage as long as it does not encroach on capital to pay that wage. .
The objective is not merely to determine wages which are fair in the abstract, but to see that employment at existing levels is not only maintained but, if possible, increased.
From this point of view, it will be clear that the level of wages should enable the industry to maintain production with efficiency.
The capacity of industry to pay should, therefore, be assessed in the light of this very important consideration.
The wages board should also be charged with the duty of seeing that fair wages so fixed for any particular industry are not very much out of line with wages in other industries in that region.
Wide disparities would inevitably lead to movement of labour, and consequent industrial unrest not only in the industry concerned but in other industries." (1) The main consideration which is to be borne in mind therefore is that the industry should be able to maintain production with efficiency and the fixation of rates,of wages should be such that there are no movements from one industry to another owing to wide disparities and employment at existing levels is not only maintained, but if possible, increased.
Different tests have been suggested for measuring the capacity of the industry to pay: viz: (1) The selling price of the product; (2) The volume of the output; (3) the profit and loss in the business; (1) Report of the Committee on Fair Wages, p. 14, para.
92 (4) the rates which have been agreed to by a, large majority of the employers; (5) the amount of unemployment brought about or likely to be brought about by the imposition of the increased wage, etc.
They are however not quite satisfactory.
The real measure of the capacity of the industry to pay has been thus laid down in " Wage. , & the State " by E.M. Burns at p. 387: " It would be necessary to inquire inter alia into the elasticity of demand for the product, for on this depends the extent to which employers could transfer the burden of the increased wage to consumers.
It would also be necessary to inquire how far the enforced payment of a higher wage would lead employers to tighten up Organisation and so pay the higher wage without difficulty.
Again unless what the trade can bear be held to imply that in no circumstances should the existing rate of profit be reduced, there is no reason why attempts should not be made to discover how far it is possible to force employers to bear the burden of an increased rate without driving them out of business.
This would involve an investigation into the elasticity of supply of capital and organization ability in that particular trade, and thus an inquiry into the rate of profits in other industries, the ease with which transferences might be made, the possibility of similar wage regulation extending to other trades, and the probability of the export of capital and organising ability etc.
" The principles which emerge from the above discussion are: (1) that in the fixation of rates of wages which 93 include within its compass the fixation of scales of wages also, the capacity of the industry to pay is one of the essential circumstances to be taken into consideration except in cases of bare subsistence or minimum wage where the employer is bound to pay the same irrespective of such capacity; (2) that the capacity of the industry to pay is to be considered on an industry cum region basis after taking a fair cross section of the industry; and (3) that the proper measure for gauging the capacity of the industry to pay should take into account the elasticity of demand for the product, the possibility of tightening up the Organisation so that the industry could pay higher wages without difficulty and the possibility of increase in the efficiency of the lowest paid workers resulting in increase in production considered in conjunction with the elasticity of demand for the product no doubt against the ultimate background that the burden of the increased rate should not be such as to drive the employer out of business.
The machinery for fixations of wages: The fixation of wages may form the subject matter of reference to industrial tribunals or similar machinery under the Labour Relations Law.
But this machinery is designed for the prevention and settlement of industrial disputes which have either arisen or are apprehended, disputes relating to wages being one of such disputes.
The ensuring of an adequate wage is however a distinctive objective and it requires the setting up of some kind of wage fixing board, whether they be trade boards or general boards.
It is seldom that legislative enactments themselves fix the rates of wages, though a few such instances are known.
This method of regulation of wages has now become obsolete in view of its inflexibility. " (1) " The Constitution of Boards falls naturally into two main groups.
P. 26, para.
94 general and employers in general being represented.
This group includes among others the Industrial Welfare Commission of Texas, consisting of the Commissioner of Labour, the representative of employers of labour on the Industrial Accidents Board and the State Superintendent of Public Instruction; the Minimum Wage Board of Manitoba, composed of two representatives of employers, and two of workers (one of each to be a woman) and one disinterested person; and the South Australian Board of Industry, consist ing of a President and four Commissioners, two of whom are to be nominated by the South Australian Employers ' Federation and two by the United Trades and Labour Council of the State.
On the other hand are those Boards representative of one trade only or of part of a trade, or of a group of allied trades.
An attempt is made to obtain a body of specialists and the membership of the Board reflects this intention.
It will contain an equal number of representatives of employers and workers, together with an impartial chairman, and in some cases members of the public as well.
Of this type are the British Trade Boards; the South Australian, Victorian and Tasmanian Wages Boards; and the Advisory or Wages Boards set up by many of the Central Commissioners in the United States and Canada. " (1) The following is a brief description of the composition and working of wages boards in the United Kingdom: " In the United Kingdom where trade boards, and not general boards, have been set up, the Minister of Labour appoints a board if lie is satisfied that no adequate machinery exists in a particular trade or industry for effectively regulating the waves and that it is necessary to provide such machinery.
The trade board is a fairly large body consisting of an equal number of representatives of employers and workers with a few independent members including the Chairman.
95 are appointed on the recommendation of the associations concerned.
The trade board publishes a notice announcing its tentative proposals for the fixation or revision of a wage rate and invites objections or comments.
After a two months ' notice the board takes a final decision and submits a report to the Minister who must confirm the rate unless, for any special reasons, he returns the recommendations to the board for further consideration.
" (1) The Wage Council Act, 1945 (8 & 9 Geo.
VI, ch. 17) provides for the establishment of Wage Councils.
The Minister of Labour and National Service has the power to make a wages council order after considering objections made with respect to the draft order on behalf of any person appearing to him to be affected.
The Wage Council makes such investigation as it thinks fit and publishes notice of the wage regulation proposals and parties affected are entitled to make written representations with respect to these proposals which representations the Wage Council considers.
The Wage Council can make such further enquiries as it considers necessary and thereafter submit the proposals to the Minister either without amendment or with such amendments as it thinks fit in regard to the same.
The Minister considers these wage regulations proposals and makes an order giving effect to the proposals from such date as may be specified in the order.
Remuneration fixed by the wage regulation orders is called statutory minimum remuneration.
There are also similar provisions under the Agricultural Wage Regulation Act, 1924 (14 & 15 Geo.
V, ch. 37) in regard to the regulation of wages by Agricultural Wages Committees and the Agricultural Wages Board.
In Canada and Syria a board consists of generally 5 members, but in China the size of the board varies from 9 to 15.
In all these countries employers and workers obtain equal representation.
In Canada the boards are required to enquire into the conditions of work and wages.
25 26, para.
96 the recommendations have to be submitted to the Lieutenant Governor who issues orders. " In the United States of America some state laws prescribe that the representatives of employers and workers should be elected, but in the majority of States the administrative authorities are authorised to make direct appointments.
The boards so set up are empowered to make enquiries, to call for records, to summon witnesses and to make recommendations regarding minimum wages.
Some of the American laws lay down a time limit for the submission of proposals.
The administrative authority may accept or reject a report and refer it back for reconsideration, or form a new board for considering the matter afresh.
Some of the laws provide that if the report is not accepted, the matter must be submitted again to the same wages board or a new wages board.
" (1) The whole procedure for the determination of wages in the United States of America is described in two decisions of the Supreme Court: (i) Interstate Commerce Com.
vs Louisville & M. R. (2) and (ii) Opp.
Cotton Mills Inc. vs Administration (3).
The Fair Labour Standards Act of 1938 in the U.S.A. provides for convening by the Administrator of industry committees for each such industry which from time to time recommend the minimum rate or rates of wages to be paid by the employers.
The committee Recommends to the administrator the highest minimum wage rates for the industry which it determines, having due regard to economic and competitive conditions, will not substantially curtail employment in the industry.
In Australia, also there are provisions in various states for the appointment of wage boards the details of which we need not go into.
We may only refer to the wage board system in Victoria which was established (1) Report of the Committee on Fair Wages, p. 26, para.
(2) ; ; (3) (1940) 312 U S 126; ; 97 in 1896 as a means of directly regulating wages and working conditions in industries subject to " sweating ", and was not intended to control industrial relations as such.
" Under the Factories and Shops Act, 1924, wage boards are set up for the various industries with a ' court of Industrial Appeals to decide appeals from a determination of a wage board.
Industries for which there is no special wage board are regulated by the General Wages Board, which consists of two employers ' representatives nominated by the Victorian Chamber of Manufacturers, two employees ' representatives nominated by the Melbourne Trade Hall Council, and a chairman, agreed upon by these four members or nominated by the minister for labour.
"(1) It may be noted that in the majority of cases these wage boards are constituted of equal number of representatives of employers and employees and one or more independent persons, one of whom is appointed the chairman.
The position in India has been thus summarised: " The history of wage fixation in India is a very recent one.
There was practically no effective machinery until the last war for the settlement of industrial disputes or the fixation of wages.
The Act had limited application and the Court was not charged with the responsibilities of fixing and regulating wages.
During the war State intervention in the settlement of industrial dis putes became necessary, and numerous adjudicators were appointed to adjudicate on trade disputes under the Defence of India Rules.
The , is the first effective measure of All India applicability for the settlement of industrial disputes.
Under this Act various Tribunals have passed awards regulating wages in a number of important industries.
" The first enactment specifically to regulate wages in this country is the .
(1) Kenneth F. Walker, "Industrial Relations in Australia".
13 98 This Act is limited in its operation to the so called sweated industries in which labour is practically unorganised and working conditions are far worse than in organised industry.
Under that Act the appropriate Government has either to appoint a Committee to hold enquiries and to advise it in regard to the fixation of minimum rates of wages or, if it thinks that it has enough material on hand, to publish its proposals for the fixation of wages in the official gazette and to invite objections.
The appropriate Government finally fixes the minimum rates of wages on receipt of the recommendations of the Committee or of objections from the public.
There is no provision for any appeal.
There is an advisory board in each province to co ordinate the work of the various committees.
There is also a Central Advisory Board to co ordinate the work of provincial boards.
Complaints of non payment of the minimum rates of wages fixed by Government may be taken to claims authorities.
Breaches of the Act are punishable by criminal courts.
" (1) It is worthy of note that these committee, subcommittees, advisory board and central advisory board are to consist of persons to be nominated by the Central Government representing employers and employees in the scheduled employments, who shall be equal in number, and independent persons not exceeding one third of its total number of members; one of such independent persons shall be appointed the chairman by the appropriate Government. " Under a recent amendment to the Bombay Industrial Relations Act, 1946, wage boards can be set up in the Province of Bombay either separately for each industry or for a group of industries.
The wage board is to consist of an equal number of representatives of employers and employees and some independent persons including the Chairman, all of whom are nominated by the Government.
51, 52.
99 pay.
When a matter has been referred to a wages board, no proceedings may be commenced or continued before a conciliator, conciliation board, labour court or industrial court.
The wages boards are authorised to form committees for local areas for the purpose of making enquiries.
It is obligatory on" Government to declare the decisions of the wages boards binding, but where Government feel that it will be inexpedient on public grounds to give effect to the whole or any part of the decision, the matter has to be placed before the Provincial Legislature, the decision of which will be binding.
There is provision for the filing of appeals from the decisions of the wages boards to the Industrial Court.
" (1) Those wage boards moreover are under the superintendence of the Industrial Court.
We may also notice here Recommendation 30, being the recommendation concerning the application of Minimum Wage Fixing Machinery made by the International Labour Office, 1949 (2): (1) The minimum wage fixing machinery whatever form it may take (for instance, trade board for individual trades, tribunals), should operate by way of investigation into the relevant conditions in the trade or part of trade concerned and consultation with the interests primarily and principally affected, that is to say, the employers and workers in the trade or part of trade, whose views on all matters relating to the fixing of the minimum rate of wages should in any case be solicited and be given full and equal consideration. " (2) (a) To secure greater authority for the rates that may be fixed, it should be the general policy that the employers and workers concerned through representatives equal in number or having equal voting strength, should jointly take a direct part in the deliberations and decisions of the wage fixing body; in any case, where representation is accorded to one side, the other side should be represented on the same footing.
The wage fixing body should also include one or more independent persons whose votes can ensure (1) Report of the Committee on Fair Wages, P. 27, para.
Such independent persons should, as far as possible, be selected in agreement with or after consultation with the employers ' and workers ' representatives on the wage fixing body.
(b)In order to ensure that the employers ' and workers ' representatives shall be persons having the confidence of those whose interests they respectively represent, the employers and workers concerned should be given a voice as far as is practicable in the circumstances in the selection of their representatives, and if any organisations of the employers and workers exist these should in any case be invited to submit names of persons recommended by them for appointment on the wage fixing body.
(c)The independent person or persons mentioned in paragraph (a) should be selected from among men or women recognised as possessing the necessary qualifications for their duties and as being dissociated from any interest in the trade or part of trade concerned which might be calculated to put their impartiality in question.
" The following appraisement of the system of establishing trader boards by the committee on fair wages may be noted in this context: " A trade board has the advantage of expert knowledge of the special problems of the trade for which it has been set up and is, therefore, in a position to evolve a scheme of wages suited to the conditions obtaining in the trade.
The system, however, suffers from the limitation that there is no one authority to co ordinate the activities of the various boards with the result that wide disparities may arise between the scales sanctioned for similar industries.
The Bombay Textile Labour Inquiry Committee have stated in their report that the trade board system is the best suited to Indian conditions, particularly because the very manner of 101 functioning of trade boards is such that wages are arrived at largely by discussion and conciliation and that it is only in exceptional cases that the deciding votes of the Chairman and of the independent members have to be given." (1) It is clear therefore that a wage board relating to a, particular trade or industry constituted of equal number of representatives of employers and employees, with an independent member or members one of whom is appointed a chairman, is best calculated to arrive at the proper fixation of wages in that industry.
Principles for guidance.
If a wage board is thus appointed it is necessary that the principles for its guidance in wage fixation should also be laid down by the appointing authority.
The following passage from "Minimum Wage An International Survey I.L.O. Geneva, 1939, summarises the position as it obtains in various countries: " As will be clear from the analysis of legislation given earlier in this monograph, the fundamental principle of the Australian system, both in the Commonwealth and in the State sphere, is that of the living wage.
Even in those cases where the law contains no reference to this principle its importance is in practice great. .
As a criterion of wage regulation the principle of the living wage is however no more than a vague and general indication of the purpose of the legislation.
It leaves the broadest possible discretion in practice to the wage fixing tribunals.
In the case of the Commonwealth laws indeed the Court is left completely free to determine the principles on which the basic or living wage is to be assessed.
Under certain of the State laws specific, though limited, directions are given.
Thus in Queensland there is a statutory definition of the family unit on whose requirements the basic wage is to be calculated.
In certain cases the general emphasis on the criterion of the workers ' needs is supplemented by directions to fix wage rates that will be " fair and reasonable " and in doing so to take into account the average standard (1) Report of the Committee on Fair Wages, P. 27, para.
53, 102 of comfort being enjoyed by workers in the same locality or in similar occupations.
Such references, it may be noted, involve at least an indirect allusion to general economic conditions and the capacity of industry to pay, since the standards currently enjoyed are closely related to these factors.
In at least one case (in Queensland) the Court is specifically directed to examine the probable effects of its decisions upon industry and the community in general.
" In the United States of America the Fair Labour Standards Act of 1938 enunciates certain principles for the guidance of the industry committees which are convened by the Administrator under the Act: " The committee shall recommend to the Administrator the highest minimum wage rates for the industry which it determines, having due regard to economic and competitive conditions, will not substantially curtail employment in the industry " and further " in determining whether such classifications should be made in any industry in making such classification, and in determining the minimum wage rates for such classification, no classification shall be made, and no minimum wage rate shall be fixed, solely on a regional basis, but the industry committee and the Admini strator shall consider among other relevant factors the following.
(1) competitive conditions as affected by transportation, living, and production cost; (2) the wages established for work of like or comparable character by collective labour agreements negotiated between employers and employees by representatives of their own choosing; and (3) the wages paid for work of like or comparable character by employers who voluntarily maintain minimum wage standards in the industry.
No classification shall be made under this section on the basis of age or sex.
" The normal rule however is to leave a wide discretion to the tribunals responsible for the fixation of wages inasmuch as they being constituted of equal numbers of representatives of the employers and the 103 employees are best calculated to appreciate the whole position and arrive at correct results.
Procedure to be followed : The procedure to be followed by the wage boards is equally fluid.
The wage councils and the central coordinating committees appointed under the Wages Council Act, 1945, as also the agricultural wages committees and the agricultural boards appointed under the Agricultural Wages Regulation Act, 1924, in the United Kingdom each of them subject, of course, to the regulations which might be made by the minister as to the meetings and procedure of these bodies including quorum, etc., is entitled to regulate its procedure in such manner as it thinks fit.
The wage boards in Australia " are called together informally by the chairman upon request of either party.
, No legal formalities or procedures need be complied with.
Meetings of wage boards are held in the offices of the Department of Labour an officer of the department acting as secretary.
" (1) The wage boards thus constituted are left to regulate their procedure in such manner as they think fit and it is not necessary that any regulation should be made in regard to the procedure to be adopted by them in the conduct of the enquiry before them.
There are, however, a number of safeguards which have been provided in order to protect the interests of the parties concerned.
The wages councils established by the Minister of Labour and National Services in the United Kingdom are so established after considering objections from persons appearing to be affected thereby and wage regulation orders are also recommended by these councils after considering the written representations in regard to their proposals which are duly published in the manner prescribed.
These recommendations are again in their turn considered by the minister and it is only after the minister is satisfied that these wage regulation orders are promulgated, the minister having the power in proper cases to send the same back for reconsideration by the wage (1) Kenneth F. Walker " Industrial Relations in Australia ", P. 24.
104 councils.
The reports of the industry committees convened by the administrator in the United States of America are subject to scrutiny by the administrator who gives notice to all interested persons and gives them an opportunity of being heard in regard to the same.
it is only after this is done that he approves and carries into effect the recommendations in these reports on his being fully satisfied that they are proper and if he disapproves of these recommendations he again refers the matter to such committees for further considerations and recommendations.
The orders of the administrator are again subject to review in the Circuit Court of Appeals in the United States and further revision in the U. section Supreme Court upon certiorari or certification.
As regards the determinations of the special boards in some of the States of the Commonwealth of Australia appeals lie against the same to the court of industrial appeals and they are also challengeable before the High Court.
Such safeguards are also provided in our .
Here the work of the committees, sub committees and advisory committees is coordinated by advisory boards and the work of the advisory boards is coordinated by the central advisory board which advises the Central Government in the matter of the fixing of the minimum rates of wages and other matters under the Act and it is after the receipt of such advice from the Central advisory board by the appro priate Government that the latter takes action in the matter of fixation or revision of minimum rates of wages.
Where, however, the appropriate Government propose to fix the minimum rates of wages without reference to the various committees, or sub committees, it publishes its proposals by notification in the Official Gazette for the information of persons likely to be affected thereby and fixes the minimum rates of wages only after considering the representations received by it from the interested parties.
105 The wage boards appointed by the amended Bombay Industrial Relations Act, 1946, are subject to the appellate jurisdiction as well as supervisory jurisdiction of the industrial courts in the State and parties affected by their decisions are entitled to file appeals against the same in the industrial courts.
If these safeguards are provided against the determinations of the wage boards, it will be really immaterial what procedure they adopt in the course of the proceedings before them.
Charactero the functions performed: There is considerable divergence of opinion in regard to the character of the functions performed by these wage boards and a controversy has arisen as to whether the functions performed by them are administrative, judicial or quasi judicial or legislative in character.
The question assumes importance on two grounds: viz., (i) whether the decisions of the wage boards are open to judicial review and (ii) whether the principle of audi alteram partem applies to the proceedings before the wage boards.
If the functions performed by them were administrative or legislative in character they would not be subject to judicial review and not only would the not be amenable to the writs of certiorari or prohibition under articles 32 and 226 of the ' Constitution, they would also not be amenable to the exercise of special leave jurisdiction under article 136.
Their decisions moreover would not be vulnerable on the ground that the principle of audi alteram partem, i. e., no man shall be condemned unheard, was not followed in the course of the proceedings before them I4 106 and the procedure adopted by them was contrary to the principles of natural justice.
It is well settled that writs of certiorari and prohibition will lie only in respect of judicial or quasijudicial acts: " the orders of certiorari and prohibition will lie to bodies and persons other than courts stricto sensu.
Any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, is subject to the controlling jurisdiction of the High Court of justice, exercised by means of these orders." (1).
The principle of audi alteram partem also applies only to judicial or quasi judicial proceedings: As was observed by the Judicial Committee of the Privy Council in Patterson vs District Commissioner of Accra (2): "On this part of the case, counsel suggested that the provisions of section 9 were in the nature of a " mass punishment " of the inhabitants of the proclaimed district and he relied on the well known passage from the judgment of the court in Bonaker vs Evans (3), " no proposition can be more clearly established than that a man cannot incur the loss of liberty or property for an offence by a judicial proceeding until he has had a fair opportunity of answering the charge against him, unless indeed the legislature has expressly or impliedly given an authority to act, without that necessary preliminary.
This is laid down in there a number of cases are mentioned] and many other cases, concluding with that of Capel vs Child (4) in which Bayley B. says he knows of no case in which you are to have a judicial proceeding, by which a man is to be deprived of any part of his property, without his having an opportunity of being heard. .
Their Lordships have already indicated that, in their view, the section does not contemplate any judicial proceeding, and thus a decision against the appellant does not infringe the principles stated in Bonaker vs Evans." (3) (1) Halsbury 's Laws of England, 3rd Edn., Vol. 11, at p. 55,para. 114.
(2)[1948] A.C. 341.
(4) (1832) 2 C. (3) 16 Q.B. 162, 171.J. 558.
107 The distinction between a legislative and a judicial function is thus brought out in Cooley 's Constitutional Limitations, 8th Edn., Vol. 1, ch.
V under the caption of " the powers which the legislative department may exercise ", at p. 185: " On general principles, therefore, those inquiries, deliberations, orders, and decrees, which are peculiar to such a department, must in their nature be judicial acts.
The former decide upon the legality of claims and conduct, and the latter make rules upon which, in connection with the constitution, those decisions should be founded.
It is the province of judges to determine what is the law upon; existing cases.
In fine, the law is applied by one, and made by the other.
But to do the last to pass new rules for the regulation of new controversies is in its nature a legislative act; and if these rules interfere with the past, or the present, find do not look wholly to the future, they violate the definition of a law as " a rule of civil conduct " because no rule of conduct can with consistency operate upon what occurred before the rule itself was promulgated.
" It is the province of judicial power, also to decide private disputes between or concerning persons; but of legislative power to regulate public concerns, and to make laws for the benefit and welfare of the State.
Nor does the passage of private statutes, when ' lawful, are enacted on petition, or by the consent of all concerned; or else they forbear to interfere with past translations and vested rights.
" The following classic passage from the opinion of Holmes, J., in Prentis vs Atlantic Coast Line Co. Ltd., (1), is very apposite in this context: " A judicial inquiry investigates, declares, and enforces liabilities as they stand on present or past facts and under laws supposed already to exist.
That is its purpose and end.
Legislation, on the other hand (1) ; , 226 227 ; 53 L. Ed. 15o, 158, 159.108 looks, to the future and changes existing conditions by making a new rule, to be applied thereafter to all or some part of those subject to its power.
That question depends not upon the character of the body, but upon the character of the proceedings.
The nature of the final act determines the nature of the previous enquiry." (See also Mitchell Coal & Coke Co. vs Pennsylvania R. Co. (1) and Louisville & Nashville Railroad Company vs Green Garrett (2) A practical difficulty however arises in thus characterising the functions as legislative or judicial because the functions performed by administrative agencies do not fall within watertight compartments.
Stason and Cooper in their treatises on " Cases and other materials on Administrative Tribunals" point out: One of the great difficulties of properly classifying a particular function of ail administrative agency is that frequently and, indeed; typically a single function has three aspects.
It is partly legislative, partly judicial and partly administrative.
Consider, for example, the function of rate making.
It has sometimes been characterised as legislative, sometimes as judicial.
In some aspects, actually, it involves merely executive or administrative powers.
For example, where the Interstate Commerce Commission fixes a tariff of charges for any railroad, its function is viewed as legislative.
But where the question for decision is whether a shipment of a mixture of coffee and chicory should be charged the rate established for coffee or the lower rate established for chicory, the question is more nearly judicial.
On the other hand, where the problem is merely the calculation of the total freight charges due for a particular shipment, the determination can fairly be described as an administrative act." (1) ; ; 571.
Ed. 1472, 1482.
(2) ; ; , 239.
109 This difficulty is solved by the Court considering I in a proper case whether the administrative agency performs a predominantly legislative or judicial or administrative function and determining its character accordingly.
(Vide: Village of Saratoga Springs vs Saratoga Gas, Electric Light & Power Co. (1), and People ex rel.
Central Park, North ((., East River R. Co.
Willcox (2).
Robson 's Justice and Administrative Law, 3rd Edn.
, states at p. 608 (foot note): " An example of a subordinate body of this type is a Wage Council, which is not an administrative tribunal but a subordinate legislative authority.
" Griffith 's Principles of Administrative Lam, contains the following passage at p. 39: " The subordinate legislation which occupies more space than any other subject relates to Wages Councils.
By the Wages Councils Act, 1945, the Minister of Labour and National Service was empowered to establish by order Wages Councils to operate in industries and trades.
Six such orders were made in 1947.
Wages Councils, under the Act, may submit to the Minister detailed "wages regulations proposals" for fixing remuneration and making provisions for holidays.
The Minister then makes orders embodying and giving effect to these proposals.
In 1947, fifty five such orders were made, covering thirty one different trades.
" Barbare Wootton in " Social Foundations of Wage Policy; Modern Methods of Wage Determination makes the following observations at p. 88: " Both arbitration tribunals and courts of inquiry share with one important difference the tripartite structure of statutory wage councils; they are composed of equal numbers of representatives of employers and of workers under an independent chairman together with (in some cases) additional independent members.
(2) (1909) 194 New York 383.
110 representative members of the latter are chosen from within the industry concerned, whereas employers and workers on arbitration tribunal come from outside the industry whose disputes they have to resolve; if in any case technical knowledge of a particular industry is required, this is normally supplied by the help of assessors who take no part in the final award.
This difference between the constitution of wage boards and that of arbitration tribunals clearly implies a corresponding distinction between the legislative function of the former and the judicial function of the latter.
The wages board drafts laws for its own industry, whereas the arbitration court gives judgment on matters submitted by others.
The choice of industrial arbitrators unconnected with the industries the merits of whose claims they must pledge, is evidently intended as a guarantee that they, like other judges, will be free from bias arising from personal interest ".
The High Court of the Commonwealth of Australia has taken a similar view in Australian Boot Trade Employees Federation vs Whybrow & Co. (1), in discussing an award made by the wages board empowered by a State statute to fix minimum rates of wages.
The test applied for determining the character of that function may be stated in the words of Issacs J. at p. 318: " If the dispute is as to the relative rights of parties as they rest on past or present circumstances, the award is in the nature of a judgment, which might have been the decree of an ordinary judicial tribunal acting Linder the ordinary judicial power.
There the law applicable to the case must be observed.
If, however, the dispute is as to what shall in the future be the mutual rights and responsibilities of the partiesin other words, if no present rights 'are asserted or denied, but a future rule of conduct is to be prescribed, thus creating new rights and obligations, with sanctions for non conformity then the determination that so prescribes, call it an award, or arbitration, determination, or decision or what you will, is essentially of a legislative character, and limited only by the law which authorises it.
If, again, there are neither present (1)(1910) ; , 318.
111 rights asserted, nor a future rule of conduct prescribed, but merely a fact ascertained necessary for the practical effectuation of admitted rights, the proceeding, though called an arbitration, is rather in the nature of an appraisement or ministerial act.
" As against this trend of opinion it has been urged that the decisions of the Wage Councils in the shape of wage regulation proposals submitted to the minister in Great Britain under the Wage Councils Act derive their sanction from the orders made by the minister giving effect to these proposals; but for such orders of the minister they would merely remain the determinations of the Wage Councils and would not acquire any legislative character.
In regard to the determinations of the wage boards empowered by the statutes to fix the minimum rates of wages in the Commonwealth of Australia also it is pointed out that under the provisions of the Factories and Shops Act, 1905, of Victoria "Every determination of any Special Board shall unless and until so quashed. . have the like force, validity and effect as if such determination had been enacted in this Act. . . thus investing the deter mination of the boards with the characteristics of a legislative act.
Reference is made to the provisions of the Fair Labour Standards Act of 1938 in the United States of America, where the wages orders ultimately approved by the Administrator are subject to judicial review in the Circui Courts of Appeals or in the United States courts of appeals of the particular ]District and also subject to further review by the Supreme Court of the United States of America on certification.
The , in our country also provides for the committees, sub committees, advisory sub committees, advisory boards and central advisory boards for fixing minimum rates of wages and the recommendations of these committees are forwarded to the appropriate Government who by notification in the official gazette fix minimum rates of wages in respect of each scheduled employment.
The notification is a token of the approval by the appropriate Government 112 of these recommendations of the Committees and invests them with legal sanction.
The recent amendment of the Bombay Industrial Relations Act, 1946, empowers the State Government by notification in the official Gazette to constitute for one or more industries a wage board for the State and enjoins these wage boards to follow the same procedure as the Industrial Court in respect of arbitration proceedings before it and appeals from the decisions of these wage boards lie to the Industrial Courts which has powers of superintendence and control over these wage boards and it cannot, under the circumstances be urged that these wage boards perform any legislative functions.
These are the two opposite points of view which have been pressed before us and it is impossible to state that the functions performed by the wage boards are necessarily of a legislative character.
If that were the only ' consideration the dictum of Justice Holmes cited above would apply and the functions performed by these wage boards would be invested with a legislative character.
This is however not all, and regard must be had to the provisions of the statutes constituting the wage boards.
If on a scrutiny of the provisions in regard thereto one can come to the conclusion that they are appointed only with a view to determine the relations between the employers and the employees in the future in regard to the wages payable to the employees there would be justification for holding that they were performing legislative functions.
If, however, on a consideration of all the relevant provisions of the statutes bringing the wage boards into existence, it appears that the powers and procedure exercised by them are assimilated to those of Industrial Tribunals or their adjudications are subject to judicial review at the hands of higher Tribunals exercising judicial or quasi judicial 113 functions, it cannot be predicated that these wage boards are exercising legislative functions.
Whether they exercise these functions or not is thus to be determined by the relevant provisions of the statutes incorporating them and it would be impossible to lay down any universal rule which would help in the ' determination of this question.
Even if on the construction of the relevant provisions of the statute we come to the conclusion that the functions performed by a particular wage board are not of a legislative character, the question still remains whether the functions exercised by them are administrative in character or judicial or quasi judicial in character, because only in the latter event would their decision be amenable to the writ jurisdiction or to the special leave jurisdiction above referred to.
There is no doubt that these wage boards are not exercising purely judicial functions.
They are not courts in the strict sense of the term and the functions which they perform may at best be quasi judicial in character.
The fact that they are administrative agencies set up for the purpose of fixation of wages do not necessarily invest their functions with an administrative character and in spite of their being administrative bodies they can nevertheless be exercising quasi judicial functions if certain conditions are fulfilled.
The position in law has been thus summarised in Halsbury 's Laws of England, 3rd Ed., Vol. 11, at pp.
55 56: " The orders of certiorari and prohibition will lie to bodies and persons other than courts stricto sensu.
Any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, is subject to the controlling jurisdiction of the High Court of Justice, exercised by means of these orders.
It is not necessary that it should be a court; an administrative body in ascertaining facts or law may be under a duty to act judicially notwithstanding that its proceedings have none of the formalities of, and are not in accordance 15 114 with the practice of, a court of law.
It is enough if it is exercising, after hearing evidence, judicial functions in the sense that it has to decide on evidence between a proposal and an opposition.
A body may be under a, duty, however, to act judicially (and subject to control by means of these orders) although there is no form of lies inter partes before it; it is enough that it should have to determine a question solely on the facts of the particular case, solely on the evidence before it, apart from questions of policy or any other extraneous considerations." " Moreover an administrative body, whose decision is actuated in whole or in part by questions of policy, may be under a duty to act judicially in the course of arriving at that decision.
Thus, if in order to arrive at the decision, the body concerned had to consider proposals and objections and consider evidence, if at some stage of the proceedings leading up to the decision there was something in the nature of a lies before it, then in the course of such consideration and at that stage the body would be under a duty to act judicially.
If, on the other hand, an administrative body in arriving at its decision has before it at no stage any form of lis and throughout has to consider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any time to act judicially." (See also the decision of this Court in Nagendra Nath Bora vs Commissioner of Hills Division and Appeals, Assam (1).
In order therefore to determine whether an administrative body is exercising a quasi judicial function, it would be necessary to examine in the first instance, whether it has to decide on evidence between a proposal and an opposition and secondly, whether it is under a duty to act judicially in the matter of arriving at its decision.
The question whether or not there is a duty to act judicially must be decided (1) ; 115 in each case in the light of the circumstances of the particular case and the construction of the particular statute, with the assistance of the general principles already set out." (Ibid, para. 115).
The decision in R. vs Manchester Legal Aid Committee Ex parte R. A. Brand & Co. Ltd. (1), lays down when an administrative body can be said to have a duty to act judicially: " The true view, as it seems to us, is that the duty to act judicially may arise in widely different circumstances which it would be impossible, and, indeed, inadvisable, to attempt to define exhaustively.
Where the decision is that of a court, then, unless, as in the case, for instance, of justices granting excise licences, it is acting in a purely ministerial capacity, it is clearly under a duty to act judicially.
When, on the other hand, the decision is that of an administrative body and is actuated in whole or in part by questions of policy, the duty to act judicially may arise in the course of arriving at that decision.
Thus, if, in order to arrive at the decision, the body concerned had to consider proposals, and objections and consider evidence, then there is the duty to act judicially in the course of that inquiry.
That, as it seems to us, is the true basis of the decision in Errington vs Minister of Health (2). . . . . . . (See also Rex vs The London Country Council: Ex parte Entertainments Protection Association Ld.
(3). . . " Further, an administrative body in ascertaining facts or law may be under a duty to act judicially not withstanding.that its proceedings have none of the formalities of and are not in accordance with the practice of a court of law." Vide Board of Education vs Rice (4) " More recently it has been held by this Court on ,many occasions that certiorari will lie to quash the decision of rent control tribunals, and this notwith (1) , 428, 429, 430.
(2) (3) , 233 4.
(4) , 182.
116 standing that such a tribunal is entitled to act on its own knowledge and information, without evidence unless submitted, and without a hearing except on notice from a party; see Rex vs Brighton.
and Area Rent Tribunal (1).
" If, on the other hand, an administrative body in arriving at its decision at no stage has before it any form of lis and throughout has to consider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any stage to act judicially: Compare Franklin vs Minister of Town and Country Planning." (2).
It is strenuously urged before us by learned counsel for the petitioners that if the functions which the wage boards perform in the matter of fixation of the rates of wages are considered in the light of the principles cited above, it would appear that as between the employers, on the one hand, and the employees, on the other, there is a proposition and opposition.
The employees demand that a particular statutory minimum wage should be fixed and the scales of wages should also be determined in a particular manner.
The employers on their part would maintain that the status quo should continue or that, in any event, much less than the statutory minimum wage demanded by the employees should be fixed and also that the scales of wages should be fixed on a gradation which is much less than or in any event, different from that suggested by the employees.
The employees may say that certain factors which are material in the fixation of wages and which affect the employees should be considered as determinative of the rates of wages while the importance of these factors may be sought to be minimized by the employers who might put forward certain other factors affecting them, in their turn, as determinative of those rates, the importance of which may be sought to be minimized by the employees on the other hand.
All these would create proposition and opposition on both sides with the result that a lis would arise between them.
The determination of these (1) [1950] 2 K.B 410.
(2) ; , 102.
117 points at issue would have to be ' arrived at by the wage boards and the wage boards could only do so after collecting proper data and materials and hearing evidence in that behalf.
If the functions performed by the wage board would thus consist of the determination of the issues as between a proposition and an opposition on data and materials gathered by the board in answers to the questionnaire issued to all parties interested and the evidence led before it, there is no doubt that there would be imported in the proceedings of the wage board a duty to act judicially and the functions performed by the wage board would be quasijudicial in character.
It has been on the other hand urged before us by the learned counsel for the respondents that the very constitution of the wage boards is against the fundamental principle of jurisprudence which postulates that no man should be a judge in his own cause.
It was laid down by the House of Lords in Franklin vs Minister of Town and Country Planning (1) at p. 103: " My Lords, I could wish that the use of the word bias " should be confined to its proper sphere.
Its proper significance, in my opinion, is to denote a departure from the standard of even handed justice which the law requires from those who occupy judicial office, or those who are commonly regarded as holding a quasi judicial office, such as an arbitrator.
The reason for this clearly is, that having to adjudicate as between two or more parties, he must come to his adjudication with an independent mind, without any inclination or bias towards one side or other in the dispute.
" The representatives of the employers and the representatives of the employees who are appointed on the wage board along with an independent chairman and some other members, it is submitted, would necessarily have a bias in favour of those whom they represent and therefore would not be competent to be judges and the wage board thus constituted could hardly be called a judicial body.
There is considerable force in these contentions, but (1) ; ,102.
118 we do not feel called upon to express our final opinion on this question in view of the conclusion which we have hereafter reached in regard to the ultra vires character of the decision of the Wage Board itself.
We are however bound to observe that whatever be the character of the functions performed by the wage boards whether they be legislative or quasi judicial, if proper safeguards are adopted of the nature discussed earlier, e. g., provision for judicial review or the adopting of the procedure as in the case of the recommendations of the wage councils in the United Kingdom, or the reports of the advisory committees which come to be considered by the administrator under the Fair Labour Standards Act of 1938 in the United States of America, no objection could ever be urged against the determinations of the wage boards thus arrived at on the score of the principles of natural justice having been violated.
We now proceed to consider how far the impugned Act violates the fundamental rights of the petitioners.
Re : Article 19 (1) (a).
it has, however, got to be read along with article 19 (2) which lays down certain constitutionally permissible limitations on the exercise of that right. article 19 (2) as substituted by the Constitution (First Amendment) Act, 1951, with retrospective effect reads as under: " Nothing in sub clause (a) of clause (1) shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right conferred by the said sub clause in the interests of the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to contempt of court, defamation or incitement to an offence.
" If any limitation on the exercise of the fundamental right under article 19 (1) (a) does not fall within the four corners of article 19 (2) it cannot be upheld.
The General Meaning of Freedom: To be free is to have the use of one 's powers of action (i) without restraint or control from outside and (ii) with whatever means or equipment the action requires.
To be free is essentially to be free from something some arbitrary impediment to action, some dominating power or authority.
And so long as it can be taken for granted that the unhindered person has all he needs to act withwhich is usually the case the negative meaning remains the chief element of the conception. " But since freedom is for action, and action is for an end, the positive kernel of freedom lies in the ability to achieve the end; to be free means to be free for some accomplishment.
And this implies command of the means to achieve the end.
Unless the equipment necessary for effective action is at hand, unrestraint may be a mockery of freedom. . .
Unrestraint without equipment is not liberty for any end which demands equipment." (pp.
54 55).
Resulting Conception of Freedom of the Press: " The emerging conception of freedom of the press may be summarised as follows,% As with all freedoms, press freedom means freedom from and freedom for.
A free press is free from compulsions from whatever source, governmental or social, external or internal.
From compulsions, not from pressures; for no press can be free from pressures except in a moribund society empty of contending forces and beliefs.
These pressures, however, if they are persistent and distorting as financial, clerical, popular, institutional pressures may become approach compulsion; and something is then lost from effective 120 freedom which the press and its public must unite to restore.
, " A free press is free for the expression of opinion in all its phases.
It is free for the achievement of those goals of press service on which its own ideals and the requirements of the community combine and which existing techniques make possible.
For these ends it must have full command of technical resources, financial strength, reasonable access to sources of information at home and abroad, and the necessary facilities for bringing information to the national market.
The press must grow to the measure of this market.
There is paucity of authority in India on the nature, scope and extent of this fundamental right to freedom of speech and expression enshrined in article 19 (1) (a) of the Constitution.
The first case which came up for decision before this court was that of Ramesh Thaper vs The State of Madras (1).
It was a case of a ban on the entry and circulation of the appellant 's journal in the State of Madras under the provisions of section 9 (1 A) of the Madras Maintenance of Public Order Act, 1949, and it was observed by Patanjali Sastri J. (as he then was) at p. 597: " There can be no doubt that freedom of speech and expression includes freedom of propagation of ideas, and that freedom is ensured by the freedom of circulation.
" Liberty of circulation is as essential to that freedom as the liberty of publication.
Indeed, without circulation the publication would be of little value.": Ex parte Jackson (2).
See also Lovell V. City of Griffin (3).
Brij Bhushan & Anr.
vs The State, of Delhi (4) was the next case which came up for decision before this Court and it concerned the constitutionality of section 7 (i) (e) of the East Punjab Public Safety Act, 1949.
It was a provision for the imposition of pre censorship on a journal.
Patanjali Sastri J. (as he then was) (1) [1950] S.C.R 594, 597.
(2) (1877)96 U S 727 ; ; (3) (1937) 303 U S 444 ; ; (4) ; , 6o8.
121 who delivered the majority judgment observed at p. 608: " There can be little doubt that the imposition of precensorship on a journal is a restriction on the liberty of the press which is an essential part of the right to freedom of speech and expression declared by article 19 (1) (a).
As pointed out by Blackstone in his Commentaries " the liberty of the Press consists in laying no previous restraint upon publications, and not in freedom from censure for criminal matter when published.
(Blackstone 's Commentaries, Vol.
IV, pp. 151, 152).
" These are the only two decisions of this Court which involve the interpretation of article 19 (1) (a) and they only lay down that the freedom of speech and expression includes freedom of propagation of ideas which freedom is ensured by the freedom of circulation and that the liberty of the press is an essential part of the right to freedom of speech and expression and that liberty of the press consists in allowing no previous restraint upon publication.
There is however, a considerable body of authority to be found in the decisions of the Supreme Court of the United States of America bearing on this concept of the freedom of speech and expression.
vs Bombay Co. 16 122 Ltd. (1) and State of Bombay vs R.M.D. Chamarbaugwala (2).
Grosjean vs American Press Co. (3), was a case where a statute imposed a license tax on the business of publishing advertisements and it was observed at p. 668: " The evils to be prevented were not the censorship of the press merely, but any action of the Government by means of which it might prevent such free and general discussion of public matters as seems absolutely essential to prepare the people for an intelligent exercise, of their rights as citizens." (Vide Cooley 's Constitutional Limitations, 8th Edn., Vol. 11, p. 886).
The statute was there struck down as unconstitutional because in the light of its history and of its present setting it was seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public was entitled in virtue of the constitutional guarantees.
The following passage from the dissenting opinion in The Associated Press vs The National Labour Relations Board (4) is also instructive: " If the freedom of the press does not include the right to adopt and pursue a policy without governmental restriction, it is a misnomer to call it freedom.
" It was also observed there at p. 965: " Due regard for the constitutional guarantee requires that the publisher or agency of the publisher of news shall be free from restraint in respect of employment in the editorial force.
" Schneider vs Irvingtor (5) was concerned with the effect of the Municipal Regulations against littering of (1) [1952] S.C. R. I I 12, I 120.
(2) 4, 918.
(3) ; , 249; go L. Ed. 66o, 668.
(4) 136; ; 963.
(5) (1939) 308 U S 147; ; , 164.
123 streets.
In the course of its decision the Court made the following observations at p. 164: " This court has characterized the freedom of speech and that of the press as fundamental personal rights and liberties.
The phrase is not an empty one and was not lightly used.
It stresses, as do many opinions of this court, the importance of preventing the restriction of enjoyment of these liberties.
" Non interference by the State with this right was emphasized in Thomas vs Collins (1) at p. 448: " But it cannot be the duty, because it is not the right, of the State to protect the public against false doctrine.
The very purpose of the First Amendment is to foreclose public authority from I assuming a guardianship of the public mind through regulating the press, speech, and religion.
In this field every person must be his own watchman for truth, because the forefathers did not trust any Government to separate the true from the false for us. . .
In 93 L. Ed.at p. 1151 is given a summary of the decisions of the Supreme Court of the United States of America on this subject under the heading " The Supreme Court and the right of Free Speech and Press " and it contains at p. 1153 the following passage under the caption " Right in General : Freedom from Censorship and Punishment ": " The freedom of speech and of press are fundamental personal rights & liberties, the exercise of which lies at the foundation of free Government by free men. .
The very purpose of the first Amendment is to foreclose public authority from assuming a guardianship of the public mind through regulating the press, speech, and religion; it rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public." The dissenting opinion of Douglas J. in Beauharnais vs Illinois(2) contains the following at p. 943: (1) (1944) 323 U S 516, 545 ; 89 L. Ed 430, 448.(2) , 285; ; , 943.
There is room for regulation of the ways and means of invading privacy.
No such leeway is granted the invasion of the right of free speech guaranteed by the First Amendment.
Until recent years that had been the course and direction of constitutional law.
Yet recently the Court in this and other cases has engraved the right of regulation onto the First Amendment by placing in the hands of the legislative branch the right to regulate " within reasonable limits " the right of free speech.
This to me is an ominous and alarming trend.
The free trade in ideas which the framers of the Constitution visualised disappears.
In its place there is substituted a new orthodoxy an orthodoxy that changes with the whims of the age or the day, an orthodoxy which the majority by solemn judgment proclaims to be essential to the safety, welfare, security, morality, or health of Society.
Free speech in the constitutional sense disappears.
Limits are drawn limits dictated by expediency, political opinion, prejudices or some other desideratum of legislative action.
" It is clear from the above that in the United States of America: (a) the freedom of speech comprehends the freedom of press and the freedom of speech and press are fundamental personal rights of the citizens; (b)the freedom of the press rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public; (c) Such freedom is the foundation of free Government of a free people; (d)the purpose of such a guarantee is to prevent public authorities from assuming the guardianship of the public mind and (e)freedom of press involves freedom of employment or non employment of the necessary means of exercising this right or in other words, freedom from restriction in respect of employment in the editorial force.
This is the concept of the freedom of speech and expression as it obtains in the United States of America 125 and the necessary corollary thereof is that no measure can be enacted which would have the effect of imposing a pre censorship, curtailing the circulation or restricting the choice of employment or unemployment in the editorial force.
Such a measure would certainly tend to infringe the freedom of speech and expression and would therefore be liable to be struck down as unconstitutional.
The press is however, not immune from.
It was observed in Grosjean vs American Press Co. (1): " It is not intended by anything we have said to suggest that the owners of newspapers are immune from any of the ordinary forms of taxation for support of the Government; But this is not an ordinary form of tax but one single in kind with a long history of hostile misuse against the freedom of the press.
The newspapers, magazines and other journals of the country, it is safe to say, have shed and continue to shed, more light on the public and business affairs of the nation than any other instrumentality of publicity; and since informed public opinion is the most patent of all restraints upon misgovernment, the suppression or abridgment of the publicity afforded by a free press cannot be regarded otherwise than with gave concern.
The tax here involved is bad not because it takes money from the pockets of the appellees.
If that were all, a wholly different question would be presented.
It is bad: Because, in the light of its history and of its present setting, it is seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public is entitled in virtue of the constitutional guarantees.
A free press stands as one of the great interpreters between the Government and the people.
To allow it to be fettered is to fetter ourselves.
" (1) (1935) 297 U S 233, 249; ; , 668.
126 In The Associated Press vs National Labour Relations Board (1), it was held that the freedom of the press safeguarded by the First Amendment was not abridged by the application in the case of an editor employed by the Associated Press to determine the news value of the items received and to rewrite them for transmission to members of the association throughout the United States who must function without bias and prejudice, of the provisions of the National Labour Relations Act which inhibited an employer from discharging an employee because of union activities.
It was further observed at p. 960: " So it is said that any regulation protective of union activities, or the right collectively to bargain on the part of such employees, is necessarily an invalid invasion of the freedom of the press.
We think that the contention not only has no relevance to the circumstances of the instant case but is an unsound, generalization." Murdock vs Pennsylvania (2), was a case of a license fee for the sale of religious books and Mr. Justice Frankfurter in his dissenting opinion at p. 1311 observed: " A tax upon newspaper publishing is not invalid simply because it falls upon the exercise of a constitutional right.
Such a tax might be invalid if it invidiously singled out newspaper publishing for bearing the burden of taxation or imposed upon them in such ways as to encroach on the essential scope of a free press.
If the Court could justifiably hold that the tax measures in these cases were vulnerable on that ground, I would unreservedly agree.
But the Court has not done so, and indeed could not. " In Oklahoma Press Publishing Co. vs Walling (1), and in Mabee vs White Planis Publishing Co. (4) the Federal Fair Labour Standards Act was held applicable to the press and it was observed in the former case at p. 621: " Here there was no singling out of the press for treatment different from that accorded other business in general.
Rather the Act 's purpose was to place (1) ; ,136; ; , 963.
(2) (1942) 319 U S 105, 136 ; ; , 1311.
(3) ; 194; go L. Ed. 614, 621.
Nothing in the Grosjean case (1), forbids Congress to exempt some publishers because of size from either a tax or a regulation which would be valid if applied to all.
" The Constitution of the United States of America Analysis and Interpretation Prepared by the Legislative Reference Service, Library of Congress, summarises the position thus at p. 792 : " The Supreme Court, citing the fact that the American Revolution " really began when. . . that Government (of England) sent stamps for newspaper duties to the American colonies " has been alert to the possible uses of taxation as a method of suppressing objectionable publications.
With respect to license or privilege taxes, however, they stand on a different footing.
Their privilege is granted by the Constitution and cannot be withheld by either State or Federal Government.
" The application to newspapers of the Anti Trust Laws, the National Labour Relations Act, or the Fair Labour Standards Act, does not abridge the freedom of the press.
" The Laws regulating payment of wages have similarly been held as not abridging the freedom of speech and expression and the following observations in the same publication (at p. 988) in regard to the Minimum Wage Laws are apposite: "MINIMUM WAGE LAWS: The theory that a law prescribing minimum wages for women and children violates due process by impairing freedom of contract was finally discarded in 1937 (West Coast Hotel Co. vs Parrish, ; The current theory of the Court, particularly when labor is the beneficiary of legislation, was recently stated by Justice Douglas for a majority of the Court, in the following terms: " Our recent decisions make plain that we do not sit as a super legislature to weigh the wisdom of legislation nor (1) (1935) 297 'U section 233.
But the state legislatures have constitutional authority to experiment with new techniques; they are entitled to their own standard of the public welfare; they may within extremely broad ,limits control practice; in the business labor field, so long as specific constitutional prohibitions are not violated and so long as conflicts with valid and controlling federal laws are avoided (Day Brite Lighting, Inc. vs Missouri, 342 U. section 421, 423 (1952) ).
" While therefore no such immunity from the general laws can be claimed by the press it would certainly not be legitimate to subject the press to laws which take away or abridge the freedom of speech and expression or which would curtail circulation and thereby narrow the scope of dissemination of information, or fetter its freedom to choose its means of exercising the right or would undermine its independence by driving it to seek Government aid.
Laws which single out the press for laying upon it excessive and prohibitive burdens which would restrict the circulation, impose a penalty on its right to choose the instruments for its exercise or to seek an alternative media, prevent news papers from being started and ultimately drive the press to seek Government aid in order to survive, would therefore be struck down as unconstitutional.
Such laws would not be saved by article 19(2) of the Constitution.
This Court had occasion to consider the scope of article 19(2) in Brij Bhushan & Anr.
vs The State of Delhi (1), where Fazl Ali J. in his dissenting judgment observed at p. 619.
" It must be recognized that freedom of speech and expression is one of the most valuable rights guaranteed to a citizen by the Constitution and should be jealously guarded by the Court.
It must also be recognised that free political discussion is essential for the proper functioning of a democratic government, and the tendency of the modern jurists is to deprecate censorship though they all agree that " liberty of the press " is not to be confused with its " licentiousness (1) [1950) S.C.R. 605, 608.
129 But the Constitution itself has prescribed certain limits and this Court is only called upon to see whether a particular case comes within those limits.
" Unless, therefore, a law enacted by the Legislature comes squarely within the provisions of article 19 (2) it would not be saved and would be struck down as ' unconstitutional on the score of its violating the fundamental right of the petitioners under article 19 (1) (a).
In the present case it is obvious that the only justification for the enactment of the impugned Act is that it imposes reasonable restrictions in the interests of a section of the general public, viz., the working journalists and other persons employed in the newspaper establishments.
It does not fall within any of the categories specified in article 19 (2), viz., " In the interests of the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to.
contempt of court, defamation or incitement to an offence.
" Article 19 (2) being thus out of the question the only point that falls to be determined by us is whether the provisions of the impugned Act in any way take away or abridge the petitioners ' fundamental right of freedom of speech and expression.
It was contended before us by the learned Attorney General that it was only legislation directly dealing with the right mentioned in article 19 (1) (a) that was protected by it.
If the legislation was not a direct legislation on the subject " article 19 (1) (a) would have no application, the test being not the effect or result of legislation but its subject matter.
" As the preventive detention order results in the detention of the applicant in a cell it was contended on his behalf that the rights specified in article 19 (1), (a), (b), (c), (d), (e) and (g) have been infringed.
17 130 same argument was urged in respect of the rest of the rights mentioned in sub clauses (b), (c), (d), (e) and (g).
Although this argument is advanced in a case which deals with preventive detention, if correct, it should be applicable in the case of punitive detention also to any one sentenced to a term of imprisonment Linder the relevant section of the Indian Penal Code.
So considered, the argument must clearly be rejected In spite of the saving clauses (2) to (5), permitting abridgement of the rights connected with each of them punitive detention under several sections of the Penal Code, e. g., for theft,, cheating, forgery and even ordinary assault, will be illegal.
Unless such conclusion necessarily follows front the article, it is obvious that such construction should be avoided.
In my opinion, such result is clearly not the outcome of the Constitution.
The article has to be read.
without any pro conceived notions.
So read, it clearly means that the legislation to be examined must be directly in respect of one of the rights mentioned in the sub clauses.
If there is a legislation directly attempting to control a citizen 's freedom of speech or expression, or his right to assemble peaceably and without arms, etc,, the question whether that legislation is saved by the relevant saving clause of article 19 will arise.
If, however, the legislation is not directly in respect of any of these subjects, but as a result of the operation of other legislation, for instance, for punitive or preventive detention, his right under any of these sub clauses is abridged, the question of the application of article 19 does not arise.
The true approach is only to consider the directness of the legislation and not what will be the result of the detention otherwise valid, on the mode of the detent 's life.
On that short ground, in my opinion, this argument about the infringement of the rights mentioned in article 19 (1) generally must fail.
Any other construction put on the article, it seems to me, will be unreasonable." This opinion was expressed by Kania C. J. alone, the other learned judges forming the Bench not expressing themselves on this question.
This passage was, however cited, with approval by a Bench of this 131 Court in Ram Singh & Ors.
vs The State of Delhi (1).
It was held by the Full Court in that case that though personal liberty is sufficiently comprehensive to include the freedoms enumerated in article 19 (1) and its deprivation would result in the extinction of these freedoms, the Constitution his treated these constitutional liberties as distinct fundamrntal rights and made separate provisions in articles 19, 21 and 22 ,is to the limitations and conditions subject to which alone they could be taken away or abridged.
(2) of article 19 and may therefore be void, an order of preventive detention cannot be held to be, invalid merely because: " the detention is made with a view to prevent the making of speeches prejudicial to the, maintenance of public order. . . ." This was also a case of detention under the Preventive Detention Act and the detention of the detenu had been ordered with a view to prevent him from making speeches prejudicial to the maintenance of public order.
Public order was not one of the categories mentioned in article 19 (2) as it then stood, and any restriction imposed upon the freedom of speech and expression could nit be justified on that ground, the only relevant ground in that connection then being undermining of the security of the State or its overthrow.
A restriction on the freedom of speech and expression ill the maintenance of public order would therefore not have been justified under article 19 (2) and if the Court had come to the conclusion that there was an infringement of the right of freedom of speech and expression the order could not have been saved under article 19 (2).
The Court however, took the view that the direct object of the order was preventive detention and not the infringement of the right of freedom of speech and expression, which was merely (1)[1951] S.C.R.451, 455. 132 consequential upon the detention of the detenu and therefore upheld the validity of the order.
It was, therefore, urged by the learned Attorney General that the object of the impugned Act was only to regulate certain conditions of service of working journalists and other persons employed in the newspaper establishments and not to take away or abridge the right of freedom of speech and expression enjoyed by the petitioners and that therefore the impugned Act could not come within the prohibition of article 19 (1) (a) read with.
article 13 (2) of the Constitution.
It was contended, on the other hand, on behalf of the petitioners that the Court has got to look at the true nature and character of the legislation and judge its substance and not its form, or in other words, its effect and operation.
It was pointed out that the impugned Act viewed as a whole was one to regulate the employment of the necessary organs of newspaper publications and therefore related to the freedom of the Press and as such came within the prohibition.
Reliance was placed in this behalf on the following passage in Minnesota Ex Rel.
Olson (1): " With respect to these contentions it is enough to say that in passing upon constitutional questions the Court has regard to substance and not to mere matters of form, and that, in accordance with familiar principles, the statute must be tested by its operation and effect." The following observations of Mahajan J. (as he then was) in Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co., Ltd. (2) were also relied upon: " In order to decide these issues it is necessary to examine with some strictness the substance of the legislation for the purpose of determining _what it is that the legislature has really done; the Court, when such questions arise, is not overpersuaded by the mere appearance of the legislation.
In relation to Constitutional prohibitions binding a legislature it is clear that the legislature cannot disobey the prohibitions merely (1)(1930) ; , 708; ; , 1363.
(2)[1954] S.C.R. 674, 683. 133 by employing indirect method of achieving exactly the same result.
Therefore, in all such cases the court has to look behind the names, forms and appearances to discover the true character and nature of the legislation.
" The impugned Act is as its long title shows an act to regulate certain conditions of service of working journa lists and other persons employed in newspaper establishments and in the very forefront of the Act, the , is by section 3 made applicable to working journalists with certain modification in connection with the application of section 25F of that Act.
The rest of the provisions contained in ch.
II concerned themselves with the payment of gratuity, hours of work and leave and fixation of wages of the working journalists.
The regulation of the conditions of service is thus the main object which is sought to be achieved by the impugned Act.
Chapter III of the Act applies the provisions of the , and the Employees ' Provident Funds Act, 1952, to all the employees of the newspaper establishments wherein twenty or more newspaper employees are employed and covers working journalists as well as other employees in the employ of the newspaper establishments.
The miscellaneous provisions contained in ch.
IV are designed merely to implement or to carry out the provisions of the main part of.
the Act and they do not make any difference so far as the effect and operation of the Act is concerned.
If this is the true nature of the Act, it is impossible to say that the Act was designed to affect the freedom of speech and expression enjoyed by the petitioners or that was its necessary effect and operation.
It was conceded in the course of the arguments that if a general law in regard to the industrial or labour relations had been applied to the press industry as a whole no exception could have been taken to it.
If the matter had rested with the application of the , to the working journalists or with the application of the , or the Employees ' Provident Fund,% Act, 1952, to them no exception could have been taken to this 134 measure.
It was, however, urged that apart from the application of these general laws to the working journalists, there are provisions enacted in the impugned Act in relation to payment of gratuity, hours of work, leave and fixation of the rates of wages which are absolutely special to the press industry qua the working journalists and they have the effect of singling out the press industry by creating a class of privileged workers with benefits and rights which have not been conferred upon other employees and the provisions contained therein have the effect of laying a direct and preferential burden on the press, have a tendency to curtail the circulation and thereby narrow the scope of dissemination of information, fetter the petitioner 's freedom to choose the means of exercising their right and are likely to undermine the independence of the press by having to seek Government aid.
It is obvious that the enactment of this measure is for the amelioration of the conditions of the workmen in the newspaper industry.
It would not be possible for the State to take up all the industries together and even as a matter of policy it would be expedient to take the industries one by one.
Even in regard to the workmen employed it would be equally expedient to take a class of employees who stand in a separate category by themselves for the purpose of benefiting them in the manner contemplated.
This circumstance by itself would therefore not be indicative of any undue preference or a prejudicial treatment being meted out to that particular industry, the main object being the amelioration of the conditions of those workmen.
It could not also be said that there was any ulterior motive behind the enactment of such a measure because the employers may have to share a greater financial burden than before or that the working of the industry may be rendered more difficult than before.
These are all incidental disadvantages which may manifest themselves in the future working of the industry, but it could not be said that the Legislature in enacting that measure was aiming at these disadvantages when it was trying to ameliorate the 135 conditions of the workmen.
Those employers who are favourably situated, may not feel the strain at all while those of them who are marginally situated may not be able to bear the strain and may in conceivable cases have to disappear 'after closing down their establishments.
That, however, would be a consequence.
which would be extraneous and not within the contemplation of the Legislature.
It could therefore hardly be urged that the possible effect of the impact of these measures in conceivable cases would vitiate the legislation as such.
All the consequences which have been visualized in this behalf by the petitioners, viz., the tendency to curtail circulation and thereby narrow the scope of dissemination of information, fetters on the petitioners ' freedom to choose the means of exercising the right, likelihood of the independence of the press being undermined by having to seek government aid; the imposition of penalty on the petitioners ' right to choose the instruments for exercising the freedom or compelling them to seek alternative media, etc., would be remote and depend upon various factors which may or may not come into play.
Unless these were the direct or inevitable consequences of the measures enacted in the impugned Act, it would not be possible to strike down the legislation as having that effect and operation.
A possible eventuality of this type would not necessarily be the consequence which could be in the contemplation of the Legislature while enacting a measure of this type for the benefit of the workmen concerned.
Even though the impugned Act enacts measures for the benefit of the working journalists who are employed in newspaper establishments, the working journalists are but the vocal organs and the necessary agencies for the exercise of the right of free speech and expression, and any legislation directed towards the amelioration of their conditions of service must necessarily affect the newspaper establishments and have its repercussions on the freedom of Press.
The real difficulty, however, in the way of the petitioners is that whatever be the measures enacted for the benefit of the working journalists neither the intention nor the effect and operation of the impugned Act is to take away or abridge the right of freedom of speech and expression enjoyed by the petitioners.
The gravamen of the complaint of the petitioners against the impugned Act, however, has been the appointment of the Wage Board for fixation of rates of wages for the working journalists and it is contended that apart from creating a class of privileged workers with benefits and rights which were not conferred upon other employees of industrial establishments, the Act has left the fixation of rates of wages to an agency invested with arbitrary and uncanalised powers to impose an indeterminate burden on the wage structure of the press, to impose such employer employee relations as in its discretion it thinks fit and to impose such burden and relation , for such time as it thinks proper.
This contention will be more appropriately dealt with while considering the alleged infringement of the fundamental right enshrined in article 19(1) (g).
Suffice it to say that so far as article 19(1) (a) is concerned this contention also has a remote bearing on the same and need not be discussed here at any particular length.
Re: Article (19(1) (g).
The fundamental right of the petitioners herein is the right to carry on any occupation, trade or business.
This freedom also is hemmed in by limitations which are to be found in article 19(6), which in so far as it is relevant for our purposes enacts: " Nothing in sub clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right, conferred by the said sub clause," 137 The contention under this head is thus elaborated on behalf of the petitioners: 1.The impugned Act imposes unreasonable restrictions on the freedom to carry on business: (a) in empowering the fixation of rates of wages on criteria relevant only for fixation of minimum, wages; (b)in empowering fixation of wages, grant of gratuity and compensation without making it incumbent on the Board to consider the major factor of the capacity of the industry to pay; (c)in authorizing the Board to have.
regard to not what is relevant for such fixation but to what the Board deems relevant for the purpose; and (d)in providing for a procedure which does not compel the Board to conform to the rules under the , thus permitting the Board to follow any arbitrary procedure violating the principle of audi alteram partem.
2.The restrictions enumerated above in so far as they affect the destruction of the petitioners ' business exceed the bounds of permissible legislation under article 19(1)(g).
The unreasonableness of the restriction is further sought to be emphasized by pointing out that under section 12 of the impugned Act, the decision of the Board is declared binding on all employers, though the working journalists axe not bound by the same and are entitled, if they are dissatisfied with it, to agitate for further revision by raising industrial disputes between themselves and their employers and having them adjudicated under the .
The test of reasonable restrictions which can be imposed on the fundamental right enshrined in article 19(1)(g) has been laid down by this Court in two decisions: In Chintaman Rao vs The State of Madhya Pradesh(1) Mahajan J. (as he then was) observed at p. 763 : "The phrase "reasonable restriction" connotes that the limitation imposed on a. person in enjoyment (1) ; , 763.
138 of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public.
The word " reasonable " implies intelligent care and deliberation, that is, the choice of a course which reason dictates.
Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in article 19(1)(g), and the social control permitted by clause (6) of article 19, it must be held to be wanting in that quality." [cited with approval in Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh & Ors.
(1) and in Ch.
Tika Ramji vs State of ' Uttar Pradesh & Ors.
The State of Madras vs V. G. Rao (3) was the next case in which this phrase came to be considered by this Court and Patanjali Sastri C. J. observed at p. 606: " This Court had occasion in Dr. Khare 's case (4) to define the scope of the judicial review under clause (5) of article 19 where the phrase " imposing reasonable restrictions on the exercise of the right " also occurs and four of the five judges participating in the decision expressed the view (the other judge leaving the question open) that both the substantive and the procedural aspects of the impugned restrictive law should be examined from the point of view of reasonableness: that is to say, the Court should consider not only factors such as the duration and the extent of the restrictions but also the circumstances under which and the manner in which their imposition has been authorised.
It is important in this context to bear in mind that the test of reasonableness, where ever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern, of reasonableness can be laid down as applicable to all cases.
The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion (1) ; , 811. (3) ; , 606, 607.
(2) ; , 446.
(4) ; 139 of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict.
" This criterion was approved of in State of West Benqal vs Subodh Gopat Bose & Others (1) where the present Chief Justice further expressed his opinion that the fact of the statute being given retrospective operation may also be properly taken into consideration in determining the reasonableness of the restriction imposed in the interest of the general public [see also a recent decision of this Court in Virendra vs State of Punjab (2)].
The appointment of a wage board for the purposes of fixing rates of wages could not be and was not challenged as such because the constitution of such wage boards has been considered one of the appropriate modes for the fixation of rates of wages.
The , can only apply when an industrial dispute actually arises or is apprehended to arise between the employers and the employees in a particular industrial establishment.
Though under the amendment of that Act by the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956, (36 of 1956), there is a provision for the appointment of a National Tribunal by the Central Government for the adjudication of industrial disputes which in the opinion of the Central Government involve questions of national importance or are of such a nature that industrial establishments situated in more than one State are likely to be interested in, or affected by, such dispute (Vide section 7 B) the condition precedent, however, is the existence of an industrial dispute or the appre hension of one.
If the wages for the employees of a particular industry have got to be fixed without such an industrial dispute having arisen or being apprehended to arise, the only proper mode of such fixation would be the appointment of wage boards for the purpose.
They take the place of Industrial Tribunals or National Industrial Tribunals and are generally constituted of equal number of representatives of the employers and the employees in that particular industry along with a quota of independent member or (1) ; , 626.
(2) ; 140 members one of whom is appointed the chairman of the Board.
The main grievance of the petitioners, however, has been that the relevant criteria for the fixation of rates of wages were not laid down in section 9(1) of the Act.
Section 8 empowered the Central Government to constitute a wage board for fixing rates of wages in respect of working journalists in accordance with the provisions of the Act and section 9(1) directed that in fixing such rates of wages the Board &hall have regard to the cost of living, the prevalent rates of wages for comparable employments, the circumstances relating to the newspaper industry in different regions of the country and to any other circumstances which to the Board may seem relevant.
These criteria, it was contended, were only relevant for fixing minimum rates of wages, ' though the word " minimum " which had been used in the Bill No. 13 of 1955 as introduced in the Rajya Sabha was deleted when the Act actually came to be passed and it was further contended that the capacity of the Industry to pay which was an essential circumstance to be taken into consideration in the fixation of wages was not set out as one of the circumstances to be taken into consideration by the Board in fixing rates of wages.
It was also contended that the other circumstances which the Board was directed to consider in addition to those specifically enumerated in section 9(1) were such as to the Board may seem relevant thus relegating these circumstances to the subjective determination of the Board with the necessary consequence that no Court or other authority could scrutinize the same objectively.
We do not propose to enter into any elaborate discussion on the question whether it would be competent to us in arriving at a proper construction of the expression " fixing rates of wages " to look into the Statement of Objects and Reasons attached to the Bill No. 13 of 1955 as introduced in the Rajya Sabha or the circumstances under which the word " minimum " came to be deleted from the provisions of the Bill relating to rates of wages and the Wage Board and the fact of such deletion when the Act came to be passed in its present 141 form.
There is a consensus of opinion that these are not aids to the construction of the terms of the Statute which have of course to be given their plain and grammatical meaning [See: Ashvini Kumar Ghosh & Anr.
vs Arabinda Bose & Anr.
(1) and Provat Kumar Kar and others vs William Trevelyan ' Curtiez Parkar It is only when the terms of the statute are ambiguous or vague that resort may be had to them for the purpose of arriving at the true intention of the legislalature.
We have already stated in the earlier part of this judgment that the Act was passed with a view to implement the recommendations of the Press Commission 's Report and we have already seen that the concept of minimum wage, as adopted by the Press Commission was not that of a bare subsistence or minimum wage but what it termed a minimum wage was meant to provide for not merely the bare subsistence of living, but for the efficiency of the worker, making provision also for some measure of education, medical requirements and amenities.
This was the concept of a minimum wage which was sought to be implemented by the legislature and for that purpose the capacity of the industry to pay was an essential circumstance to be taken into consideration and the deletion of the word " minimum ", if at (1) [1953] S.C.R. I. (2) A.I.R. 1950 Cal.
142 all, had the effect of widening the scope of the enquiry before the Wage Board.
if the word " minimum " had been used in relation to the rates of wages and the Wage Board in the impugned Act, the wage Board in its deliberations would have been necessarily confined (to a consideration of that aspect alone.
But, by the deletion of that wordfrom the context the Wage Board was invested with a power to determine the question of the fixation of rates of wages unfettered by any such limitations and to fix the rates of wages in any pro per manner having regard to the circumstances of the case, whether the resultant wages would be a statutory minimum wage or would approximate to a standard of wage, though having regard to the economic conditions of our country at present they could not find it within their power to fix living wages for the working journalists.
The criteria which were specified in section 9(1) of the Act comprised also the prevalent rates of wages for comparable employments.
This criterion had no relation whatever to Minimum wages.
Reference may be made in this connection to a decision of the Industrial Court in the case of Nellimarla Jute Mills (1), where it was held that the comparison with rates of waves in other concerns could be undertaken for determining fair wage and the upper limit of wages but not for determining the minimum or floor level of wages which should depend on the minimum requirements of the workers ' family consisting of three consumption units.
If, therefore, the criterion of the prevalent rates of wages for comparable employments can on a true construction of section 9(1)be considered consistent only with the fixation of rates of wages which are higher than (1) [1053] , 143 the bare subsistence or minimum wage whether they be statutory minimum wage or fair wage or even living wage, it could not be urged that the criteria specified in section 9(1) of the Act were relevant only for fixation of minimum wages.
The capacity of the industry to pay was therefore one of the essential circumstances to be taken into consideration by the Wage Board whether it be for the fixation of rates of wages or the scales of wages which, as we have observed before, were included within the expression " rates of wages ".
This was by no means an unimportant circumstance which could be assigned a minor role.
It was as important as the cost of living, and the prevalent rates of wages for comparable employments and ought to have been specifically mentioned in section 9(1).
The Legislature however, was either influenced in not mentioning it as such by reason of the view taken by the Press Commission in that behalf or thought that the third criterion which was specified in section 9(1), viz., the circumstances relating to the newspaper industry in different regions of the country was capable of including the same.
Even here, there is considerable difficulty in reconciling oneself to this mode of construction.
Even if it were thus capable of being included, the minor role assigned to it along with literacy of the population, the popularity of the newspapers, predilections of the population in the matter of language and other circumstances of the like nature prevailing in the different regions of the country would make it difficult to imagine that this circumstance of the capacity of the industry to pay was really in the mind of the Legislature, particularly when it is remembered that the Press Commission attached no signifi cance to the same.
From that point of view, the criticism of the petitioners would appear to be justified viz., : that it was not made incumbent on the Board to consider the major factor of the capacity of the 144 industry to pay as an essential circumstance in fixing the rates of wages.
It is, however, well recognized that the Courts would lean towards the constitutionality of an enactment and if it is possible to read this circumstance as comprised within the category of circumstances relating to the newspaper industry in different regions of the country, the court should not strike down the provisions as in any manner whatever unreasonable and violative of the fundamental right of the petitioners.
We are therefore of opinion that section 9(1) did not eschew the consideration of this essential circumstance, viz., the capacity of the industry to pay and it was not only open but incumbent upon the Wage Board to consider that essential circumstance in order to arrive at the fixation of the rates of wages of the working journalists.
The last criterion enumerated in section 9(1) of the Act was " any other circumstance which to the Board may seem relevant " and it was urged that this was left merely to the subjective determination of the Board and the Board was at liberty to consider the circumstances, if any, falling within this category in its own absolute discretion which could not be Controlled by any higher authority.
If the matters were left to be objectively determined then it would certainly be enquired into and the existence or otherwise of such circumstances would be properly scrutinized in appro priate proceedings.
The manner in which, however, this criterion was left to be determined by the Board on its subjective satisfaction was calculated to enable the Board to exercise arbitrary powers in regard to the same and that was quite unreasonable in itself.
The case of Thakur Raghubir Singh vs Court of Wards, Ajmer & Ors.
(1), was pointed out as an illustration of such an arbitrary power having been vested in the Court of Wards which could in its own discretion and on its subjective determination assume the superintendence of the property of a landed proprietor who habitually infringed the rights of his tenants.
The provision was there struck down because such subjective (1)[1953] section C. R. 1049,1052.
145 determination which resulted in the superintendence of the property of a citizen being assumed could, not be scrutinized and the propriety thereof investigated by higher authorities.
This argument, however, does not help the petitioners because this criterion is on a par with or ejusdem generis with the other criteria which have been specifically enumerated in the earlier part of the section.
The major and important criteria have been specifically enumerated and if would be impossible for the Legislature exhaustively to enumerate the other circumstances which would be relevant to be considered by the Board in arriving at the fixation of the rates of wages.
In the course of the enquiry the Board might come across other relevant circumstances which would weigh with it in the determination of the rates of wages and it would not be possible for the Legislature to think of them or to enumerate the same as relevant considerations and it was therefore, and rightly in our opinion, left to the Board to determine the relevancy of those circumstances and take them into consideration while fixing the rates of wages.
If the principles which should guide the Board in fixing the rates of wages were laid down with sufficient clarity and particularity and the criteria so far as they were of major importance were specifically enumerated there was nothing wrong in leaving other relevant considerations arising in the course of the enquiry to the subjective satisfaction of the Board.
The Board was, after all, constituted of equal numbers of representatives of employers and the employees and they were best calculated to take into account all the relevant circumstances apart from those which were, specifically enumerated in the section.
It was, however, contended that the procedure to be followed by the Board for fixing the rates of wages was not laid down and it was open to the Board to follow any arbitrary procedure violating the principle of audi alteram partem and as such this also was unreasonable.
Section 20 (2) (d) of the impugned Act gave power to the Central Government to make rules 19 146 inter alia in regard to the procedure to be followed by the Board in fixing rates of wages and section 11 provided that subject to any rules which might be prescribed the Board may, for the purpose of fixing rates of wages, exercise the same powers and follow the same procedure as an Industrial Tribunal constituted under the , exercises or follows for the purpose of adjudicating an industrial dispute referred to it.
This was, however, an enabling provision which vested in the Board the discretion whether to exercise the same powers and follow the same procedure as an Industrial Tribunal.
It has to be remembered, however, that in the United Kingdom the Wage Councils and the Central Co ordinating Committees under the Wages Councils Act, 1945, and the Agricultural Wages Board under the Agricultural Wages Regulations Act, 1924, also are empowered to regulate their proceeding in such manner as they think fit.
The Wage Boards in Australia have also no formal procedure prescribed for them, though the Wage Boards which are established under the amended Bombay Industrial Relations Act, 1946, are enjoined to follow the same procedure as an industrial court in respect of industrial proceedings before it.
It would not therefore be legitimate to hold that the procedure to be followed by the wage board for fixing rates of wages must necessarily be prescribed by the statute constituting the same.
It is no doubt contemplated in each of these statutes that rules of procedure may be prescribed; but even though they, may be so prescribed, it is left to the discretion of the wage boards to regulate their procedure in such manner as they think fit, subject of course to the rules thus prescribed.
A wide discretion is thus left with the wage boards to prescribe their own rules of procedure, but it does not therefore follow that they are entitled to follow any arbitrary rules of procedure.
The wage boards are responsible bodies entrusted with the task of gathering data and materials relevant for the 147 determination of the issues arising before them and even though they are not judicial tribunals but administrative agencies they would elicit all relevant information and invite answers to the questionnaire or representations from the parties concerned, hear evidence and arrive at their determination after conforming to the principles of natural justice.
Even though they may perform, quasi judicial functions, the exercise of arbitrary powers by them would not be countenanced by, any court or higher authority.
No doubt certain specific provisions as to payment of gratuity, hours of work and leave are specifically enacted, but when we come to the fixation of rates of wages we find that a wage board has been constituted for the purpose.
The principles to be followed by the Wage Board for fixing rates of wages are also laid down and the decision of the Board is to be published in the same manner as awards of industrial courts,under the .
Then follows section 11 which talks of the powers and procedure of the Board and there also, subject to any rules of procedure which may be prescribed by the Central Government, the Board is empowered to exercise the same powers and follow the same procedure as an Industrial Tribunal constituted under the of wages, exercise the same powers and follow the same procedure.
All these 148 circumstances point to the conclusion that even though the Board was not bound to exercise the same powers and follow the same procedure as an industrial tribunal constituted under the , the Board was, in any event, not entitled to 'adopt any arbitrary procedure violating the principles of natural justice.
If on the construction of the relevant sections of the statute the functions which the Wage Board was performing would be tantamount to laying down a law or rule of conduct for the future so that all the employers and the employees in the ' industry not only those who were participating in it in the present but also those who would enter therein in the future would be bound by it, the dictum of Justice Holmes would apply and the functions performed by the wage board could be characterized as legislative in character.
Where, however, as in the present case, the constitution of the Wage Board is considered in the background of the application of the provisions of the to the working journalists and the provisions for the exercise of the same powers and following the same procedure as an industrial tribunal constituted under the , it would be possible to argue that the Wage Board was not exercising legislative functions but was exercising functions which were quasi judicial in character.
In this connection, it was also pointed out that the Legislature itself while enacting the impugned Act did not consider these functions as legislative at all.
The Rules of Procedure and Conduct of Business in Lok Sabha (1957) provide in Rule No. 70 for a Bill involving proposals for the delegation of legislative power shall further be accompanied by a memorandum explaining such proposals and drawing attention to their scope and stating also whether they are of normal or exceptional character.
There is also a committee on subordinate legislation which is established for scrutinizing and reporting to the House; whether the powers to make regulations, rules, sub rules, by laws, etc., conferred by the Constitution or delegated by Parliament are being properly exercised within 'such 149 delegation (vide Rule 317 ibid).
The constitution by the Legislature of the Wages Board in the matter of the fixation of rates of wages was not considered as a piece of delegated legislation in the memorandum regarding delegated legislation appended to the draft Bill No. 13, of 1955 introduced in the Rajya Sabha on September 28, 1955, and the only reference that was made there was to Cl.
19 of the Bill which empowered the Central Government to make rules in respect of certain matters specified therein and it was stated that these were purely procedural matters of a routine character and related inter alia to prescribing hours of work, payment of gratuity, holidays, earned leave or other kinds of leave and the procedure to be followed by the Minimum Wager, Board in fixing minimum wages and the manner in which its decisions may be published.
Clause 19 (3) of the Bill further provided that all rules made under this section shall as soon as practicable after they are made, be laid before both Houses of Parliament.
These clauses were ultimately passed as section 20 of the impugned Act but they were the only piece of delegated legislation contemplated by the Legislature and were covered by the memorandum regarding the same which was appended to the Bill.
The decision of the Wage Board was not to be laid before both the Houses of Parliament which would have been the case if the fixation of rates of wages was a piece of delegated legislation.
It was only to be published by the Central Government after it/ was communicated to it by the Wage Board in such manner as the Central Government thought fit, a provision which was akin to the publication of award,,; of the Industrial Tribunals by the appropriate Government under the provisions of the .
This circumstance also was pointed out as indicative of the intention of the Legislature not to constitute the Wage Board a sub legislative authority.
While recognizing the force of these contentions we may observe that it is not necessary for our purposes to determine the nature and character of the functions performed by the Wage Board here.
It is sufficient to say that the Wage Board was not empowered or 150 authorised to adopt any arbitrary,procedure and flout the principles of, natural justice.
It was next contended that the restrictions imposed on newspaper establishments under the terms of the impugned Act were unreasonable in so far as they would have the effect of destroying the business of the petitioners and would therefore exceed the bounds of permissible legislation under article 19(6).
This power to regulate is not a power to destroy, and limitation is not the, equivalent of confiscation.
" Similar observations of the Judicial Committee of the Privy Council in the Municipal Corporation of the City of Toronto vs Virgo (2) and the Attorney General for Ontario vs Attorney General for the Dominion (3) were also relied upon and particularly the following observations in the former case: " But their Lordships think there is a marked distinction to be drawn between the prohibition or prevention of a trade and the regulation or governance of it and indeed a power to regulate and govern seem,,; to imply the continued existence of that which is sought to be, regulated or governed." These observations were considered by this Court in Saghir Ahmed vs State of U. P. & Ors.
(4) and after considering the various cases which Were cited by both sides, this Court observed: " Be that as it may,, although in our opinion the normal use of the word " restrictionseems to be in the sense of I., limitation" and notextraction ", we would on this occasion prefer not toexpress any final (1) ; , 331; ; , 644.(2) , 93 (J C) (4) ; ,724.(3) , 363.
151 opinion on this matter" and the Court ultimately wound up by saving that ,whether the restrictions are reasonable or not would depend to a large extent on the nature of the trade and the conditions prevalent in it." Even if the provisions of the impugned Act would not necessarily have the effect of destroying the business of the petitioners but of crippling it and making it impossible for the petitioners to continue the same except under onerous conditions, they would have the effect of curtailing their circulation and drive them to seek government aid and thereby impose an unreasonable burden on their right to carry on business and would come within the ban of article 19(1) (g) read with article 13(2) of the Constitution.
Several provisions of the impugned Act were referred to in this context.
Section 2(f) of the Act which defines working journalist " so as to include " proofreader was pointed out in this connection and it was urged that even though the Press Commission Report recommended the exclusion of certain class of proof readers from the definition of working journalists the Legislature went a step further and included all proof readers within that definition thereby imposing upon the newspaper establishments an unreasonable burden far in excess of what they were expected to bear.
The provision as to the notice in relation to the retrenchment of working journalist was also extended beyond the limitations specified in section 25F of the , and was extended to six months in the case of an Editor and three months in the case of any other working journalist.
The provision with regard to retrenchment was also made applicable retrospectively to all cases of retrenchment which had occurred between July 14, 1954, and March 12, 1955 ; so also the payment of gratuity was ordered not only in the cases usually provided for but also in cases where a working journalist who had been in continuous service for not less than three years voluntarily resigned from service from a newspaper establishment.
The hours of work prescribed were 144 hours only during any period of four consecutive weeks and they were 152 far less in number than the hours of work recommended by the Press Commission Report.
The fixation of rates of wages was entrusted to the Wage Board which could fix any wages which it thought proper irrespective of the capacity of the industry to pay and might be such as the industry could not bear.
These provisions taken each one by itself may not have the effect of destroying the petitioners ' business altogether or even crippling it in the manner indicated but taken cumulatively along with the provisions contained in sections 14 and 15 of the impugned Act which applied the provisions of the , and, the Employees ' Provident funds Act, 1952, to newspaper establishments would certainly bring about that result and would therefore constitute an unreasonable restriction on the, petitioners ' right to carry on business.
We shall deal with these contentions one by one.
B. Sen Gupta in his " Journalism as a Career " (1955) talks of the position of the proof reader as follows: " The proof reader is another important link in the production of a newspaper.
On him depends, not to a small extent, the reputation of a paper.
He has to be very careful in correcting mistakes and pointing out any error of fact or grammar that has crept into any news item or article through oversight or hurry on the part of the sub editor.
He has not only to correct mistakes but also to see that corrections are carried out ", and the Kemsley Manual of Journalism has the following passage at p. 337: " Having thus seen the proof reader in action, lot us consider in detail what proof reading denotes.
It is primarily the art and practice of finding mistakes in printed matter before publication and of indicating the needed corrections.
It includes the detection of variations between the type and the copy from which it was 153 set, misstatements of facts, figures or dates, errors in grammar, inaccuracies in quotations, and other defects.
Often, too, it happens that, though the proof reader does not feel justified in himself making a correction, he takes other action.
If he thinks there is a mistake but is not sure, he must query the proof so that the editorial staff may decide.
He may spot a libel, or think he has.
In either case it is important that the matter shall be queried and passed back to editorial authority.
" It is obvious from this that proof readers should be men of exceptional knowledge and sound judgment.
They should be conversant with current affairs, familiar with names of public men and quite sure how they should be spelled.
Some specialize in different branches of sport, others in theatre, the cinema, music and so on.
This saves much time in looking up books of reference, though, of course, the books are there." As a matter of fact, the Wage Board in the Schedule to its decision defines "proof reader" as " a person who checks up printed matter or " Proof " with edited copy to ensure strict conformity of the former with the latter.
" If this is the important role played by the proofreaders then no wonder that the Legislature in spite of the recommendations of the Press Commission included them also in the definition of working journalist.
The provisions in regard to notice cannot be said to be per se unreasonable.
249, foot note (e), contains the following statement in regard to the periods of reasonable notice to which persons of various employments have been found entitled: Newspaper editor, from six months (Fox Bourne vs Vernon & Co. Ltd., ; to twelve months (Grundy vs Sun Printing and Publishing Association, (1916) 33 T. L. R. 77, C. A.).
Sub editor of a newspaper, six months (Chamberlain vs Bennett, Foreign correspondent to The Times, six months period (Lowe vs Walter, The Press Commission also recommended that the period of notice for the termination of services should be based on the length of the service rendered and the nature of the appointment.
There could be no hard and fast rule as to what the notice period should be.
The practice upheld by law or by collective bargaining varies from country to country.
In England the practice established by some judicial decisions is that the editor is entitled to a year 's notice and an assistant editor to six months ' notice.
After examining the provisions in regard to notice which are in vogue in England, the Commission also noticed a decision in Bombay (Suit No. 735 of 1951 in the City Civil Court) where the judge concerned held that in the circumstances of the particular case the plaintiff, an assistant editor was entitled to a notice of four months although in normal times, he said, the rule adopted in England of six months should be the correct rule to adopt in India and a longer period of notice was suggested for editors because it was comparatively much more difficult to secure another assignment for a journalist of that seniority and standing in the profession.
The period of six months, in the case of an editor, and three months, in the case of any other working journalists prescribed under section 3(2) of the impugned Act was therefore not open to any serious objection.
The retrospective operation of this provision in regard to the period between July 14, 1954, and March 12, 1955, was designed to meet the few cases of those employees in the editorial staff of the newspaper 155 establishments who had been retrenched by the managements anticipating the implementation of the recommendations of the Press Commission.
There was nothing untoward in that provision also.
When we come however to the provision in regard to the payment of gratuity to working journalists who voluntarily resigned from service from newspaper establishments, we find that this was a provision which was not at all reasonable.
A gratuity is a scheme of retirement, benefit and the conditions for its being awarded have been thus laid down in the Labour Court decisions in this country.
In the case of Ahmedabad Municipal Corporation it was observed at p. 158 : " The fundamental principle in allowing gratuity is that it is a retirement benefit for long services, a provision for old age and the trend of the recent authorities as borne out from various awards as well as the decisions of this Tribunal is in favour of double benefit We are, therefore, of the considered opinion that Provident Fund provides a certain measure of relief only and a portion of that consists of the employees ' wages, that he or his family would ultimately receive, and that this provision in the present day conditions is wholly insufficient relief and two retirement benefits when the finances of the concern permit ought to be allowed.
" (See also Nundydroog Mines Ltd. (2).
These were cases however of gratuity to be allowed to employees on their retirement.
The Labour Court decisions have however awarded gratuity benefits on the resignation of an employee also.
In the case of Cipla Ltd. (3), the Court took into consideration the capacity of the concern and other factors therein referred to and directed gratuity on full scale which included (2) on voluntary retirement or resignation of an employee after 15 years continuous service.
Similar considerations were imported in the case of (1) , 58.
(2) , 267.
(3) , 358.
156 the Indian Oxygen & Acetylene Co., Ltd. where it was observed: " It is now well settled by a series of decisions of the Appellate Tribunal that where an employer company has the financial capacity the workmen would be entitled to the benefit of gratuity in addition to the benefits of the Provident Fund.
In considering the financial capacity of the concern what has to be seen is the general financial stability of the concern.
The factors to be considered before granting a scheme of gratuity are the broad aspects of the financial condition of the concern, its profit earning capacity, the profit earned in the past, its reserves and the possibility of replenishing the reserves, the claim of capital put having regard to the risk involved, in short the financial stability of the concern.
There also the court awarded gratuity under ground No. 2, viz., on retirement or resignation of an employee after 15 years of continuous service and 15 months ' salary or wage.
It will be noticed from the above that even in those cases where gratuity was awarded on the employee 's resignation from service, it was granted only after the completion of 15 years continuous service and not merely on a minimum of 3 years service as in the present case.
1503), there would be no justification for awarding the same when an employee voluntarily resigns and brings about a termination of his service, except in exceptional circumstances.
One such exception is the operation of what is termed " The conscience clause ".
157 Among the benefits which the status of professional journalist may confer (whether it stems from the law or from an agreement) is one of particular importance, since it goes to the very core of the profession.
It concerns freedom of information.
It is intended to safeguard the journalist 's independence, his freedom of thought and his moral rights.
It constitutes what has been called in France the " conscience clause ".
The essence of this clause is that when a journalist 's integrity is seriously threatened, he may break the contract binding him to the newspaper concern, and at the same time receive all the indemnities which are normally payable only if it is the employer who breaks the contract.
In France, accordingly, under the law of 1935, the indemnity for dismissal which, as we have seen, may be quite substantial, is payable even when the contract is broken by a professional journalist, in cases where his action is inspired by " a marked change in the character or policy of the newspaper or periodical, if such change creates for the person employed a situation prejudicial to his honour, his reputation, or in a general way his moral interests.
" This moral right of a journalist is comparable to the moral right of an author or artist, which the law of 1935 was the first to recognize, has since been acknowledged in a number of countries.
It was stated in the collective contract of January 31, 1938, in Poland in this form: " The following are good and sufficient reasons for a journalist to cancel hip, contract without warning; (a) the exertion of pressure by an employer upon a journalist to induce him to perform an immoral action; (b) a fundamental change in the political outlook of the journal, proclaimed by public declaration or otherwise made manifest, if the journalist 's employment would thereafter be contrary to his political opinions or the dictates of his conscience.
In these circumstances he shall be entitled to an indemnity. .
This indemnity is payable in the same manner as was the salary.
" The other exception is where the employee has been in continuous service of the employer for a period of more than 15 years.
Where however an employee voluntarily resigns from service of the employer after a period of only three years, there will be no justification whatever for awarding him a gratuity and any such provision of the type which has been made in section 5(1)(a)(iii) of the Act would certainly be unreasonable.
The provision in regard to the hours of work also cannot be considered unreasonable having regard to the nature and quality of the work to be done by working journalists.
That leaves the considerations of fixation of rates of wages by the Wage Board.
As we have already observed, the Wage Board is constituted of equal numbers of representatives of the newspaper establishments and the working journalists with an independent chairman at its head and principles for the guidance of the Wage Board in the fixation of such rates of wages directing the Wage Board to take into consideration amongst other circumstances the capacity of the industry to pay have also been laid down and it is impossible to say that the provisions in that behalf are in any manner unreasonable.
that the decision of the Wage Board may be arrived at ignoring some of these essential criteria which have been laid down in section 9(1) of the Act or that the procedure followed by the Wage Board may be contrary to the principles of natural justice.
But that would 159 affect the validity of the decision itself and not the constitution of the Wage Board which as we have seen cannot be objected to on this ground.
The further provision contained in section 17 of the Act in regard to the recovery of money due from an employer empowering the State Government or any such authority appointed in that behalf to issue a certificate for that amount to the collector in the same manner as an arrear of land revenue was also impeached by the petitioners on this ground.
We shall have occasion to deal with this provision in connection with the alleged infringement of the fundamental right under article 14 hereafter.
We do not subscribe to the view that such a provision infringes the fundamental right of the petitioners to carry on business under article 19(1)(g).
This attack of the petitioners on the constitutionality of the impugned Act under article 19(1)(g), viz., that it violates the petitioners ' fundamental right to carry on business, therefore, fails except in regard to section 5(1)(a)(iii) thereof which being clearly severable from the rest of the provisions, can be struck down as unconstitutional without invalidating the other parts of the impugned Act.
Re. Article 14.
The question as formulated is that the impugned Act selected the working journalists for favoured treatment by giving them a statutory guarantee of gratuity, hours of work and leave which other persons in similar or comparable employment had not got and in providing for the fixation of their salaries without following the normal procedure envisaged in the .
The following propositions are advanced: 1.
In selecting the Press industry employers from all industrial employers governed by the ordinary law regulating industrial relations under the , and Act I of 1955, the impugned Act subjects the Press industry employers to discriminatory treatment.
160 2.
Such discrimination lies in (a) singling out newspaper employees for differential treatment; (b)saddling them with a new burden in regard to a section of their workers in matters of gratuities, compensation, hours of work and wages; (c)devising a machinery in the form of a Pay Commission for fixing the wages of working journalists; (d)not prescribing the major criterion of capacity to pay to be taken into consideration; (e)allowing the Board in fixing the wages to adopt any arbitrary procedure even violating the principle of audi alteram partem; (f)permitting the Board the discretion to operate the procedure of the for some newspapers and any arbitrary procedure for others; (g) making the decision binding only on the employersand not on the employees, and (h) providing for the recovery of money due from the employers in the same manner as an arrear of land revenue.
3.The classification made by the impugned Act is arbitrary and unreasonable, in so far as it removes the newspaper employers vis a vis working journalists from the general operation of the , and Act I of 1955.
The principle underlying the enactment of article 14 has been the subject matter of various decisions of this Court and it is only necessary to set out the summary thereof given by Das J. (as be then was) in Budhan Choudhry & Others vs The State of Bihar (I). " The provisions of article 14 of the Constitution have come up for discussion before this Court in a number of cases, namely, Chiranjit Lal Chowdhuri vs The Union of India (2), The State of Bombay vs F. N. Balsara (3), The State of West Bengal vs Anwar Ali (1)[1955] I S.C.R. 1045, 1048.
(2) ; (3) ; 161 Sarkar (1), Kathi Raning Rawat vs The State of Saurashtra (2), Lachmandas Kewalram Ahuja vs The State of Bombay (3), Quasim Razvi vs The State of Hyderabad (1), and Habeeb Mohamad vs The State of Hyderabad (5).
It is now well established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation.
In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) that differentia must have a rational relation to the object sought to be achieved by the statute in question.
The classification may be founded on different bases; namely, geographical, or according to objects or occupations or the like.
What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration.
It is also well established by the decisions of this Court that article 14 condemns discrimination not only by a substantive law but also by a law of procedure.
" It is in the light of these observations that we shall now proceed to consider whether the impugned Act violates the fundamental right of the petitioners guaranteed under article 14 of the Constitution.
A further passage from the Report may also be quoted in this context: " It is essential to realise in this connection that the work of a journalist demands a high degree of general education and some kind of specialised training.
They thus form an essential adjunct to democracy.
The profession must, therefore, be manned by men of high intellectual and moral qualities.
The journalists are in a sense creative artists and the public rightly or, wrongly, expect from them a general omniscience and a capacity to express opinion on any topic that may arise, under the sun.
Apart from the nature of their work the conditions under which that work is to be performed, are peculiar to this profession.
Journalists have to work at very high pressure and as most of the papers come out in the morning, the journalists are required to work late in the night and round the clock.
The edition must go to press by a particular time and all the news that breaks before that hour has got to find its place in that edition.
Journalism thus becomes a highly specialized job and to handle it adequately a person should be well read, have the ability to size up a situation and to arrive quickly at the correct conclusion, and have the capacity to stand the stress and strain of the work involved.
His work cannot be measured, as in other industries, by the quantity of the output, for the quality of work is an essential element in measuring the capacity of the journalists.
Moreover, insecurity of tenure is a peculiar feature of this profession.
This is not to say that no insecurity exists in other professions but circumstances may arise in connection with profession of journalism which may lead to unemployment in this profession, which would not necessarily have that result in other professions.
Their security depends to some extent on the whims and caprices of the proprietors.
We have come across cages where a change in the ownership of the paper or a, change in the editorial policy of the paper has resulted in a considerable change in the editorial staff.
In the case of other industries a change in the proprietorship does not normally entail a change in the staff.
But as the essential purpose of a newspaper is not only to give news but to educate &.
d guide public opinion, a change in the proprietorship or in the editorial policy of the paper may result 163 and in some cases has resulted in a wholesale change of the staff on the editorial side.
These circumstances, which are peculiar to journalism must be borne in mind in framing any scheme for improvement of the conditions of working journalists." (para. 512).
These were the considerations which weighed with the Press Commission in recommending the working journalists for special treatment as compared with the other employees of newspaper establishments in the matter of amelioration of their conditions of service We may also in this connection refer to the following passage from the Legislation for Press, Film and Radio in the world to day (a series of studies published by UNESCO in 1951) (supra) at p. 403: " Under certain systems, special advantages more extensive than those enjoyed by ordinary employees are conferred upon journalists.
These may be sanctioned by the law itself.
For instance, certain Latin American countries have enacted legislation in favour of journalists which is in some cases very detailed and far reaching and offers special benefits, more particularly in the form of protection against the risk of sickness or disability, dismissal or retirement.
" In France, the law of 29 March, 1935, conferred on journalists substantial advantages which at the time were far in advance of general social legislation.
Thus, for example, this law gives all professional journalists the right to an annual holiday with pay.
One month 's holiday is granted to journalists who have been working for a newspaper or periodical for at least one year, and five weeks to journalists whose contract has been in force for 10 years at least.
Should a contract of indefinite duration be terminated, the journalist is entitled to one or two month 's notice and also to an indemnity for dismissal which may not be less than one month 's salary per year or part of a year of service, at the most recent rate of pay.
However, if the period of service exceeds 15 years, the 164 amount of the indemnity is fixed, as we have seen, by an arbitral committee.
" The working journalists are thus a group by themselves and could be classified as such apart from the other employees of newspaper establishments and if the Legislature embarked upon a legislation for the purpose of ameliorating their conditions of service there was nothing discriminatory about it.
They could be singled out thus for preferential treatment against the other employees of newspaper establishments.
A classification of this type could not come within the ban of article 14.
The only thing which is prohibited under this article is that persons belonging to a particular group or class should not be treated differently as amongst themselves and no such charge could be levelled against this piece of legislation.
If this group of working journalists was specially treated in this manner there is no scope for the objection that group had a special legislation enacted for its benefit or that a special machinery was created, for fixing the rates of its wages different from the machinery employed for other workmen under the .
The payment of retrenchment compensation and gratuities, the regulation of their hours of work and the fixation of the rates of their wages as compared with those of other workmen in the newspaper establishments could also be enacted without any such disability and the machinery for fixing their rates of wages by way of constituting a wage board for the purpose could be similarly devised.
What was contemplated by the provisions of the impugned Act how.
ever, was a general fixation of rates of wages of working journalists which would ameliorate the conditions of their service and the constitution of a wage board for this purpose was one of the established modes of achieving that object.
If, therefore, such a 165 machinery was devised for their benefit, there was nothing objectionable in it and there was no discrimination as between the working journalists and the other employees of newspaper establishments in that behalf.
The capacity of the industry to pay was certainly to be taken into consideration by the Wage Board, as we have already seen before, and the procedure of the Board also was assimilated to that adopted by an industrial tribunal under the , or was, in any event, to be such as would not be against the principle of audi alteram partem or the principles of natural justice.
There was no occasion, if the Wage Board chose to exercise the same powers and follow the same procedure as the Industrial Tribunal under the Industrial Disputes Act, 1947, for it to discriminate between one set of newspaper establishments and others.
If it in fact assumed unto itself the powers of the Industrial Tribunal it would be bound to follow the procedure prescribed under the , and if it were thus to follow the same, no discrimination could ever be made in the manner suggested.
The decision of the Wage Board was no doubt made binding only on the employers and the working journalists were at liberty to agitate the question of increase in their wages by raising an industrial dispute in regard thereto.
Once the rates of wages were fixed by the Wage Board, it would normally follow 'that they would govern the relationship between the employers and the working journalists, but if liberty was reserved to the working journalists for further increase in their wages under the provisions of the there was nothing untoward in that provision and that did not by itself militate against the position that what was done for the benefit of the working journalists was a, measure for the amelioration of their conditions of service as a group by themselves.
There could not be any question of discrimination between the employers on the one hand and the working journalists on the other.
They were two contesting parties ranged on opposite sides and the fact that one of them was treated in a different manner from the other in the 166 matter of the amelioration of the conditions of service of the weaker party would not necessarily vitiate the decision of the Wage Board.
The weaker of the two parties could certainly be treated as a class by itself and the conferment of special benefits in the matter of trying to ameliorate their conditions of service could certainly not be discriminatory.
The provisions contained in section 17 of the Act in regard to the recovery of money due from the employers in the same manner as an arrear of land revenue also was not discriminatory.
In the conflict between the employers and the employees it very often came about that the employers did not implement the measures which had been enacted for the benefit of the employees and the employees were thus hard put to realise and cash those benefits.
Even the , contained a like provision in section 33C thereof (vide the amendment incorporated therein by Act 36 of 1956) which in its turn was a reproduction of the old section 25 1 which had been inserted therein by Act 43 of 1953.
It may be remembered that if the provisions of the , which was a general Act, had been made applicable to the working journalists there would have been no quarrel with the same.
Much less there could be any quarrel with the introduction of section 17 into the impugned Act when the aim and object of such provision was to provide the working journalists who were a group by themselves from amongst employees employed in the newspaper establishments with a remedy for the recovery of the monies due to them in the same manner as the workmen under the .
We do not see anything discriminatory in making such a provision for the recovery of monies due by the employers to these working journalist 'section Similar is the position in regard to the alleged dis crimination between Press industry employers on the one hand and the other industrial employers on the other.
The latter would, certainly be governed by the ordinary law regulating industrial relations under the .
Employers qua the working journalists again would be a class by them 167 selves and if a law was enacted to operate as between them in the manner contemplated by the Act that could not be treated as discriminatory.
If measures have got to be devised for the amelioration of the conditions of working journalists who are employed in the newspaper establishments, the only way in which it could be done was by directing this piece of legislation against the Press Industry employers in general.
Even considering the Act as a measure of social welfare legislation the State could only make a beginning somewhere without embarking on similar legislations in relation to all other industries and if that was done in this case no charge could be levelled against the State that it was discriminating against one industry as compared with the others.
The classification could well be founded on geographical basis or be according to objects or occupations or the like.
The only question for consideration would be whether there was a nexus between the basis of classification and the object of the Act sought to be challenged.
In our opinion, both the conditions of permissible classification were fulfilled in the present case.
The classification was based on an intelligible differentia which distinguished the working journalists from other employees of newspaper establishments and that differentia had a rational relation to the object sought to be achieved, viz., the amelioration of the conditions of service of working journalists.
This attack on the constitutionality of the Act also therefore fails.
Re. Article 32: In regard to the infringement of article 32, the only ground of attack ha, , been that the impugned Act did not provide for the giving of the reasons for its decision by the Wage Board and thus rendered the petitioners ' right to approach the Supreme Court for enforcement of their fundamental right nugatory.
It is contended that the right to apply to the Supreme Court for a writ of certiorari required an order infringing a fundamental right, that such a right was itself a fundamental right and any legislation which attempted to restrict or defeat this right was an infraction of 168 article 32 and was as such void.
It is further contended that a writ of certiorari could effectively be directed only against a speaking order, i. e., an order disclosing reasons, and if a statute enabled the passing of an order that need give no reasons such statute attempted ,to sterilize the powers of this Court from investigating the validity of the order and was therefore violative of article 32.
Learned Counsel for the petitioners has relied upon a decision of the English Court in Rex vs Northumberland Compensation Appeal Tribunal, Ex parte Shaw where Lord Goddard C. J. observed at p. 718: " Similarly anything that is stated in the order which an inferior court has made and which has been brought up into this court can be examined by the court, if it be a speaking order, that is to say, an order which sets out the grounds of the decision.
If the order is merely a statement of conviction that there shall be a fine of 40s.
, or an order of removal or quashing a poor rate, there is an end of it, this court cannot examine further.
If the inferior court tells this court why it had done what it has and makes it part of its order, this court can examine it.
" This decision was affirmed by the Court of Appeal (and the decision of the Court of Appeal is reported in Rex vs Northumberland Compensation Appeal Tribunal, Ex parte Shaw (2) and while doing so Denning L. J. (as he then was) discussed at p. 352, what was it that constituted the record : " What, then, is the record?.
Following these cases I think the record must contain at least the document which initiates the proceedings; the pleadings if any; and the adjudication; but not the evidence, nor the reasons, unless the tribunal chooses to incorporate them.
If the tribunal does state its reasons, and these reasons are wrong in law, certiorari lies to quash the decision.
" This decision only affirmed that certiorari could lie only if an order made by the inferior tribunal was a speaking order.
It did not lay down any duty on the inferior tribunal to set out the reasons for its order but (1) , 718.
(2) ; 169 only pointed out that if no reasons were given it would be impossible for the High Court to interfere by exercising its prerogative jurisdiction in the matter of certiorari.
A more relevant decision on this point is that of this Court in A. K. Gopalaa vs The State of Madras and, Anr.
In that case the provision of law which was impugned amongst others was one which prevented the detenu on pain of prosecution from disclosing to the Court the grounds of his detention communicated to him by the detaining authority.
This provision was struck down as ultra vires and void.
The reason given by Mahajan J. (as he then was) is stated at p. 243: " This Court would be disabled from exercising its functions under article 32 and adjudicating on the point that the grounds given satisfy the requirements of the sub clause if it is not open to it to see the grounds that have been furnished.
It is a guaranteed right of the person detained to have the very grounds which are the basis of the order of detention.
This Court would be entitled to examine the matter and to see whether the grounds furnished are the grounds on the basis of which he has been detained or they contain some other vague or irrelevant material.
The whole purpose of furnishing a detained person with the grounds is to enable him to make a representation refuting these grounds and of proving his innocence.
In order that this Court may be able to safeguard this fundamental right and to grant him relief it is absolutely essential that the detenu is not prohibited under penalty of punishment to disclose the grounds to the Court and no injunction by law can be issued to this Court disabling it from having a look at the grounds.
Section 14 creates a substantive offence if the grounds are disclosed and it also lays a duty on the Court not to permit the disclosure of such grounds.
It virtually amounts to a suspension of a guaranteed right provided by the Constitution inasmuch as it indirectly by a stringent provision makes administration of the law by this Court impossible and at the same (1) ; , 100.
22 170 time it deprives a detained person from obtaining justice from this Court.
In my opinion, therefore, this section when it prohibits the disclosure of the grounds contravenes or abridges the rights given by Part III to a citizen and is ultra vires the powers of Parliament to that extent.
" It is no doubt true that if there was any provision to be found in the impugned Act which prevented the Wage Board from giving reasons for its decision, it might be construed to mean that the order which was thus made by the Wage Board could not be a speaking order and no writ of certiorari could ever be available to the petitioners in that behalf.
It is also true that in that event this Court would be powerless to redress the grievances of the petitioners by issuing a writ in the nature of certiorari and the fundamental right which a citizen has of approaching this Court under article 32 of the Constitution would be rendered nugatory.
The position, however, as it obtains in the present case is that there is no such provision to be found in the impugned Act.
The impugned Act does not say that the Wage Board shall not give any reason for its decision.
It is left to the discretion of the Wage Board whether it should give the reasons for its decision or not.
In the absence of any such prohibition it is impossible for us to hold that the fundamental right conferred upon the petitioners under article 32 was in any manner whatever sought to be infringed.
It may be noted that this point was not at all urged in the petitions which the petitioners had filed in this Court but was taken up only in the course of the arguments by the learned Counsel for the petitioners.
It appears to have been a clear after thought; but we have dealt with the same as it was somewhat strenuously urged before us in the course of the arguments.
Apart from challenging the vires of the Act dealt with above, the petitioners contend that the decision of the Wage Board itself is illegal and void because: (1) Reconstitution of the Board was ultra vires and unauthorised by the Act as it stood at the time, the rules having been published only on July 30, 1956.
(2)The decision by a majority was unwarranted by the Act and since there was no provision in the Act, the Rules providing for the same went beyond the Act and were therefore ultra vires.
(3)The procedure followed by the Board offended the principles of natural justice and was therefore invalid; (4) The decision was invalid, because (a) no reasons were given, (b) nor did it disclose what considerations prevailed with the Board in arriving at its decision; (5) Classification on the basis of gross revenue was illegal and unauthorised by the Act.
(6)Grouping ;into chains or multiple units was unauthorised by the Act.
(7)The Board was not authorised by the Act to fix the salaries of journalists except in relation to a particular industrial establishment and not on an All India basis of all newspapers taken together; (8)The decision was bad as it did not disclose that the capacity to pay of any particular establishment was ever taken into consideration.
(9) The Board had no authority to render a decision which was retrospective in operation.
(10) The Board had no authority to fix scales of pay for a period of 3 years (subject to review by the Govt.by appointing another Wage Board at the end of these 3 years) and (11) The Board was handicapped for want of Cost of Living Index.
172 The position in law is that the decision would be illegal on any of the following three grounds, viz., (A)Because the Act under which it was made was ultra vires; [ See Mohammad Yasin vs Town Area Committee, Jalalabad & anr.
(1) and Himmatlal Harilal Mehta vs State of Madhya Pradesh (2) ].
(B)Because the decision itself infringed the fundamental rights of the petitioners.
[ See Bidi Supply Co.v.
Union of India &
(3) ].
(C) Because the decision was ultra vires the Act.
See Pandit Ram Narain vs State of Uttar Pradesh & ors.
(4) ].
The decision of the Wage Board before us cannot be challenged on the grounds that the impugned Act under which the decision is made is ultra vires or that the decision itself infringes the fundamental rights of the petitioners.
The first ground of attack is based on the circumstance that Shri K. P. Kesava Menon who was originally appointed a member of the Wage Board resigned on or about June 21, 1956, which resignation was accepted by the Central Government by a notification dated July14, 1956, and by the same notification the Central Government appointed in his place Shri K. M. Cherian and thus reconstituted the Wage Board.
There was no provision in the Act for the resignation of any member from his membership or for the filling in of the vacancy which thus arose in the membership of the Board.
A provision in this behalf was incorporated only in the Working Journalists Wage Board Rules, 1956, which were published by a notification in the Gazette of India Part 11 Section 3 on date July 31, 1956.
It was, therefore, contended that such reconstitution of the Board by the appointment of Shri K. M. Cherian in place of Shri K. P. Kesava Menon was unauthorised by the Act as it then stood (1) ; , 578.
(2) ; , 1127.
(3) [1956] S.C.R.267.
(4) ; 173 and the Board which actually published the decision in question was therefore not properly constituted.
It is necessary to remember in this connection that section 8 of the Act empowered the Central Government by notification in the Official Gazette to constitute a Wage Board.
This power of constituting the Wage Board must be construed having regard to section 14 of the , which says that where by any Central Act or Regulation made after the commencement of the Act, any power is conferred then, unless a different intention appears that power may be exercised from time to time as occasion arises.
If this is the true position there was nothing objectionable in the Central Government reconstituting the Board on the resignation of Shri K. P. Kesava Menon being accepted by it.
The Wage Board can in any event be deemed to have been constituted as on that date, viz., July 14, 1956, when all the 5 members within the contemplation of section 8(2) of the Act were in a position to function.
Shri K. P. Kesava Menon had not attended the preliminary meeting of the Board which had been held on May 26, 1956, and the real work of the Wage Board was done after the appointment of Shri K. M. Cherian in his place and stead and it was only after July 14, 1956, that the Wage Board as a whole constituted as it was on that date really functioned as such.
The objection urged by the petitioners in this behalf is too technical to make any substantial difference in regard to the constitution of the Wage Board and its functioning.
Re. 2.
This ground ignores the fact that the Working Journalists Wage Board Rules, 1956, which were published on July 31, 1956, were made by the Central Government in exercise of the power conferred upon it by section 20 of the Act.
That section empowered the Central Government to make rules to carry out the purposes of the Act, in particular to provide for the procedure to be followed by the Board in fixing rates of wages.
Rule 8 provided that every question considered at a meeting of the Board was to be decided by a majority of the votes of the members present and 174 voting.
In the event of equality of votes the Chairman was to have a casting vote. . .
This Rule therefore prescribed that the decision of the Board could be reached by a majority and this was the rule which was followed by the Board in arriving at its decision.
The rule was framed by the Central Government by virtue of the authority vested in it under section 20 of the Act and was a piece of delegated legislation which if the rules were laid before both the Houses of Parliament in accordance with section 20(3) of the Act acquired the force of law.
After the publication of these rules, they became a part of the Act itself and any decision thereafter reached by the Wage Board by a majority as prescribed therein was therefore lawful and could not be impeached in the manner suggested.
This ground has reference to the alleged violation by the Wage Board of the principles of natural justice.
It is urged that the procedure established under the was not in terms prescribed for the Wage Board, the Board having been given under section 11 of the Act the discretion for the purpose of fixing rates of wages to exercise the same powers and follow the same procedure as an Industrial Tribunal constituted under the , while adjudicating upon an industrial dispute referred to it.
On two distinct occasions, however, the Wage Board definitely expressed itself that it had the powers of an Industrial Tribunal constituted under the ' The first occasion was when the questionnaire was issued by the Wage Board and in the questionnaire it mentioned that it had such powers under section 11 of the Act.
The second occasion arose when a number of newspapers and journals to whom the questionnaire was addressed failed to send their replies to the same and the Wage Board at its meeting held on August 17, 1956, reiterated the position and decided to issue a Press Note requesting the newspapers and journals to send their replies as soon as possible, inviting their attention to the fact that the Board had powers of an Industrial Tribunal under the 175 Act and if newspapers failed to send their replies, the Board would be compelled to take further steps in the matter.
This is clearly indicative of the fact that the Wage Board did seek to exercise the powers under the terms of section 11 of the Act.
Even though, the exercise of such powers was discretionary with the Board, the, Board itself assumed these powers and assimilated its ,position to that of an Industrial Tribunal constituted under the .
If, then, it assumed those powers, it only followed that it was also bound to follow the procedure which an Industrial Tribunal so constituted was bound to follow.
It is further urged that in the whole of the questionnaire which was addressed by the Wage Board to the newspaper establishments, there was no concrete proposal which was submitted by the Wage Board to them for their consideration.
The only question which was addressed in this behalf was Question No. 4 in Part "A" which asked the newspaper establishments whether the basic minimum wage, dearness allowance and metropolitan allowance suggested by the Press Commission were acceptable to them and if not, what variations would they suggest and why.
The question as framed would not necessarily focus the attention of the newspaper establishments to any proposal except the one which was the subject matter of that question, viz., the proposal of the Press Commission in that behalf and the newspaper establishments to whom the questionnaire was addressed would certainly not have before them any indication at all as to what was the wage structure which was going to be adopted by the Wage Board.
Even though the Wage Board came to the conclusion, as a result of its having collected the requisite data and gathered sufficient materials, after receiving the answers to the questionnaire and examining the witnesses, that certain wage structure was a proper one in its opinion, it was necessary for the Wage Board to communicate the proposals in that regard to the various newspaper establishments concerned and invite them to make their representations, if any, within a specified period.
It was only after such representations were received from the interested parties 176 that the Wage Board should have finalized its proposals and published its decision.
If this procedure had been adopted the decision of the Wage Board could not have been challenged on the score of its being contrary to the principles of natural justice.
It would have been no doubt more prudent for the Wage Board to have followed the procedure outlined above.
The ground No. 8 is, in our opinion, sufficiently determinative of the question as to the ultra vires character of the Wage Board decision and in view of the 'conclusion reached by us in regard to the same, we refrain from expressing any opinion on this ground of attack urged by the Petitioners.
Re. 4.
This ground is urged because no reasons were given by the Wage Board for its decision.
As a matter of fact, the Wage Board at its meeting dated April 22, 1957, agreed that reasons need not be given for each of the decisions and it was only sufficient to record the same and accordingly it did not give any reasons for the decision which it published.
In the absence of any such reasons, however, it was difficult to divine what considerations, if any, prevailed with the Wage Board in arriving at its decision on the various points involved therein.
It was no doubt not incumbent on the Wage Board to give any reasons for its decision.
The Act made no provision in this behalf and the Board was perfectly within its rights if it chose not to give any reasons for its decision.
Prudence should, however, have dictated that it gave reasons for the decision which it ultimately reached because if it had done so, we would have been spared, the necessity of trying to probe into its mind and find out whether any particular circumstance received due consideration at its hands in arriving at its decision.
The fact that no reasons are thus given, however, would not vitiate the decision in any manner and we may at once say that even though no reasons are given in the form of a regular judgment, we have sufficient indication of the Chairman 's mind in the note which he made on April 30, 1956, which is a contemporaneous record ex plaining the reasons for the decision of the majority.
177 This note of the Chairman is very revealing and throws considerable light on the question whether particular circumstances were at all taken into consideration by the Wage Board before it arrived at its decision.
Re. 5.
This ground concerns the classification of newspaper establishments on the basis of gross revenue.
Such classification was challenged as illegal and unauthorised by the Act.
The Act certainly says nothing about classification and could not be expected to do so.
What the Act authorised it to do was to fix the rates of wages for working journalists having regard to the principles laid down in section 9(1) of the Act.
In fixing the wage structure the Wage Board constituted under the Act was perfectly at liberty if it thought necessary to classify the newspaper establishments in any manner it thought proper provided of course that such classification was not irrational.
If the newspaper establishments all over the country had got to be considered in regard to fixing of rates of wages of working journalists employed therein it was inevitable that some sort of classification should be made having regard to the size and capacity of newspaper establishments.
Various criteria could be adopted for the purpose of such classi fication, viz., circulation of the newspaper, advertisement revenue, gross revenue, capital invested in the business, etc., etc.
Even though the proportion of advertisement revenue to the gross revenue of newspaper establishments may be a relevant consideration for the purpose of classification, we are not, prepared to say that the Wage Board was not justified in adopting this mode of classification on the basis of gross revenue.
It was perfectly within its competence to do so and if it adopted that as the proper basis for classification it cannot be said that the basis which it adopted was radically wrong or was such as to vitiate its decision.
It may be remembered in this connection that the Newspaper Industry Inquiry Committee in U. P. had suggested in its report dated March 31,1949, classification of newspapers in the manner following: "A " Class Papers with (1) a circulation of 10,000 copies or above or (2) an invested capital of rupees 3 lakhs or more : (3) an annual income between rupees one lakhs and 3 lakhs or more: "B " Class Papers with (1) a circulation below 10,000 but above 5,000 copies or (2) an invested capital between rupees one lakh and 3 lakhs or (3)an annual income between rupees one lakh and 3 lakhs; "C " Class Papers with (1)a circulation below 5000 copies or (2) an invested capital below rupees one lakh or (3) an annual income below rupees one lakh.
The classification on the basis of gross revenue was attacked by the petitioners on the ground that in the gross revenue which is earned by the newspaper establishments, advertisement revenue ordinarily forms a large bulk of such revenue and the revenue earned by circulation of newspapers forms more often than not a small part of the same, though in regard to language newspapers the position may be some what different.
The petitioners on the other hand suggested that the profit and loss of the newspaper establishments should be adopted as the proper test and if that were adopted a different 179 picture altogether would be drawn.
The balancesheets and the profit and loss accounts of the several newspaper establishments would require to be considered and it was contended that even if the gross revenue of a particlar newspaper establishment were so large as to justify its inclusion on the basis of gross revenue in Class " A " or Class " B " it might be working at a loss and its classification as such would not be justified.
We have already referred in the earlier part of this judgment to the unsatisfactory nature of the profit and loss test.
Even though the profit and loss accounts and the balance sheets of the several limited companies may have been audited by their auditors and may also have been accepted by the Income tax authorities, they would not afford a satisfactory basis for classification of these newspaper establishments for the reasons already set out above.
As a matter of fact, even before us attempts were made by the respondent, the Indian Federation of Working Journalists to demonstrate that the profit and loss accounts and the balance sheets of several petitioners were manipulated and unreliable.
We are not called upon to decide whether the profit and loss test is one which should be accepted; it is sufficient for our purpose to say that if such a test was not accepted by the Wage Board, the Wage Board was certainly far from wrong in doing so.
Re. 6.
This ground relates to grouping into chains or multiple units and the ground of attack is that such grouping is unauthorised by the Act.
The short answer to this contention is that if such grouping into chains or multiple units was justified having regard to the conditions of the newspaper industry in the country, there was nothing in the Act which militated against such grouping.
The Wage Board was authorised to fix the wage structure for working journalists who were employed in various newspaper establishments all over the country.
If the chains or multiple units existed in the country the newspaper establishments which formed ' such chains 180 or multiple units were well within the purview of the inquiry before the Wage Board and if the Wage Board thus chose to group them together in that manner such grouping by itself could not be open to attack.
The Act could not have expressly authorized the Wage Board to adopt such grouping.
It was up to the Wage Board to consider whether such grouping was justified under the circumstances or not and unless we find something in the Act which prohibits the Wage Board from doing so, we would not deem any such grouping as unauthorised.
The real difficulty, however, in the matter of grouping into chains or multiple units arises in connection with the capacity of the industry to pay, a topic which we shall discuss hereafter while discussing the ground in connection therewith.
Re. 7.
This ground is based on the definition of " newspaper establishment" found in Sec.
2 (d) of the Act.
" Newspaper establishment" is there defined as " an establishment under the control of any person or body of persons, whether incorporated or not, for the production or publication of one or more newspapers or for conducting any news agency or syndicate.
" So, the contention put forward is that " an establishment " can only mean " an establishment " and not a group of them, even though such an individual establishment may produce or publish one or more newspapers.
The definition may comprise within its scope chains or multiple units, but even so, the establishment should be one individual establishment producing or publishing a chain of newspapers or multiple units of newspapers.
If such chains or multiple units were, though belonging to some person or body of persons whether incorporated or not, produced or published by separate newspaper establishments, common control would not render.
the constitution of several newspaper establishments as one establishment for the purpose of this definition, they would none the less be separate newspaper establishments though under common control.
Reliance was placed in support of this contention on a decision of the Calcutta High Court in Pravat Kumar 181 vs W. T. C. Parker (1), where the expression which came up for construction before the Court was " employed in an industrial establishment " and it was observed that: " Employed in an industrial establishment " must mean employed in some particular place, that place being the place used for manufacture or an activity amounting to industry, as that term is used in the Act.
" A similar interpretation was put on the expression industrial establishment " by the Madras High Court in section R. V. Service Ltd. vs State of Madras (2), where it was observed at p. 12: " They referred only to a dispute between the workers and the management of one industrial establishment, the Kumbakonam branch of the section R. V. section Ltd. I find it a little difficult to accept the contention of the learned counsel for the Madras Union, that the Kumbakonam branch of the section R. 'V. section Ltd., is not an industrial establishment as that expression has been used in the several sections of the Act. . . . . .
I need refer only to section 3 of the Act to negative the contention of the learned counsel for the Madras Union, the section R. V. section Ltd., with all its branches should betaken as one industrial establishment.
" These decisions lend support to the contention that a newspaper establishment like an industrial establishment should be located in one place, even though it may be carrying on its activities of production or publication of more newspapers than one.
If these activities are carried on in different places, e. g., in different towns or cities of different States, the newspaper establishments producing or publishing such newspapers cannot be treated as one individual establishment but should be treated as separate newspaper establishments for the purpose of working out the relations between themselves and their employees.
There would be no justification for including these different newspaper establishments into.
one chain or multiple unit and treating them, as if they were one (1) A. I. R. , 118, para.
(2) A. I. R. , 122.
182 newspaper establishment.
Here again, the petitioners are faced with this difficulty that there is nothing in the Act to prohibit such a grouping.
If a classification on the basis of gross revenue could be legitimately adopted by the Wage Board then the grouping into chains or multiple units could also be made by it.
There is nothing in the Act to prohibit the treating of several newspaper establishments producing or publishing one or more newspapers though in different parts of the country as one newspaper establishment for the purpose of fixing the rates of wages.
It would not be illegitimate to expect the same standard of employment and conditions of service in several newspaper establishments under the control of any person or body of persons, whether incorporated or not; for an employer to think of employing one set of persons on higher scales of wages and another set of workers on lower scales of wages would by itself be iniquitous, though it would be quite legitimate to expect the difference in scales having regard to the quality of the work required to be done, the conditions of labour in different regions of the country, the standard of living in those regions and other cognate factors.
All these considerations would necessarily have to be borne in mind by the Wage Board in arriving at its decision in regard to the wage structure though the relative importance to be attached to one circumstance or the other may vary in accordance with the conditions in different areas or regions where the newspaper establishments are located.
Re. 8.
We now come to the most important ground, viz., that the decision of the Wage Board has not taken into consideration the capacity to pay of any particular newspaper establishment.
As we have already seen, the fixings: of rates of wages by the Wage Board did not prescribe whether the wages which were to be fixed were minimum wages, fair wages, or living, wages and it was left to the discretion of the Wage Board to determine the same.
The principles for its guidance were, However, laid down and they prescribed the circumstances which were to be taken into consideration before 183 such determination was made by the Wage Board.
One of the essential considerations was the capacity of the industry to pay and that was comprised within the category " the circumstances relating to newspaper industry in different regions of the country ".
It remains to consider, however, whether the Wage Board really understood this category in that sense and in fact applied its mind to it.
At its preliminary meeting held on May 26, 1956, the Board set up a SubCommittee to draft a questionnaire to be issued to the various journals and organisations concerned, with a view to eliciting factual data and other relevant information required for the fixation of wages.
The Sub committee was requested to bear in mind the need inter alia for 'proper classification of the country into different areas on the basis of certain criteria like population, cost of living, etc.
This was the only reference to this requirement of section 9(1) and there was no reference herein to the capacity of the industry to pay which we have held was comprised therein.
The only question in the questionnaire as finally framed which had any reference to this criterion was Question No. 7 in Part " A " under the heading " Special Circumstances " and that question was: " Are there in your regions any special conditions in respect of the newspaper industry which affect the fixing of rates of wages of working journalists ? If so, specify the conditions and indicate how they affect the question of wages.
The Wage Board no doubt asked for detailed accounts of newspaper establishments and also required information which would help it in the proper evaluation of the nature and quality of work of various categories of working journalists, but the capacity of the industry to pay which was one of the essential considerations was nowhere prominently brought in issue and no information on that point was sought from the various newspaper establishments to whom the questionnaire was going to be addressed.
The answers to Question No. 7 as summarized by the Wage Board no doubt referred in some cases to the capacity 184 of the industry to pay but that was brought in by the newspaper establishments themselves who answered the question in an incidental manner and could not be said to be prominent in the minds of the parties concerned.
It is pertinent to observe that even before the Press Commission the figures had disclosed that out of 127 newspapers 68 had been running into loss and 59 with profits and there was an overall profit of about 1% on a capital investment of seven crores.
The profit and loss accounts and the balance sheets of the various companies owning or controlling newspaper establishments were also submitted before the Wage Board but they had so far as they went a very sorry tale to tell.
The profit and loss statements for the year 1954 55 revealed that while 43 of them showed profits 40 had incurred losses.
Though no scientific conclusion could be drawn from this statement it showed beyond doubt that the condition of the newspaper industry as a whole could not be considered satisfactory.
Under these circumstances, it was all the more incumbent upon the Wage Board even though it discounted these profit and loss statements as not necessarily reflecting the true financial position of these newspaper establishments, to consider the question of the capacity of the industry to pay with greater vigilance.
There was again another difficulty which faced the Wage Board in that behalf and it was that out of 5,705 newspapers to whom the questionnaire was addressed only 312 or at best 325 had responded and the Wage Board was in the dark as to what was the position in regard to other newspaper establishments.
As a matter of fact, the chairman in his note dated April 30, 1957, himself pointed out that the Wage Board had no data before it of all the newspapers and where it had, that was in many cases not satisfactory.
This aspect was again emphasized by him in his note when he reiterated that the data available to the Wage Board had not been as complete as it would have wished them to be and therefore recommended in the end the establishment of a standing administrative machinery which would collect from all newspaper 185 establishments in the country on a systematic basis detailed information and data such as those on employment, wage rates and earnings, financial condition of papers, figures of circulation, etc., which may be required for the assessment of the effects of the decision of the Wage Board at the time of the review.
The Wage Board, in fact, groped in the dark in the absence of sufficient data and information which would enable it to come to a proper conclusion in regard to the wage structure which it was to determine.
In the absence of such data and materials the Board was not in a position to work out what would be the impact of its proposals on the capacity of the industry to pay as a whole or even region wise and the chairman in his note stated that it was difficult for the Board at that stage to work out with any degree of precision, the economic and other effects of its decision on the newspaper industry as a whole.
Even with regard to the impact of these proposals on individual newspaper establishments the chairman stated that the future of the Indian language newspapers was bright, having regard to increasing literacy and the growth of political con sciousness of the reading public, and by rational management there was great scope for increasing the income of newspapers and even though there was no possibility of any adjustment which might satisfy all persons interested, it was hoped that no newspaper would be forced to close down as a result of its decision; but that if there was a good paper and it deserved to exist, the Government and the public would help it to continue.
This was again a note of optimism which does not appear to have been justified by any evidence on the record.
Even though, the Wage Board classified the newspaper establishments into 5 classes from " A " to " E " on the basis of their gross revenue the proportion of the advertisement revenue to the gross revenue does not appear to have been taken into consideration nor was the essential difference which subsisted between the circulation and the paying capacity of the language newspapers as compared with newspapers in the 24 186 English language taken into account.
If this had been done, the basis of gross revenue which the Wage Board adopted would have been modified in several respects.
The grouping of the newspapers into chains or multiple units implied that the weaker units in those groups were to be treated as on a par with the stronger units and it was stated that the loss in the weaker units would be more than compensated by the profits in the more prosperous units.
The impact of these proposals on groups of newspapers was only defended on principle without taking into consideration the result which they would have on the working of the weaker units.
Here also the Chairman expressed the opinion that the Board was conscious that as a result of its decision, some of the journalists in the weaker units of the same group or chain may get much more than those working in its highest income units.
He however stated that if the principle was good and scientific, the inevitable result of its application should be judged from the stand point of Indian Journalism as a whole and not the burden it casts on a particular establishment.
It is clear therefore, that this principle which found favour with the Wage Board was sought to be worked out without taking into consideration the burden which it would impose upon the weaker units of a particular newspaper establishment.
The representatives of the employers objected to the fixation of scales of wages on the plea that fixation of rates of wages did not include the fixation of scales of wages.
This contention was negatived by the representatives of the employees as also by the Chairman and the Wage Board by its majority decision accepted the position that it could, while fixing the rates of wages also fix the scales of wages.
The Press Commission itself had merely suggested a basic minimum wage for the consideration of the parties concerned but had suggested that so far as the scales of wages were concerned they were to be settled by collective bargaining or by adjudication.
Even though the Wage Board took upon itself the burden of fixing scales of wages as really comprised within the terms of their reference, it was incumbent upon it to consider what the impact of 187 the scales of wages fixed by it would be on the capacity of the industry to pay.
There is nothing on the record to suggest that both as regards the rates of wages and the scales of wages which it determined the Wage Board ever took into account as to what the impact of its decision would be on the capacity of the industry to pay either as a whole or region wise.
There is, however, a further difficulty in upholding the decision of the Wage Board in this behalf and it is this that even as regards the fixation of the rates of wages of working journalists the Wage Board does not seem to have taken into account the other provisions of the Act which conferred upon the working journalists the benefits of retrenchment compensation, payment of gratuity, hours of work and leave.
These provisions were bound to have their impact on the paying capacity of the newspaper establishments and if these had been borne in mind by the Wage Board it is highly likely that the rates of wages including the scales of wages as finally determined might have been on a lesser scale than what one finds in its decision.
This difficulty becomes all the more formidable when one considers that the working journalists only constituted at best one fifth of the total staff employed in the various establishments.
The rest of the 80% comprised persons who may otherwise be described as factory workers who would be able to ameliorate their conditions of service by having resort to the machinery under the .
If the conditions of service of the working journalists were to be improved by the Wage Board the other employees of newspaper establishments were bound to be restive add they would certainly, at the very earliest opportunity raise industrial disputes with a view to the betterment of their conditions of service.
Even though the Industrial Courts established under the , might not give them relief commensurate with the relief which the Wage Board gave to the working journalists, there was bound to be an improvement, in their conditions of service which the Industrial Court would certainly determine having regard to the benefits which the working journalists 188 enjoyed and this would indeed impose an additional financial burden on the newspaper establishments which would substantially affect their capacity to pay.
This consideration also was necessarily to be borne in mind by the Wage Board in arriving at its final decision and one (foes not find anything on the record which shows that it was actually taken into consideration by the Wage Board.
The retrospective operation of the.
decision of the Wage Board was also calculated to impose a financial burden on the newspaper establishments.
Even though this may be a minor consideration as compared with the other considerations above referred to, it was none the less a circumstance which the Wage Board ought to have considered in arriving at its decision in regard to the fixing of rates of wages.
The financial burden which was imposed by the decision of the Wage Board was very vividly depicted in the statements furnished to us on behalf of the petitioners in the course of the hearing before us.
These statements showed that the wage bill of these newspaper establishments was going to be considerably increased, that the retrospective operation of the decision was going to knock off a considerable sum from their reserves and that the burden imposed upon the newspaper establishments by the joint impact of the provisions of the Act in regard.
to retrenchment compensation, payment of gratuity, hours of work and leave as well as the decision of the Wage Board in regard to the fixing of rates of wages and the scales of wages would be such as would cripple the resources of the newspaper establishments, if not necessarily lead to their complete extinction.
These figures have been given by us in the earlier 189 part of our judgment and we need not repeat the same.
The conclusion, however, is inescapable that the decision of the Wage Board imposed a very heavy financial burden on the newspaper establishments, which burden was augmented by the classification on the basis of gross revenue, fixation of scales of wages, provisions as, regards the hours of work and leave, grouping of newspapers into chains or multiple units and retrospective operation given to the decision of the Wage Board as therein mentioned.
If these proposals had been circulated, before being finalized, by the Wage Board to the various newspaper establishments so that these newspaper establishments could, if they so desired, submit their opinions thereupon and their representations, if any, in regard to the same to the Wage Board for its consideration and if the Wage Board had after receiving such opinions and representations from the newspaper establishments concerned finalised it decision, this attack on the ground of the Wage Board not having taken into consideration the capacity of the industry to pay as a whole or region wise would have lost much of its force.
The Wage Board, however, did nothing of the type.
Proposals were exchanged between the representatives of the employers and the representatives of the employees.
The discussion that the chairman had with each set of representatives did not bear any fruit and the chairman himself by way of mediation, as it were, submitted to them his own proposals presumably having regard to the different points of view which had been expressed by both these parties.
The decision in regard to the scales of wages, was, as we have seen before, a majority decision which was not endorsed by the representatives of the employers.
The proposals of the chairman also were not acceptable to the representatives of the employers but the representatives of the employees accepted them and they thus became the majority decision of the Wage Board.
The ultimate decision of the chairman on those points does not appear to have been the result of any consideration of the capacity of the industry to pay as a whole or region wise but reflects a compromise 190 which he brought about between the diverse views but which also was generally accepted only by the representatives of the employees and not the representatives of the employers.
We are supported in this conclusion by the observations of the chairman himself in the note which he made simultaneously with the publication of the decision on April 30, 1957, that it was difficult for the Wage Board at that stage to work out with any degree of precision, the economic and other effects of the decision on the newspaper industry as a whole.
An attempt was made on behalf of the respondents in the course of the hearing before us to shew that by the conversion of the currency into naye pyse and the newspapers charging to the public higher price by reason of such conversion, the income of several newspapers had appreciably increased.
These figures were, however, controverter on behalf of the petitioners and it was pointed out that whatever increase in the revenue was brought about by reason of this conversion of price into naye pyse was more than offset by the fall in circulation, ever rising price of newsprint and the higher commission, etc., which was payable by the newspaper establishments to their commission agents.
The figures as worked out need not be described here in detail; but we are satisfied that the conversion of the price into naye pyse had certainly not the effect which was urged and did not add to the paying capacity of the newspaper establishments.
The very fact that the Wage Board thought it necessary to express a pious hope that if there is a good paper and it deserves to exist, the Government and the public will help it to continue, and also desired the interests which it felt had been hit hard by its decision not to pass judgment in haste, but to watch, the effects of its decision in actual working with patience for a period of 3 to 5 years, shows that, the Wage Board was not sure of its own ground and was publishing its decision merely by way of an experiment.
The chairman urged upon the Government of India 191 the desirability of creating immediately a standing administrative machinery which could also combine in itself the functions of implementing and administering its decision and that of preparing the ground for the review and revision envisaged after 3 to 5 years.
This was again a, pious hope indulged in by the Wage Board.
It was not incumbent on the Government to fulfill that expectation and there was no knowing whether the Government would ever review or revise the decision of the Wage Board at the expiration of such period.
We have carefully examined all the proceedings of the Wage Board and the different tables and statements prepared by them.
Neither in the proceedings nor in any of the tables do we see satisfactory evidence to show that the capacity of the industry to pay was examined by the Board in fixing the wage structure.
As we have already observed, it was no doubt open to the Board not to attach undue importance to the statements of profit and loss accounts submitted by various newspaper establishments, but, since these statements prima facie show that the trade was not making profit it was all the more necessary for the Board to satisfy itself that the different classes of the newspaper establishments would be able to bear the burden imposed by the wage structure which the Board had decided to fix.
Industrial adjudication is familiar with the method which is usually adopted to determine the capacity of the employer to pay the burden sought to be imposed on him.
If the industry is divided into different classes it may not be necessary to consider the capacity of each individual unit to pay but it would certainly be necessary to consider the capacity of the respective classes to bear the burden imposed on them.
A cross section of these respective classes may have to be taken for careful examination and all relevant factors may have to be borne in mind in deciding what burden the class considered as a whole can bear.
If possible, an attempt can also be made, and is often made, to project the burden of the wage structure into two or three succeeding years and determine how it affects the financial position of the employer.
The whole of the 192 record before the Board including the chairman 's note gives no indication at all that an attempt was made by the Board to consider the capacity of the industry to pay in this manner.
Indeed, the proceedings show that the demands made by the representatives of the employees and the concessions made by the employers ' representatives were taken as rival contentions and the Chairman did his best to arrive at his final decision on the usual basis of give and take.
In adopting this course, all the members of the Board seem to have lost sight of the fact that the essential prerequisite of deciding the wage structure was to consider the capacity of the industry to pay and this, in our opinion, introduces a fatal infirmity in the decision of the Board.
If we had been satisfied that the Board had considered this aspect of the matter, we would naturally have been reluctant to accept any challenge to the validity of the decision on the ground that the capacity to pay had not been properly considered.
After all, in cases of this kind where special Boards are set up to frame wage structures, this Court would normally refuse to constitute itself into a court of appeal on questions of fact; but, in the present case, an essential condition for the fixation of wage structure has been completely ignored and so there is no escape from the conclusion that the Board has contravened the mandatory requirement of section 9 and in consequence its decision is ultra vires the Act itself.
Re. 9.
This ground, viz., that the Board had no authority to render a decision which was retrospective in operation in also untenable.
The Wage Board certainly had the jurisdiction and authority to pronounce a decision which could be retrospective in effect from the date of its appointment and there was no legal flaw in the Wage Board prescribing that its decision should be retrospective in operation in the manner indicated by it.
We have already dealt with it above.
193 Be.
Ground No. 10 talks of the authority of the Wage Board to fix scales of pay for a period of 3 years, subject to review by the Government by appointing another Wage Board at the end of that period.
We are not concerned with such fixation of the period for the ' simple reason that the Board has not in terms done so.
The only authority which it had was to fix the rates of wages and submit its decision in respect thereof to the Government.
Any pious hope expressed that the decision should be subject to review or revision by the Government by appointment of another Wage Board after the lapse of 3 or 5 years was not a part of its decision and we need not pause to consider the effect of such fixation of the period, if any, because it has in fact not been done.
Re. 11.
The last ground talks of the Wage Board being handicapped for want of Cost of Living Index.
This ground also cannot avail the petitioners for the simple reason that the decision of the Wage Board itself referred in Clause 24 thereof to the all India cost of living index number published by the Labour Bureau of the Government of India 0 Base 1944: 100 and fixed the dearness allowance in relation to the same.
These statistics were available to the Wage Board and it cannot be said that the Wage Board was in any manner whatever handicapped in that respect.
On a consideration of all the grounds of attack thus levelled against the validity and the binding nature of the decision of the Wage Board, we have, therefore, come to the conclusion that the said decision cannot be sustained and must be set aside.
The petitions will, therefore, be allowed and the petitioners will be entitled to an order declaring that section 5 (1) (a) (iii) of the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955, is ultra vires the Constitution of India and that the decision of the Wage Board dated April 30, 1957, is illegal and void.
As regards the costs, in view of the fact that the 25 194 petioners have failed in most of their contentions in regard to the constitutionality of the Act, the fairest, order would be that each party should bear and pay its own costs of these petitions Civil Appeals Nos.699 703 of 1957.
These Civil Appeals are directed against the decision of the Wage Board and seek to set aside the same as destroying the very existence of the newspaper establishments concerned and infringing their fundamental rights.
Special leave under article 136 of the Constitution was granted by this Court in respect of each of them, subject to the question of maintainability of the appeals being open to be urged.
These appeals are also covered by the judgment just delivered by us in Petition No. 91 of 1957 & Ors., and the appellants would be entitled to a declaration in each one of them that the decision of the Wage Board is ultra vires the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955, and therefore void and inoperative.
The appellants having substantially succeeded in their respective petitions under article 32 of the Constitution, the question has now become purely academic and we need not spend any time over the same.
| These petitions on behalf of certain newspaper establishments challenged the constitutional validity of the Working journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955, and the legality of the decision of the Wage Board, constituted thereunder, purporting to act under section 9 of the Act.
The impugned Act, which was passed in order to implement the recommendations of the Press Commission and had for its object the regulation of the conditions of service of working journalists and other persons employed in newspaper establishments, provided, inter alia, for the payment of gratuity to a working journalist who had been in continuous service, whether before or after the commencement of the Act, for not less than three years, even when he voluntarily resigned from service, regulated hours of work and leave, provided for the payment of retrenchment compensation with retrospective effect in certain cases and by section 9(1) laid down the principles that the Wage Board was to follow in fixing the rates of wages of working journalists.
Under those principles the Wage Board was to have regard to the cost of living, the prevalent rates of wages for comparable employments, the circumstances relating to the newspaper industry in different regions of the country and to any other circumstances which it might consider relevant.
The petitioners contended on various grounds that the provisions of the impugned Act violated their fundamental rights under articles 19(1)(a), 19(1)(g), 14 and 32 Of the Constitution and that the decision of the Wage Board fixing the rates and scales of wages, which was arrived at without any consideration whatsoever as to the capacity of the newspaper industry to pay the same, imposed too heavy a financial burden on the industry and spelled its total ruin, was vitiated by a wrong approach and non application of the proper criteria and transgressed the principles of natural justice and was, therefore, illegal and void: Held, that the constitutional validity of the impugned Act, with the sole exception of section 5(1)(a)(iii) of the Act which infringed 13 article 19(1)(g) of the Constitution, was beyond question and as that section, severable as it was from the rest of the Act, must alone be declared ultra vires.
Section 9(1) of the Act, properly construed, made it incum bent on the Wage Board to take into consideration the capacity of the newspaper industry to pay the rates and scales of wages recommended by it and as there was nothing to indicate that it bad done so, its decision was void and inoperative.
Held, further, that there could be no doubt, in view of the interpretation put upon article 19(1)(a) of the Constitution by this Court, that liberty of the press was an essential part of the freedom of speech and expression guaranteed by that Article and the press had thereunder the right of free propagation and free circulation without any previous restraint on publication.
Ramesh Thaper vs The State of Madras, ; and Brij Bhushan vs The State of Delhi, ; , referred to.
It was legitimate and proper to refer in this connection to the decisions of the Supreme Court of the United States of America, since article 19(1)(a) of the Constitution was based on Amendment 1 of the Constitution of that country, and the rules that could be deduced therefrom made it clear that although freedom of the press included freedom from restriction in respect of employment in the editorial staff, the press was not immune from ordinary forms of taxation or from the application of general laws relating to industrial relations or laws regulating payment of wages.
Case law reviewed.
But if a law were to single out the press for laying prohibitive burdens on it that would restrict the circulation, penalise its freedom of choice as to personnel, prevent newspapers from being started and compel the press to seek Government aid, it would be violative of article 19(1)(a) and would fall outside the protection afforded by article 19(2) of the Constitution.
The impugned Act, judged by its provisions, was not such a law but was a beneficent legislation intended to regulate the conditions of service of the working journalists and the consequences aforesaid could not be the direct and inevitable result of it.
Although there could be no doubt that it directly affected the press and fell outside the categories of protection mentioned in article 19(2), it had not the effect of taking away or abridging the freedom of speech and expression of the petitioners and did not, therefore, infringe article 19(1)(a) of the Constitution.
A.K. Gopalan vs The State of Madras, ; , Ram Singh vs The State of Delhi, Minnesota Ex Rel.
Olson, ; ; and Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co., Ltd., ; , considered.
14 Nor could the impugned Act be held to be violative of article 19(1)(g) of the Constitution in view of the test of reason ableness laid down by this Court.
Chintaman Rao vs The State of Madhya Pradesh, [1950] S.C.R. 759, The State of Madras vs V. G. Rao, ; , a State of West Bengal vs Subodh Gopal Bose, [1954] section C. R. 587 and Virendra vs State of Punjab, ; , referred to.
It was not correct to say that section 9(i) of the Act did not lay down the relevant criteria for the fixation of rates of wages.
On a true construction of that section it must be held that the criterion of prevalent rates of wages for comparable employment could be consistent only with the wages higher than the bare subsistence or minimum wages and, since rates of wages must be held to include scales of wages as well, it was essential that the Wage Board should take into consideration the capacity of the newspaper industry to pay before it could fix the rates of wages.
Although the Act did not specifically say so, it was possible to hold that the third criterion laid down by the section, namely, the circumstances relating to the newspaper industry in different regions of the country, included such a consideration.
The provisions of the section were not, therefore, unreasonable and violative of article 19(1)(g) of the Constitution.
The provisions of section 9(1) of the impugned Act did not vest uncontrolled power in the Wage Board.
The last criterion of that section which empowered the Board to take into consideration any other circumstances that it might think relevant, must be read ejusdem generis with the other criteria that preceded it and as they laid down with sufficient clarity and particularity the principles for the guidance of the Board, the Legislature was perfectly justified in leaving such considerations as might arise in course of the enquiry to the subjective satisfaction of the Board constituted, as it was, of equal number of representatives of both the employers and employees.
Thakur Raghbir Singh vs Court of Wards, Ajmer, [1953] S.C.R. 1049, considered.
It was not correct to say, having regard to the provisions of sections 11 and 20(2)(d) of the impugned Act, that the Act did not lay down any procedure for the Board to follow or that it was open to the Board to follow any arbitrary procedure violating the principles of natural justice.
There could be no substance in the contention of the peti tioners that the provisions of the impugned Act relating to proofreaders, whom it included within the definition of working journalists, period of notice under section 3(2), retrospective operation in cases specified by section 4 and hours of work, imposed unreasonable restrictions on their fundamental right to carry on business.
Gratuity, however, was a reward for good, efficient and faithful service rendered for a considerable period and there could be 15 no justification for awarding the same when an employee voluntarily resigned, except in certain exceptional circumstances.
The award of gratuity, therefore, to an employee who voluntarily resigned from service after a period of only three years, under section 5(1)(a)(iii) of the Act, must be held to be unreasonable and wholly unjustified.
The impugned Act was not discriminatory in character and did not violate article 14 of the Constitution.
Working journalists formed a separate class by themselves and could be classified apart from the rest of the newspaper employees on a perfectly intelligible differentia rationally related to the object which the Act had in view.
Nor could the provisions of either section 12 or section 17 of the Act, therefore, be said to be discriminatory in character.
Budhan Choudhary vs The State of Bihar, [1955] 1 S.C.R. 1045, applied.
The impugned Act contained no prohibition nor did it in any way prevent the Wage Board from giving reasons for its decision and thus passing a speaking order where it chose to do so, and it could not, therefore, be said to have violated the fundamental right of a citizen to move the Supreme Court for a writ of certiorari under article 32 of the Constitution.
Rex vs Northumberland Com.
Appeal Tribunal, Ex Parte Shaw, and Rex vs Northumberland Compensation Appeal Tribunal, Ex Parte Shaw, ; , held inapplicable.
A.K. Gopalan vs The State of Madras, ; , relied on.
The question whether a particular body was exercising legislative, administrative or judicial or quasi judicial functions has to be determined in the light of the statute under which it was constituted and an administrative body functioning as such can also be acting in a quasi judicial capacity.
The test would be whether it had to decide on evidence and decide judicially.
So judged, there could be no doubt that the Wage Board under the impugned Act was functioning in a quasi judicial capacity.
Nagendra Nath Bora vs Commissioner of Hills Division and Appeals, Assam, ; , referred to.
Case law reviewed.
Although this Court would not normally enter into questions of fact, in this case the Wage Board had wholly ignored an essential condition for the exercise of its function and imposed a very heavy financial burden on the newspaper industry.
Although the Classification of the newspaper industry on the basis of grossrevenue, fixation of scales of wages, provisions as to the, hours of work, leave, retrospective operation in specified cases, and grouping of newspapers into chains or multiple units could not be said to be improper or unjustified, they made the burden heavier still.
16 The Board made no enquiry whatsoever as to the ability of the industry to pay either as a whole or region wise and did not call for or hear representations from them before finalising its decision.
Its decision was, therefore, ultra vires the Act and contrary to the principles of natural justice.
|
Summarize this legal judgement text concisely | Appeals Nos. 412 and 413 of 1956.
Appeals by special leave from the judgment and order dated October 17, 1955, of the Patna High Court in M.J.C. No. 577 of 1953, made on reference by the Board of Revenue, Bihar in Appeals Nos. 495 and 496 of 1952.
1358 M. C. Setalvad, Attorney General, for India, Rajeshwari Prasad and section P. Varma, for the appellant.
Mahabir Prasad, Advocate General for the State of Bihar and R. C. Prasad, for the respondent.
February 19.
The Judgment of Das, C.J. Venkatarama Aiyar, section K. Das and Sarkar, JJ. ",as delivered by Das C. J. Bose, J. delivered a separate judgment.
DAS C. J.
These two appeals, which have been filed with the special leave granted by an order made by this Court on April 3, 1956, and which have been consolidated together by the same order, are dire led against the judgment pronounced by the Patna high Court on October 17, 1955, in Miscellaneous Judicial Case No. 577 of 1953, deciding certain questions refer.
red to it by the Board of Revenue, Bihar under section 25 of the Bihar Sales Tax Act, 1947 (No. XIX of 1947) hereinafter referred to as the 1947 Act.
The said references arose out of two orders passed by the Board of Revenue in revision of two sales tax assessment orders made against the appellant company.
The appellant company is a company incorporated under the Indian Companies Act.
Its registered office is in Bombay; its factory and works are at Jamshedpur in the State of Bihar and its head sales ' office is in Calcutta in the State of West Bengal.
It has store yards in the States of Madras, Bombay, West Bengal, Uttar Pradesh, Hyderabad, Madhya Pradesh, Punjab and Andhra.
It carries on business as manufacturer of iron and steel and is a registered dealer under the 1947 Act, the registration No. being section C. 905.
Its course of dealing is thus described in the judgment under appeal: " The intending purchaser has to apply for a permit to the Iron and Steel Controller at Calcutta, who forwards the requisition to the Chief Sales Officer of the assessee working in Calcutta.
The Chief Sales Officer thereafter makes a "works order" and for.
wards it to Jamshedpur.
The " works order " mentions the complete specification of the goods required.
1359 After the receipt of the "works order" the Jamshedpur factory initiates a " rolling " or " manufacturing " programme.
After the goods are manufactured, the Jamshedpur factory sends the invoice to the Controller of Accounts who prepares the forwarding notes, and on the basis of these forwarding notes, railway receipts are prepared.
The goods are loaded in the wagons at Jamshedpur and despatched to various stations, but the consignee in the railway receipt is the assessee itself and the freight also is paid by the assessee.
The railway receipts are sent either to the branch offices of the assessee or to its bankers, and after the purchaser pays the amount of consideration, the railway receipt is delivered to him.
These facts are admitted and the correctness of these facts are not disputed by the State of Bihar.
" The appellant company was separately assessed for two periods: (1) from July 1, 1947 to March 31, 1948, and (2) from April 1, 1948 to March 31, 1949.
For the first period the appellant company filed a return under section 12(1) of the 1947 Act before the Sales Tax Officer showing a gross turnover of Rs. 12,80,15,327 8 5.
From this gross turnover the appellant company claimed to deduct a sum of Rs. 2,88,60,787 13 0 being the amount of valuable consideration for the goods manufactured at Jamshedpur in the State of Bihar but sold, delivered and consumed outside that State on the ground that in none of the transactions in respect of the said sum did the property in the goods pass to the purchasers in the State of Bihar.
The appellant company further claimed a deduction of Rs. 1,10,87,125 13 0 on account of railway freight, actually paid by it for the despatch of the goods.
The Sales tax Officer, by his assessment order dated July 22, 1949, disallowed both the claims for deduction and, on the other hand added a sum of Rs. 13,66,496 11 0, being the amount of sales tax realised by the appellant company from its purchasers, to its taxable turnover and assessed the appellant company to sales tax amounting to Rs. 15,31,374 5 9.
For the second period the appellant company filed a return showing a gross turnover of Rs. 21,64,45,450 0 0. 1360 From this gross turnover the appellant company claimed a deduction of Rs. 10,71,66,233 11 0 being the amount of valuable consideration for goods manufactured at Jamshedpur in the State of Bihar, but sold, delivered and consumed outside that State on the same ground as hereinbefore mentioned.
The appellant company also claimed a deduction of Rs. 40,89,973 9 0 on account of railway freight actually paid by it for the despatch of the goods.
The Sales Tax Officer by his assessment order dated September 24, 1949, disallowed both the claims and added the sum of Rs. 22,37,919 4 0, being the amount of sales tax realised by the appellant company from its purchasers, to its taxable turnover and assessed the appellant company to sales tax amounting to Rs. 28,30,458 6 0.
Against these two assessment orders the appellant company preferred two appeals under section 24 of the 1947 Act to the Commissioner of Sales Tax of Chota Nagpur who, on April 29, 1950, dismissed both the appeals.
The appellant company went up to the Board of Revenue on two revision applications against the two orders of the Commissioner.
The Board of Revenue,by its order dated August 30, 1952, confirmed the orders of the Commissioner with certain modifications and remanded the cases to the Sales Tax Officer.
The appellant company applied under section 25 of the 1947 Act to the Board of Revenue in Reference Cases Nos. 495 and 496 of 1952 for reference of certain questions of law to the High Court.
By a common order dated October 5, 1953, made in the said two references the Board of Revenue referred the following questions of law to the High Court for its decision " (1) Is the Bihar Sales Tax Act, 1947, as amended in 1948, ultra vires the Provincial Legislature in view of the extended meaning of the expression taxes on sale of goods given in the Act in the light of the provisions of the Government of India Act, 1935 ? (2)Are the provisions of section 2(g) of the 1947 Act ultra vires the Provincial Legislature ? 1361 (3) Is it legal to include sales tax in the taxable turnover of an assessee like the petitioner ? (4) Was the Bihar Sales Tax (Amendment) Act of 1948 legally extended to Chotanagpur ? (5) Were the levy and collection of sales taxes for periods prior to the 26th January 1950, under the Sales Tax Act then in force rendered illegal by the provisions of the Constitution ? (6) Was the Commissioner, who passed orders, in appeal, after the Constitution came into force, bound to decide the appeal according to the provisions of the Constitution in respect of taxes levied or sought to be levied for periods prior to the 26th January, 1950, when the Constitution came into force ?" Out of these six questions, question No. 3 was decided in favour of the appellant company and the respondent State has not preferred any appeal against that decision or questioned its correctness.
Question No. 4 was not pressed before the High Court and does not survive before us.
Questions Nos. 1, 2, 5 and 6 were decided against the appellant company and the two consolidated appeals are directed against the High Court 's decision on these questions.
It will be noticed that questions Nos.
I and 2, in effect, raise the same problem, namely, as to the vires of the 1947 Act and questions Nos. 5 and 6 are concerned with the validity of the retrospective levy of sales tax by reason of the amendment of section 4 of the 1947 Act.
The following points, as formulated by the learned Attorney General appearing for the appellant company, have been urged before us in support of these appeals: " (1) The tax levied under section 4(1) read with section 2(g), second proviso, cl.
(ii), is not a tax on sale within the meaning of Entry 48 in List II of the Seventh Schedule to the Government of India Act, 1935.
(2) The doctrine of nexus is not applicable to sales tax.
(3) In any event the nexus in the present case is not real and sufficient but is illusory.
1362 (4)Having regard to the provisions of the law mentioned above, the tax levied is in the nature of duty of excise rather than a tax on sale.
(5)The retrospective levy by reason of the amendment of section 4(1) destroys its character as a sales tax and makes it a direct tax on the dealer instead of an indirect tax to be passed on to the consumer.
" In order to appreciate the arguments that have been advanced before us on the points noted above, it is necessary to refer to the relevant statutory provisions, which were in force at the material times.
Section 99, of the Government of India Act, 1935, authorised a Provincial Legislature, subject to the provisions of that Act, to make laws for the Province or for any part thereof.
Section 100(3) of that Act provided that, subject to the two preceding sub sections, the Provincial Legislature had, and the Federal Legislature had not, power to make laws for any Province or any part thereof with respect to any of the matters enumerated in List 11 of the Seventh Schedule to that Act.
The matter enumerated in Entry 48 in List II was as follows: " Taxes on the sale of goods and on advertisements.
" It is in exercise of this legislative power that the Provincial Legislature of Bihar passed the 1947 Act which received the assent of the Governor General on June 21, 1947, and came into force on July 1, 1947, by virtue of a notification made in the official gazette under section 1(3) of the said Act.
The relevant portion of section 4(1) of the 1947 Act, which was the charging section, was, prior to its amendment hereinafter mentioned, expressed in the following terms: " Subject to the provisions of sections 5, 6, 7 and 8 and with effect from such date as the Provincial Government may, by notification in the official gazette, appoint, being not earlier than 30 days after the date of the said notification, every dealer whose gross turnover during the year immediately preceding the commencement of this Act on sales which had taken place both in and outside Bihar exceeded Rs. 10,000 shall be liable to pay tax under this Act 1363 on sales which have taken place in Bihar after the date was notified.
" It should be noted that, although the 1947 Act came into force on July 1, 1947, by virtue of a notification published in the official gazette under section 1(3) thereof, the charging section quoted above did not come into operation because, by its own terms, it required a further notification in the official gazette to bring it into effect.
For some reason, not apparent on the record, the Provincial Government did not issue any notification as contemplated by section 4(1).
To cure this omission Ordinance III of 1948 was promulgated by the Governor amending section 4(1)(a) of the 1947 Act.
Section 4(1), as amended, read as follows: " Subject to the provisions of sections 5, 6, 7 and 8 and with effect from the commencement of this Act, every dealer, whose turnover during the year immediately preceding the date of such commencement, on sales which have taken place both in and outside Bihar exceeded Rs. 10,000, shall be liable to pay tax under this Act on sales which have taken place in Bihar on and from the date of such commencement.
" On March 22, 1949, Ordinance III of 1948 was replaced by Bihar Sales Tax (Amendment) Act, 1948 (VI of 1949) hereinafter referred to as the amending Act.
Section 16 of this amending Act provided that the substituted section 4(1) should form part of the 1947 Act and should always be deemed to have formed part thereof with effect from its commencement, that is to say, from July 1, 1947, as hereinbefore mentioned.
Two things should be noted, namely, (1) that the person sought to be charged was every dealer whose gross " turnover" during the specified period on " sales " which had taken place both in and outside Bihar exceeded Rs. 10,000 and (2) that the liability to pay tax was on " sales " which had taken place in Bihar on and from the date of such commencement.
This takes us back to section 2(g) which defines " sale ".
The material part of the definition of " sale ", previous to the amendment made by the amending Act, 173 1364 read as follows: " 'Sale ' means, with all its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of contract but does not include a mortgage, hypothecation, charge or pledge: Provided . . . . . . . . .
Provided further that notwithstanding anything to the contrary in the Indian (III of 1930), the sale of any goods which are actually in Bihar at the time when, in respect thereof, the contract of sale as defined in section 4 of that Act is made, shall, wherever the said contract of sale is made be deemed for the purpose of this Act to have been made in Bihar.
. . . . . . . . . .
Section 2 of the amending Act amended section 2(g) of the 1947 Act by substituting a new proviso to cl. (g) for the original second proviso thereto.
The material part of section 2(g), thus amended, read as follows: " 'Sale 'means, with all its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of contract but does not include a mortgage, hypothecation, charge, or pledge: Provided . . . . . . . . .
Provided further that notwithstanding anything to the contrary in the Indian (111 of 1930), the sale of any goods (i) which are actually in Bihar at the time when, in respect thereof, the contract of sale as defined in section 4 of that Act is made, or (ii) which are produced or manufactured in Bihar by the producer or manufacturer thereof, shall, wherever the delivery or contract of sale is made, be 1365 deemed for the purposes of this Act to have taken place in Bihar.
The amending Act by section 3 substituted for the old sub section
(1) of section 4 of the 1947 Act the following sub ' section, namely: " (1) Subject to the provisions of sections 5, 6, 7 and 8 and with effect from the commencement of this Act, every dealer whose gross turnover during the year immediately preceding the date of such commencement, on sales which have taken place both in and outside Bihar exceeded Rs. 10,000 shall be liable to pay tax under this Act on sales which have taken place in Bihar on and from the date of such com mencement: Provided that the tax shall not be payable on sales involved in the execution of a contract which is shown to the satisfaction of the Commissioner to have been entered into by the dealer concerned on or before the 1st day of October, 1944.
" Although the amending Act received the assent of the Governor General on March 15, 1949, it came into force on October 1, 1948, as provided in section 1(2) thereof.
Section 16 of the amending Act, however, provided that the amendment made by section 3 should form part and should be deemed always to have formed part of the 1947 Act as if the said Act had been enacted as so amended from the commencement thereof, that is to say, from July 1, 1947.
The 1947 Act was further amended in 1951 by Bihar Act VII of 1951 and again in 1953 by Bihar Act XIV of 1953, but we are not, in the present case, concerned with those amendments.
Although the charging section, namely, section 4(1), as amended, operates from July 1, 1947, the definition of sale as amended, became operative only from October 1, 1948.
Therefore, the definition of " sale ", as it stood prior to the amendment, was applicable to all sales made by the appellant throughout the first period hereinbefore mentioned, i.e., the period from July 1, 1947 to March 31, 1948 and also to those made during the period from April 1, 1948 to October 1, 1948, which was only a portion of the second 1366 period hereinbefore mentioned and the amended definition applied to all sales made by the appellant during the remaining portion of the second period, i.e., from October 1, 1948 to March 31, 1949.
Bearing in mind the relevant provisions of the 1947 Act as they stood both before and after the amendment and the period of their applicability we now proceed to consider the points urged before us by the learned Attorney General appearing for the appellant company.
Points Nos. 1 and 4: It will be convenient to take up those two points together for they have been dealt with together by the learned Attorney General.
The validity of section 4(1) read with section 2(g), second proviso, is challenged in two ways.
In the first place it is urged that section 100(3) of the Government of India Act, 1935 read with Entry 48 in List II of the Seventh Schedule thereto authorised the Legislature of Bihar to make a law with respect to tax on the sale of goods. " Sale of Goods ", as a legal topic, has well defined and well understood implications both in English and Indian Law.
The English Common Law relating to sale of goods has been codified in the English Sale of Goods Act, 1893.
In India the matter was originally governed by the provisions of Chapter VII of the .
Those provisions have since been replaced by the Indian Sale of Goods Act, Act III of 1930.
Our attention has been drawn to section 4 of the Indian Sale of Goods Act which clearly makes a distinction between a sale and an agreement for sale.
It is pointed out that that section groups " sales " and " agreements to sell " under the single generic name of " contract of sale ", following in this respect the scheme of English Sale of Goods Act, 1893, and that it treats " sales " and "agreements to sell " as two separate categories, the vital point of distinction between them being that whereas in a sale there is a transfer of property in goods from the seller to the buyer, there is none in an agreement to sell.
It is then urged, on the authority of a decision of this Court in the Sales Tax Officer, Pilibhit vs Messrs. Budh Prakash 1367 Jai Prakash (1) that there having thus existed at the time of the enactment of the Government of India Act, 1935, a well defined and well established distinction between a " sale " and an " agreement to sell " it would be proper to interpret the expression " sale of goods " in Entry 48 in the sense in which it was used in legislation both in England and in India and to hold that it authorised an imposition of a tax only when there was a completed sale involving the transfer of title in the goods sold.
Reference is then made to the decision of the Federal Court in the case of Province of Madras vs Boddu Paidanna and Sons (2) where the Federal Court at page 101 observed that in the case of sales tax the liability to tax arose on the occasion of a sale " which Patanjali Sastri C. J. in his judgment in the State of Bombay vs United Motors (India) Ltd. (3) described as " the taxable event.
" The argument is that the Bihar Legislature could only make a law imposing a tax on the sale of goods, that is to say, on a concluded sale involving the transfer of property in the goods sold from the seller to the buyer as contemplated by the Sale of Goods Act.
The Bihar Legislature could not, by giving an extended definition to the word "sale", extend its legislative power under Entry 48 in List II of the Seventh Schedule to the Government of India Act, 1935, so as to impose a tax on anything which is short of a sale.
For our present purpose no exception need be taken to the proposition thus formulated and indeed in Budh Prakash Jai Prakash 's case (1) this Court struck down that part of the definition of it sale " in section 2(h) of the Uttar Pradesh Sales Tax Act, 1948, which enlarged the definition of " sale " so as to include " forward contracts".
But is the position the same here? We think not.
It will be noticed that section 4(1) imposed on the dealer the liability to pay a tax on " sale " as defined in section 2(g).
Both before and after the amendment of section 2(g) the principal part of the definition meant the transfer of the property in goods.
All that the second proviso did was not to extend the (1) ; , 247.
(2) (3) ; , 1088.
definition of "" sale but only to locate the I" sale " in certain circumstances mentioned in that proviso in Bihar.
The basis of liability under s 4(1) remained as before, namely, to pay tax on " sale .
The fact of the goods being in Bihar at the time of the contract of sale or the production or manufacture of goods in Bihar did not by itself constitute a " sale " and did not by itself attract the tax.
The taxable event still remained the " sale " resulting in the transfer of ownership in the thing sold from the seller to the buyer.
No tax liability actually accrued until there was a concluded sale in the sense of transfer of title.
It was only when the property passed and the " sale " took place that the liability for paying sales tax under the 1947 Act arose.
There was no enlargement of the meaning of " sale " but the proviso only raised a fiction on the strength of the facts mentioned therein and deemed the " sale " to have taken place in Bihar.
Those facts did not by themselves constitute a" sale " but those facts were used for locating the situs of the sale in Bihar.
It follows, therefore, that the.
provisions of section 4(1) read with section 2(g), second proviso, were well within the legislative competency of the Legislature of the Province of Bihar.
The vires of section 4(1) read with section 2(g), second proviso, is also questioned on the ground that it is in reality not a tax on the sale of goods but is in substance a duty of excise within the meaning of Entry 45 in List I of the Seventh Schedule to the Government of India Act, 1935, with respect to which the Provincial Legislature could not, under section 100 of that Act, make any law.
Our attention is drawn to cl.
(ii) of the second proviso which contemplated a sale of the goods by the producer or manufacturer thereof.
It is urged that, according to this clause, tax was not imposed on all sales of goods produced or manufactured in Bihar, but was imposed only on those goods produced or manufactured in Bihar which were sold by the producer or manufacturer.
It is pointed out, as and by way of an illustration, that if the goods produced or manufactured in Bihar were taken out of the Province of Bihar and then gifted away by the producer or 1369 manufacturer to a person 'outside Bihar and that person sold the goods, he would not be liable under the proviso.
This argument, however, overlooks the fact that under cl.
(ii) the producer or manufacturer became liable to pay the tax not because he produced or manufactured the goods, but because he sold the goods.
In other words the tax was laid on the producer or manufacturer only qua seller and not qua manufacturer or producer as pointed out in Boddu.
Paidanna 's case (1).
In the words of their Lordships of the Judicial Committee in Governor General vs Province of Madras (2), " a duty of excise is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced.
It is a tax on goods and not on sales or the proceeds of sale of goods.
" If the goods produced or manufactured in Bihar were destroyed by fire before sale the manufacturer or producer would not have been liable to pay any tax under section 4 (1) read with section 2 (g), second proviso.
As Gwyer C. J. said in Boddu Paidanna 's Case (1) at page 102 the manufacturer or producer would be "liable, if at all, to a sales tax because he sells and not because he manufactures or produces; and he would be free from liability if he chose to give away everything which came from his factory.
" In our judgment both lines of the argument advanced by the learned Attorney General in support of points and 4 are untenable and cannot be accepted.
Re. point No. 2: The theory of nexus has been applied in support of tax legislation in more cases than one, not only in this country but also in Australia and England.
In Wanganui Rangitikei Electric Power Board vs Australian Mutual Provident Society (3) Dixon J. observed: " So long as the statute selected some fact or circumstance which provided some relation or connection with New South Wales, and adopted this as the ground of its interference, the validity of an enactment. . would not be open to challenge." The same learned Judge in Broken Hill South Ltd. vs (1) (3) ; , 600.
(2) (1945) L.R. 721.A. 91, 103.
1370 Commissioner of Taxation (N. section W.)(1), said at page 375: " If a connection exists, it is for the legislature to decide how far it should go in the exercise of its ,powers.
As in other matters of jurisdiction or authority courts must be exact in distinguishing between ascertaining that the circumstances over which the power extends exist and examining the mode in which the power has been exercised.
No doubt there must be some relevance to the circumstance in the exercise of the power.
But it is of no importance upon the question of validity that the liability imposed is, or may be, altogether disproportionate to the territorial connection.
" Even the dissenting Judge Rich J. accepted the theory of nexus at page 361: " I do not deny that once any connection with New South Wales appears, the legislature of that State may make that connection the occasion or subject of the imposition of a liability.
But the connection with New South Wales must be a real one and the liability sought to be imposed must be pertinent to that connection.
" The Estate Duty Assessment Act 1914 1928 which charged estate duty on moveable properties situate abroad which had passed from a deceased person domiciled in Australia by gift intervivos made by him within a year of his death was not struck down for extra territoriality but was upheld as constitutional in The Trustees Executors and Agency Co. Ltd. vs The Federal Commissioner of Taxation (2).
The nexus theory was applied in full force in Governor General vs Raleigh Investment Co. (3); Wallace Brothers and Co. Ltd. vs Commissioner of Income Tax, Bombay City (4) and A. H. Wadia vs Commissioner of Income Tax, Bombay (5).
In Raleigh Investment Co. 's case(3) the assessee company was a company incorporated in England.
Its registered office was in England.
It held shares in nine Sterling Companies incorporated (1) ; (2) ; (3)[1944) F.C.R. 229.
(4) (5) 1371 in England.
Those nine Sterling Companies carried on business in British India and earned income, profits or gains in British India and declared and paid dividends in England to its shareholders including the assessee company.
Tile assessee company was charged to income tax under section 4 (1) of the Indian Income tax Act.
It should be noted that the assessee company was not resident in British India, carried on no business in British India and made no income, profits or gains out of any business carried on by it in British India.
It invested its money and acquired shares in England in the nine Sterling Companies which were English Companies.
It was only when those nine Companies declared and paid dividends in England that the assessee company really earned its income, profits or gains, out of its investments in England in shares of nine Sterling Companies.
The circumstance that the nine Sterling Companies derived their income, profits or gains, out of business carried on by them in British India out of which they paid dividends to the assessee company was regarded as sufficient nexus so as to fasten the tax liability on the assessee company in respect of the income, profits or gains, it derived from the nine Sterling Companies.
Even such a distantly derivative connection with the source of income was held as a sufficient nexus to enable the British Indian tax autho rities to charge the assessee company with income tax.
The conclusions reached by Spens C. J. in Raleigh Investment Co. 's case, (1) are formulated thus at page 253: " If some connection exists, the legislature is not compelled to measure the taxation by the degree of benefit received in particular cases by the taxpayer.
This affects the policy and not the validity of the legislation ".
In Wallace Brothers case (2) the connection of the assessee company with British India was not so remote as in Raleigh Investment Co. 's case (1), for in the former case the assessee company was a partner in a (1) 174 (2) 1372 firm which carried on business in British India but that connection was held to be sufficient nexus to bring to British Indian tax not only the income, profits or gains made by the assessee as a partner in the firm but also its income, profits or gains which accrued without British India in the previous year.
In Wadia 's case (1), also an income tax case, it was held that a law imposing a tax cannot be impugned on the ground that it is extra territorial, if there is a connection between a person who is subjected to a tax and the country which imposes that tax.
The connection must, however, be a real one and the liability sought to be imposed must be pertinent to that connection.
At page 140 Chief Justice Kania observed: " Generally, States can legislate effectively only for their own territories, but for purposes of taxation and similar matters, a State makes laws designed to operate beyond its territorial limits." The learned Attorney General points out that the three last mentioned cases in which the nexus theory was applied were income tax cases and submits that that principle cannot be extended to sales tax laws.
He points out that in Bengal Immunity Co. Ltd. vs The State of Bihar (2) this Court expressly left open the question, whether the theory of nexus applied to legislation with respect to sales tax.
The passage at page 639 relied upon by the learned Attorney General only refers to the fact that the different State Legislatures considered themselves free to make a law imposing tax on sales or purchases of goods provided the State concerned had some territorial nexus with such sales or purchases and went on to say that the question whether they were right or wrong in so doing had not been finally decided by the courts.
That passage, properly understood, can hardly be said to indicate that the theory of nexus does not apply to sales tax legislation at all.
The drift of the meaning of the passage was that the sufficiency of the different next relied on by the different States had not been tested by the courts.
The passage strongly relied upon by the learned Attorney General is to be (1) (2) 1373 found at page 708 where Bhagwati J. after referring to the earlier cases, observed : " It is a moot point whether this theory of territorial connection or nexus which has been mainly applied in income tax cases, is also applicable to sales tax legislation, the sphere of income tax legislation and sales tax legislation being quite distinct.
Whereas in the case of income tax legislation the tax is levied either on a person who is within the territory by exercising jurisdiction over him in personam or upon income which has accrued or arisen to him or is deemed to have or arisen to him or has been derived by him from sources within the territory and it is, therefore, germane to enquire whether any part of such income has accrued or arisen or has been derived from a source within the territory, in the case of sales tax legislation it is the sale or purchase of goods which is the subject matter of taxation and it cannot be predicated that the sale or purchase takes place at one or more places where the necessary ingredients of sale happen to be located.
The theory of territorial connection or nexus was not put to the test at any time prior to the enactment of the Constitution and it is not necessary also for us to give a definite pronouncement on the subject.
" Apart from the fact that the concluding words in the passage quoted above may be read as indicating that the observations were obiter, it appears to us to be too late in the day to contend that the theory of nexus does not apply to sales tax legislation at all.
Indeed an examination of the decisions of this Court will clearly show that the applicability of the theory of nexus to sales tax legislation has been clearly recognised by this Court.
In The State of Bombay vs The United Motors (India) Ltd. (1) this Court bad to interpret the true meaning of the explanation to article 286(1)(a) of the Constitution.
That explanation created a fiction locating the situs of a sale or purchase in the State in which the goods had actually been delivered as a result of such sale or purchase for the purpose of consumption in that (1) ; , 1088.
1374 State notwithstanding the fact that, under the general law relating to sale of goods, the property in the goods had, by reason of such sale or purchase, passed in another State.
This Court by a majority then held that in view of the fiction created by the explanation the sale which was in reality an inter State sale became an intrastate sale and consequently the delivery and consuming State had the, right to impose tax on that sale.
It is true that that decision has been departed from in the Bengal Immunity Co. 's case (1) on the question of the interpretation of article 286 of the Constitution, but on the point we are now discussing that decision clearly implies a recognition of the applicability of the nexus theory to the imposition of sales tax.
The observations of Patanjali Sastri C. J. on the question of nexus in that case cannot, therefore, be said to be unnecessary for the decision of that case.
In Poppatlal Shah vs The State of Madras (2) Mukherjea J. delivering the unanimous judgment of the Constitution Bench of this Court definitely applied the theory of nexus to sales tax legislation.
Support for that conclusion was found directly in the decision of the Judicial Committee in Wallace Brothers and Co. Ltd. vs Commissioner of Income Tax, Bombay City (3) which, it was said, had been applied by this Court to sales tax legislation in the United Motors ' case (4), but it is quite clear that the decision had, independently of the United Motors ' case (4), adopted the principle of Wallace Brothers and Co. 's case (3) to sales tax legisla tion.
In a recent case, The State of Bombay vs R.M.D. Chamarbaugwala(5), which was concerned with tax on cross word competition, this Court applied the theory of nexus and upheld the legislative competency of the Bombay Legislature to impose tax on the gambling competitions.
At page 901 this Court said: " 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 (1) (3) (5) ; ,901.
(2) ; (4) ; , 1088.
1375 taxing statute may be upheld.
Sufficiency of the territorial connection involve 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.
" Applying these principles to the facts of that case this Court came to the conclusion that they constituted sufficient territorial nexus which entitled the State of Bombay to impose a tax on the gambling that took place within its boundaries and that the law could not be struck down on the ground of extra territoriality.
It is not necessary for us on this occasion to lay down any broad proposition as to whether the theory of nexus, as a principle of legislation, is applicable to all kinds of legislation.
It will be enough, for disposing of the point now under consideration, to say that this Court has found no apparent reason to confine its application to income tax legislation but has extended it to sales tax and to tax on gambling and that we see no cogent reason why the nexus theory should not be applied to sales tax legislation.
The learned Attorney General submits that the theory of nexus cannot be applied to sales tax legislation because such legislation is concerned with a tax on the transaction of sale,, that is to say, a completed sale and to break up a sale into its component parts and to take one or more of such parts and to apply the theory to it will.
mean that the State will be entitled to impose a tax on one or more of the ingredients or constituent elements of the transaction of sale which by itself or themselves will not amount to a sale.
This argument overlooks the fact that the provisions of the sales tax legislation we are considering limit its charging section to " sale ".
In order to attract the charging section there must be a completed 1376 sale involving the transfer of property in the goods sold from the seller to the buyer.
The nexus theory does not impose the tax.
It only indicates the circumstance in which a tax imposed by an act of the ,Legislature may be enforced in a particular case and unless eventually there is a concluded sale in the sense of passing of the property in the goods no tax liability attaches under the Act.
One or more of the several ingredients constituting a sale only furnished the connection between the taxing State and the "sale".
The learned Attorney General also said that one and the same transaction of sale may be taxed by different States by applying the nexus theory and there will be multiple taxation which will obstruct the free flow of inter State trade.
There is no force in this argument, for article 286(2) of the Constitution, as it stood originally, was a complete safeguard against such eventuality and after the amendment of that Article and the relevant entries in the Legislative List such contingency will not arise.
In our opinion the arguments advanced by the learned Attorney General on this point cannot be accepted.
Re. point No. 3: The learned Attorney General next contends that in any case the nexus must be real and pertinent to the subject matter of taxation.
He contends that the presence of the goods in Bihar referred to in the old second proviso, which is reproduced in el.
(i) of the second proviso as amended, is of no consequence.
The production or manufacture, according to him, has no connection with and never enters into the transactions of sale.
He relies on the observations of Chief Justice Gwyer in Boddu Paidanna 's case (1), at page 102, namely, that " a sale bad no necessary connection with manufacture or production." That observation was made by the learned Chief Justice in order to emphasise the fact that the tax levied on the first sale by the manufacturer or producer was a tax imposed on him qua seller and not qua manufacturer or producer.
The question whether the fact of production or manufacture of goods may legitimately form a nexus between the transaction of sale and the taxing (1) 1377 State was not in issue in that case at all.
It is un necessary in this case to lay down any hard and fast test as to the sufficiency of nexus which will enable a State to impose a tax or to enumerate the instances of such connection.
For the purpose of the present, case it is sufficient to state that in a sale of goods the goods must of necessity play an important part, for it is the goods in which, as a result of the sale, the property will pass.
In our view the presence of the goods it the date of the agreement for sale in the taxing State or the production or manufacture in that State of goods the property wherein eventually passed as a result of the sale wherever that might have taken place, constituted a sufficient nexus between the taxing State and the sale.
In the first case the goods are actually within the State at the date of the agreement for sale and the property in those goods will generally pass within the State when they are ascertained by appropriation by the seller with the assent of the purchaser and delivered to the purchaser or his agent.
Even if the property in those goods passes outside the State the ultimate sale relates to those very goods.
In the second case the goods, wherein the title passes eventually outside the State, are produced or manufactured in Bihar and the sale wherever that takes place is by the same person who produced or manufactured the same in Bihar.
The producer or manufacturer gets his sale price in respect of goods which were in Bihar at the date when the important event of agreement for sale was made or which were produced or manufactured in Bihar.
These are relevant facts on which the State could well fasten its tax.
If the facts in the Raleigh Investment Co. 's case (1), were sufficient nexus there is no reason why the facts mentioned in the proviso should not also be sufficient.
Whatever else may or may not constitute a sufficient nexus, we are of opinion that the two cases with which we are concerned in this case are sufficient to do so.
Re. point No. 5: The argument on this point is that sales tax is an indirect tax on the consumer.
The (1) [1044] F.C.R. 229.
1378 idea is that the seller will pass it on to his purchaser and collect it from them.
If that is the nature of the sales tax then, urges the learned Attorney General, it cannot be imposed retrospectively after the, sale transaction has been concluded by the passing of title from the seller to the buyer, for it cannot, at that stage, be passed on to the purchaser.
According to him the seller collects the sales tax from the purchaser on the occasion of the sale.
On that time goes past, the seller loses the chance of realising it from the purchaser and if it cannot be realised from the purchaser, it cannot be called sales tax.
In our judgment this argument is not sound.
From the point of view of the economist and as an economic theory, sales tax may be an indirect tax on the consumers, but legally it need not be so.
Under the 1947 Act the primary liability to pay the sales tax, so far as the State is concerned, is on the seller.
Indeed before the amendment of tile 1947 Act by the amending Act the sellers had no authority to collect the sales tax as such from the purchaser.
The seller could undoubtedly have put up the price so as to include the sales tax, which he would have to pay but he could not realise any sales tax as such from the purchaser.
That circumstance could not prevent the sales tax imposed on the seller to be any the less sales tax on the sale of goods.
The circumstance that the 1947 Act, after the amendment, permitted the seller who was a registered dealer to collect the sales tax as a tax from the purchaser does not do away with the primary liability of the seller to pay the sales tax.
This is further made clear by the, fact that the registered dealer need not, if he so pleases or chooses, collect the tax from the purchaser and sometimes by reason of competition with other registered dealers he may find it profitable to sell his goods and to retain his old customers even at the sacrifice of the sales tax.
This also makes it clear that the sales tax need not be passed on to the purchasers and this fact does not alter the real nature of the tax which, by the express provisions of the law, is cast upon the seller.
The buyer is under no liability to pay sales tax in addition to the agreed sale price 1379 unless the contract specifically provides otherwise.
See Love vs Norman Wright (Builders) Ltd. (1).
If that be the true view of sales tax then the Bihar Legislature acting within its own legislative field had the powers of a sovereign legislature and could make its law prospectively as well as retrospectively.
We do not think that there is any substance in this contention either.
For reasons stated above none of the contentions urged by the learned Attorney General in support of these appeals can be sustained.
The result, therefore, is that these appeals must be dismissed with costs.
BOSE J.
With great respect I cannot agree.
It will not be necessary to elaborate my point of disagreement at length because this is pro Constitution legislation and much of what we decide in this case wilt not affect post Constitution Acts.
Put very shortly, my view is this.
First, a State can only impose a tax on the sale of goods.
It has no power to tax extra territorially, therefore it can only tax sales that occur in the State itself.
With great respect I feel it is fallacious to look to the goods, or to the elements that constitute a sale, because the power to tax is limited to the sale and the tax is not on the goods or on the agreement to sell or on the price as such but only on the sale.
Therefore, unless the sale itself takes place in the State, the State cannot tax.
That brings me to the next point, the situs of a sale.
Now I know that this is a matter on which many different views are possible but what is clear to me is that a sale cannot have more than one situs.
It is not a mystical entity that can be one in many and many in one at one and the same time, here, there and everywhere all at once nor is it a puckish elf that pops up now here, now there and next everywhere.
It is a very mundane business transaction, of the earth.
earthy.
It can have only one existence and one situs.
Opinions may differ on where that is and how it is to be determined, but it is our duty, as the supreme authority on the law of the land, to choose (1) I75 1380 one of those many views and say that that is the law of our land and that in India the situs is determined in this way or that and, having determined it, make it uniform for the whole country.
I am conscious that the selection must be arbitrary, but for all that, it must be made.
Left to myself, I would have preferred Chesbire 's view about the proper law of the contract set out by him in Chapter VIII of his book on Private International Law, 4th edition.
I referred to this in The Delhi Cloth and General Mills Co. Ltd. vs Harnam Singh(1).
I quote him again: "The proper law is the law of the country in which the contract is localised.
Its localisation will be indicated by what may be called the grouping of its elements as reflected in its formation and in its terms.
The country in which its elements are most densely grouped will represent its natural seat." He is not dealing with this question.
He is dealing with International Law and the difficulties that arise in dealing with contracts whose elements are grouped in different States with different, and often conflicting, laws.
He is developing the theme that for any one contract there should be but one law to govern it in all its stages and that the most logical conclusion is to select the law of the country in which the contract has its natural seat.
But whether his view is accepted or any of the others that he discusses, he stresses the need for one objective rule and contends strongly that the choice should not be left to the parties to the deal, even as I say that it should not be left to the States.
He quotes an American Judge, at page 203 of his book, who says that " Some law must impose the obligation, and the parties have nothing whatsoever to do with that, no more than with whether their acts are torts or crimes.
" Now none of that is of immediate application here but it contains the germ of an idea and points to the embarrassment and folly of letting differing laws run amuck in governing a single transaction.
Following up that thought I would say that we are dealing here with a Constitution Act that speaks with one voice (1) , 418. 1381 and authority throughout the land.
It tells the various States, as one day some international voice that will rule the world will say to the peoples in it, " you may do this and may not do that " ; and " this " and " that " mean, but one thing everywhere.
One writ runs throughout the land and it has but one meaning and one voice.
" When I say that you may only legislate for your own territory and that you may tax certain sales, you must realise that the meaning that I give to I sale ' is the meaning that my Supreme Court shall give to it and that it cannot mean differing things in different areas ; and you must realise that the only sales that you may tax are the ones that lie in your own territory.
My Supreme Court shall determine where a sale is situated and once that is determined it cannot be situated anywhere else.
If it does not happen to be in your territory you cannot tax it.
" Our present Constitution did not adopt Cheshire 's view.
It made another choice.
In the old Explanation to article 286 (now repealed) it selected the place where the goods are actually delivered, as a direct result of the sale or purchase, as the situs.
Well, so be it.
That is as good as any other and I would have been as happy to select that as any of the other possibilities.
But what I do most strongly press is that a Constitution Act cannot be allowed to speak with different voices in different parts of the land and that a mundane business concept well known and well understood cannot be given an ethereal omnipresent quality that enables a horde of hungry hawks to swoop down and devour it simultaneously all over the land: " some sale; some hawks " as Winston Churchill would say.
I would therefore reject the nexus theory in so far as it means that any one sale can have existence and entity simultaneously in many different places.
The States may tax the sale but may not disintegrate it and, under the guise of taxing the sale in truth and in fact, tax its various elements, one its head and one its tail, one its entrails and one its limbs by a legislative fiction that deems that the whole is within its claws simply because, after tearing it apart, it finds a hand 1382 or a foot or a heart or a liver still quivering in its grasp.
Nexus, of course, there must, be but nexus of the entire entity that is called a sale, wherever it is deemed to be situate.
Fiction again.
Of course, it is fiction, but it is a fiction as to situts imposed by the Constitution Act and by the Supreme Court that speaks for it in these matters and only one fiction, not, a dozen little ones.
My point is simple.
If you are allowed to tax a dog it must be within the territorial limits of your taxable, jurisdiction.
You cannot tax it if it is born elsewhere and remains there simply because its mother was with you at some point of time during the period of gestation.
Equally, after birth, you cannot tax it simply because its tail is cut off (as is often done in the case of certain breeds) and sent back to the fond owner, who lives in your jurisdiction, in a bottle of spirits, or clippings of its hair.
There is a nexus of sorts in both cases but the fallacy lies in.
thinking that the entity is with you just because a part that is quite different from the whole was once there.
So with a sale of a motor car started and concluded wholly and exclusively in New York or London or Timbuctoo.
You cannot tax that sale just because the vendor lives in Madras, even if the motor car is brought there and even assuming there is no bar on international sales, for the simple reason that what you are entitled to tax is the sale, and neither the owner nor the car, therefore unless the sale is situate in your territory, there is no real nexus.
And once it is determined objectively by the Constitution Act or in Supreme Court how and where the sale is situate, its situs is fixed and cannot be changed thereafter by a succession of State legislatures each claiming a different situs by the convenient fiction of deeming.
The only question is whether it is too late in the day to take this view because of our previous decisions and those of the Federal Court.
I say not, for, though there is a consensus of opinion that there must be a territorial nexus and that it must not be illusory, no decision that I know of says that when you are given the right to tax a certain thing which is a composite 1383 entity, quite separate and distinct from the various elements of which it is composed, you may tear that whole apart and seize on some, element that is quite a different thing from that which you are entitled to tax and hold that the taxable entity is in your State simply because at some relevant point of time one of the ingredients that went to make up the whole but which is a separate and distinct thing from the whole, as different from it as chalk is from cheese, happened to be within your clutches.
I do not intend to analyse the cases on this point because it is pointless to pursue a matter that will only be of academic interest.
All I will do therefore is to say that the question of nexus has been referred to in the following cases and that none of them reaches a decision on this particular point.
These cases are Governor General in Council vs Ratleigh Investment Co., Ltd. (1), A. H. Wadia vs Commissioner of Income tax, Bombay Poppatlal Shah vs The Slate of Madras (3), State of Travencore Cochin vs Shanmugha Vilas Cashew Nut Factory (4), and The Bengal Immunity Co., Ltd. vs The State of Bihar (5).
I would allow the appeals.
ORDER OF THE COURT.
In view of the opinion of the majority, the appeals are dismissed with costs.
Appeals dismissed.
(1) [1944] 229, 247, 253.
(2) [1048] F.C.R. 121, 153, 154, 165.
(3) ; (4) [1954]S.C.R. 53, 101.
(5) , 708, 768, 769.
| The appellant company, carrying on business as manufacturer of iron and steel, with its factory and works at Jamshedpur in Bihar, was assessed to sales tax for two periods prior to the Constitution, under the Bihar Sales Tax Act, 1947 (No. XIX Of 1947), enacted by the Bihar Legislature in exercise of its exclusive power under the Government of India Act, 1935.
The company used to send its goods from Jamshedpur to various parts of India.
In the railway receipt the company itself figured as the consignee, it paid the freight and the receipt was sent either to its branch offices or bankers to be handed over to the purchaser when he paid the price.
From the amounts shown as gross turn over in the two returns for the two periods, the company claimed deduction of certain amounts, being the valuable consideration for the goods manufactured in Bihar but sold, delivered and consumed outside, on the ground that in none of the transactions in respect of the said sums did property in the goods pass to the purchasers in Bihar.
The appellant claimed further deductions on account of the railway freight paid by it.
The Sales Tax Officer disallowed both the claims and added the amounts of sales tax realised by the appellant from its purchasers to the taxable turnover.
The company appealed against the orders of assessment, but the Commissioner of Sales Tax dismissed its appeals.
The Board of Revenue, in revision, confirmed the orders of the Commissioner with certain modifications and remanded the matters to the Sales Tax Officer.
On the appellant 's application for reference of certain questions of law, the Board referred them to the High Court.
One of them related to the legality of adding the Sales Tax to the turn over and was answered in favour of the appellant and the respondent did not appeal.
The other questions decided by the High Court against the appellant related to the vires of the Act and the validity of retrospective levy of sales tax under section 4(1) of the Act.
The appellant 's contentions in the appeals were that the tax levied under section 4(1) read with section 2(g) second proviso, cl.
(II), of the Act, was not a sales tax within the meaning of Entry 48 in List II of the Seventh Schedule to the Govern ment of India Act, 1935, but was in the nature of excise duty 172 1356 which a provincial legislature had no power to impose, that the theory of territorial nexus was inapplicable to sales tax and, in any case, there was no real or sufficient nexus in the present cases and that retrospective levy of the sales tax under section 4(1) Of the Act destroyed the indirect nature of the tax, thus making it a direct tax on the dealer which could not be passed on to the consumer: Held, (per Das, C. J., Venkatarama Aiyar, section K. Das and A.K. Sarkar, jj., Bose, J. dissenting), that the contentions raised on behalf of the appellant must be negatived.
The provisions of section 4(1) read with section 2(g), second proviso, of the Bihar Sales Tax Act, as amended by the Bihar Sales Tax (Amendment) Act, 1948, (VI Of 1949), were within the legislative competence of the Legislature of the Province of Bihar.
Both before and after the amendment, the word 'sale ' as used in section 4(1) and as defined by section 2(g) of the Act, meant the transfer of property in the goods sold.
The second proviso added by the amending Act did not extend that meaning so as to include a contract of sale.
What it actually did was to lay down certain circumstances in which a sale, although completed elsewhere, was to be deemed to have taken place in Bihar.
Those circumstances did not constitute the sale, but only located the situs of the sale.
Sales Tax Officer, Pilibhit vs Messrs. Budh Prakash jai Prakash; , , distinguished.
Nor was it correct to contend that the tax levied under section 4(1) read with section 2(g) Of the Act was in the nature of excise duty.
Under cl.
(ii) of the second proviso to section 2(g) of the Act the producer or manufacturer became liable to pay the tax not because he produced or manufactured the goods but because he sold them.
Province of Madras vs Boddu Paidanna and Sons, [1942] F.C.R. go and Governor General vs Province of Madras, (1945) L.R. 72 I.A. 91, referred to.
There can be no doubt that the theory of territorial nexus does apply to sales tax legislation.
Although sales tax can be levied only on a completed sale, this theory has its use in indicating the circumstances in which the tax may be enforced in a particular case.
One or more of the several ingredients of a sale may furnish the connection between the taxing State and the sale.
State of Bombay vs United Motors (India) Ltd., [1953] S.C.R. 1069, Poppatlal Shah vs The State of Madras, [1953] S.C.R. 677 and The State of Bombay vs R.M.D. Chamarbaugwala, ; , relied on.
Bengal Immunity Co. Ltd. vs The State of Bihar, , considered.
Case law reviewed.
1357 As in a sale of goods, the goods must necessarily play an important part, the circumstances mentioned in the proviso to section 2(g) of the Act, namely, the presence of the goods in Bihar at the date of the agreement of sale or their production or manufacture there must be held to constitute a sufficient nexus between the taxing province and the sale wherever that might take place.
Governor General vs Raleigh Investment, , relied on.
Province of Madras vs Boddu Paidanna and Sons, [1942] F.C.R. go, distinguished.
It would not be correct to contend that the theory of nexus might lead to multiple taxation or obstruct inter State trade.
Article 286(2) of the Constitution and the relevant entries in the Legislative List are a complete safeguard to any such contingency.
Although as a matter of economic theory, sales tax maybe an indirect tax realisable from the consumer, it need not be legally so and is not so under the Bihar Sales Tax Act, 1947, which imposes the primary liability on the seller.
A buyer, moreover, is not bound to pay sales tax over and above the agreed sale price unless he is by contract bound to do so.
There can, therefore, be no scope for the argument that the retrospective enforcement of the tax under section 4(1) of the Act could destroy the character of the tax or that it was beyond the legislative competence of the Bihar Legislature.
Love vs Norman Wright (Builders) Ltd., L.R. (1944) 1 K.B. 484, referred to.
Per Bose, J. Sales tax can be imposed only on the sale.
It is, therefore, wrong to look to the goods or the agreement to sell or any other elements that constitute a sale in order to impose the tax.
A State can tax a sale of goods that takes place within its boundary.
It has no power to tax extra territorially, and since a completed sale can have only one situs no State Legislature can be allowed to break up a sale into its component parts, which are separate and distinct from the sale itself, and by an application of the theory of nexus claim that ,,he sale wholly took place within it.
The nexus can only be in respect of the entire sale, wherever it may take place and not of its several parts.
|
Summarize this legal judgement text concisely | Appeal No. 197 of 1956.
Appeal from the judgment and order dated August 6,1954, of the Bombay High Court in Appeal No. 30 of 1954, arising out of the judgment and order dated January 28, 1954, of the said High Court in Insolvency No. 74 of 1951.
1385 M. C. Setalvad, Attorney General for India, section N. Andley and J. B. Dadachanji, for the appellants.
Purshottam Tricumdas and I. N. Shroff, for the respondent.
February 20.
The following Judgment of the Court was delivered by GAJENDRAGADKAR J.
This appeal by special leave arises from the notice of motion taken out by the respondent official assignee under section 55 of the Presidency towns Insolvency Act against the appellants for a declaration that a deed of gift executed by the insolvent Daulatram Hukamchand on May 22, 1950, in favour of the appellants was void.
It appears that some creditors of Daulatram filed a petition in the High Court of Judicature at Bombay, Insolvency Case No. 74 of 1.951, for an order that the said Daulatram be adjudged insolvent as he had given notice of suspension of payment of the debts on August 2, 1951.
Daulatram was adjudicated in solvent on August 21, 1951, with the result that the estate of the insolvent vested in the respondent under section 17 of the Act.
On September 26, 1951, the respondent took out the present notice of motion.
The impugned deed of gift has been executed by the insolvent in favour of his wife and three sons who are the appellants before us.
In reply to the notice of motion appellants I to 3 filed a joint affidavit setting out the facts and circumstances under which the said deed of gift had been executed by the insolvent in their favour.
In substance, the appellants ' case was that, though the document purported to be a gift, it was really a transaction supported by valuable con sideration and as such it did not fall within the mischief of section 55 of the Act.
At the hearing of this notice of motion before Mr. Justice Coyajee, when the appellants sought to lead evidence in support of this plea, the respondent objected and urged that the evidence which the appellants wanted to lead was inadmissible under section 92 of the Indian Evidence Act.
The learned Judge, however, overruled the respondent 's objection and allowed the appellants to lead 1386 their evidence.
In the end the learned Judge did not accept the appellants ' contention and, by his judgment delivered on January 28, 1954, he granted the declaration claimed by the respondent under section 55 of the Act.
Against this judgment and order the appellants preferred an appeal (No. 30 of 1954) which was heard by Chagla C. J. and Shah J.
The learned Judges took the view that Mr. Justice Coyajee had erred in law in allowing oral evidence to be led by the appellants in support of their plea that the transaction evidenced by the deed of gift was in reality a transfer for consideration.
The learned Judges held that the gift in question had been executed by the donor in favour of the donees out of natural love and affection and that, under section 92, it was not open to the appellants to lead evidence to show that the transaction was supported not by the consideration of natural love and affection but by another kind of valuable consideration .
On this view of the matter the learned Judges did not think it necessary to consider the oral evidence actually led by the appellants and decide whether Mr. Justice Coyajee was right or not in rejecting the said evidence on the merits.
That is how the appeal preferred by the appellants was dismissed on August 6, 1964.
On September 23, 1954, the application made by the appellants for a certificate was rejected by the High Court at Bombay; but special leave was granted to the appellants by this Court on November 3, 1954, and that is how the appeal has come before us for final disposal.
The principal point which arises in this appeal is whether the appellants were entitled to lead oral evidence with a view to show the real nature of the impugned transaction.
In deciding this question, it would be necessary to consider the true scope and effect of sections 91 and 92 of the Evidence Act.
Chapter VI of the Evidence Act which begins with section 91 deals with the exclusion of oral by documentary evidence.
Section 91 provides that, " when the terms of a contract, or of a grant, or of any other disposition of property, have been reduced to the form of a document, 1387 and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of the terms of such contract, grant or other disposition of property, or of such matter, except the document itself, or secondary evidence of its contents in cases in which secondary As, evidence is admissible under the provisions hereinbefore contained.
" The normal rule is that the contents of a document must be proved by primary evidence which is the document itself in original.
Section 91 is based on what is sometimes described as the " best evidence rule ".
The best evidence about the contents of a document is the document itself and it is the production of the document that is required by section 91 in proof of its contents.
In a sense, the rule enunciated by section 91 can be said to be an exclusive rule inasmuch as it excludes the admission of oral evidence for proving the contents of the document except in cases where secondary evidence is allowed to be led under the relevant provisions of the Evidence Act.
Section 92 excludes the evidence of oral agreements and it applies to cases where the terms of contracts, grants or other dispositions of property have been proved by the production of the relevant documents themselves under section 91 ; in other words ' it is after the document has been produced to prove its terms under section 91 that the provisions of section 92 come into operation for the purpose of excluding evidence of any oral agreement or statement, for the purpose of contradicting, varying, adding to or subtracting from its terms.
The application of this rule is limited to cases as between parties to the instrument or their representatives in interest.
There are six provisos to this section with which we are not concerned in the present appeal.
It would be noticed that sections 91 and 92 in effect supplement each other.
Section 91 would be frustrated without the aid of section 92 and section 92 would be inoperative without the aid of section 91.
Since section 92 excludes the admission of oral evidence for the purpose of contradicting, varying, adding to or subtracting from the terms of the document properly proved 176 1388 under section 91, it may be said that it makes the proof of the document conclusive of its contents.
Like section 91, section 92 also can be said to be based oil the best evidence rule.
The two sections, however, differ in some material particulars.
Section 91 applies to all documents, whether they purport to dispose of rights or not, whereas section 92 applies to documents which can be described as dispositive.
Section 91 applies to documents which are both bilateral and unilateral, unlike section 92 the application of which is confined only to bilateral documents.
Section 91 lays down the rule of universal application and is not confined to the executant or executants of the documents.
Section 92, on the other hand, applies only between the parties to the instrument or their representatives in interest.
There is no doubt that section 92 does not apply to strangers who are not bound or affected by the terms of the document.
Persons other than those who are parties to the document are not precluded from giving extrinsic evidence to contradict, vary, add to or subtract from the terms of the document.
It is only where a question arises about the effect of the document as between the parties or their representatives in interest that the rule enunciated by section 92 about the exclusion of oral agreement can be invoked.
This position is made absolutely clear by the provisions of section 99 itself.
Section 99 provides that " persons who are not parties to a document or their representatives in interest may give evidence of any facts tending to show a contemporaneous agreement varying the terms of the document.
" Though it is only variation which is specifically mentioned in section 99, there can be no doubt that the third party 's right to lead evidence which is recognized by section 99 would include, a right to lead evidence not only to vary the terms of the document, but to contradict the said terms or to add to or subtract from them.
If that be the true position, before considering the effect of the provisions of section 92 in regard to the appellants ' right to lead oral evidence, it would be necessary to examine whether section 92 applies at all to the present proceedings between the official assignee who is the respondent and the 1389 donees from the insolvent who are the appellants before us.
Does the official assignee represent the insolvent, and can he be described as the representative ininterest of the insolvent, when he moves the Insolvency Court under section 55 of the Presidency towns Insolvency Act ? It is true that, under section 17 of the Act, on the making of an order of adjudication, the property of the insolvent wherever situate vests in the official assignee and becomes divisible among his creditors; but the property in respect of which a declaration is claimed by the official assignee under section 55 has already gone out of the estate of the insolvent, and it cannot be said to vest in the official assignee as a result of the order of adjudication itself.
Besides, when the official assignee makes the petition under section 55 he does so obviously and solely for the benefit of the creditors.
An insolvent himself has, and can possibly have, no right to challenge the transfer effected by him.
In this respect the official assignee has a higher title than the insolvent and, when, under section 55, he challenges any transfer made by the insolvent, he acts not for the insolvent or on his behalf, but in the interest of the whole body of the insolvent 's creditors.
In theory and on principle, as soon as an order of adjudication is made, all proceedings in regard to the estate of the insolvent come under the control of the Insolvency Court.
It may be said that the official assignee in whom the estate of the insolvent vests is to guard not only the interests of the creditors of the insolvent but also " public morality and the interest which every member of the public has in the observance of commercial morality "(1).
There is no doubt that it is the Insolvency Court alone which has jurisdiction to annul the insolvent 's transactions, whether the case is governed by the Presidency towns Insolvency Act or by the Provincial Insolvency Act; and so the proceedings taken under section 55 cannot be deemed to be proceedings taken for and on behalf of the insolvent at all.
(1) " The Law of Insolvency in India " By Rt.
Sir D. F. Mulla, Kt. 2nd Ed., p. 231.
1390 The provisions of section 55 themselves support the same conclusion.
Under section 55, any transfer of property not being a transfer made before and in consideration of marriage or made in favour of a purchaser or encumbrancer in good faith and for valuable consideration shall, if the transferor is adjudged insolvent within two years of the date of transfer, be void against the official assignee.
This section, like section 53 A of the Provincial Insolvency Act, makes the impugned transfers voidable at the instance of the official assignee or the receiver.
The transfers in question are not declared void as between the parties themselves; they are avoided by the official assignee or the receiver and their avoidance is intended to enure for the benefit of the whole body of the creditors of the insolvent.
The relevant sections of the two Insolvency Acts in effect require the Insolvency Courts to set aside the impugned transactions in exercise of the Insolvency Courts ' exclusive jurisdiction in that behalf The obvious object of these provisions is to bring back to the insolvent 's estate, property which has left the estate by the impugned act of the insolvent himself and make the said property available for distribution amongst his creditors.
It would, therefore, be impossible to hold that, when the official assignee makes a petition under section 55 of the Act, he is acting as a representative ininterest of the insolvent.
In this connection it would be relevant to remember that, in cases governed by the Presidency towns Insolvency Act, the practice in Calcutta and Bombay consistently allows a creditor who has proved his debt to file a petition to set aside the transfer under section 55 of the Act if he shows that the official assignee, on being tendered a reasonable indemnity has unreasonably refused to make an application.
Similarly, under section 54 A of the Provincial Insolvency Act, a creditor himself can make the application if the receiver refuses to take any action.
Now, if an application is made by a creditor for setting aside a voluntary transfer effected by the insolvent, there can be no doubt that the creditor is not the representative 1391 in interest of the insolvent and the creditor would obviously not be affected by the provisions of section 92 of the Indian Evidence Act.
It would really be anomalous if section 92 were to apply to proceedings instituted by the official assignee under section 55 though the said section cannot and would not apply to similar proceedings instituted by a creditor.
Having regard to the object with which section 55 has been enacted, the nature of the proceedings taken under it, and the nature and effect of the final order which is contemplated under it, it is clear that, like the creditor who may apply, the official assignee also cannot be said to be the representative in interest of the insolvent in these proceedings.
If that be the true position, section 92 cannot apply to the present proceedings between the respondent and the appellants; and so there can be no doubt that the respondent would not be precluded from leading evidence of an oral agreement for the purpose of contradicting, varying, adding to or subtracting from the terms of the impugned document.
The question raised by Shri Purushottam which still remains to be considered is whether the appellants who undoubtedly are the representatives in interest of the insolvent can avoid the application of a. 92.
In our opinion, the answer to this question must be in favour of the appellants.
It is urged before us by Shri Purushottam that the scheme of the relevant provisions of Ch.
VI of the Indian Evidence Act is inconsistent with the appellants ' contention that they can lead oral evidence about the alleged agreement which may tend to change the character of the transaction itself.
Shri Purushottam bases his argument mainly on the provisions of section 91 read with section 99 of the Act.
He contends that section 91 requires the production and proof of the document itself for the purpose of proving the contents of the document; and by necessary implication all evidence about any oral agreement which may affect the terms of the document is excluded by section 91 itself.
We are not impressed by this argument.
As we have already observed, sections 91 and 92 really supplement each other.
It is because section 91 by itself would not have excluded 1392 evidence of oral agreements which may tend to vary the terms of the document that section 92 has been enacted; and if section 92 does not apply in the present case, there is no other section in the Evidence Act which can be said to exclude evidence of the agreement set up by the appellants.
What section 91 prohibits is the admission of oral evidence to prove the contents of the document.
In the present case, the terms of the document are proved by the production of the document itself.
Whether or not the said terms could be varied by proof of an oral agreement is a matter which is not covered by section 91 at all.
That is the subject matter of section 92; and so, if section 92 does not apply, there is no reason to exclude evidence about an oral agreement solely on the ground that if believed the said evidence may vary the terms of the transaction.
Shri Purushottam 'also relied upon the provi sions of section 99.
His argument is that it is only persons who are not parties to a document or their representatives in interest who are allowed by section 99 to give evidence of facts tending to show a contemporaneous agreement varying the terms of the document.
lit other words, the effect of section 99 is not only to allow strangers to lead such evidence, but to prohibit parties or their representatives in interest from leading such evidence independently of tile provisions of section 92 of the Evidence Act.
We do not read section 99 as laying down any such prohibition by necessary implication.
As a matter of fact, from the terms of section 92 itself, it is clear that strangers to the document are outside the scope of section 92 ; but section 99 has presumably been enacted to clarify the same position.
It would be unreasonable, we think, to hold that section 99 was intended not only to clarify the position with regard to the strangers to the document, but also to lay down a rule of exclusion of oral evidence by implication in respect of the parties to the document or their representatives in interest.
In our opinion, the true position is that, if the terms of any transfer reduced to writing are in dispute between a stringer to a document and a party to it or his representative in interest, the restriction imposed by section 92 in regard to 1393 the exclusion of evidence of oral agreement is inapplicable; and both the stranger to the document arid the party to the document or his representative in interest are at liberty to lead evidence of oral agreement notwithstanding the fact that such evidence, if believed, may contradict, vary, add to or subtract from its terms.
The rule of exclusion enun ciated by section 92 applies to both parties to the document and is based on the doctrine of mutuality.
It would be inequitable and unfair to enforce that rule against a party to a document or his representative in interest in the case of a dispute between the said.
party or his representative in interest on the one hand and the stranger on the other.
In dealing with this point we may incidentally refer to the relevant statement of the law by Phipson in his treatise on " Evidence": " Where the transaction has been reduced into writing merely by agreement of the parties ", it is observed, " extrinsic evidence to contradict or vary the writing is excluded only in proceedings between such parties or their privies, and not in those between strangers, or a party and a stranger; since strangers cannot be precluded from proving the truth by the ignorance, carelessness, or fraud of the parties (R. vs Cheadle, 3 B. and Ad. 833); nor, in proceedings between a party and a stranger, will the former be estopped, since there would be no mutuality " (1).
The result is that section 92 is wholly inapplicable to the present proceedings and so the appellants are entitled to lead evidence in support of the plea raised by them.
It appears that the attention of the learned Judges who heard the appeal in the High Court at Bombay was not drawn to this aspect of the matter.
That is why they proceeded to deal with the question about the admissibility of oral evidence led by the appellants on the assumption that section 92 applied.
We must accordingly set aside the decree passed by the court of appeal in the High Court at Bombay and send the appeal back to that Court for disposal on the merits in accordance with law.
In the circum (1) Phipson on Evidence 9th Ed., p. 602.
1394 stances of this case, we think that the fair order as to costs of this appeal would be that the costs should abide the final result in the appeal before the High Court at Bombay.
Appeal allowed.
Case remanded.
| One D executed, on May 22, 1950, a deed of gift in favour of the appellants, his wife and sons.
Upon the application of his creditors D was adjudged an insolvent on August 21, 1951 and his estate vested in the respondent.
On September 26, 1951, the respondent took out a notice of motion under section 55 of the Presidency towns Insolvency Act for a declaration that the deed of gift was void.
In reply the appellants pleaded that the transaction, though it purported to be a gift, was in reality a transfer for valuable consideration.
The respondent objected that the evidence which the appellants sought to lead in support of their plea was inadmissible under section 92 of the Indian Evidence Act : Held, that section 92 of the Evidence Act was not applicable to the proceedings and the appellants were entitled to lead evidence in support of the plea raised by them.
Section 92 is only applicable to cases as between parties to an instrument or their representatives in interest.
Where, however the dispute is between a stranger to an instrument and a party to it or his representative in interest, section 92 is inapplicable, and both the stranger and the party or his representative are at liberty to lead evidence of oral agreement notwithstanding the fact that such evidence if believed, may contradict, vary, add to or subtract from its terms.
In the present case, though the appellants were the representatives in interest of the insolvent, the respondent, when he made the petition under section 55 of the Presidency towns Insolvency Act, was not acting as a representative in interest of the insolvent, and, therefore, the proceedings were not between the parties to the instrument or their representatives in interest.
|
Summarize this legal judgement text concisely | Appeals Nos. 35 & 36 of 1954.
1505 Appeals from the judgments and order dated August 28, 1952, of the Bombay High Court in Appeals Nos. 34 and 35 of 1952, arising out of the orders dated January 24, 1952, of the said High Court exercising its Civil Original Jurisdiction in Misc.
Applications Nos. 302 of 1951 and 303, 304 and 305 of 1951 respectively.
R. J. Kolah, B. Narayanaswami, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellant.
H. N. Sanyal, Addl.
Solicitor General of India, N. P. Nathwani and R. H. Dhebar, for respondent No. 3 in C. A 35 & No. 5 in C. A. 36.
D. H. Buch and Naunit Lal, for respondent No. 2 in C. A. 35 & Nos. 2 4 in C. A. 36. 1958.
March 19.
The Judgment of the Court was delivered by BOSE J.
These appeals arise out of petitions made to the Bombay High Court under article 226 for writs of certiorari.
The appellant is the manager of the Tata Mills Limited, which carries on business in the manufacture and sale of textile goods in Bombay and as such is responsible for the payment of wages under the .
The first respondent was the Authority under the at the times material to these appeals.
The sixth respondent is the present Authority.
The Authority is entrusted with the duty of deciding cases falling within the purview of the Act.
The second, third, fourth and fifth respondents are employees in the Mills.
A dispute arose about a claim made by the operatives of the Mills for a bonus for the year 1948.
This was referred to the Industrial Court at Bombay which made an award on April 23, 1949, and awarded a bonus equivalent to four and a half months ' wages subject to certain conditions of which only the sixth is material here.
It runs as follows: " Persons who are eligible for bonus but who are 1506 not in the service of the Mill on the date of the payment shall be paid in one lump sum by the 30th November 1949.
In such cases, claims in writing should be made to the Manager of the Mill concerned." Those operatives who made a claim before the date fixed above were duly paid but payment was refused to the third respondent, who applied much later, on the ground that the condition subject to which the award was made was not fulfilled.
The third respondent thereupon made an application before the first respondent, the Authority under the .
Similar claims were made by the second, fourth and fifth respondents for a bonus for the year 1949.
The, Industrial Court awarded a bonus equal to two months ' wages and in the sixth condition put the date as December 31, 1950.
By this time Labour Appellate Tribunals came into existence, so both sides filed appeals against the award to the Labour Appellate Tribunal of Bombay.
The appeals failed and the award was upheld.
After that, the matter followed the same pattern.
Respondents 2, 4 and 5 applied for their bonus after December 31, 1950.
The Mills refused to pay and these respondents applied to the first respondent, the Authority under the .
The two sets of claims, that is to say, the claim of the third respondent for a bonus for the year 1948 and the claims of the second, fourth and fifth respondents for bonuses for the year 1949, were heard together.
The appellant contested these applications on two grounds.
He questioned the jurisdiction of the Authority to entertain the petitions made to it.
He also contended that, in any event, as the condition subject to which the award was made, namely, an application on or before November 30, 1949, was not fulfilled, the claim for a bonus did not lie.
The first respondent held that it had jurisdiction and, after hearing the parties on the merits, decreed the various claims.
1507 The appellant thereupon filed writ petitions in the High Court.
They were heard and dismissed by Coyajee J.
An appeal was then filed in the same High Court and heard by the Chief Justice and Bhagwati J.
They held that the questions raised were covered by an earlier decision of theirs in another case dated March 11, 1952, and, following that decision, dismissed the appeals without hearing further arguments, as counsel on both sides agreed that the matter was covered by the earlier decision.
The appellant then applied for a certificate for leave to appeal here.
This was granted by Chagla C. J. and Dixit J. on February 2, 1953.
The first question that we have to decide is whether the first respondent had jurisdiction to entertain the petitions made to him as the Authority under the .
This depends on whether these bonuses are " wages " within the meaning of the definition in section 2(vi) of the Act.
The scope of the Authority 's jurisdiction is set out in section 15 of the Act.
It is to bear and decide (1)all claims arising out of deduction from wages, and (2) all claims regarding delay in the payment of wages.
Therefore, unless these bonuses are " wages " within the meaning of the Act, the Authority will have no jurisdiction.
The definition of " wages " in section 2(vi) of the Act is long and complicated but leaving aside the clauses in it that are not material for our present purpose, it runs " 'Wages ' means all remuneration. . . which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable, whether conditionally upon regular attendance, good work or conduct or other behaviour of the person employed, or otherwise, to a person employed in respect of his employment or of work done in such employment, and includes any bonus or other additional remuneration 191 191 1508 of the nature aforesaid which would be so payable and any sum payable to such person by reason of the termination of his employment, but does not include. . . and then five matters that are not included are set out.
Now consider this clause by clause. " ' Wages ' means all remuneration.
" Is bonus a remuneration ? We think it is Remuneration is only a more formal version of " payment " and payment is a recompense for service rendered.
Now it is true that bonus in the abstract need not be for services rendered and in that sense need not be a remuneration; for example, there is a shareholder 's bonus in certain companies, and there is a life insurance bonus and so forth.
But that is not the kind of bonus contemplated here because the kind of remuneration that the definition contemplates is one that is payable " in respect of his employment or of work done in such employment.
" Therefore, the kind of bonus that this definition con templates is one that is remuneration for services rendered or work done.
Accordingly, it is a " remuneration " and as the definition includes all remuneration of a specified kind, we are of opinion that bonus of the kind contemplated here falls within the clause that says it must be " remuneration ".
Next comes a clause that limits the kind of remuneration, for, though the opening words are " all remuneration " the words that follow limit it to all remuneration of the kind specified in the next clause, that is, to remuneration " which would be payable if the terms of the contract of employment, express or implied, were fulfilled.
" Now the question is whether the kind of bonus contemplated by this definition must be a bonus that is payable as a clause of the contract of employment.
We think it is, and for this reason.
If we equate " bonus " with " remuneration ", the 1509 definition says clearly enough that the bonus must be such that it is payable "if the terms of the contract are fulfilled", that is to say, it will not be payable if the terms are not fulfilled.
Now, we can understand a position where a statute declares that whenever the terms of the contract of employment are fulfilled the bonus shall be payable; equally, we can envisage a situation in which an employer engages to pay a bonus should the terms of the contract of employment be fulfilled, by a separate and independent agreement that is riot part of the contract of employment.
In either case, the matter could be said to fall within this part of the definition.
But we can see no way in which a bonus can be said to be payable if and when the terms of the contract of employment are fulfilled outside these two cases (namely, legislation, or a separate contract that is not part of the contract of employment), except when it is payable by reason of a term, express or implied, in the contract of employment itself.
In any event, if there are such cases, the present is not one of them, for the bonus here is payable under an award of an Industrial Court and has nothing to do with the fulfilment or otherwise of the terms of the contract of employment, except indirectly.
It was argued that as an Industrial Court can direct payment of bonus should an industrial dispute arise in that behalf, the matter falls within the definition.
But does it ? One of the matters that an Industrial Court might take into consideration before awarding a bonus is whether all the terms of the contract of employment have been duly fulfilled and it is possible that such a Court might refuse to award a bonus in cases where the terms were not fulfilled, but it would not be bound by such a consideration and its right to make an award of bonus is not conditional on the fulfilment of the terms of the contract of employment, whereas, under the definition, that is an essential ingredient.
Therefore, even if due fulfilment of the terms of the contract of employment was to be one of the reasons for the award, the bonus so awarded would not be payable because the terms of the contract 1510 had been fulfilled but because of an industrial dispute and because in order to settle it, the Court awarded the bonus.
It is not necessary to analyse the definition any further (except for one clause) because, even if all the other ingredients are present, the clause we have just considered would exclude a bonus of the kind we have here, that is to say, a bonus awarded by an Industrial Court.
The clause we have yet to examine is this: " and includes any bonus or other additional remuneration of the nature aforesaid which would be so payable.
" It was contended that the words " and includes any bonus " stand by themselves and that the words that follow must be disregarded when bonus is under consideration because they relate only to "additional remuneration " and riot to " bonus ".
Now, it may be possible to say that the words " of the nature aforesaid " only govern the words " additional remuneration " and that they do not apply to "bonus", with the result that the inclusion clause " and includes any bonus etc." would refer to two separate things, namely, (1) bonus and (2)other additional remuneration of the nature aforesaid.
In our opinion, the clause means (1) "bonus. . . which would be so payable ", and (2)" other additional remuneration of the nature aforesaid which would be so payable.
" If that is correct, then the words " which would be so payable " throw us back to the earlier part of the definition and we reach the position that the kind of bonus that is included by the inclusion clause is the kind that would be payable " if the terms of the contract of employment, express or implied, are fulfilled.
" There is another reason for reaching this conclusion.
The opening words of the definition make it clear that " wages " means remuneration that is payable when the terms of the contract of employment are fulfilled.
Therefore, that is something certain.
1511 One knows ahead of time that if the terms of the contract are fulfilled, then the bonus is payable.
It may be that the exact amount has yet to be determined but the fact that bonus is payable and can be claimed as soon as the terms of the contract are fulfilled is a matter that can be predicated beforehand, that is to say, even before the terms of the contract are fulfilled, or indeed, even before the work has started if the contract is made that far ahead.
But that is not the case when bonus is awarded by an Industrial Court, for there it is impossible to say ahead of time whether bonus will be awarded or not; indeed, at the time the contract is entered into, it would be impossible to say whether such a claim could be laid at a II because a difference of opinion between one worker and his employer about the right to bonus would Dot necessarily lead to an industrial dispute.
When an Industrial Court awards a bonus, independent of any contract, it does so only if there is an available surplus for a distribution of bonus and the amount of the award would depend on the extent of the surplus available for that purpose.
Therefore, the fulfilment or otherwise of the terms of the contract of employment is not an essential ingredient of an award of an Industrial Court.
In F. W. Heilgers & Co. vs N. C. Chakravarthi the learned Judges of the Federal Court held that a bonus not payable under a contract of employment does not fall within the definition of "wages" in section 2(vi) of the , as it stood before the amendment in 1957.
We are concerned with the old definition here and not the amended one, so the present case is, in our opinion, covered by that authority.
It is true that no bonus had been awarded in Heilgers ' case (1) and that therefore there was no ascertained sum, whereas there is one in the present case, or rather a sum that is ascertainable, but that was only one of the grounds on which the learned Judges proceeded.
They held that in order to bring a particular (1) , 360. 1512 payment under the definition of "wages", two things are necessary " (1) a definite sum, and (2) a contract indicating when the sum becomes payable "; and they said " It is obvious that unless there is an express provision for paying a stipulated sum, the definition will not cover such a payment.
" The bonus in the present case is not payable because of a contract but because of the award of an Industrial Court.
Therefore, according to the Federal Court, it is not " wages " within the meaning of the .
In 1957 the definition was amended and the following was added: " wages ' means and includes (c) any additional remuneration payable under the terms of employment (whether called a bonus or by any other name); but does not include (1) any bonus (whether under a scheme of profit sharing or otherwise) which does not form part of remuneration payable under the terms of employment The change would have been unnecessary had the law been otherwise under the old definition; nor is it possible to say that the clause was added by way of abundant caution because the Federal Court decided otherwise in 1949.
In view of this amendment, and in view of the Federal Court 's decision, we do not feel justified in taking a different view, especially as we think the decision was right.
The learned Judges of the Bombay High Court tried to distinguish the Federal Court 's judgment on the ground that no bonus had been declared there and ,so there was no ascertained sum, but, as we have pointed out, the ratio of the decision covers the present case and, in any case, that is our view quite apart from their conclusion.
1513 On this view, it is not necessary to consider the other points that were argued because, if the definition of wages ", as it stood before the amendment, is not wide enough to include a bonus of the kind we have here, namely, one payable under an award of an Industrial Court, then, the Authority under the had no jurisdiction to entertain the petitions made to it under section 15 of the Act.
The appeals are allowed with costs.
The decisions of the learned High Court Judges are set aside and also the decrees of the Authority under the .
There will be only one set of costs.
Appeals allowed.
| The Industrial Court, Bombay, awarded bonus equal to 4 1/2 months ' wages to the operatives of the Tata Mills Ltd. and directed that those operatives who were no longer in the service of the Mills should be paid the bonus in one lump sum by a fixed date and in such cases claims in writing should be made to the Manager of the Mills.
The operatives who made a claim before the date fixed were duly paid but payment was refused to operatives who applied after that date.
The operatives who had been refused payment made applications to the Authority under the Payment of Wages Act.
The Mills contended that the Authority had no jurisdiction to entertain the application, but the contention was rejected.
The Mills filed a writ petition before the Bombay High Court which was dismissed by a Single judge and an appeal against that decision was also dismissed by a Division Bench: Held, that the bonus awarded by the Industrial Court was not wages within the meaning of section 2(Vi) of the Payment of Wages Act and as such the Authority had no jurisdiction to entertain the applications made to it under section I5 of the Act.
Though such bonus was remuneration it was not remuneration payable on the fulfilment of the terms of the contract of employment, express or implied, as required by section 2(vi).
F. W. Heilgers & Co. vs N. C. Chakravarthi, [1949] F.C.R. 356, followed.
|
Summarize this legal judgement text concisely | Appeal No. 78 of 1954.
Appeal from the judgment and decree dated April 17, 1950, of the Bombay High Court in Appeal No. 642 of 1949, arising out of the judgment and decree dated July 30, 1949, of the Court of Civil Judge, Senior Division, Ahmedabad in Suit No. 10 of 1946.
Purshottam Tricumdas, M. H. Chhatarpati and section section Shukla, for the appellants.
H. N. Sanyal, Additional Solicitor General of India and I. N. Shroff, for the respondent.
March 21.
The Judgment of the Court was delivered by GAJENDRAGADKAR J.
This is an appeal by the plaintiffs against the decree passed by the High Court of Bombay dismissing their suit to recover from the defendant Rs. 1,52,334 8 9 as damages for breach of contract for non delivery of certain cotton goods.
The plaintiffs ' claim had been decreed by the trial court but on appeal it has been dismissed.
The appellants are the partners of M/S. Navinchandra & Co. This partnership had placed an order with the respondent for 251 bales of printed chints on or about July 4, 1942, and the said order had been accepted by the respondent by its letters dated July 1 1 and July 20, 1942.
The delivery period for the said goods was fixed for the months of September and October, 1942.
Another order was placed by the 215 appellants with the respondent for 31 bales of printed chints on July 24, 1942, and this order was accepted by the respondent on July 25, 1942.
The delivery of these goods was to be given in the month of October 1942.
On August 9, 1942, the workers in the respondent mills went on strike in sympathy with the Quit India, movement which had then commenced.
In consequence, the respondent wrote to the appellants ' firm on August 15, 1942, and stated that, in view of the strike and the political situation, the delivery time of all the pending contracts should be automatically understood as extended for the period the working of the mills was stopped and until the normal state of affairs recurred.
The strike came to an end and the mills resumed working on November 22, 1942.
On December 5, 1942, Jasubhai, who was then in charge of the management of the mills was approached by the appellants, Keshavlal and Ratilal, for obtaining delivery of the goods.
He, however, told them that the appellants ' contracts were void and so no delivery could be claimed or given.
On December 6, 1942, the said Jasubhai wrote to the appellants informing them that their contracts were not binding on the mills as they were null and void.
It may be mentioned at this stage that, when the contracts were made between the appellants and the respondent, Chinubhai Lalbhai was in charge of the managing agency of the mills.
Subsequently, on September 18, 1942, as a result of the compromise between Chinubhai and his brothers Jasubhai and Babubhai, this managing agency of the mills fell to the share of Jasubhai and Babubhai.
On December 17, 1942, the appellants wrote to the respondent that, as the respondent had extended the time of delivery of all goods by its letter dated August 15, 1942, the respondent was bound to deliver the contracted goods and that if the respondent did not do so, the appellants would be compelled to take legal proceedings against the respondent.
In reply, the respondent repeated its earlier contentions by its letter dated December 20, 1942.
The appellants then formally demanded the delivery of goods in January 216 and again in February 1943, and, since the demand was not complied with, the appellants filed the present suit on January 9, 1946, claiming damages to the extent of Rs. 1,52,334 8 9 with interest and costs.
In the plaint, it was alleged that the suit was in time because the request made by the respondent for extension of time had been accepted by the appellants. 'The suit was resisted by the respondent on several grounds.
In particular, the respondent urged that there was no agreement between the parties with regard to the extension of time and so the suit was barred by limitation.
The learned trial judge framed several issues with two of which the present appeal is concerned.
These two issues related to the question of extension of time for the performance of the contract and the plea of limitation.
On both these points, the learned judge found in favour of the appellants.
In the result the appellants ' claim was decreed.
The respondent then preferred an appeal in the High Court at Bombay and his appeal was allowed.
The learned Judges of the High Court have held that the oral evidence led by the appellants to show the acceptance of the respondent 's proposal for the extension of time could not be treated as true or reliable.
They also rejected the appellants ' case on the ground that the conduct of the appellants subsequent to the stoppage of the respondent 's mills did not show acceptance of the respondent 's proposal for extension of time.
Besides, in the opinion of the High Court, even if acceptance had been proved, it was not possible to ascribe any certain or definite meaning to the words used by the respondent in its letter dated August 15, 1942 (exhibit P. 78), and so this agreement to extend time was void since it wag vague and uncertain.
That is why it was held that the appellants ' suit was barred by time.
It is these findings which are challenged before us by the appellants in the present appeal.
It is obvious that the value of the claim in the trial court as well as before us is more than Rs. 20,000 and the judgment of the High Court under appeal has reversed the decree passed by the learned trial judge.
The appellants are thus entitled to agitate 217 both questions of fact and of law before us in this appeal.
The first point which has been urged before us by the appellants is in respect of the finding made by the High Court against the appellants on the question of the extension of time for the performance of the contract.
The argument is that the learned Judges of the High Court were in error in rejecting the oral ' evidence led by the appellants.
It would, therefore, be necessary to consider the material evidence bearing on this point.
The proposal to extend time was made by the respondent by its letter (exhibit P. 78) on August 15, 1942.
Ratilal P. W.
I stated that, four or five days after this letter was received, he went to Ahmedabad where he met and consulted Keshavlal.
Then he saw Chinubhai at the mills and told him that he accepted the extension of time as per the said letter.
In cross examination, Ratilal added that he met Chinubhai at the office in his mills.
I He also stated that, besides the subject of extension of time, no other matter was discussed between them at the said meeting.
He admitted that no letter had been written by the appellants confirming their acceptance of the respondent 's proposal to extend time.
The evidence given by Ratilal is corroborated by the testimony of Keshavlal.
It appears on the evidence of both these witnesses that, after the mills reopened, they had gone to Jasubhai and demanded delivery of the bales according to the contracts.
The appellants argued that there is really no reason why the evidence of these two witnesses should be disbelieved.
It is significant that the main plea raised by the respondent against the appellants ' claim in the present suit was that the contract itself was invalid and not bind ing on it and that the letter written by Laxmidas on August 15, 1942, was likewise unauthoirised and not binding on it.
These pleas have been negatived in the courts below.
It is fairly clear from the record that the attitude adopted by the respondent in the present dispute was actuated more by Jasubhai 's prejudice against Chinubhai and it may be safely 28 218 asserted that some of the pleas taken by the respondent were known to the respondent to be untenable.
The appellant,% rely upon this conduct of the respondent and suggest that the oral testimony of Ratilal and Keshavlal is consistent with probabilities and should be believed.
Chinubhai also gave evidence in the case.
He stated that the proposal to extend time had 'been conveyed by Laxmidas under his instructions.
It is common ground that similar request was made to all the constituents of the mills both in Ahmedabad and outside Ahmedabad.
Chinubhai did not remember whether he had got any written reply to the letter of August 15, 1942, from the appellants but the effect of some of the statements made by him would generally appear to be that lie had received oral acceptance of the said proposal from the appellants.
However, in answer to further questions put to him in cross examination, Chinubhai stated that he did not remember whether the appellants accepted the offer or not.
It is, however, clear that the evidence of Chinubhai is not at all inconsistent with the statements made by Ratilal and Keshavlal.
It is common ground that the prices of the goods were rising at the material time and so it is more likely that the appellants were willing to extend time because they would naturally be keen on obtaining delivery of the goods under the contract.
In both the courts below an argument appears to have been urged by reference to the sauda books kept by the respondent.
Shri Dharamasi Harilal had brought the sauda books in the court but neither party got the books exhibited in the case.
The learned trial judge took the view that, since the sauda books were not produced and proved by the respondent, it led to the inference that, if the books had been produced, they would have shown an endorsement made against the suit contracts that the extension of time had been agreed upon by the appellants.
On the other hand, the learned Judges of the High Court were inclined to draw the inference that, since the appellants did not want the said sauda books to be exhibited, it would appear that the said books did not contain any note about the extension.
In our opinion, it would be 219 unsafe to draw either of these two inferences in the present case.
Therefore, the decision of the question would depend upon the appreciation of oral evidence considered in the light of probabilities and other relevant circumstances in the case.
On the whole, we are disposed to take the view that the evidence given by Ratilal and Keshavlal is true.
Besides, the conduct of the parties also points to the ' same conclusion.
If the period for the delivery of the goods had not been extended by mutual consent, we would normally have expected the appellants to make a demand for delivery of the goods on due dates as fixed under the original contracts.
It is conceded that no such demand was made.
On the other hand, it is only after the mills reopened that Ratilal and Keshavlal saw Jasubhai and discussed with him the question about the delivery of the goods.
This is admitted by the respondent in its letter dated December 6, 1942, (exhibit P. 62).
The appellants were, however, told by the respondent that the saudas of their firm were not binding on the respondent and that the same were void.
It is somewhat remarkable that though this document disputes the validity of the sauda, even alternatively it does not suggest that the period of extension had not been agreed to by the appellants.
It may be that, since Jasubhai then wanted to challenge the validity of the contracts themselves, he did not care to make any alternative plea.
But however that may be, the conduct of the appellants is, in our opinion, consistent with their case that they had agreed to the extension of time.
The true legal position in regard to the extension of time for the performance of a contract is quite clear under section 63 of the Indian Contract Act.
Every promise, as the section provides, may extend time for the performance of the contract.
The question as to how extension of time may be agreed upon by the parties has been the subject matter of some argument at the Bar in the present appeal.
There can be no doubt, we think, that both the buyer and the seller must agree to extend time for the delivery of goods.
It would not be open to the promise by his unilateral act to extend 220 the time for performance of his own accord for his own benefit.
It is true that the agreement to extend time need not necessarily be reduced to writing.
It may be proved by oral evidence.
In some cases it may be proved by evidence of conduct.
Forbearance on, the part of the buyer to make a demand for the delivery of goods on the due date as fixed in the original contract may conceivably be relevant on the question of the intention of the ' buyer to accept the seller 's proposal to extend time.
It would be difficult to lay down any hard and fast rule about the requirements of proof of such an agreement.
It would naturally be a question of fact in each case to be determined in the light of evidence adduced by the parties.
Having regard to the probabilities in this case, and to the conduct of the parties at the relevant time, we think the appellants are entitled to urge that their oral evidence about the acceptance of the respondent 's proposal for the extension of time should be believed and the finding of the learned trial judge on this question should be confirmed.
The finding in favour of the appellants on this point is not, however, decisive of the dispute between the parties in the present appeal.
It still remains to be considered whether the agreement between the parties about the extension of time suffers from the infirmity of uncertainty and vagueness.
The learned Judges of the High Court have come to the conclusion that the letter of August 15, 1942, which is the basis of the agreement for the extension of time is so vague and uncertain that the agreement as to extension of time itself becomes void and unenforceable.
The correctness of this conclusion must now be considered.
The basis of the agreement is the letter and so it is the construction of this letter which assumes considerable importance.
This is how the letter reads: Dear Sirs, Your good selves are well aware of the present political situation on account of which entire working of our Mills is closed.
At present, it is difficult to say as to how long this state of affairs will continue and as such we regret 221 we cannot fulfil the orders placed by you with us in time.
Under the circumstances, please note that the delivery time of all your pending contracts with us shall be automatically understood as extended for the period the working is stopped and till the normal state of affairs recurs.
" It would be noticed that the letter begins by making a reference to the current political situation which led to the closure of the mills and it adds that it was vary difficult to anticipate how long the said state of affairs would continue.
It is common knowledge that, at the material time, the whole country in general and the city of Ahmedabad in particular was in the grip of a very serious political agitation and nobody could anticipate how long the strike resulting from the said, agitation would last.
It 'is in that atmosphere of uncertainty that the respondent requested the appellants to note that the time for delivery would be automatically extended " for the period the working is stopped and till the normal state of affairs recurs ".
The first condition does not present any difficulty.
As soon as the strike came to an end and the closure of the mills was terminated, the first condition would be satisfied.
It is the second condition that creates the real difficulty.
What exactly was meant by the introduction of the second condition is really difficult to determine.
So many factors would contribute to the restoration of the normal state of affairs that the satisfaction of the second condition inevitably introduces an element of grave uncertainty and vagueness in the said proposal.
If the normal state of affairs contemplated by the second condition refers to the normal state of affairs in the political situation in the country that would be absolutely and patently uncertain.
Even if this normal state of affairs is construed favourably to the appellants and it is assumed that it has reference to the working of the mills, that again does not appreciably help to remove the elements of uncertainty and vagueness.
When can normal working of the mills be deemed to recur? For the normal working of the mills several factors are essential.
The full complement of workmen should be 222 present.
The requisite raw material should be available and coal in sufficient quantities must be in stock.
Some other conditions also may be necessary to make the working of the mills fully normal.
Now, unless all the constituent elements of the normal working of the mills are definitely specified and agreed upon, the general expression used in the letter in that behalf cannot be construed as showing anything definite or certain.
Therefore, even if the appellants ' evidence about the acceptance is believed, that only shows in a very general and loose way the acceptance of the proposal contained in the letter.
It does not assist us in determining what was understood between the parties and agreed upon by them as constituting the normal state of affairs mentioned in the letter.
In this connection, it would be relevant to refer to the material allegations in the plaint itself.
In para.
7, the plaint has averred that the plaintiffs agreed to the said extension of time for the delivery of the said goods as suggested by the defendant, that is by a period during which the said mills would remain closed.
In other words, the whole of the plaint proceeds on the assumption that the extension of the period for the delivery of goods had reference only to the stoppage of the mills.
Indeed, it was sought to be argued at one stage that the second condition in the letter should be treated as a meaningless surplusage and the extension of time agreed upon between the parties should be read in the light of the first condition alone.
In support of this argument reliance was placed on the decision in Nicolene Ld.
vs Simmonds (1).
In that case, a contract for the sale of a quantity of reinforcing steel bars was expressed as subject to " the usual conditions of acceptance ".
The seller repudiated the contract whereupon the buyers claimed and were awarded by the trial judge damages for the breach of contract.
On appeal, the seller contended that the contract was not concluded there being no consensus ad item in regard to the conditions of acceptance.
It was held that, there being no " usual conditions of acceptance ", the condition was meaningless and should be ignored, and that the (1) , 552.
223 contract was complete and enforceable.
Dealing with the relevant clause, Denning L. J. observed, "that clause was so vague and uncertain as to be incapable of any precise meaning.
It is clearly severable from the rest of the contract.
It can be rejected without impairing the sense or reasonableness of the contract as a whole, and it should be so reacted.
The contract should be held good and the clause ignored ".
Then ' the learned Lord Justice pointed out that " the parties themselves treated the contract as subsisting.
They regarded it as creating binding obligations between them and it would be most unfortunate if the law should say otherwise ".
" You would find ", observed the learned Lord Justice, " defaulters all scanning their contracts to find some meaningless clause on which to ride free ".
In our opinion, this decision can be of no assistance to the appellants ' case before us.
The second condition in the letter in question constitutes a clause which had to be agreed upon by the parties since it formed one of the conditions of the respondent 's proposals for the extension of time.
The respondent 's proposal was to extend time for the performance of the contract subject to two conditions and unless both the conditions were agreed upon between the parties there would be no valid or binding extension of time under section 63 of the Indian Contract Act.
The fact that the second condition introduced by the respondent is vague and uncertain, does not necessarily show that the said condition was intended by the respondent to be the addition of a meaningless surplusage.
If that be the true position, then the material allegations in the plaint itself demonstrably prove that there has been no acceptance by the appellants of the second condition mentioned by the respondent in its proposal to extend time for the performance of the contract.
Besides, as we have already indicated, it is really difficult to hold that the respondent had a clear and precise notion as to the constituent elements of the second condition mentioned in its letter and that the appellants were duly apprised of the said constituent elements and agreed with the said condition with that knowledge.
In this connection, we may usefully refer to the decision 224 of the House of Lords in Scammel (G.) And Nephew, Ld.
vs (Ouston) (H. C. And J. 0.) (1).
In this case, the respondent had agreed to purchase from the appellant a new motor van but stipulated that this order was given on the understanding that the balance of purchase price can be had on the hire purchase terms over a. period of two years.
The House of Lords held that the clause as to hire purchase terms was so vague that no precise meaning could be attributed to it and consequently there was no enforceable contract between the parties.
In his speech, Lord Wright observed that " the object of the court is to do justice between the parties, and the court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intention, looking at substance and not at mere form.
But the test of intention is to be found in the words used.
If these words, considered however broadly and untechnically and with due regard to all the just implications, fail to evince any definite meaning on which the court can safely act, the court has no choice but to say that there is no contract ".
Then the learned Law Lord added that his reason for thinking that the clause was vague was not only based on the actual vagueness and unintelligibility of the words used but was confirmed by the startling diversity of the explanations tendered by those who think there was a bargain of what the bargain was.
We would like to add that, when the appellants attempted to explain the true meaning of the second condition, it was discovered that the explanations given by the appellants ' counsel were diverse and inconsistent.
We must, therefore, hold that the learned Judges of the High Court were right in coming to the conclusion that the conditions mentioned by the respondent in its letter asking for extension of time were so vague and uncertain that it is not possible to ascertain definitely the period for which the time for the performance of the contract was really intended to be extended.
In such a case, the agreement for extension must be held to be vague and (1) 225 uncertain and as such void under section 29 of the Indian Contract Act.
There is one more point which must be considered.
It was strongly urged before us by the appellants that, in the trial court, no plea had been taken by the respondent that the agreement for the extension of time was vague and uncertain.
No such plea appears to have been taken even in the grounds of appeal preferred by the respondent in the High Court at Bombay; but apparently the plea was allowed to be raised in the High Court and the appellants took no objection to it at that stage.
It cannot be said that it was not open to the High Court to allow such a plea to be raised even for the first time in appeal.
After all, the plea raised is a plea of law based solely upon the construction of the letter which is the basis of the case for the extension of time for the performance of the contract and so it was competent to the appeal court to allow such a plea to be raised under 0.
41, r. 2, of the Code of Civil Procedure.
If, on a fair construction, the condition mentioned in the document is held to be vague or uncertain, no evidence can be admitted to remove the said vagueness or uncertainty.
The provisions of section 93 of the Indian Evidence Act are clear on this point.
It is the language of the document alone that will decide the question.
It would not be open to the parties or to the court to attempt to remove the defect of vagueness or uncertainty by relying upon any extrinsic evidence.
Such an attempt would really mean the making of a new contract between the parties.
That is why we do not think that the appellants can now effectively raise the point that the plea of vagueness should not have been entertained in the High Court.
The result is we confirm the finding of the High Court on the question of vagueness or uncertainty of the agreement to extend time and that must inevitably lead to the dismissal of the present appeal.
We are, however, free to state that we have reached this conclusion with some reluctance because we are satisfied that there are no bona fides in the attitude 29 226 adopted by the respondent in the present litigation.
The main pleas raised by the respondent against the binding character of the contracts themselves as well as against the authority of Laxmidas to write the letter for extension of time have been rejected by both the courts below, and the only ground on which the respondent succeeds before us was made on behalf of the ,respondent for the first time in appeal.
Under these circumstances we think the fair order as to costs would be that parties should bear their own costs throughout.
The result is the appeal fails and is dismissed but there would be no order as to costs throughout.
Appeal dismissed.
| The appellants entered into a contract with the respondent mills for the purchase of certain goods in which the time for delivery was fixed for the months of September and October, 1942.
Before the expiry of the time fixed there was a strike in the mills and the respondent wrote a letter to the appellants on August 15, 1942, that in view of the strike and the political situation, the delivery time of all the pending contracts should be automatically understood as extended for the period the working of the mills was stopped and until the normal state of affairs recurred.
Though the strike came to an end the respondent declined to give delivery of the goods on the ground that the contracts were void.
In the suit filed by the appellants on January 9, 1946, for damages for breach of the contract the respondent pleaded that there was no agreement between the parties with regard to the extension of time and so the suit was barred by limitation.
The appellants ' case and their evidence which was consistent with the conduct of the parties at the relevant time only showed definitely that they had orally agreed to the proposal made by the respondent for extension of time for the period during which the mills would remain closed, and as regards the second condition referred to in the respondent 's letter dated August 15, 1942, " till the normal state of affairs recurs (which was vague and uncertain), the evidence did not show that there was an acceptance by the appellants of the said condition.
The question was whether there was an enforceable agreement for extension of time for performance of the contract within the meaning of the Indian Contract Act : Held, (1) An extension of time for the performance of the contract Under section 63 of the Indian Contract Act must be based upon an agreement between the parties, and it would not be open to the promise by his unilateral act to extend the time for performance of his own accord for his own benefit.
Such an agreement need not necessarily be reduced to writing and can be proved by oral evidence or by evidence of conduct.
(2) The respondent 's proposal for extension of time contained in the letter dated August 15, 1942, was subject to two conditions, and the fact that the second condition was vague and 214 uncertain does not necessarily show that it was intended to be treated as a meaningless surpluses.
As there was no acceptance by the appellants of the second condition there was no valid or binding agreement for extension of time under section 63 of the Indian Contract Act.
Nicolene Ld.
vs Simmonds, , distinguished.
(3) In any event as the conditions were so vague and uncer tain that it was not possible to ascertain definitely the period for which the time for the performance of the contract was really intended to be extended, the agreement for extension was void under section 29 Of the Indian Contract Act.
Scammel (G.) and Nephew, Ld.
vs Oustom (H. C. and 1.
G.) Queston, , relied on.
|
Summarize this legal judgement text concisely | 220, 222, 240 and 380 to 395 of 1955.
Petitions under Article 32 of the Constitution of India for the enforcement of Fundamental Rights.
Dec. 10, 11, 12, 13, 17, 18, 19.
Jan. 7, 8, 9.
D. Narsa Raju, Advocate General for the State of Andhra Pradesh and T. M. Sen, for the respondent.
The petitions are premature and incompetent as the facts of each transaction of sale are yet to be investigated and it is not possible to know the character of each sale, nor can it be determined which sales can be and which cannot be taxed by Andhra Pradesh.
[CHIEF JUSTICE.
You should be reasonably satisfied that the sales are of such a nature that you can levy tax on them before you issue a notice.
BOSE J. You must state the facts on which you think you can tax the sales.] section K. DAS J.
Your stand is that all transactions could be taxed by the delivery State.] D. Narsa Raju.
My State is taxing under the decision of this Court in the United Motors case ( [1953]S. C. R. 1069).
[ Upon the counsel for the petitioners stating that he would confine his arguments to the imposition of tax on Explanation sales only, which some of the transactions indisputably were, the Court indicated that it would hear the petitions. ] K. section Krishnaswami Iyengar, N. Srinivasan and R. Ganapathy Iyer, for the petitioners.
The Andhra (Madras) Act does not seek to tax Explanation sales 1427 at all.
It talks of " property passing " only and as such Andhra can tax only such sales where property passes in Andhra.
See Poppatlal Shah vs State of ' Madras, ( [1953] section C. R. 677).
Section 22 does not enlarge the definition of sales; it only restricts the power of the State to tax.
The explanation to section 22, like the explanation to article 236(1), is merely for the purpose of defining what is an outside sale and not for determining what is an inside sale.
See Bengal Immunity Company case ( at 640).
The power of the President under article 372(2) being merely to bring the State laws into conformity with article 286, section 22, which was introduced by the Presidential Adap tation Order under article 372(2), cannot be construed as permitting the imposition of tax on Explanation sales which was prohibited by article 286.
If section 22 was construed to permit such imposition it was unconstitutional, illegal and void and must be deemed to be non est.
See Bengal Immunity Company case ( at 667).
What did not exist could not be validated.
The Sales Tax Laws (Validation) Act, 1956, was not valid legislation under article 286(2).
Article 286(2) only empowers Parliament to lift the ban on the imposition of tax on inter State ales and after it has lifted the ban the State legislature may impose the tax.
Parliament is not competent to impose sales tax; such power is vested only in the State legislatures.
Article 286(2) does not give Parliament power to validate or ratify laws of the State legislatures.
The power under article 286(2) can be exercised only once and finally and fully, not partially.
Parliament can only lift the ban as from the day the power is exercised and riot retrospectively.
Punjab Province vs Daulat Singh, (73 I. A. 59); Behram Khurshed Pesikaka vs The State of Bombay ( [ 1955 ] I section C. R. 613, 654 and 655).
The case of Dialdas vs Talwalkar (A. 1.
R. has been wrongly decided.
But even this decision helps the petitioners in so far as it lays down that where tax had neither been collected nor levied the Validation Act did not confer power to assess or levy.
The whole 181 1428 policy of the Validation Act was to save the State from disgorging the, tax illegally collected.
Both levy and collection must be within the period specified in section 2 of the, Act.
Mettur Industries Ltd. vs The State of Madras (A. 1.
R. and Mysore Spinning and Manufacturing Co. Ltd. vs Deputy Commercial Tax Officer (A. 1.
R. are against the petitioners.
R. Ganapathy Iyer followed.
Section 22 of the Andhra (Madras) Act did riot enlarge the powers of taxation.
Mathew vs Travancore Cochin Board of Reventue (A. 1.
R. 1957 T. C. 300).
The validation being for a temporary period which expired on September 6, 1.955, no action can be taken after that date under the validated laws.
Kesavan Madhava Menon vs The State of Bombay, ( ; , 234, 235), section Krishnan vs The State of Madras, ( [1951]S. C. R. 62 1, and State of Punjab vs Mohar Singh,[1955 ] I section C. R. 893).
The tax being a sinole pointtax under the Act, and the petitioners having already paid the tax at the time of the purchase of the yarn from the Mills, no second tax was payable.
The Andhra (Madras) Act being a new Act the tax on yarn is hit by the Essential Commodities Act (52 of 1952) read with article 286(3) of the Constitution.
Petitioners are not dealers in Andhra Pradesh and cannot be assessed.
There are no sales in Andhra; all sales being in Madras.
V.L. Narasimhamoorthy, J. B. Dadachanji and Rameshtvar Nath, for the Mysore Spinning & Mfg. Co., Ltd., and Minerva Mills Ltd., (Interveners), supported the petitioners.
Section 22 does not authorise the imposition of tax on Explanation sales.
It could not have been the intention of the President to allow the State to add a new category of sales the Explanation Sales to be taxed.
The language of article 286(2) indicates that the lifting of the ban is a condition precedent to legislation by the States imposing tax on inter State sales.
Alternatively, the power to tax inter State sales is with Parliament under Entry 97 of List I of Schedule VII of the Constitution.
Section 22 was wiped out and obliterated by the judgment in the 1429 Bengal Immunity Company case.
See Behram Khurshed Pesikaka vs The State of Bombay, ([1955] 1 section C. R. 613); Newberry vs United States; , The same interpretation must be given to the explanation to section 22 as has been given to the explanation to article 286(1)(a).
The non obstante clause in section 22 has only the effectof subtracting something from the power to tax andriot of adding to it.
Ram Narain Sons Ltd. vs Asst.
Commissioner of Sales Tax ([1955] 2 S.C. R. 483); Aswini Kumar Ghosh vs Arbinda Bose ([1953] S.C.R. 1, 22, 24); A. V. Fernandez vs The State of Kerala, ([1957] section C. R. 837).
N. A. Palkhiwala, J. B. Dadachanji and Rameshwar Nath, for Tata Iron & Steel Co., Ltd., (Intervener).
There must be a factual levy before Parliament can validate it.
Section 22(ii) removes inter State sales from the purview of the Act.
Fernandez 's case supports this contention.
On a proper construction of article 286(2), according to the decision in the Bengal Immunity Company case, there was no levy on interState sales and there was nothing for Parliament to lift the ban for.
( [ 1955 ] 2 section C. R. 603, 621, 662, 667).
There is a vital difference between retrospective and retroactive operation.
There is no power in Parliament to validate ex post facto a violation of article 286(2).
Parliament must first lift the ban and then the State legislation may come imposing tax on inter State sales.
Parliament is competent to prevent what otherwise would have been a violation of the Constitution, but it is not competent to condone an accomplished violation.
Section 2 of the Validating Act will operate only where taxes have already been collected or have been finally assessed.
P. N. Bhagwati and .1.
N. Shroff, for Pashebbhai Patel & Co., Ltd., (Intervener) supported the petitioners.
D. Narsa Raju, Advocate General of Andhra Pradesh and T. M. Sen, for the respondents.
Article 372(2) must take regard of the provision of the Constitution to bring the State laws into conformity with which the power of adaptation is to be exercised.
That provision 1430 is article 286.
Implicit in article 286(1) is the recognition that the delivery State alone may tax.
The President would be acting within his power to enable the delivery State to tax Such power is in accordance with the provisions of the Constitution.
The power of the legislature to bring the laws in accordance with the Constitution is conferred upon the President.
Consequently, the explanation to section 22 can be read along with the definition of sale and it does add to that definition by bringing Explanation sales within it.
K. V. Subramania Iyer, D. N. Mukherjee and B. N. Ghosh, for Madura Mills Co., Ltd., (Intervener).
The Adaptation Order made by tile President is not 'law of a State ' within the meaning of the Validating Act. 'Law of a State ' in the Validating Act must mean the same thing as in article 286(2).
The President exercising power under article 372(2) is not controlled by article 286; he exercises a power which belongs to the President and not a power on behalf of the State.
Section 22 of the Andhra (Madras) Act is not law made by the State Legislature and is not validated by the Validating Act.
The power of imposition of sales tax on inter State sales was taken away from the States.
The bail under article 286(2) is only in respect of existing laws; there is no power in the States to enact laws imposing tax on interstate sales.
The power to impose tax on inter State sales is within the exclusive domain of Parliament under Entry 42 of List I of the Seventh Schedule of the Constitution and Entry 54 of List 11 must be construed as not including such power.
A reference to article 301 reinforces this interpretation.
The freedom under article 301 includes freedom from sales tax.
See The Commonwealth vs The State of South Australia, (38 C. L. R. 408).
The Validation Act is not legislation within Entry 42.
See Bank of N. section W. vs The Commonwealth, (76 C. L. R. 1, 381); Robbins vs Taxing District of Shelby County ((1877) ; ; McLeod vs Dilworth Co. ((1944) 88 L. Ed.
1304).
C. K. Daphtary, Solicitor General of India, G. N. 1431 Joshi and T. M. Sen, for the Union of India (Intervener).
The Sales Tax Laws Validation Act, 1956, is valid legislation tinder article 286(2).
In effect and in substance the Validation Act is a law which removes the ban imposed by article 286(2), and is not really a Validating Act.
Article 286(2), in respect of existing laws, merely said that they should not be effective or operative.
It did not take away the competency of the legislatures to make laws providing for taxes oil inter State sales.
Such a law may be against the provision of the Constitution, but that does not repeal or obliterate it.
It is only in abeyance.
See Bhikaji Narain Dhakra,s and others vs The State Of Madhya Pradesh and another, ([ ; , 600).
Legislative power generally includes the power to legislate retrospectively.
There is no limitation in article 286(2) as respects retrospective legislation.
Parliament could, therefore, lift the ban retrospectively.
Section 22 is a piece of conditional legislation.
As soon as the ban under article 286(2) was lifted by Parliament it came into operation.
The Validation Act is not a temporary statute.
A temporary statute is one which says that it is to be effective for a particular period.
The Validating Act operates even now and is effective, though it is in respect of sales of a particular period.
It is open to the States to initiate proceedings now for taxing the Explanation sales made during the period mentioned in section 2 even though no such proceedings had been taken during that period.
Entry 42 of List I which reads: " Inter State trade and commerce " does not confer any power of taxation on Parliament.
In the scheme of our Constitution a general Entry does not include the power of taxation.
Taxes, duties, etc., are enumerated in a separate group in Entries 82 92 in List I. V. K. T. Chari, Advocate General for the State of Madras, B. R. Gopalakrishnan and T. M. Sen for the State of Madras (Intervener).
In construing section 22 of the Andhra (Madras) Act regard must be had to the law as it stood till September 6, 1955, when judgment was delivered in the Bengal Immunity Company case.
In view of the decision in the United Motors 1432 case ([1953] section C. R. 1069, 1085, 1086, 1093, 1094), Explanation sales were regarded as 'inside sales ' in the delivery State, and the delivery State was entitled to tax sales.
The law of a State which imposed tax on Explanation sales would remain on the statute book, in spite of the decision in The Bengal Immunity Company case, but could not be enforced.
See Bhikaji Narain Dhakras and others vs The State of Madhya Pradesh and another ([1955] 2 S.C.R. 589); Ulster Transport Authority vs James Brown & Sons Ltd. ((1953) Northern Ireland Reports 79).
Section 2 of the Validating Act refers to such a law.
Mahabir Prasad, Advocate General for the State of Bihar, Rajeshwar Prasad and section P. Varma, for the State of Bihar (Intervener); G. C. Mathur and C. P. Lal, for the State of Uttar Pradesh (Intervener) supported the respondents and the Union of India.
R. Ganapathy Iyer, for the petitioners, replied.
K. V. Subramania Iyer, for Madura Mills Co., Ltd., (Intervener), also replied with the permission of the Court.
March II.
The judgment of Das C. J., Venkatarama Aiyar, section K. Das and Vivian Bose, JJ. was delivered by Venkatarama Aiyar J. Sarkar J. delivered a separate judgment.
VENKATARAMA AIYAR J.
The petitioners are dealers carrying on business in the City of Madras in the sale and purchase of yarn, and they have filed the present applications under article 32 of the Constitution for the issue of a writ of prohibition or other appropriate writ restraining the State of Andhra from taking proceedings for imposing tax on certain sales effected by them in favour of merchants who are residing or carrying on business in what is now the State of Andhra Pradesh, on the ground, inter alia, that the said sales were made in the course of inter State trade, and that no tax could be levied on them by reason of the prohibition contained in article 286(2) of the Constitution.
The course of dealings between the parties resulting 1433 in the above sales has been set out in para.
5 in Petition No. 220 of 1955.
It is therein stated that the dealers in Andhra would place orders for the purchase of yarn with the petitioners in Madras, that the contracts would be concluded at Madras, that the goods would be delivered ex godown at Madras and would thereafter be despatched to the purchasers either by lorries or by rail as might be directed by them, that when the goods were sent by rail, the railway receipts would be taken either in the name of the consignees, and sent to them by post or in the name of the consignor and endorsed to the purchasers and delivered to them in Madras or sent to them by post endorsed in favour of a bank and the purchasers would take delivery of those receipts after payment to the bank.
It is said that in all cases price of the goods was paid in Madras.
On the above allegations, it is manifest that the sales mentioned therein are not all of the same kind, and in point of law, the incidents attaching to them might be different.
A consideration of the validity of the imposition with reference to the several classes of sales mentioned above would he wholly airy and pointless without a determination of the facts relating to them, which, however, have not been investigated.
Counsel for the petitioners, however, concedes that the, dispute in these proceedings is confined to the proposed imposition of tax, in so far as it relates to sales of the character mentioned in the Explanation to article 286(1)(a), that is to say, sales in which the property in the goods sold passed outside the State of Andhra but the goods themselves were actually delivered as a result of the sale for consumption within that State.
These sales have been referred to in the arguments before us as "Explanation sales ", and it will be convenient to adopt that expression in referring to them in this judgment.
It will be seen that the above sales would all of them have been intrastate, so long as the Andhra State formed part of the composite State of Madras, and questions of the character now agitated before us could not then have arisen.
On September 14, 1953, 1434 Parliament enacted the Andhra State Act (30 of 1953), whereby a separate State called the State of Andhra was constituted incorporating therein territories which had previously thereto formed part of the State of Madras, and this Act came into force on October 1, 1953.
Under section 53 of the Andhra State Act, the laws in force in the territories in the Andhra State prior to its constitution are to continue to be in force even thereafter, and one of those laws is the Madras General Sales Tax Act (Madras 9 of 1939), hereinafter referred to as the Madras Act.
Section 54 of the Andhra State Act conferred on the Government a power to adapt laws for the purpose of facilitating the application of any law previously made, and in exercise of the power conferred by this section, an Adaptation Order was passed on November 12, 1953, whereby the word " Andhra " was substituted for the word "Madras" in the Madras Act.
We shall hereafter refer to the Madras Act as continued and applied in the State of Andhra as the Andhra (Madras) Act.
It will be convenient at this stage to refer to the relevant provisions of this Act.
The preamble to the Act states that " it is expedient to provide for the levy of a general tax on the sale of goods in the State of Madras".
"Sale" is defined in section 2(h), omitting what is not material, as meaning " 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.
" Section 2(i) defines " 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 ".
Section 3 is the charging section and provides that every dealer shall pay for each year tax on his total turnover for such year.
By the Madras General Sales Tax (Amendment) Act No. 25 of 1947, a new Explanation was added to the definition of " sale ", and it is as follows: Explanation 2: " Notwithstanding anything to the contrary in the Indian Sale of (Goods Act, 1930, the sale or purchase of any goods shall be deemed, for 1435 the purposes of this Act, to have taken place in this Province, wherever the contract of sale or purchase might have been made (a) if the goods were actually in this Province at the time when the contract of sale or purchase in respect thereof was made, or (b) in case the contract was for the sale or purchase of future goods by description, then, if the goods are actually produced in this Province at any time after the contract of sale or purchase in respect thereof was made.
" This amendment came into force on January 1, 1948.
In Poppatlal Shah vs The State of Madras (1), this Court had to consider the scope of the definition of " sale " in section 2(h) and of Explanation 2, and it was therein held that though the power to tax a sale was really a power to tax a transaction of sale and a law imposing such tax would be competent if any of the ingredients of sale had taken place within the State, the Madras Act had, by its definition of " sale " in section 2(h) prior to the enactment of Explanation 2, imposed a tax only when the property in the goods passed within the State, and that in respect of sales which had taken place prior to the amendment, the tax would be unauthorised if the property in the goods passed outside the State of Madras.
It was also observed that after the amendment came into force, a tax on a sale which came within Explanation 2 would be valid.
That was the position in law under the Madras Act prior to the enactment of the Constitution.
It is now necessary to refer to the changes effected in the law by the Constitution.
Article 286, which is relevant for the present purpose, is as follows: 286(1).
" No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place (a) outside the State; or (b) in the course of the import, of the goods into, or export of the goods out of, the territory of India.
(1) ; 182 1436 Explanation.
For the purposes of Sub clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State.
(2) Except in so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase take,,; place in the course of interstate trade or commerce: Provided that the President may by order direct that any tax on the sale or purchase of goods which was being lawfully levied by the Government of any State immediately before the commencement of this Constitution shall, notwithstanding that the imposition of sucli tax is contrary to the provisions of this clause, continue to be levied until the, thirty first day of March, 1951.
(3) No law made by the Legislature of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any such goods as have been declared by Parliament by law to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent.
" Article 372(2) enacts that, " For the purpose of bringing the provisions of any law in force in the territory of India into accord with the provisions of this Constitution, the President may by order make such adaptations and modifications of such law, whether by way of repeal or amendment, as may be necessary or expedient, and provide that the law shall, as from such date as may be specified in the order, have effect subject to the adaptations and modifications so made, and any such adaptation or modification shall not be questioned in any court of law.
" In exercise of the power conferred by this provision, 1437 the President made Adaptation Orders with reference to the Sales Tax Laws of all the States, and as regards the Madras Act, he issued on July 2, 1952, the Fourth, Amendment inserting a new section, section 22 in that Act.
It runs as follows: " Nothing contained in this Act shall be deemed to impose or authorise the imposition of a tax on the sale or purchase of any goods where such sale or purchase takes place (a) (i) outside the State of Madras, or (ii)in the course of import of the goods into the territory of India or of the export of the goods out of such territory, or (b) except in so far as Parliament may by law otherwise provide, after the 31st March, 1951, in the course of inter State trade or commerce, and the provisions of this Act shall be read and construed accordingly.
Explanation: For the purposes of cl.
(a) (i) a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State.
" It will be noticed that the Explanation to article 286 (1) (a) is reproduced verbatim in section 22 of the Madras Act.
The true meaning and scope of this Explanation came up for consideration before this Court in The State of Bombay and another vs The United Motors India Ltd., and others (1).
Therein, it was held by a majority that though the sales falling within the Explanation would, in fact, be in the course of interState trade, they became, by reason of the fiction introduced therein, invested with the character of intra State sales, and would be liable to be taxed by the State within which the goods were delivered for consumption.
Acting on this judgment, the Board of Revenue (Commercial Taxes) Andhra State, issued a (1) ; 1438 notification on July 13, 1954, calling upon dealers to submit returns of their turnover of sales in which goods were delivered in the Andhra State for consumption, and a copy thereof was sent to the Madras Yarn Merchants ' Association, of which the petitioners are members.
The Association disputed the liability of the Madras dealers to pay any tax in respect of the sales to the Andhra dealers, and after some correspondence, the Andhra State finally issued on June 30, 1955, notices to the petitioners to send their returns of turnover by July 15, 1955, failing which it was stated that assessments would be made on the best judgment basis, and that, further, the dealers would be liable to the penalties prescribed by the law (Vide Annexure H to the petition).
Thereupon, the petitionera have filed the present petitions challenging the validity of the demand made by the Andhra State on the ground, inter alia, that the sales proposed to be taxed were inter State sales, and that they were immune from taxation under article 286(2).
These petitions were filed on various dates in July and August, 1955.
While they were pending, the question of the true scope of the Explanation to article 286 (1) (a) came up again for consideration before this Court in The Bengal Immunity Company Limited vs The State of Bihar and others (1).
By its judgment dated September 6, 1955, this Court held, again by a majority, that the sales falling within the Explanation being inter State in character, could not be taxed by reason of article 286(2), unless Parliament lifted the ban, that the Explanation to article 286 (1) (a) controlled only that clause and did not limit the operation of article 286 (2), and that the law had not been correctly laid down in The United Motors case (2).
On the decision in The Bengal Immunity Company case(1) it cannot be doubted that the claim of the Andhra State to tax Explanation sales would be unconstitutional, and indeed, that was admitted by the State in a statement filed on October 21, 1955, wherein it was stated that having regard (1) [1955]2 S.C.R. 603.
(2) ; 1439 to the decision aforesaid, the petitions might be allowed but without costs.
Before final orders were passed on the petitions, however, the Sales Tax Validation Ordinance No. III of 1956, was promulgated on January 30, 1956, and that was later replaced by the Sales Tax Laws Validation Act (7 of 1956) and that came into force on March 21, 1956.
Section 2 of this Act runs as follows: " Notwithstanding any judgment, decree or order of any court no law of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any goods where such sale or purchase took place in the course of inter State trade or commerce during the period between the 1st day of April, 1951, and the 6th day of September, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the course of interstate trade or commerce; and all such taxes levied or collected or purporting to have been levied or collected during the aforesaid period shall be deemed always to have been validly levied or collected in accordance with law." On February 19, 1957, the Andhra State which had become the State of Andhra Pradesh under section 3 (1) of the States Reorganisation Act (37 of 1956) filed a fresh statement that by reason of the Validation Act the State was entitled to impose a tax on the Explanation sales, which had taken place during the period between the 1st day of April, 1951, and the 6th day of September, 1955 (which will hereinafter be referred to as the specified period), and that the petitions should therefore be dismissed.
The petitioners challenge the correctness of this position.
They contend that the Andhra (Madras) Act does not, in fact, impose a tax oh the Explanation sales, and that, in consequence, the Validation Act can have no effect on it; that the Validation Act is itself unconstitutional and void; that the Act even if valid, does not validate section 22 of the Andhra (Madras) Act; that it validates only levies and collections of tax already made, and does not authorise the initiation 1440 of fresh proceedings for assessment of tax or for realisa tion of the same; that even if the Act authorised fresh imposition of taxes, that could not be done without further legislation pursuant thereto by the State, and that no action could be taken on the basis of section 22 of the Andhra (Madras) Act, as, being unconstitutional when enacted, it was for all purposes non est ; that tax on the sale of yarn could under the Act be levied only at a single point and the State of Madras having imposed a tax on the sale of goods now proposed to be taxed, the Andhra State could not impose a tax once again on the sale of the self same goods, and that, further, the tax on yarn would, so far as the Andhra State is concerned, be bad as being hit by the Essential Commodities Act (52 of 1952), read with article 286 (3).
It must be mentioned that similar to the Adaptation Order which enacted section 22 in the Madras Act, there were Adaptation Orders by the President with reference to the Sales Tax Laws in all the States, and provisions similar to section 22 were enacted therein.
As any decision by this Court on the questions raised in the petitions must conclude similar questions under the laws of other States, those States applied for and obtained permission to intervene in these proceedings, and we have heard the Advocates General of Madras, Uttar Pradesh and Bihar on the questions.
As the main point for determination is the vires of the Sales Tax Laws Validation Act (which will hereinafter be referred to as the impugned Act), the Union of India has intervened, and the learned Solicitor General has addressed us on the questions relating to the validity of that Act.
Certain assessees who are interested in the decision of the above questions also applied for and obtained permission to intervene, and they are the Mysore Spinning and Manufacturing Co., the Minerva Mills, Ltd., the Tata Iron and Steel Co. Ltd., and the Madura Mills Co. Ltd., and counsel appearing for them have, in general, supported the petitioners.
Counsel for the Madura Mills Co. Ltd., raised a further contention different from and inconsistent with 1441 the position taken by the petitioners and other inter.
veners, and that is that under Entry 42 in List I of the Seventh Schedule to the Constitution, inter State trade and commerce is the exclusive domain of the Union Legislature, that tax on inter State sales is comprised therein, that the States have accordingly no power to tax such sales, and that Parliament is not competent to authorise them to impose such a tax, and that, accordingly, the impugned Act is wholly misconceived and inoperative.
On these contentions, the questions that arise for our determination are: (I) Whether the Andhra (Madras) Act, in fact, imposes a tax on the class of sales falling within the Explanation to article 286 (1) (a); (II)Whether the impugned Act is ultra vires the ground that it is not authorised by the terms of article 286(2); (III) (a) Whether section 22 of the Andhra (Madras) Act is within the protection of the impugned Act, and (III)(b) Whether the impugned Act validates only levies and collections made during the specified period, or whether it authorises the imposition and collection of taxes on such sales in future; (IV)Whether section 22 of the Madras Act was null and void on the ground that it was in contravention of article 286 (2), and whether the proceedings sought to be taken thereunder on the strength of the impugned Act are incompetent; (V) Whether tax on inter State sales is within the exclusive competence of Parliament, and whether the impugned Act is, in consequence, bad as authorising the States to levy tax ; (VI)Whether the proposed imposition of tax is illegal on the ground that successive sales of yarn are subject under the law to be taxed at only one point, and as the State of Madras has already taxed the present sales, the State of Andhra cannot again levy a tax on them ; and (VII)Whether the proposed imposition of tax on yarn by the Andhra State is hit by the Essential Commodities Act, read with article 286(3), and is illegal? 1442 (1):The first question that falls to be determined is whether the Andhra (Madras) Act, in fact, imposes a tax on the Explanation sales.
Only if it does that, would the further questions as to the vires and the operation of the impugned Act arise for consideration.
We have already referred to the relevant provisions of the Madras Act and to the decision of this Court in Poppatlal Shah vs The State of Madras (1), wherein it was held that under the definition of " sale " in section 2(h) of that Act and apart from the Explanations to it which are not material for the present discussion, power had been taken by the Province of Madras to tax only sales in which property in the goods passed inside the State.
It must, therefore, be taken that under the Act, as it stood prior to the Constitution, the State of Madras had no power to impose a tax on sales of the kind mentioned in the Explanation to article 286 (1)(a).
Now, the question is whether the Adaptation Order of the President (Fourth Amendment) dated July 2, 1952, has, by the insertion of section 22 in the Madras Act, altered the position.
The contention of the respondent is that it has, because it has bodily incorporated the Explanation to article 286 (1) (a) in the section itself, and as under that Explanation, all sales falling within its ambit would be sales inside the State of Madras, they became taxable as sales within the definition in section 2 (h) of the Madras Act; and that accordingly under section 22 of the Andhra (Madras) Act the Explanation sales become taxable by the Andra State as sales within that State.
The petitioners dispute this position, and contend that that is not the true effect of the Explanation, and that properly construed, it does not authorise the in position of any tax which was not leviable under the provisions of the Act, prior to its enactment.
It is argued that the object of article 286 of the Constitution was merely to impose restrictions on the power which the States had under Entry 54 in List 11 to enact laws imposing tax on sales, and that, in that context, the true scope of the Explanation to article 286 (1) (a) was that it merely took away from the State its power to (1) ; 1443 tax a sale in which the property passed inside it if the goods were actually delivered under the sale for consumption in another State and not to confer on the delivery State a power to tax such a sale, and that the Explanation in section 22 which is, word for word, a reproduction of the Explanation to article 286 (1) (a) must be construed as having the same import.
Reliance is placed in support of this contention on the following observations of this Court in The Bengal Immunity Company case(1) at p. 640: " In clause (1) (a) the Constitution makers have placed a ban on the taxing power of the States with respect to sales or purchases which take place outside the State.
If the matter had been left there the ban would have been imperfect, for the argument would have still remained as to where a particular ,ale or purchase took place.
Does a sale or purchase take place at the place where the contract of sale is made, or where the property in the goods passes or where the goods are delivered ? These questions are answered by the Explanation.
That Explanation is 'for the purposes of sub clause (a) ', i.e., for the purpose of explaining which sale or purchase is to be regarded as having taken place outside a State.
By saying that a Parti cular sale or purchase is to be deemed to take in a particular State the Explanation only indicates that such sale or purchase has taken place outside all other States.
The Explanation is neither an Exception nor a Proviso but only explains what is an outside sale referred to in sub clause (a).
This it does by creating a fiction.
That fiction is only for the purposes of subclause (a) and cannot be extended to any other purpose.
It should be limited to its avowed purpose.
To say that this Explanation confers legislative power on what for the sake of brevity has been called the delivery State is to use it for a collateral purpose which is not permissible.
.Further, it is utterly illogical and untenable to say that article 286 which was introduced in the Constitution to place restrictions on the legislative powers of the States, by a side wind, as it were, (1) 183 1444 gave enlarged legislative powers to the State of delivery by an explanation sandwiched between two restrictions.
This construction runs counter to the entire scheme of the article and the explanation and one may see no justification for imputing such indirect and oblique purpose to this article.
" Now, the contention of the petitioners is that these observations are decisive of the present controversy, because the same provision expressed in ipsissima verba cannot have one meaning in article 286(1) (a) and quite a different one in section 22 of the Madras Act; and on the construction put by this Court on the Explanation to article 286(1) (a), the Explanation to section 22 of the, Andhra (Madras) Act must be interpreted as prohibiting States other than Andhra from taxing sales under which goods are delivered for consumption outside those States, even though property passed inside them and not as authorising the State of Andhra to tax sales in which goods are delivered therein for consumption , even though property in the goods passed outside that State.
It is argued that this conclusion is reinforced by the opening words of section 22, viz., "Nothing contained in this Act shall be deemed to impose or authorise the imposition of a tax on the sale or purchase of any goods".
The effect of this, it is said, is to impose a restriction on the power which the State previously possessed, of taxing sales coming within the definition in section 2 (h) and not to enlarge it.
The decision in Government of Andhra vs Nooney Govindarajulu (1) is cited in support of these contentions.
The error in this argument lies in this that it focusses attention exclusively on the terms in which the Explanations are couched in article 286(1) (a) and in section 22 and completely overlooks the fundamental difference in the context and setting of these two enactments.
The scope and purpose of article 286 have been considered at length in the decisions of this Court in The United Motors case (2) as also in The Bengal Immunity Company case (3), and it is sufficient to briefly recapitulate them.
Under Entry 48 in List 11 of the (1) (1957) 8 Sales Tax Cases 297.
(2) ; (3) 1445 Seventh Schedule to the Government of India Act, 1935, the Provincial Legislature had the exclusive competence to enact a law imposing a tax on the sale of goods, and under section 99 (1), such a law could be made " for the Province or for any part thereof ".
In Wallace Brothers & Co. Ltd. vs Income tax Commissioner (1), the question arose as to the validity of certain provisions of the Indian Income tax Act, which sought to tax non resident foreigners in respect of their foreign income.
The Indian Legislature had under Entry 54 in List I of the Government of India Act power to enact laws imposing tax on income other than agricultural income, and under section 99(1) the law could be made " for the whole of :British India or for any part thereof ".
It was held by the Privy Council that the requirements of section 99 were satisfied if there was sufficient territorial connection between the State imposing the tax and the person who was sought to be taxed, and the receipt of income by the assessees in British India furnished sufficient nexus to give validity to the legislation imposing tax on their foreign income.
If this doctrine of nexus is applicable to laws imposing tax on sales and it was applied by this Court to those laws in the United Motors case (2) at p. 1079 and in Poppatlal Shah 's case (3) at pp.
682 683 then it would be competent to the State to enact a law imposing a tax on sales not merely when the property in the goods passed within the State but even when it (lid not, if there was sufficient connection between the State and the transaction of sale, such as the presence of the goods in the State at the date of the agreement, as was held recently by this Court in Tata Iron & Steel Co. Ltd. vs State of Bihar (4).
In fact, acting on the nexus theory the Legislatures of the States enacted Sales Tax Laws adopting one or more of the nexi as the basis of taxation.
This resulted in multiple taxation, as a consequence of which the free flow of commerce between the States became obstructed and the larger economic interests of the country suffered.
It was to repair this mischief that the Constitution, while (1) (1948) L.R. 75 I.A. 86.
(2) ; (3) ; (4) ; 1446 retaining the power in the States to tax sales under Entry 54 in List II sought to impose certain restrictions on that power in article 286.
One of those restrictions is contained in article 286(1)(a) which prohibits a State from taxing outside sales.
The Explanation now under consideration is attached to this provision, and it is in this context, viz., in its setting in an Article, the object of which was to impose fetters on the legislative powers of the States, that this Court observed that though positive in form, it was in substance negative in character, and that its true purpose was not to confer any fresh power of taxation on the State but to restrict the power which it previously had under Entry 54.
These considerations will clearly be in apposite in construing a taxing statute like the Madras Act, the object of which is primarily to confer power on the State to levy and collect tax.
When we find in such a statute a provision containing a prohibition followed by an Explanation which is positive in its terms, the true interpretation to be put on it is that while the prohibition is intended to prevent taxation of outside sales on the basis of the nexus doctrine, the Explanation is intended to authorise taxation of sales falling within its purview, subject of course to the other provisions of the Constitution, such as article 286 (2).
It should be remembered that unlike the Constitution, the law of a State can speak only within its own territories.
It cannot operate either to invest another State with a power which it does not possess, or divest it of a power which it does possess under the Constitution.
Its mandates can run only within its own borders.
That being the position, what purpose would the Explanation serve in section 22 of the Madras Act, if it merely meant that when goods are delivered under a contract of sale for consumption in the State of Madras, the outside State in which property in the goods passes has no power to tax the sale ? That is not the concern of the State of Madras, and indeed, the Legislature of Madras would be incompetent to enact such a law.
In its context and setting, therefore, the Explanation to section 22 must mean that it 1447 authorises the State of Madras to impose a tax on sales falling within its purview.
Thus, while in the context of article 286 (1) (a) the Explanation thereto could be construed as purely negative in character though positive in form, it cannot be so construed in its setting in section 22 of the Madras Act, where it must have a positive content.
Nor is there much force in the contention that the non obstante clause in section 22 has only the effect of substracting something from the power to tax conferred on the State by the charging section, section 3, read with section 2 (h) and not of adding to it.
In Aswini Kumar Ghosh and another vs Arabinda Bose and another (1), It was observed by this Court that " the enacting part of a statute must, where it is clear, be taken to control the non obstante clause where both cannot be read harmoniously ".
Now, as the Explanation lays down in clear and unambiguous terms that the sales of the character mentioned therein are to be deemed to have taken place inside the State in which goods are delivered for consumption, full effect must be given to it, and its operation cannot be cut down by reference to the non obstante clause.
It cannot be put against this construction that it renders the non obstante clause ineffective and useless.
According to the definition in section 2 (h), a sale in which property passes inside the State of Madras will be liable to be taxed, even though the goods are delivered for consumption outside that State, but under the Explanation such a sale will be deemed to have taken place in the out side State in which goods are delivered for consumption, and therefore the State of Madras will have nO power to tax it: The purpose which the non obstante clause serves is to render the Explanation effective against the definition in section 2 (h) and not to render it ineffective in its own sphere, as determined on its terms.
But it is contended that in order to reach this result it was necessary that the Explanation to section 22 should have been made a part of the definition of " sale " under section 2 (h), because under section 3, which is the charging (1) ; , 24.
1448 section, it is the turnover of sales that is subject to tax, that sale for the purpose of that section is only what is defined as " sale " under section 2 (h), and that the Explanation sales not having been brought within that definition, no charge could be imposed thereon.
The Explanation in section 22, it is argued, cannot override section 2 (h), and if its object was to confer on the State a power to tax sales falling within its ambit, that has not, in fact, been achieved.
It is pointed out by way of contrast that in the Sales Tax Laws of some other States, such as Bihar and Uttar Pradesh, the Explanation has been added to the definition of sale.
Now, a contention that what the Legislature intended to bring about it has failed to do by reason of defective draftsmanship is one which can only be accepted in the last resort, when there is no avenue left for escape from that conclusion.
But that clearly is not the position here.
Section 22 opens with the words " Nothing contained in this Act ", and that means that that section is to be read as controlling, inter alia, the definition of sale in section 2 (h).
Otherwise, sales in which property passes in Madras but delivery is outside that State would be taxable under section 2 (h) and under section 3, even though they are within the prohibition enacted in section 22.
If the provisions of section 22 are effective for the purpose of limiting the operation of section 2 (h), we do not see any difficulty in construing the Explanation therein as equally effective for the purpose of enlarging it.
Again, it is a rule of construction well establisbed that the several sections forming part of a statute should be read, unless there are compelling reasons contra, as constituting a single scheme and construed in such manner as would give effect to all of them.
On this principle, section 2 (h) and section 22 must be read together as defining what are sales, which are taxable under the Act and what are not, and so read, the Explanation really means that in sales in which goods are delivered for consumption in the State of Madras, the property therein shall be deemed to have passed inside that State, notwithstanding that it has, under the Sale of Goods Act, passed outside that State.
On this construction, those 1449 sales will fall within the definition in section 2 (h) and will be taxable.
The contention of the petitioners highly technical and based oil the non insertion of the Explanation in section 2 (h) must, in our opinion, be rejected as unsound.
It is next contended that the power of the President under Art,.
372 (2) is merely to bring the provisions of the State laws into conformity with article 286, and that having regard to the interpretation put on that Article in The Bengal Immunity Company case (1), the Explanation in section 22 would be valid in so far as it prohibits the State of Madras from imposing a tax on sales in which goods are delivered outside Madras, though property therein passed inside that State, but that in so far as it makes taxable sales in which property passes outside the State of Madras but the goods themselves are delivered for consumption in Madras, it is much more than bringing the. ,State law into conformity with article 286, and is, in consequence, unauthorised and bad.
It is argued that such a provision could be enacted by the Legislature of Madras, as was in fact, done by the legis latures of many of the States, but the President could not do it in exercise of the special and limited power conferred on him by article 372(2).
That power is merely, it is contended, to take the definition of " sale " in section 2(h) of the Madras Act, strike out therefrom whatever is repugnant to article 286, such as sales in which goods are delivered for consumption outside Madras, and leave it there and not to add to it.
We are not satisfied that that is a correct view to take of the powers of the President under article 372(2).
It is to be observed that article 286(1)(a) and the Explanation thereto form, in their setting in a taxing statute, integral parts of and different facets of the same concept.
Sales in which property passes outside the State of Madras but delivery for consumption is inside Madras are at once inside sales for Madras and outside sales for the other States.
Now, if in exercise of the power to adapt, the enactment of the Explanation is requisite to give effect to one aspect of that (1) 1450 concept, that is, for prohibiting the State of Madras from taxing sales when goods are delivered outside, we fail to see why it should not operate to give effect to the other aspect of the concept which is so integrally connected with it, viz., taxing of sales in which goods are delivered for consumption in the State of Madras, if its language is comprehensive and wide enough to include such sales.
We find it difficult to hold that the self same Explanation is intra vires the powers of the President in so far as it prohibits the State from taxing gales, in which goods are delivered Outside the State but is ultra vires in so far as it authorises that State to tax sales in which goods are delivered inside it.
It should be remembered in this connection that the power which the President has under article 372(2) to adapt is the legislative power of the State whose law is adapted, and that includes the power to repeal and amend any provision.
Provided that the law as adapted is within the legislative competence of the State and its enactment is in the process of bringing the State law into conformity with article 286, it seems to us that it is within the ambit of the power con ferred by article 372(2).
The question, however, is of academic interest, because of the concluding words of article 372(2), which enact that no adaptation order made under that provision shall be liable to be questioned.
It was suggested for the petitioners that these words would have no application when the adaptation order went beyond the terms of article 372(2), and that it was open to them to challenge its validity on the ground that it amounted to more than bringing the existing law into conformity with article 286.
We are unable to agree.
If the adaptation order is within the scope of article 372(2), then it is valid of its own force, and does not require the aid of a clause such as is contained in the concluding portions thereof.
It is only when the adaptation amounts to something more than merely bringing the State law into conformity with the Constitutional provisions that there can arise a need for such a clause.
In our opinion, the effect of the concluding words of article 372(2) is to 1451 render the question of the validity of the adaptation non justiciable.
The Adaptation Order in question must, accordingly, be held to be not open to attack on the ground that it goes beyond the limits contemplated by article 372(2).
It is then argued that even though the Adaptation Order of the President might not be open to question even if it had imposed for the first time a tax on sales which had not been previously imposed by the Act, nevertheless in deciding whether it does, in fact, impose such a tax, it would be relevant to take into account that the object of article 372(2) was only to bring the State laws into conformity with the Constitution, and that, in consequence, the Explanation in section 22 must be construed as having the same meaning as the Explanation in article 286(1)(a).
This would, no doubt, be a legitimate consideration in interpreting the language of the Explanation, but then, it must be remembered that at the time when the Adaptation Order was made, the true interpretation of the Explanation to article 286(1)(a) had not been the subjectmatter of any decision, and it is therefore difficult to impute to the framers of section 22 the construction put by this Court on the Explanation to article 286(1)(a) in The Bengal Immunity Company case (1) any more than the one put on it in The United Motors case (2).
We are therefore thrown back on the language of the Explanation itself to discover its true scope.
If, in enacting the Explanation, the Adaptation Order merely intended to prohibit the State of Madras from imposing tax on sales under which goods are delivered for consumption outside that State even though property therein passed inside that State, it would clearly have expressed that intention in words to the following effect: " For the purposes of clause (a)(i), a sale under which goods are delivered for consumption outside the State of Madras shall be deemed to have taken place outside that State, notwithstanding that property in those goods passed inside that State ".
But the language of the Explanation is general, and fixes the situs of sales of (1) (2) ; 184 1452 an inter State character in the State in which goods are actually delivered for consumption.
Under this Explanation, a sale under which goods are delivered outside the State of Madras will be an outside sale for that State even though property in the goods passed inside that State, and likewise, a sale under which goods are delivered inside the State of Madras will be an inside sale for that State, even though property in the goods passed outside that State.
As the language of the Explanation is general and of sufficient amplitude not merely to restrict but also to add to the power of the State to tax Explanation sales, and as the reasons for construing it as purely restrictive in article 286(1)(a) are, as already stated, without force in their application to a taxing statute, we must give full effect to the words of the enactment, and bold that they operate to confer on the State a power to tax Explanation sales.
There is one other contention relating to this aspect of the matter, which remains to be considered, and that is that even if the Explanation could be construed as authorising the imposition of a tax on the sales mentioned therein, a reading of the section as a whole makes it clear that, in fact, no such tax was imposed, as it expressly enacts that "Nothing contained in this Act shall be deemed to impose a tax on inter State sales ".
The argument is that the Explanation sales being inter State sales and the section having exempted them from taxation, they go out of the statute book altogether, and do not exist for the purpose of the impugned Act.
We are unable to agree with this contention.
Article 286(2) consists of two parts, one imposing a restriction on the power possessed by the States to tax sales under Entry 54 in so far as such sales are in the course of inter State trade and commerce and another, vesting in Parliament a power to enact a law removing that restriction.
If section 22 had merely enacted that portion of article 286(2) which prohibited imposition of taxes on interstate sales, that might have furnished some plausible ground for the contention now urged by the petitioners.:but it enacts both the parts of article 286(2), 1453 the restriction imposed therein and also the condition on which that restriction is to cease, viz., Parliament providing otherwise by law.
Taken along with the admitted power of the States to impose tax on sales under Entry 54, the true scope of section 22 is that it does impose a tax on the Explanation sales, but the imposition is to take effect only when Parliament lifts the ban.
In other words, it is a piece of legislation imposing tax in praesenti but with a condition annexed that it is to come into force in futuro as and when Parliament so provides.
It is not contended that there is in the Constitution any inhibition against conditional legislation.
In The Queen vs Burah (1), it was held by the Privy Council that a legislature acting within the ambit of authority conferred on it by the Constitution has the power to enact a law either absolutely or conditionally, and that position has been repeatedly affirmed in this Court.
Vide In The , etc.
(2) and Sardar Inder Singh vs State of Rajasthan(3).
It would clearly be within the competence of the Madras Legislature to enact a law imposing a tax on sales conditional on the ban enacted in article 286(2) being lifted by Parliamentary legislation, and that, in our opinion, is all that has been done in section 22.
The Madras Act defines the event on which the tax becomes payable and the person from whom and the rate at which it has to be levied, and forms a complete code on the topic under consideration.
It could have no immediate operation by reason of the bar imposed by article 286(2), but when once that is removed by a law of Parliament, there is no impediment to its being enforced.
That satisfies all the requirements of a conditional legislation.
But it was argued that section 22 of the Madras Act could not be so construed, because it was not open to the President acting in exercise of the power conferred on him under article 372 (2) to impose a conditional levy ; nor would it be competent to the Legislature of Madras to make a levy conditional or otherwise, unless Parliament had authorised it.
We see no force in this argument.
As (1) (1878) L.R. 5 I.A. 178.
(2) ; (3) ; 1454 article 286(2) is itself in two parts, one a restriction on the power of the State and the other, a condition on which such restriction will cease to operate, an adaptation made pursuant thereto must also be similar in its contents.
Nor is there in article 286 (2) any prohibition of any legislation by tile State Legislature against enacting laws imposing tax on interstate sales.
It merely enacts that such law can have no effect.
The words "No law of a State shall impose " mean only that no such law shall be effective to impose a tax.
It is also contended that under the Sales Tax Acts, the levy of tax is annual and the rules contemplate submission of quarterly returns and payment of taxes every quarter on the admitted turnover, and that a conditional legislation under which payment of tax will become enforceable in futuro would be inconsistent with the scheme of the Act and the rules.
But this argument, when examined, comes to no more than this that the existing rules do not provide a machinery for the levy and the collection of taxes which might become payable in future, when Parliament lifts the ban.
Assuming that that is the true position, that does not affect the factum of the imposition, which is the only point with which we are now concerned.
That the States will have to frame rules for realizing the tax which becomes now payable is not a ground for holding that there is, in fact, no imposition of tax.
It should also be mentioned in this connection that the Madras Act makes a clear distinction between sales which are outside the operation of the Act, and sales which are within its operation but are exempt from taxation.
Section 4 provides that the provisions of the Act shall not apply to the sale of electrical energy, motor spirit, manufactured tobacco and certain other articles.
In contrast to this is the language of section 22, which expressly enacts that the Act shall not be deemed to impose a tax on inter State sales, except in so far as Parliament may by law otherwise provide.
We are of opinion that, on the true construction of section 22 of the Act, there is an imposition of tax on Explanation sales but that it could be enforced only when Parliament so provides.
1455 We have so far considered the question on principle and on the language of the statute.
We may now.,.
refer to the decisions of the High Courts, wherein this question has been considered.
In Mettur Industries Ltd. vs State of Madras (1), the point directly arose for decision as to whether section 22 of the Madras Act did.
in fact, levy a tax on the Explanation sales so as to fall within the protection of the Sales Tax Laws Validation Act.
It was held that the Explanation to section 22 had ' the effect of rendering the sale one inside the State so as to fall within the definition of that word in section 2 (h), and that it was taxable.
Next in point of time is the decision of the Bombay High Court in Dial Das vs P. section Talwalkar (2) in which the question arose with reference to section 46 of the Bombay Sales Tax Act (Bom.
III of 1953), corresponding to section 22 of the Madras Act.
It was held that it did impose a tax, though it was to operate only if Parliament so provided.
Then, there are two decisions of the Travancore Cochin High Court, Mathew vs Travancore Cochin Board of Revenue(3) and Cochin Coal Co., Ltd. vs State Of Travancore Cochin(4), in which it was held that section 26 of the Travancore Cochin General Sales Tax Act corresponding to section 22 of the Madras Act, had not the effect of imposing, of its own force, a tax on the Explanation sales, and the decision in Mettur Industries Ltd. vs Madras State (supra) was not followed.
In The Mysore Spinning and Manufacturing Co., Ltd. vs Deputy Commercial Tax Officer, Madras (5) the Madras High Court re affirmed the view which it had taken in Mettur Industries Ltd. vs State of Madras (supra), and held that section 22 had the effect of imposing a tax on the Explanation sales.
In The Government of Andhra vs Nooney Govindarajulu (supra), the true effect of section 22 of the Madras Act came up for consideration before the Andhra High Court, and it was held therein, dffering from Mettur Industries Ltd. vs State of Madras (1) and Dial Das vs P. section Talwalkar (2) that in view of the observations of this Court as to the scope of the (1) A.I.R. 1957 Mad. 362.
(2) A.I.R. 1957 Bom.
(3) A.I.R. 1957 T.C. 300.
(4) (1956) 7 Sales Tax Cases 731.
(5) A.I.R. 1957 Mad.
1456 Explanation in article 286 (1) (a), the Explanation in section 22 could not be construed as imposing a tax on the sales mentioned therein, and that that conclusion also followed on the opening words of the section that " Nothing contained in this Act shall be deemed to impose, or authorise the impo sition of a tax. . .
For the reasons already given, we are unable to agree with the decisions in Mathew vs Travancore Cochin Board of Revenue(1), Cochin Coal Co. Ltd. vs State of Travancore Cochin(2) and The Government of Andhra vs Nooney Govindarajulu (3).
We are of opinion that the law has been correctly laid down in Mettur Industries Ltd. vs State of Madras (4) and Dial Das vs P. section Talwalkar (5).
We accordingly hold that section 22 operated to impose a tax falling within the Explanation, subject to authorisation by Parliament as provided in article 286 (2).
In this view, the contention urged on behalf of the States that the Explanation to article 286 (1) (a), being a provision of the Constitution, operated by its own force to impose a tax on the sales covered by it, and did not require to be supplemented by any State legislation to become effective, does not call for any detailed consideration.
Suffice it to say that it cannot be maintained if the true scope of article 286 is to define and limit the powers of State Legislatures with reference to imposition of sales tax and not to itself impose it.
(11) That brings us on to the next question which is whether the impugned Act, Sales Tax Laws Validation Act, is ultra vires on the ground that it is not authorised by the terms of article 286 (2).
Now, it is a well known rule of interpretation that in order to understand the true nature and scope of an Act it is necessary to ascertain what the evils were which were intended to be redressed by it.
The starting point of the trouble which ultimately led to the enactment of the impugned Act is the Explanation to article 286(1)(a), which came into force on January 26, 1950.
The terms in which it is worded undoubtedly suggest that sales (1) A.I. R. (2) (1956) 7 Sales Tax Cases 731.
(3) (1957) 8 Sales Tax Cases 297.
(4) A.I.R. 1957 Mad.
(5) A.I.R. 1957 Bom.
1457 of the description mentioned therein are to be treated as sales inside the delivery State for purposes of taxation.
That is how it would seem to have been understood in the Adaptation Order under which section 22 was inserted in the Madras Sales Tax Act and in the Adaptation Orders relating to the Sales Tax Laws of other States; for, as already stated, in a taxing statute the language of the Explanation can only mean that a sale failing within its purview is an inside sale enabling the State to tax it.
In The United Motors case (1), the construction put by this Court on the Explanation was that though but for it the sales mentioned therein would be in the course of interState trade and commerce, its effect was to convert them into intrastate sales, so as to bring them within the taxing power of the delivery State.
It was only later that this Court held finally in The Bengal Immunity Company case (2) that the Explanation sales were not divested of their character as inter State sales as the Explanation to article 286 (1) (a) did not govern article 286 (2), and that in the absence of Parliamentary legislation as contemplated by article 286 (2), taxation of sales falling within its purview would be unconstitutional.
This judgment was delivered on September 6, 1955.
But acting on the apparent tenor and import of the Explanation and the construction put upon it in The United Motors case (1), the States in India had been levying taxes oil the sales falling within its purview.
The position on September 6, 1955, was that the States had imposed and collected large amounts by way of tax on Explanation sales; that there were proceedings pending for assessment of tax on such sales; and that apart from this, the States would have been entitled to take, but for the decision in The Bengal Immunity Company case (2), proceedings for the assessment of tax in respect of those sales.
Now, the result of the decision in The Bengal Immunity Company case (2) was that the levy of the tax on the Explanation sales became unauthorised and the States were faced with large claims for restitution of the (1) ; (2) 1458 amounts realised, involving threat to their economic stability.
It should also be mentioned that quite a large number of dealers had, acting under provisions of the Sales Tax Acts which empowered them to pass the tax on, collected it from their purchasers for the purpose of payment to the State, and as after the decision in The Bengal Immunity Company case (1) they could no longer be called upon to pay it, they stood to make an unjust gain of it.
These were the evils which called for redress, and it was to remedy them that Parliament enacted the Sales Tax Validation Ordinance No. III of 1956, and eventually replaced it by the impugned Act.
Section 2 of the Act provides that no law of a State imposing a tax on sales which took place in the course of interState trade or commerce between April 1, 1951, and September 6, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sales were in the course of inter State trade.
The section further provides that all taxes levied or collected under such a law during the specified period shall be deemed to have been validly levied or collected.
The policy behind the Act is obviously to declare the law as interpreted in The United Motors case (2) as the law governing sales filling within the Explanation up to the date of the judgment in The Bengal Immunity Company case(1) and to give effect to the law as laid down in that decision for the sales effected subsequent thereto.
The question is whether this Act is unconstitutional as being ultra vires the powers of Parliament tinder Art ' 286 (2).
The petitioners maintain that it is, and put forward several grounds in support of that position.
It is firstly contended by them that under Entry 54 in List II, the power to make laws in respect of tax on sales is vested exclusively in the States, that the power which is conferred on Parliament under article 286(2) is only to enact a law directing or permitting the States to impose a tax on inter States sales and not to itself enact a law with reference thereto that the impugned Act being one to validate Sales (1) (2) ; 1459 Tax Laws is substantive in character and is not authorised by the terms of article 286 (2) and is, in consequence, unconstitutional.
It is argued that to validate is to confirm or ratify, and that can be only in respect of acts which one could have himself performed, and that if Parliament cannot enact a law relating to sales tax, it cannot validate such a law either, and that such a law is accordingly unauthorised and void.
The only basis for this contention in the Act is its description in the Short Title as the " Sales Tax Laws Validation Act " and the marginal note to section 2, which is similarly worded.
But the true nature of a law has to be determined not on the label given to it in the statute but on its substance.
Section 2 of the impugned Act which is the only substantive enactment therein makes no mention of any validation.
It only provides that no law of a State imposing tax on sales shall be deemed to be invalid merely because such sales are in the course of inter State trade or commerce.
The effect of this provision is merely to liberate the State laws from the fetter placed on them by article 286 (2) and to enable such laws to operate on their own terms.
The true scope of the impugned Act is, to adopt the language of this Court in the decisions in The United Motors case (1) and The Bengal Immunity Company case (2), that it lifts the ban imposed on the States against taxing inter State sales and not that it validates or ratifies any such law.
Considering the legislation on its substance, we have .no doubt that it is within the scope of the authority conferred on Parliament by article 286 (2) and is not ultra vires.
It is next contended that the impugned Act is wholly retrospective in character in that it operates on sales which took place during the specified period, and that such a legislation is, having regard to the intendment of article 286 (2), outside its terms.
It is argued that this Article, to start with, enacts a restriction on the power of the State to impose taxes on inter State sales and then vests in Parliament a power (1) (2) 185 1460 to remove that restriction, and that in logical sequence therefore, there should first be a legislation by Parliament authorising the States to impose a tax on interState sales and then a law of the State made in accordance therewith, and that that order having been reversed in the present case, the impugned Act is unconstitutional.
We do not agree with this contention.
Article 286 (2) merely provides that no law of a State shall impose tax on inter State sales " except in so far as Parliament may by law otherwise provide ".
It places no restrictions on the nature of the law to be passed by Parliament.
On the other hand, the words " in so far as " clearly leave it to Parliament to decide oil the form and nature of the law to be enacted by it.
What is material to observe is that the power conferred on Parliament under article 286 (2) is a legislative power, and such a power conferred on a Sovereign Legislature carries with it authority to enact a law either prospectively or retrospectively, unless there can be found in the Constitution itself a limitation on that power.
Now, there is nothing express in article 286 (2) imposing a restriction on the power of Parliament to enact a law with retrospective operation.
But it is argued for the petitioners that such a restriction is to be implied from the scheme of it, which is that there is a prohibition on the power of the State to enact a law imposing tax on inter State sales, unless Parliament lifts the ban, and it is said that a prohibition operates only in futuro and therefore a law removing that prohibition must also operate in futuro.
The decision of the Privy Council in Punjab Province vs
Daulat Singh (1) is relied on in support of this proposition.
There, the question arose with reference to the validity of a mortgage of agricultural lands in the Punjab executed in the year 1933.
Section 13 A of the Punjab Alienation of Land Act which came into force in 1939 enacted that transfer of a land by a member of an agricultural tribe in favour of another member of the tribe was void if the transferee was a benamidar for a person who was not a member of that tribe, whether such transfer was (1) (1946) L.R. 73 I.A. 59.
1461 made before or after the Act.
The mortgagee instituted a suit, challenging the vires of this section on the ground that it contravened section 298(1) of the Government of India Act, 1935, which provided that no subject of His Majesty domiciled in India shall be prohibited from acquiring, holding or disposing of property on grounds only of religion, place of birth or descent.
The mortgagor in reply relied on section 298 (2) which enacted that nothing in that section shall affect the operation of any law which prohibits the sale or mortgage of agricultural land situate in any particular area and owned by a person belonging to the agriculturist class.
In rejecting this contention, the Privy Council observed that what was saved by section 298 (2) was a law prohibiting certain kinds of transfers, that the word " prohibition " could properly apply only to acts to be done in futuro, and that the impugned provision, section 13 A, was intra vires the Constitutional provision in so far as it prohibited transfers after the date of its enactment, but to the extent that it avoided transfers which had taken place prior to that date, it was ultra vires.
This decision proceeded solely on the connotation of the word " prohibits " in section 298 (2) of the Government of India Act, and can be of no assistance in the construction of article 286 (2), wherein that word does not occur.
And even on the substance of it, we see no real analogy between the case in Punjab Province vs Daulat Singh (1) and the present.
There, the law which was authorised by section 298 (2) was one prohibiting certain transfers; here the law which Parliament is authorised to make is one not prohibiting the States from imposing tax on inter State sales, but permitting them to do so.
While a law prohibiting transfers must be prospective, a law authorising imposition of tax need not be.
It can be both prospective and retrospective.
A decision more directly in point is the one in The United Provinces vs Atiqa Begum(2).
There, the question arose on the construction of section 292 of the Government of India Act, 1935, which enacted that, " Notwithstanding the repeal by this Act of the (1) I. A. 59.
(2) 1462 Government of India Act, but subject to the other provisions of this Act, all the law in force in British India immediately before the commencement of Part III of this Act shall continue in force in British India until altered or repealed or amended by a competent Legislature or other competent authority.
" The Legislature of the United Provinces had enacted a law modifying the pre existing law relating to the payment of rents by tenants to landlords and giving it retrospective operation.
The question was whether the enactment was repugnant to section 292 which had provided that the preexisting law was to continue in force until it was altered.
It was held that the power of a legislature to pass a law included a power to pass it retrospectively, and that the words of section 292 did not operate to impose any restriction on that power, and that the legislation was intra vires.
In our opinion, the principle of this decision is applicable to the present case, and the impugned Act cannot be held to be bad on the ground that it is retrospective in operation.
It is next contended that the impugned Act is ultra vires, inasmuch as it is much more than a mere retrospective law, and that it is really a piece of ex post facto legislation, which is not authorised by article 286(2).
The argument in support of this contention may thus be stated : A ' State legislature is competent under Entry 54 in List II to enact a law taxing sale of goods, and when such a law is made to operate retrospectively it may not be open to challenge on constitutional grounds, though its propriety may be open to question on grounds of policy.
Parliament has no competence to enact laws in respect of tax on sales filling within Entry 54 in List 11, but article 286(2) confers on it a power to authorise the States to impose a tax on inter State sales.
The impugned Act does not do that, but validates ex post facto laws of States imposing such a tax retrospectively for the specified period.
Such a general law may be intra vires the States but not Parliament, nor is it one which can be justified by the power granted to it to " provide otherwise.
" It is therefore unconstitutional and void, In 1463 our opinion, this argument is only an amalgam of the two contentions already dealt with, and does not require further detailed consideration.
The impugned Act, though it is in name a validating Act, is in essence a law lifting the ban under article 286 (2), and if no limitation on the character of that law could be spelt out of the language of that Article, then it must be upheld as within the authority conferred by it.
It is also argued that even if the power to make a law conferred on Parliament under article 286 (2) comprehends a power to enact a law with retrospective operation, that power cannot extend to authorising what is unconstitutional, and that as section 22 of the, Madras Act and the corresponding provisions in the statutes of other States were unconstitutional and illegal when made as contravening the prohibition enacted in article 286 (2), the impugned Act must be held to be unauthorised and bad in that it seeks to give effect to those provisions.
But this is to beg the very question which we have to decide.
If it is competent to the legislatures of the States to enact a law imposing a tax on inter State sales to take effect when Parliament so provides, there is nothing unconstitutional or illegal either in section 22 of the Madras Act or in the corresponding provisions in the Acts of other States.
If conditional legislation is valid, as we have held it is, then section 22 is clearly intra vires, and the foundation on which this contention of the petitioners rests, disappears and it must fall to the ground.
In the result, we are of opinion that the impugned Act is intra vires, and is not open to challenge on any of the grounds put forward by the petitioners.
(111) (a).
We have now to consider the contention that even if the impugned Act is valid, that would not give efficacy to section 22 of the Madras Act or the corresponding provisions in the laws of other States which came in by adaptation under article 372 (2).
The ground urged in support of this contention is that the expression " law of a State " in article 286 (2) has a technical import, and means a law which is enacted by the legislature of a State in the manner prescribed by the Constitution and open to challenge in courts if 1464 it is unconstitutional, that that expression occurring , in section 2 of the impugned Act must bear the same meaning which it has in article 286 (2) as it was enacted, pursuant to the authority contained therein, and that section 22 of the Madras Act is not a law of that description, as it was made by the President in exercise, of the special power conferred on him by article 372 (2), and is, as provided therein, not open to attack in a court of law.
We do not see why we should restrict the connotation of the words " law of a State " in the manner contended above.
The law of a State signifies, in its ordinary acceptation, whatever is an expression of the legislative, as distinguished from the executive or judicial power of a State.
Its normal mode under the Constitution is no doubt that it is enacted by the legislature of the State constituted in accordance with the procedure prescribed therein.
But that is not the only mode in which the legislative power of the State could be exercised.
Under article 213, the Governor is authorised, subject to the conditions laid down therein, to issue Ordinances which have the force of law, and these Ordinances are clearly laws of the State and not the less so by reason of their not having been passed by the State legislature.
Under article 252, it is open to Parliament acting on resolutions of the legislatures of two or more States, to enact laws on subjects which are within the exclusive competence of the States, a recent instance of such legislation being Act 42 of 1955, the validity of which was the subject of consideration in R. M. D. Charnarbaugwalla vs Union of India(1).
Can it, be contended that these are not laws of the States for which they were enacted, because they were not passed by the legislatures of those States ? We entertain no doubt that by the expression " law of a State " in article 286 (2) and section 2 of the impugned Act is meant whatever operates as law in the state, and that section 22 of the Madras Act is a law within those enactments.
Nor does it affect this conclusion that that law may not be open to challenge in a court of law.
A right to challenge a (1) ; 1465 law must depend on the provisions of the Constitution governing the matter, and if those provisions enact that it is not open to question in a court of law or ' that it is liable to be questioned only on certain specified grounds, that will not have the effect of depriving a statute duly enacted of its character as law.
We are also not satisfied that a law as adapted under article 372 (2) is not open to attack on the ground that it contravenes some constitutional provision.
We are disposed to think that the concluding words of article 372 (2) preclude an attack on the Adaptation Order only on the ground that it does more than merely bringing the State law into conformity with the Constitution and is, in consequence, ultra vires the powers conferred by that article.
In the result, we must hold that section 22 of the Madras Act is within the protection afforded by section 2 of the impugned Act.
(111) (b) : The next contention of the petitioners that falls to be considered is whether even on the footing that the impugned Act is intra vires the powers of Parliament under article 286 (2), the proceedings which are proposed to be taken by the State of Andhra against them for assessment of tax are incompetent, because the Act validates only levies or collections made during the specified period but does not authorise the initiation of fresh proceedings for levy or collection of tax.
It is contended that though section 2 of the impugned Act consists of two clauses, one giving effect to laws of States imposing tax on inter State sales in so far as they took place during the specified period and the other validating levy or collection of tax made during that period, the first clause has no independent operation, the only purpose which it serves being to lead up to the second which is the only effective clause in the section.
It is argued that if the intention of the legislature was not merely to validate the levies or collections already made but also to maintain the laws in force so as to enable the States to take fresh proceedings for assessment and levy of tax, then there was no need whatsoever for the second clause, as effectuation of the Act would automatically validate the levies and collections made thereunder.
It is said 1466 that the object of the legislation was only to see that the States had not to refund amounts collected by them, and that for achieving that object it was necessary only to give effect to the second clause.
The decision in Dialdas vs P. section Talwalkar (1) already cited, was relied on as supporting the petitioners on this point.
In our judgment, the language of the enactment is too clear and unambiguous to admit of this contention.
If the purpose of the enactment is what the petitioners contend it to be, then nothing would have been easier for the legislature than to have so framed the section as to confine its operation to levies or collections already made, without giving effect to the law itself.
On the contention of the petitioners, the first clause has to be discarded as wholly inoperative, and we should be 10th to adopt a construction which leads to that result.
It is true that on the contention of the State that the first clause has independent operation the second clause would be unnecessary, as even without it, the result sought to be achieved by it must follow on the first clause itself.
But it is to be noted that the first clause has reference to the exercise of legislative power while the second is concerned with administrative action, and it is possible that the second clause might have been enacted by way of abundant caution.
It is nothing strange or unusual for a legislature to insert a provision ex abundanti cautela, so as to disarm possible objection; but it is in conceivable that it should enact a provision which is wholly inoperative.
Of two alternative constructions of which one leads to the former and the other involves the latter result, there cannot be any question that it is the former that is to be preferred.
Nor is it permissible to cut down the plain meaning of the terms of the statute on considera tions of policy behind the legislation.
But even from that point of view, there was the fact that there were dealers who had collected taxes from their purchasers for payment to the State, but were relieved of (1) A.I.R. 1957 Bom.
1467 that obligation by the judgment in The Bengal Immunity Company case (1) and that, further, to validate only levies and collections made would give an advantage to those who evaded the law as then understood, over those who loyally obeyed it.
It follows that we are unable to agree with the decision in Dialdas vs P. section Talwalkar (2), in so far as it held that it was not competent to the State to start fresh proceedings for assessment of tax on the strength of the impugned Act.
In our opinion, the true construction of section 2 is that the two clauses therein are, as indicated by the conjunction, distinct and independent in their opera.
tion, and that the laws of the States are kept in force in respect of sales which had taken place during the specified period, and that proceedings in respect thereof for assessment are within the protection of the Act.
It was next argued that the impugned Act is a temporary statute, as its operation is limited to sales which took place during the specified period, and that period having expired, no proceedings could now be taken on the strength of the provisions of that Act, and reliance was placed on the observations of this Court in Keshavan Madhava Menon vs The State of Bombay (3), in support of this position.
But the impugned Act is in no sense a temporary Act.
Its life is not limited to any specified period.
It is a permanent statute operating on all sales which took place during the specified period.
The fallacy in this contention of the petitioners lies in mixing up the period, the sales during which are brought within the operation of the Act, with the period of the operation of the Act itself.
The former may be said to be temporary, but the latter clearly is not.
(IV) It is next contended that even if the impugned Act authorised starting of fresh proceedings for assessment of tax on the Explanation sales which had taken place during the specified period, no action in that behalf could be taken under section 22 of the (1) (2) A.I.R. 1957 Bom.
(3) ; , 235.
186 1468 Andhra (Madras) Act, because it was, when it was enacted, repugnant to article 286(2) of the Constitution, and was therefore void.
It is argued that a statute which is unconstitutional is a nullity and must be treated as non est and that the impugned Act could not infuse life into it.
It may be open, it is said, to the Legislature of the State of Andhra to enact a fresh law giving it even retrospective operation as provided in the impugned Act, but in the absence of such a legislation, the provisions of the Act as they stood prior to the impugned Act are incapable of enforcement.
It would be sufficient answer to this contention that section 22 of the Madras Act is only a piece of conditional legislation, imposing tax on interState sales when Parliament should enact a law lifting the ban, and if such legislation is competent as we have held it is, then no question of unconstitutionality of the section when it was enacted could arise.
But it would be more satisfactory to decide the point on its own merits, as the question raised has been, of late, the subject of considerable discussion in this Court.
Now, in considering the question as to the effect of unconstitutionality of a statute, it is necessary to re member that unconstitutionality might arise either because the law is in respect of a matter not within the competence of the legislature, or because the matter itself being within its competence, its provisions offend some constitutional restrictions.
In a Federal Constitution where legislative powers are distributed between different bodies, the competence of the legislature to enact a particular law must depend upon whether the topic of that legislation has been assigned by the Constitution Act to that legislature.
Thus, a law of the State on an Entry in List 1, Sch.
VII of the Constitution would be wholly incompetent and void.
But the law may be on a topic within its competence, as for example, an Entry in List II, but it might infringe restrictions imposed by the Constitution on the character of the law to be passed, as for example, limitations enacted in Part III of the Constitution.
Here also, the law to the extent of the repugnancy will be 1469 void.
Thus, a legislation on a topic not within the competence of the legislature and a legislation within its competence but violative of constitutional limitations have both the same reckoning in a court of law; they are both of them unenforceable.
But does it follow from this that both the laws are of the same quality and character, and stand on the same footing for all purposes ? This question has been the subject of consideration in numerous decisions in the American Courts, and the preponderance of authority is in favour of the view that while a law on a matter not within the competence of the legislature is a nullity, a law on a topic within its competence but repugnant to the constitutional prohibitions is only unenforceable.
This distinction has a material bearing on the present discussion.
If a law is on a field not within the domain of the legislature, it is absolutely null and void, and a subsequent cession of that field to the legislature will not have the effect of breathing life into what was a still born piece of legislation and a fresh legislation on the subject would be requisite.
But if the law is in respect of a matter assigned to the legislature but its provisions disregard constitutional prohibitions, though the law would be unen.
forceable by reason of those prohibitions, when once they are removed, the law will become effective without re enactment.
Willoughby on the Constitution of the United States, Vol. 1, at p. 11 says : " The validity of a statute is to be tested by the constitutional power of a legislature at the time of its enactment by that legislature, and, if thus tested it is beyond the legislative power, it is not rendered valid, without re enactment, if later, by constitutional amendment, the necessary legislative power is granted.
However, it has been held that where an act is within the general legislative power of the enacting body, but is rendered unconstitutional by reason of some adventitious circumstance, as for example, when a State legislature is prevented from regulating a matter by reason of the fact that the Federal 1470 Congress has already legislated upon that matter, or by reason of its silence is to be construed as indicating that there should be no regulation, tile act does not need to be re enacted in order to be enforced, if this cause of its unconstitutionality is removed.
" In Cooley on Constitutional Law at p. 201, it is stated that " a finding of unconstitutionality does not destroy the statute but merely involves a refusal to enforce it".
In Wilkerson vs Rahrer (1), the State of Kansas had enacted a law in 1889 forbidding the sale of intoxicating liquor.
This was bad in so far as it related to sales in the course of interstate trade, as it was in contravention of the Commerce Clause.
But in 1890, the Congress passed a law conferring authority on the States to enact prohibition laws.
The question was whether a prosecution under the law of 1889 in respect of a breach of that law subsequent to the Congress legislation in 1890 was maintainable.
Repelling the contention that the statute of 1889 was a nullity when it was passed and could not be enforced without reenactment, the Court observed: " This is not the case of a law enacted in the unauthorized exercise of a power exclusively confided to Congress, but of a law which it was competent for the State to pass, but which could not operate upon articles occupying a certain situation until the passage of the Act of Congress.
That Act in terms removed the obstacle, and we perceive no adequate ground for adjudging that a re enactment of the state law was required before it could have the effect upon imported which it had always had upon domestic property.
" It should be noted that in this case the law of 1889 applied to intrastate sales also, and it was admittedly valid to that extent.
The impugned legislation was therefore unconstitutional only in part.
Rottschafer after referring to the conflict of authorities on 'this question in the States, refers to the decision in Wilkerson vs Rahrer (1) as embodying the better view.
Vide American Constitutional Law, 1939 Edn.
p. 39.
A similar view was taken in Ulster Transport (1) (1891) I40 U.S. 545; ; 1471 Authority vs James Brown & Sons Ltd. (1).
There, construing section 5(1) of the Act of 1920 which enacts that " any law made in contravention of the restrictions imposed by this sub section shall so far as it contravenes these restrictions, be void ", Lord MacDermott L. C. J. observed: " I am not aware of any authority for the view that language such as this necessarily means that contravention must produce an actual gap in the statute book in the sense that the measure concerned, or some specific part thereof, simply drops out of the authorized text.
As well as this vertical severability, if I may so describe it, I see no reason why, if the circumstances warrant such a course, the terms of section 5(1) should not be sufficiently met by what I may call a horizontal severance, a severance that is which, without excising any of the text, removes from its ambit some particular subject matter, activity or application.
This, I think, would give effect to the words ' so far as it contravenes ' without impinging on the meaning or weight to be attached to the word ' void '.
" It will be noted that this decision also deals with a statute which was in part unconstitutional.
Coming to the authorities of this Court where this question has been considered: In Behram Khurshed Pesikaka vs The State of Bombay (2) the question arose with reference to the Bombay Prohibition Act of 1949 which, subject to certain exceptions provided therein, prohibited the consumption of liquor.
In The State of Bombay and another vs F. N. Balsara (3) this Court had held that this provision was obnoxious to article 19(1)(g) of the Constitution in so far as it related to medicinal and toilet preparations containing alcohol.
The appellant was prosecuted for the offence of consuming liquor, and his defence was that he had taken medicine containing alcohol.
The point in dispute was whether the burden was upon the appellant to prove that he had taken such a medicine or for the prosecution to show that he had not.
This (1) (1953) Northern Ireland Reports 79.
(2) , 654.
(3) ; 1472 Court held that the onus was on the prosecution, and the same not having been discharged, the appellant was entitled to be acquitted.
In the course of the judgment, Mahajan C. J. made the following observations, which are relied on by the petitioners: " The constitutional invalidity of a part of section 13(b) of the Bombay Prohibition Act having been declared by this Court, that part of the section ceased to have any legal effect in judging cases of citizens arid had to be regarded as null and void in determining whether a citizen was guilty of an offence.
" It must be observed that the question of the constitu tionality of the Act did not arise directly for deter mination and was incidentally discussed as bearing on the incidence of burden of proof.
And further, these observations have reference to the enforceability of the provisions of the Bombay Prohibition Act, while the bar under article 19 continued to operate.
There was no question of the lifting of ban imposed by article 19, 'and the question as to the effect of lifting of a ban did not arise for decision.
In the context in which they occur, the words " null and void " cannot be construed as implying that the impugned law must be regarded as non est so as to be incapable of taking effect, when the bar is removed.
They mean nothing more than that the Act is unenforceable by reason of the bar.
In A. V. Fernandez vs State of Kerala (1) the question arose with reference to the Travancore Cochin General Sales Tax Act and the Rules made thereunder.
Prior to the Constitution, the assessees were liable to pay tax on the total turnover of sales including those inside the State and those outside the State.
Where the sales were of cocoanut oil, there was a provision for deduction of the price paid for the purchase of copra from the total turnover.
After the coming into force of the Constitution, a new section, section 26, corresponding to section 22 of the Madras Act, was introduced incorporating therein the provisions of article 286, and consequent thereon, the sales which took place outside the State were excluded from the turnover.
On this, (1) ; 1473 a question arose as to the quantum of deduction to which the assessee was entitled in respect of his purchase of copra.
He claimed that he was entitled to deduct the price paid for copra not only in respect of oil which was sold inside the State but also oil sold outside the State.
This contention was rejected by the High Court, which limited the deduction to purchase of copra relating to the sales inside ' the State, and in affirming that decision, this Court observed : " 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 rule 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, 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.
" On the strength of the above observations, the petitioners contend that the provisions relating to inter State sales must be treated as non existent, and that, therefore, a fresh enactment of the statute would be necessary to bring them into operation.
Here again, the point for decision was only as to the effect of the ban under article 286 on the transactions which came within its purview.
That ban had not then been lifted and the effect of the lifting of such a ban on the existing law did not fall to be considered.
We are unable to read the observations relied on by the petitioners as implying that section 22 of the Madras Act must be taken to have been blotted out of the statute book.
A case directly in point is Bhikaji Narayan Dhakras and others vs The State of Madhya Pradesh and another (1).
There, the question arose with reference (1) ; 1474 to the C. P. & Berar Motor Vehicles (Amendment) Act, 1947 (Act 3 of 1948).
That Act had amended section 43 of the , by introducing provisions which authorised the Provincial Government " to take up the entire motor transport business in the Province and run it in competition with and even to the exclusion of motor transport operators ".
These provisions, though valid at the time when they were enacted, became void on the coming into force of the Constitution as infringing the rights of citizens to carry on business, protected by article 19(1)(g).
The Constitution, however, was amended on June 18,1951, and article 19(6) was amended so as to authorise the State to carry on business " to the exclusion, complete or partial, of citizens or otherwise ".
Subsequent to this amendment, the Government issued a notification under section 43 of the Amendment Act of 1948, and it was the validity of that notification that was in issue.
The contention was that as section 43 of the Act of 1948 had become void at the date of the Constitution, a notification issued by the Government under that section after the date of the amendment of the Consti tution was not valid, as it must be taken to have become non est.
It was held by this Court that section 43 of the Act of 1948 could not be held to have been effaced out of the statute book, because it continued to operate on transactions prior to the coming into force of the Constitution, and that even after the Constitution, it would be operative as against non citizens, that the consequence of section 43 being repugnant to article 19(1)(g) was that it could not be enforced so long as the prohibition contained therein was in force, but that when once that prohibition had been removed as it was by the First Amendment, the provisions of that Act which had been dormant all the time became active and enforceable.
The result of the authorities may thus be summed up: Where an enactment is unconstitutional in part but valid as to the rest, assuming of course that the two portions are severable, it cannot be held to have been wiped out of the statute book as it admittedly must remain there for the purpose of enforcement of 1475 the valid portion thereof, and being on the statute book, even that portion which is unenforceable on the ground that it is unconstitutional will operate proprio vigore when the Constitutional bar is removed, and there is no need for a fresh legislation to give effect thereto.
On this view, the contention of the petitioners with reference to the Explanation in section 22 of the Madras Act must fail.
That Explanation operates, as already stated, on two classes of transactions.
It renders taxation of sales in which the property in the goods passes in Madras but delivery takes place outside Madras illegal on the ground that they are outside sales falling within article 286(1) (a).
It also authorises the imposition of tax on the sales in which the property in the goods passes outside Madras but goods are delivered for consumption within Madras.
It is valid in so far as it prohibits tax on outside sales, but invalid in so far as sales in which goods are delivered inside the State are concerned, because such sales are bit by article 286(2).
The fact that it is invalid as to a part has not the effect of obliterating it out of the statute book, because it is valid as to a part and has to remain in the statute book for being enforced as to that part.
The result of the enactment of the impugned Act is to lift the ban under article 286(2), and the consequence of it is that that portion of the Explanation which relates to sales in which property paws outside Madras but the goods are delivered inside Madras and which was unenforceable before, became valid and enforceable.
In this view, we do not feel called upon to express any opinion as to whether it would make any difference in the result if the impugned provision was unconstitutional in its entirety.
There is one other aspect of the question to which reference must be made.
The decisions in Behram Khurshed Pesikaka vs The State of Bombay (1) and Bhikaji Narain Dhakras and others vs The State of Madhya Pradesh and another (2) both turn on the construction of article 13 of the Constitution, which enacts that laws shall be void to the extent they are (1) 187 (2) ; , 187 1476 repugnant to the provisions of Part III.
We are concerned in these petitions not with infringement of any of the provisions of Part III but of article 286(2), and the point for our decision is as to the effect of the infringement of that provision.
article 286(2) does not provide that a law which contravenes it is void, and when regard is had to the context of that provision, it is difficult to draw the inference that that is the consequence of contravention of that provision.
article 372(1) provides for the continuance in force of all laws existing at the date of the Constitution.
The proviso to article 286(2) enacts that the President may by an order continue the operation of the Sales Tax Laws up to March 31, 1951, and article 286(2) itself enacts that no law of a State shall impose a tax.
In the context in which they occur, the true meaning to be given to these words is, as already observed, that no law of a State shall be effective to impose a tax; that is to say, the law cannot be enforced in so far as it imposes such a tax.
Whether we consider the question on broad principles as to the effect of un constitutionality of a statute or on the language of article 286(2), the conclusion is inescapable that section 22 of the Madras Act and the corresponding provisions in the other statutes cannot be held to be null and void and non est by reason of their being, repugnant to article 286(2) and the bar under that Article having been now removed, there is no legal impediment to effect being given to them.
(V) We shall now deal with the contention of the learned counsel for the Madura Mills Ltd., who struck a new path cutting across the lines on which the petitioners and the other interveners proceeded.
He contended that the decisive factor in the determination of the question was Entry 42 in List I of the Seventh Schedule, "Inter State trade and commerce", that under that Entry, Parliament had the exclusive power to enact laws in respect of inter State trade and commerce and that included power to impose a tax on inter State sales, that the States had therefore no competence under the Constitution to enact a law imposing tax on such sales, that the laws passed 1477 by the States after the Constitution imposing such a tax were ultra vires and void, that the impugned Act purporting to give effect to such laws was likewise ultra vires and inoperative, and that, in consequence, the proceedings sought to be taken under section 22 of the Madras Act and the corresponding provisions in the sister Acts of other States were unauthorised and illegal.
The argument in support of this contention was as follows: Entry 42 in List I is based on the Commerce Clause of the American Constitution, article 1, section 8 that " The Congress shall have power to regulate commerce among the several States ", and that has been interpreted by the Supreme Court of the United States as meaning that the States have no power to enact a law imposing a tax on the carrying on of inter State trade (Vide Robins vs Taxing District of Shelby County (1), or imposing tax on inter State sales (Vide McLeod vs Dilworth Co. (2)).
The contents of Entry 42 are the same as those of the Commerce Clause, and it must therefore be construed as of the same effect.
It is also a well established rule of construction that the Entries in the Legislative Lists must be interpreted liberally and in a wide sense.
The true interpretation therefore to be put upon Entry 42 is that Parliament has, and therefore, in view of the non obstante clause in article 246(1) and of the words "subject to" in article 246(3), the States have not, the power to impose tax on inter State sales.
Article 301 which provides that trade and commerce in the territory of India shall be free is also intended to achieve the same result.
It reproduces section 92 of the Commonwealth of Australia Constitution Act, and the authorities on that section have held that imposition of a tax on inter State trade would be obnoxious to that provision.
That the freedom in article 301 includes freedom from taxation is also implicit in article 304 (a) in which an exception to article 301 is made in respect of the imposition of tax on goods imported from other States.
The result is, it is argued, that after the Constitution no law of a State can impose a tax on (1) ; ; (2) (1044) ; ; 1478 inter State sales, and in consequence, section 22 of the Madras Act, which came into force after the Constitution, would, if it is construed as imposing a tax, be bad, and the impugned Act which proceeds on the view that the States have the power to enact laws imposing a tax on inter State sales and seeks to give effect to them would also be unconstitutional and void.
This contention suffers, in our opinion, from serious infirmities.
It overlooks that our Constitution was not written on a tabula rasa, that a Federal Constitution had been established under the Government of India Act, 1935, and though that has undergone considerable change by way of repeal, modification and addition, it still remains the framework on which the present Constitution is built, and that the provisions of the Constitution must accordingly be read in the light of the provisions of the Government of India Act.
It fails to give due weight to the setting of the relevant provisions of the Constitution and the interpretation which is to be put upon them in their context.
In the Government of India Act, 1935, there was no Entry corresponding to Entry 42 in List I of the Constitu tion.
But there was in List II, Entry 48 which corresponds to Entry 54 in the Constitution.
It is not in dispute that under Entry 48 the States had power to pass a law imposing a tax on inter State sales, because the terms of the Entry are wide and would include inter State as well as intrastate sales.
It was on this view that the Provinces had enacted laws imposing tax on inter State sales.
Then the Constitu tion came into force, and it included for the first time a new Entry 42 in List 1.
It also reproduced Entry 48 in Entry 54 in List II in terms, for our purposes, identical.
Having regard to the connotation of that Entry in the Government of India Act, 1935, one would have expected that if it was intended by the Constitution makers that the States should be deprived of the power to tax interstate sales which they had under Entry 48 in the Government of India Act, that would have been made clear in the Entry itself.
It is material to note that while Entry 48 in the Government 1479 of India Act was "Taxes on the sale of goods and on advertisement ", Entry 54 in List II of the Constitution as originally enacted was " Taxes on the ' sale or purchase of goods other than newspapers".
Thus, the Constitution did limit the scope of Entry 48 by excluding from it newspapers, and if it was its intention to exclude inter State sales from its purview, nothing would have been easier for it than to have said so, instead of leaving that result to be inferred on a construction of Entry 42 in List I in the light of the American authorities on the Commerce Clause.
This Is strong indication that Entry 42 is not to be read as including tax on inter State sales.
This conclusion is further strengthened, when regard is had to the scheme of the Lists in the Seventh Schedule and the principle underlying the enumeration of heads of legislation therein.
In List 1, Entries I to 81 mention the several matters over which Parliament has authority to legislate.
Entries 82 to 92 enumerate the taxes which could be imposed by a law of Parliament.
An examination of these two groups of Entries shows that while the main subject of legislation figures in the first group, a tax in relation thereto is separately mentioned in the second.
Thus, Entry 22 in List I is " Railways ", and Entry 89 is " Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freights ".
If Entry 22 is to be construed as involving taxes to be imposed, then Entry 89 would be superfluous.
Entry 41 mentions "Trade and commerce with foreign countries; import and export across customs frontiers ".
If these expressions are to be interpreted as including duties to be levied in respect of that trade and commerce, then Entry 83 which is " Duties of customs including export duties " would be wholly redundant.
Entries 43 and 44 relate to incorporation, regulation and winding up of corporations.
Entry 85 provides separately for Corporation tax.
Turning to List II, Entries I to 44 form one group mentioning the subjects on which the States could legislate.
Entries 45 to 63 in that List form another group, and they deal with 1480 taxes.
Entry 18, for example, is " Land " and Entry 45 is " Land revenue ".
Entry 23 is " Regulation of mines " and Entry 50 is " Taxes on mineral rights ".
The above analysis and it is not exhaustive of the Entries in the Lists leads to the inference that taxation is not intended to be comprised in the main subject in which it might on an extended construction be regarded as included, but is treated as a distinct matter for purposes of legislative competence.
And this distinction is also manifest in the language of article 248, Cls.
(1) and (2), and of Entry 97 in List I of the Constitution.
Construing Entry 42 in the light of the above scheme, it is difficult to resist the conclusion that the power of Parliament to legislate on inter State trade and commerce under Entry 42 does not include a power to impose a tax on sales in the course of such trade and commerce.
Article 286 has a direct bearing on the point now under discussion.
It imposes various restrictions on the power of the State to enact laws imposing taxes on sale of goods and one of those restrictions has reference to taxes on inter State sales, vide article 286(2).
It is implicit in this provision that it is the States that have got the power to impose a tax on such sales, as there can be no question of a restriction on what does not exist.
That is how article 286(2) has been construed by this Court both in The United Motors case (1) and in The Bengal Immunity Company case (2).
It was observed therein that under Entry 54, as under Entry 48 of the Government of India Act, the power to tax sales rested with the States, and that article 286(2) was enacted with the object of avoiding multiple taxation of inter State sales in exercise of the power conferred by that Entry.
This again strongly supports the conclusion that Entry 54 must be interpreted as including the power to tax inter State sales and Entry 42 as excluding it.
In order to get over this hurdle, learned counsel put forward the contention that article 286(2) had reference only to laws which were in existence at the time when the Constitution came into force, and that the (1) ; (2) 1481 power given to Parliament was one to continue those laws.
Reference was made to the proviso to article 286(2) which authorised the President to direct that the taxes which were being levied by the State before the commencement of the Constitution might be continued to be levied until March 31, 1951, and it was said that the power conferred under article 286(2) was of the same character, and that it merely enabled Parliament to continue pre Constitution laws.
Now, it cannot be disputed that the language of article 286(2) would, in terms, comprehend future legislation.
Language similar to the one used in article 286 (2) is also to be found in article 287, and there, it clearly has reference to laws to be enacted after the Constitution.
Indeed, it was conceded that on the wording of article 286(2) both existing and future legislation would be included.
But it was contended that its operation should be limited to existing laws, because as Entry 42 in List I includes tax on inter State sales, any law of the State subsequent to the Constitution imposing such a tax would be incompetent.
This, however, is petitio principii.
The point for decision is whether tax on inter State sales is included within Entry 42.
The inference to be drawn from the plain language of article 286(2) is that it is not.
It is no answer to this to say that Entry 42 includes it, and that, therefore, the meaning of article 286(2) should be cut down.
We cannot accede to such a contention.
To sum up: (1) Entry 54 is successor to Entry 48 in the Government of India Act, and it would be legitimate to construe it as including tax on interState sales, unless there is anything repugnant to it in the Constitution, and there is none such.
(2) Under the scheme of the Entries in the Lists, taxation is regarded as a distinct matter and is separately set out.
(3) Article 286(2) proceeds on the basis that it is the States that have the power to enact laws imposing tax on inter State Sales.
it is a fair inference to draw from these considerations that under Entry 54 in List 11 the States are competent to enact laws imposing tax on inter State sales.
We must now consider the arguments that have 1482 been put forward as supporting the opposite conclusion.
It is firstly contended that the Entries in the Legislative Lists must be construed broadly and not narrowly or in a pedantic manner, and that, in accordance with this principle, Entry 42 should be construed, there being no limitation contained therein, as inclusive of the power to tax sales in inter State trade and commerce.
The rule of construction relied on is no doubt well established; but the question is as to the application of that rule in the present case.
The question here is not simpliciter whether a particular piece of legislation falls within an Entry or not.
The point in dispute before us is whether between two Entries assigned to two different Legislatures the particular subject of legislation falls within the ambit of the one or the other.
If Entry 42 in List I is to be construed liberally, so must Entry 54 in List II be, and the point is not settled by reference to article 246, Cls.
(1) and (3) and to the principle laid down in Union Colliery Company of British Columbia vs Bryden (1) that where there is a conflict of jurisdiction between a Central and a Provincial Legislature, it is the law of the Centre that must prevail.
article 246, Cls.
(1) and (3) have to be invoked only if there is a conflict as to the scope of two Entries in the two Lists and not otherwise.
What has therefore first to be decided is whether there is any conflict between Entry 42 in List I and Entry 54 in List 11.
If there is not, the application of the non obstante clause in article 246(1) or of the words " subject to " in article 246(3) does not arise.
There is another rule of construction also wellsettled that the Entries in two Legislative Lists must be construed if possible so as to avoid a conflict.
In Province of Madras vs Boddu Paidanna and Sons (2) the question was as to whether the first sales by a manufacturer of goods were liable to be taxed by the Province under Entry 48 in List II, or whether it was really a tax on excise which was within the exclusive competence of the Centre under Entry 45 in List 1.
It was held by the Federal Court that the (1) (2) 1483 correct approach to the question was to see whether it was possible to effect a reconciliation between the two Entries so as to avoid a conflict and overlapping, ' and that, in that view, though excise duty might in a extended sense cover the first sales by the manufacturer, in the context of entry 48 in List II it should be held not to include it, and that therefore the Province had the right to tax the first sales.
This view was approved by the Privy Council in GovernorGeneral in Council vs Province of Madras (1).
If it is possible therefore to construe Entry 42 as not including tax on interstate sales, then on the principle enunciated in Province of Madras vs Boddu Paidanna and Sons (2) and Governor General in Council vs Province of Madras (1) we should so construe it, as that will avoid a conflict between the two Entries.
It was also argued in support of the contention that Entry 42 in List I must be held to include the power to tax, that that was the interpretation put by the American authorities on the Commerce Clause, and that there was no reason why a different construction ,should be put on Entry 42 in list I of our Constitution.
It is true that our Constitution makers bad before them the Commerce Clause and the authorities thereon, but it is a mistake to suppose that they intended to bodily transplant that clause in Entry 42.
We had in the Government of India Act, 1935, a fullfledged Federal Constitution in force in this Country, and what the Constitution makers did was to draw from other Federal Constitutions of the world, adapt and modify the provisions so as to sent our conditions and fit them in our Constitution.
In this new context, those provisions do not necessarily mean what they meant in their old setting.
The threads were no doubt taken from other Constitutions, but when they were woven into the fabric of our Constitution, their reach and their complexion underwent changes.
Therefore, valuable as the American decisions are as showing how the question is dealt with in a sister (1) (1945) L.R. 72 I.A. 91.
(2) 188 1484 Federal Constitution, great care should be taken in applying them in the interpretation of our Constitution.
We should not forget that it is our Constitution that we are to interpret, and that interpretation must depend on the context and setting of the particular provision which has to be interpreted.
Applying these principles and having regard to the features already set out, we must hold that Entry 42 in List I is not to be interpreted as including taxation.
The same remarks apply to the argument based upon section 92 of the Commonwealth of Australia Constitution Act and article 301 of 'our Constitution.
We should also add that article 304 (a) of the Constitution cannot be interpreted as throwing any light on.
the scope of article 301 with reference to the question of taxation, as it merely reproduces section 297 (1) (b) of the Government of India Act, and as there was no provision therein corresponding to article 301, section 297 (1)(b) could not have implied what is now sought to be inferred from article 304 (a).
In the result, we are of opinion that if the States had the power under Entry 54 to impose a tax on inter State sales subject only to the restriction enacted in article 286 (2), then by virtue of the impugned Act such law is rendered operative and proceedings taken thereunder are valid.
We have reached this conclusion on a construction of the statutory provisions bearing on the question without reference to the Sixth Amendment of the Constitution which, proceeding on the view that the States had the power to tax interState sales under Entry 54, has amended the Constitu tion, and has vested the power to tax interstate sales in the Centre.
(VI) Another contention urged by the petitioners is that the levy of tax proposed to be made by the Andhra State on the sale of yarn by them to dealers in the State of Andhra is illegal, because under the Madras Act and the Rules made thereunder, where there are successive sales of yarn the tax can be imposed at only one point, and as the Government of Madras had already imposed a tax on the sale within that State, a second levy on the self same goods by the State of Andhra is unauthorised.
and that therefore 1485 the threatened proceedings for assessment are incompetent.
This contention is clearly untenable.
When the Madras Act provides for a single levy on successive sales of yarn, it can have only application to sales in the State of Madras, as it would be incompetent to the Legislature of Madras to enact a law to operate in another State.
But it is argued that section 53 of the Andhra State Act, 1953, on its true interpretation enacts that though for political purposes Andhra is to be regarded as a separate State, for the enforcement of laws as they stood on that date it should be deemed to be a part of the State of Madras.
We do not agree with this interpretation.
In our opinion, section 53 merely provides that the laws in existence in the territories which were constituted into the State of Andhra should continue to, operate as before.
In fact, by an Adaptation Order issued on November 12, 1953, even the name of Andhra was substituted for Madrts in the Madras General Sales Tax Act.
There is no substance in this contention.
(VII) Lastly, it is argued that the Essential Commodities Act enacted by Parliament in exercise of the power conferred by article 286 (3) has declared that yarn is an essential commodity, and that if the Madras Act is to be construed as a fresh enactment for the Andhra State by reason of sections 53 and 54 of the Andhra State Act and the Adaptation Order dated November 12, 1953, then it would be bad inasmuch as the procedure prescribed in that provision had not been followed.
The basis of this contention is that the Madras Act as applied to the Andhra State is a now Act for purposes of article 286 (3), but that is not so.
The Madras Act was in force in the territories which now form part of the Andhra State until October 1, 1953, and thereafter that Act continues to be in operation by force of section 53 of the Andhra State Act.
Moreover, the Madras Act become operative in the new State of Andhra not under any law passed by the Legislature of the State of Andhra but under section 53 of a law enacted by Parliament and therefore article 286 (3) has no application.
We should add that the Essential Commodities Act (LII of 1952) has itself 1486 been repealed and is no longer in operation.
This contention of the petitioners also should be rejected.
The petitioners sought to raise certain other contentions such as that they are not "dealers" in the Andhra State, and that the Explanation to section 22 had no application to the sales sought to be taxed, as the goods were delivered not in the State of Andhra but in Madras.
But these are questions which ought properly to be raised before the assessing authorities, and cannot be gone into in these proceedings.
In the result, the petitions fail and are rejected.
The petitions have had a chequered career, their fortures fluctuating with changes in the interpretation of the law and in the law itself.
In the circumstances, we direct the parties to bear their own costs.
SARKAR J.
The petitioners who are dealers in cotton yarn carrying on business in the city of Madras had sold goods to various persons in the State of Andhra.
This State, the respondent in these petitions, demanded taxes on these sales under the provisions of the Sales Tax Act applying to its territories.
The petitioners challenged the respondents right to tax the, sales, and filed these petitions for writs of prohibition or other suitable writs restraining the respondent from levying and collecting the tax.
The Act mentioned various kinds of sales which could be taxed under it.
The procedures followed by the petitioners in effecting the sales were diverse and have not yet been ascertained, and it is not possible without such ascertainment to decide whether they are or are not taxable under the provisions of the Act read with other relevant laws.
To avoid this difficulty it has been agreed between the parties that the only question that will be decided on these petitions is whether the respondent can tax a sale under which the pro perty in the goods sold passed outside the State of Andhra but the goods were delivered in that State for consumption there.
Before proceeding to discuss this question it is necessary to refer to certain antecedent events.
On January 26, 1950, the Constitution of India was 1487 promulgated.
It continued the laws previously in force in the territories of India subject to its provisions.
Article 372(2) of the Constitution provides that, "For the purpose of bringing the provisions of any law in force in the territory of India into accord with the provisions of this Constitution, the President may by order make such adaptations and modifications of such law, whether by way of repeal or amendment, as may be necessary or expedient.
" Article 286 of the Constitution as it stood prior to its amendment in 1956, that being what this case is concerned with, contained the following provisions : " article 286.
(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place (a) outside the State ; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India,.
Explanation.
For the purposes of sub clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consump tion in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State.
(2) Except in so far as Parliament my by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase talks place in the course of inter State trade or commerce : " In the year 1939 the legislature of Madras had enacted the Madras General Sales Tax Act and this was continued in force by the Constitution after its promulgation.
In order to bring its provisions into accord with the Constitution, the President under his power mentioned earlier, passed on July 2, 1952, the Adaptation of Laws(Fourth Amendment) Order which 1488 added a new section to the Madras Act, being section 22.
The terms of this section are important in this case and will be set out later.
The effect of the Explanation in article 286(1)(a) came up for consideration by this Court in the case of The State of Bombay vs The United Motors (India) Ltd. (1).
This Court held by its judgment pronounced by a majority, on March 30, 1953, that a State 'could tax a sale under which goods were delivered within its territories for consumption there though the property in the goods passed beyond its territories and a provision in a State statute purporting to levy such a tax did not contravene article 286.
Andhra is a new State which came into existence on October 1, 1953.
It was created by the Andhra State Act, 1953, largely out of territories previously belonging to the State of Madras.
Later, the new State came to be designated as the State of Andhra Pradesh but I will refer to it as the State of Andhra or simply Andhra.
Section 53 of the Andhra State Act provided that the laws in force prior to the Con stitution of the State of Andhra in the territories included in it, were thereafter to continue in force there.
The Madras General Sales Tax Act therefor(, became applicable to the State of Andhra and it became go applicable with the new section 22 previously added to it.
Subsequently, the Madras Act as applying in the State of Andhra was, to suit the latter State, adapted by substituting for the name Madras the name Andhra wherever it occurred in that Act.
I will hereafter call this Act the Sales Tax Act.
Sometime in the year 1954 the respondent, the State of Andhra, issued notices to the petitioners demanding taxes under its Sales Tax Act.
As I have earlier stated the petitioners challenged the right of the respondent to levy the tax and certain correspondence followed.
As the respondent insisted on collecting the tax, the petitioners instituted the present proceeding, , in July and August, 1955.
While these proceedings were pending, the question of the effect of article 286 again came up for consideration (1) ; 1489 by this Court in the case of the Bengal Immunity Company Ltd. vs The State of Bihar(1).
This Court by its judgment pronounced, again by a majority, on September 6, 1955, held that until Parliament by law made in the exercise of powers vested in it under article 286(2) otherwise provided, no State could impose any tax on a sale or purchase of goods when such sale or purchase took place in the course of inter State trade or commerce and the majority decision in the State of Bombay vs The United Motors (India) Ltd. (2) in so far as it decided to the contrary could not be accepted andfurther that the explanation in article 286(1)(a)did not confer any right on the State in which the goods were delivered under a sale, to tax it notwithstanding that the property in the goods passed in another State.
In view of this decision the respondent was advised that it could not oppose the petitions and on October 21, 1955, it actually filed statements in these proceedings submitting that the petitions might be allowed.
Before however the petitions could be heard and disposed of, an Ordinance called the Sales Tax Laws Validation Ordinance, 1956, was promulgated by the President on January 30, 1956.
This Ordinance was later, on March 21, 1956, replaced by the Sales Tax Laws Validation Act, 1956.
Both these enactments were in identical terms.
The operative provision of the Validation Act is set out below.
" Notwithstanding any judgment, decree or order of any court no law of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any goods where such sale or purchase took place in the course of inter State trade or commerce during the period between the 1st day of April, 1951, and the 6th day of September, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the course of interstate trade or commerce ; and all such taxes levied or collected or purporting to have been levied or collected during the (1) (2) ; 1490 aforesaid period shall be deemed always to have been validly levied or collected in accordance with law.
" The respondent was advised that the Validation Act had changed the situation and in view of it the petitions could no longer succeed.
Thereupon, the respondent on February 19, 1957, filed fresh statements submitting that the petitions should be dismissed.
The petitions have now come up for hearing in these circumstances.
The validity of the Validation Act itself has been challenged.
But I do not think it necessary to decide that question.
I will assume that that Act is perfectly valid.
It does not however itself levy any tax.
Its only effect, so far as these cases are concerned, is to permit the Sales Tax Act to operate to tax sales which took place in the course of trade between Andhra and any other State between certain dates.
I will not refer to these dates hereafter for what Ihave to say applies to sales between them only.
As has been agreed between the parties, as mentioned at the commencement of this judgment, the only question that we have to decide is whether a sale under which the goods were delivered in Andhra for consumption there though property in them passed in Madras, can be taxed by the respondent.
Such a sale would no doubt be a sale in the course of trade between Andhra and Madras.
It is said that such a sale cannot be taxed by the respondent notwithstanding the Validation Act, because the Sales Tax Act does not purport to tax it.
Does the Sales Tax Act then contain any provision taxing such a sale ? Now the Act authorises the levy of a tax on sales as defined in it.
A sale is defined in section 2(h) of the Act.
It is not disputed however that that definition does not include a sale under which goods are delivered in Andhra for consumption there but property in them passes in Madras and no further reference to that section is therefore necessary.
It is however said that the effect of the Explanation in section 22 is to make such a sale, a sale within the meaning of the Act and therefore liable to be taxed under it.
So I proceed to examine that section.
Section 22 as it stood at the relevant time reads thus: 1491 S.22.
"Nothing contained in this Act shall be deemed to impose, or authorise the imposition of, a tax on the sale or purchase of any goods, where such ' sale or purchase takes place (a) (i) outside the State of Andhra, or (ii) in the course of the import of the goods into the territory of India or of the export of the goods out of such territory, or (b) except in so far as Parliament may by law otherwise provide, after the 31st day of March 1951 in the course of inter State trade or commerce, and the provisions of this Act shall be read and construed accordingly.
Explanation.
For the purposes of clause (a)(i), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods, the property in the goods has by reason of such sale or purchase passed in another State.
" Does the Explanation in this section then say that when under a sale goods are delivered in Andhra, the sale shall be deemed to have taken place there though the property in the goods may have passed in another State, for example, Madras ? It no doubt says, without specifying any particular State, that a sale shall be deemed to have taken place in the State in which the goods were delivered under it though the property in them has passed in another State.
But it seems to me impossible from the language used to say that it contemplated a case in which the goods were delivered in Andhra though property in them passed in another State.
For the sake of clarity I have left out in what I have just said the term as to consumption in the State in which the goods were delivered and no question as to such consumption is in dispute in these cases.
The Explanation opens with the words " For the purposes of clause (a) (i) ".
What then is that clause ? 189 1492 It only contains the words "outside the State of Andhra".
It completes the sentence part of which has preceded it.
The complete sentence says, Nothing in this Act shall be deemed to impose, or authorise the imposition of, a tax on the sale or purchase of any good,,;, where such sale or purchase takes place (a) (i) outside the State of Andhra.
It then savs that no tax shall be levied under the Act on a sale which takes place outside Andhra.
It is after this that the Explanation comes and starts with the words " for the purposes of clause (a) (i)".
These words must therefore mean, for the purpose of explaining which sale is to be regarded as having taken place outside Andhra.
The Explanation then is for this purpose.
I will now turn to the remaining and the substantive portion of the Explanation.
That must explain when a sale is to be regarded as having taken place outside Andhra.
The substantive portion of the Explanation however mentions a sale which is to be deemed to have taken place inside a State.
Keeping its purpose in mind, it must be taken by saying that a certain sale is to be deemed inside a State, to say that it is outside the State of Andhra.
It follows that the Explanation does not contemplate that the State inside which a sale is to be deemed to have taken place, can be the State of Andhra.
That State cannot be the State of Andhra, for then the Explanation would not show when a sale is to be deemed to be outside Andhra and that by its language is the only purpose for which it is enacted.
Therefore the Explanation can only be read as contemplating a State other than Andhra as the State inside which a sale shall be deemed to have taken place.
This is the inevitable result produced by the opening words of the Explanation understood according to their plain meaning.
So the Explanation, omitting portions of it for the sake of clarity, can only be read in the manner shown below: For the purposes of clause (a)(i) a sale or purchase shall be deemed to have taken place in the State being a State other than Andhra, in which the goods have 1493 been actually delivered notwithstanding that the property in the goods has passed in the State of Andhra.
I therefore find it impossible to say that the Explanation states that a sale shall be deemed to have taken place inside Andhra if under it the goods have been delivered there though the property in them passed in another State.
The Explanation does not hence, in my view, authorise the taxation of a sale under which goods are delivered in Andhra though property in them passed in Madras.
The view that I have taken of the purpose of the Explanation in section 22 was taken of the purpose of the Explanation in article 286(1)(a) in the Bengal Immunity Company case (1).
It was said at p. 646 of the report, " Here the avowed purpose of the Explanation is to explain what an outside sale referred to in sub clause (a) is ".
The language of the Explanations and the setting of each in its respective provision are identical.
That language must therefore have the same meaning.
It is said that the consideration that prevailed with the Court in the Bengal Immunity Company case (1) in dealing with article 286 cannot apply in dealing with section 22 for the latter is a provision in a taxing statute which the former is not.
But I do not see that this comment, even if justified, would lead to a different meaning being put on words used when they occur in a taxing statute from that when they occur in a statute which does not purport to levy a tax.
As a matter of language only, words must have the same meaning.
The words "for the purpose of clause (a)(i)" must therefore have tile same meaning in the Explanation in article 286(1)(a) as in the Explanation in section 22.
1 am unable to distinguish the present case from the Bengal Immunity Company case (1) for the purpose of determining the meaning of the words used.
It is then said that the Explanation in i. 22 has two facets; that when it talks of a sale inside one State, it at the same time necessarily talks of a sale outside all other States.
Therefore it is said that when under a (1) 1494 sale goods are delivered in Andhra but property in .them passes outside Andhra, the Explanation at the same time makes such a sale inside Andhra and outside all other States.
I do not follow this.
Why should the Explanation in this Andhra Act be concerned with saying when a sale shall be deemed to have taken place outside all other States ? Andhra cannot of course legislate for any other State.
Nor is there anything in this Act which makes it necessary for the purposes of it to say when a sale shall be deemed to be outside all other States.
It follows therefore that a construction cannot be put on the language used in tile Explanation which produces the result of showing a sale to be inside Andhra and so outside all other States.
Further, as I have earlier pointed out, the words " For the purposes of clause (a)(i)" with which the Explanation starts, show conclusively that it is necessarily confined to a sale under which goods are delivered in a State other than Andhra and the property in the goods passes in Andhra.
It is no objection to this reading of the Explanation to say that the Andhra Act would then be saying when a sale is to be deemed to have taken place inside another State and it has no power to do so as it can legislate only for itself and for no other State.
Such an objection would be pointless because Andhra by saying that a sale shall be deemed to have taken place inside another State is only legislating for itself and only saying that such a sale is therefore an outside sale so far as it is concerned and cannot be taxed in view of section 22(a) of its Act.
It may be that it is possible in construing the Explanation in article 286(1)(a) to conceive of two facets because that dealt with all States or any two States at a time and for all these the Constitution was fully competent to lay down the law.
That however is not possible when construing a law passed by a State legislature.
Such law cannot regulate the laws of other States.
And in this case the conception is further impossible because the language shows that the Explanation is for explaining when a sale is to be deemed to have taken place outside the State of Andhra.
It is not meant to 1495 explain when it is deemed to have taken place outside any State whatsoever that State may be.
I am therefore unable to see that the Explanation has any facet showing what would be a sale inside Andhra.
The conclusion that I reach is that the Sales Tax Act with which these cases are concerned does not authorise '.he taxing of a sale under which goods are delivered in Andhra but the property in them passes in Madras.
In this view of the matter I do not think it necessary to discuss the various other grounds on which the respondent 's right to tax these sales was also challenged.
In the result I would allow these petitions.
BY COURT: In view of the opinion of the majority, the petitions an dismissed.
The parties are to bear their own costs.
Petitions dismissed.
| The petitioners were dealers carrying on business in the City of Madras in the sale and purchase of yarn.
The dealers in the State of Andhra used to place orders for the purchase of yarn with the petitioners in Madras, where the contracts were concluded and the goods were delivered ex godown at Madras and thereafter despatched to the purchasers who would take delivery of them within their State.
The present dispute related to sales in which property in the goods sold passed outside the State of 1423 Andhra, but the goods themselves were actually delivered as a result of the sale for consumption within that State.
After the coming into force of the Constitution of India the President in the exercise of the powers conferred by article 372(2) made Adaptation Orders with reference to the Sales Tax Laws of all the States, and as regards the Madras General Sales Tax Act, 1939, he issued an Amendment inserting a new section, section 22 in that Act, which was a verbatim reproduction of the Explanation to article 286 (i)(a) of the Constitution.
Oil July 13, 1954, the Board of Revenue (Commercial Taxes) in the State of Andhra, acting on the decision in The State of Bombay and another vs The United Motors (India) Ltd., and others; , , called upon dealers in the State of Madras to submit returns of their turnover of sales in which goods were delivered in the State of Andhra for consumption.
Thereupon they filed the present petitions under article 32 Of the Constitution challenging the demand on the grounds, inter alia, that the sales proposed to be taxed were inter State sales and that they were immune from taxation under article 286(2) Of the Constitution.
While the petitions were pending the Supreme Court pronounced on September 6, 1955, its judgment in The Be gal Immunity Company Limited vs The State of Bihar and others, [1055] 2 S.C.R. 603, according to which the petitioners were not liable to be taxed.
But before final orders were passed on the petitions Parliament passed Sales Tax Laws Validation Act, 1956, section 2 whereof provided that no law of a State imposing or authorising the imposition of tax on inter State sales during the period between April 1, 1951, and September 6, 1955, shall be deeme to be invalid or ever to have been invalid merely by reason of the fact that the sales took place in the course of the inter State trade.
That section further provided that taxes levied or collected on such sales during the aforesaid period shall be deemed to have been validly levied or collected.
It was the con tention of the State of Andhra that by reason of the aforesaid provision it had the right to impose tax on inter State sales during the aforesaid period.
On the other hand the petitioners contended, inter alia, that (I) section 22 Of the Madras General Sales Tax Laws Validation Act, 1956, which gave validity to laws which imposed a tax, did not authorise the imposition, (2) the Sales Tax Laws Validation Act was ultra vires article 286(2), (3) section 22 of the Madras Act was not a "law of a State" within article 286(2) and section 2 of the impugned Act, (4) the impugned Act only validated levies already made and did not authorise the initiation of fresh proceedings for imposing tax, (5) section 22 having been unconstitutional when it was enacted and therefore void, no proceedings could be taken thereunder on the basis of the Validation Act, as the effect of unconstitutionality of the law was to efface it out of the statute book, and (6) the proposed levy was bad as infringing the Rule which provided that the sale of yarn could be taxed only at one point.
It was also contended that under the Constitution it was only the Parliament that has the competence to impose tax on inter State sales and that the Sales Tax Laws Validation Act 1424 was bad in that it gave validity, to the laws of the State to impose the tax : Held (Sarkar J. dissenting), that section 22 of the Madras General Sales Tax Act, 1939, did in fact impose a tax on the class of sales covered by the Explanation to article 286(1)(a) but that it was conditional on the ban enacted on article 286(2) being lifted by law of Parliament as provided therein, and that it was therefore validated by section 2 of the Sales Tax Laws Validation Act, 1956.
The construction put upon the Explanation to article 286(1)(a) of the Constitution in The Bengal Immunity Company case that it merely prohibited the outside States from imposing a tax on the class of sales falling within the Explanation and did not confer on the delivery State any power to impose a tax on such sales has no application to a taxing statute of a State the object of which was primarily to confer power on the State to levy and collect tax.
Section 22 and section 2(h) of the Madras General Sales Tax Act must be read together as ' defining the sales which are taxable under the Act.
Mettur Industries Ltd. vs State of Madras, A.I.R. 1957 Mad.
362, The Mysore Spinning and Manufacturing Co. Ltd. vs Deputy Commercial Tax Officer, Madras, A.I.R. 1957 Mad. 368 and Dial Das vs P. section Talwalkay, A.I.R. 1957 Bom.
71, approved.
Mathew vs Travancore Cochin Board of Revenue, A.I.R. 1957 T. C. 300, Cochin Coal Co. Ltd. vs The State of Travancore Cochin, (1956) 7 Sales Tax Cases 731 and The Government of Andhra vs Nooney Govin arajulu, (1957) 8 Sales Tax Cases 297, disapproved.
Queen vs Burah, (1878) 5 I.A. 178 and In Ye The , etc.
; , relied on : Held (Per section R. Das, C. J., Venkatarama Aiyar, section K. Das and Vivian Bose, JJ.) that (i) the Sales Tax Laws Validation Act, 1956, is in substance one lifting the ban on taxation of interState sales and is within the authority conferred on Parliament tinder article 2 6(2) and further that under that provision it was competent to Parliament to enact a law with retrospective operation.
Punjab Province vs Daulat Singh, (1946) L.R. 73 I.A. 59, distinguished.
The United Province vs Atiqa Bcgum, , (2) the Adaptation Order made by the President under article 372(2) is valid and is not open to attack on the ground that it goes beyond the limits contemplated by that Article.
(3)the expression " law of a State " in article 286(2) and section 2 of the Sales Tax Laws Validation Act means whatever operates as law in the State, and that section 22 of the Madras General Sales Tax Act is a law within those enactments.
1425 (4) section 2 of the Sales Tax Laws Validation Act validates not only the levies already collected but also authorises the imposition of tax on sales falling within the Explanation which had taken place during the period specified in section 2.
The Act is not a temporary Act though its operation is limited to sales taking place within a specified period.
Dial Das vs P. section Talwalkay, A.I.R. 1937 Bom.
71, in so far as it held that it was not competent to the State to start fresh proceedings for assessment, disapproved.
(5) though section 22 of the Madras General Sales Tax Act was unconstitutional when enacted the effect of the unconstitu tionality was not to efface it out of the statute book.
Unconstitutionality might arise either because the law is in respect of a matter not within the competence of the legislature or because the matter itself being within the competence, its provisions offend some constitutional restrictions.
Which a law which is not within the competence of the legislature is a nullity a law on a topic within its competence but repugnant to any constitutional prohibition is only unenforceable.
In the latter class of legislation when once the constitutional prohibition is removed the law becomes enforceable without re enactment.
Where an enactment is unconstitutional in part but valid as to the rest, assuming that the two portions are severable, it cannot be held to have been wiped out of the statute book, as admittedly it must remain there for the purpose of enforcement of the valid portion.
Moreover in the view that the impugned law is conditional legislation it cannot be held to have become non est.
Behram Khurshed Pesikaka vs The State of Bombay, [1955] I S.C.R. 6I3 and A. V. Fernandez vs State of Kerala, ; , distinguished.
Bhikaji Narayan Dhakras and others vs The State of Madhya Pradesh and a other; , , relied on.
(6) under Entry 42 in List 1, Sch.
VII of the Constitution, legislation with respect to inter State trade and commerce is exclusively within the competence of Parliament.
Under Entry 54, List 11, taxes on sale of goods is within the exclusive competence of the State Legislature, and reading the two Entries together Entry 42 must be construed as excluding the power to tax sale of goods.
The scheme of the Entries in the Lists is that taxation is regarded as a distinct matter and is separately set out.
Entry 42, List 1, must therefore be construed as not including the power to impose tax on inter State sales.
(7) the proposed imposition does not infringe the rule that the sales of yarns should be subject to taxation at a single point because the proposed levy is by the State of Andhra and the rule in question prohibits only multiple taxation in the same State.
Per Sarkar J.
The Sales Tax Act does not authorise the taxation of a sale under which goods are delivered in the State of 1426 Andhra but the property in them passes outside that State.
The Explanation in section 22 of the Act only contemplates a State other than Andhra as the State inside which a sale shall be deemed to have taken place.
The words " for the purposes of clause (a)(i) " have the same meaning in the Explanation in article 286(1) as in the Explanation in section 22 of the Act, and the present case is not distinguishable from the decision in The Bengal Immunity Company Limited vs The State of Bihar and others,
|
Summarize this legal judgement text concisely | AppeAl No. 19 of 1956.
Appeal from the judgment and decree dated July 21, 1954, of ' the Patna High Court in Letters Patent Appeal No. 24 of 1951, arising out of the judgment and decree dated May 15, 1951, of the said High Court in Matrimonial Suit No. 2 of 1950.
M. C. Setalvad, Attorney General for India, N. C. Chatterjee and P. K. Chatterjee, for the appellant.
Both the Courts below have failed to draw the proper inference of the commission of adultery, which should legitimately have been drawn from the facts proved.
Both the Single Judge and the Appeal Court failed to take into consideration some pieces of evidence and certain other pieces of evidence which were equally important had been misread and misconstrued and as a matter of legitimate and proper inference the lower courts should not have arrived at any other 179 1412 conclusion but that the wife was guilty of adultery and in such case the interference with the finding of facts below by the Supreme Court will be called for.
State of Madras vs A. Vaidanatha Iyer, A. I. R. 1958 section C. 61 and Stephen Seneviratne vs The King, A. I. R. 1936 P. C. 289.
N.C. Chatterjee continued.
The judgment of the High Court suffers from certain serious infirmities and this Court should not act on the rigid principle that finding of fact should not be interfered with in the final court of appeal.
Sir William Scott 's dictum in Loveden vs Loveden, ; , as to " the guarded discretion of a reasonable and just man" does not mean there should be satisfactory evidence of the commission of a matrimonial offence.
Lord MacDermott has pointed out in Preston Jones vs Preston Jones, L. R. , that if a judge is satisfied beyond reasonable doubt as to the commission of the matrimonial offence relied on by the petitioner as ground for divorce, he must surely be "satisfied" within the meaning of the enactment, and no less so in cases of adultery where the circumstances are such as to involve the paternity of a child.
To succeed on an issue of adultery it is not necessary to prove the direct fact of, or even an act of adultery in time and place ; for if it were so, in many few cases would that proof be attainable.
It has been pointed out in a number of cases that rarely the parties are surprised in a direct act of adultery and such evidence will have to be disbelieved.
Rydon on Divorce, 6th Edn., P. 115; Douglas vs Douglas, In nearly every case the fact of adultery is inferred from circumstances which lead to it by fair inference as a necessary conclusion.
Unless it is so held there will absolutely be no protection to marital rights.
Allen vs Allen, [1894] p.248, approving Loveden vs Loveden.
Counsel then cited Davis vs Davis, In that case Bucknill, L. J., and Somervell, L. J., held that when husband petitions for divorce on the ground of wife 's cruelty, it is 1413 unnecessary to introduce any question of the standard of proof required of a criminal charge.
Denning, L. J., emphasised that a suit for divorce is a civil and not a criminal proceeding.
The same standard of proof as that required in criminal cases is not needed.
The stringency of proof required in a criminal court is not necessarily called for in divorce suit.
Lord Merriman 's dictum quoting Churchman vs Churchman, , that the same strict proof is required in the case of matrimonial offence as is required in connection with criminal offence has been too widely expressed and should be read in the light of later judgments.
Recent judgment of the Court of Appeal (Bucknill, L. T., and Denning, L. J.,) lays down the correct law in Gower vs Gower, , that the correct approach has been laid down by Denning, L. J., who observed that the court should not be irrevocably committed to the view that a charge of adultery must, be regarded a criminal charge, to be proved beyond all reasonable doubt.
All that the statute requires is that the court must be satisfied on the evidence that the case of the petitioner has been proved and it is submitted that Denning, L. J., has enunciated the correct principle and the statute lays down a standard and puts adultery on the same footing as cruelty, desertion or unsoundness of mind.
N. C. Chatterjee cited also Mordaunt vs Moncrieffe, section P. Varma, for the respondent.
The burden of proof is on the person alleging adultery and there is always a presumption of innocence.
In any event on a petition for divorce some strict proof is required of adultery as is required in a criminal case before a person is found guilty.
Ginesi vs Ginesi, Applying the dictum of Lord Merriman in Churchman vs Churchman, [19451 P. 44, the trial court was not satisfied of the guilt beyond all reasonable doubt.
It is for the trial judge to decide an issue of fact ; unless he has misdirected himself his finding should not be disturbed.
R. Patnaik, for co respondent No. 1.
Submitted that 1414 the evidence in the case falls far short of the standard of proof required.
March 10.
Tile Judgment of the Court was delivered by KAPUR J. This is an appeal with a certificate under section 56 of the Divorce Act (IV of 1869) (hereinafter called the Act) against a judgment and decree dated July 21, 1954, of the High Court of Patna dismissing the husband 's suit.
The husband who is the appellant sued his wife who is respondent No. I for dissolution of marriage on the ground of her adultery with two co respondents now respondents Nos. 2 and 3.
The suit was tried in the High Court by Shearer J., who dismissed the suit and this decree was on appeal confirmed by the Appeal Court.
The question as to the legality of the certificate granted was raised but in the view that we have taken it is not necessary to decide this question.
The husband was married to the wife at Kharagpur on February 3, 1,943, and there is no issue of the marriage.
The parties thereafter resided at "Rose Villa" at Samastipur and respondent No. 2 was residing with his mother in an adjoining house called " Sunny Nook".
The husband alleged various acts of adultery between the wife and the other two respondents.
As regards allegations of ' adultery of the wife with respondent No. 3, the High Court has found against the husband and these findings have not been challenged before us.
The allegations of adultery between the wife and respondent No. 2 were also held not proved.
In appeal before us the husband has confined his case to the acts of adultery alleged to have been committed at the Central Hotel, Patna where the wife and respondent No. 2 are alleged to have resided together between July 25, 1950 and July 28, 1950, under the assumed names of Mr. and Mrs. Charles Chaplin.
The wife pleaded that she came to Patna solely with the object of having her tooth extracted and returned to Samastipur the same day and that she had to come alone as in spite of her request the husband refused to accompany her.
1415 Respondent No. 2 pleaded that he came to Patna with his mother " in connection with seeking employment under the Superintendent Of Police, Anti Smuggling Department, also in connection with mother 's tooth trouble and for house hold shopping ".
He also pleaded that he stayed with his mother in the same room under his own name and not under an assumed name.
The trial judge found that the wife and respondent No. 2 and the latter 's mother stayed in two rooms in the Hotel Nos. 9 & 10 from July 25, 1950 to July 28, 1950.
He accepted the, testimony of the Manager of the Hotel, Cardoza P. W. 3 and also of the sweeper Kira Ram P. W. 4.
He found that the Wife and respondent No. 2 were seen by Kira Rain in room No. 10 and also that the party, i.e., the wife, respondent No. 2 and the latter 's mother were served morning tea in one room which they had together but he did not infer any acts of adultery from this conduct.
The document exhibit 8 dated November 22, 1950, but actually written earlier was held by the learned Judge to contain " a large substratum of truth ".
The Appeal Court (section K. Das C. J. and Ramaswami J.) agreed with the findings of the trial judge but they also were unable to draw the inference of the commission of adultery front the evidence.
In appeal it was contended that the findings of the courts below. were vitiated because certain pieces of ' evidence had been misread, some ignored and as a matter of legitimate and proper inference the court should not have arrived at any other conclusion but that the wife was guilty of adultery with respondent No. 2.
This Court will not ordinarily interfere with findings of fact given by the trial judge and the Appeal Court but if in giving the findings the Courts ignore certain important pieces of evidence and other pieces of evidence which are equally important are shown to have been misread and misconstrued and this Court comes to the conclusion that on the evidence taken as a whole no tribunal could properly as a matter of legitimate inference arrive at the conclusion that it has, interference by this Court will be called for.
(See 1416 State of Madras vs A. Vaidanatha Iyer Purvez Ardeshir Poonawala vs The State of Bombay(2); Stephen Seneviratne vs The King (3).
The Central Hotel, Patna, which is alleged to be the scene of adultery by the wife bad only 10 rooms, which were all single, but whenever necessary additional beds were put in.
At the relevant time M. C. Cardoza P. W. 3 was employed as its Manager, Kira Ram P. W. 4 as a sweeper, Abdul Aziz P. W. 5 and Usman Mian P. W. 6 as bearers.
Kira Ram identified the wife as the lady who had stayed at the hotel with respondent No. 2 but the other hotel servants although they were shown the photograph of the wife and also saw her in court were unable to recognize her as the person who stayed with respondent No. 2.
But they did identify him as the gentleman who had stayed in the hotel along with two ladies.
Examined by counsel Kira Ram stated: Q. " (Pointing out to the wife) I ask you, do you know this lady? A. Yes.
Did they ever visit your hotel? A. Yes.
Q. How long ago? A. About 9 or 10 months ago.
Q. How long did they stay there? A.
About 4 or 5 days.
What room did they occupy? A. Room No. 10 ".
He was unable to say as to the number of beds in room No. 10 nor is there any other evidence in regard to this.
He also stated : Q. " During their stay for these 4 or 5 days in your hotel, did you go to clean their bath room ? A. Yes.
Did you see them in that room whenever you went ? A.
Yes, whenever I used to go to sweep the room I found Memsaheb and Saheb there.
" (Questioned by the Court the witness said: Q. "Can you remember was there any other Memsaheb with these two? A.
There was another Memsaheb who lived in room No. 9.
What was she like young Memsaheb or what ? A.
She was not very old, but she was old." (1) A. T. R. , 64.
(2) Cr. A.
I 22 Of 1954, decided on December 20, 1957.
(3) A.I.R. 1936 P.C. 289, 299.
1417 And this obviously refers to respondent No. 2 's mother.
The evidence of Kira Ram therefore shows that the wife and respondent No. 2 occupied one room, room No. 10.
No question was put to this witness as to his hours of duty nor was the manager Cardoza asked anything about it but another witness Abdul Aziz bearer P.W. 5, was asked about it as follows: Q. " What are the hours of work of the sweeper ? A.
He comes at 7 a.m. and he leaves in the evening.
He sometimes goes away at about 11 and 11 30 a.m.or 12 noon".
Similarly no questions were put to Kira Ram about the state of habillement of the wife and respondent No. 2 and the witness never deposed about this fact.
The learned trial Judge erroneously thought that when Kira Ram spoke of the wife and respondent No. 2 lie " speaks as if ' they ' were fully dressed and not en deshabille " and the Appeal Court took this finding to be " as if this witness 's evidence showed that both of them were fully dressed".
The Appeal Court also seems to have misdirected itself in regard to the duty hours.
It said " the sweeper concedes that he was on duty from 6 a.m. to 11 a.m. " There is also evidence which has not been rejected that morning tea was served to all the three, i.e., the wife, respondent No. 2 and the mother of the latter in the same room.
The statement of Kira Ram that the wife and respondent No. 2 occupied the same room receives corroboration from exhibit 6 the hotel bill and receipt dated July 29, 1950 for room No. 10 in the name of Mr. and Mrs. Charles Chaplin.
This document even though contempo raneous with the events under consideration and strongly corroborative of Kira Ram 's evidence and of the statement of Cardoza that when Mr. and Mrs. Charles Chaplin "stayed in the hotel, they stayed in their own room " does not seem to have been brought to the notice of either of the Courts below.
Because of the infirmities pointed out above the import of the testimony of Kira Ram which has in the main been accepted by both the Courts below has been missed and its necessary consequences ignored.
1418 Then there is the evidence as to disappearance of the entry in the Hotel Visitor 's Book which was in the handwriting of respondent No. 2.
This entry was in the assumed name of Mr. and Mrs. Charles Chaplin from Hong Kong but when he (respondent No. 2) was asked to fill in the Foreigner 's form the entry was changed from Hong Kong to Samastipur.
The entry itself could not be produced in Court because as deposed by Cardoza, respondent No. 2 came to the hotel and by managing to send the hotel servant away from the room where the Visitor 's Book was kept, he tore off the pages containing this entry.
This fact receives support from the complaint which Cardoza made to the police on December 5, 1950, and the entry in regard to this complaint made in the Station House Diary of the same date.
Both these documents have been produced as Exs.
1/1 and 1/2.
The significance of this piece of evidence lies in the fact that it was done after the husband started collecting evidence of adultery and after lie and his sister had inspected the entry which according, to his statement was in the handwriting of respondent No. 2.
The reason of the wife 's visit to Patna was tooth trouble.
After her tooth was extracted she did not ,ice her Dentist again even though he had asked her to (lo so.
Her version is that she returned to Samastipur the same evening which the Courts below have not accepted.
Thus it shows that she stayed on at the Central Hotel, Patna for four days with respondent No. 2 without any reason being given by her and so far as the hotel bill and receipt exhibit 6 goes, the hotel charges for her stay were paid by " Charles Chaplin ", i.e., respondent No. 2 and not by her.
This fact has again escaped the notice of both the Courts below.
And this is more in consonance with guilt than innocence of the wife.
There are then the statements of J. A. Baker P.W. 8 and T.H. O 'Conior P.W. 9 to the effect that in September 1950, at the house of O 'Connor respondent No. 2 in the presence of these two witnesses boasted of his having had a good time with the wife and that she was a remarkable lady ".
Respondent No. 2 1419 had also love letters purporting to be from the wife, parts of which he read out to these witnesses.
They repeated the story to the husband which set him thinking.
Shearer J. held this part of the evidence to be true and the Appeal Court also accepted it but construed it as showing that there was no adulterous connection at that time, i.e., in September or it had ended at the instance of the wife.
Even as it is this finding is not destructive of the husband 's case as to adultery at Patna in the month of July; on the other hand it supports adulterous relations.
The presence of the mother of respondent No. 2 might have been a shield against the commission of adultery at Patna but the document exhibit 8 which has been accepted by the Courts below to have a substratum of truth just strips it away.
This document is indicative of the mother 's attitude towards the wife.
The following extract from this document is relevant as showing that she wanted the wife for her son: " How nice it would have been if you had married my son David '.
On another occasion while having tea along with her she begged me to leave my husband and go away with her son who was ruining his life and health and could not settle down to a job as he could not bear to see me married to another man.
" The presence of the mother would thus be no impediment to adulterous relations between the two.
The wife in the witness box wholly denied the episode of the Central Hotel including her stay there, which has deprived the Courts of her explanation.
We are, therefore unable to get any assistance from her or as a matter of that from respondent No. 2 as to what happened in the hotel at Patna.
The appellant contends that the only conclusion to be arrived at upon the evidence taken as a whole is that the wife was guilty of adultery with respondent No. 2.
In other words the evidence was in quality and quantity such that it satisfies the requirements of section 14 of the Act which provides: section 14 "In case the Court is satisfied on the 180 1420 evidence that the case of the petitioner has been proved. . . . . . . . . ." The important words requiring consideration are "satisfied on the evidence ".
These words imply that the duty of the Court is to pronounce a decree if satisfied that the case for the petitioner has been proved but dismiss the petition if riot so satisfied.
In section 4 of the English Act, Matrimonial Causes Act of 1937 the same words occur and it has been there held that the evidence must be clear and satisfactory beyond the mere balance of probabilities and conclusive in the sense that it will satisfy what Sir William Scott described in Loveden vs Loveden (1), as " the guarded discretion of ' a reasonable and just man ".
Lord MacDermott referring to the description of Sir William Scott said ' in Preston Jones vs Preston Jones (2): " The jurisdiction in divorce involves the status of the parties and the public interest requires that the marriage bond shall not be set aside lightly or without strict enquiry.
The terms of the statute recognise this plainly, and I think it would be quite out of keeping with the anxious nature of its provisions to hold that the court might be "satisfied " in respect of a ground for dissolution, with something less than proof beyond reasonable doubt.
I should, perhaps, add that I do not base my conclusion as to the appropriate standard of proof on any analogy drawn from the criminal law.
I do not think it is possible to say, at any rate since the decision of this House in Mordaunt vs Moncrieffe (3) that the two jurisdictions are other than distinct.
The true reason, as it seems to me, why both accept the same general standard proof beyond reasonable doubt lies not in any analogy but in the gravity and public importance of the issue with which each is concerned.
" The Act lays down in section 7 that Courts in all suits and proceedings under the Act shall act and give relief on principles and rules which in the opinion of the (1) ; , 649; (1810) 2 Hag.
Con. 1, 3.
(2) , 417.
(3) 1421 Court are as nearly as may be conformable to the principles and rules on which the Court for Divorce and Matrimonial Causes in England for the time being acts and gives relief.
In our opinion the rule laid down by the House of Lords would provide the principle and rule which Indian Courts should apply to cases governed by the Act and the standard of proof in divorce cases would therefore be such that if the judge is satisfied beyond reasonable doubt as to the commission of the matrimonial offence he would be satisfied within the meaning of section 14 of the Act.
The two jurisdictions, i.e., matrimonial and criminal are distinct jurisdictions but the terms of section 14 make it plain that when the Court is to be satisfied on the evidence in respect of matrimonial offences the guilt must be proved beyond reasonable doubt and it is on that principle that the Courts in India would act and the reason for adopting this standard of proof is the grave consequence which follows a finding of guilt in matrimonial causes.
Gower vs Gower (1) was pressed before us by counsel for the appellant as to the approach that the court should have to a matrimonial offence.
But in view of the decision in Preston Jones Case (2) it is unnecessary to discuss that case.
In a suit based on a matrimonial offence it is not necessary and it is indeed rarely possible to prove the issue by any direct evidence for in very few cases can such proof be obtainable.
The question to be decided in the present case therefore, is whether on the evidence which has been led, the court can be satisfied beyond reasonable doubt that adultery was committed by the wife with respondent No. 2 at Patna between July 25, 1950, and July 28, 1950.
In our opinion the facts proved are quantitatively and qualitatively sufficient to satisfy the test laid down by the House of Lords in Preston Jones Case (2).
The wife went to Patna and stayed with respondent No. 2 under an assumed name.
They occupied the same room, i.e., room No. 10.
There was undoubtedly a guilty inclination and passion indicated by the conduct of respondent No. 2 and there is no contrary indication as to (1) (2)[1951] A.C. 391, 417.
1422 the inclination and conduct of the wife.
On the other hand her conduct as shown by the evidence is so entirely consistent with her guilt as to justify the conclusion of her having committed adultery with respondent No. 2 and therefore the finding of the Courts below as to the guilt should be reversed.
We would, therefore, allow this appeal, set aside the judgment and decree of the High Court and pass a decree nisi for dissolution of marriage.
As adultery has been proved respondent No. 2 shall pay the costs in this Court and in the Courts below.
Appeal allowed.
| The appellant sued his wife for dissolution of marriage on the ground of her adultery.
On the evidence the trial court found that it was not possible to hold that adultery had been committed, though it found that one of the letters contained "a large substratum of truth".
The High Court in appeal concurred with the decision.
On appeal to the Supreme Court it was contended for the appellant that the finding of the courts below was vitiated because certain pieces of evidence had been misread, and some others ignored.
As a matter of legitimate and proper inference the Court should not have arrived at any other conclusion, but that the wife was guilty of adultery with respondent NO. 2.
The evidence showed that the wife went to Patna and stayed in a hotel with respondent NO. 2 under an assumed name, that they occupied the same room in the hotel, that the conduct of the respondent indicated a guilty inclination, and that so far as the wife was concerned, her conduct was entirely consistent with her guilt : Held, that, the nature of the evidence adduced was such as would satisfy the requirements of section 14 of the Divorce Act, and that the finding of the Courts below that an inference of adultery could not be drawn therefrom must be set aside.
Although it is not usual for the Supreme Court to interfere 1411 on questions of fact, where, however, the courts below ignore or misconstrue important pieces of evidence in arriving at their finding, and this Court is of the opinion that no tribunal could have come to such a finding oil the evidence taken as a whole, such finding was liable to be interfered with by this Court.
Held, further, that the words "satisfied on the evidence" in section 14 Of the Divorce Act, 1869, imply that it is the duty of the (Court to pronounce a decree only when it is satisfied that the case lhas been proved beyond reasonable doubt as to the commission of a matrimonial offence.
The evidence must be clear and satisfactory beyond mere balance of probabilities.
It is not neccessary and rarely possible, to prove the issue by any direct evidence.
The rule laid down in Preston Jones vs Preston Jones, , lays down the principle that should be followed by tile courts under section 7 Of the Divorce Act.
State of Madras vs A. vaidanatha Iyer; , , Purvez Ardeshir Poonawala vs The State of Bombay, Cr. A. 122 Of 1954, decided on December 20, 1957, Stephen Seneviratne vs The A.I.R. 1936 P.C. 289, Mordaunt vs Moncrieffe, (1874) 30 649 and Gower vs Gower [1950] 1 All.
E.R. 804, referred to.
Loveden vs Loveden, ; (1810) 2 Hag.
1,3, referred to.
Preston Jones vs Preston Jones, , relied upon.
|
Summarize this legal judgement text concisely | 249 of 1956.
Under Article 32 of the Constitution of India for the enforcement of Fundamental Rights.
R. Ramamurthi Aiyar and B. K. B. Naidu, for the petitioners.
Purshottam Tricumdas, P. Ramaswamy, Advocate, 2 Bombay High Court, with special permission and 1.
N. Shroff, for the respondent No. 1.
Y. Kumar, for the interveners.
C. K. Daphtary, Solicitor General of India and B. Sen, for the Attorney General of India (To assist the Court).
March 19.
The following Judgment of the Court was delivered by GAJENDRAGADKAR J.
This is an application under article 32 of the Constitution.
The petitioner is a private limited company having its registered office at No. 201, Mount Road, Madras.
The company is the, proprietor of a daily newspaper called " The Hindu " which is published at Madras and has a large circulation in India and abroad.
The shareholders of the company are all citizens of India.
The first respon dent, Shri N. Salivateeswaran, is a journalist of Bombay and he has been supplying news to various newspapers and journals one of which was the Hindu.
The supply of news by the first respondent to the Hindu was under an agreement under which he was being paid a fixed monthly honorarium.
Contrary to the advice and instructions of the petitioner, the first respondent left India for Zurich on May 1, 1956.
The petitioner thereupon relieved him of his duties and terminated with effect from March 1, 1956, the arrangement under which he was supplying news to the Hindu.
He returned to India in July 1956, and requested the petitioner to reconsider its decision; but the petitioner did not think that any case for reconsideration had been made out.
Thereupon the first respondent made an application to the Labour Minister of the State of Bombay under section 17 of the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955 (Act 45 of 1955), hereinafter referred to as the act.
On receiving this application the State of Bombay nominated Shri M. R. Meher, 1.
C. section (Retired), second respondent, as the authority under section 17 of the act for the purpose of enquiry into the first respondent 's application and requested him to examine the claim made by the first 3 respondent and, in case he was satisfied that any money was due, to issue a certificate for that amount to the Collector of Bombay for further action as provided under section 17.
A copy of the application was served on the petitioner by order of the second respondent; and a covering letter addressed to the petitioner called upon him to file his written statement in reply to the first respondent 's claim.
By his application the first respondent had claimed a sum of Rs. 1,57,172 8 0 from the petitioner.
In his written statement, the petitioner disputed the whole of the claim made by the first respondent and traversed all the material allegations made by him in support of his claim.
The petitioner also contended that the second respondent had no jurisdiction to go into the matters arising from the first respondent 's application.
It was also urged by the petitioner alternatively that, even if the second respondent had jurisdiction to deal with the matter, he had the discretion to decline to consider the matter and leave it to be tried in the ordinary courts.
The petitioner requested the second respondent to exercise his discretion and direct the first respondent to establish his claim in the appro priate civil court.
The petitioner 's written statement was filed on October 18, 1956.
The second respondent decided to deal with the question of jurisdiction as a preliminary issue.
He heard both the parties on this preliminary issue and, by his order dated November 12, 1956, he recorded his conclusion that he had jurisdiction to deal with the matter and that it was unnecessary to direct the first respondent to establish his claim in the ordinary civil court.
Accordingly the matter was adjourned to December 1, 1956, for hearing on the merits.
It is this order which is challenged by the petitioner before us by his present petition under article 32 of the Constitution.
The petitioner 's case is that section 17 of the act provides only for a mode of recovery of any money due to a working journalist.
It does not empower the State Government or the authority specified by the State Government to act as a forum for adjudicating 4 upon the merits of the disputed claim.
That being so, the second respondent has no jurisdiction to deal with the merits of the first respondent 's claim against the petitioner.
In the alternative, the petitioner contends that,if section 17 confers jurisdiction on the State Government or the authority specified by the State Government to adjudicate upon disputed claims mentioned in the said.
section, the said section would be ultra vires and void.
On these alternative pleas, two alternative reliefs are claimed by the petitioner.
The first relief claimed is that a writ in the nature of the writ of prohibition or other suitable writ or direction be issued restraining the second respondent from exercising any powers under section 17 of the act and proceeding with the enquiry into the application filed by the first respondent and forwarded to him by the State Government and issue him a certificate.
The other relief claimed is that this court should be pleased to order and direct that section 17 of the act is ultra vires and void on the grounds set out in the petition.
It would be necessary and convenient to construe section 17 of the act first and determine its true scope and effect.
The larger question about the vires of this act and the validity of the decision of the Wage Board set up by the Central Government under section 8 of the act have been considered by us in the several petitions filed by several employers in that behalf before this Court.
We have held in those petitions that, with the exception of section 5 (1) (a) (iii) which deals with the payment of gratuity to employees who voluntarily resign from service, the rest of the act is valid.
That is why the question about the vires of section 17 need not be considered in the present petition over again.
The main point which remains to be considered, however, is: Does section 17 constitute the State Government or the authority specified by the State Government into a forum for adjudicating upon the merits of the claim made by newspaper employee against hip, employer under any of the provisions of this act ? Section 17 provides: " Where any money is due to a newspaper employee from an employer under any of the provisions 5 of this Act, whether by way of compensation, gratuity or wages, the newspaper employee may, without prejudice to any other mode of recovery, make an application to the State Government for the recovery of the money due to him, and if the State.
Government or such authority as the State Government may specify in this behalf is satisfied that any money is so due, it shall issue a certificate for that ' amount to the collector and the collector shall proceed to recover that amount in the same manner as an arrear of land revenue.
" It is clear that the employee 's claim against his employer which can form the subject matter of an enquiry under section 17 must relate to compensation awardable under section 4 of the act, gratuity awardable under section 5 of the act, or wages claimable under the decision of the Wage Board.
If the employee wishes to make any other claim against his employer, that would not be covered by section 17.
As the marginal note shows, the section deals with the recovery of money due from an employer.
The employee contends that the process of recovery begins with the making of an application setting out the claim and ends with the actual recovery of the amount found due.
On this construction, the dispute between the employee and his employer in regard to any claim which the employee may make against his employer would fall to be determined on the merits right up from the start to the issue of the certificate under this section.
In other words, if a claim is made by the employee and denied by the employer, the merits of the claim together with the other issues that may arise between the parties have to be considered under this section.
On this argument section 17 provides a self contained procedure for the enforcement of the claims covered by it.
On the other hand, the case for the petitioner is that the section provides for a procedure to recover the amount due from an employer, not for the determination of the question as to what amount is due.
The condition precedent for the application of section 17 is a prior determination by a competent authority or the 6 court of the amount due to the employee from his employer.
It is only if and after the amount due to the employee has been duly determined that the stage is reached to recover that amount and it is at this stage that the employee is given the additional advantage provided by section 17 without prejudice to any other mode of recovery available to him.
According to this view, the State Government or the authority specified by the State Government has to hold a summary enquiry on a very narrow and limited point: Is the amount which is found due to the employee still due when the employee makes an application under section 17, or, has any amount been paid, and, if yes, how much still remains to be paid? It is only a limited enquiry of this type which is contemplated by section 17.
Within the scope of the enquiry permitted by this section are not included the examination and decision of the merits of the claim made by the employee.
When the section refers to the application made by the employee for the recovery of the money due to him, it really contemplates the stage of execution which follows the passing of the decree or the making of an award or order by an appropriate court or authority.
In our opinion, the construction suggested by the petitioner should be accepted because we feel that this construction is more reasonable and more consistent with the scheme of the act.
It is significant that the State Government or the specific authority mentioned in section 17 has not been clothed with the normal powers of a court or a tribunal to hold a formal enquiry.
It is true that section 3, sub section
(1) of the Act provides for the application of the , to or in relation to working journalists subject to sub section
(2); but this provision is in substance intended to make working journalists workmen within the meaning of the main .
This section cannot be read as conferring on the State Government or the specified authority mentioned under section 17 power to enforce attendance of witnesses, examine them on oath, issue commission or pass orders in respect of discovery and inspection such as can be passed by the boards, courts 7 or tribunals under the .
It is obvious that the relevant provisions of section 11 of the , which confer the said powers on the conciliation officers, boards, courts and tribunals cannot be made applicable to the State Government or the specified authority mentioned, under section 17 merely by virtue of section 3(1) of the act.
In this connection, it would be relevant to remember that section 11 of the act expressly confers the material powers on the Wage Board established tinder section 8 of the Act.
Whatever may be the true nature or character of the Wage Board whether it is a legislative or an administrative body the legislature has taken the precaution to enact the enabling provisions of section 11 in the matter of the said material powers.
It is wellknown that, whenever the legislature wants to confer upon any specified authority powers of a civil court in the matter of holding enquiries, specific provision is made in that behalf.
if the legislature had intended that the enquiry authorised under section 17 should include within its compass the examination of the merits of the employee 's claim against his employer and a decision on it, the legislature would undoubtedly have made an appropriate provision conferring on the State Government or the specified authority the relevant powers essential for the purpose of effectively holding such an enquiry.
The fact that the legislature has enacted section 11 in regard to the Wage Board but has not made any corresponding provision in regard to the State Government or the specified authority under section 17 lends strong corroboration to the view that the enquiry contemplated by section 17 is a summary enquiry of a very limited nature and its scope is confined to the investigation of the narrow point as to what amount is actually due to be paid to the employee under the decree, award, or other valid order obtained by the employee after establishing his claim in that behalf.
We are reluctant to accept the view that the legislature intended that the specified authority or the State Government should hold a larger enquiry into the merits of the employee 's claim without conferring on the State Government or the 8 specified authority the necessary powers in that behalf.
In this connection, it would be relevant to Point out that in many cases some complicated questions of fact may arise when working journalists make claims for wages against their employers.
It is not unlikely that the status of the working journalist, the nature of the office he holds and the class to which he belongs may themselves be matters of dispute between the parties and the decision of such disputed questions of fact may need thorough examination and a formal enquiry.
If that be so it is not likely that the legislature could have intended that such complicated questions of fact should be dealt with in a summary enquiry indicated by section 17.
Section 17 seems to correspond in substance to the provisions of section 20, sub section
(1) of the Industrial Disputes (Appellate Tribunal) Act, 1950, which has now been repealed.
Under this section, any money due from an employer under any award or decision of an industrial tribunal may be recovered as arrears of land revenue or as a public demand by the appropriate Government on an application made to it by the person entitled to the money under that award or decision.
It is clear that the proceedings under section 20, sub section
(1) could commence only if and after the workman had obtained an award or decision in his favour.
We are inclined to think that the position under section 17 is substantially similar.
In this connection we may also refer to the provisions of section 33C of the (14 of 1947).
sub section
(1) of section 33C has been added by Act 36 of 1956 and is modelled on the provisions of section 17 of the present Act.
Section 33C, sub section
(2), however, is more relevant for our purpose.
Under section 33C, sub section
(2), where any workman is entitled to receive from his employer any benefit which is capable of being computed in terms of money, the amount at which such benefit may be computed may, subject to any rules made under this act, be determined by such Labour Court as may be specified in this behalf by the appropriate Government, and the amount so determined should be recovered as provided for in 9 sub section
Then follows sub section
(3) which provides for an enquiry by the Labour Court into the question of computing the money value of the benefit in question.
The Labour Court is empowered under this sub section to appoint a commissioner who shall, after taking such evidence as may be necessary, submit a report to the Labour Court, and the Labour Court shall determine the amount after considering the report of the commissioner and other circumstances of the case.
These provisions indicate that, where an employee makes a claim for some money by virtue of the benefit to which he is entitled, an enquiry into the claim is contemplated by the Labour Court, and it is only after the Labour Court has decided the matter that the decision becomes enforceable under section 33C(1) by a summary procedure.
It is true that, in the present case, the Government of Bombay has specified the authorities under the Payment of Wages Act and the as specified authorities under section 17 to deal with applications of newspaper employees whose wages are less than Rs. 200 per month or more respectively; but there can be no doubt that, when the second respondent entertained the first respondent 's application, he was acting as the specified authority under section 17 and not as an industrial tribunal.
It is clear that, under section 17, the State Government would be entitled to specify any person it likes for the purpose of holding an enquiry under the said section.
The powers of the authority specified under section 17 must be found in the provisions of the act itself and they cannot be inferred from the accidental circumstance that the specified authority otherwise is a member of the industrial tribunal; since there is no provision in the act which confers on the specified authority the relevant and adequate powers to hold a. formal enquiry, it would be difficult to accept the position that various questions which may arise between the working journalists and their employers were intended to be dealt with in a summary and an informal manner without conferring adequate powers on the 2 10 specified authority in that behalf.
The second respondent himself was impressed by this argument but he was inclined to hold that the necessary power could be assumed by him by implication because he thought that, in the absence of such implied power, his jurisdiction under section 17 could not be effectively exercised.
In our opinion, this approach really begs the question.
If the legislature did not confer ad.
equate powers on the specified authority under section 17, a more reasonable inference would be that the nature and scope of the powers under section 17 is very limited and the legislature knew that, for holding such a limited and narrow enquiry, it was unnecessary to confer powers invariably associated with formal and complicated enquiries of a judicial or quasi judicial character.
We must accordingly hold that the second respondent had no jurisdiction to entertain the first respondent 's application at this stage.
It appears from the order made by the second respondent that he took the view that, though he had jurisdiction to deal with the application, it would have been open to him to refuse to exercise that jurisdiction and to direct the first respondent to establish his claim in the ordinary civil court.
He, however, thought that he need not exercise that power in the present case.
We are satisfied that the second respondent was in error in both these conclusions.
If he had jurisdiction to deal with this matter under section 17, it is difficult to appreciate how, in the absence of any provision in that behalf, he could have directed the first respondent to establish his claim in the ordinary civil court.
Such an order would clearly have amounted to the second respondent 's failure to exercise jurisdiction vested in him.
Besides, if section 17 had really given him discretion in this matter as assumed by the second respondent, on the merits of this case it would obviously have been a case which should have been referred to the ordinary civil court.
This, however, is now a matter of purely academic interest.
The question which still remains to be considered is: What would be the proper order to make on the present petition in view of our conclusion that the 11 second respondent had no jurisdiction to entertain the first respondent 's application.
The present petition purports to invoke our jurisdiction under article 32 of the Constitution and it was a valid and competent petition in so far as it challenged the vires of section 17 itself; but, once section 17 is held to be valid and in order, the competence of the petition under article 32 is naturally open to serious jeopardy.
No question about the fundamental rights of the petitioner is involved and his grievance against the order passed by the second respondent cannot be ventilated by a petition under article 32.
This position is fairly conceded by the learned counsel for the petitioner.
He, however, argued that, if we construe section 17 in his favour and hold that the second respondent had no jurisdiction to entertain the first respondent 's application, his purpose would be effectively served even though technically his petition may ultimately be dismissed on the ground that it is not competent under article 32 of the Constitution.
In our opinion, there is considerable force in this contention.
We would accordingly hold that the second respondent has no jurisdiction to entertain the first respondent 's application; but, since the petition itself is not competent under article 32, we would direct that the petition fails on this technical ground and must be dismissed.
There would be no order as to costs.
Petition dismissed.
| The respondent No. I was a journalist supplying news to the petitioner 's newspaper on payment of a fixed monthly honorarium.
Contrary to the petitioner 's instructions the respondent No. I left India and thereupon the petitioner terminated the arrangement.
Upon his return to India the respondent No. I requested the petitioner to reconsider its decision but the petitioner declined to do so.
The respondent No. I applied to the State Government under section 17 Of tile Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955 claiming a large sum of money from the petitioner.
The State Government nominated respondent NO. 2 as the authority under section 17 of the Act and referred the claim to him.
The petitioner disputed the whole claim and contended that the respondent NO. 2 had no jurisdiction to adjudicate upon the merits of the disputed claim: Held, that the authority specified under section 17 of the Act had no jurisdiction to determine the amount due as the section merely provided for a procedure to recover an amount from the employer which had previously been determined by a competent authority or court.
If the legislature had intended that the enquiry under section 17 should include the examination of the merits of the claim and a decision thereon, it would have made appropriate provisions conferring upon the State Government or the specified authority the relevant powers essential for the purpose of effectively holding such an enquiry; but no such powers had been conferred.
|
Summarize this legal judgement text concisely | ence No. 1 of 1958.
Reference by the President of India under Article 143(1) of the Constitution of India on the Kerala Education Bill, 1957.
The circumstances which led to this Reference by the President and the questions referred appear from the full text of the Reference dated March 15, 1958, which is reproduced below: WHEREAS the Legislative Assembly of the state of Kerala has passed a Bill to provide for the better Organisation and development of educational institutions in the State of Kerala (hereinafter referred to as the Kerala Educational Bill); AND WHEREAS the said Bill, a copy whereof is annexed hereto, has been reserved by the Governor of Kerala, under article 200 of the Constitution, for my consideration ; AND WHEREAS sub clause 3 of clause (3) of the said Bill enables the Government of Kerala, inter alia, to recognise any school established and maintained by any person or body of persons for the purpose of providing the facilities set out in sub clause (2) of the said clause to wit, facilities for general education, special education and for the training of teachers ; AND WHEREAS sub clause (5) of clause 3 of the said Bill provides, inter alia, that any new school established or any higher class opened in any private school, after the Bill has become an Act and the Act has come into force, otherwise than in accordance with the provisions of the Act and the rules made under section 36 thereof, shall not be entitled to be recognised by the Government of Kerala; AND WHEREAS a doubt has arisen whether the provisions of the said sub clause (5) of clause 3 of the said Bill confer upon the Government an unguided 1002 power in regard to the recognition of new schools and the opening of higher classes in any private school which is capable of being exercised in an arbitrary and discriminatory manner; AND WHEREAS a doubt has further arisen whether such power of recognition of new schools and of higher classes in private schools is not capable of being exercised in a manner affecting the right of the minorities guaranteed by clause (1) of article 30 of the Constitution to establish and administer educational institutions of their choice; AND WHEREAS sub clause (3) of clause 8 of the said Bill requires all fees and other dues, other than special fees, collected from the students in an aided school to be made over to the Government of Kerala in such manner as may be prescribed, notwithstanding anything contained in any agreement, scheme or arrangement ; AND WHEREAS a doubt has arisen whether such requirement would not affect the right of the minorities guaranteed by clause (1) of article 30 of the Constitution to administer educational institutions established by them; AND WHEREAS clauses 9 to 13 confer upon the Government certain powers in regard to the administration of aided schools;, AND WHEREAS a doubt has arisen whether the exercise of such powers in regard to educational institutions established by the minorities would not affect the right to administer them guaranteed by clause (1) of article 30 of the Constitution; AND WHEREAS clause 15 of the said Bill empowers the Government of Kerala to take over, by notification in the Gazette, any category of aided schools in any specified area or areas, if they are satisfied that for standardising general education in the State of Kerala or for improving the level of literacy in any area or for more effectively managing the aided educational institutions in an area or for bringing education of any category under their direct control it is necessary to do so in the public interest, on 1003 payment of compensation on the basis of market value of the schools so taken over after deducting therefrom the amounts of aids or grants given by that Government for requisition, construction or improvement of the property of the schools; AND WHEREAS a doubt has arisen whether such power is not capable of being exercised in any arbitrary and discriminatory manner; AND WHEREAS clause 33 of the said Bill provides that, notwithstanding anything contained in the Code of Civil Procedure, 1908, or any other law for the time being in force, no courts can grant any temporary injunction or make any interim order restraining any proceedings which is being or about to be taken under the Act; AND WHEREAS a doubt has arisen whether the provisions of the said clause 33, in so far as they relate to the jurisdiction of the High Courts, would offend article 226 of the Constitution ; AND WHEREAS there is likelihood of the constitutional validity of the provisions of the Bill herein before referred to being questioned in courts of law, involving considerable litigation ; AND WHEREAS, in view of what has been here in before stated, it appears to me that the questions of law hereinafter set out have arisen and are of such nature and of such importance that it is expedient that the opinion of the Supreme Court of India should be obtained thereon; NOW, THEREFORE, in exercise of the powers conferred upon me by clause (1) of article 143 of the Constitution, 1, Rajendra Prasad, President of India, hereby refer the following questions to the Supreme Court of India for consideration and report thereon, namely : " (1) Does sub clause (5) of clause 3 of the Kerala Education Bill, read with clause 36 thereof, or any of the provisions of the said sub clause, offend article 14 of the Constitution in any particulars or to any extent ? (2) Do sub clause (5) of clause 3, sub clause (3) of 1004 clause 8 and clauses 9 to 13 of Kerala Education Bill or any provisions thereof, offend clause (1) of article 30 of the Constitution in any particulars or to any extent? (3) Does clause 15 of the Kerala Education Bill, or any provisions thereof, offend article 14 of the Constitution in any particulars or to any extent ? (4) Does clause 33 of the Kerala Education Bill, or any provisions thereof, offend article 226 of the Constitution in any particulars or to any extent ? " 1958.
April 29, 30.
May 1, 2, 5, 6, 7, 8, 9 and 12.
Setalvad, Attorney General for India, C. K. Daphtary, Solicitor General of India, H. N. Sanyal, Additional Solicitor General of India, G. N. Joshi and R. H. Dhebar, for the President of India.
The preamble to the Constitution of India lays emphasis on liberty of thought, expression, belief, faith and worship and assures the dignity of the individual.
To give effect to these ideals the Constitution provides fundamental rights for the individuals in articles 19, 25 and 28 and for groups in articles 26, 29 and 30.
The fundamental rights in articles 29 and 30 are absolute and no restrictions can be placed on them, though restrictions can be placed on other fundamental rights.
These rights may be compared with the rights under article 44 (2) of the Irish Constitution and section 93 of the British North America Act.
The freedoms conferred by articles 26, 29 and 30 were considered by this Court in The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mulutt, ( ; at 1028 1029) and The State of Bombay vs Bombay Education Society, ( ; at 578, 580, 586).
Article 30 (1) gives absolute right to the minorities to establish and administer educational institutions of their choice.
The Constitution having ensured religious freedom under article 26 and cultural freedom in article 29, left the means to promote and conserve these freedoms to the minorities themselves to work out under article 30 (1).
Clause 3 (5) of the Kerala Education Bill which provides that the establishment of new schools and opening of higher classes shall be according to the Rules to 1005 be framed under cl. 36 to entitle them to be recognised by the Government, confers upon the executive unguided and uncontrolled powers and offends article 14.
The ' legislature does not lay down any policy, but leaves it to the executive tinder the rule making powers.
A. Thangal Kunju Musaliar vs M. Venkitachalam Potti, ([1955] 2 S.C.R. 1196 at 1239, 1241); The State of West Bengal vs Anwar Ali Sarkar, ([1952] S.C.R. 284 at 345, 346).
It is incorrect to say that Christians and Muslims are not minorities in Kerala.
When the Constitution speaks of minorities it speaks on an all India basis.
The fact that a certain community formed a very high percentage of the population in a particular State did not detract from its status as a minority.
The provisions of the Bill make illusory the rights granted by article 30 (1) to minorities.
By using the instrument of Government aid the Bill seeks to deprive the minorities of their right to administer their own schools.
Shirur Mutt Case, ( ; at 1028, 1029).
The right of the minorities under article 30(1) to establish and administer their institutions is an absolute and unfettered right and is consistent with their getting aid from the Government.
Article 337 makes special pro vision for educational grants for the benefit of the Anglo Indian community.
Article 30 (1) is infringed whether the schools go in for aid or not.
Clause 8 (3) of the Bill under which in all aided schools all fees, etc., collected from the students will have to be made over to the Government deprives the management of the right of administration.
Pierce vs Society of Holy Sisters Names, ; at 1077); Maher vs Nebraska, ; at 1044).
Clause 15 of the Bill empowers the Government to acquire any category of aided schools in any specified area.
This clause is wholly subversive of article 30 (1).
It also offends article 14 as it empowers the Government to pick and choose any schools, by suitably selecting the category and area, for acquisition, no criteria having been laid down for making the choice.
Clause 33 of the Bill prohibits all Courts from 1006 granting any temporary injunction or interim order regarding any proceedings taken under the Act.
To the extent that this clause infringes article 226 or article 32, it is void.
Interim orders are also passed under articles 226 and 32 as ancillary to the main relief.
The State of Orissa vs Madan Gopal Rungta, ( [1952] S.C.R. 28 at 34).
Halsbury 's Laws of England, 3rd Edn., Vol.
11, p. 110, para.
Kaslival, Advocate General of Rajasthan, R.H. Dhebar and T. M. Sen, for the State of Rajasthan adopted the arguments of the Attorney General for India.
G. section Pathak, with M. R. Krishna Pillai for the Kerala Christian Education Action Committee, with J. B. Dadachanji for the Kerala School Managers Association and with V. O. Abraham and J. B. Dadachanji for the Aided School Managers ' Association in Badogara and Quilandy, Catholic Union of India and Catholic Association of Bombay.
The preamble to the Constitution speaks of securing to the citizens of India fraternity assuring the dignity of the individual and the unity of the Nation.
Articles 25 to 30 have been framed to secure this unity.
article 30 is in absolute terms and does not permit regulation or restriction of the rights conferred by it. " Their choice " in article 30 cannot be controlled by the State.
It has been the normal method of running the minority institutions with aid and recognition.
Implict in article 30(1) is the right of a parent or guardian to impart such education this children as he likes.
Bombay Education Society vs The State of Bombay, at 653).
It is the right of every person of the minority community to educate his children in school administered by that community.
The State of Bombay vs Bombay Education Society, ; at 586).
The word " administer should be interpreted as in ; at 1076, 67 L. Ed. 1042 at 1045 and ; at 647.
The ordinary dictionary meaning of administer is ' to manage ' or 'carry on '.
The legislature cannot even indirectly infringe the fundamental rights.
Dwarkadas Shrinivas vs The Sholapur Spinning and Weaving Co. Ltd., ( ; at 683); 1007 Punjab Province vs Daulat Singh, ( 73 1.
A. 59) ; The State of Bombay vs Bombay Education Society, ( [1955] 1 section C. R. 568 at 583).
American Jurisprudence, Vol.
11, p. 724, See.
The whole scheme of the Bill is to secularise education and, thus it infringes the fundamental rights guaranteed under article 30.
Clause 3 of the Bill which requires permission to be obtained to establish a school, cl. 10 which empowers the Government to prescribe qualifications of teachers in minority community schools and cl. 26 which makes it obligatory on parents to send their children to Government or aided schools where compulsory education is in force, all offend article 30.
Similarly cls.
6, 7, 8, 11, 12, 14, 15 and 28 are destructive of this fundamental right.
Frank Anthony and P. C. Aggarwala, for the All India Anglo Indian Association and for the Apostolic Carmel Education Society and Roman Catholic Diocese.
Under article 143 this Court has the discretion to refuse to answer the reference.
In Re Allocation of Lands and Buildings, ( [1943] F. C. R. 20 at 22).
The present reference is most incomplete and wholly unsatisfactory and the Court should, following Zafrullah Khan J. in In re Levy of Estate Duty, ( at 334, 335), decline to answer it.
The reference is incomplete as this Court has been asked to examine whether certain provisions of the Bill offend certain specified fundamental rights though actually those provisions offend other fundamental rights also.
There are several important provisions in the Bill, which have not specifically been referred, which also offend fundamental rights.
Such a reference is unfair to the Court and deadly to my clients.
If this Court is in favour of giving its opinion on the reference, the scope thereof should be extended to include all objections to the validity of the provisions of the Bill, and this Court has inherent jurisdiction to do so.
Anglo Indian schools occupy a special position.
Article 30(1) gives to the Anglo Indian community the fundamental right to establish educational institutions of their choice.
These fundamental rights were not subject to any social control.
The object of the 128 1008 Kerala Education Bill was to strike at the Christian Church, especially the Catholics, to eliminate their religion, to take away their property, to eliminate all education agencies other than those of the State so that the State may regiment education and indoctrinate children.
The Bill which sought to implement directive principles of State policy in article 45 by providing for free and compulsory education infringed article 30(1).
Directive principles must yield to fundamental rights.
The State of Madras vs Sm.
Champakam Dorairajan, ([1951] section C. R. 521 at 531).
The State cannot compel minority educational institutions not to charge fees for primary classes.
This compulsion coupled with the embargo imposed by the Bill on children going to schools not recognised by the Government would extinguish the choice of the minorities guaranteed by article 30.
Recognition was part of the right of the minorities under article 30.
Article 337 provides for special grants or aids to educational institutions run by Anglo Indians and the State cannot take that away or place conditions or restrictions on it.
Clause 3(5) of the Bill infringes both article 30(1) and article 14.
It discriminates between existing schools which could continue to charge fees and primary classes and new schools which cannot charge such fees if they want to be recognised.
The conditions imposed on the opening of new schools by the minorities are such that they deprive them of the right under article 30(1).
Nur ud Din Ahmed, section section Shukla and P. C. Aggarwala, for the All India Jamiat ul ulema e Hind.
The Bill seeks to achieve nationalisation of educational institutions and thus to deprive the minorities of their right to establish and administer schools of their own choice under article 30.
This right includes the right of the minorities to receive aid and also get Government recognition of their schools without any restrictions.
The provisions of the Bill gives powers to the State without laying down the basis and standards for the exercise of that power.
1009 G. C. Mathur and C. P. Lal for the state of U. P. adopted the arguments of the Attorney General for India.
B. K. B. Naidu, for the Kerala State Muslim League adopted the arguments of G. section Pathak and Frank Anthony.
D.N. Pritt, Sardar Bahadur and C. M. Kuruvilla, for the State of Kerala.
The questions referred to the Court by the President arose out of certain doubts entertained by the President in respect of certain provisions of the Bill.
If the President did not entertain certain other doubts, the parties cannot insist that the President must have had those other doubts also.
The Court has no power to go beyond those questions which are raised in the reference.
The State of Kerala wants the Court to reply to all the four questions referred and it would abide by the view which the Court will express on these questions.
The Kerala Education Bill is a progressive piece of legislation which seeks to provide a better organisation and development of educational institutions in the State, and a varied and comprehensive educational service throughout the State.
It seeks to provide employment to about 70,000 teachers and to give security to the teachers.
The Bill also seeks to implement the directive principles of State policy in article 45 by providing for free and compulsory primary education for all.
The Bill lays down a clear principle and policy, as stated in its objects, to provide for the better organisation and development of education.
This is further made clear by the preamble which seeks to provide for a varied and comprehensive educational service throughout the State.
Nationalisation which could have been easily and lawfully achieved was not the policy adopted by the State.
Its policy was to maintain the three different categories of schools, the Government run schools, the private aided schools and the private schools recognised by the Govern ment.
The Court could not get a complete picture until the rules were framed.
The framing of the 1010 rules had necessarily to be left to the Government. 'a Such I delegated legislation ' is an integral and inevitable part of a modern State power.
Clause 3(5) of the Bill read with cl. 36 does not violate article 14.
Jadunandan Yadav vs R. P. Singh (A. I. R. 1958 Pat.
43 at 47); Biswambhar Singh vs The State of Orissa ([1954] section C. R. 842); Pannalal Binjraj vs Union of India, ( ; at 248, 256, 262); Sardar Inder Singh vs The State of Rajasthan ( [1957] section C. R. 605).
The rules to be framed by the Government would go for scrutiny before the same legislature which passed the Bill and when passed by the legislature the rules will become part of the Act.
This was not really delegated legislation but legislation in two stages.
In order to protect certain privileges of minorities the State cannot discard the glorious principles of free and compulsory education.
The rights of minorities cannot destroy the rights of citizens to universal free education.
If the minorities want Government aid and recognition for their schools, they could be granted on the general terms and conditions applicable to others.
The words I of their choice ' cannot be interpreted to mean the establishment of schools with the aid of the tax payer 's money and also with the assurance of enough pupils to attend those schools.
Christians and Muslims are not minorities in Kerala.
Christians, forming the second largest community, constituted one fourth of the population, while Muslims, forming the third largest community, constituted one seventh of the total population.
Minorities in the context of the educational rights guaranteed under the Constitution mean only those sections of the population in particular areas of a State who are in a minority, and not those who can be regarded as minorities in the country as a whole.
The only minority community in Kerala which can claim the benefit of article 30(1) are the Jews, who do not choose to have their own educational institutions.
Schools run by minorities in Kerala were not strictly minority schools as envisaged by article 30(1) as they were not run mainly for the children of the 1011 minority community.
In most of these schools at least 75 per cent.
of the students were from non minorities.
Article 30(1) contemplates schools for the education of members of the minority communities only.
Right of the minority communities to establish and administer institutions of their choice does not include the right to receive aid and recognition on their own terms.
Article 30(2) only prohibited the State from discriminating against any educational institution on the ground of religion or language.
In order to attract the operation of article 30(1) it should be established that there is a minority community, that it has established an educational institution and that the educational institution is run for the education of the members of that community.
Ramani Kanta Bose vs The Gauhati University (I. L. R. [1951] Ass.
348 at 352).
Not one of these conditions is fulfilled in any of the educational institutions in the State.
The choice in article 30(1) lies in the establishment of a school and not in its management.
The provisions of the Bill relating to the establishment and recognition of schools, restrictions on alienation of school property, appointment of managers, selection of teachers by the State Public Service Commission and the taking over the management of the schools in public interest are all reasonable conditions imposed to ensure better Organisation of education and security of service conditions to the teachers.
The category of schools in respect of which the power of acquisition can be exercised under cl. 15 of the Bill comes under a classification which differentiates it from those other categories which are excluded from classification being such as is calculated to further the purposes and the policy underlying the legislation.
Clause 15 does not infringe article 14 at all.
In enacting cl. 33 of the Bill the State Legislature did not intend, and must be presumed not to have intended, to affect the operation of article 226 in any way.
section Easwara Iyer and K. R. Chaudhury, for the Kerala Private Secondary School Office Staff 1012 Association and Kerala Private Teachers ' Federation, adopted the arguments of D. N. Pritt.
May 22.
The opinion of Das C. J., Bhagwati, B. P. Sinha, Jafer Imam, section K. Das and J. L. Kapur, JJ. was delivered by Das C. J. Venkatarama Aiyar J. delivered a separate opinion.
DAS C. J.
This reference has been made by the President under article 143 (1) of the Constitution of India for the opinion of this Court on certain questions of law of considerable public importance that have arisen out of or touching certain provisions of the Kerala Education Bill, 1957, hereinafter referred to as "the said Bill", which was passed by the Legislative Assembly of the State of Kerala on September 2, 1957, and was, under article 200, reserved by the Governor of Kerala for the consideration of the President.
After reciting the fact of the passing of the said Bill by the Legislative Assembly of Kerala and of the reservation thereof by its Governor for the consideration of the President and after setting out some of the clauses of the said Bill and specifying the doubts that may be said to have arisen out of or touching the said clauses, the President has referred to this Court certain questions hereinafter mentioned for consideration and report.
It is to be noted that the said Bill not having yet received the assent of the President the doubts, leading up to this reference, cannot obviously be said to have arisen out of the actual application of any specified section of an Act on the facts of any particular case and accordingly the questions that have been referred to this Court for its consideration are necessarily of an abstract or hypothetical nature and are not like specific issues raised in a particular case brought before a court by a party aggrieved by the operation of a particular law which he impugns.
Further, this reference has been characterised as incomplete and unsatisfactory in that, according to learned counsel appearing for some of the institutions it does not clearly bring out all the constitutional 1013 defects attaching to the provisions of the Bill and serious apprehension has been expressed by learned counsel before us that our opinion on these isolated ' abstract or hypothetical questions may very positively prejudice the interests, if not completely destroy the very existence, of the institutions they represent and, in the circumstances, we have been asked not to entertain this reference or give any advisory opinion on the questions put to us.
It may be of advantage to advert, at the outset, to the ambit and, scope of the jurisdiction to be exercised by this Court under article 143 of the Constitution.
There is no provision similar to this in the Constitution of the United States of America or in the Commonwealth of Australia Constitution Act, 1900 (63 and 64 Vic.
12) and, accord ingly, the American Supreme Court as well as the High Court of Australia, holding that the jurisdiction and powers of the court extend only to the decision of concrete cases coming before it, have declined to give advisory opinions to the executive or legislative branches of the State.
Under section 60 of the Canadian Supreme Court Act, 1906, the Governor General in Council may refer important questions of law concerning certain matters to the Supreme Court and the Supreme Court appears to have been held bound to entertain the reference and answer the questions put to it.
Nevertheless, the Privy Council has pointed out the dangers of such advisory opinion and has, upon general principles deprecated such references.
Said the Earl of Halsbury L. C. in Attorney General for Ontario vs Hamilton Street Railway (1): " They would be worthless as being speculative opinions on hypothetical questions.
It would be contrary to principle, inconvenient, and inexpedient that opinions should be given up on such questions at all.
When they arise, they must arise in concrete cases, involving private rights; and it would be extremely unwise for any judicial Tribunal to attempt beforehand to exhaust all possible cases and facts (1) , 529. 1014 which might occur to qualify, cut down, and override the operation of the particular words when the concrete case is not before it.
" To the like effect are the observations of Lord Haldane in Attorney General for British Columbia vs Attorney General for Canada (1) : ". .
Under this procedure questions may be put of a kind which it is impossible to answer satisfactorily.
Not only may the question of future litigants be prejudiced by the court laying down principles in an abstract form without any reference or relation to actual facts, but it may turn out to be practically impossible to define a principle adequately and safely without previous ascertainment of the exact facts to which it is to be applied.
" Reference may, with advantage, be also made to the following observations of Lord Sankey I,.
C. in In Re The Regulation and Control of Aeronautics In Canada (2) : ".
It is undesirable that the Court should be called upon to express opinions which may affect the rights of persons not represented before it or touching matters of such a nature that its answers must be wholly ineffectual with regard to parties who are not and who cannot be brought before it for example, foreign Government.
" Section 4 of the Judicial Committee Act, 1833 (3 and 4 William IV, Ch. 41) provides that " It shall be lawful for His Majesty to refer to the said Judicial Committee for hearing and consideration any such other matters whatsoever as His Majesty shall think fit and such Committee shall thereupon hear and consider the same and shall advise His Majesty thereon in manner aforesaid.
" It is to be noted that it is made obligatory for the Judicial Committee to hear and consider the matter and advise His Majesty thereon.
The Government of India Act, 1935, by section 213(1), authorised the Governor General to consult the Federal Court, if at any time it appeared to the Governor General that there had arisen or was likely to arise a question of (1) , 162.
(2) , 66. 1015 law which was of such a nature and of such public importance that it was expedient to obtain the opinion of the Federal Court upon it and empowered that court, after such hearing as they thought fit, to report to the Governor General thereon.
This provision has since been reproduced word for word, except as to the name of the court, in cl.
(1) of Art 143 of our Constitution.
That Article has a new clause, being cl.
(2) which empowers the President, notwithstanding anything in the proviso to article 131, to refer a dispute of the kind mentioned in the said clause to the Supreme Court for opinion and the Supreme Court shall, after such hearing as it thinks fit, report to the President its opinion thereon.
It is worthy of note that, while under cl.
(2) it is obligatory on this Court to entertain a reference and to report to the President its opinion thereon, this Court has, under cl.
(1), a discretion in the matter and may in a proper case and for good reasons decline to express any opinion on the questions submitted to it.
In view of the language used in section 213(1), on which article 143(1) of our Constitution is based, and having regard to the difference in the language employed in cls.
(1) and (2) of our article 143 just alluded to, the scope of a reference made under article 143(1) is obviously different from that of a reference under section 4 of the Judicial Committee Act, 1833 and section 60 of the Canadian Supreme Court Act, 1906, and this Court, under article 143(1), has a discretion in the matter and consequently the observations of their Lordships of the Privy Council quoted above are quite apposite and have to be borne in mind.
There have been all told four references by the Governor General under section 213(1) of the Government of India Act, 1935, and in two of them some of the Judges of the Federal Court have made observations on the ambit and scope of such a reference.
Thus in In re Allocation of Lands and Buildings (1), Gwyer C. J. said : " On considering the papers submitted with the case we felt some doubt whether any useful purpose (I) , 22, 129 1016 would be served by the giving of an opinion under section 213 of the Act.
The terms of that section do not 'impose an obligation on the Court, though we should always be unwilling to decline to accept a Reference, except for good reason; and two difficulties presented themselves.
First, it seemed that questions of title might sooner or later be involved, if the Government whose contentions found favour with the Court desired, as the papers show might be the case, to dispose of some of the lands in question to private individuals, and plainly no advisory Opinion under section 213 would furnish a good root of title such as might spring from a declaration of this Court in proceedings taken under section 204(1) of the Act by one Government against the other.
" In In re Levy of Estate Duty (1) Spens C. J. said at p.320 of the authorised report : " It may be stated at the outset that when Parliament has thought fit to enact section 213 of the Constitution Act it is not in our judgment for the Court to insist on the inexpediency (according to a certain school of thought) of the advisory jurisdiction.
Nor does it assist to say that the opinions expressed by the Court on the questions referred " will have no more effect than the opinions of the law officers ": Attorney General for Ontario vs Attorney General for Canada (2).
That is the necessary result of the jurisdiction being advisory.
" Referring to the objection that the questions related to contemplated legislation and not to the validity or operation of a measure already passed, the learned Chief Justice observed at p. 321 : " The fact that the questions referred relate to future legislation cannot by itself be regarded as a valid objection.
Section 213 empowers the Governor General to make a reference when questions of law are " likely to arise. . . . . . . . .
In this class of cases, the reference should, in the very nature of things, be made before the legislation has been (1) , 320, 321, 350).
(2) , 589.
1017 introduced and the objection based upon the hypothetical character of the questions can have no force.
may, however, add that instances were brought to our ' notice in which references had been made under the corresponding provision in the Canadian Supreme Court Act when the matter was at the stage of a Bill.
" Zafrulla Khan J. declined to entertain the reference and to answer the questions on high authority quoted and discussed elaborately in his separate opinion.
The learned Judge, after pointing out in the earlier part of his opinion that it was " a jurisdiction the exercise of which on all occasions must be a matter of delicacy and caution ", concluded his opinion with the following observations at page 350: " In the state of the material made available to us I do not think any useful purpose would be served by my attempting to frame answers to the questions referred.
Indeed, I apprehend, that any such attempt might result in the opinion delivered being made the foundation of endless litigation hereafter, apart altogether from any question relating to the vires of the proposed law, and operating to the serious prejudice of persons whom it might be attempted to bring within the mischief of that law.
It is bound to raise ghosts far more troublesome than any that it might serve to lay.
For these reasons I am compelled respectfully to decline to express any opinion on the questions referred.
" The present reference is the second of its kind under article 143(1) of the Constitution, the first one being concerned with the In Re (1).
The nature and scope of the reference under article 143(1) was not discussed in the In Re case (1), but, we conceive, that the principles laid down by the Judicial Committee and the Federal Court quoted above will serve as a valuable guide indicating the line of approach to be adopted by this Court in dealing with and disposing of the reference now before us.
The principles established by judicial (1) ; 1018 decisions clearly indicate that the complaint that the questions referred to us relate to the validity, not of a statute brought into force but, of a Bill which has yet to be passed into law by being accorded the assent of the President is not a good ground for not entertaining the reference for, as said by Spens C. J. article 143(1) does contemplate the reference of a question of law that is " likely to arise ".
It is contended that several other constitutional objections also arise out of some of the provisions of the Bill considered in the light of other provisions of the Constitution, e.g., article 19(1)(g) and article 337 and that as those objections have not been included in the reference this Court should not entertain an incomplete reference, for answers given to the questions put may be misleading in the absence of answers to other questions that arise.
In the first place it is for the President to determine what questions should be referred and if he does not entertain any serious doubt on the other provisions it is not for any party to say that doubts arise also out of them and we cannot go beyond the reference and discuss those problems.
The circumstance that the President has not thought fit to refer other questions as to the constitutional validity of some of the clauses of the said Bill on the ground that they infringe other provisions of the Constitution cannot be a good or cogent reason for declining to entertain this reference and answer the questions touching matters over or in respect of which the President does entertain some doubt.
In order to appreciate the true meaning, import and implications of the provisions of the Bill which are said to have given rise to doubts, it will be necessary to refer first to certain provisions of the Constitution which may have a bearing upon the questions under consideration and then to the actual provisions of the Bill.
The inspiring and nobly expressed preamble to our Constitution records the solemn resolve of the people of India to constitute India into a SOVEREIGN DEMOCRATIC REPUBLIC and, amongst other things, to secure to all its citizens JUSTICE, LIBERTY, and EQUALITY and to promote among 1019 them all FRATERNIT Y assuring the dignity of the individual and the unity of the Nation.
One of the most cherished objects of our Constitution is, thus, to ' secure to all its citizens the liberty of thought, expression, belief, faith and worship.
Nothing provokes and stimulates thought and expression in people more than education.
It is education that clarifies our belief and faith and helps to strengthen our spirit of worship.
To implement and fortify these supreme purposes set forth in the preamble, Part III of our Constitution has provided for us certain fundamental rights.
Article 14, which is one of the articles referred to in two of the questions, guarantees to every person, citizen or otherwise, equal protection of the laws within the territory of India.
Article 16 ensures equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State.
In order to avail themselves of the benefit of this Article all citizens will presumably have to have equal opportunity for acquiring the qualifications, educational or otherwise, necessary for such employment or appointment.
Article 19(1) guarantees to citizens the right, amongst others, to freedom of speech and expression (sub cl.
(a)) and to practise any profession, or to carry on any occupation, trade or business (sub cl.
These rights are, however, subject to social control permitted by cls.
(2) and (6) of article 19.
Under article 25 all persons are equally entitled, subject to public order, morality and health and to the other provisions of Part III, to freedom of conscience and the right freely to profess, practise and propagate religion.
Article 26 confers the fundamental right to every religious denomination or any section thereof, subject to public order, morality and health, to establish and maintain institutions for religious and charitable purposes, to manage its own affairs in matters of religion, to acquire property and to administer such property in accordance with law.
The ideal being to constitute India, into a secular State, no religious instruction is, under article 28(1), to be provided in any educational institution wholly maintained out of State funds and under cl.
(3) of the 1020 same Article no person attending any educational institution recognised by the State or receiving aid out of State funds is to be required to take part in any religious instruction that may be imparted in such institution or to attend any religious worship that may be conducted in such institution or in any premises attached thereto unless such person or, if such person is a minor, his guardian has given his consent thereto.
Article 29(1) confers on any section of the citizens having a distinct language, script or culture of its own to have the right of conserving the same.
Clause (2) of that Article provides that no citizen shall be denied admission into any educational institution maintained by the State or receiving aid out of State funds on grounds only of religion, race, caste, language or any of them.
Article 30, cl.
(1) of which is the subject matter of question 2 of this reference, runs as follows: " 30(1) All minorities, whether based on religion or language, shall have the right to establish and administer educational institutions of their choice.
(2) The State shall not, in granting aid to educational institutions, discriminate against any educational institution on the ground that it is under the management of a minority, whether based on religion or language.
" While our fundamental rights are guaranteed by Part III of the Constitution, Part IV of it, on the other hand, lays down certain directive principles of State policy.
The provisions contained in that Part are not enforceable by any court, but the principles therein laid down are, nevertheless, fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws.
Article 39 enjoins the State to direct its policy towards securing, amongst other things, that the citizens, men and women, equally, have the right to an adequate means of livelihood.
Article 41 requires the State, within the limits of its economic capacity and deve lopment, to make effective provision for securing the right, inter alia, to education.
Under article 45 the State 1021 must endeavour to provide, within a period of ten years from the commencement of the Constitution, for free and compulsory education for all children until they complete the age of fourteen years.
Article 46 requires the State to promote with special care the education and economic interests of the weaker sections of the people, and, in particular, of the Scheduled Castes and the Scheduled Tribes, and to protect them from social injustice and all forms of exploitation.
Part XVI of our Constitution also makes certain special provisions relating to certain classes.
Thus article 330 provides for the reservation of seats for Scheduled Castes and Scheduled Tribes in the House of the People.
Article 331 provides for the representation of the Anglo Indian community in the House of the People.
Reservations are made, by articles 332 and 333, for the representation for the Scheduled Castes and Scheduled Tribes and the Anglo Indians in the Legislative Assembly of every State for ten years after which, according to article 334, these special provisions are to cease.
Special provision is also made by article 336 for the Anglo Indian community in the matter of appointment to certain services.
Article 337 has an important bearing on the question before us.
It provides that during the first three financial years after the commencement of this Constitution, the same grants, if any, shall be made by the Union and by each State for the benefit of the Anglo Indian community in respect of education as were made in the, financial year ending on the thirty first day of March, 1948 and that during every succeeding period of three years this grant may be less by ten per cent.
than those for the immediately preceding period of three years, provided that at the end of ten years from the commencement of the Constitution such grants, to the extent to which they are a special concessions shall cease.
The second proviso to that Article, however, provides 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.
This is 1022 clearly a condition imposed by the Constitution itself on the right of the Anglo Indian community to receive the grant provided under this Article.
Article 366(2) defines an " Anglo Indian ".
Presumably to implement the directive principles alluded to above the Kerala Legislative Assembly has passed the said Bill in exercise of the legislative power conferred upon it by articles 245 and 246 of the Constitution read with entry II of List 11 in the Seventh Schedule to the Constitution.
This legislative power is, however, to be exercised under article 245 " subject to the provisons of this Constitution ".
Therefore, although this legislation may have been undertaken by the State of Kerala in discharge of the obligation imposed on it by the directive principles enshrined in Part IV of the Constitution, it must, nevertheless, subserve and not over ride the fundamental rights conferred by the provisions of the Articles contained in Part III of the Constitution and referred to above.
As explained by this Court in the State of Madras vs Smt.
Champakam Dorairajan (1) and reiterated recently in Mohd. Hanif Quareshi vs The State of Bihar (2) " The directive principles of State policy have to conform to and run as subsidiary to the Chapter on Fundamental Rights ".
Neverthe less, in determining the scope and ambit of the fundamental rights relied on by or on behalf of any person or body the court may not entirely ignore these directive principles of State policy laid down in Part IV of the Constitution but should adopt the principle of harmonious construction and should attempt to give effect to both as much as possible.
Keeping in view the principles of construction above referred to we now proceed to examine the provisions of the said Bill in order to get a clear conspectus of it.
The long title of the said Bill describes it as " A Bill to provide for the better Organisation and 'development of educational institutions in the State.
" Its preamble recites thus: " Whereas it is deemed necessary to pro (1) ; , 53I. (2) ; 1023 vide for the better Organisation and development of educational institutions in the State providing a varied and comprehensive educational service throughout the State.
" We must, therefore, approach the substantive provisions of the said Bill in the light of the policy and purpose deducible from the terms of the aforesaid long title and the preamble and so construe the clauses of the said Bill as will subserve the said policy and purpose.
Sub clause (3) of cl.
I provides that the Bill shall come into force on such date as the Government may, by notification in the Gazette, appoint and different dates may be appointed for different provisions of this Bill a fact which is said to indicate that Government will study the situation and bring into force such of the provisions of the said Bill which will best subserve the real needs of its people.
Clause 2 contains definitions of certain terms used in the said Bill of which the following sub clauses may be noted: " (1) " aided school " means a private school which is recognised by and is receiving aid from the Government; (3) " existing school " means any aided, recognised or Government school established before the commencement of this Act and continuing as such at such commencement; (6) " private school " means an aided or recognised school; (7) " recognised " means a private school recognised by the Government under this Act Clause 3 deals with " Establishment and recognition of schools.
" Sub clause (1) empowers the Government to " regulate the primary and other stages of education and courses of instructions in Government and private schools.
" Sub clause (2) requires the Government to " take, from time to time, such steps as they may consider necessary or expedient, for the purpose of providing facilities for general education, special education 130 1024 and for the training of teachers.
" Sub clause (3) provides that "the Government may, for the purpose of providing such facilities: (a) establish and maintain schools; or (b) permit any person or body of persons to establish and maintain aided schools; or (c) to recognise any school established and maintained by any person or body of persons.
" All existing schools, which by the definition mean any aided, recognised or Government schools established before and continuing at the commencement of the Bill are, by sub cl.
(4) to be deemed to have been established in accordance with this Bill.
The proviso to sub clause (4) gives an option to the educational agency of an aided school existing at the commencement of that clause, at any time within one month of such commencement after giving notice to the Government of its intention so to do, to opt to run the school as a recognised school subject to certain conditions therein mentioned.
Sub clause (5) of cl. 3, which forms, in part, the subject matter of two of the questions referred to runs as follows: " 3 (5) After the commencement of this Act, the establishment of a new school or the opening of a higher class in any private school shall be subject to the provisions of this Act and the rules made thereunder and any school or higher class established or opened otherwise than in accordance with such provisions shall not be entitled to be recognised by the Government.
" Clause 4 of the Bill provides for the constitution of a State Education Advisory Board consisting of officials and non officials as therein mentioned, their term of office and their duties.
The purpose of the setting up of such a Board is that it should advise the Government on matters pertaining to educational policy and administration of the Department of Education.
Clause 5 requires the manager of every aided school on the first day of April of each year to furnish to the authorised officer of the Government a list of properties, moveable and immoveable, of the school.
A default in furnishing such list entails, under sub cl.
(2) of that clause, the withholding of the maintenance grant.
Clause 6 imposes restrictions on the alienation of any 1025 property of an aided school, except with the previous permission ill writing of the authorised officer of the Government.
An appeal is provided against the order of the authorised officer refusing or granting such permission under sub cl.
Sub clause (3) renders any transaction in contravention of sub cl.
(1) or sub el.
(2) null and void and on such contravention the Government, under sub cl.
(4), is authorised to withhold any grant to the school.
Clause 7 deals with managers of aided schools.
Sub clause (1) authorises any Education agency to appoint any person to be a manager of an aided school, subject to the approval of the authorised officer, all the existing managers of aided schools being deemed to have been appointed under the said Bill.
The manager is made responsible for the conduct of the school in accordance with the provisions of this Bill and the rules thereunder.
Subclause (4) makes it the duty of the manager to maintain such record and accounts of the school and in such manner as may be prescribed by the rules.
The manager is, by sub cl.
(5), required to afford all necessary and reasonable assistance and facilities for the inspection of the school and its records and accounts by the authorised officer.
Sub clause (6) forbids the manager to close down any school without giving to the authorised officer one year 's notice expiring with the 31st May of any year of his intention so to do.
Sub clause (7) provides that, in the event of the school being closed or discontinued or its recognition being withdrawn, the manager shall make over to the authorised officer all the records and accounts of the school.
Sub clause (8) provides for penalty for the contravention of the provisions of sub cls.
(6) and (7).
Clause 8 provides for the recovery of amounts due from the manager of an aided school as an arrear of land revenue.
Sub clause (3) of cl. 8, which is also referred to in one of the questions, runs as follows: " 8 (3) All fees and other dues, other than special fees, collected from the students in an aided school after the commencement of this section shall, notwithstanding anything contained in any agreement, scheme 1026 or arrangement, be made over to the Government in such manner as may be prescribed.
" Clause 9 makes it obligatory on the Government to pay the salary of all teachers in aided schools direct or through the headmaster of the school and also to pay the salary of the non teaching staff of the aided schools.
It gives power to the Government to prescribe the number of persons to be appointed in the non teaching establishment of aided schools, their salaries, qualifications and other conditions of service.
The Government is authorised, under sub cl.
(3), to pay to the manager a maintenance grant at such rates as may be prescribed and under sub cl.
(4) to make grants in aid for the purchase, improvement and repairs of any land, building or equipment of an aided school.
Clause 10 requires Government to prescribe the qualifications to be possessed by persons for appointment as teachers in Government schools and in private schools which, by the definition, means aided or recognised schools.
The State Public Service Commission is empowered to select candidates for appointment as teachers in Government and aided schools according to the procedure laid down in cl. 11.
Shortly put, the procedure is that before the 31st May of each year the Public Service Commission shall select for each district separately candidates with due regard to the probable number of vacancies of teachers that may arise in the course of the year, that the list of candidates so selected shall be published in the Gazette and that the manager shall appoint teachers of aided schools only from the candidates so ,selected for the district in which the school is located subject to the proviso that the manager may, for sufficient reason, with the permission of the Commission, appoint teachers selected for any other district.
Appointment of teachers in Government schools are also to be made from the list of candidates so published.
In selecting candidates the Commission is to have regard to the provisions made by the Government under cl.
(4) of article 16 of the Constitution, that is to say, give representation in the educational service to persons belonging to the Scheduled Castes or Tribes 1027 a provision which has been severely criticised by learned counsel appearing for the Anglo Indian and Muslim communities.
Clause 12 prescribes the conditions of service of the teachers of aided schools obviously intended to afford some security of tenure to the teachers of aided schools.
It provides that the scales of pay applicable to the teachers of Government schools shall apply to all the teachers of aided schools whether appointed before or after the commencement of this clause.
Rules applicable to the teachers of the Government schools are also to apply to certain teachers of aided schools as mentioned in sub cl.
Sub clause (4) provides that no teacher of ail aided school shall be dismissed, removed, reduced in rank or suspended by the manager without the previous sanction of the authorised officer.
Other conditions of service of the teacher of aided schools are to be as prescribed by rules.
Clause 14 is of considerable importance in that it provides, by sub clause (1), that the Government, whenever it appears to it that the manager of any aided school has neglected to perform any of the duties imposed by or under the Bill or the rules made thereunder, and that in the public interest it is necessary so to do, may, after giving a reasonable opportunity to the manager of the Educational agency for showing cause against the proposed action, take over the management for a period not exceeding five years.
In cases of emergency the Government may, under sub el.
(2), take over the management after the publication of notification to that effect in the Gazette without giving any notice to the Educational agency or the manager.
Where any school is thus taken over without any notice the Educational agency or the manager may, within three months of the publication of the notification, apply to the Government for the restoration of the school showing the cause therefor.
The Government is authorised to make orders which may be necessary or expedient in connection with the taking over of the management of an aided school.
Under sub el.
(5) the Government is to pay such rent as maybe fixed by the Collector in respect of the properties taken possession of, On taking over any 1028 school the Government is authorised to run it affording any special educational facilities which the school was doing immediately before such taking over.
Right of appeal to the District Court is provided against the order of the Collector fixing the rent.
Sub cl.
(8) makes it lawful for the Government to acquire the school taken over under this clause if the Government is satisfied that it is necessary so to do in the public interest, in which case compensation shall be payable in accordance with the principles laid down in cl. 15 for payment of compensation.
Clause 15 gives power to the Government to acquire any category of schools.
This power can be exercised only if the Government is satisfied that for standardising general education in the State or for improving the level of literacy in any area or for more effectively managing the aided educational institutions in any area or for bringing education of any category under their direct control and if in the public interest it is necessary so to do.
No notification for taking over any school is to be issued unless the proposal for the taking over is supported by a resolution of the Legislative Assembly.
Provision is made for the assessment and apportionment of compensation and an appeal is provided to the District Court from the order passed by the Collector determining the amount of compensation and its apportionment amongst the persons entitled thereto.
Thus the Bill contemplates and provides for two methods of acquisition of aided schools, namely, under sub cl.
(8) of el.
14 the Government may acquire a school after having taken possession of it under the preceding sub clauses or the Government may, under el. 15, acquire any category of aided schools in any specified area for any of the several specific purposes mentioned in that clause.
Clause 16 gives power to the Government to exempt immoveable properties from being taken over or acquired.
Clause 17 provides for the establishment of Local Education Authorities, their constitution and term of office and clause 18 specifies the functions of the Local Education Authorities.
Clauses 19 and 20 are important and read as follows: 1029 " 19.
Recognised schools: The provisions of subsections (2), (4), (5), (6), (7), (8) and (9) of section 7 shall apply to recognised schools to the same extent ' and in the same manner as they apply to aided schools." " 20.
No fee to be charged from pupils of primary classes: No fee shall be payable by any pupil for any tuition in the primary classes in any Government or private school." Part II of the Bill deals with the topic of compulsory education.
That part applies to the areas specified in el.
Clause 23 provides for free and compulsory education of children throughout the State within a period of ten years and is intended obviously to discharge the obligation laid on the State by article 45 of the directive principles of State policy.
Clauses 24 and 25 deal with the constitution of Local Education Committees and the functions thereof Clause 26, which has figured largely in the discussion before us runs as follows : " 26.
Obligation on guardian to send children to school: In any area of compulsion, the guardian of every child shall, if such guardian ordinarily resides in such area, cause such child to attend a Government, or private school and once a child has been so caused to attend school under this Act the child shall be compelled to complete the full course of primary education or the child shall be compelled to attend school till it reaches the age of fourteen.
" We may skip over a few clauses, not material for our purpose, until we come to el. 33 which is referred to in one of the questions we have to consider.
That clause provides " 33.
Courts not to grant injunction Notwithstanding anything contained in the Code of Civil Procedure, 1908, or in any other law for the time being in force, no court shall grant any temporary injunction or make any interim order restraining any proceedings which is being or about to be taken under this Act.
" Clause 36 confers power on the Government to make 1030 rules for the purpose of carrying into effect the provisions of the Bill and in particular for the purpose of the establishment and maintenance of schools, the giving of grants and aid to private schools, the grant of recognition to private schools, the levy and collection of fees in aided schools, regulating the rates of fees in recognised schools, the manner in which the accounts, registers and records shall be maintained, submission of returns, reports and accounts by managers, the standards of education and course of study and other matters specified in sub cl.
(2) of that clause.
Clause 37 is as follows: " 37.
Rules to be laid before the Legislative Assembly: All rules made under this Act shall be laid for not less than fourteen days before the Legislative Assembly as soon as possible after they are made and shall be subject to such modifications as the Legislative Assembly may make during the session in which they are so laid.
" Under cl.
38 none of the provisions of the Bill applies to a school which is not a Government or a private school, i. e., aided or recognized school.
The above summary will, it is hoped, clearly bring out the purpose and scope of the provisions of the said Bill.
It is intended to serve as showing that the said Bill contains many provisions imposing considerable State control over the management of the educational institutions in the State, aided or recognised.
The provisions, in so far as they affect the aided institutions, are much more stringent than those which apply only to recognised institutions.
The width of the power of control thus sought to be assumed by the State evidently appeared to the President to be calculated to raise doubts as to the constitutional validity of some of the clauses of the said Bill on the ground of apprehended infringement of some of the fundamental rights guaranteed to the minority communities by the Constitution, and accordingly in exercise of the powers vested in him by article 143(1) the President has referred to this Court, for consideration and report the following questions: 1031 " (1) Does sub clause (5) of clause 3 of the Kerala Education Bill, read with clause 36 thereof or any of the provisions of the said sub clause, offend article 14 of the Constitution in any particulars or to any extent? (2) Do sub clause (5) of clause 3, sub clause (3) of clause 8 and clauses 9 to 13 of the Kerala Education Bill, or any provisions thereof, offend clause (1) of article 30 of the Constitution in any particulars or to any extent ? (3) Does clause 15 of the Kerala Education Bill, or any provisions thereof, offend article 14 of the Constitution in any particulars or to any extent ? (4) Does clause 33 of the Kerala Education Bill, or any provisions thereof, offend article 226 of the Constitution in any particulars or to any extent ?" On receipt of the reference this Court issued notices to persons and institutions who appeared to it to be interested in the matter calling upon them to file their respective statements of case concerning the above mentioned questions.
Three more institutions were subsequently, on their own applications, granted leave to appear at the hearing.
The Union of India, the State of Kerala and all the said persons and institutions have filed their respective statements of case and have appeared before us by counsel and taken part in the debate.
A body called the Crusaders ' League his by post sent its views but has not appeared at the hearing.
We have had the advantage of hearing very full arguments on the points arising out of the questions and we are deeply indebted to learned counsel appearing for the parties for the very great assistance they have rendered to us.
It will be necessary, at this stage, to clear the ground by disposing of a point as to the scope and ambit of questions I and 2.
It will be noticed that both these questions challenge the constitutional validity, inter alia, of clause 3 (5) of the said Bill which has already been quoted in extensor The argument advanced by the learned Attorney General and other learned counsel appearing for bodies or institutions challeng 131 1032 ing the validity of the said Bill is that the provision of cl.
3(5), namely, that the establishment of a new school "shall be subject to the provisions of this Act and the rules made thereunder " attracts all other clauses of the said Bill as if they are set out seriatim in sub el.
(5) itself.
Therefore, when questions I and 2 challenge the constitutional validity of el.
3(5) they, in effect, call in question the validity of all other clauses of the said Bill.
Learned counsel appearing for the State of Kerala, however, opposes this line of argument on several grounds.
In ' the first place, he contends that cl.
3(5) attracts only those provisions of this Bill which relate Lo the establishment of a new school.
When asked to specify what provisions of the said Bill relate to I he establishment of a new school which, according to him, are attracted by cl.
3(5), the only provision that he refers to is sub cl.
(3) of cl. 3.
Learned counsel for the State of Kerala maintains that el.
3(5) attracts only el.
3(3) and the rules that may be made under el. 36(2)(a) and no other clause of the said Bill and, therefore, no other clause is included within the scope of the questions unless, of course, they are specifically mentioned in the questions, as some of the clauses are, in fact, specifically mentioned in question 2.
If the mention of cl.
3(5) in those questions, ipso facto, attracted all other clauses of the said Bill, why, asks learned counsel, were other clauses specifically mentioned in, say, question 2 ? Learned counsel also contends that after a school is established the other clauses will proprio vigore apply to that school and there was no necessity for an express provision that a newly established school would be subject to the other provisions of the Bill.
As the other clauses of the Bill will apply to all schools established after the Bill becomes an Act without the aid of cl.
3(5), a reference to that clause in the questions cannot bring within their ambit any clause of the Bill which is not separately and specifically mentioned in the questions.
Finally learned counsel contends that even if cl.
3(5) attracts the other provisions of the Bill, it does not necessarily follow that the other provisions also form the subject matter of the questions.
In our judgement, 1033 neither of the two extreme, positions can be seriously maintained.
The contentions advanced by learned counsel for the State of Kerala appear to us to be open to several criticisms.
If the intention of sub cl.
(5) of cl. 3 was to attract only those provisions of the Bill which related only to the establishment of a new school and if sub cl.
(3) of cl. 3 was the only provision in that be half, apart from the rules to be framed under el. 36(2)(a), then as a matter of intelligible drafting it would have been more appropriate to say, in siib cl.
(3) of el. 3, that the establishment of new schools ",,;hall be subject to the provisions of this clause and the rules to be made under el. 36(2)(a) ".
Clause 3(5) is quite clearly concerned with the establishment of new schools Government, aided or recognised schools, and says that after the Bill becomes law all new schools will be subject to the other provisions of the Bill.
So far as new Government schools are concerned, el.
3(5) certainly attracts el.
3(3)(a), for that provision authorises the Government to establish new schools; but to say that el.
3(5) only attracts el.
3(3) appears to be untenable, for that sub clause does not in terms provide for the establishment of new aided or recognised schools.
As already observed, el.
3(3)(a) specifically provides for the establishment and maintenance of new schools by the Government only.
Clause 3(3)(b) provides only for the giving of permission by the Government to a person or body of persons to establish and maintain aided schools.
Likewise el.
3(3)(c) authorises the Government only to recognise any school established, and maintained by any person or body of persons.
Clause 3(4) introduces a fiction whereby all existing schools, which mean all existing Government, aided or recognised schools, shall be deemed to have been established in accordance with this Bill.
Then comes cl.
3(5) which is couched in very wide terms.
It says, inter alia, that after the commencement of the operation of the said Bill the establishment of new schools should be subject to the other provisions of the Bill and the rules made thereunder.
The rules to be framed under cl. 36(2)(a), (b) & 1034 (c) appear to be respectively correlated to cl.
3(3)(a), (b) & (c).
Bearing in mind the provisions of cl. 38 which places all schools other than Government and private, i. e., aided or recognised schools, outside the purview of the Bill, the establishment of what sort of new schools, we ask, does sub cl.
(5) contemplate and authorise ? Obviously aided or recognised schools established after the Bill becomes law.
Clause 3(5), like cl.
3(3), has apparently been very inartistically drawn, but reading the clause as a whole and particularly the concluding part of it, namely, that any school 'established otherwise than in accordance with such provisions shall not be entitled to be recognised by the Government, there can be no doubt that cl.
3(5) itself contemplates and authorises the establishment of new schools as aided or recognised schools.
The opening of new schools and the securing of aid or recognition from the Government constitute the establishment of new schools contemplated by el.
3(5) read with cl.
Reading el.
3(5) in the context of its setting, we have no doubt that its purpose is not merely to authorise the establishment of new schools but to subject the new schools to all the provisions of the said Bill and the rules made thereunder.
To accept the restrictive argument that el.
3(5) attracts only el.
3(3) will be putting a too narrow construction on sub cl.
(5) not warranted by the wide language thereof or by the language of cl.
We do not think that there is much force in the argument that it was not necessary to expressly provide for the application of the other provisions to new schools to be established after the Bill became law and that the other clauses of the said Bill would by their own force and without the aid of sub cl.
(5) apply to such newly established schools, for having, in terms, expressly made the new schools subject to the other provisions it is not open to the State of Kerala now to say that sub el.
(5) need not have made the other provisions of the said Bill applicable to new schools established after the said Bill comes into operation or that it does not attract the other.
clauses although it expressly purports to do or that it is not open to those who oppose the Bill to refer 1035 to any other clause in support of their case.
If el.
3(5) did not expressly attract the other provisions, the President would perhaps have framed the questions differently.
If, therefore, it be held, as we are inclined to do, that cl.
3(5) makes the new schools subject to the other provisions of the said Bill, what will be the position ? If, as submitted by the learned AttorneyGeneral and other counsel supporting him, some of the clauses of the said Bill impinge upon the fundamental rights of the members of the minority community or educational institutions established or to be established by them and if el.
3(5) makes those clauses applicable to the new schools they may establish after the Bill becomes law, then not only do those other clauses violate their rights but el.
3(5) which openly and expressly makes those other clauses apply to such new schools must also encounter the challenge of unconstitutionality.
In other words, the vice of unconstitutionality, if any, of those other clauses must attach to cl.
3(5) because it is the latter which in terms makes the new schools subject to those objectionable clauses.
Therefore, in a discussion on the validity of el.
3(5) it becomes germane to discuss the validity of the other clauses.
In short, though the validity of the other clauses is not by itself and independently, the subject matter of either of those questions, yet their validity or otherwise has to be taken into consideration in determining the constitutional validity of el.
3(5) which makes those clauses applicable to the newly established schools.
It is in this sense that, we think, a discussion of the validity of the other clauses comes within the purview of questions I and 2.
We do not, in the circumstances, consider it right, in view of the language employed in this el.
3(5), to exclude the consideration of the constitutional validity of the other clauses of the Bill from the discussion on questions I and 2 which challenge the constitutional validity of el.
3(5) of the said Bill.
Indeed, in the argument before us frequent references have been made to the other clauses of the said Bill in discussing questions I and 2 and we have heard the respective contentions of learned 1036 counsel on the validity or otherwise of those clauses in so far as they have a bearing on the questions put co us which we now proceed to consider and answer.
Questions 1 and 3.
Question I challenges the constitutional validity of sub cl.
(5) of el.
3 of the said Bill read with el.
36 thereof on the ground that, the same violates the equal protection of the laws guaranted to all persons by article 14 of the Constitution.
Question 3 attacks el.
15 of the said Bill on the same ground, namely, that it is violative of article 14 of the Constitution.
As the ground of attack tinder both the questions is the same, it will be convenient to deal with them together.
The true meaning, scope and effect of article 14 of our Constitution have been the subject matter of discussion and decision by this Court in a number of cases beginning with the case of Chiranjit Lal Chowdhuri vs The Union of India and others (1).
In Budhan Choudhry vs The State of Bihar (2) a Constitution Bench of seven Judges of this Court explained the true meaning and scope of that Article.
Recently in the case of Ram Krishna Dalmia and others Sri Justice section R. Tendolkar (3), the position was at length by this Court, by its judgment on March 28, 1958, and the several principles firmly established by the decisions of this Court were set out seriatim in that judgment.
The position ",as again summarised in the still more recent case of land.
Hanif Quaeshi vs The State of Bihar (1) in the following words: " The meaning, scope and effect of article 14, which is the equal protection clause in our Constitution, has been explained by this Court in a series of decisions in cases begining with Chiranjit Lal Chowdhury vs The Union Of India (1) and ending with the recent case of Ram Krishna Dalmia vs Sri Justice section R. Tendolkar (1).
It is now well established that while article 14 forbids class legislation it does not forbid reasonable classification for the purposes of legislation (1) [1950] section C. E. 869.
(2) (3) ; (4) ,g. 1037 and that in order to pass the test of permissible classi fication two conditions must be fulfilled, namely, (i) 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) such differentia must have a rational relation to the object sought to be achieved by the statute in question.
The classification, it has been held, may be founded on different bases, namely, geographical or according to objects or the occupations or the like and what is necessary is that there must be a nexus between the basis of classification and the object of the Act tinder consideration .
The pronouncements of this Court further establish, amongst other things, that there is always a presumption in favour of the constitutionality of an enactment and that the burden is upon him, who attacks it, to show that, there has been a clear violation of the constitutional principles.
The courts, it is accepted, must presume that, the legislature understands and correctly the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds.
It must be borne in mind that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest and finally that in order to sustain the presumption of constitutionality the Court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation.
" In the judgment of this Court in Ram Krishna Dalmia 's case (1) the statutes that came up for consideration before this Court were classified into five several categories as enumerated therein.
No useful purpose will be served by re opening the discussion and, indeed, no attempt has been made in, that behalf by learned counsel.
We, therefore, proceed to examine the impugned provisions in the light of the aforesaid principles enunciated by this Court.
Coming now to the main argument founded on (1) ; 1038 article 14, the Bill, it is said, represents a deliberate attempt on the part of the party now in power in Kerala to strike at the Christian Church and especially that of the Catholic persuasion, to eliminate religion, to expropriate the minority communities of the properties of their schools established for the purpose of conserving their distinct language, script and culture, and in short, to eliminate all educational agencies other than the State so as to bring about a regimentation of education and by and through the educational institutions to propagate the tenets of their political philosophy and indoctrinate the impressionable minds of the rising generation.
It is unfortunate that a certain amount of heat and passion was introduced in the discussion of what should be viewed as a purely legal and constitutional problem raised by the questions ; but perhaps it is understandable in the context of the bitter agitation and excitement provoked by the said Bill in the minds of certain sections of the people of the State.
We desire, however, to emphasise that this Court is not concerned with the merit or otherwise of the policy of the Government which has sponsored this measure and that all that we are called upon to do is to examine the constitutional questions referred to us and to pronounce our opinion on the validity or otherwise of those provisions of the Bill which may properly come within the purview of those questions.
The doubts which led to the formulation of question 1 are thus recited in the order of reference which had better be stated in its own terms: " AND WHEREAS sub clause (3) of clause 3 of the said Bill enables the Government of Kerala, inter alia, to recognise any school established and maintained by any person or body of persons for the purpose of providing the facilities set out in subclause (2) of the said clause, to wit, facilities for general education, special education and for the train ing of teachers; AND WHEREAS sub clause (5) of clause 3 of the said Bill provides, inter alia, that any new school established or any higher class opened in any private 1039 school, after the Bill has become an Act and the Act has come into force, otherwise than in accordance with the provisions of the Act and the rules made under section 36 thereof, shall not be entitled to be recognised by the Government of Kerala; AND WHEREAS a doubt has arisen whether the provisions of the said sub clause (5) of clause 3 of the said Bill confer upon the Government an unguided power in regard to the recognition of new schools and the opening of higher classes in any private school which is capable of being exercised in an arbitrary and discriminatory manner; AND WHEREAS a doubt has further arisen whether such power of recognition of new schools and of higher classes in private schools is not capable of being exercised in a manner affecting the right of the minorities guaranteed by clause (1) of article 30 of the Constitution to establish and administer educational institutions of their choice; Likewise the doubts concerning cl.
15 are formulated in the following recitals in the order of reference : " AND WHEREAS clause 15 of the said Bill empowers the Government of Kerala to take over, by notification in the Gazette, any category of aided schools in any specified area or areas, if they are satisfied that for standardising general education in the State of Kerala or for improving the level of literacy in any area or for more effectively managing the aid Id educational institutions in any area or for bringing education of any category under their direct control it is necessary to do so in the public interest, on payment of compensation on the basis of market value of the schools so taken over after deducting therefrom the amounts of aids or grants given by that Government for requisition, construction or improvement of the property of the schools; AND WHEREAS a doubt has arisen whether such power is not capable of being exercised in an arbitrary and discriminatory manner.
" 132 1040 The legal aspect of the matter arising out of the two questions is further elaborated thus by learned counsel appearing for the persons or institutions contesting the validity of the Bill: Clause 3 (5) makes all the provisions of the Bill applicable to new schools that may be established after the Bill becomes law.
Clause 3 (5) gives the Government an unguided, uncontrolled and uncanalised power which is capable of being exercised "with an evil eye and an unequal hand" and the Government may, at its whim or pleasure, single out any person or institution and subject him or it to hostile and discriminatory treatment.
The Bill does not lay down any policy or principle for the guidance of the Government in the matter of the exercise of the wide powers so conferred on it by the different clauses of the Bill.
It is pointed out that cl. 3 does not lay down any policy or principle upon which the Government may or may not permit any person or body of persons to establish and maintain an aided school or grant recognition to a school established by any person.
The Government may grant such permission or recognition to persons who support its policy but not to others who oppose the same.
Clause 6 does riot say in what circumstances the authorised officer of the Government may or may not give permission to the alienation of the property of an aided school.
He may give permission in one case but arbitrarily withhold it in another similar case.
Likewise the authorised officer may not, under el. 7, approve of the appointment of a particular person as manager of in aided school for no better reason than the prejudice or dislike of his Government for that particular person 's political views or affiliations.
The Government may, under cl. 9, pay the maintenance grant to the manager of one aided school but not to that of another.
Particular schools or categories of schools in particular areas may be singled out for discriminatory treatment under cls.
14 and 15 of the Bill.
It is next pointed out that if cl. 3 (5) is read with cls.
21, 26 and 28 of the Bill the result will be palpably discriminatory because in an area which is not an area of compulsion a new school which may be established after the Bill 1041 comes into operation and which may not seek recognition or aid can charge fees and yet attract scholars but a new school similarly established in an area of compulsion will be hit directly by cl. 26 and will have no scholars, for no guardian will be able lawfully to send his ward to a school which is neither a Government school nor a private school and such a new school will not be able to function at all, for it will have no scholar and the question of its charging fees in any class will not arise.
There is no force in this last mentioned point, for the Legislature, it must be re membered, knows the needs of its people and is entitled to confine its restriction 'to those places where the needs are deemed to be the clearest and, therefore, the restrictions imposed in areas of compulsion are quite permissible on the ground of classification on geographical basis.
Whatever other provisions of the Constitution, such restriction may or may not violate, which will be discussed later, it certainly does not infringe article 14.
A further possibility of discrimination is said to arise as a result of the application of the same provisions of the Bill to all schools which are not similarly situate.
The argument is thus developed: The Constitution, it is pointed out, deals with the schools established by minority communities in a way different from the way it deals with other schools.
Thus Anglo Indian schools are given grants under article 337 of the Constitution and educational institu tions started by all minority communities including the Anglo Indians are protected by articles 29 and 30.
The educational institutions of the minorities are thus different from the educational institutions established by the majority communities who require no special privilege or protection and yet the Bill purports to put in the same class all educational institutions although they have not the same characteristics and place equal burdens on unequals.
This indiscriminate application of the same provisions to different institutions having different characteristics and being unequal brings about a serious discrimination violative of the equal protection clause of the Constitution.
In 1042 support of this argument reliance is placed on the decision of the American Supreme Court in Cumber 'land Coal Co. vs Board of Revision (1).
That decision, in our judgment, has no application to the facts of the case before us.
There the taxing authorities assessed the owners of coal lands in the city of Cumberland by applying a flat rate of 50 per cent.
not on the actual value of the properties but on an artificial valuation of $ 260 per acre arbitrarily assigned to all coal lands in the city irrespective of their location.
It was not disputed that the value of properties which were near the river banks or close to the railways was very much more than that of properties situate far away from the river banks or the railways.
The artificial valuation of $ 260 per acre was much below the actual value of the properties which were near the river banks or the railways, whereas the value of the properties situate far away, from the riverbank or the railways was about the same as tile assigned value. 'The result of applying the equal rate of tax, namely, 50 per cent.
on the assigned value was that the owners of more valuable properties had to pay much less than what they would have been liable to pay upon the real value of those properties.
Therefore, the method of assessment worked out clearly to the disadvantage of the owners of properties situate in the remoter parts of the city and was obviously discriminatory.
There the discrimination was an integral part of that mode of taxing.
That is not the position here, for there is no discrimination in the provisions of the said Bill and consequently the principle of that decision can have no application to this case.
This does not, however, conclude the matter and we have yet to deal with the main argument that the Bill does not lay down any policy or principle for the guidance of the Government in the exercise of the wide powers vested in it by the Bill.
Reference has already been made to the long title and the preamble of the Bill.
That the policy and purpose of a given measure may be deduced from the long title and the preamble thereof has been recognised (1) ; ; ,150. 1043 in many decisions of this Court and as and by way of ' ready reference we may mention our decision in Biswambar Singh vs The State of Orissa (1) as an instances in point.
The general policy of the Bill as laid down in its title and elaborated in the preamble is " to provide for the better Organisation and development of educational institutions providing a varied and comprehensive educational service throughout the State.
" Each and every one of the clauses in the Bill has to be interpreted and read in the light of this policy.
When, therefore, any particular clause leaves any discretion to the Government to take any action it must be understood that such discretion is to be exercised for the purpose of advancing and in aid of implementing and not impeding this policy.
It is, therefore, not correct to say that no policy or principle has at all been laid down by the Bill to guide the exercise of the discretion left to the Government by the clauses in this Bill.
The matter does not, however, rest there.
The general policy deducible from the long title and preamble of the Bill is further reinforced by more definite.
statements of policy in different clauses thereof.
Thus the power vested in the Government under cl.
3(2) can be exercised only " for the purpose of providing facilities for general education, special education and for the training of teachers ".
It is " for the purpose of providing such facilities " that the three several powers under heads (a), (b) and (c) of that sub clause have been conferred on the Government.
The clear implication of these provisions read in the light of the policy deducible from the long title and the preamble is that in the matter of granting permission or recognition the Government must be guided by the consideration whether the giving of such permission or recognition will enure for the better Organisation and development of educational institutions in the State, whether it will facilitate the imparting of general or special education or the training of teachers and if it does then permission or recognition must be granted but it must be refused if it impedes that purpose.
It is true that the (1) ; , 855.
1044 word " may " has been used in sub el.
(3), but, according to the well known rule of construction of statutes, 'if the existence of the purpose is established and the conditions of the exercise of the discretion are fulfilled, the Government will be under an obligation to exercise its discretion in furtherance of such purpose and no question of the arbitrary exercise of discretion can arise.
[Compare Julius vs Lord Bishop of Oxford (1) ].
If in actual fact any discrimination is made by the Government then such discrimination will be in violation of the policy and principle deducible from the said Bill itself and the court will then strike down not the provisions of the Bill but the discriminatory act of the Government.
Passing on to cl. 14, we find that the power conferred thereby on the Government is to be exercised only if it appears to the Government that the manager of any aided school has neglected to perform the duties imposed on him and that the exercise of the power is necessary in public interest.
Here again the principle is indicated and no arbitrary or unguided power has been delegated to the Government.
Likewise the power, under el. 15(1) can be exercised only if the Government is satisfied that it is necessary to exercise it for " standardising general education in the State or for improving the level of literacy in any area or for more effectively managing the aided educational institutions in any area or for bringing the education of any category under their direct control " and above all the exercise of the power is necessary " in the public interest ".
Whether the purposes are good or bad is a question of State policy with the merit of which we are not concerned in the present discussion.
All that we are now endeavouring to point out is that the clause under consideration does lay down a policy for the guidance of the Government in the matter of the exercise of the very wide power conferred on it by that clause.
The exercise of the power is also controlled by the proviso that no notification under that sub clause shall be issued unless the proposal for the taking over is supported by a resolution of the Legislative Assembly a proviso (1) 1045 which clearly indicates that the power cannot be exercised by the Government at its whim or pleasure.
Skipping over a few clauses, we come to cl. 36.
The ' power given to the Government by cl. 36 to make rules is expressly stated to be exercised " for the purpose of carrying into effect the provisions of this Act ".
In other words, the rules to be framed must implement the policy and purpose laid down in its long title and the preamble and the provisions of the other clauses of the said Bill.
Further, under el. 37 the rules have to be laid for not less than 14 days before the Legislative Assembly as soon as possible after they are made and are to be subject to such modifications as the Legislative Assembly may make during the session in which they are so laid.
After the rules are laid before the Legislative Assembly they may be altered or amended and it is then that the rules, as amended become effective.
If no amendments are made the rules come into operation after the period of 14 days expires.
Even in this latter event the rules owe their efficacy to the tacit assent of the Legislative Assembly itself.
Learned counsel appearing for the State of Kerala submitted in picturesque language that here was what could be properly said to be legislation at two stages and the measure that will finally emerge consisting of the Bill and the rules with or without amendment will represent the voice of the Legislative Assembly itself and, therefore, it cannot be said that an unguided and uncontrolled power of legislation has been improperly delegated to the Government.
Whether in approving the rules laid before it the Legislative Assembly acts as the Legislature of Kerala or acts as the delegatee of the Legislature which consists of the Legislative Assembly and the Governor is, in the absence of the standing orders and rules of business of the Kerala Legislative Assembly, more than we can determine.
But all that we need say is that apart from laying down a policy for the guidance of the Government in the matter of the exercise of powers conferred on it under the different provisions of the Bill including cl. 36, the Kerala Legislature has, by cl. 15 and el. 37 provided further safeguards.
In this 1046 connection we must bear in mind what has been laid down by this Court in more decisions than one, namely, that discretionary power is not necessarily a discriminatory power and the abuse of power by the Government will not be lightly assumed.
For reasons stated above it appears to us that the charge of unconstitutionality of the several clauses which come within the two questions now under consideration founded on article 14 cannot be sustained.
The position is made even clearer whether we consider the question of the validity of el.
15(1) for, apart from the policy and principle deducible from the long title and the preamble of the Bill and from that sub clause itself, the proviso thereto clearly indicates that the Legislature has not abdicated its function and that while it has conferred on the Government a very wide power for the acquisition of categories of schools it has not only provided that such power can only be exercised for the specific purposes mentioned in the clause itself but has also kept a further and more effective control over the exercise of the power, by requiring that it is to be exercised only if a resolution is passed by the Legislative Assembly authorising the Government to do so.
The Bill, in our opinion, comes not within category (iii) mentioned in Ram Krishna Dalmia 's case (1) as contended by Shri G. section Pathak but within category (iv) and if the Government applies the provisions in violation of the policy and principle laid down in the Bill the executive action will come under category (v) but not the Bill and that action will have to be struck down.
The result, therefore, is that the charge of invalidity of the several clauses of the Bill which fall within the ambit of questions I and 3 on the ground of the infraction of article 14 must stand repelled and our answers to both the questions I and 3 must, therefore, be in the negative.
Question 2 : Articles 29 and 30 are set out in Part III of our Constitution which guarantees our fundamental rights.
They are grouped together under the sub head " Cultural and Educational Rights ".
The text and the marginal notes of both the Articles show that their purpose is to confer those fundamental (1) ; 1047 rights on certain sections of the, community which constitute minority communities.
Under cl.
(1) of article 29 any section of the citizens residing in the territory of India or any part thereof having a distinct language, script or culture of its own has the right to conserve the same.
It is obvious that a minority community can effectively conserve its language, script or culture by and through educational institutions and, therefore, the right to establish and maintain educational institutions of its choice is a necessary concomitant to the right to conserve its distinctive language, script or culture and that is what is conferred on all minorities by article 30(1) which has here in before been quoted in full.
This right, however, is subject, to el. 2 of article 29 which provides that no citizen shall be denied admission into any educational institution maintained by the State or receiving aid out of State funds on grounds only of religion, race, caste, language or any of them.
As soon as we reach article 30 (1) learned counsel for the State of Kerala at once poses the question: what is a minority ? That is a term which is not defined in the Constitution.
It is easy to say that a minority community means a community which is numerically less than 50 per cent, but then the question is not fully answered, for part of the question has yet to be answered, namely,50 per cent.
of what ? Is it 50 percent of the entire population of India or 50 per cent.
of the population of a State forming a part of the Union ? The position taken up by the State of Kerala in its statement of case filed herein is as follows: "There is yet another aspect of the question that falls for consideration, namely as to what is a minority under article 30(1) The state contends that Christians, a certain section of whom is vociferous in its objection to the Bill on the allegation that it offends article 30(1), are not in a minority in the State.
It is no doubt true that Christians are not a mathematical majority in the whole State.
They constitute about one fourth of the population; but it does not follow therefrom that they form a minority within the meaning of article 30 (1).
133 1048 The argument that they do, if pushed to its logical conclusion, would mean that any section of the people forming under fifty per cent.
of the population should be classified as a minority and be dealt with as such.
Christians form the second largest community in Kerala State; they form, however, a majority community in certain area of the State.
Muslims form the third largest community in the State, about one seventh of the total population.
They also, however, form the majority community in certain other areas of the State.
(In , it was held that persons who are alleged to be a minority must be a minority in the particular region in which the institution involved is situated).
" The State of Kerala, therefore, contends that in order to constitute a minority which may claim the fundamental rights guaranteed to minorities by article 29 (1) and 30 (1) persons must numerically be a minority in the particular region in which the educational institution in question is or is intended to be situate.
A little reflection will at once show that this is not a satisfactory test.
Where is the line to be drawn and which is the unit which will have to be taken ? Are we to take as our unit a district, or a sub division or a taluk or a town or its suburbs or a municipality or its wards ? It is well known that in many towns persons belonging to a particular community flock together in a suburb of the town or a ward of the municipality.
Thus Anglo Indians or Christians or Muslims may congregate in one particular suburb of a town or one particular ward of a municipality and they may be in a majority there.
According to the argument of learned counsel for the State of Kerala the Anglo Indians or Christians or Muslims of that locality, taken as a unit, will not be a " minority " within the meaning of the Articles under consideration and will not, therefore, be entitled to establish and maintain educational institutions of their choice in that locality, but if some of the members belonging to the Anglo Indian or Christian community happen to reside in another suburb of the same town or another ward of the same municipality 1049 and their number be less than that of the members of other communities residing there, then those members of the Anglo Indian or Christian community will be a minority within the meaning of articles 29 and 30 and will be entitled to establish and maintain educational institutions of their choice in that locality.
Likewise the Tamilians residing in Karolbagh, if they happen to be larger in number than the members of other communities residing in Karolbagh, will not be entitled to establish and maintain a Tamilian school in Karolbagh, whereas the Tamilians residing in, say, Daryaganj where they may be le ,is numerous than the members of other communities residing in Daryaganj will be a minority or section within the meaning of articles 29 and 30.
Again Bihari labourers residing in the industrial areas in or near Calcutta where they may be the majority in that locality will not be entitled to have the minority rights and those Biharis will have no educational institution of their choice imparting education in Hindi, although they are numerically a minority if we take the entire city of Calcutta or the State of West Bengal as a unit.
Likewise Bengolis residing in a particular ward in a town in Bihar where they may form the majority will not be entitled to conserve their language, script or culture by imparting education in Bengali.
These are, no doubt, extreme illustrations, but they serve to bring out the fallacy inherent in the argument on this part of the case advanced by learned counsel for the State of Kerala.
Reference has been made to article 350 A in support of the argument that a local authority may be taken as a unit.
The illustrations given above will apply to that case also.
Further such a construction will necessitate the addition of the words " within their jurisdiction " after the words " minority groups ".
The last sentence, of that Article also appears to run counter to such argument.
We need not, however, on this occasion go further into the matter and enter upon a discussion and express a final opinion as to whether education being a State subject being item 11 of List 11 of the Seventh Schedule to the Constitution subject only to the provisions of entries 62, 63, 64 and 66 of List I and 1050 entry 25 of List III, the existence of a minority community should in all circumstances and for purposes of all laws of that State be determined on the basis of the population of the whole State or whether it should be determined on the State basis only when the validity of a law extending to the whole State is in question or whether it should be determined on the basis of the population of a particular locality when the law under attack applies only to that locality, for the Bill before us extends to the whole of the State of Kerala and consequently the minority must be determined by reference to the entire population of that State.
By this test Christians, Muslims and Anglo Indians will certainly be minorities in the State of Kerala.
It is admitted that out of the total population of 1,42,00,000 in Kerala there are only 34,00,000 Christians and 25,00,000 Muslims.
The Anglo Indians in the State of Travancore Cochin before the re Organisation of the States numbered only 11,990 according to the 1951 Census.
We may also emphasise that question 2 itself proceeds on the footing that there are minorities in Kerala who are entitled to the rights conferred by article 30 (1) and, strictly speaking, for answering question 2 we need not enquire as to what a minority community means or how it is to be ascertained.
We now pass on to the main point canvassed before us, namely, what are the scope and ambit of the right conferred by article 30 (1).
Before coming to grips with the main argument on this part of the case, we may (teal with a minor point raised by learned counsel for the State of Kerala.
He contends that there are three conditions which must be fulfilled before the protection and privileges of article 30 (1) may be claimed, namely, (1) there must be a minority community, (2) one or more of the members of that community should, after the commencement of the Constitution, seek to exercise the right to establish an educational institution of his or their choice, and (3) the educational institution must be established for the members of his or their own community.
We have already determined, according to the test referred to above, that the Anglo Indians, Christians and Muslims are minority communities in the 1051 State of Kerala.
We do not think that the protection and privilege of article 30 (1) extend only to the educational institutions established after the date our Constitution came into operation or which may hereafter be established.
On this hypothesis the educational institutions established by one or I more members of any of these communities prior to the commencement of the Constitution would not be entitled to the benefits of article 30 (1).
The fallacy of this argument becomes discernible as soon as we direct our attention to article 19(1)(g) which, clearly enough, applies alike to a business, occupation or profession already started and carried on as to those that may be started and carried on after the commencement of the Constitution.
There is no reason why the benefit of article 30(1) should be limited only to educational institutions established after the commencement of the Constitution.
The language employed in article 30(1) is wide enough to cover both pre Constitution and post Constitution institutions.
It must not be overlooked that article 30(1) gives the minorities two rights, namely, (a) to establish, and (b) to administer, educational institutions of their choice.
The second right clearly covers pre Constitution schools just as article 26 covers the right to maintain pre Constitution religious institutions.
As to the third condition mentioned above, the argument carried to its logical conclusion comes to this that if a single member of any other community is admitted into a school established for the members of a particular minority community, then the educational institution ceases to be an educational institution established by the particular minority community.
The argument is sought to be reinforced by a reference to article 29(2).
It is said that an educational institution established by a minority community which does not seek any aid from the funds of the State need not admit a single scholar belonging to a community other than that for whose benefit it was established but that as soon as such an educational institution seeks and gets aid from the State coffers article 29(2) will preclude it from denying admission to members of the other communities on grounds only of religion, race, caste, 1052 language or any of them and consequently it will cease to be an educational institution of the choice of the minority community which established it.
This argument does not appear to us to be warranted by the language of the Article itself.
There is no such limitation in article 30(1) and to accept this limitation will necessarily involve the addition of the words " for their own community " in the Article which is ordinarily not permissible according to well established rules of interpretation.
Nor is it reasonable to assume that the purpose of article 29(2) was to deprive minority educational institutions of the aid they receive from the State.
To say that an institution which receives aid on account of its being a minority educational institution must not refuse to admit any member of any other community only on the grounds therein mentioned and then to say that as soon as such institution admits such an outsider it will cease to be a minority institution is tantamount to saying that minority institutions will not, as minority institutions, be entitled to any aid.
The real import Of article 29(2) and article 30(1) seen is to us to be that they clearly contemplate a, minority institution with a sprinkling of outsiders admitted into it.
admitting a non member into it the minority institution does not shed its character and cease to be a minority institution.
Indeed the object of conservation of ' the distinct language, script and Culture of a minority may be better served by propagating the same amongst non members of the particular minority community.
In our opinion, it is not possible to read this condition into Art ' 30(1) of the Constitution.
Having disposed of the minor point, referred to above, we now take up the main argument advanced before us as to the content of article 30(1).
The first point to note is that the Article gives certain rights not only to religious minorities but also to linguistic minorities.
In the next place, the right conferred on such minorities is to establish educational institutions of their choice.
It does not say that, minorities based on religion should establish educational institutions for teaching religion only, or that linguistie minorities 1053 should have the right to establish educational institutions for teaching their language only.
What the article says and means is that the religious and the linguistic minorities should have the right to establish educational institutions of their choice.
There is no limitation placed on the subjects to be taught in such educational institutions.
As such minorities will ordinarily desire that their children should be brought up properly and efficiently and be eligible for higher university education and go out in the world fully equipped with such intellectual attainments as will make them fit for entering the public services, educa tional institutions of their choice will necessarily include institutions imparting general secular education also.
In other words, the Article leaves it to their choice to establish such educational institutions as will serve both purposes, namely, the purpose of conserving their religion, language or culture, and also the purpose of giving a thorough, good general education to their children.
The next thing to note is that the Article, in terms, gives all minorities, whether based on religion or language, two rights, namely, the right to establish and the right to ad minister educational institutions of their The key to the understanding of the true meaning and implication of the Article under consideration are the words " of their own choice ".
It is said that the dominant word is " choice " and the content of that Article is as wide as the choice of the particular minority community may make it.
The ambit of the rights conferred by Art:30(1) has, therefore, to be determined on a consideration of the matter from the points of view of the educational institutions themselves.
The educational institutions established or administered by the minorities or to be so established or administered by them in exercise of the rights conferred by that, Article, may be classified into three categories, namely, (1) those which do not seek either aid or recognition from the State, (2) those which want aid, and (3) those which want only recognition but not aid.
As regards the institutions which come within the first category, they are, by cl. 38 of the Bill, outside 1054 the purview of the Bill and, according to learned counsel for the State of Kerala, nothing can be done for or against them under the Bill.
They have their right under article 30(1) and they can, says learned counsel, exercise that right to their heart 's content unhampered by the Bill.
Learned counsel appearing for the institutions challenging the validity of the Bill, on the other hand, point to cl. 26 of the Bill to which reference has already been made.
They say that if the educational institutions, present or future, which come within the first category happen to be located within an area of compulsion they will have to close down for want of scholars, for all guardians residing within such area are, by cl. 26, enjoined, on pain of penalty provided by el. 28, to send their wards only to Government schools or private schools which, according to the definition, means aided or recognised schools.
Clause 26, it is urged, abridges and indeed takes away the fundamental right conferred on the minorities by article 30(1) and is, therefore, unconstitutional.
The educational institutions coming within the first category, not being aided or recognised are, by el. 38, prima facie outside the purview of the Bill.
None of the provisions of the Bill including those mentioned in the Question apply to them and accordingly the point sought to be raised by them, namely, the infraction of their right under article 30(1) by el.
26 of the Bill does not come within the scope of question 2 and we cannot, on the present reference, express any opinion on that point.
As regards the second category, we shall have to sub divide it into two classes, namely, (a) those which are by the Constitutional itself expressly made eligible for receiving grants, and (b) those which are not entitled to any grant by virtue of any express provision of the Constitution but, nevertheless, seek to get aid.
Anglo Indian educational institutions come within sub category (a).
An Anglo Indian is defined in article 366(2).
The Anglo Indian community is a wellknown minority community in India based on religion as well as language and has been recognised 1055 as such by this Court in The State of Bombay vs Bombay Education Society (1).
According to the figures set out in the statement of case filed by the" two Anglo Indian institutions represented before us by Shri Frank Anthony, about which figures there is no dispute, there are 268 recognised Anglo Indian schools in India out of which ten are in the State of Kerala.
Anglo Indian educational institutions established prior to 1948 used to receive grants from the Government of those days.
Article 337, presumably in view of the special circumstances concerning the Anglo Indian community and to allay their natural fears for their future well being, preserved this bounty for a period of ten years.
According to that Article all Anglo Indian educational institutions which were, receiving grants up to the financial year ending on March 31, 1948, will continue to receive the same grant subject to triennial diminution of ten per cent.
until the expiry of ten years when the grant, to the extent it is a special concession to the Anglo Indian community, should cease.
The second proviso imposes the condition that at least 40 per cent.
of the annual admissions must be made available to the members of comnunities other than the Anglo Indian community.
Likewise article 29 (2) provides, inter alia, that no citizen shall be denied admission into any educational institution receiving aid out of State funds on grounds only of religion, race, caste, language or any of them.
These are the only constitutional limitations to the right of the Anglo Indian educational institutions to receive aid.
Learned counsel appearing for two Anglo Indian schools contends that the State of Kerala is bound to implement the provisions of article 337.
lndeed it is stated in the statement of case filed by the State of Kerala that all Christian schools are aided by that State and, therefore, the Anglo Indian schools, being also Christian schools, have been so far getting from the State of Kerala the grant that they are entitled to under Art,. 337.
Their grievance is that by introducing (1) ; , 583.
134 1056 this Bill the State of Kerala is now seeking to impose, besides the constitutional limitations mentioned in the second proviso to article 337 and article 29 (2), further and more onerous conditions on this grant to the Anglo Indian educational institutions although their constitutional right to such grant still subsists.
The State of Cls.
8(3),and 9 to13 besides other clauses attracted by cl.
3(5) of the Bill curtailing and, according to them completly takeing away, their constitutional right to manageown affairs as a price for the grant to which under article 337, they are entitled unconditionally except to the extent mentioned in the second proviso to that article and in article 29 (2).
Learned counsel for the State of Kerala does not seriously dispute, as indeed he cannot fairly do, that so far as the grant under article 337 is concerned the Anglo Indian educational institutions are entitled to receive the same without any fresh strings being attached to such grant, although he faintly suggests that the grant received by the Anglo Indian educational institutions under article 337 is not strictly speaking " aid " within the meaning of that word as used in the Bill.
We are unable to accept I that part of his argument as sound.
The word " aid" has not been defined in the Bill.
Accordingly we must give this simple English word its ordinary and natural meaning.
It may, in passing, be noted that although the word " grant " is used in article 337 the word " aid " is used in article 29 (2) and article 30 (2), but there can be no question that the word " aid " in these two Articles will cover the " grant " under article 337.
Before the passing of the said Bill the Anglo Indian educational institutions were receiving the bounty formerly from the State of Madras or Travancore Cochin and after its formation from the present new State of Kerala.
In the circumstances, the amount received by the AngloIndian institutions as grant under article 337 must be construed as " aid " within the meaning of the said Bill and these Anglo Indian educational institutions in receipt of this grant payable under article 337 must accordingly be regarded as aided schools " within 1057 the meaning of the definitions in cl. 2, sub cls.
(1) and (6).
The imposition of stringent terms as fresh or additional conditions precedent to this grant to the Anglo Indian educational institutions will, therefore, infringe their rights not only under article 337 but also under article 30 (1).
If the Anglo Indian educational institutions cannot get the grant to which they are entitled except upon terms laid down by the provisions of the Bill then, if they insist on the right of administration guaranteed to them by article 30 (1) they will have to exercise their option tinder the proviso to el. 3 (4) and remain content with mere recognisation, subject to certain terms therein mentioned which may also be an irksome and intolerable encroachment on their right of administration.
But the real point is that no educational institution can in modern times, afford to subsist and efficiently function without some State aid and, therefore, to continue their institutions they will have to seek aid and will virtually have to surrender their constitutional right of administering educational institutions of their choice.
the premises, they may, in our opinion, legitimately complain that so far as the grants under article 337 are concerned, the provisions of the clauses of the I ')ill mentioned in question 2 do in substance and effect infringe their fundamental rights under article 30 (1) and are to that extent void.
It is urged by learned counsel for the State of Kerala that this Court should decline to answer this question until rules are framed but if the provisions of the Bill are obnoxious on the face of them, no rule can cure that defect.
No or do we think that there is any substance in the argument advanced by learned counsel for Kerala that this Bill has ]lot introduced anything now and the Anglo Indian schools are not being subjected to anything beyond what they have been submitting to under the Education Acts and Codes of Travancore or Cochin or Madras.
In 1945 or 1947 when those Acts and codes came into operation there were no fundamental rights and there can be no loss of fundamental right merely on the ground of non exercise of it.
There is no case of estoppel here, assuming that there can be an estoppel against the 1058 Constitution.
There can be no question, therefore, that the Anglo Indian educational institutions which are entitled to their (,rants under article 337 are being subjected to onerous conditions and the provisions of the said Bill which legitimately come within question 2 as construed by us infringe their rights not only under article 337 but also violate their rights under article 30 (1) in that they are prevented from effectively exercising those rights.
it should be borne in mind that in determining the constitutional validity of a measure or a provision therein regard must be had to the real effect and impact thereof on the fundamental right.
See the decisions of this Court in Rashid Ahmad vs Muunicipal Board Kairana 's case (1), Mohd. Yasin vs The Town Area Committee, Jalalabad 's case (2) and The State of Bombay vs Bombay Education Society 's case (3).
Learned counsel for the State of Kerala next urges that each and every one of the Anglo Indian educational institutions are getting much more than what they are entitled to under article 337 and that consequently, in so far as , these Anglo Indian educational institutions are getting more than what is due to them under article 337, they are, as regards the excess, in the same position as other Anglo Indian educational institutions started after 1948 and the educational institutions established by other minorities who have no right to aid under any express provision of the Constitution but are in receipt of aid or seek to get it.
This takes us to the consideration of the cases of the educational institutions which fall within sub category (b) mentioned above, namely, the institutions which are not entitled to any grant of aid by virtue of any express provision of the Constitution but, nevertheless, seek to get aid from the State.
We have already seen that article 337 of the Constitution makes special provision for granting aid to Anglo Indian educational institutions established prior to 1948.
There is no constitutional provision for such grant of aid to educational institutions established by (1) ; , 571.
(2) ; , 577.
(3) ; , 583.
1059 the Anglo Indian community after 1948 or to those established by other minority communities at any time.
The other minority communities or even the Anglo Indian community in respect of post 1948 educational institutions have no constitutional right, fundamental or otherwise, to receive any grant from the State.
It is, however, well known that in modern times the demands and necessities of modern educational institutions to be properly and efficiently run require considerable expense which cannot be met fully by fees collected from the scholars and private endowments which are not adequate and, therefore, no educational institution can be maintained in a state of efficiency and usefulness without substantial aid from the State.
Articles 28(3), 29(2) and 30(2) postulate educational institutions receiving aid out of State funds.
By the bill now under consideration the State of Kerala also contemplates the granting of aid to educational institutions.
The said Pill, however, imposes stringent terms as conditions precedent to the grant of aid to educational institutions.
The provisions of the Bill have already been summarised in detail in an earlier part of this opinion and need not be recapitulated.
Suffice it to say that if the said Bill becomes law then, in order to obtain aid from State funds, an educational institution will have to submit to the conditions laid down in cls.
3. 5, 6, 7, 8, 9, 10, 11, 12, 14, 15 and 20.
Clause 36 empowers the Government to make rules providing for the giving of aids to private schools.
Learned counsel appearing for the educational institutions opposing the Bill complain that those clauses virtually deprive their clients of their rights under article 30(1).
Their grievances are thus stated: The gist of the right of administration of a school is the power of appointment, control and dismissal of teachers and other staff.
But under the said Bill such power of management is practically taken away.
Thus the manager must submit annual statements (el. 5).
The fixed assets of the aided schools are frozen and cannot be dealt with except with the permission of the authorised officer (cl. 6).
No educational agency of an aided 1060 school can appoint a manager of its choice and the manager is completely under the control of the authorised officer, for he must keep accounts in the manner he is told to do and to give periodical inspection of them, and on the closure of the school the accounts must be made over to the authorised officer (el. 7).
All fees etc.
collected will have to be made over to the Government (el. 8 (3)).
Government will take up the task of paying the teachers and the non teaching staff (cl. 9).
Government will prescribe the qualification of teachers (cl. 10).
The school authorities cannot appoint a single teacher of their choice, but must appoint persons out of the panel settled by the Public Service Commission (cl. 11).
The school authorities must provide amenities to teachers and cannot dismiss, remove, reduce or even suspend a teacher without the previous sanction of the authorised officer (cl. 12).
Government may take over the management on being satisfied as to certain matters and can then acquire it outright (el. 14) and it can also acquire the aided school, against on its satisfaction is to certain matters on which it is easily possible to entertain different views (cl. 15).
Clause 20 peremptorily prevents a private school, which means an aided or recognised school, from charging any fees for tuition in the primary classes where the number of scholars are the highest, Accordingly they contend that those provisions do offend the fundamental rights conferred on them by article 30(1).
Learned counsel appearing for the State of Kerala advances the extreme contention that article 30 (1) Confers on the minorities the fundamental right to establish and administer educational institutions of their choice and nothing more.
They are free to exercise such rights as much as they like and as long as they care to do so on their own resources.
But this fundamental right goes no further and cannot possibly extend to their getting financial assistance from the coffers of the State.
If they desire or seek to obtain aid from the State they must submit to the terms on which the State offers aid to all other educational institutions established by other people just as a person 1061 will have to pay 15 naye paise if he wants to buy a stamp for an inland letter.
Learned counsel appearing for the two Anglo Indian schools as well.
as learned counsel appearing for the Jamait ul ulemia iHind, on the other hand, insist in their turn, on an equally extreme proposition, namely, that their clients ' fundamental rights under article 30 (1) are, in terms, absolute and not only can it not be taken away but cannot even be abridged to any extent.
They draw our attention first to article 19 (1) (g) which confers on the citizens the fundamental right to carry on any business and then to cl. 6 of that article which permits reasonable restrictions being imposed on that fundamental right and they contend that, as there is no such provision in article 30 (1) conferring on the State any police power authorising the imposition of social control, the fundamental rights tinder article 30 (1) must be held to be absolute and cannot be subjected to any restriction whatever.
They reinforce their arguments by relying on articles 28 (3), 29 (2) and 30 (2) which, they rightly submit, do contemplate the grant of aid to educational institutions established by minority com munities.
Learned counsel also strongly rely on articles 41 and 46 of the Constitution which, as directive principles of State policy, make it the duty of the State to aid educational institutions and to promote the educational interests of the minorities and the weaker sections of the people.
Granting of aid to educational institutions is, according to learned counsel, the normal function of the Government.
The Constitution contemplates institutions wholly maintained by the State, as also institutions receiving aid from the State.
If, therefore, the granting of aid is a governmental function, it must, they say, be discharged in a reasonable way and without infringing the fundamental rights of the minorities.
There may be no fundamental right given to any person or body administering an educational institution to get aid from the State and indeed if the State has not sufficient funds it cannot distribute any.
Nevertheless if the State does distribute aid it cannot, they contend, attach such conditions to it as will deprive the 1062 minorities of their fundamental rights under article 30(1).
Attaching stringent conditions, such as those provided by the said Bill and summarised above, is violative of the rights guaranteed to the minorities by article 30(1).
Surrender of fundamental rights cannot, they conclude, be exacted as the price of aid doled out by the State.
We are thus faced will a problem of considerable complexity apparently difficult of solution.
There is, on the one hand the minority rights under article 30(1) to establish and administer educational institutions of their choice and the duty of the Government to promote education, there is, on the other side the obligation of the State under article 45 to endeavour to introduce free and compulsory education.
We have to reconcile between these two conflicting interests arid to give effect to both if that is possible and bring about a synthesis between the two.
The directive principles cannot ignore or override the fundamental rights but must, as we have said, subserve the fundamental rights.
We have already observed that article 30(1) gives two rights to the minorities, (1) to establish and (2) to administer, educational institutions of their choice.
The right to administer cannot obviously include the right to maladminister.
The minority cannot surely ask for aid or recognition for an educational institution run by them in unhealthy surroundings, without any competent teachers, possessing any semblance of Qualification, and which does not maintain even a fair standard of teaching or which teaches matters subversive of the welfare of the scholars.
It stands to reason, then, that the constitutional right to administer an educational institution of their choice does not necessarily militate against the claim of the State to insist that in order to In grant aid the State may prescribe reasonable regulations to ensure the excellence of the institutions to be aided.
Learned Attorney General concedes that reasonable regulations may certainly be imposed by the state as a condition for aid or even for recognition.
There is no right in any minority, other than Anglo Indians, to get aid, but, he contends, that if the State chooses to 1063 grant aid then it must not say " I have money and I shall distribute aid but I shall not give you any aid unless you surrender to me your right of administra .
" The State must not grant aid in such manner as will take away the fundamental right of the minority community under article 30(1).
Shri ( 'X. section Pathak appearing for some of the institutions opposing the Bill agrees that it is open to the State to lay down conditions for recognition, namely, that an institution must have a particular amount of funds or properties or number of students or standard of education and so forth and it is open to the State to make a law prescribing conditions for such recognition or aid provided, however, that such law is constitutional and does not infringe any fundamental right of the minorities.
Recognition and grant of aid, says Shri G. section Pathak, is the governmental function and, therefore, the State cannot impose terms as condition precedent to the grant of recognition or aid which will be violative of article 30(1).
According to the statement of case filed by the State of Kerala, every Christian school in the State is aided by the State.
Therefore, the conditions imposed by the said Bill on aided institutions established and administered by minority communities, like the Christians, including the Anglo Indian community, will lead to the closing down of all these aided schools unless they are agreeable to surrender their fundamental right of management.
No educational institutions can in actual practice be carried on without aid from the State and if they will not get it unless they surrender their rights they will, by compulsion of financial necessities, be compelled to give up their rights under article 30(1).
The legislative powers conferred on the legislatures of the States by articles 245 and 246 are subject to the other provisions of the Constitution and certainly to the provisions of Part III which confers fundamental rights which are, therefore, binding on the State legislatures.
The State legislatures cannot, it is clear, disregard or override those provisions merely by employing indirect methods of achieving exactly the 135 1064 same result.
Even the legislature cannot do indirectly what it certainly cannot do directly.
Yet that will be the effect of the application of these provisions of the Bill and according to the decisions of this Court already referred to it is the real effect to which regard is to be had in determining the constitutional validity of any measure.
Clauses 6, 7, 9, 10, 11, 12, 14, 15 and 20 relate to the management of aided schools.
Some of these provisions, e.g., 7, 10, 11(1), 12(1)(2)(3) and (5) may easily be regarded as reasonable regulations or conditions for the grant of aid.
Clauses 9, 11(2) and 12(4) are, however, objected to as going much beyond the permissible limit.
It is said that by taking over the collections of fees, etc., and by undertaking to pay the salaries of the teachers and other staff the Government is in reality confiscating the school fund and taking away the prestige of the school, for none will care for the school authority.
Likewise cl.
II takes away an obvious item of management, for the manager cannot appoint any teacher at all except out of the panel to be prepared by the Public Service Commission, which, apart from the question of its power of taking up such duties, may not be qualified at all to select teachers who will be acceptable to religious denominations and in particular sub el.
(2) of that clause is objectionable for it thrusts upon educational institutions of religious minorities teachers of Scheduled Castes who may have no knowledge of the tenets of their religion and may be otherwise weak educationally.
Power of dismissal, removal, reduction in rank or suspension is an index of the right of management and that is taken away by cl.
12(4).
These are, no doubt, serious inroads on the right of administration and appear perilously near violating that right.
But considering that those provisions are applicable to all educational institutions and that the impugned parts of cls. 9, 11 and 12 are designed to give protection and security to the ill paid teachers who are engaged in rendering service to the nation and protect the backward classes, we are pre pared, as at present advised, to treat these clauses 9, 11(2) and 12(4) as permissible regulations which the 1065 State may impose on the minorities as a condition for granting aid to their educational institutions.
We,, however, find it impossible to support cls.
14 and 15 of the said Bill as mere regulations.
The provisions of those clauses may be totally destructive of the rights under article 30(1).
It is true that the right to aid is not implicit in article 30(1) but the provisions of those clauses, if submitted to on account of their factual compulsion as condition of aid, may easily be violative of article 30(1) of the Constitution.
Learned counsel for the State of Kerala recognises that cls.
14 and 15 of the Bill may annihilate the minority communities ' right to manage educational institutions of their choice but submits that the validity of those clauses is not the subject matter of question 2.
But, as already explained, all newly established schools seeking aid or recognition are, by el.
3(5), made subject to all the provisions of the Act.
Therefore, in a discussion as to the constitutional validity of cl.
3(5) a discussion of the validity of the other clauses of the Bill becomes relevant, not as and by way of a separate item but in determining the validity of the provisions of el.
In our opinion, sub el. 3 of el. 8 and cls. 9, 10, 11, 12 and 13 being merely regulatory do not offend.
article 30(1), but the provisions of sub cl.
(5) of cl. 3 by making the aided educational institutions subject to cls.
14 and 15 as conditions for the.
grant of aid do offend against article 30(1) of the Constitution.
We now come to the, last category of educational institutions established and administered by minority communities which seek only recognition but not aid from the State.
The extreme arguments advanced with regard to recognition by learned counsel for the State of Kerala and learned counsel for the two Anglo Indian schools and learned counsel for the Muslim institutions proceed on the same lines as those advanced respectivly by them on the question as to granting of aid, namely, that the State of Kerala maintains that the minority communities may exercise their fundamental right under article 30(1) by establishing educational institutions of their choice wherever they like and administer the same in their own way 1066 and need not seek recognition from the Government, but that if the minority communities desire to have 'State recognition hey must submit to the terms imposed, as conditions precedent to recognition, on every educational institution.
The claim of the educational institutions of the minority communities, on the other hand, is that their fundamental right under article 30(1) is absolute and cannot be subjected to any restriction whatever.
Learned counsel for the two Anglo Indian schools appearing on this reference, relying on some decisions of the American Supreme Court, maintains that a child is not the creature of the State and the parents have the right to get their child educated in educational institutions of their choice.
Those American decisions proceed on the language of the due process clauses of the Fifth and the Fourteenth Amendments and have no application to a situation arising under our Constitution and we need not, therefore, discuss them in detail here.
Adverting to the two conflicting views propounded before us we repeat that neither of the two extreme propositions can be sustained and we have to reconcile the two, if possible.
Article 26 gives freedom to religious denominations or any section thereof, subject to public order, morality and health, to establish and maintain institutions for religious and charitable purposes.
Article 29(1) gives protection to any section of citizens residing in the territory of India having a distinct language, script or culture of its own the right to conserve the same.
As we have already stated, the distinct language, script or culture of a minority community can best be conserved by and through educational institu tions, for it is by education that their culture can be inculcated into the impressionable minds of the children of their community.
It is through educational institutions that the language and script of the minority community can be preserved, improved and strengthened.
It is, therefore, that article 3O(1) confers on all minorities, whether based on religion or language, the right to establish and administer educational institutions of their choice.
The minorities, quite understandably, regard it as essential that the education 1067 of their children should be in accordance with the teachings of their religion and they hold, quite honestly, that such an education cannot be obtained in ordinary schools designed for all the members of the public but can only be secured in schools conducted under the influence and guidance of people well versed in the tenets of their religion and in the traditions of their culture.
The minorities evidently desire that education should be imparted to the children of their community in an atmosphere congenial to the growth of their culture.
Our Constitution makers recognised the validity of their claim and to allay their fears conferred on them the fundamental rights referred to above.
But the conservation of the distinct language, script or culture is not the only object of choice of the minority communities.
They also desire that scholars of their educational institutions should go out in the world well and sufficiently equipped with the qualifications necessary for a useful career in life.
But according to the Education Code now in operation to which it is permissible to refer for ascertaining the effect of the impunged provision on existing state of affairs, the scholars of unrecognised schools are not permitted to avail themselves of the opportunities for higher education in the University and are not eligible for entering the public services.
Without recognition, therefore, the educational institutions established or to be established by the minority communities cannot fulfil the real objects of their choice and the rights under article 30(1) cannot be effectively exercised.
The right to establish educational institutions of their choice must, therefore, mean the right to establish real institutions which will effectively serve the needs of their community and the scholars who resort to their educational institutions.
There is, no doubt, no such thing as fundamental right to recognition by the State but to deny recognition to the educational institutions except upon terms tantamount to the surrender of their constitutional right of administration of the educational institutions of their choice is in truth and in effect to deprive them of their rights under article 30(1).
We repeat that the legislative power is subject to the 1068 fundamental rights and the legislature cannot indirectly take away or abridge the fundamental rights which it could not do directly and yet that will be the result if the said Bill containing any offending clause becomes law.
According to the decisions of this Court referred to above, in judging the validity of any law regard must be had to its real intendment and effect on the rights of the aggrieved parties, rather than to its form.
According to the Education Codes certain conditions are prescribed whether as legislative or as executive measures we do not stop to enquire as conditions for the grant of recognition and it is said, as it was said during the discussion on the question of aid, that the said Bill imposes no more burden than what these minority educational institutions along with those of other communities are already subjected to.
As we have observed there can be no question of the loss of a fundamental right merely by the non exercise of it.
There is no case here of any estoppel, assuming that there can be any estoppel against the Constitution.
Therefore, the impugned provisions of the said Bill must be considered on its merits.
By cl. 19 the following clauses, namely, 7 (except sub cls.
I and 3 which apply only to aided schools), 10 and 20 were made applicable to recognised schools.
We are prepared to accept the provisions of sub cls. 2, 4 to 9 of cl. 7 and the provisions of cl. 10 as permissible regulations but it is difficult to treat el. 20 as merely regulatory.
That clause peremptorily requires that no fees should be charged for tuition in the primary classes.
There is no dispute that the number of pupils in the primary classes is more than that in the other classes.
The 1955 1956 figures of school going children, as to which there is no dispute, show that of the age group) of 6 to II cent per cent.
of boys attend classes, while 91 per cent.
of girls of that age group do the same.
There is a drop in attendance when we come to age group 11 to 14.
In that age group 36.2 per cent.
of boys and 29 per cent.
of girls go to school.
It is clear, therefore, that although the rate of fees charged in primary classes is lower than those charged in higher classes, the total amount collected from scholars 1069 attending primary classes is quite considerable and forms an appreciable part of the total income of the school.
If this Bill becomes law, all these schools will have to forego this fruitful source of income.
There is, however, no provision for counterbalancing the loss of fees which will be brought about by el. 20 when it comes into force.
There is no provision, such as there is in el. 9 which applies to aided schools only, that the State should make good that loss.
Therefore, the ,imposition of such restriction against the collection of fees from any pupil in the primary classes as a condition for recognition will in effect make it impos sible for an educational institution established by a minority community being carried on.
It is true that el. 36(2)(c) empowers the Government to make rules providing for the grant of recognition to private schools and we are asked to suspend our opinion until the said Bill comes into force and rules are actually made.
But no rule to be framed under el. 36(2)(c) can nullify the constitutional infirmity of cl.
3(5) read with cl. 20 which is calculated to infringe the fundamental rights of minority communities in respect of recognised schools to be established after the commencement of the said Bill.
Learned counsel for the State of Kerala referred us to the directive principles contained in article 45 which requires the State to endeavour to provide, within a period of ten years from the commencement of the Constitution, for free and compulsory education for all children until they complete the age of fourteen years and with considerable warmth of feeling and indignation maintained that no minorities should be permitted to stand in the way of the implementation of the sacred duty cast upon the State of giving free and compulsory primary education to the children of the country so as to bring them up properly and to make them fit for discharging the duties and responsibilities of good citizens.
To pamper to the selfish claims of these minorities is, according to ].earned counsel, to set back the hands of the clock of progress.
Should these minorities, asks learned counsel, be permitted to perpetuate the sectarian fragmentation of the people 1070 and to keep them perpetually segregated in separate and isolated cultural enclaves and thereby retard the unity of the nation ? Learned counsel for the minority institutions were equally cloquent as to the sacred.
obligation of the State towards the minority communities.
It is not for this Court to question the wisdom of the supreme, law of the land.
We the people of India have given unto ourselves the Constitution which is not for any particular community or section but for all.
Its provisions are intended to protect all, minority as well as the majority communities.
There can be no manner of doubt that our Constitution has guaranteed certain cherished rights of the minorities concerning their language, culture and religion.
These concessions must have been made to them for good and valid reasons.
Article 45, no doubt, requires the State to provide for free and compulsory education for all children, but there is nothing to prevent the State from discharging that solemn obligation through Government and aided schools and article 45 does not require that obligation to be discharged at the expense of the minority communities.
So long as the Constitution stands as it is and is not altered, it is, we conceive, the duty of this Court to uphold the fundamental rights and thereby honour our sacred obligation to the minority communities who are of our own.
Throughout the ages endless inundations of men of diverse creeds, cultures and races Aryans and non Aryans, Dravidians and Chinese, Scythians, Huns, Pathans and Mughalshave come to this ancient land from distant regions and climes.
India has welcomed them all.
They have met and gathered.
given and taken and got mingled, merged and lost in one body India 's tradition has thus been epitomised in the following noble lines: " None shall be turned away From the shore of this vast sea of humanity That is India ".
Indeed India has sent out to the world her message of goodwill enshrined and proclaimed in our National Anthem: Poems by Rabindranath Tagore.
1071 Day and night ,the voice goes out from land to land, calling Hindus, Buddhists, Sikhs and Jains round thy throne and Parsees, Mussalmans and Christians.
Offerings are brought to thy shrine by the East and the West to be woven in a garland of love.
Thou bringest the hearts of all peoples into the harmony of one life, Thou Dispenser of India 's destiny, Victory, Victory, Victory to thee.
"* It is thus that the genius of India has been able to find unity in diversity by assimilating the best of all creeds and cultures.
Our Constitution accordingly recognises our sacred obligations to the minorities.
Looking at the rights guaranteed to the minorities by our Constitution from the angle of vision indicated above, we are of opinion that el. 7 (except sub cls.
I and 3 which apply only to aided schools) and cl. 10 may well be regarded as permissible regulation which the State is entitled to impose as a condition for according its recognition to any educational institution but that el. 20 which has been extended by el. 3 (5) to newly established recognised schools, in so far as it affects educational institutions established and administered by minority communities, is violative of article 30 (1).
Question 4 : This question raises the constitutional validity of cl. 33 of the said Bill.
That clause, which has hereinbefore been set out in full, provides that notwithstanding anything contained in the Code of Civil Procedure, 1908, or any other law for the time being in force no Court shall grant any temporary injunction or make any interim order restraining any proceeding which is being or about to be taken under the provisions of the Bill when it becomes an Act.
Article 226 of the Constitution confers extensive jurisdiction and power on the High Courts in the States.
This jurisdiction and power extend throughout the territories in relation to which the High Court exercises *Rabindranath Tagore.
136 1072 jurisdiction.
It can issue to any person or authority, including in appropriate cases any Government, within those territories, directions, orders or writs of the nature mentioned therein for the enforcement of the fundamental rights or for any other purpose.
No enactment of a State Legislature can, as long as that Article stands, take away or abridge the jurisdiction and power conferred on the High Court by that Article.
The question is whether cl. 33 does so.
The doubts which have arisen with regard to cl. 33 are thus formulated in the order of reference : " AND WHEREAS clause 33 of the said Bill provides that, notwithstanding anything contained in the Code of Civil Procedure, 1908, or any other law for the time being in force, no courts can grant any temporary injunction or make any interim order restraining any proceedings which is being or about to be taken under the Act; AND WHEREAS a doubt has arisen whether the provisions of the said clause 33, in so far as they relate to the jurisdiction of the High Courts, would offend Article 226 of the Constitution, The State of Kerala in their statement of case disowns in the following words all intentions in that behalf : " 52.
Kerala State asks this Honourable Court to answer the fourth question in the negative, on the ground that the power given to High Courts by article 226remains unaffected by the said cl. 33.
Kerala State contends that the argument that cl.33 affects article 226 is without foundation.
The Constitution is the paramount law of the land, and nothing short of a constitutional amendment as provided for under the Constitution can affect any of the provisions of the Constitution, including article 226.
The power conferred upon High Courts under article 226 of the Constitution is an Over riding power entitling them, under certain conditions and circumstances, to issue writs, orders and directions to subordinate courts, tribunals and authorities notwithstanding any rule or law to the contrary Learned counsel for the State of Kerala submits that el.
33 must be read subject to articles 226 and 32 of the 1073 Constitution.
He relies on the well known principle of construction that if a provision in a statute is capable of two interpretations then that interpretation should be adopted which will make the provision valid rather than the one which will make it invalid.
He relies on the words " other law for the time being in force " as positively indicating that the clause has not the constitution in contemplation, for it will be inapt to speak of the Constitution as a " law for the time being in force ".
He relies on the meaning of the word "Law " appearing in articles 2, 4, 32 (3) and 367(1) of the Constitution where it must mean law enacted by a legislature.
He also relies on the definition of " Indian Law " in section 3(29) of the General Clauses Act and submits that the word " Law " in cl. 33 must mean a law of the same kind as the Civil Procedure Code of 1908, that is to say, a law made by an appropriate Legislature in exercise of its legislative function and cannot refer to the Constitution.
We find ourselves in agreement with this contention of learned counsel for the State of Kerala.
We are not aware of any difficulty and none has been shown to us in construing cl.
33 as a provision subject to the overriding provisions of article 226 of the Constitution and our answer to question No. 4 must be in the negative.
In accordance with the foregoing opinion we report on the questions as follows: Question No. 1 : No. QuestionNo.
2: (i) Yes, so far as Anglo Indian educational institutions entitled to grant under article 337 are concerned.
(ii) As regards other minorities not entitled to grant as of right under any express provision of the Constitution, but are in receipt of aid or desire such aid and also as regards AngloIndian educational institutions in so far as they are receiving aid in excess of what are due to them under article 337, clauses 8(3), and 9 to 13 do not offend article 30(1) but clause 3(5) in so far as it makes such educational institutions subject to clauses 14 and 15 do offend article 30(1).
(iii) Clause 7 (except sub cls.
(1) and (3) which applies only to aided schools), cl. 10 in 1074 so far as they apply to recognised schools to be established after the said Bill comes into force do not offend article 30(1) but cl.
3(5) in so far as it makes the new schools established after the commencement of the Bill subject to el. 20 does offend article 30(1).
Question No. 3: No. Question No. 4: No ; clause 33 is subject to article 226 of the Constitution.
VENKATARAMA AIYAR J.
I agree that the answer to Questions Nos 1, 3 and 4 should be as stated in the judgment of My Lord, the Chief Justice.
But as regards Question No. 2, 1 am unable to concur in the view expressed therein that Cl.
(20) of the Bill is, in its application to educational institutions of minorities, religious or linguistic, repugnant to article 30(1) of the Constitution , and is, in consequence, to that extent void.
Clause (20) provides that: " No fee shall be payable by any pupil for any tuition in the primary classes in any Government or private school.
" Now, the question is whether this Clause is violative of the right which article 30(1) confers on all minorities based on religion or language, to establish and administer educational institutions of their choice.
Ex facie, Cl.
(20) does not prohibit the establishment or administration of such institutions by the minorities; it only provides that in private schools no fee shall be payable by students in the primary classes.
On the terms of this Clause, therefore, it is difficult to see how it offends article 30(1).
But it is contended by learned counsel who appeared for the minorities that in practice no school could be run unless fees are collected from the students, that therefore Cl.
(20) must, if operative, result in the extinction of the educational institutions of minorities, and that was a direct invasion of their right to establish and maintain those institutions.
It is no doubt the law that in deciding on the constitutionality of an enactment, regard must be had not merely to its language but also to its effect on the rights of the parties, not merely to what it says but to what it does.
Even so, it is difficult to see how 1075 Cl.
(20) can be said to infringe article 30(1).
It applies only to Government and private schools, and a private school is defined in Cl.
2(6) as " meaning an aided or recognised school ".
Clause (38) provides that : " Nothing in this Act shall apply to any school which is not a Government or a private school.
" The result is that there is no prohibition against minorities, religious or linguistic, establishing their own educational institutions and charging fees, so long as they do not seek aid or recognition from the State.
It is only when they make a demand on the State for aid or recognition that the provisions of the Bill will become applicable to them.
But it is argued that the right of the minorities to establish their own educational institutions will be Tendered illusory, if the students who pass out of them cannot sit for public examinations held by the State or be eligible for recruitment to State services, and that, it is said, is the effect of the non recognition of the institutions.
It is accordingly contended that for the effective exercise of the rights under article 30(1), it is necessary to imply therein a right in the minorities to have those institutions recognised by the State.
That is the crucial question that has to be determined.
If there is no right in the minorities to have their institutions recognised by the State, then the question whether Cl.
(20) is ail invasion of that right would not arise for decision.
It is only if we hold that such right is to be implied in article 30(1) that the further question will have to be considered whether Cl.
(20) infringes that right.
Now, whether minorities, religious or linguistic, have a right to get recognition for their institutions under article 30(1) must depend on the interpretation to be put on that Article.
There is nothing in it about recognition by the State of ' educational institutions established by minorities, and if we are to accept the contention of learned counsel appearing for them, we must read into the statute words such as " and it shall be the duty of the State to recognise such institutions.
" It is a rule of construction well established that words are not to be 1076 added to a statute unless they are required to give effect to its intention otherwise manifest therein, and that rule must apply with all the greater force here, seeing that what we are interpreting is a Constitution.
Now, a reference to the relevant provisions of the Constitution shows that such a right is not implicit in article 30(1).
Article 28(1) provides that no religious instruction shall be provided in any educational institution maintained wholly out of State funds.
Article 28(3) enacts that no person attending any educational institution recognised by the State or receiving aid out of State funds shall be required to take part in religious instruction.
Under article 29(2), no person is to be denied admission into any educational institution maintained by the State or receiving aid out of State funds on grounds only of religion, race, caste, language or any of them.
In article 30(2), there is express provision that in granting aid no discrimination should be made against any educational institution on the ground that it is under the management of a minority based on religion or language.
It is clear from the above catena of provisions that the Constitution makes a clear distinction between State maintained, State aided and State recognised educational institutions, and provides for different rights and obligations in relation to them.
If it intended that the minorities mentioned in article 30(1) should have a fundamental right in the matter of the recognition of their educational institutions by the State, nothing would have been easier than to have said so.
On the other hand, there is good reason to infer that it has deliberately abstained from imposing on the State such an obligation.
The educational institutions protected by article 30(1) might impart purely religious instruction.
Indeed, it seems likely that it is such institutions that are primarily intended to be protected by article 30(1).
Now, to compel the State to recognise those institutions would conflict with the fundamental concept on which the Constitution is framed that the State should be secular in character.
If institutions which give only religious education can have no right to compel recognition by the State 1077 under article 30(1), how could educational institutions established by minorities and imparting secular education be held to possess that right? The contents of article 30(1) must be the same as regards all institutions falling within its ambit.
Construing, therefore, Art.30(1) on its language, it is difficult to support the conclusion that it implies any right in the minorities to have their educational institutions recognised by the State.
The matter does not rest there.
There is in the Constitution a provision which seems clearly to negative the right, which is claimed on behalf of the minorities.
Article 45 provides that: " The State shall endeavour to provide, within.
a period of ten years from the commencement of this Constitution, for free and compulsory education for all children until they complete the age of fourteen years.
" It is precisely this obligation laid on the State by the Constitution that is sought to be carried out in cl.
(20) of the Bill.
Now, it should be clear that if the right of the minorities to establish and maintain educational institutions under article 30(1) carries with it an implied right to be recognised by the State, then no law of the State can compel them to admit students free and therefore article 45 can never become operative, since what it provides is free education for all children and not merely for children other than those who attend institutions falling within article 30(1).
It is contended that the directive principles laid down in Part IV cannot override the fundamental rights guaranteed by the Constitution, and that article 45 cannot be applied so as to defeat the rights conferred on minorities under article 30(1).
This is quite correct.
But the question here is, not whether a directive principle can prevail over a fundamental right, but whether there is a fundamental right in the minorities to have their educational institutions recognised by the State, and when there is nothing express about it in article 30(1) and it is only by implication that such a right is sought to be raised, it is pertinent to ask, can we by implication infer a right which is inconsistent 1078 with the express provisions of the Constitution? Considering the question, therefore, both on the language of article 30(1) and on the principle laid down in article 45, 1 find myself unable to accept the contention that the right of the minorities is not merely to establish educational institutions of their choice but to have them recognised by the State.
That must be sufficient to conclude this question.
But then it was argued that the policy behind article 30(1) was to enable minorities to establish and maintain their own institutions, and that that policy would be defeated if the State is not laid under an obligation to accord recognition to them.
Let us assume that the question of policy can be gone into, apart from the language of the enactment.
But what is the policy behind article 30(1) ? As I conceive it, it is that it should not be in the power of the majority in a State to destroy or to impair the rights of the minorities, religious or linguistic.
That is a policy which permeates all modern Constitutions, and its purpose is to encourage individuals to preserve and develop their own distinct culture.
It is well known that during the Middle Ages the accepted notion was that Sovereigns were entitled to impose their own religion on their subjects, and those who did not conform to it could be dealt with as traitors.
It was this notion that was responsible during the 16th and 17th Centuries for numerous wars between nations and for civil wars in the Continent of Europe, and it was only latterly that it came to be recognised that freedom of religion is not incompatible with good citizenship and loyalty to the State, and that all progressive societies must respect the religious beliefs of their minorities.
It is this concept that is embodied in articles 25, 26, 29 and 30.
Article 25 guarantees to persons the right to freely profess, practice and propagate religion.
Article 26 recognises the right of religious denominations to establish and maintain religious and charitable institutions.
Article 29(1) protects the rights of sections of citizens to have their own distinct language, script or culture.
Article 30(1) belongs to the same category as articles 25, 26 and 29, 1079 and confers on minorities, religious or linguistic, the right to establish and maintain their own educational institutions without any interference or hindrance from the State.
In other words, the minorities should have the right to live, and should be allowed by the State to live, their own cultural life as regards religion or language.
That is the true scope of the right conferred under article 30(1), and the obligation of the State in relation thereto is purely negative.
It cannot prohibit the establishment of such institutions, and it should not interfere with the administration of such institutions by the minorities.
That right is not, as I have already pointed out, infringed by Cl.
The right which the minorities now claim is something more.
They want not merely freedom to manage their own affairs, but they demand that the State should actively intervene and give to their educational institutions the imprimatur of State recognition.
That, in my opinion, is not within article 30(1).
The true intention of that Article is to equip minorities with a shield whereby they could defend themselves against attacks by majorities, religious or linguistic, and not to arm them with a sword whereby they could compel the majorities to grant concessions.
It should be noted in this connection that the Constitution has laid on the State various obligations in relation to the minorities apart from what is involved in article 30(1).
Thus, article 30(2) provides that a State shall not, when it chooses to grant aid to educational institutions, discriminate against institutions of minorities based on language or religion.
Likewise, if the State frames regulations for recognition of educational institutions, it has to treat all of them alike, without discriminating against any institution on the ground of language or religion.
The result of the constitutional provisions bearing on the question may thus be summed up: (1)The State is under a positive obligation to give equal treatment in the matter of aid or recognition to all educational institutions, including those of the minorities, religious or linguistic.
137 1080 (2)The State is under a negative obligation as regards those institutions, not to prohibit their establishment or to interfere with their administration.
Clause 20 of the Bill violates neither of these two obligations.
On the other hand, it is the contention of the minorities that must, if accepted, result in discrimination by the State.
While recognised institutions of the majority communities will be subject to el.
(20), similar institutions of minority communities falling within article 30(1) will not be subject to it.
The form cannot collect fees, while the latter can.
This surely is discrimination.
It may be stated that learned counsel for the minorities, when pressed with the question that on their contention article 45 must become a dead letter, answered that the situation could be met by the State paying compensation to the minority institutions to make up for the loss of fees.
That serves clearly to reveal that what the minorities fight for is what has not been granted to them under article 30(2) of the Constitution, viz., aid to them on the ground of religion or language.
In my opinion, there is no justification for putting on article 30(1) a construction which would put the minorities in a more favoured position than the majority communities.
I have so far discussed the scope of article 30(1) on its language and on the principle underlying it.
Coming next to the authorities, cited before us, the observations in City of Winnipeg vs Barrett: City of Winnipeg vs Logan (1) would appear to support the contention of the State of Kerala that Cl.
(20) does not offend article 30(1).
That was a decision on section 22 of the Manitoba Act, 1870, which is as follows: " In and for the province, the said legislature may exclusively make laws in relation to education, subject and according to the following provisions: (1)Nothing in any such law shall prejudicially affect any right or privilege with respect to denominational schools which any class of persons have by law or practice in the province at the Union.
" Now, the facts are that there were in Manitoba deno minational schools run by Roman Catholics which (1) 457 1081 were maintained with fees paid by students and donation,,; from the Church.
In 1890, the Provincial Legislature passed the Public Schools Act, and it enacted that all Protestant and Roman Catholic school districts should be subject to the provisions of this Act, and that all public schools should be free schools.
A portion of the legislative grant for education was to be allotted to public schools, and it was provided that any school not conducted according to all the provisions of the Act or the regulations of the Department of Education should not be deemed to be a public school within the meaning of the Act and was not to be entitled to participate in the grant.
The validity of these provisions was challenged by the Roman Catholic institutions on the ground that they contravened section 22 of the Manitoba Act, and infringed the rights and privileges guaranteed therein.
The Supreme Court of Canada upheld this contention; but this judgment was reversed by the Privy Council, and it was held that the provisions of the Act did not offend section 22 of the Manitoba Act.
Lord Macnagliten delivering the judgment of the Board observed: " Notwithstanding the Public Schools Act, 1890, Roman Catholics and members of every other religious body in Manitoba are free to establish schools throughout the province ; they are free to maintain their schools by school fees or voluntary subscriptions; they are free to conduct their schools according to their own religious tenets without molestation or interference ".
In the result, it was held that the Act did not infringe the rights of the denominational institutions under section 22.
These observations appear to be very apposite to the present contention.
The position occupied by the minority institutions under article 30(1) is not dissimilar to that of the Roman Catholic schools of Manitoba under section 22 of the Act of 1870, and the position created by Cl.
(20) is precisely that which the 1890 Act created in that Province.
It remains to notice the contention advanced by Mr. Pritt that the basis on which the arguments of the counsel for the minorities proceeded that students 1082 who pass out of unrecognised institutions were at a ,disadvantage in the matter of eligibility to sit at public examinations or to be admitted in the services to the State, was itself without foundation, and that even if there was any substantial discrimination in treatment between students who pass out of unrecognised schools and those who pass out of Government or recognised schools, that was the result of provisions of the Education Codes in force in the State, that it might be that those provisions are bad as infringing article 30(1) of the Constitution, but that did not affect the validity of cl.
(20) as that was inapplicable to unrecognised institutions by virtue of cl.
(38), and that, in consequence, there was nothing in the Bill which could be said to offend article 30(1).
The rules of the Education Code are not really before us, and they are not the subject matter of the present reference.
In my view, there is much to be said in favour of the contention that if article 30(1) is at all infringed, it is by the rules of the Education Code and not by el.
But it is unnecessary to pursue this aspect further, as I consider that even otherwise, the vires of Cl.
(20) is not open to question.
In my view, that Clause does not offend article 30(1) and is intra vires.
I agree that Cls.
(14) and (15) must be held to be bad, and the ground of my decision is this: It may be taken and indeed it is not disputed that if the State grants aid to an educational institution, it must have the power to see that the institution is properly and efficiently run, that the education imparted therein is of the right standard, that the teachers possess the requisite qualifications, that the funds are duly applied for the purpose of the institution and the like.
In other words, the State must have large powers of regulation and of control over State aided educational institutions.
These powers must be liberally construed, and the decision of the Legislature as to what they should be is not to be lightly interfered with, as it is presumed to know best the needs of the State, the nature and extent of the evils rampant therein and the steps that should be taken to remedy them.
But the power to regulate does not, in general, comprehend 1083 the power to prohibit, and the right to control the affairs of an institution cannot be exercised so as to extinguish it.
Now, Cls.
(14) and (15) operate to put an end to the right of private agencies to establish and maintain educational institutions and cannot be upheld as within the power of the State to regulate or control.
The State is undoubtedly free to stop aid or recognition to a school if it is mismanaged.
It can, even as an interim measure, arrange in the interests of the students to run that school, pending its making other arrangements to provide other educational facilities.
It can also resume properties which had been acquired by the institutions with the aid.
of State grant.
But it cannot itself compulsorily take over the school and run it as its own, either on the terms set out in Cl.
(14) or Cl.
That is not a power which springs directly from the grant of aid.
To aid is not to destroy.
Those clauses would, in my opinion, infringe the right to establish and maintain institutions, whether such right is to be founded on article 19(1)(g) or article 30(1).
I should add that in Question No. 2, the question of the validity of Cl.
(20) or Cls.
(14) and (15) is not expressly referred for our opinion.
But it is said that the reference to Cl.
3(5) attracts all the provisions of the Bill, because the establishment of new institutions or schools is under that Clause subject to the provisions of the Bill and the rules made thereunder.
I have grave doubts whether on the terms of the reference, we are called upon to express our opinion on the validity of all the provisions of the Bill.
The reference is not generally on the vires of the provisions of the Bill.
It is limited to the validity of specified provisions, Cls.
3(5), 8(3) and 9 to 13.
There has been no satisfactory answer to the question as to why if it was intended that we should pronounce on the validity of all the provisions of the Bill, Cls.
8(3) and (9) to (13) should have been specifically mentioned.
Moreover, the reference is preceded by detailed recitals as to the doubts which had been raised in the mind of the President as to the validity of certain provisions, and there is no hint therein that there was any doubt 138 1084 concerning the vires of provisions other than those expressly mentioned.
If the maxim "Expressum facit cessare tacitum " can properly be invoked in the construction of instruments, it must a fortiori be so, in interpreting a document drawn up by the Union Government with great care and deliberation.
And having regard to the nature of the advisory jurisdiction under article 143, the reference should be construed narrowly rather than broadly.
But this discussion is academic, as there have been full arguments on the validity of all the provisions, and we are expressing our opinion thereon.
In the result, my answer to Question No. 2 is that, excepting Cls.
(14) and (15), the other provisions of the Bill do not offend article 30(1) of the Constitution.
As regards schools of the Anglo Indian Communities, article 337 provides for aid being given to them on the conditions and to the extent specified therein.
That is outside article 30(1) and independent of it, and I agree with My Lord, the Chief Justice, that the provisions of the Bill are, to the extent they affect or interfere with the rights conferred by that Article, bad.
Reference answered accordingly.
| This was a reference under article 143(1) of the Constitution made by the President of India for obtaining the opinion of the 996 Court upon certain questions relating to the constitutional validity of some of the provisions of the Kerala Education Bill, 1957, which had been passed by the Kerala Legislative Assembly but was reserved by the Governor for the consideration of the President.
The Bill, as its title and preamble indicated, had for its object the better Organisation and development of the educational service throughout the State, presumably, in implementation of the provisions of article 45 of the Constitution and conferred wide powers of control on the State Government in respect of both aided and recognised institutions.
Of the four questions referred to this Court, the first and third impugned cl.
3(5) read with cl. 36 and cl. 15 of the Bill as being discriminatory under article 14, the second impugned cls.
3(5), 8(3) and cls.
9 to 13 Of the Bill as being violative of minority rights guaranteed by article 30(1) and the fourth, cl. 33 of the Bill, as offending article 226 of the Constitution.
Clause 3(5) of the Bill made the recognition of new schools subject to the other provisions of the Bill and the rules framed by the Government under cl.
(36), Cl.
(15) authorised the Government to acquire any category of 'Schools, cl.
8(3) made it obligatory on all aided schools to hand over the fees to the Government, cls.
9 to 13 made provisions for the regulation and management of the schools, payment of salary to the teachers and the terms and conditions of their appointment and cl.
(33) forbade the granting of temporary injunctions and interim orders in restraint of proceedings under the Act.
This Court took the view that since cl.
3(5) attracted the other provisions of the Bill, in case anyone of them was found to be unconstitutional, cl.
3(5) itself could not escape censure.
Held (per Das C. J., Bhagwati, B. P. Sinha, Jafer Imam, section K. Das and J. L. Kapur JJ.), that although article 143(1) Of the Constitution, which virtually reproduced the provisions of section 213(1) of the Government of India Act, 1935, gave this Court the discretion, where it thought fit, to decline to express any opinion on the questions referred to it, the objection that such questions related, not to a statute brought into force but, to the validity of a Bill that was yet to be enacted, could be no ground for declining to entertain the reference.
Article 143(1) of the Constitution had for its object the removal of the doubts at the President and was in no way concerned with any doubts that a party might entertain and no reference could be incomplete or incompetent on the ground that it did not include other questions that could have been included in it and it was not for this Court to go beyond the reference and discuss them.
The Advisory jurisdiction conferred by article 143(1) was different from that conferred by article 143(2) of the Constitution in that the latter made it obligatory on this Court to answer the reference.
In re Levy of Estate Duty, , relied on.
997 Attorney General for Ontario vs Hamilton Street Railway, , Attorney General for British Columbia vs Attorney General for Canada, , ln re The Regulation and Control of Aeronautics In Canada, [1932] A. C. 54, In re Allocation of Lands and Buildings, [1943] F. C. R. 20 and In Ye ; , , considered.
A directive principle of State policy could not override a fundamental right and must subserve it, but no Court should in determining the ambit of a fundamental right, entirely ignore a directive principle but should try to give as much effect to both as possible by adopting the principle of harmonious construction.
State of Madras vs Smt.
Champakam Doraiyajan, [1951] S.C.R. 525 and Mohd. Hanif Quayeshi vs The State of Bihar, ; , referred to.
In answering the questions under reference, the merits or otherwise of the policy of the Government sponsoring the Bill could be no concern of this Court and its sole duty was to pronounce its opinion on the constitutional validity of such provisions of the Bill as were covered by the questions.
judged in the light of the principles laid down by a series of decisions of this Court explaining article 14 Of the Constitution, the clauses of the Bill that came within questions 1 and 3 could not be said to be violative of that Article.
The restriction imposed by cl.
3(5) read with cl. 26 of the Bill, which made it obligatory on the guardians to send their wards to a Government or a private school in an area of compulsion and thus made it impossible for a new school in such area, seeking neither aid nor recognition, to function, could not be said to be discriminatory since the State knew best the needs of its people, and such discrimination was quite permissible, based, as it was, on geographical classification.
Mohd. Hanif Ouareshi vs The State of Bihar, [1959] section C. R. 629, Chiyanjit Lal Chowdhury vs The Union of India, , Ramkrishna Dalmia vs Sri justice section R. Tendolkar; , , referred to.
No statute could be discriminatory unless its provisions discriminated, and since the provisions of the Bill did not do so, it could not be said to have violated equal protection of law by its uniform application to all educational institutions although not similarly situate.
Cumberland Coal Co. vs Board of Revision, (1931) 284 U. section 23; ; , held inapplicable.
The policy and purpose of a statute could be deduced from its long title and the preamble.
The impugned Bill laid down its policy in the long title and the preamble and reinforced it by 998 more definite statements in the different clauses and, consequently, such discretion as it left to the Government had to be exercised in implementing that policy.
The use of the word may in cl.
3(3) could make no difference, for once the purpose was established and the conditions of the exercise of the discretion were fulfilled, it was incumbent on the Government to exercise it in furtherance of that purpose.
If it failed to do so, the failure, and not the Bill, must be censured.
Biswambar Singh vs The State of Orissa, ; and Julius vs Lord Bishop of Oxford, (1880) 5 App.
CaS. 214, referred to.
Discretionary power was not necessarily discriminatory, and abuse of power by the Government could not be lightly assumed.
Apart from laying down the policy, the State Legislature provided for effective control by itself by cl. 37 and the proviso to cl. 15 of the Bill.
It could not, therefore, be said that the Bill conferred unguided or uncontrolled powers on the Government.
Article 30(1) Of the Constitution, which was a necessary concomitant to article 29(1) and gave the minorities the right to establish and administer their institutions, did not define the word 'minority ', nor was it defined anywhere else by the Constitution, but it was absurd to suggest that a minority or section envisaged by article 30(1) and article 29(1) could mean only such persons as constituted a numerical minority in the particular region where the educational institution was situated or resided under a local authority.
Article 350 A of the Constitution, properly construed, could lend no support to such a proposition.
As the impugned Bill extended to the entire State, minorities in the State must be determined on the basis of its entire population, and thus the Christians, the Muslims and the Anglo Indians would be its minority communities.
Article 30(1) of the Constitution made no distinction between minority institutions existing from before the Constitution or established thereafter and protected both.
It did not require that a minority institution should be confined to the members of the community to which it belonged and a minority institution could not cease to be so by admitting a non member to it.
Nor did article 30(1) in any way limit the subjects to be taught in a minority institution, and its crucial words " of their own choice ", clearly indicated that the ambit of the rights it conferred was determinable by the nature of the institutions that the minority communities chose to establish and the three categories into which such institutions could thus be classified were (1) those that sought neither aid nor recognition from the State, (2) those that sought aid, and (3) those that sought recognition but not aid.
The impugned Bill was concerned only with institutions of the second and third categories.
999 The word 'aid ' used by articles 29(2) and 30(2) included grant ' under article 337 of the Constitution and that word occurring in the Bill must have the same meaning.
Consequently, such clauses of the Bill mentioned in question No. 2 as imposed fresh and stringent conditions precedent to such grant over and above those to which it was subject under articles 337 and 29(2), violated not only article 337 but also, in substance and effect, article 30(1) of the Constitution and were to that extent void.
Rashid Ahmad vs Municipal Board, Kaiyana, ; , Mohd. Yasin vs The Town Area Committee, jalalabad; , and The State of Bombay vs Bombay Education Society, ; , referred to.
Although there was no constitutional right to the grant of aid except for Anglo Indian educational institutions under article 337 Of the Constitution, State aid was indispensable to educational institutions and Arts:, 28(2), 29(2) and 30(2) clearly contemplated the grant of such aid and articles 41 and 46 charged the State with the duty of aiding educational institutions and promoting such interests of the minorities.
But the right of the minorities to administer their educa tional institutions under article 30(1), was not inconsistent with the right of the State to insist on proper safeguards against maladministration by imposing reasonable regulations as conditions precedent to the grant of aid.
That did not, however, mean that the State Legislature could, in the exercise of its powers of legislation under articles 245 and 246 of the Constitution, override the fundamental rights by employing indirect methods, for what it had no power to do directly, it could not do indirectly.
So judged, cl.
3(5) of the Bill by bringing into operation and imposing cls.
14 and 15 as conditions precedent to the grant of aid, violated article 30(1) of the Constitution.
Similar considerations applied to the grant of State recognition as well.
No minority institution could fulfill its real object or effectively exercise its rights under article 30(1) without State recognition, as otherwise it would not be open to its scholars under the Education Code to avail of the opportunities for higher education in the University or enter the public services.
While it was undoubtedly true that there could be no fundamental right to State recognition, denial of recognition except on such terms as virtually amounted to a surrender of the right to administer the institution, must, in substance and effect infringe article 30(1) of the Constitution.
Clause 3(5), read with Cl. 20 of the Bill, in forbidding the charging of tuition fees in the primary classes, deprived the minority institutions of a fruitful source of income without compensation, as was provided by cl.
(9) for aided schools, and thus imposed a condition precedent to State recognition which was in 127 1000 effect violative of article 30(1) and was, therefore, void to that extent.
No rules, when framed under the Act, could cure such invalidity.
Article 45 of the Constitution did not require the State Government to provide free and compulsory education to the detriment of minority rights guaranteed by the Constitution,if the Government so chose it could do so through the Government and aided schools, and this Court was in duty bound to uphold such fundamental rights as the Constitution had thought fit to confer on the minority communities.
The wide powers and jurisdiction conferred on the High Courts by article 226 of the Constitution could not be affected by a provision such as cl.
(33) of the Bill, which forbade Courts to issue temporary injunctions or interim orders in restraint of any proceedings thereunder, and it must be read as subject to the overriding provisions of article 226 of the Constitution.
Venkatarama Aiyar J.
It was obvious that article 30(1) Of the Constitution did not in terms confer a right on the minority institutions to State recognition, nor, properly construed, could it do so by implication, for such an implication, if raised, would be contrary to the express provisions of article 45 Of the Constitution.
Article 30(1) was primarily intended to protect such minority institutions as imparted purely religious education and to hold that the State was bound thereunder to recognise them would be not only to render article 45 wholly infructuous but also to nullify the basic concept of the Constitution itself, namely, its secular character.
There was no conflict here between a fundamental right and a directive principle of State policy that must yield, and the principle of article 45 must have full play.
Clause (20) of the Bill was designed to enforce that principle and cl.
3(5) Of the Bill in making it a condition precedent to State recognition could not violate article 30(1) Of the Constitution.
Nor could a consideration of the policy behind article 30(1) lead to a different conclusion, assuming that the question of policy could be gone into apart from the language, since that policy was no other than that the majority community of the State should not have the power to destroy or impair the religious or linguistic rights of the minority communities.
The only two obligations, one a positive and the other a negative, that article 30(1) read with articles 25, 26, 29 and 30(2) of the Constitution imposed on the State were (1) to extend equal treatment as regards aid or recognition to all educational institutions, including those of the minorities, religious or linguistic, and (2) not to prohibit the establishment of minority institutions or to interfere with their administration.
To hold that the State Government was further bound under article 30(1) to accord recognition to minority institutions would be 1001 to put the minorities in a more favoured position than the majority community, which the Constitution never contemplated.
City Winnipeg vs Barrett : City of Winnipeg vs Logan, , referred to.
|
Summarize this legal judgement text concisely | 104 of 1957.
Petition under Article 32 of the Constitution for the enforcement of fundamental rights.
R. V. section Mani, for the petitioner.
267 H. N. Sanyal, Additional Solicitor General of India, R. Ganapathy Iyer and R. H. Dhebar for respondents, Nos. 1 3.
N.N. Keshwani, for I. N. Shroff, for respondent No. 4. 1958.
March 24.
The Judgment of Das C. J. Venkatarama Aiyar, section K. Das and Sarkar JJ.
was delivered by Das C. J. Bose J. delivered a separate Judgment.
DAS C. J. We have had the advantage of perusing the judgment prepared by our learned Brother Bose J. which he will presently read.
While we agree with him that this application must be dismissed, we would prefer to base our decision on reasons slightly different from those adopted by our learned Brother.
The relevant facts will be found fully set out by him in his judgment.
The petitioner has come up before us on an application under article 32 of the Constitution praying for setting aside the order made by the respondent No. 3 on March 19, 1956, directing the petitioner to stop the cutting of forest wood and for a writ, order or direction to the respondents not to interfere in any manner whatever with the rights of the petitioner to enter the forests, appoint her agents, obtain renewal passes, manufacture charcoal and to exercise other rights mentioned in the petition.
Since the application is under article 32 of the Constitution, the petitioner must make out that there has been an infringement of some fundamental right claimed by her.
The petitioner 's grievance is that the offending order has infringed her fundamental right under article 19(1)(f) and 19(1)(g).
She claims to have derived the fundamental rights, which are alleged to have been infringed, from a document dated April 26, 1948, whereby her husband Shri Balirambhau Doye, the proprietor of certain forests in eight several Tehsils, granted to her the right to take and appropriate all kinds of wood Building wood, fuel wood and bamboos, etc. from the said forests for a period from the 268 date of the document up to December 26, 1960.
The terms of the document have been sufficiently set out in the judgment to be presently delivered by Bose J. and need not be set out here.
The petitioner has paid Rs. 26,000 as consideration for the rights granted to her.
The genuineness of this document and the good faith of the parties thereto have not been questioned.
The document, however, has not been registered under the Indian Registration Act.
The nature of the rights claimed by the petitioner has to be ascertained on a proper interpretation of the aforesaid document.
We do not consider it necessary to examine or analyse the document minutely or to finally determine what we may regard as the true meaning and effect thereof, for, as will be presently seen, whatever construction be put on this document, the petitioner cannot complain of the breach of any of her fundamental rights.
If the document is construed as conveying to her any part or share in the proprietary right of the grantor, then, not being registered under the Indian Registration Act, the document does not affect the immoveable property or give her any right to any share or interest in the immoveable property.
Assuming that she had acquired a share or interest in the proprietary right in spite of the document not having been registered, even then that right has vested in the State under section 3 of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950, and she may in that case only claim compensation if any is payable to her under the Act.
If the document is construed as purely a license granted to her to enter upon the land, then that license must be taken to have become extinguished as soon as the grantor 's proprietary rights in the land vested in the State under section 3 of the Act.
if the document is construed as a license coupled with a grant, then the right acquired by her would be either in the nature of some profits a prendre which, being an interest in land, is immoveable property or a purely personal right under a contract.
If the document is construed as having given her a profits a prendre which is an interest in land, then also 269 the document will not affect the immoveable property and will not operate to transmit to the petitioner any such profits a prendre which is in the nature of ' immoveable property, as the document has not been registered under the Indian Registration Act, as has been held in Ananda Behera vs The State of Orissa (1).
If it is a purely personal right, then such right will have no higher efficacy than a right acquired under a contract.
If, therefore, the document is construed as a matter of contract, then assuming but without deciding that a contract is a property within articles 19(1)(f) or 31(1) of the Constitution, she cannot com plain, for the State has not acquired or taken possession of her contract in any way.
The State is not a party to the contract and claims no benefit under it.
The petitioner is still the owner and is still in possession of that contract, regarded as her property, and she can hold it or dispose of it as she likes and if she can find a purchaser.
The petitioner is free to sue the grantor upon that contract and recover damages by way of compensation.
The State is not a party to the contract and is not bound by the contract and accordingly acknowledges no liability under the contract which being purely personal does not run with the land.
If the petitioner maintains that, by some process not quite apparent, the State is also bound by that contract, even then she, as the owner of that contract, can only seek to enforce the contract in the ordinary way and sue the State if she be so advised, as to which we say nothing, and claim whatever damages or compensation she may be entitled to for the alleged breach of it.
This aspect of the matter does not appear to have been brought to the notice of this Court when it decided the case of Chhotabai Jethabai Patel and Co. vs The State of Madhya Pradesh (2) and had it been so done, we have no doubt that case would not have been decided in the way it was done.
For the reasons stated above, whatever rights, if any, may have accrued to the petitioner under that document on any of the several interpretations noted above, the cannot complain of the infringement by the (1) ; , (2) ; 270 State of any fundamental right for the enforcement of which alone a petition under article 32 is maintainable.
We, therefore, agree that this petition should be dismissed with costs.
BOSE J. This is a writ petition under article 32 of the Constitution in which the petitioner claims that her fundamental right to cut and collect timber in the forests in question has been infringed.
The petitioner 's husband, Balirambhau Doye, was the Zamindar of Pandharpur.
On April 26, 1948, he executed an unregistered document, that called itself a lease, in favour of his wife, the petitioner.
The deed gives her the right to enter upon certain areas in the zamindari in order to cut and take out bamboos, fuel wood and teak.
Certain restrictions are put on the cutting, and the felling of certain trees is prohibited.
But in the main, that is the substance of the right.
The term of the deed is from April 26, 1948 to December 26, 1960, and the consideration is Rs. 26,000.
The petitioner says that she worked the forests till 1950.
In that year the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950, which came into force on January 26, 1951, was enacted.
Under section 3 of that Act, all proprietary rights in the land vest in the State on and from the date fixed in a notification issued under sub section
The date fixed for the vesting in this area was March 31, 1951.
After that, the petitioner was stopped from cutting any more trees.
She therefore applied to the Deputy Commissioner, Bhandara, under section 6(2) of the Act for validating the lease.
The Deputy Commissioner held, on August 16, 1955, that the section did not apply because it only applied to transfers made after March 16, 1950, whereas the petitioner 's transfer was made on April 26, 1948.
But, despite that, he went on to hold that the Act did not apply to transfers made before March 16, 1950, and so leases before that could not be questioned.
He also held that the lease was genuine and ordered that the petitioner be allowed to work the forests subject to the conditions set out in 271 her lease and to the rules framed under section 218(A) of the C. P. Land Revenue Act.
It seems that the petitioner claimed compensation from Government for being ousted from the forests from 1951 to 1955 but gave up the claim on the understanding that she would be allowed to work the forests for the remaining period of the term in accordance with the Deputy Commissioner 's order dated August 16, 1955.
She thereupon went to the Divisional Forest Officer at Bhandara and asked for permission to work the forests in accordance with the above order.
She applied twice and, as all the comfort she got was a letter saying that her claim was being examined, she seems to have taken the law into her own hands, entered the forests and started cutting the trees; or so the Divisional Forest Officer says.
The Divisional Forest Officer thereupon took action against her for unlawful cutting and directed that her name be cancelled and that the cut materials be forfeited.
This was on March 19, 1956.
Because of this, the petitioner went up to the Government of Madhya Pradesh and made an application dated September 27, 1956, asking that the Divisional Forest Officer be directed to give the petitioner immediate possession and not to interfere with her rights.
Then, as nothing tangible happened, she made a petition to this Court under article 32 of the Constitution on August 26, 1957.
The foundation of the petitioner 's rights is the deed of April 26, 1948.
The exact nature of this document was much canvassed before us in the arguments by both sides.
It was said at various times by one side or the other to be a contract conferring contractual rights, a transfer, a licence coupled with a grant, that it related to move able property and that, contra, it related to immoveable property.
It will be necessary, therefore, to ascertain its true nature before I proceed further.
As I have said, the document calls itself a " lease deed ", but that is not conclusive because the true nature of a document cannot be disguised by labelling it something else.
272 Clause (1) of the deed runs " We executed this lease deed . and which by this deed have been leased out to you in consideration of Rs. 26,000 for taking out timber, fuel and bamboos etc.
" At the end of clause (2), there is the following paragraph: " You No. 1 are the principal lessee, while Nos. 2 and 3 are the sub lessees.
" Clause (3) contains a reservation in favour of the proprietor.
A certain portion of the cutting was reserved for the proprietor and the petitioner was only given rights in the remainder.
The relevant passage runs: " Pasas 16, 17, 18 are already leased out to you in your lease.
The cutting of its wood be made by the estate itself.
Thereafter, whatever stock shall remain standing, it shall be part of your lease.
Of this stock, so cut, you shall have no claim whatsoever.
" Clause (5) runs " Besides the above pasas the whole forest is leased out to you.
Only the lease, of the forest woods is given to you.
" Clause (7) states " The proprietorship of the estate and yourself are (in a way) co related and you are managing the same and therefore in the lease itself and concerning it, you should conduct yourself only as a lease holder explicitly Only in the absence of the Malik, you should look after the estate as a Malik and only to that extent you should hold charge as such and conduct yourself as such with respect ' to sub lessees.
" The rest of this clause is Without the signatures of the Malik, nothing, would be held valid and acceptable, including even your own pasas transactions,. . .
The lease under reference shall not be alterable or alienable by any body.
" The only other clause to which reference need be made is clause (8).
It runs 273 "You should not be permitted to recut the wood in the area which was once subject to the operation of cutting.
otherwise the area concerned will revert to the estate.
The cutting of the forests should be right at the land surface and there should not be left any deep furrows or holes.
" I will examine the seventh clause first.
The question is whether it confers any proprietary rights or interest on the petitioner.
I do not think it does.
It is clumsily worded but I think that the real meaning is this.
The petitioner is the `proprietor 's wife and it seems that she was accustomed to do certain acts of management in his absence.
The purpose of clause (7) is to ensure that when she acts in that capacity she is not to have the right to make any alteration in the deed.
There are no words of transfer or conveyance and I do not think any part of the proprietary rights, or any interest in them, are conveyed by this clause.
It does not even confer rights of management.
It only recites the existing state of affairs and either curtails or clarifies powers as manager that are assumed to exist when the proprietor is away.
Although the document repeatedly calls itself a lease, it confers no rights of enjoyment in the land.
Clause (5) makes that clear, because it says Only the lease of the forest woods is given to you ' .
In my opinion, the document only confers a right to enter on the lands in order to cut down certain kinds of trees and carry away the wood.
To that extent the matter is covered by the decision in Chhotabhai Jethabhai Patel & Co. vs The State of Madhya Pradesh (1), and by the later decision in Ananda Behera vs The State of Orissa (2), where it was held that a transaction of this kind amounts to a licence to enter on the land coupled with a grant to out certain trees on it and carry away the wood.
In England it is a profit a prendre because it is a grant of the produce of the soil " like grass, or turves or trees ".
See 12 Halsbury 's Laws of England (Simonds Edition) page 522, Note (m).
(2) [1953]S.C.R.476,483.
(2) ; , 922, 923.
35 274 It is not a " transfer of a right to enjoy the immoveable property " itself (section 105 of the Transfer of Property Act), but a grant of a right to enter upon the land and take away a part of the produce of the soil from it.
In a lease, one enjoys the property but has no right to take it away.
In a profit a prendre one has a licence to enter on the land, not for the purpose of enjoying it, but for removing something from it, namely, a part of the produce of the soil.
Much of the discussion before us centred round the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act of 1950.
But I need not consider that because this, being a writ petition under article 32, the petitioner must establish a fundamental right.
For the reasons given in Ananda Behera 's case (1), I would hold that she has none.
This runs counter to Chhotebhai Jethabhai Patel 's case but, as that was a decision of three Judges and the other five, I feel that we are bound to follow the later case, that is to say, Ananda Behera 's case (1), especially as I think it lays down the law aright.
The learned counsel for the petitioner contended that his client 's rights flowed out of a contract and so, relying on Chhotebhai Jethabhai Patel 's case(2), he contended that he was entitled to a writ.
As a matter of fact, the rights in the earlier case were held to flow from a licence and not from a contract simpliciter (see page 483) but it is true that the learned Judges held that a writ petition lay.
In so far as the petitioner rests her claim in contract simpliciter, I think she has no case because of the reasons given in Ananda Behera 's case (1): " If the petitioners ' rights are no more than the right to obtain future goods under the Sale of Goods Act, then that is a purely personal right arising out of a contract to which the State of Orissa is not a party and in any event a refusal to perform the contract that gives rise to that right may amount to a breach of contract but cannot be regarded as a breach of any fundamental right.
" To bring the claim under article 19(1)(f) or article 31(1) (1) [1955]2 S.C.R. 919.
(2) ; 275 something more must be disclosed, namely, a right to property of which one is the owner or in which one has an interest apart from a purely contractual right.
Therefore, the claim founded in contract simpliciter disappears.
But, in so far as it is founded either on the licence, or on the grant, the question turns on whether this is a grant of moveable or immovable property.
Following the decision in Ananda Behera 's case (1), I would hold that a right to enter on land for the purpose of cutting and carrying away timber standing on it is a benefit that arises out of land.
There is no difference there between the English and the Indian law.
The English law will be found in 12 Halsbury 's Laws of England (Simonds Edition) pages 620 and 621.
But that still leaves the question whether this is moveable or immoveable property.
Under section 3 (26) of the General Clauses Act, it would be regarded as " immovable property " because it is a benefit that arises out of the land and also because trees are attached to the earth.
On the other hand, the Transfer of Property Act says in section 3 that standing timber is not immoveable property for the purposes of that Act and so does section 2 (6) of the Registration Act.
The question is which of these two definitions is to prevail.
Now it will be observed that " trees " are regarded as immoveable property because they are attached to or rooted in the earth.
Section 2(6) of the Registration Act expressly says so and, though the Transfer of Pro party Act does not define immoveable property beyond saying that it does not include " standing timber, growing crops or grass ", trees attached to earth (except standing timber), are immovable property, even under the Transfer of Property Act, because of section 3 (26) of the General Clauses Act.
In the absence of a special definition, the general definition must prevail.
Therefore, trees (except standing timber) are immoveable property.
Now, what is the difference between standing timber and a tree ? It is clear that there must be a distinction because the Transfer of Property Act draws one in the definitions of " immoveable property " and (1) ; 276 " attached to the earth " ; and it seems to me that the distinction must lie in the difference between a tree and timber.
It is to be noted that the exclusion is only of standing timber " and not of " timber trees".
Timber is well enough known to be " wood suitable for building houses, bridges, ships etc., whether on the tree or cut and seasoned.
(Webster 's Collegiate Dictionary).
Therefore, " standing timber " must be a tree that is in a state fit for these purposes and, further, a tree that is meant to be converted into timber so shortly that it can already be looked upon as timber for all practical purposes even though it is still standing.
I? not, it is still a tree because, unlike timber, it will continue to draw sustenance from the soil.
Now, of course, a tree will continue to draw sustenance from the soil so long as it continues to stand and live; and that physical fact of life cannot be altered by giving it another name and calling it " standing timber ".
But the amount of nourishment it takes, if it is felled at a reasonably early date, is so negligible that it can be ignored for all practical purposes and though, theoretically, there is no distinction between one class of tree and another, if the drawing of nourishment from the soil is the basis of the rule, as I hold it to be, the law is grounded, not so much on logical abstractions as on sound and practical common sense.
It grew empirically from instance to instance and decision to decision until a recognisable and workable pattern emerged; and here, this is the shape it has taken.
The distinction, set out above, has been made in a series of Indian cases that are collected in Mulla 's Transfer of Property Act, 4th edition, at pages 16 and 21.
At page 16, the learned author says "Standing timber are trees fit for use for building or repairing houses.
This is an exception to the general rule that growing trees are immoveable property." At page 21 he says "Trees and shrubs may be sold apart from the land, to be cut and removed as wood, and in that case they are moveable property.
But if the transfer 277 includes the right to fell the trees for a term of years, so that the transferee derives a benefit from further growth, the transfer is treated as one of immoveable ' property." The learned author also refers to the English law and says at page 21 " In English law an unconditional sale of growing trees to be cut by the purchaser, has been held to be a sale of an interest in land; but not so if it is stipulated that they are to be removed as soon as possible.
" In my opinion, the distinction is sound.
Before a tree can be regarded as " standing timber " it must be in such a state that, if cut, it could be used as timber; and when in that state it must be cut reasonably early.
The rule is probably grounded on generations of experience in forestry and commerce and this part of the law may have grown out of that.
It is easy to see that the tree might otherwise deteriorate and that its continuance in a forest after it has passed its prime might hamper the growth of younger wood and spoil the forest and eventually the timber market.
But however that may be, the legal basis for the rule is that trees that are not cut continue to draw nourishment from the soil and that the benefit of this goes to the grantee.
Now, how does the document in question regard this In the first place, the duration of the grant is twelve years.
It is evident that trees that will be fit for cutting twelve years hence will not be fit for felling now.
Therefore, it is not a mere sale of the trees as wood.
It is more.
It is not just a right to cut a tree but also to derive a profit from the soil itself, in the shape of the nourishment in the soil that goes into the tree and maker, it grow till it is of a size and age fit for felling as timber; and, if already of that size, in order to enable it to continue to live till the petitioner chooses to fell it.
This aspect is emphasised in clause (5) of the deed where the cutting of teak trees under 1/2 feet is prohibited.
But, as soon as they reach that girth within the twelve years, they can be felled.
And clause (4) speaks of a first cutting and a second cutting and a 278 third cutting.
As regards trees that could be cut at once, there is no obligation to do so.
They can be left standing till such time as the petitioner chooses to fell them.
That means that they are not to be converted into timber at a reasonably early date and that the intention is that they should continue to live and derive nourishment and benefit from the soil; in other words, they are to be regarded as trees and not as timber that is standing and is about to be cut and used for the purposes for which timber is meant.
It follows that the grant is not only of standing timber but also of trees that are not in a fit state to be felled at once but which are to be felled gradually as they attain the required girth in the course of the twelve years;.
and further, of trees that the petitioner is not required to fell and convert into timber at once even though they are of the required age and growth.
Such trees cannot be regarded as timber that happens to be standing because timber, as such, does not draw nourishment from the soil.
If, therefore, they can be left for an appreciable length of time, they must be regarded as trees and not as timber.
The difference lies there.
The result is that, though such trees as can be regarded as standing timber at the date of the document, both because of their size and girth and also because of the intention to fell at an early date, would be moveable, property for the purposes of the Transfer of Property and Registration Acts, the remaining trees that are also covered by the grant will be immoveable property, and as the total value is Rs. 26,000, the deed requires registration.
Being unregistered, it passes no title or interest and, therefore, as in Ananda Behera 's case (1) the petitioner has no fundamental right which she can enforce.
My lord the Chief Justice and my learned brothers prefer to leave the question whether the deed here is a lease or a licence coupled with a grant, open because, on either view the petitioner must fail.
But we are all agreed that the petition be dismissed with costs.
Petition dismissed.
| By an unregistered document the husband of the petitioner granted her the right to take and appropriate all kinds of wood from certain forests in his Zamindary.
With the passing of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950, all proprietary rights in land vested in the State under section 3 Of that Act and the petitioner could no longer cut any wood.
She applied to the Deputy Commissioner and obtained from him an order under section 6(2) of the Act permitting her to work the forest and started cutting the trees.
The Divisional Forest Officer took action against her and passed an order directing that her name might be cancelled and the cut materials forfeited.
She moved the State Government against this order but to no effect.
Thereafter she applied to this Court under article 32 of the Constitution and contended that the order of Forest Officer infringed her fundamental rights under articles 19(i)(f) and 19(1)(g) : Held (per curiam), that the order in question did not infringe the fundamental rights of the petitioner under articles 19(1)(f) and 19(i)(g) and the petition must be dismissed.
34 266 Ananda Behera vs The State of Orissa, [1955] 2 S.C.R. gig, followed.
Chhotabai jethabai Patel and Co. vs The State of Madhya Pradesh, ; , not followed.
Held (per Das C. J., Venkatarama Aiyar, section K. Das and A. K. Sarkar, jj.), that it was not necessary to examine the docu ment minutely and finally determine its real character for the purpose of deciding the matter in controversy, for whatever construction might be put on it, the petition must fail.
If the document purported to transfer any proprietary interest in land, it would be ineffective both for non registration under the Registration Act and under section 3 of the Madhya Pradesh Abolition of Proprietary Rights Act which vested such interest in the State.
If it was a profits a prendre that was sought to be transferred by it, then again the document would be compulsorily registrable as a profits a prendre was by its nature immoveable property.
If it was a contract that gave rise to a purely personal right, assum ing that a contract was property within the meaning of article 19(i)(f) and 31(1) Of the Constitution, the petitioner could not complain as the State had not acquired or taken possession of the contract which remained her property and she was free to dispose of it in any way she liked.
The State not being a party to that contract would not be bound by it, and even if for some reason or other it could be, the remedy of the petitioner lay by way of a suit for enforcement of the contract and compensation for any possible breach of it and no question of infringement of any fundamental right could arise.
Per Bose, J. The document conferred a right on the peti tioner to enter on the lands in order to cut down and carry away, not merely the standing timber, but also other trees that were not in a fit state to be felled at once.
The grant was, therefore, not merely in respect of moveable property but immoveable property as well.
Being valued at Rs. 26,ooo, the document was compulsorily registrable under the Registration Act otherwise no title or interest could pass ; and in absence of such registration the petitioner had no fundamental rights that could be enforced, as held by this court in Ananda Behera 's case.
Although standing timber is not immoveable property under the Transfer of Property Actor the Registration Act, trees attacked to the earth which are immoveable property under section 3(26) of the General Clauses Act, as also section 2(6) of the Registration Act, must be so under the Transfer of Property Act as well.
|
Summarize this legal judgement text concisely | Appeal No.350 of 1957.
Appeal by special leave from the judgment and order dated August 6, 1956, of the Calcutta High Court on a notice of motion in Appeal No. 152 of 1955.
N. C. Chatterjee and P. K. Mukherjee, for the appellant.
B. Sen and P. K. Ghosh (for P. K. Bose), for respondent No. 1. 1958.
February 14.
The Judgment of the Court was delivered by VENICATARAMA AIYAR J.
This is an appeal against an order of the High Court of Calcutta dated August 6, 1956, rejecting the application of the appellant to be brought on record as appellant in appeal No. 152 of 1955 pending before it.
The second respondent, Sudhir Kumar Mitter, was the owner of two houses, No. 86/1, Cornwallis Street and No. 7 C, Kirti Mitter Lane, Calcutta.
On May 19, 1934, he executed a mortgage for Rs. 3,000 over the said houses in favour of the first respondent, Sm.
Nirmala Sundari Dassi.
She instituted Suit No. 158 of 1935 on this mortgage, and obtained a pre liminary decree on March 8, 1935.
The matter then came before the Registrar for taking of accounts, and by his report dated July 23, 1935 he found that a sum 1289 of Rs. 3,914 6 6 was due to her, and on that, a final decree was passed on April 20, 1936.
Under r. 27 of ch.
16 of the Original Side Rules of the Calcutta High Court, a person in whose favour a decree is passed has to apply for drawing up of the decree within four days from the date thereof.
The rule then provides that " if such application for drawing up a decree or order is not made within the time aforesaid, the decree or order,shall not be drawn up except under order of Court or a Judge to be obtained, unless otherwise ordered, by a petition ex parte ".
The importance of this provision is that until a decree is drawn up as mentioned therein, no certified copy thereof would be issued to the party and without such a certified copy, no execution proceedings could be taken.
The first respondent who had acted with such alacrity and speed in putting her mortgage in suit and obtaining a decree, took no steps whatsoever to have the decree drawn up, for nearly 18 years.
On May 12, 1952, the second respondent sold both the houses to the appellant herein for a sum of Rs. 60,000 which was, it is stated, utilised largely for discharging prior mortgages on which decrees had been obtained and execution proceedings taken.
The deed of sale recites that the properties were sold free of all encumbrances.
The first respondent who had so far taken no steps to have the decree drawn up now bestirred herself, and on February 17, 1954 obtained an ex parte order under r. 27 aforesaid, granting her leave to draw up and complete the decree.
That having been done pursuant to the order, she filed on April 29, 1954 the final decree, and commenced proceedings for sale of the mortgaged properties.
Coming to know of this, the second respondent appeared before the Registrar, and raised the objection that the execution of the decree was barred by limitation.
The Registrar felt some doubt in the matter, and made a special report under ch. 26, r. 50 seeking the opinion of the Court on the question of limitation, and the first respondent was also directed to take out a notice of motion for directions.
The matter then came before P. B. Mukharji J. and after hearing 1290 counsel for both the respondents, he held that the execution of the decree was not barred.
Vide judgment reported in Nirmala Sundari vs Sudhir Kumar (1).
Against this judgment, the second respondent preferred Appeal No. 152 of 1955, and that is still pending.
We now come to the application, out of which the present appeal arises.
On July 25, 1956 the appellant applied to be brought on record as appellant in Appeal No. 152 of 1955.
The allegations in support of the petition were that she had purchased the properties from the second respondent on May 12, 1952 free of all encumbrances, that the execution proceedings started by the first respondent were not maintainable as the decree had become time barred, that the second respondent, Sudhir Kumar Mitter, had been conducting proceedings in opposition to the execution sale only at her instance and for her benefit, that he had filed Appeal No. 152 of 1955 also oil her behalf, that latterly he had entered into a collusive arrangement with the first respondent with a view to defeat her rights, and that therefore it was necessary that she should be allowed to come on record as appellant so that she might protect her interests.
The prayer in the petition was that she be substituted in the place of the second respondent or in the alternative, be brought on record as additional appellant.
The application was strenuously opposed by both the respondents.
They stated that they had entered into an arrangement settling the amount due to the first respondent at Rs. 17,670, that that settlement was fair and bona fide and binding on the appellant, and that further her application was not maintainable.
This application was heard by Chakravarti C. J. and Lahiri J. and by their order dated August 6, 1956, they dismissed it.
The appellant then applied under article 133 for leave to appeal to this Court, and in rejecting that application, the learned Chief Justice observed that the original application was pressed only under 0. 22, r. 10 of the Civil Procedure Code and it was dismissed, as it was conceded that the applicant, (1) A.I.R. 1955 Cal. 484. 1291 not being a person who had obtained a transfer pending appeal, was not entitled to apply on the terms of that rule, that the prayer in the alternative that the applicant might be brought on record without being substituted under 0. 22, r. 10 which merited favourable consideration bad not been mentioned at the previous hearing, and that no certificate could be granted under article 133 with a view to that point being raised in appeal, as the order sought to be appealed against was not a final order.
The appellant thereafter obtained special leave to appeal under article 136 of the Constitution, and that is how the appeal comes before us.
It is contended OD behalf of the appellant that her application is maintainable under 0. 22, r. 10 of the Civil Procedure Code, because Suit No. 158 of 1935 must be considered to have been pending until the decree therein was drawn up which was in 1954, and the transfer in her favour had been made prior thereto on May 12, 1952.
The decision in Lakshan Chunder Dey vs Sm.
Nikunjamani Dassi (1) is relied on, in support of this position.
But it is contended for the first respondent that even if Suit No. 158 of 1935 is considered as pending when the transfer in favour of the appellant was made, that would not affect the result as no application had been made by her to be brought on record in the original court during the pendency of the suit.
Nor could the application made to the appellate Court be sustained under 0. 22, r. 10, as the transfer in favour of the appellant was made prior to the filing of that appeal and not during its pendency.
This contention appears to be well founded ; but that, however, does not conclude the matter.
In our opinion, the application filed by the appellant falls within section 146 of the Civil Procedure Code, and she is entitled to be brought on record under that section.
Section 146 provides that save as otherwise provided by the Code, any proceeding which can be taken by a person may also be taken by any person claiming under him.
It has been held in Sitharamaswami vs Lakshmi Narasimha (2) that an appeal is a proceeding for the (1) 164 (2) Mad. 510.
1292 purpose of this section, and that further the expression " claiming under" is wide enough to include cases of devolution and assignment mentioned in 0. 22, r. 10.
This decision was quoted with approval by this Court in Jugalkishore Saraf vs Raw Cotton Co., Ltd. (1), wherein it was hold that a transferee of a debt on which a suit was pending was entitled to execute the decree which was subsequently passed therein, under section 146 of the Civil Procedure Code as a person claiming under the decree holder, even though an application for execution by him would not lie under 0. 21, r. 16, and it was further observed that the words "save as otherwise provided " only barred proceedings, which would be obnoxious to some provision of the Code.
It would follow from the above authorities that whoever is entitled to be but has not been brought oil record under 0. 22, r. 10 in a pending suit or proceeding would be entitled to prefer an appeal against the decree or order passed therein if his assignor could have filed such an appeal, there being no prohibition against it in the Code, and that accordingly the appellant as an assignee of the second respondent of the mortgaged properties would have been entitled to prefer an appeal against the judgment of P. B. Mukharji J.
It is next contended that section 146 authorises only the initiation of any proceeding, and that though it would have been competent to the appellant to have preferred an appeal against the judoment of P. B. Mukharji J. she not having done so was not entitled to be brought on record as an appellant to continue the appeal preferred by the second respondent.
We are not disposed to construe section 146 narrowly in the manner contended for by counsel for the first respondent.
That section was introduced for the first time in the Civil Procedure Code, 1908 with the object of facilitating the exercise of rights by persons in whom they come to be vested by devolution or assignment, and being a beneficent provision should be construed liberally and so as to advance justice and not in a restricted or technical sense.
It has been held by a Full Bench of the Madras High Court in Muthiah Chettiar vs Oovinddoss Krishnadass (2) that the assignee of a part of a (1) [1955] i S.C.R. 1369.
(2) Mad.
1293 decree is entitled to continue an execution application filed by the transferor decree holder.
Vide also Moidin Kutty vs Doraiswami (1).
The right to file an appeal must therefore be held to carry with it the right to continue an appeal which had been filed by the person under whom the applicant claims, and the petition of the appellant to be brought on record as an appellant in Appeal No. 152 of 1955 must be held to be main.
tainable under section 146.
It remains to consider whether, on the merits, there should be an order in favour of the appellant.
Of that, we have no doubt whatsoever.
The proceedings in which she seeks to intervene arise in execution of a mortgage decree.
She has purchased the properties comprised in the decree for Rs. 60,000 under a covenant that they are free from encumbrances.
And after her purchase, the first respondent has started proceedings for sale of the properties, nearly 18 years after the decree had been passed.
The appellant maintains that the execution proceedings are barred by limitation, and desires to be heard on that question.
It is true that P. B. Mukharji J. has rejected this contention, but a reading of his judgment shows and that is what he himself observes that there are substantial questions of law calling for decision.
Even apart from the plea of limitation, there is also a question as to the amount payable in discharge and satisfaction of the decree obtained by the first respondent in Suit No. 158 of 1935.
Both the respondents claim that they have settled it at Rs. 17,670.
But it is stated for the appellant that under the decree which is sought to be executed the amount recoverable for principal and interest will not exceed Rs. 6,000.
In the affidavit of Sanjit Kumar Ghose dated December 20, 1956, filed on behalf of the first respondent, particulars are given as to how the sum of Rs. 17,670 was made up.
It will be seen therefrom that a sum of Rs. 7,200 is claimed for interest up to March 8, 1956, calculating it not at the rate provided in the final decree but at the contract rate.
Then a sum of Rs. 5,000 is included as for costs incurred by the mortgagee in suits other than (1) I.L.R. 1294 Suit No. 158 of 1935 and in proceedings connected therewith.
The appellant contends that the properties in her hands could, under no circumstances, be made liable for this amount.
A sum of Rs. 1,750 is agreed to be paid for costs in the sale reference, in the proceedings before P. B. Mukharji J. and in Appeal No. 152 of 1955.
Asks the appellant, where is the settlement in this, and how can it bind me ? It is obvious that there are several substantial questions arising for determination in which the appellant as purchaser of the properties is vitally interested, and indeed is the only person interested.
As a purchaser pendente lite, she will be bound by the proceedings taken by the first respondent in execution of her decree, and justice requires that she should be given an opportunity to protect her rights.
We accordingly set aside the order of the Court below dated August 6, 1956 and direct that the appellant be brought on record as additional appellant in Appeal No. 152 of 1955.
As Sudhir Kumar Mitter, the appellant now on record, has dropped the fight with the first respondent, we conceive that no embarrassment will result in there being on record two appellants with Conflicting interest.
But, in any event, the Court can, if necessary, take action suo motu either under 0. 1, r. 10 or in its inherent jurisdiction and transpose Sudhir Kumar Mitter as second respondent in the appeal, as was done in In re Mathews.
Oates vs Mooney (1), and Vanjiappa Goundan vs Annamalai Chettiar (2 ).
As for costs, the appellant should, in terms of the order of this Court granting her leave to appeal, pay the contesting respondent her costs in this appeal.
The costs of and incidental to the application in Appeal No. 152 of 1955 in the High Court will abide the result of that appeal.
Appeal allowed.
| The second respondent sold the properties to the appellant in ,952 and the deed of sale recited that the properties were sold free of all encumbrances.
The first respondent who had obtained a mortgage decree in respect of the properties in 1935 did not take any steps to have the decree drawn up as required under the Original Side Rules of the Calcutta High Court until 1954, when she commenced proceedings for sale of the mortgaged properties.
The second respondent raised the objection that the execution of the decree was barred by limitation but that was overruled by a single judge of the High Court and an appeal against that order was preferred by the second respondent.
Apprehending that the second respondent might enter into a collusive arrangement with the first respondent with a view to defeat her rights, the appellant made an application in the High Court under 0. 22, r. 10 of the Code of Civil Procedure praying that she might be substituted in the place of the second respondent, or in the alternative, be brought on record as additional appellant.
The High Court having dismissed the application, the appellant brought the present appeal: Held, that the application could not be sustained under 0. 22, r.10, of the Code of Civil Procedure because (i) assuming that 1288 the suit was considered as having been pending until the decree was drawn up in 954 no application was made to the Court where the suit was pending as provided in 0. 22, r. 10, and (ii) the application made to the appellate Court was also not within 0. 22, r. 10, as the transfer in question was made prior to the filing of the appeal and not during its pendency.
The application, however, falls within section I46 of the Code of Civil Procedure and the appellant is entitled to be brought on record since an appeal is a proceeding within the meaning of that section and the right to file an appeal carries with it the right to continue an appeal which had been filed by the person under whom the appellant claims.
Jugalkishore Sayaf vs Raw Cotton Ltd., [1955] I S.C.R. 1369, Sitharamaswami vs Lakshmi Narasimha, Mad.
51O and Muthia Chettiar vs Govinddoss Kyishnadoss, Mad.
gig, relied on.
|
Summarize this legal judgement text concisely | Appeal No. 34 of 1957.
Appeal from the judgment and order dated August 31, 1955, of the Labour Appellate Tribunal of India, Calcutta in Appeal Nos.
Cal 187 & Cal 188 of 1954, arising out of the Award dated May 15, 1954, of the 328 Industrial Tribunal, Assam in Reference No. 20 of 1953 published in the Assam Gazette dated June 16, 1954.
C.B. Aggarwala and K. P. Gupta for the appelants.
P.K. Goswami, section N. Mukherjee and B. N. Ghosh, for the respondent.
March 31.
The Judgment of the Court was delivered by KAPUR J.
In this appeal brought by special leave against the order of the labour Appellate Tribunal, Calcutta dated August 31, 1955, the controversy between the parties is confined to the question of bonus.
The appellants are the workmen including members of the Indian staff and artisans employed by the respondent, the Assam Co. Ltd., a company incorporated in the United Kingdom and engaged in tea, industry in the State of Assam.
The appellants claimed bonus for the years 1950, 1951 and 1952 at the rate of 6 months ' wages per year.
The respondent offered to the Indian staff excluding the artisans Rs. 51,061 as bonus for 1950, Rs. 48,140 for 1951 and Rs. 15,493 for 1952 which works out at 2.3% of the net profit for the year 1950, 3.1 % for the year 1951 and 3.9 % for the year 1952.
This dispute was referred to the Industrial Tribunal by a notification of the Assam Government dated August 27, 1953.
The Industrial Tribunal allowed depreciation as given in the company 's balance sheets for the three years and allowed as return on the paid up capital and on the reserve 7% and 5% respectively and held the artisans also to be entitled to bonus.
For the purpose of mode of payment the Industrial Tribunal accepted the " unit scheme" under which the company had been paying bonus since the year 1926.
It was of the opinion that the scheme was fair and rational and gave incentive to industrial efficiency and to production.
Both the appellants and the respondent appealed against this order, the former as to the correctness of 329 the accounts, the amount of the return on capital and reserves and the " unit scheme " and again claimed six months ' wages per year as bonus.
The latter appealed against the percentages allowed on the capital and the reserves and claimed 10% and 8% respectively as a fair return.
It objected to the inclusion of the artisans amongst the workmen eligible for bonus and also to the application of what is known as the Bombay formula to Tea industry.
The Labour Appellate Tribunal varied the Tribunal 's award and allowed depreciation at the rate allowable under the Indian Income Tax Act, confirmed 7% on the paid up capital but raised the return on the reserves from 5% to 6% in order to meet the claim of the company for rehabilitation which though not claimed before the Industrial Tribunal, was put forward before it as a basis for increase in return on reserves.
In this Court the appellants again repeated their objection to the amount of depreciation, the return on capital and on reserves and to the " unit scheme " but were prepared to confine their claim to two months ' was as bonus.
Counsel for the respondent objected to the applicability of the formula to an industry like the 'tea industry, his contention being that circumstances and considerations applicable to the textile industry cannot apply to Tea industry which, being connected with agriculture, is affected by various factors which must be taken into consideration in the matter of depreciation, return oil capital and return on reserves.
The principles on which the ascertainment of the surplus on the basis of which bonus becomes determinable and distributable have been laid down by this Court in Sree Meenakshi Mills vs Their Workmen The formula there laid down is: " Distributable surplus has to be ascertained after providing from the gross profits for (1) depreciation, (2) rehabilitation, (3) return at 6 per cent.
on the paid up capital (4) return on the working capital at a lesser but reasonable rate, and (5) for an estimated amount in respect of the payment of income tax." (1) ; 42 330 Under this formula the depreciation allowable in cases arising under the Industrial Disputes Act is the normal depreciation including shift depreciation.
We did not understand counsel for the respondent to contend that there was anything in the formula which was wrong in principle but that it had to be adjusted to suit the circumstances of the Tea industry.
No circumstances, were however, given by him which would make it unfair to apply the formula nor were any figures or particulars furnished for varying it in regard to depreciation.
The Industrial Tribunal allowed 7% return on capital as against 6% held allowable under the formula.
Its reasons for this increase were : That the tea industry here may have often to face various adverse circumstances more adverse than those that may come upon other industries and may have more risks than other industries.
It may however be noted that the company in the instant case is more than a Century old one faring well all through and has thus been so far a prosperous one and on a sound footing and as such it is expected to have built up a substantial reserve.
" The Labour Appellate Tribunal maintained this higher rate of return on capital on the ground " of its being exposed to greater risks than any other industry namely weather, pests in the plants and gradual deterioration of the soil over which no man has any control These additional risk factors are no doubt present in an industry connected with agriculture like the tea industry and in our opinion they justify the giving of a higher rate of return on capital.
Instead of 4% allowed by the formula the industrial Tribunal fixed the return on reserves at 5% on the ground of its being sufficient to guard the interests of the company but the Labour Appellate Tribunal increased it to 6% to meet replacements and rehabilitation charges since the " usual method of calculating these charges is not possible in the present case " and, " we are to see that the industry does not.
suffer for want of replacement and rehabilitation funds and must 331 provide such funds in some other way, namely, by allowing a return on the working capital at higher rates ".
In the absence of any claim in the respondent 's Written Statement for rehabilitation or any figures for determining this amount, this extra one per cent.
is insupportable.
It is not a case where a claim could not be made or figures could not have been given at the proper stage.
The additional one per cent.
cannot therefore be allowed.
In our opinion the reasons given by the Industrial Tribunal sufficiently support the giving of 5% on the reserves as being fair considering the risks of the tea industry which is exposed to various adverse circumstances and elements.
The Industrial Tribunal has not acted unreasonably nor in disregard of any accepted principles in calculating the return on reserves at 5% and we see no cogent 'reason for varying this rate.
The respondent has, since 1926, been paying bonus to its employees according to a scheme called the " unit scheme " which according to the Industrial Tribunal has the merit of being more rational and gives incentive to industrious habits and efficiency loading to more production.
The Labour Appellate Tribunal did not go into the merits of the scheme but ordered payment according to it.
Under this scheme units are credited to each workman, taking into consideration the importance of the job he holds, the wages he gets and the number of years he has been employed in that particular job.
The value of units so awarded thus vary commensurate with considerations of efficiency and experience.
The establishment is divided into twelve categories and the medical staff into three each based on the relative importance of the nature of work done by a workman.
Thus in the descending order of their importance the jobs are classified as: 1.
Head Mohori; 2.
Head Clerk; 3.
Divisional Mohori ; 4.
Land Mohori; Hazaria Mohori; 5.
Kamjari Mohori; 6.
Godown Mohori; 7.
2nd Tea House Mohori; 2nd Kerani; 2nd Hazaria Mohori; 8.
2nd Godown Mohori; 9.Gunti Mohori; 10.
3rd Tea House Mohori; 11.Mondal; 12.
Apprentices.
Units would thus be awarded to workmen in the 332 particular category they are in and the more qualified the worker the better his work and the higher his wage, the higher the number of units he would be entitled to.
The amount available for distribution as bonus is divided by the aggregate number of units of all the workmen participating in the scheme and each worker would be entitled to a multiple of the amount payable on one unit and the units to his credit.
It appears to us that the estimate of the Industrial Tribunal as to the suitability of the scheme was fully justified and payment of bonus in accordance with this scheme will not only result in fair distribution of bonus but would also lead to improvement in the quality and quantity of work.
This scheme is not to be confused with production bonus though it has the merit of combining the fair distribution of the surplus available and the maintenance of efficiency in the establishment.
Taking the figures on the basis of the award made by the Industrial Tribunal we find that Rs. 7,64,608 would be the surplus for the year 1950, Rs. 77,823 for 1951 and a deficit of Rs. 10 lacs for the year 1952.
The total sum available for three years will be nil.
On the basis of the claim which counsel for the appellant has made before us, i. e., two months ' wages, we find that the amount of bonus required for the members of the staff for the year 1950 will be one sixth of Rs. 4,63,095 and for the year 1951, one sixth of Rs. 4,83,893 and for 1952 one sixth of Rs. 5,31,202 which works out to Rs. 77,182 for 1950, Rs. 80,647 for 1951 and Rs. 88,533 for 1952.
The amounts required for the artisans further increase these figures.
No doubt on the calculations which have now been made the appellant may justify the claim of two months ' bonus for the year 1950 but the same cannot be said in regard to It )he claim for the years 1951 and 1952 because of the available surplus which is only Rs. 77,823 for 1951 and there is a deficit of about 10 lacs of rupees for the year 1952.
Taking all these figures into consideration, we are of the opinion that the amounts awarded by the Industrial Tribunal are fair and proper.
As the Labour Appellate Tribunal 333 allowed depreciation and rehabilitation on an erroneous basis, we would set aside the order of the Labour Appellate Tribunal and would restore that of the Industrial Tribunal with this modification that the Respondent shall make available the additional amount required for payment of the proportional bonus to the artisans.
The appeal is, therefore, allowed to this extent, the order of the Labour Appellate Tribunal set aside and the award of the Industrial Tribunal restored with this modification that the respondent shall also provide an additional amount for these three years for payment to the artisans of proportionate bonus on the basis of the " Unit System ".
As neither of the parties have succeeded in their main contentions, the fair order in regard to costs should be that the parties do bear their respective costs throughout.
| The appellants claimed bonus for the years 1950, 1951 and 1952 at the rate of six months ' wages per year.
The Industrial Tribunal to which the dispute was referred allowed, in calculating the surplus available for payment of bonus, inter alia return on paid up capital and on the reserves at 7% and 5% respectively and accepted the " unit scheme " of payment of bonus which the company had been following since 1926.
Under this scheme units were credited to each workman taking into consideration the importance of the job he held, the wages he got and the number of years he had been employed in that particular job, and each workman was paid bonus in proportion to the units to his credit.
On appeal the Labour Appellate Tribunal modified the award and raised the return on the reserves from 5% to 6% : Held, that the formula laid down in Sree Meenakski Mills vs Their workmen, ([1958] S.C.R. 878 at 884) for ascertaining the surplus on the basis of which bonus becomes determinable and distributable could be applied to the tea industry with suitable adjustments.
The allowing Of 7% return on capital as against 6% held allowable under that formula was justified by the additional risk factors in the tea industry.
The allowing Of 5% return on reserves by the Industrial Tribunal as against 4% allowed by the formula was not unreasonable, it being sufficient to safeguard the interests of the company.
But the increasing of this to 6% by the Appellate Tribunal was insupportable in the absence of any claim in the respondent 's written statement for rehabilitation or ,of any figures for determining this amount.
The " unit scheme " was suitable for the payment of bonus and would result not only in the fair distribution of bonus but would also lead to improvement in the quality and quantity of work.
|
Summarize this legal judgement text concisely | Appeal No. 39 of 1955.
Appeal from the judgment and decree dated August 28, 1953, of the Calcutta High Court in Appeal from Original Decree No. 97 of 1950 arising out of the judgment and decree dated April 27, 1950, of the Court of Second Sub Judge of Zillah Hooghly in Rent Suit No. 3 of 1949.
B. Bagchi and P. K. Chosh, for the appellant.
N. C. Chatterjee and D. N. Mukherjee, for the respondents.
March 24.
The following Judgment of the Court Was delivered by SINHA J.
The main controversy in this appeal on a certificate granted by the High Court of Calcutta, against the concurrent decisions of the courts below, centers round the true interpretation and effect of sections 15 and 16 of the Bengal Tenancy Act Act VIII of 1885 (hereinafter referred to as the Act).
The courts below have substantially decreed the plaintiff 's suit for arrears of rent in respect of a se patni tenure.
Hence, the appeal by the defendant.
The plaintiffs ancestor, Nirmal Chandra Benerjee, was a durpatnidar under the patnidar in respect of the tenure in question.
He died leaving him surviving, his three sons Satya Ranjan, Satya Jiban and Satya Kiron who became the durpatindars in respect of the tenure by succession, and there is no dispute that they were so mutated in the superior landlord 's office.
There was a partition suit between them in the court of the 228 subordinate judge at Alipur, being Title Suit No. 128 of 1946.
During the pendency of that suit, Promode Kumar Banerjee was appointed Receiver of the properties under partition.
Satya Jiban died during the pendency of the partition suit.
The exact date of his death does not appear in the record.
His heirs are: his widow Tusharika Debi and his two sons, Uptal Kumar Banerjee who is of unsound mind, and Ujjal Kumar Banerjee, a minor.
The Receiver aforesaid, instituted the suit out of which this appeal arises, for arrears of rent, against the first defendant, now appellant, in respect of the years 1352 to 1355 B. section He put the total claim inclusive of interest, at Rs. 40,000 and odd, which was subsequently reduced to Rs. 27,000 and odd.
It is not necessary to go into the details of the claim, because the amount decreed is no more in controversy.
To the suit for rent, being Rent Suit No. 3 of 1949, in the court of of Second Subordinate Judge, Hooghly, the heirs aforesaid of Satya Jiban were impleaded as proforma defendants Nos. 2, 2(a) and 2(b), and so were Satya Kiran and Satya Ranjan as defendants 3 and 4, respectively.
During the pendency of the rent suit, the partition suit was compromised, with the result that the durpatni tenure in question was allotted to Satya Jiban 's branch of the family.
Hence, the plaint was amended by an order of the court, dated July 25, 1949, by substituting the aforesaid heirs of Satya, Jiban as the plaintiffs in the place of the Receiver aforesaid, who was the original plaintiff and who was discharged from the record.
The suit was contested on a number of grounds, but it is now necessary only to refer to the plea in bar of the suit, namely, that the plaintiffs substituted as aforesaid, and by transposition from the category of proforma defendants to that of plaintiffs, were not entitled to sue for rent on the ground that they had not got themselves mutated in the place of their predecessors in title in the landlord 's records and that, therefore, this suit was barred under section 16 of the Act.
It is no more necessary to set out the facts bearing on the devolution of title to the property in question, 229 because that was not a controversy raised in the High Court, and the arguments in this Court were, therefore, confined to the technical plea aforesaid.
After hearing the parties, the learned trial judge decreed the suit for Rs. 25,000 and odd.
The first defendant preferred an appeal to the Calcutta High Court, and a Divisional Bench of that Court, after hearing the parties, directed a limited remand to the trial court, for taking additional evidence in proof of certain documents filed by the plaintiffs but not properly proved at the original trial.
The trial court was also directed to submit its findings on the question of the right of the plaintiffs to maintain the suit in view of the provisions of sections 15 and 16 of the Act.
After remand, the documents on proof were again, marked as exhibits I and 2, and the finding was returned by the trial court in due course.
After the receipt of the finding, the High Court heard the appeal once again and dismissed it with costs.
The appellant moved the High Court and obtained the necessary certificate.
Hence this appeal.
In this Court, it was argued on behalf of the appellant that the provisions of section 15 are mandatory; that those provisions not having been complied with, the bar imposed by section 16, operates against the plaintiffs, with the result that they are not entitled to recover the arrears of rent by suit.
Sections 15 and 16 are in these terms: " 15.
When a succession to a permanent tenure takes place, the person succeeding shall give notice of the succession to the landlord or his common agent, if any, in the prescribed form within six months from the date of succession, in addition to or substitution of any other mode of service, in the manner referred to in sub section (3) of section 12: Provided that where, at the instance of the person succeeding, mutation is made in the rent roll of the landlord within six months of the succession, the person succeeding shall not be required to give notice under this section." " 16.
A person becoming entitled to a permanent tenure by succession shall not be entitled to recover by suit or other proceeding any rent payable to him as 230 the holder of the tenure, until the duties imposed upon him by section 15 have been performed.
" It is common ground that the notice contemplated by section 15, was not given, but it was contended on behalf of the plaintiff respondents that the proviso to that section had been complied with inasmuch as evidence had been adduced by the plaintiffs and accepted by the courts below, that the superior landlords accepted rents from the plaintiffs and granted them rent receipts in respect of the tenure in question, after ordering mutation of their names in the rent ,roll.
In order to bring the case within the proviso to section 15, quoted above, the plaintiffs served a requisition on the landlords (I) Maharajadhiraj of Burdwan, and (2) Sri Ramlal Bandopadhyaya, to produce all papers in respect of mutation of names regarding the tenure in question.
Those documents were not produced, but the plaintiffs examined P. W. 2 an employee of the Burdwan Raj and P. W. 3 their own employee to prove the necessary mutation.
P. W. 2 deposed that the plaintiffs paid Rs. 101 as fee for mutation of their names in the office of the Maharajadhiraj of Burdwan and that they were mutated in respect of the 8 annas ' interest.
P. W. 3, similarly, proves mutation in the office of Ramlal Babu, in respect of the other 8 annas ' share.
In pursuance of the mutation, rent was paid and accepted by the landlords.
The necessary order of mutation and the rent receipt exhibits 2 and respectively were produced and placed on record after being duly proved Nothing has been brought out in the cross examination of these two witnesses to detract from the value of their evidence.
Naturally.
therefore.
the courts below had no difficulty in accepting their evidence corroborated by those pieces of documentary evidence.
But it was contended on behalf of the appellant that section 15 requires proof of mutation in the rent roll of the landlord, and the rent roll or its certified copy, should have been adduced in evidence, and in the absence of the primary evidence of mutation contained in the rent roll the plaintiffs have failed to prove the requisite mutation.
In our opinion, there is no substance in this contention.
The landlords rent roll 231 was not in the custody or control of the plaintiffs.
They served requisition on their landlords to produce those documents.
As those documents were not produced by the parties who would ordinarily be in possession of their rent rolls, the plaintiffs had no option but to adduce secondary evidence of the mutation, namely, the order sanctioning mutation and the payment of rent to the superior landlord, in pursuance of the sanction of mutation.
Like any other disputed fact, the factum of mutation in the landlords rent roll can be proved by the production of the original rent roll or by its certified copy, if available, and failing those, by other secondary proof of mutation.
In the circumstances, we are inclined to hold that in this case, the courts below were justified in coming to the conclusion that there was the necessary mutation of the plaintiffs in the landlords ' rent roll.
It was next contended that there is no proof that the mutation, even if made, had been made " within six months of the succession ".
It is true that the date of the death of Satya Jiban, plaintiffs predecessor in title, is not known, if that is the point of time with reference to which the six months ' period has to be calculated.
If the starting point of time is the date of the allotment of the tenure in question to the plaintiffs ' share as a result of the partition, we know that June 20, 1949, is the date of the compromise, as appears from the list of dates supplied by the counsel for the appellant.
The rent receipt, exhibit 1, is dated January 4, 1950, and the order of mutation passed by the Burdwan Raj, is dated January 20, 1950.
Apparently, therefore, the mutation must have been effected within six months from the date of the compromise, as a result of which the entire tenure was allotted to the plaintiffs ' share.
If was not argued be fore us that this was not a case of succession, as contemplated by section 15, namely, the death of the last holder on the happening of which event, the succession to the tenure opened in favour of the plaintiffs.
Satya Jiban had only one third share in the entire tenure by inheritance from his father.
The other two thirds shares had been inherited by his two brothers aforesaid.
Hence, strictly speaking, succession to only 232 the one third share of Satya Jiban, could open on his death.
But as this aspect of the case was not canvassed before us, we need not express any opinion on it.
As already indicated, the date of the death of Satya Jiban not having been brought on record and if the six months ' period has to be counted from that date, it has got to be assumed in favour of the appellant that the mutation even if effected as found by the courts below, was not done within the prescribed time.
It may also be mentioned that it was not argued before us that the rent suit having originally been filed by the Receiver pendente lite, who represented the entire 16 annas interest in the tenure, the suit had been properly instituted, and no question under sections 15 and 16 of the Act, would, therefore, arise if any devolution of interest took place during the pendency of the suit.
For the purpose of determining the present controversy, we proceed on the assumption that the mutation had not been made within six months as prescribed by section 15, and that this defect affected the entire interest in the tenure in spite of the fact that the two thirds interest which originally belonged to Satya Jiban 's brothers, came to the plaintiffs as a result of the compromise in the partition suit.
Section 16 as it stands after the amendment by the Bengal Act IV of 1928, does not impose an absolute bar on the recovery by suit of the arrears of rent.
The bar is there only " until the duties imposed upon him (that is, the plaintiffs) by section 15, have been performed.
" Now, section 16 does not speak of any time limit.
It only speaks of the bar to the recovery of the arrears until the performance by the landlord of the duty of giving notice of the succession or getting mutation made on the succession.
It was argued on behalf of the appellant that the performance of the duty aforesaid is inextricably bound up with the period of six months, and that the performance of the duty beyond that period, is no performance at all in the eye of law.
We are not impressed by this argument, and there are several very good reasons for holding to the contrary.
The provisions of section 15 are meant not only for the benefit of the landlord or of the inferior tenant, but of the intermediate landlords also, that is to say, the 233 provision for notice, or in the alternative, for mutation .of names in the landlord 's rent roll, is meant to protect the interest of the superior landlord in that it ensures payment of his dues by the intermediate landlord before the latter can realise the same from his tenant, in this case, the se pataidar.
Those provisions also ensure that the rightful persons entitled to the durpatni interest, get themselves mutated in the superior landlord 's office, so that the inferior tenants may know who their new landlords are as a result of succession to their old landlords.
The legislature,, by fixing the limit of six months, intended to indicate that the notice of the mutation should be effected within six months, that is to say, within a reasonable time from the date of the devolution of interest, even as there are similar provisions in respect of the mutation of proprietors in the Collectorate for the purpose of regular realization of public demands.
But the legislature did not intend to make it mandatory in the sense that failing to observe the time limit, the landlord completely deprives himself of his right to receive rent from his tenant, even though otherwise due.
That is the reason why, in section 16, there is no indication of time limit.
On the other hand, there is an indication to the contrary in so far as the last clause quoted above, provides that the bar against the recovery by suit of any rent payable to the holder of the tenure, operates only until he performs the duties imposed upon him by section 15.
Section 16, being in the nature of a penal provision, has to be strictly limited to the words contained in the penal clause, and the penalty should not be extended by implication.
If the legislature had intended that the penalty should operate for all times if the duty were not performed within the time specified in section l5, the legislature would have used the words " within the prescribed time "; or some such words.
Instead of laying down such a time limit, the legislature has, by the amendment aforesaid by Act IV of 1928, made it clear that the bar operates only so long as the duty has not been performed.
No authority has been cited before us in support of the extreme proposition that 30 234 the failure on the part of the landlord to serve the requisite notice or to get the necessary mutation effected within six months, has . he effect of wiping out the landlord 's right to receive rent.
There may be rulings to the contrary, but this Court has to resolve the controversy on the language of the relevant sections of the statute, quoted above.
That language does not clearly indicate that the result contended for on behalf of the appellant, must necessarily ensue on his making a default to take those necessary steps within the time specified.
The language of the statute is not so peremptory in express terms or by necessary implication.
On the other hand, as already indicated the language easily lends itself to the construction that the prescribed time is not in the nature of a statutory bar to the exercise of the landlord 's right to recover rent.
in this connection, it has to be remembered that patni tenure and all other subordinate tenures under the patnidar, are permanent tenures.
Hence, the relationship of landlord and tenant, continues from generation to generation without there being any necessity of fresh attornment on the death of a durpatnidar or other grades of tenants in the process of sub infeudation.
The relationship is all the time there, only the landlord 's record has to be kept up to date by making the necessary substitution in the rent roll or by giving notice of the change in the succession to the landlord 's interest.
The legislature had to indicate a time by way of laying down the ordinary procedure for taking the steps indicated in section 15.
Six months ' period was deemed by the legislature to be a sufficiently long period to enable those steps being taken in the ordinary course of business.
But it is not difficult to imagine cases where such steps may not be feasible within the prescribed time.
For example, where the landlord dies leaving him surviving only an infant heir without a proper guardian to protect the infant 's interest, it may take a considerably longer period than six months to have a proper guardian appointed, if necessary, through court.
It may well be that the succession itself is disputed, and the controversy may take some years to get determined finally.
It cannot be reasonably 235 suggested that because the requisite notice or the mutation has not been given or effected within the prescribed period of six months, the landlord 's right to recovery` of rent, disappears.
That could not have been the intention of the legislature.
Again, it may easily be supposed that an honest tenant goes to his new landlord and pays him rent hand to hand, even though there has been no such step taken within the time as contemplated by section 15.
It cannot be said that such a payment of rent out of court, will not be recog nized by a court, if and when a controversy about such a payment were to arise.
In this way instances maybe multiplied where the provisions of section 15 of the Act, have not been strictly complied with, but still the receipt and payment of rent as between the patnidar and his tenant, have continued for a sufficiently long period, to prove what was required to be done under that section.
In our opinion, the inference is clear that the provision as regards the time limit, is not mandatory but only directory, and that transgression of that directory provision has the effect of only delaying the landlord 's remedy of recovery of arrears of rent by suit so long as the landlord has not done what he is required by law to do.
But that provision has not the effect of absolutely depriving the landlord of his remedy by suit for all times; he may recover through court, of course, subject to the law of limitation.
In our opinion, therefore, acceptance of the appellant 's arguments would be nothing more than " piling unreason upon technicality", which no, court of justice can countenance.
In view of these considerations, it must be held that there is no merit in this appeal which is, accordingly dismissed with costs.
Appeal dismissed.
| The time limit of six months provided by section 5 of the Bengal Tenancy Act within which a tenure holder has to give notice of his succession to the landlord or have his name mutated in his rent roll is not mandatory but directory in character and the only effect which non observance of that time limit can have under section 16 of the Act, is to postpone his remedy to recover arrears of rent by way of suit till such time when he performs the duty cast upon him by section 5 Of the Act, but it cannot, by itself, bar the remedy for all time to come.
Section 16 is a penal provision and must be subjected to its statutory limitation and the penalty it imposes cannot be extended by implication.
Consequently, in a case where the sepatnidar resisted the durpatnidars ' suit for recovery of arrears of rent on the ground, inter alia, that they had not got themselves mutated in the landlord 's records under section 15 of the Bengal Tenancy Act and as such 227 the suit was barred under section 16 of the Act and the courts below found on the evidence adduced by the durpatnidars that the landlord had accepted rents from them and granted receipts after ordering mutation of their names in the rent roll: Held, that the courts below were right in holding in favour of the durpatnidars that there was the necessary mutation in the landlord 's rent roll.
The factum of mutation in the landlord 's rent roll can be proved not only by the production of original rent roll or its certified copy but,failing these, also by other secondary proof of mutation.
|
Summarize this legal judgement text concisely | Appeal No. 230 of 1953.
Appeal from the judgment and decree dated August 29, 1950 of the former Madhya Bharat High Court at Indore in Special Appeal No. 5 of 1949, arising out of the judgment and decree dated December 2, 1948, of the said High Court in Civil First Appeal No. 61 of 1948 against the judgment and decree dated June 11, 315 1948, on its Original Side in Civil Original Suit No. 30 of 1947.
N.C Chatterjee, section C. Isaacs, J. D. Patel, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellant.
M. P. Amin, C. B. Sanghi and 1.
N. Shroff, for the respondents.
March 28.
The following Judgment of the Court was delivered by SARKAR T.
The Princely States that existed in British India, merged themselves in the Union of India not very long after India became independent.
Before the merger some of these States passed through certain stages which may be called transitional.
The decision of this appeal depends on certain laws that came into existence during the transitional stage through which the Princely State of Indore passed before it became merged in the Indian Union.
Up to April 22, 1948, Indore as one of the Princely States of India enjoyed internal sovereign rights and had its own laws and courts.
These laws and courts derived their authority from the Ruler of Indore in whom the sovereign power was vested.
The highest court in Indore was called the High Court.
The suit out of which this appeal arises was filed by the appellant against the respondents in the Indore High Court on November 6, 1947.
It, was a suit for the specific performance of an agreement whereby it is said, Govindram Sakstria, whose heirs and legal representatives the respondents are, agreed to sell to the appellant a share in a business.
The said Govindram Saksaria having died prior to the suit it was brought against the respondents.
On April 22, 1948, the Rulers of Gwalior, Indore and certain other States in the region known as Malwa (Madhva Bharat) entered into a Covenant to unite and integrate their territories in one State with a common executive, legislature and judiciary, by the name of the United State of Gwalior, Indore and Malwa (Madhya Bharat) and to include in that United 316 State any other State the Ruler of which later agreed with the approval of the Government of India, to merge his State in the United State.
Article 3 of the Covenant provided for the constitution of a Council of Rulers one of the members of which was to be its President, such President being called the Rajpramukh.
It also provided that the Ruler of Gwalior would be the first Raj Pramukh of the United State.
Under article 6 of the Covenant, the Ruler of each covenanting State was required to make over the administration of his State to the Raj Pramukh by a date not later than July 1, 1948.
This article also provided that upon the administration of a State being made over to the Raj Pramukh, all rights, authority and jurisdiction belonging to its Ruler and appertaining or incidental to its Government, would vest in the United State.
Similar provision was also made in respect of the vesting of the rights, authority and jurisdiction of the Ruler of a State which by a subsequent agreement became included in the United State.
Article 10 provided that as soon as practicable a Constituent Assembly for the United State would be formed in the manner indicated, for framing its Constitution and that the Raj Pramukh would by August 1, 1948, constitute an interim Legislative Assembly.
It also provided that until the Constitution framed by the Constituent Assembly came into operation, the Raj Pramukh would have the power to make and promulgate Ordinances for the peace and good Government of the United State but such Ordinances would have force for a period not longer than six months from its promulgation and would be liable to be controlled or superseded by an Act of the interim Legislative Assembly.
As a matter of interest it may be mentioned here, though nothing turns on that in this appeal, that the United State later became a Part B State as defined in the Constitution of India and lastly, merged in the territories of what is now the State of Madhya Pradesh.
The suit brought by the appellant was heard by a single Judge of the Indore High Court who decreed it by his judgment pronounced on June 11, 1948.
It 317 was five days after this judgment had been pronounced, namely, on June 16, 1948, that the Ruler of Indore made over the administration of his State to the Raj Pramukh of the United State in terms of the Covenant.
It appears, however, that the High Court of Indore continued functioning even thereafter.
On June 19, 1948, the Raj Pramukh promulgated Ordinance No. 2 of 1948 to provide for the establishment of a High Court for the United State.
Section.
2 of the Ordinance provided that it would come into force on such date as the Raj Pramukh might prescribe and the Raj Pramukh by a Notification.
published on July 28, 1948, prescribed July 29, 1948, as such date.
On Ordinance No. 2 of 1948 so coming into force on July 29, 1948, the High Court of the State of Indore ceased to function from that date.
Section 35 of the Ordinance provided that on the taking over of the administration of any State by the Raj Pramukh its High Court would cease to exist and all cases pending before it would be transferred to the High Court of the United State established by the Ordinance.
The provisions of this section were found to be anomalous in the cases of States like Indore, where the administration had been taken over sometime before the Ordinance had come into force and the High Court under it established, for in regard to these States the cases pending in the State High Courts could not on the dates their administration was taken over, be transferred to the United State High Court as it had not then come into existence.
To remedy this anomaly, on October 16, 1948, the Raj Pramukh promulgated Ordinance No. 14 of 1948.
This Ordinance replaced section 35 in Ordinance 2 of 1948 by a new section and provided that it would be deemed to have always been so replaced.
The new section provided that in the case of any State whose administration had been taken over by the Raj Pramukh before the establishment of the High Court of the United State, the High Court of the State would cease to exist and function from the date of such establishment and thereupon all cases pending before the High Court of the State would be transferred to the High Court of the United State and the appeals 318 which would have lain to the High Court of the State would lie to the High Court of the United State.
Before Ordinance No. 14 of 1948 had been promulgated, the respondents on August 24, 1948, preferred an appeal to the Divisional bench of the High Court of the United State from the decision of the High Court of Indore decreeing the appellant 's suit on June 11, 1948, to which reference has been made earlier.
A few days later, namely, on September 7, 1948, the appellant also preferred a cross appeal to the Divisional Bench against the same decision.
On December 2, 1948, the Divisional Bench decided the appeal and the cross appeal in favour of the respondents and dismissed the appellant 's suit.
Now came the United State of Gwalior, Indore and Malwa (Madhya Bharat) High Court of Judicature Act, VIII of 1949, hereafter referred to as the Act.
It was enacted by the Interim Legislative Assembly of the United State which had earlier come into existence.
The Act came into force on January 18, 1949.
Section 40 of this Act repealed Ordinance No. 2 of 1948.
The question that arises in this appeal depends on the construction of some of the provisions of this Act which are now set out.
Preamble: Whereas it is necessary to provide for the continuance of the High Court of Judicature for the United State of Gwalior, Indore and Malwa (Madhya Bharat) established under Ordinance No. 11 of 1948, it is hereby enacted as follows: section 4.
In this Act unless there is anything repugnant in the subject or context: (d) " High Court " means the High Court functioning as the High Court of the United State.
section 2(a).
It shall extend to the whole of the United State of Gwalior Indore and Malwa (Madhya Bharat) and shall apply to all persons within the said United State over whom the Courts having jurisdiction in the Covenanting States forming part of the said United State had jurisdiction.
(b) This Act shall apply to all Criminal and Civil Proceedings including those under testamentary, 319 intestate, matrimonial, divorce and insolvency jurisdiction, pending in the Courts in any State on the (late on which the State is included in the United State and to such proceedings, arising in the said States,after those dates.
Special appeal shall lie to the Full Bench of the High Court from : (1) a decree or an appealable order passed by the Divisional Bench of two Judges of the High Court in the exercise of extraordinary or appellate civil jurisdiction.
On March 31, 1949, the appellant filed an appeal to the Full Bench of the High Court from the judgment of the Divisional Bench dismissing his suit.
He claimed to be entitled to file this appeal under section 25 of the Act.
The Full Bench dismissed the appeal on the ground that section 25 was not available to the appellant and in this view of the matter it did not go into the merits of the appellant 's case.
It appears that another Full Bench of the High Court consisting of three Judges had held on an earlier occasion that section 25 did not apply where the Divisional Bench had delivered its judgment before the Act had come into force and no appeal Jay from such a judgment under this section.
That view was endorsed by the judgment of the later Full Bench which however was larger consisting of five Judges.
In the present appeal to this Court, the correctness of the last Full Bench judgment is being challenged.
The appellant contends that section 2(b) of the Act ap.
plied the Act including section 25 to the proceedings mentioned in it and section 25 so applied gave a right of appeal to the Full Bench of the High Court from the decision of a Divisional Bench of that Court passed in these proceedings.
He then says that the judgment of the Divisional Bench dated ]December 2, 1948 from which he had appealed to the Full Bench had been passed in such a proceeding and therefore his appeal was competent.
The High Court does not appear to have held that that proceeding was not of any 320 of the kinds mentioned in section 2(b) and it seems to us that it was of one of these kinds.
Section 2(b) mentions two kinds of proceedings, namely, first those pending in the Courts in any State on the date on which that State was included in the United, State and secondly those which arose in the States after those dates.
Now the proceeding in which the Divisional Bench pronounced judgment was an appeal from a decision of a Single Judge of the Indore High Court given on June 11, 1948, that is, before that State became included in the United State.
The appeal had however been filed on August 24, 1948, that is, after Indore had been included in the United State.
The appellant contends that the fact that the decree from which he had appealed had been passed before the date of inclusion of Indore in the United State while his appeal had been filed after that date made no difference for an appeal being only a continuation of the proceedings in a suit, the proceedings must be deemed to have been pending all along since the filing of the suit and therefore on the date when Indore was included in the United State though the appeal was filed later.
Dinonath Ghose vs Shama Bibi (1) to which we were referred would seem to support the appellant 's contention.
In any case it seems beyond doubt that the appeal in which the judgment of the Divisional Bench, dated December 2, 1948, was pronounced, was a proceeding of the second kind mentioned in section 2(b), namely, " proceedings, arising in the said States, after those dates ", i. e., the date of the inclusion of the State in the United State.
It seems clear to us that the words " arising in the said States " do not refer to proceeding arising in a Princely State for the Princely State had ceased to exist after its inclusion in the United State and no proceeding could arise therein after such inclusion.
So to understand these would result in this part of section 2(b) being rendered nugatory.
We do not think,.
however such a result is inevitable.
These words can well be taken to refer to a proceeding arising in the areas of an erstwhile Princely State subsequently included in the United (1) Cal.
23. 321 State.
We think that to be the proper meaning to be given to these words.
So understood the appeal in which the judgment of the Divisional Bench, dated December 2, 1948, was given was a proceeding arising in the areas of the erstwhile Indore State after the inclusion of that State in the United State for it was filed after such inclusion.
It is therefore clearly a proceeding of the second kind mentioned in section 2(b).
The learned Judges of the High Court however did not, as earlier stated, accept the appellant 's contention that section 25 gave a right of appeal to the Full Bench from the judgment of the Divisional Bench passed in a proceeding mentioned in section 2(b).
Their reasons for this view would appear broadly to be these: To accede to the appellant 's contention a retrospective operation would have to be given to the Act and thereby affect the right vested in the respondents at the date of the passing of the Act to the finality of the judgment of the Divisional Bench delivered before that date; the rules of construction of a statute required that only such retrospective operation should be given to it as its language compelled; there was no such language used in section 2(b), which, properly understood, only gave the High Court of the United State jurisdiction over proceedings pending in the High Court of ' a Princely State on the date on which that State was included in the United State; 'in any event the language of section 2(b) would be fully satisfied by giving retrospective operation to section 25 only to the extent of applying it to proceedings pending on the date of inclusion of a State in the United State and not closed by a final judgment passed before the Act came into force.
It may be conceded that the judgment of the Divisional Bench was final under the law as it stood at the date it was passed and no appeal lay from it before the Act came into force.
The respondents had therefore at the date of the Act a vested right to the finality of this judgment.
It is also clear that a right to the finality of a judgment is a substantive right and that the acceptance of the appellant 's contention would result in depriving the respondents of such a right.
41 322 The only question in this appeal is whether section 25 gives a right of appeal from the judgment of the Divisional Bench.
The rule is clear that " provisions which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment " : Delhi Cloth and General Mills Co. Ltd. vs Income Tax Commissioner, Delhi (1).
Before proceeding further we wish to observe that the rule that a statute is not to have retrospective operation is only applicable where it is doubtful from the language used whether or not, it was intended to have such operation.
Where the language of a statute plainly gives it a retrospective operation, the rule has no application, for, " Of course, it is obviously competent for the Legislature, if it pleases, in its wisdom to make the provisions of an Act of Parliament retrospective ": Smith vs Callander (2).
We may usefully read here what Bowen L. J. said in Reid vs Reid (3): " Now the particular rule of construction which has been referred to, but which is valuable only when the words of an Act of Parliament are not plain, is embodied in the well known trite maxim ominis nova constitution futuris forman imponere debet non praeteritis, that is, that except in special cases the new law ought to be construed so as to interfere as little as possible with vested rights.
We wish to emphasise that it is not as if all efforts should be made so as not to give a statute a retrospective operation whatever its language is.
The rule does not require of the courts an " obdurate persistence " in refusing to give a statute retrospective operation.
Now, what is the language of the Act before us Section 25 does not contain any words to show that it was intended to have retrospective operation.
It only provides for the future.
It gives a new right of appeal and such appeal can of course only be filed after the Act has come into force.
But there is section 2 (b).
That section says that the Act shall apply to all civil and criminal proceedings pending in the Courts in any State on the date on which the State is included in the (1) (1927) L.R. 54 1.
A. 421.
(2) , 305.
(3) 323 United State, and to such proceedings arising in the said States after these dates.
Section 2 (b) therefore makes section 25, and also all other sections of the Act, applicable to the proceedings mentioned in it.
Now what is the effect of this ? What is the result if a section giving a right of appeal is made applicable to a proceeding ? It can only be that an appeal would lie under that section from a judgment passed in that proceeding.
It is, in our view, clear that the language of section 2(b) applies section 25 to a proceeding which was pending on a date before the Act came into force, and therefore gives a right of appeal from a judgment of a Divisional Bench passed in that proceeding, whenever it may have been passed, that is to say, irrespective of whether it was passed before the Act or after it.
We have here plain language which gives the statute retrospective operation.
It does not seem to us that there is any scope here.
of applying the rule of presumption against the retrospective operation of a statute.
But it is said that section 2(b) only extends the jurisdiction of the High Court to the pending cases over which it would not otherwise have any jurisdiction, and is not intended to give retrospective operation to any part of the Act.
It is said that that this is the real effect of section 2(b) is clear because it is put along with 2(a) which only specifies the territories and the persons over whom the High Court having authority under the Act is to have jurisdiction.
It seems to us, however, that whether a section only creates jurisdiction or not will depend on its language and not on its proximity to another section of the same statute defining jurisdiction.
Then it is said that the Act repealed and substantially re enacted Ordinance No. 2 of 1948 and as the corresponding section of that Ordinance, namely, s.4(b), which was practically in the same language as s.2(b) of the Act, was only concerned with jurisdiction, s.2(b) must be understood to do the same.
This contention was accepted by the learned Judges of the High Court but in this they were clearly in error.
We do not wish to be understood as saying that in no case is a reference to the old law permissible for interpreting a new statute, but it seems to us that in the present 324 case such a reference was not justified.
One of the cases on which the learned Judges of the High Court based themselves is Tumahole Bereng vs The King (1).
There the Judicial Committee were dealing with a statute only a part of which had been amended and after reminding themselves of the wisdom of the warning given by Lord Watson in Bradlaugh vs Clarke (2) that it is " an extremely hazardous proceeding to refer to provisions which have been absolutely repealed, in order to ascertain what the legislature meant to enact in their room and stead," observed at p. 267: ". the circumstances of the present case put it beyond the mischief Lord Watson was minded to discourage, and that for two reasons.
In the first place, the terms of the section as it now stands are sufficiently difficult and ambiguous to justify the consideration of its evolution in the statute book as a proper and logical course; and secondly, the object of the instant enquiry is to ascertain the true meaning of that part of the section which remains as it was, and which there is no ground for thinking the substitution of a new proviso was intended to alter.
" In the case before us the language admits of no difficulty it is simple and it applies all the sections of the Act to certain proceedings and as one of these sections at least, namely, section 25, is new, clearly a change in the law was intended.
We do not wish to suggest that the circumstances which would justify a reference to the old law have been exhaustively set out by the Judicial Committee.
It is enough for us to say that none of those circumstances exists here.
In Abdur Rahim vs Mahomed Barkat Ali (3), which was also referred to by the High Court, the Judicial Committee had to decide whether a suit was within section 92 of the Code of Civil Procedure, 1908, and for that purpose to find out what reliefs the expression " further and other relief " in the section would include.
These words are plainly wide and require definition.
The Judicial Committee referred to the earlier law on the subject to find out what that general expression was intended to include.
This case (1) (2) (1883) 8 App.
(3) (1927) L.R. 55 I.A. 96.
325 does not justify a resort to the old law by us, for here we have no general words as to the meaning of which difficulty has arisen.
The last case on which the High Court based itself for this part of it, , judgment to which we wish to refer was In re Mayfair Property Co. There the contention was that a certain interpretation would defeat the object of the Act and in order to as certain that object a reference to the old law was found necessary.
No such question arises in the case before us.
It is not contended that the object of the Act before us would be defeated if section 2(b) applied section 25 retrospectively.
For these reasons it seems to us that the present is not a case where it is permissible to in terpret section 2(b) of the Act by reference to section 4(b) of the Ordinance.
Further in our view, in any event, section 4 (b) of the Ordinance provides no assistance in interpreting section 2(b) of the Act.
Section 4(b) of the Ordinance was not concerned with applying to any case another provision in it giving a right of appeal which section 2(b) of the Act clearly is What we have to decide is, in what cases that right of appeal was given and for that purpose plainly section 4(b) of the Ordinance can afford no assistance as it was not concerned with any such right of appeal.
It is then said that sufficient meaning would be given to the words " pending in the Courts in any State on the date on which the State is included in the United State " in section 2(b), if they are understood as referring to the cases which were pending on that day and which had not been finally decided and determined before the Act had come into force.
This contention is sought to be justified on the principle " that you ought not to give a larger retrospective power to a section, even in an Act which is to some extent intended to be retrospective, than you can plainly see the Legislature meant ".
See Reid vs Reid (2).
Now it seems to us that the principle has no application here.
There is nothing in the section to indicate that the legislature intended the retrospective operation of section 25 to be confined to those pending cases which had not terminated before the Act had come into force.
Such a construction would require adding to the section the (1) (2) L.R. (1886) 31 Ch.
D 402,408.
326 words " and not finally decided before the Act comes into force ".
The rule of presumption against the retrospective operation does not require the addition of any words to a section otherwise plain.
We recall here, what we have said earlier, that the rule applies only where the words are not plain or are capable of two meanings.
It does not justify subtlety in adding words to the section to make the rule applicable.
It is also said that though section 2(b) applies section 25 to the proceedings mentioned therein, it does not expressly say that in so applying it, vested rights shall also be affected.
We think it enough to dispose of this contention to say that, the necessary result of applying section 25 to the proceedings mentioned is to disturb vested rights and that in order that a statute may have a retrospective operation it is not necessary to find words in it expressly stating that it will have such operation notwithstanding that that will disturb vested rights.
We do not think that the words are not plain to give a retrospective operation.
We therefore think that the appellant 's appeal from the Divisional Bench was competent under section 25 of the Act.
The result is that this appeal is allowed.
The decree of the Full Bench of the High Court is set aside.
The case will now go back to the High Court of (Madhya Pradesh) to be decided on the merits.
The appellant will have the costs here and below.
We have here to state that there were three other connected matters.
First, there was an application by the appellant to this Court for special leave to appeal from the Judgment of the Divisional Bench, being Petition for Special Leave to Appeal (Civil) No. 368 of 1957.
Then there was another application by the appellant to this Court for special leave to appeal from the judgment of the Full Bench, being Petition for ,Special Leave to Appeal (Civil) No. 242 of 1957.
These had been made by way of abundant caution.
Lastly, there was an application for leave to file additional documents in the appeal that has just been disposed of.
It was Civil Misc.
Petition No. 472 of 1956.
None of these applications were pressed and we therefore dismiss them but without any order for costs.
Appeal allowed, cause remitted.
| The rule that a statute is not to have retrospective operation can apply only where it is doubtful from the language used whether or not it was intended to have such operation.
Where the language of the statute plainly gives it a retrospective operation, there can be no scope for applying the rule of presumption against retrospective operation.
The rule does not require that the Courts should be obdurate in refusing to give a statute retrospective operation, equally it does not justify the reading of more words than there are into the statute in order that the rule may apply.
Delhi Cloth and General Mills Co. Ltd. vs Income Tax Com missioner, Delhi, (1927) L. R. 54 I.A. 421, Smith vs Callander, and Reid vs Reid, , considered.
The appellant brought a suit for specific performance of an agreement of sale in the High Court of Indore at a time when Indore was a Princely State in British India.
On April 22, 1948, the Rulers of Gwalior, Indore and certain other States entered into a Covenant to form the United State of Gwalior, Indore and Malwa (Madhya Bharat).
The suit was heard by a single Judge and decreed on June 11, 1948.
The Ruler of Indore on June 16, 1948, made over the administration of his State to the Raj Pramukh of the United State in terms of the Covenant.
By an ordinance promulgated by the Raj Pramukh a High Court was established for the United State and the High Court of Indore ceased to function from July 29, 1948.
The respondents preferred an appeal to the Divisional Bench of the High Court of the United State on August 24, 1948, and the appellant preferred a cross appeal under the provisions of that Ordinance.
The Divisional Bench found in favour of the respondents in both the appeal and cross appeal and dismissed the appellant 's suit by a judgment dated December 2, 1948.
The Interim Legislative Assembly of the United State enacted the United State of Gwalior, Indore and Malwa (Madhya Bharat) High Court of Judicature Act, VIII Of 1949, which came into force on January 18, 1949, and repealed the Ordinance.
40 314 By section 2(b) of the Act it was provided : This Act shall apply to all Criminal and civil proceedings including those under.
testamentary, intestate, matrimonial divorce and insolvency jurisdiction pending in the courts in any State on the date on which the State is included in the united State and to such proceedings, arising in the said states, after those dates.
By section 25 it was provided : Special appeal shall lie to the Full Bench of the High court from : (1) a decree or an appealable order passed by the Divisional Bench of two judges Of the High Court in the exercise of extraordinary or appellate civil jurisdiction.
The appellant preferred an appeal to the Full Bench of the High Court under section 25 against.
the judgment of the Divisional Bench.
The Full Bench dismissed the appeal as incompetent holding that section 25 could not be given retrospective operation so as to disturb the right that had vested in the respondents as to the finality of the judgment of the Divisional Bench which was passed before the Act came into force : Held, that section 25 Of the Act, although not in terms retrospective, has to be read with section 2(b) of the Act which made the Act, and consequently section 25, applicable to the proceedings mentioned in it and since the appeal before the Divisional Bench, filed after the inclusion of the State of Indore in the United State, was beyond doubt one of such proceedings, the competency of the appeal could not be questioned.
Although there can be no hard and fast rule that in no case should the pre existing law be referred to for the purpose of interpreting a new enactment, where, as in the present case, the language is simple, free from doubt and clearly indicates that a change in the pre existing law is intended and no reason existed requiring a reference to the pre existing law, no such reference is permissible.
Tumahole Bereng vs The King, , Abdur Rahim vs Mohomed Barkat Ali, (1927) L.R. 55 I.A. 96 and In re Mayfair .Property Co. (1898) 2 Ch .
28, referred to.
|
Summarize this legal judgement text concisely | Appeal No. 231 of 1954.
Appeal by special leave from the judgment and order dated August 17, 1953, of the Railway Rates Tribunal at Madras in Complaint Case No. 5 of 1952.
section C. Isaacs and R. C. Prasad, for the appellant.
H. N. Sanyal, Additional Solicitor General of India, H. J. Umrigar and R. H. Dhebar, for the respondents.
March 24.
The Judgment of the Court was delivered by GAJENDRAGADKAR J.
This is an appeal by special( leave against the order passed by the Railway Rates Tribunal, hereinafter called the tribunal, at Madras dismissing the appellant 's complaint under section 41 of the Indian Railways Act (9 of 1890), to be described hereinafter as the Act.
The appellant, Raigarh Jute Mills Ltd., is a limited company owning jute mills which are ,situated in Raigarh in Madhya Pradesh.
For the production of jute goods, the appellant has to bring raw material, viz., jute from many railway booking stations outside the State of Madhya Pradesh and there is no other means of transport except by rail both for bringing jute to the mills and for carrying the finished products to ports for export to foreign countries.
In its complaint, the appellant has alleged that the railway administration had contravened the provisions of section 28 of the Act and also that the charges levied by the railway administration for the freight of the appellant 's goods were unreasonable and excessive.
According to the appellant, the Assam Railway (now North Eastern Railway) offered special rates for jute from certain stations in its zone to Kanpur and the basis of these rates was cheaper than that of the rates charged between Raigarh and some other stations on the East Indian Railway and the Bengal Nagpur Railway (now the Eastern Railway).
Both the Eastern Railway and the 238 North Eastern Railway are State Railways and as such it was not open to either of them to mete out differential treatment.
The appellant further contended that the other jute ' mills in West Bengal and Madras had facilities for direct shipment of their goods without carriage by rail to the ports, whereas, in the case of the appellant, the railways charged freight up and down in respect of the entire traffic of the appellant ; inevitably the prices of the products of the.
appellant could not be brought down to the competitive level for the purposes of export out of, or sale in, India.
The appellant annexed to its complaint table,, of goods rates of the two railways and urged that the unusual increase in the rates charged to the appellant was telling very heavily on the appellant as compared to other mills.
According to the appellant, ' the freight rates should be on the basis prevailing in the year 1949 as the market had gone down to the level existing in that year.
The appellant 's complaint therefore prayed that, since the prevailing rates were unreasonable and excessive, the tribunal should issue directions for the introduction of fair and reasonable rates.
When the complaint was first filed, both the East Indian Railway with its headquarters at Calcutta and the Bengal Nagpur Railway with its headquarters at Kidderpore were impleaded as respondents.
Subsequently, the railways were reorganized and the complaint was then suitably amended with the result that the Eastern Railway with its headquarters at Calcutta was substituted for both the original respondents.
Later on, the Union of India was impleaded as respondent 2 to the complaint.
Both the respondents denied.
the allegations made in the complaint.
It was alleged on their behalf that the existing tariff rates for the movement of jute were reasonable and not excessive.
It was also alleged by the respondents that, beyond drawing attention to special rates which applied to traffic from certain stations on the Assam Railway section of the NorthEastern Railway to Kanpur, the appellant had not submitted concrete evidence, facts or figures to make out even a prima facie case that the prevailing tariff 239 rates for jute were unreasonable.
The respondents ' case was that the fact that the appellant 's mill was situated far away from the port and as such had to incur additional cost had, no relevance or bearing on the case made out in the complaint and the same cannot be treated as a ground for consideration of any special rates.
The Union of India has specifically ' raised the additional plea that even after reorganization the two railways in question were separate entities and were working in the different regions having more or less divergent local conditions, and so they did not constitute one railway administration within the meaning of the Act and section 28 was therefore inapplicable.
On these contentions four principal issues were framed by the tribunal.
All the three members of the tribunal found that the freight rates for the transport of jute to Kanpur from certain stations in the Katihar section of the North Eastern Railway were lower than those for its transport to Raigarh.
In fact this position was conceded before the tribunal.
On the question as to whether the disparity in the said rates amounted to " undue " preference under section 28 of the Act, the members of the tribunal took different views.
The President Mr. Lokur and Mr. Roy, member, were of the opinion that the two railways constituted one railway administration.
They thought that it was just and equitable to hold that, although a railway administration may mean a manager, yet in this case it also meant the Government.
They were, however, not satisfied that the disparity in the rates justified the appellant 's complaint about " undue " preference.
That is why they rejected the appellant 's grievance that the railway administration had contravened the provisions of section 28 of the Act.
Mr. Subbarao, the third member of the tribunal, was inclined to take the view that, though the final control of both the railways may be with the Government or its representative, viz., the Railway Board, the actual management of the different zones was with the respective managers, and so the two railways in question cannot be said to constitute one railway administration.
Proceeding to deal 240 with the appellant 's complaint on this basis, Mr. Subbarao rejected its argument of " undue " preference on the ground that section 28 was inapplicable in the present case.
In the result, the issue about " undue " preference was held against the appellant by all the.
members of the tribunal.
In regard to the appellant 's case that the increase in the freight for the transport of jute to Raigarh was unreasonable and excessive, the President Mr. Lokur and Mr. Sabbarao found that the plea had not been proved by any evidence.
On the other hand, Mr. Roy made a finding in favour of the appellant and held that the rates in question were shown to be unreasonable and excessive.
Since the majority decision, however, was against the appellant on this point, the appellant 's complaint was dismissed.
It is against this order of the tribunal dismissing its complaint that the appellant has come to this Court in appeal by special leave.
Before dealing with the merits of the contentions raised by the appellant, it would be convenient to refer briefly to the provisions of the Act in regard to the constitution of the tribunal as they were in operation at the material time.
Section 26 bars jurisdiction of ordinary courts in regard to acts or omissions of the railway administration specified in the section.
Section 34 deals with the constitution of the Railway Rates Tribunal.
According to this section, the tribunial consists of a President and two other members appointed by the Central Government.
The tribunal had to decide the complaint filed before it with the aid of a panel of assessors as prescribed under section 35 of the Act.
Section 46 lays down that the decision of the tribunal shall be by the majority of the members sitting and shall be final.
It is obvious that this provision about the finality of the tribunal 's decision cannot affect this Court 's jurisd iction under article 136 of the Constitution.
Let us now set out the material provisions of the Act on which the appellant 's complaint is founded.
Section 28 provides: " A railway administration shall not make or give any undue or unreasonable preference or advantage to, 241 or in favour of, any particular person or railway administration, or any particular description of traffic, in any respect whatsoever, or subject any particular person or railway administration or any particular description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatsoever." A breach of the provisions of section 28 by the railway ' administration may give rise to a complaint under section 41 (1) (a).
This section provides for complaints against a railway administration on five different grounds enumerated in cls.
(a) to (e) and it requires that the tribunal to which such complaints may be made shall hear and decide them in accordance with the provisions of ch.
In the present case, we are concerned with cls.
(a), (b) and (c) of section 41, sub section
Clause (a) covers cases of alleged contravention of the provisions of section 28; el.
(b) deals with cases where it is alleged that the administration is charging station to station rates or wagon load rates which are unreasonable; and cl.
(c) deals with cases where the railway administration is levying charges which are unreasonable.
Then section 41, sub section
(2) (i) lays down that, as soon as it is shown that the railway administration charges one trader or class of traders or the traders of any local area lower rates for the same or similar goods than it charges to other traders or class of traders or to the traders in another local area, the burden of proving that such lower charge does not amount to " undue" preference shall lie on the railway administration; and section 41 (2) (ii) lays down that, in deciding the question of " undue " preference, the tribunal may, in addition to any other considerations affecting the case, take into consideration whether such lower charge is necessary in the interest of the public.
The decision of the questions raised by the appellant before us will depend upon the scope and the effect of the provisions contained in sections 28 and 41 of the Act.
Section 28 is obviously based on the principle that the power derived from the monopoly of railway carriage must be used in a fair and just manner in respect of all persons and all descriptions of traffic 31 242 passing over the railway area.
In other words, equal charges should normally be levied against persons or goods of the same or similar kinds passing over the same or similar area of the railway lines and under the same or similar circumstances; but this rule does not mean that, if the railway administration charges unequal rates in respect of the same or similar class of goods traveling over the same or similar areas, the inequality of rates necessarily attracts the provisions of section 28.
All cases of unequal rates cannot necessarily be treated as cases of preference because the very concept of preference postulates competition between the person or traffic receiving preference and the person or traffic suffering prejudice in consequence.
It is only as between competitors in the same trade that a complaint of preference can be made by one in reference to the other.
If there is no such competition then no complaint of preference can be made even though the charges levied against similar goods may not be equal.
It may be possible to assume that there is competition between similar commodities put on the market in the same area for domestic consumption; but no such competition can be assumed between traffic of goods for export and traffic of similar goods for home consumption.
It is only when goods or persons can be said to be _pari passu that a question of preference arises and so it is where the competition between two persons or classes of goods is either admitted or proved that the question of the application of section 28 would ever arise.
Then again, even as between competing goods or persons, it would not be enough to prove mere preference to attract the provisions of section 28, for theoretically every case of preference may not necessarily be a case of " undue " preference.
It is only when the tribunal is satisfied that the railway administration has shown " undue " preference in favour of a particular class of goods that a complaint can be successfully entertained under section 41 (1) (a).
The position under section 28 thus appears to be clear.
Whoever complains against the railway administration that the provisions of section 28 have been contravened must establish that 243 there has been preference between himself and his goods on the one hand and his competitor and his goods on the other; and where it appears to the tribunal that such preference is " undue " preference, the complainant would be entitled to adequate relief under section 41 (1) (a) of the Act.
It is true that, while enquiring into the complaint ' made under section 41, as soon as the complainant shows inequality of rates and proves that the competing goods are charged less than his own, the onus shifts on to the railway administration to prove that such lower charge does not amount to " undue " preference.
The initial burden to prove preference is on the complainant; but when the said burden is discharged by the proof of unequal rates as between the complainant and his competitor, it is for the railway administration to prove that the preference is not " undue ".
In the absence of satisfactory evidence adduced by the railway administration in justification of unequal rates, the tribunal may hold that the unequal rates complained against by the complainant amounts to " undue " preference.
If, on the other hand, the railway administration leads evidence to show justification for the inequality of the rates, then notwithstanding the existence of unequal rates, the tribunal need not necessarily find that the administration has contravened the provisions of section 28, because it is only where " undue " preference by the administration is shown that it can be said to have contravened the said section.
In considering the question as to whether the alleged preference amounts to " undue " preference or not, the tribunal may also be entitled to consider whether the lower charge levied by the administration in respect of the competing class of goods was necessary in the interest of the public.
That is the result of the provisions of section 41, sub section
(2)(i) and (ii).
In this connection we may refer to some of the English decisions to which our attention was invited.
In Lever Brothers, Limited vs Midland Railway Company (1), it was held that the railway was not called upon to justify the disparity of rates on which the (1) (1909) XIII Railway and Canal Traffic Cases, 301.
244 complaint by Lever Brothers, Limited, was based because the applicants had failed to establish that Messrs. J. W. & Sons, Limited, in respect of whom the lower rate was charged, were the competitors of the applicants.
Referring to the fact that the rates charged to the two respective companies were different, Vaughan Williams L. J. observed that he did not think that the difference in rates itself constituted any undue preference by the Midland Railway Company of Watsons as competitors of Levers.
One of the reasons why the complaint made by Lever Brothers, Limited, failed was that it was not shown that Messrs. J. W. & Sons, Limited, were competitors of Lever Brothers ' Limited, and that eliminated the application of section 27 (1) of the Railway and Canal Traffic Act of 1888.
Similarly in Lancashire Patent Fuel Company Limited vs London and North Western Railway Company (1), it was held that no competition existed between coal carried for shipment, and that carried for the trader and so the application made on the ground of undue preference was incompetent.
It was proved in this case that the applicant 's slack was carried by the railway companies at a higher rate than that for slack carried for shipment; but the complaint based on this unequal charges was rejected on the ground that " it cannot be said that the slack carried by the railway companies for the applicants ever comes into competition with the slack which is carried by the railway companies for ordinary shipment ".
On the other hand, in The Nitshill and Lesmahagow Coal Company vs The Caledonian Railway Company (2), it was held that the railway administration had shown undue preference because it was proved that the goods unequally charged were commercially and substantially of the same description and there was competition between them.
Whether or not the goods were commercially and substantially of the same description was the point in issue between the parties; but the complainant 's case was accepted and it was found that, on the whole, the two articles (1) (1904) XII Railway and Canal Traffic Cases, 77, 79.
(2) (1874) 11 Railway and Canal Traffic Cases, 39, 45.
245 were substantially of the same description " and cannot but be regarded as competitive and that there ought not to be any difference in the rates at which they are carried ".
This decision shows that if unequal rates are charged for the carriage of similar or same goods travelling over similar or same areas, then the, inference as to " undue " preference can be drawn unless the preference alleged is otherwise shown to be justified by valid reasons.
In Denaby Main Colliery Company vs Manchester, Sheffield, and Lincolnshire Railway Company (1), the Earl of Selborne, in his speech, observed that he did not think it possible to hold (looking at the context in which the material words stand) that " the mere fact of inequality in the rate of charge when unequal distances are traversed can constitute a preference inconsistent with them ".
It may be pointed out incidentally that the provisions of section 2 of the Railway and Canal Traffic Act, 1854 (17 & 18 Vict. c. 31) are substantially similar to the provisions of section 28 in our Act.
Thus it is clear on these authorities that a complaint made under section 41(1)(a) can succeed only if it is shown that preference has been shown by the railway administration to the complainant 's competitor and the administration has failed to adduce evidence in justification of the said preference.
It will now be necessary to consider the merits of the appellant 's case in the light of this legal position.
The application made by the appellant does not in terms allege any "undue" preference at all.
Mr. Isaacs, for the appellant, conceded that the application had not been happily worded; but his comment was that the pleadings of both the parties are far from satisfactory.
That no doubt is true; but if the appellant wanted to make out a case against the railway administration under section 41(1)(a), it was necessary that he should have set up a specific case of "undue" preference.
The application does allege that the mills at Kanpur are able to carry raw jute at a lower rate but there is no allegation that between the goods of the Kanpur mills and the goods (1) ,114.
246 of the appellant there is any competition in the market.
On the other hand, the application refers to the advantage enjoyed by the jute mills in West Bengal and ' Madras over the appellant.
Reading the complaint filed by the appellant as a whole, it would .appear that the complaint by necessary implication refers to the competition between the goods of West Bengal and Madras mills on the one hand and the ap pellant 's goods on the other.
The appellant no doubt also avers that the rate charged for the transport of the goods are unreasonable and excessive but that is another part of the complaint which we will consider separately.
It would, therefore, be difficult to accept Mr. Isaaes argument that the appellant 's complaint should be read as including an allegation about competition between the appellant and the Kanpur mills.
If no such allegation has been made by the appellant in his complaint, it would not be fair to criticise the respondents for not denying the existence, of any such competition.
But apart from this technical difficulty, the appellant cannot even refer to any evidence on which it would be possible to base a conclusion as to the competition between the goods produced by the Kanpur mills and the appellant 's goods.
Mr. Isaacs has taken us through the evidence of Amritlal Bannerjee, Mustafi and Paul; but we have not been able to see any statement made by any of these witnesses which would show that there was a competition between the two sets of goods.
On the other hand, such meagre evidence as is available on the record would seem to suggest that the goods produced by the Kanpur mills are sent to local markets for domestic consumption and do not enter the field of competition with the appellant 's goods at all.
That presumably is the reason why the appellant could not allege any competition between its goods and the goods of the Kanpur mills and none of the witnesses could speak to it.
Mr. Isaacs was thus constrained to refer to the statement (R 18) filed by the respondents for the purposes of showing that the appellant 's goods travelled to some centres in India which may be covered by the goods of the Kanpur 247 mills.
In our opinion, this is an argument of desperation and it cannot help the appellant.
One of the questions which was apparently raised before the tribunal was in respect of the volume of traffic and it is in connection with this particular part of the dispute that relevant statements were prepared by the respondents and filed before the tribunal.
It would, we think, be unreasonable to make use of some of the statements contained in these documents for the purpose of deciding whether the appellant 's goods and the goods produced by the Kanpur mills enter into competition in the markets in India.
If the appellant had attempted to lead evidence on this point the respondents would naturally have had an opportunity to rebut that evidence.
It is too late now to make out a case of this alleged competition and seek to prove it by stray statements contained in the document filed by the respondents before the tribunal for a wholly different purpose.
That being the position of the evidence on the record we have no difficulty in accepting the view of the tribunal that competition between the goods of the Kanpur mills and the appellant 's goods has not been alleged or proved in the present proceedings.
If that be the true position, then the mere fact that the goods of the Kanpur mills are transported at more favourable rates would not attract the provisions of section 28 of the Act.
The next question which remains to be considered is whether the appellant has proved that the rates charged by the administration in respect of the goods transported by the appellant are per se unreasonable.
On this point the appellant has led no evidence at all.
In its complaint it has no doubt averred that there has been an undue increase in the freight charges but no allegation is made as to why and how the, actual charges are unreasonable.
It appears that the appellant is under a disadvantage because its mills are situated at Raigarh in Madhya Pradesh far away from the shipping centres of transport and the competing mills in West Bengal and Madras are very near the export centres: but the fact that by its geographical location the appellant has to incur, additional 248 expenses of transport would not be relevant in considering the reasonableness of the freight charges.
It is common ground that the freight charges are levied at the same rate by the railway administration in respect of either raw jute or jute products against all the mills.
There is no inequality of rates so far as the mills in this zone are concerned.
The appellant appears, to have argued before the tribunal that the rates of freight leviable by the railway administration should have some relation to the costs incurred by the appellant in producing the jute goods as well as the commodity prices prevailing in the market.
This argument has been rejected by the tribunal and we think rightly.
It seems to us clear that the costs incurred by the appellant which are partly due to the appellant 's geographical position can have no relevance whatever in determining the reasonableness or otherwise of the railway freight charged by the railway administration.
Nor can the railway freight move up and down with the rise and fall of the commodity prices.
In dealing with the question about the reasonableness of the railway freight, it would naturally be relevant to consider mainly the working costs of the railway administration and other material circumstances.
When a complaint is made against the railway administration under section 41(1)(b) or (c), the onus to prove the alleged unreasonableness of the freight rests on the complainant and if the complainant makes no effort to discharge this onus his plea that the rates are unreasonable must inevitably fail.
It appears that Mr. Roy, one of the members of the tribunal, was inclined to take the view that the special rates given to the Kanpur mills in Katihar area should be regarded as normal and reasonable rates; and since the rates charged to the appellant were higher than the said rates, he held that the rates charged against the appellant are unreasonable per se.
In our opinion, this view is entirely erroneous.
The rates charged to the Kanpur mills are admittedly special rates.
Whether or not these concessional or special rates should have been granted to the Kanpur mills is a matter with which the present enquiry is 249 not concerned.
There may be reasons to justify the said concessional rates; but it is plain that the special or concessional rates charged by the railway administration in another zone cannot be treated as the sole basis for determining what rates should be charged by the railway.
administration in other zones, and so we do not see how the appellant can successfully challenge the majority finding of the tribunal that the rates charged against the appellant 's goods are not shown to be unreasonable per se.
In the result we must hold that the tribunal was justified in rejecting the complaint made by the appellant.
The appeal therefore fails and must be dismissed with costs.
Before we part with this case, we would like to mention two points which were sought to be argued before us by the learned Additional Solicitor General on behalf of the respondents.
He challenged the correctness of the majority view of the tribunal that the two railways operating in two different zones in question constituted one railway administration within the meaning of section 3, sub section
Alternatively, he argued that, even if the two railways were held to constitute one railway administration and that the disparity in charges amounted to the granting of " undue " preference to the Kanpur mills, section 46 of the Act was a complete answer to the complaint under section 41(1)(a).
Since we have held in favour of the respondents on the points urged before us by Mr. Isaacs on behalf of the appellant, we do not propose to deal with the merits of these contentions.
Appeal dismissed.
| The appellant company owned jute mills situated in Raigarh in the State of Madhya Pradesh, and it had to bring raw material from many railway booking stations outside the State as there was no other means of transport both for bringing jute to the mills and for carrying the finished products to ports for export to foreign countries; the jute mills in West Bengal and Madras had facilities for direct shipment of their goods without carriage by rail to the ports, and so the prices of the products of the appellant could not be brought down to the competitive level for the purposes of export out of, or sale in, India.
The appellant filed a complaint before the Railway Rates Tribunal under section 41 of the Indian Railways Act, 1890, on the allegations that the Railway administration had contravened the provisions of section 28 of the Act in that it had offered special rates for certain stations in its zone to Kanpur which were cheaper than those that were charged between Raigarh and some other railway stations, and that the charges levied for the freight of the appellant 's goods were unreasonable and excessive.
The Tribunal found that competition between the goods of the Kanpur mills and the appellant 's goods had not been alleged or proved in the present case Held, that the mere fact that the goods of the Kanpur mills are transported at more favourable rates would not attract the provisions of section 28 of the Act, unless there is competition between the goods of the Kanpur mills and the appellant 's goods, and undue preference has been shown by the railway administration to the appellant 's competitor.
Nitshill and Lesmahagow Coal Company vs The Caladonian Railway Company, (1874) 11 Railway and Canal Traffic Cases, 39, Denaby Main Colliery Company vs Manchester, Sheffield and Lincolnshire Railway Company, , Lancashire Patent Fuel Company Limited vs London and North Western Railway Company, (1904) XII Railway and Canal Traffic Cases, 77 and Lever Brothers, Limited vs Midland Railway Company, (1909) XIII Railway and Canal Traffic Cases, 301, relied on.
Held, further, that in considering the question as to the reasonableness of the railway freight the relevant factors would mainly be the working costs of the railway administration and 237 other material circumstances, and neither the geographical location of the appellant on account of which it has to incur additional expenses of transport, nor the cost incurred in producing the jute goods nor the commodity prices prevailing in the market, have any relevance.
|
Summarize this legal judgement text concisely | Appeals 'Nos. 455 to 457 and 656 to 658 of 1957.
Appeals from the judgment and order dated April 29, 1957, of the Bombay High Court in Misc.
Applications Nos.
48 to 50 of 1957.
G. section Pathak, section K. Kapur, P. N. Bhagwati and Ganpat Rai, for the appellant in C. A. No. 455 of 1957 & respondent in C. A. No. 656 of 1957.
Sachin Choudhry, R. J. Joshi, J. B. Dadachanji, Rameshwar Nath and St N. Andley, for the appellants in C. As.
Nos. 456 & 457 of 1957 and respondents in C. As.
Nos. 657 & 658 of 1957.
C. K. Daphtary, Solicitor General for India, G. N. Joshi, K. H. Bhabha and R. H. Dhebar, for respondent No. 4 in C. As.
455 to 457 of 1957 and appellant in C. As.
656 to 658 of 1957.
March 28.
The Judgment of the Court was delivered by DAS C. J.
These six several appeals are directed against a common judgment and order pronounced on 36 282 April 29, 1957, by a Division Bench of the Bombay High Court in three several Miscellaneous Applications under article 226 of the Constitution, namely, No. 48 of 1957 filed by Shri Ram Krishna Dalmia (the appellant in Civil Appeal No. 455 of 1957), No. 49 of 1957 by Shri Shriyans Prasad Jain and Shri Sital Prasad Jain (the appellants in Civil Appeal No. 456 of 1957) and No. 50 of 1957 by Shri Jai Dayal Dalmia and Shri Shanti Prasad Jain (the appellants in Civil Appeal No. 457 of 1957).
By those Miscellaneous Applications the petitioners therein prayed for an appropriate direction or order under article 226 for quashing and ,setting aside notification No. section R. 0.
2993 dated ]December 11, 1956, issued by the Union of India in exercise of powers conferred on it by section 3 of the Commissions of Enquiry Act (LX of 1952) and for other reliefs.
Rules were issued and the Union of India appeared and showed cause.
By the aforesaid judgment and order the High Court discharged the rules and dismissed the applications and ordered that the said notification was legal and valid except as to the last part of cl.
(10) thereof from the words " and the action" to the words " in future cases " and directed the Commission not to proceed with the inquiry to the extent that it related to the aforesaid last part of cl.
(10) of the said notification.
The Union of India has filed three several appeals, namely, Nos. 656, 657 and 658 of 1957, in the said three Miscellaneous Applications complaining against that part of the said judgment and order of the Bombay High Court which adjudged the last part of el.
(10) to be invalid.
The (hereinafter referred to as the Act), received the assent of the President on August 14, 1952, and was thereafter brought into force by a notification issued by the Central Government under section 1 (3) of the Act.
As its long title states, the Act is one " to provide for the appointment of Commissions of Inquiry and for vesting such Commissions with certain powers ".
Sub sec tion (1) of section 3, omitting the proviso not material for our present purpose, provides: The appropriate Government may, if it is of 283 opinion that it is necessary so to do, and shall, if a resolution in this behalf is passed by the House of the, People or, as the case may be, the Legislative Assembly of the State, by notification in the Official Gazette, appoint a Commission of Inquiry for the purpose of making an inquiry into any definite matter of public importance and performing such functions and within such time as may be specified in the notification, and the Commission so appointed shall make the Inquiry and perform the functions accordingly." Under sub section
(2) of that section the Commission may consist of one or more members and where the Commission consists of more than one member one of them may be appointed as the Chairman thereof.
Section 4 vests in the Commission the powers of a civil court while trying a suit under the Code of Civil Procedure in respect of the several matters specified therein, namely, summoning and enforcing attendance of any person and examining him on oath, requiring discovery and production of any document, receiving evidence on affidavits, requisitioning any public record or copy thereof from any court or officer, issuing commissions for examination of witnesses or documents and any other matter which may be prescribed.
Section 5 empowers the appropriate Government, by a notification in the Official Gazette, to confer on the Commission additional powers as provided in all or any of the sub sections
(2), (3), (4) and (5) of that section.
Section 6 provides that no statement made by a person in the course of giving evidence before the commission shall subject him to, or be used against him in, any civil or criminal proceeding except a prosecution for giving false evidence by such statement provided that the statement is 'made in reply to a question which he is required by the Commission to answer or is relevant to the subject matter of the inquiry.
The appropriate Government may under section 7 issue a notification declaring that the Commission shall cease to exist from such date as may be specified therein.
By section 8 the Commission is empowered, subject to any rules that may be made, to regulate its own procedure including the time and place of its 284 sittings and may act notwithstanding the temporary absence of any member or the existence of any vacancy among its members.
Section 9 provides for indemnity to the appropriate Government, the members of the Commission or other persons acting under their directions in respect of anything which is done or intended to be done in good faith in pursuance of the Act.
The rest of the sections aye not material for the purpose of these appeals.
In exercise of the powers conferred on it by section 3 of the Act the Central Government published in the Gazette of India dated December 11, 1956, a notification in the following terms: MINISTRY OF FINANCE (Department of Economic Affairs) ORDER New Delhi, the 11th December, 1956 section R. O. 2993 Whereas it has been made to appear to the Central Government that: (1) a large number of companies and some firms were promoted and/or controlled by Sarvashri Ramakrishna Dalmia, Jaidayal Dalmia, Shanti Prasad Jain, Sriyans Prasad Jain, Shital Prasad Jain or some one or more of them and by others being either relatives or employees of the said person or persons, closely connected with the said persons; (2) large amounts were subscribed by the investing public in the shares of some of these companies; (3) there have been gross irregularities (which may in several respects and materials amount to illegalities) in the management of such companies including manipulation of the accounts and unjustified transfers and use of funds and assets; (4) the moneys subscribed by the investing public were in a considerable measure used not in the interests of the companies concerned but contrary to their interest and for the ultimate personal benefit of those in control and/or management; and (5) the investing public have as a result suffered considerable losses.
285 And Whereas the Central Government is of the opinion that there should be a full inquiry into these matters which are of definite public importance both by reason of the grave consequences which appear to have ensued to the investing public and also to determine such measures as may be deemed necessary in order to prevent a recurrence thereof; Now, therefore, in exercise of the powers conferred by section 3 of the Commissions of Inquiry Act (No. 60 of 1952), the Central Government hereby appoints a Commission of Inquiry consisting of the following persons, namely : Shri Justice section R. Tendolkar, Judge of the High Court at Bombay, Chairman.
Shri N. R. Modi of Messrs A. F. Ferguson & o., Chartered Accountants, Member.
Shri section C. Chaudhuri, Commissioner of Income tax, Member.
1.The Commission shall inquire into and report on and in respect of: (1) The administration of the affairs of the companies specified in the schedule hereto; (2) The administration of the affairs of such other companies and firms as the Commission may during the course of its enquiry find to be companies or firms connected with the companies referred to in the schedule and whose affairs ought to be investigated and inquired into in connection with or arising out of the inquiry into the affairs of the companies specified in the schedule hereto; (3)The nature and extent of the control, direct and indirect, exercised over such companies and firms or any of them by the aforesaid Sarvashri Ram Krishna Dalmia, Jaidayal Dalmia, Shanti Prasad Jain, Sriyans Prasad Jain, their relatives, employees and persons connected with them; (4)The total amount of the subscription obtained from the investing public and the amount subscribed by the aforesaid persons and the extent to which the funds and assets thus obtained or acquired were misused, misapplied or misappropriated; (5) The extent and nature of the investments by 286 and/or loans to and/or the use of the funds or assets by and transfer of funds between the companies aforesaid; (6)The consequences or results of such investments, loans transfers and/or use of funds and assets ; (7)The reasons or motives of such investments, loans transfers and use and whether there was any justification for the same and whether the same were made bona fide, in the interests of the companies concerned ; (8) The extent of the losses suffered by the investing public, how far the losses were avoidable and what steps were taken by those in control and/or management to avoid the losses; (9) The nature and extent, of the personal gains made by any person or persons or any group or groups of persons whether herein named or not by reason of or through his or their connection with or control over any such company or companies; (10) Any irregularities frauds or breaches of trust or action in disregard of honest commercial practices or contravention of any law (except contraventions in respect of which criminal proceedings are pending in a Court of Law) in respect of the companies and firms whose affairs are investigated by the Commission which ma come to the knowledge of the Commission and the action which in the opinion of the Commission should be taken as and by way of securing redress or punishment or to act as a preventive in future cases.
(11) The measures which in the opinion of the Commission are necessary in order to ensure in the future the due and Proper administration of the funds and assets of companies and firms in the interests of the investing public.
SCHEDULE 1.
Dalmia Jain Airways Ltd. 2.
Dalmia Jain Aviation Ltd., (now known as Asia Udyog Ltd.) 3.
Lahore Electric Supply Company Ltd., (now known as South Asia Industries Ltd.) 4.
Sir Shapurji Broacha Mills Ltd. 287 5.
Madhowji Dharamsi Manufacturing Company Ltd. 6.
Allen Berry and Co. Ltd. 7.
Bharat Union Agencies Ltd. 8.
Dalmia Cement and Paper Marketing Company Ltd., (now known as Delhi Glass Works Ltd.) 9.
Vastra Vyavasaya Ltd. Ordered that the Order be published in the Gazette of India for public information.
(No. F. 107 (18INS/56)).
H.M. Patel Secretary.
It should be noted that the above notification did not specify the time within which the Commission was to complete the inquiry and make its report.
On January 9, 1957, the Central Government issued another notification providing that all the provisions of sub sections
(2), (3), (4), and (5) of section 5 should apply to the Commission.
As the notification of December 11, 1956, did not specify the time within which the Commission was to make its report, the Central Government on February 11, 1957, issued a third notification specifying two years from that date as the time within which the Commission of Inquiry should exercise the functions conferred on it and make its report.
On February 12, 1957, three several Miscellaneous Applications were filed under article 226 of the Constitution questioning the validity of the Act and the notification dated December 11, 1956, on diverse grounds and praying for a writ or order for quashing the same.
It will be convenient to advert to a few minor objections urged before us on behalf of the petitioners in support of their appeals before we come to deal with their principal and major contentions.
The first objection is that the notification has gone beyond the Act.
It is pointed out that the Act, by section 3, empowers the appropriate Government in certain eventualities to appoint a Commission of Inquiry for the purpose of making an inquiry into any definite matter of public importance and for no other purpose.
The contention is that the conduct of an individual person 288 or company cannot possibly be a matter of public importance and far less a definite matter of that kind.
We are unable to accept this argument as correct.
Widespread floods, famine and pestilence may quite easily be a definite matter of public importance urgently calling for an inquiry so as to enable the Government to take appropriate steps to prevent their recurrence in future.
The conduct of villagers in cutting the bunds for taking water to their fields during the dry season may cause floods during the rainy season and we can see no reason why such unsocial conduct of villagers of certain villages thus causing floods should not be regarded as a definite matter of public importance.
The failure of a big bank resulting in the loss of the life savings of a multitude of men of moderate means is certainly a definite matter of public importance but the conduct of the. persons in charge and management of such a bank which brought about its collapse is equally a definite matter of public importance.
Widespread dacoities in parti cular parts of the country is, no doubt, a definite matter of public importance but we see no reason why the conduct, activities and modes operandi of particular dacoits and thugs notorious for their cruel depredations.
should not be regarded as definite matters of public importance urgently requiring a sifting inquiry.
It is needless to multiply instances.
In each case the question is: is there a definite matter of public importance which calls for an inquiry ? We see no warrant for the proposition that a definite matter of public importance must necessarily mean only some matter involving the public benefit or advantage in the abstract, e. g., public health, sanitation or the like or some public evil or prejudice, e. g., floods, famine or pestilence or the like.
Quite conceivably the conduct of an individual person or company or a group of individual persons or companies may assume such a dangerous proportion and may so prejudicially affect or threaten to affect the public well being as to make such conduct a definite matter of public importance urgently calling for a full inquiry.
Besides, section 3 itself authorises the appropriate Government to appoint a Commission 289 of Inquiry not only for the purpose of making an inquiry into a definite matter of public importance but also for the purpose of performing such functions as, may be specified in the notification.
Therefore, the notification is well within the powers conferred on the appropriate Government by section 3 of the Act and it cannot be questioned on the ground of its going beyond the provisions of the Act.
Learned counsel for the petitioners immediately replies that in the event of its being held that the notification is within the terms of the Act, the Act itself is ultra vires the Constitution.
The validity of the Act is called in question in two ways.
In the first place it is said that it was beyond the legislative competency of Parliament to enact a law conferring such a wide sweep of powers.
It is pointed out that Parliament enacted the Act in exercise of the legislative powers conferred on it by article 246 of the Constitution read with entry 94 in List I and entry 45 in List III of the Seventh Schedule to the Constitution.
The matters enumerated in entry 94 in List 1, omitting the words not necessary for our purpose, are " inquiries. . for the purpose of any of the matters in this List ", and those enumerated in entry 45 in List III, again omitting the unnecessary words, are " inquiries. . for the purposes of any of the matters specified in List II or List 111. " Confining himself to the entries in so far as they relate to " inquiries ", learned counsel for the petitioners urges that Parliament may make a law with respect to inquiries but cannot under these entries make a law conferring any power to perform any function other than the power to hold an inquiry.
He concedes that, according to the well recognised rule of construction of the provisions of a Constitution, the legislative heads should be construed very liberally and that it must be assumed that the Constitution intended to give to the appropriate legislature not only the power to legislate with respect to the particular legislative topic but also with respect to all matters ancillary thereto.
Indeed the very use of the words " with respect to in article 246 supports this principle 37 290 of liberal interpretation.
He, however, points out that the law, which the appropriate legislature is empowered to make under these entries must be with respect to inquiries for the purposes of any of the matters in the relevant lists and it is urged that the words " for the purpose of " make it abundantly clear that the law with respect to inquiries to be made under these two entries must be for the purpose of future legislation with respect to any of the legislative heads in the relevant lists.
In other words, the argument is that under these two entries the appropriate legislature may make a law authorising the constitution of a Board or Commission of Inquiry to inquire into and ascertain facts so as to enable such legislature to undertake legislation with respect to any of the legislative topics in the relevant lists to secure some public benefit or advantage or to prevent some evil or harm befalling the public and thereby to protect the public from the same.
But if an inquiry becomes necessary for, say, administrative purposes, a law with respect to such an inquiry cannot be made under these two entries.
And far less can a law be made with respect to an inquiry into any wrongs alleged to have been committed by an individual person or company or a group of them for the purpose of punishing the suspected delinquent.
This argument has found favour with the High Court, but we are, with great respect, unable to accept this view.
To adopt this view will mean adding words to the two entries so as to read " inquiries for the purpose of future legislation with respect to any of the matters in the List or Lists mentioned therein.
The matter, however, does not rest here.
A careful perusal of the language used in entry 45 in List III does, in our view, clinch the matter.
Entry 45 in List III, which is the Concurrent List, speaks, inter alia, of " inquiries for the purpose of any of the matters in List II or List 111.
Under article 246 read with this entry, Parliament as well as the Legislature of a State may make a law with respect to " inquiries for the purpose of any of the matters in List II.
" Parliament, under article 246, has no power to make a law with respect to any of the 291 matters enumerated in List 11.
Therefore, when Parliament makes a law under article 246 read with.
, entry 45 in List III with respect to an inquiry for the purposes of any of the matters in List 11, such law can never be one for inquiry for the purpose of future legislation by Parliament with respect to any of those matters in List 11.
Clearly Parliament can make a law for inquiry for the purpose of any of the matters in List 11 and none the less so though Parliament cannot legislate with respect to such matters and though none of the State Legislatures wants to Legislate on such matters.
In our opinion, therefore, the law to be made by the appropriate legislature with respect to the two legislative entries referred to above may cover inquiries into any aspect of the matters enumerated in any of the lists mentioned therein and is not confined to those matters as mere heads of legislative topic.
Quite conceivably the law with respect to inquiries for the purpose of any of the matters in the lists may also be for administrative purposes and the scope of the inquiry under such a law will cover all matters which may properly be regarded as ancillary to such inquiries.
The words " for the purposes of " indicate that the scope of the inquiry is not necessarily limited to the particular or specific matters enumerated in any of the entries in the list concerned but may extend to inquiries into collateral matters which may be necessary for the purpose, legislative or otherwise, of those particular matters.
We are unable, therefore,to hold that the Inquiry which may be set up by a law made under these two entries is, in its scope or ambit, limited to future legislative purposes only.
Learned counsel then takes us through the different heads of inquiry enumerated in the notification and urges that the inquiry is neither for any legislative nor for any administrative purpose, but is a clear usurpation of the functions of the judiciary.
The argument is that Parliament in authorising the appointment of a Commission and the Government in appointing this Commission have arrogated to themselves judicial powers which do not, in the very nature 292 of things, belong to their respective domains which must be purely legislative and executive respectively.
It is contended that Parliament cannot convert itself into a court except for the rare cases of dealing with breaches of its own privileges for which it may punish the delinquent by committal for contempt or of proceedings by way of impeachment.
It cannot, it is urged, undertake to inquire or investigate into alleged individual wrongs or private disputes nor can it bring the supposed culprit to book or gather materials for the purpose of initiating proceedings, civil or criminal, against him, because such inquiry or investigation is clearly not in aid of legislation.
It is argued that if a criminal prosecution is to be launched, the preliminary investigation must be held under the Code of Criminal Procedure and it should not be open to any legislature to start investigation on its own and thereby to deprive the citizen of the normal protection afforded to him by the provisions of the Code of Criminal Procedure.
This line of reasoning also found favour with the High Court which, after considering the provisions of the Act and the eleven heads of inquiry enumerated in the notification, came to the conclusion that the last portion of el.
(10) beginning with the words " and the action " and ending with the words ',in future cases" were ultra vires the Act and that the Government was not competent to require the Commission to hold any inquiry or make any report with regard to the matters covered by that portion of cl.
(10), for such inquiry or.
report amounts to a usurpation of the judicial powers of the Union or the State as the case may be.
While we find ourselves in partial agreement with the actual conclusion of the High Court on this point, we are, with great respect, unable to accept the line of reasoning advanced by learned counsel for the petitioners, which has been accepted by the High Court for more reasons than one.
In the first place neither Parliament nor the Government has itself undertaken any inquiry at all.
Parliament has made a law with respect to inquiry and has left it to the appropriate Government to set up a Commission of Inquiry under 293 certain circumstances referred to in section 3 of the Act.
The Central Government, in its turn, has, in exercise of the powers conferred on it by the Act, set up this Commission.
It is, therefore, not correct to say that Parliament or the Government itself has undertaken to hold any inquiry.
In the second place the conclusion that the last portion of cl.
(10) is bad because it signifies that Parliament or the Government had usurped the functions of the judiciary appears to us, with respect, to be inconsistent with the conclusion arrived at in a later part of the judgment that as the Commission can only make recommendations which are not enforceable proprio vigore there can be no question of usurpation of judicial functions.
As has been stated by the High Court itself in the latter part of its judgment, the only power that the Commission has is to inquire and make a report and embody therein its recommendations.
The Commission has no power of adjudication in the sense of passing an order which can be enforced proprio vigore.
A clear distinction must, on the authorities, be drawn between a decision which, by itself, has no force and no penal effect and a decision which becomes enforceable immediately or which may become enforceable by some action being taken.
Therefore, as the Commission we are concerned with is merely to investigate and record its findings and recommendations without having any power to enforce them, the inquiry or report cannot be looked upon as a judicial inquiry in the sense of its being an exercise of judicial function properly so called and consequently the question of usurpation by Parliament or the Government of the powers of the judicial organs of the Union of India cannot arise on the facts of this case and the elaborate discussion of the American authorities founded on the categorical separation of powers expressly provided by and under the American Constitution appears to us, with respect, wholly inappropriate and unnecessary and we do not feel called upon, on the present occasion, to express any opinion on the question whether even in the absence of a specific provision for separation of powers in our Constitution, such as there is 294 under the American Constitution, some such division of powers legislative, executive and judicial is, nevertheless implicit in our Constitution.
In the view we have taken it is also not necessary for us to consider whether, had the Act conferred on the appropriate Government power to set up a Commission of Inquiry with judicial powers, such law could not, subject, of course, to the other provisions of the Con stitution, be supported as a law made under some entry in List I or List III authorising the setting up of courts read with these two entries, for a legislation may well be founded on several entries.
Learned Counsel appearing for the petitioners, who are appellants in Civil Appeals Nos. 456 and 457 of 1957, goes as far as to say that while the Commission may find facts on which the Government may take action, legislative or executive, although he does not concede the latter kind of action to be contemplated, the Commission cannot be asked to suggest any measure, legislative or executive, to be taken by the appropriate Government.
We are unable to accept the proposition so widely enunciated.
An inquiry necessarily involves investigation into facts and necessitates the collection of material facts from the evidence adduced before or brought to the notice of the person or body conducting the inquiry and the recording of its findings on those facts in its report cannot but be regarded as ancillary to the inquiry itself, for the inquiry becomes useless unless the findings of the inquiring body are made available to the Government which set up the inquiry.
It is, in our judgment, equally ancillary that the person or body conducting the inquiry should express its own view on the facts found by it for the consideration of the appropriate Government in order to enable it to take such measure as it may think fit to do.
The whole purpose of setting up of a Commission of Inquiry consisting of experts will be frustrated and the elaborate process of inquiry will be deprived of its utility if the opinion and the advice of the expert body as to the measures the situation disclosed calls for cannot be placed before the Government 295 for consideration notwithstanding that doing so cannot be to the prejudice of anybody because it has no force of its own.
In our view the recommendations of a Commission of Inquiry are of great importance to the Government in order to enable it to make up its mind as to what legislative or administrative measures should be adopted to eradicate the evil found or to implement the beneficial objects it has in view.
From this point of view, there can be no objection even to the Commission of Inquiry recommending the imposi tion of some.
form of punishment which will, in its opinion, be sufficiently deterrent to delinquents in future.
But seeing that the Commission of Inquiry has no judicial powers and its report will purely be recommendatory and not effective proprio vigore and the statement made by any person before the Commission of Inquiry is, under section 6 of the Act, wholly inadmissible in evidence in any future proceedings, civil or criminal, there can be no point in the Commission of Inquiry making recommendations for taking any action " as and by way of securing redress or punishment " which, in agreement with the High Court, we think, refers, in the context, to wrongs already done or committed, for redress or punishment for such wrongs, if any, has to be imposed by a court of law, properly constituted exercising its own discretion on the facts and circumstances of the case and without being in any way influenced by the view of any person or body, howsoever august or high powered it may be.
Having regard to all these considerations it appears to us that only that portion of the last part of cl.
(10) which calls upon the Commission of Inquiry to make recommendations about the action to be taken " as and by way of securing redress or punishment ", cannot be said to be at all necessary for or ancillary to the purposes of the Commission.
In our view the words in the latter part of the section, namely, " as and by way of securing redress or punishment ", clearly go outside the scope of the Act and such provision is not covered by the two legislative entries and should, therefore, be deleted.
So deleted the latter portion of cl.
(10) would read and the action which in the opinion of the Commission 296 should be taken to act as a preventive in future cases ".
Deletion of the words mentioned above from cl.
(10) raises the question of severability.
We find ourselves in substantial agreement with the reasons given by the High Court on this point and we hold that the efficacy of the notification is in no way affected by the deletion of the offending words mentioned above and there is no reason to think that the Government would not have issued the notification without those words.
Those words do not appear to us to be inextricably wound up with the texture of the entire notification.
The principal ground urged in support of the contention as to the invalidity of the Act and/or the notification is founded on article 14 of the Constitution.
In Budhan Choudhry vs The State of Bihar (1) a Constitution Bench of seven Judges of this Court at pages 1048 49 explained the true meaning and scope of article 14 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 Choudhuri vs The Union of India (2) , The State, of Bombay vs F. N.Balsara(3),The state of west Bengal vs Anwar Ali Sarkar (4 ), Kathi Baning Rawat vs The State of Saurashtra(5) Lachmandas Kewalram Ahuja vs The State Of Bombay (6), Qasim Razvi vs The State of Hyderabad (7) and Habeeb Mohamad vs The State of Hyderabad (8).
it is, therefore, not necessary to enter upon any lengthy 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, filled namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together (1) ; (3) ; (5) ; [1952] S.C.R. 433.(6) (7) ; (8) ; 297 from others left out of the group and, (ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question.
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.
" The principle enunciated above has been consistently adopted and applied in subsequent cases.
The decisions of this Court further establish (a) that a law may be constitutional even though it relates to a single individual if, on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself; (b) that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles; (c) that it must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds; (d) that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest ; (e) that in order to sustain the presumption of constitutionality the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation; and (f)that while good faith and knowledge of the existing conditions on the part of a legislature are to be presumed, if there is nothing on the face of the 38 298 law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation.
The above principles will have to be constantly borne in mind by the court when it is called upon to adjudge the constitutionality of any particular law attacked as discriminatory and violative of the equal protection of the laws.
A close perusal of the decisions of this Court in which the above principles have been enunciated and applied by this Court will also show that a statute which may come up for consideration on a question of its validity under article 14 of the Constitution, may be placed in one or other of the following five classes: (i) A statute may itself indicate the persons or things to whom its provisions are intended to apply and the basis of the classification of such persons or things may appear on the face of the statute or may be gathered from the surrounding circumstances known to or brought to the notice of the court.
In determining the validity or otherwise of such a statute the court has to examine whether such classification is or can be reasonably regarded as based upon some differentia which distinguishes such persons or things grouped together from those left out of the group and whether such differentia has a reasonable relation to the object sought to be achieved by the statute, no matter whether the provisions of the statute are intended to apply only to a particular person or thing or only to a certain class of persons or things.
Where the court finds that the classification satisfies the tests, the court will uphold the validity of the law, as it did in Chiranjitlal Chowdhri vs The Union of India (1), The State of Bombay vs F. N. Balsara (2), Kedar Nath (1) ; (2) ; , 299 Bajoria vs The State of West Bengal (1), V. M. Syed Mohammad & Company vs The State of Andhra (2) and Budhan Choudhry vs The State of Bihar (3).
(ii)A statute may direct its provisions against one individual person or thing or to several individual persons or things but, no reasonable basis of classification may appear on the face of it or be deducible from the surrounding circumstances, or matters of common knowledge.
In such a case the court will strike down the law as an instance of naked discrimination, as it did in Ameerunnissa Begum vs Mahboob Begum (4) and Ramprasad Narain Sahi vs The State of Bihar (3).
(iii)A statute may not make any classification of the persons or things for the purpose of applying its provisions but may leave it to the discretion of the Government to select and classify persons or things to whom its provisions are to apply.
In determining the question of the validity or otherwise of such a statute the court will not strike down the law out of hand only because no Classification appears on its face or because a discretion is given to the Government to make the selection or classification but will go on to examine and ascertain if the statute has laid down any principle or policy for the guidance of the exercise of discretion by the Government in the matter of the selection or classification.
After such scrutiny the court will strike down the statute if it does not lay down any principle or policy for guiding the exercise of discretion by the Government in the matter of selection or classification, on the ground that the statute provides for the delegation of arbitrary and uncontrolled power to the Government so as to enable it to discriminate between persons or things similarly situate and that, therefore, the discrimination is inherent in the statute itself.
In such a case the court will strike down both the law as well as the executive action taken under such law, as it did in State of West Bengal vs Anwar, Ali Sarkar (6), Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh(7) (1) ; (2) [1954] S.C.R. I 117.
(3) (4) (5) ; (6) ; (7) ; 300 and Dhirendra Krishna Mandal vs The Superintendent and Remembrancer of Legal Affairs (1).
(iv) A statute may not make a classification of the persons or things for the purpose of applying its provisions and may leave it to the discretion of the Government to select and classify the persons or things to whom its provisions are to apply but may at the same time lay down a policy or principle for the guidance of the exercise of discretion by the Government in the matter of such selection or classification, the court will uphold the law as constitutional, as it did in Kathi Raning Rawat vs The State of Saurashtra (2).
(v) A statute may not make a classification of the persons or things to whom their provisions are intended to apply and leave it to the discretion of the Government to select or classify the persons or things for applying those provisions according to the policy or the principle laid down by the statute itself for guidance of the exercise of discretion by the Government in the matter of such selection or classification.
If the Government in making the selection or classification does not proceed on or follow such policy or principle, it has been held by this Court, e. g., in Kathi Raning Rawat vs The State of Saurashtra (2) that in such a case the executive action but not the statute should be condemned as unconstitutional In the light of the foregoing discussions the question at once arises: In what category does the Act or the notification impugned in these appeals fall ? It will be apparent from its long title that the purpose of the Act is to provide for the appointment of Commissions of Inquiry and for vesting such Commissions with certain powers.
Section 3 empowers the appropriate Government, in certain circumstances therein mentioned, to appoint a Commission of Inquiry for the purpose of making an inquiry into any definite matter of public importance and performing such functions within such time as may be specified in the notification.
It seems clear and it has not been controverted that on a proper construction of this (1) (2) ; 301 section, the functions the performance of which is contemplated must be such as are ancillary to and in aid of the inquiry itself and cannot be read as a function independent of or unconnected with such inquiry.
That being the position, as we conceive it to be, the question arises as to the scope and ambit of the power which is conferred by it on the appropriate Government.
The answer is furnished by the statute itself, for section 3 indicates that the appropriate Government .can appoint a Commission of Inquiry only for the purpose of making an inquiry into any definite matter of public importance and into no other matter.
In other words the subject matter of the inquiry can only be a definite matter of public importance.
The appropriate Government, it follows, is not authorised by this section to appoint a Commission for the purpose of holding an inquiry into any other matter.
Learned Solicitor General, in the premises, submits that the section itself on the face of it, makes.
a classification so that this statute falls within the first category mentioned above and contends that this classification of things is based on an intelligible differentia which has a reasonable relation to the object sought to be achieved by it, for a definite matter of public importance may well call for an inquiry by a Commission.
In the alternative the learned Solicitor General urges that in any case the section itself quite clearly indicates that the policy of Parliament is to provide for the appointment of Commissions of Inquiry to inquire into any definite matter of public importance and that as there is no knowing when, where or how any such matter may crop up Parliament considers it necessary or expedient to leave it to the appropriate Government to take action as and when the appropriate moment will arrive.
In the tempo of the prevailing conditions in modern society events occur which were never foreseen and it is impossible for Parliament or any legislature to anticipate all events or to provide for all eventualities and, therefore, it must leave the duty of taking the necessary action to the appropriate Government.
This delegation of authority, however, is not unguided or uncontrolled, 302 for the discretion given to the appropriate Government to set up a Commission of Inquiry must be guided by the policy laid down, namely, that the executive action of setting up a Commission of Inquiry must conform to the condition of the section, that is to say, that there must exist a definite matter.
of public importance into which an inquiry is, in the opinion of the appropriate Government, necessary or is required by a resolution in that behalf passed by the House of the People or the Legislative Assembly of the State.
If the preambles or the provisions of the statutes classed under the first category mentioned above could be read as making a reasonable classification satisfying the requirements of article 14 and if the preamble to the statute considered in the case of Kathi Raning Rawat (1) could be construed as laying down sufficiently clearly a policy or principle for the guidance of the executive, what objection can there be to construing section 3 of the Act now under our consideration as also making a reasonable classification or at any rate as declaring with sufficient clarity the policy of Parliament and laying down a principle for the guidance of the exercise of the powers conferred the appropriate Government so as to bring this statute at least in the fourth category, if not also in the first category ? On the authorities, as they stand, it cannot be said that an arbitrary and uncontrolled power has been delegated to the appropriate Government and that, therefore, the law itself is bad.
Learned counsel for the petitioners next contends that if the Act is good in the sense that has declared its policy and laid down some principle for the guidance of the Government in the exercise of the power conferred on it, the appropriate Government has failed to exercise its discretion property on the basis of a, reasonable classification.
Article 14 protects all persons from discrimination by the legislative as well as by the executive organ of the State.
"State" is defined in article 12 as including the Government and "law " is defined in article 13 as including any notification or order ' It has to be conceded, therefore, that (1) ; 303 it is open to the petitioners also to question the consti tutionality of the notification.
The attack against, the notification is that the Government has not properly implemented the policy or followed the principle laid down in the Act and has consequently transgressed the bounds of the authority delegated to it.
It is pointed out that in March, 1946, one Shri Tricumdas Dwarkadas, a solicitor of Bombay, had been appointed an officer on Special Duty to indicate the lines on which the Indian Companies Act was to be revised.
He made a report which was, however, incomplete in certain particulars.
Thereupon the Government appointed Shri Thiruvenkatachari, the Advocate General of Madras, to make further inquiry.
The last mentioned gentleman submitted his report and on the basis of that report, it is said, a memorandum containing tentative proposals was prepared and circulated to elicit the opinions of various organisations.
On October 28, 1950, a Committee called the Indian Company Law Committee popularly known as the Bhaba Committee was appointed.
That Committee went round and collected materials and made its comprehensive report on the basis of which the new Indian Companies Act has recently been remodeled.
As nothing new has since then happened why, it is asked ', should any further inquiry be made ? The conclusion is pressed upon us that there can, in the circumstances, be no definite matter of public importance which can possibly call for an inquiry.
We find no force in this argument.
In the first place the Bhaba Committee at p. 29 of its Report recommended that further inquiries may, in future, have to be made regarding some matters relating to Companies and, therefore, the necessity for fresh inquiry cannot be ruled out.
In the next place the appropriate Government is empowered to appoint a Commission of Inquiry if, in its opinion, it is necessary so to do.
The preambles to the notification recite that certain matters enumerated under five heads had been made to appear to the Central Government in consequence of which the Central Government had come to the conclusion that there should be a full inquiry into those matters which, 304 in its opinion, were definite matters of public importance both by reason of the grave consequences which appeared to have ensued to the investing public and for determining such measures as might be deemed necessary in order to prevent a recurrence thereof.
Parliament in its wisdom has left the matter of the setting up of a Commission of Inquiry to the discretion of the appropriate Government and if the appro priate Government has formed the opinion that a definite matter of public importance has arisen and calls for an inquiry the court will not lightly brush aside the opinion.
Learned counsel for the petitioners argues that granting that the question as to the necessity for constituting a Commission of Inquiry has been left to the subjective determination of the appropriate Government the actual setting up of a Commission is conditioned by the existence 'of some definite matter of public importance.
If there be no such definite matter of public importance in existence then no question of necessity for appointing a Commission can arise.
Reference is then made to the first preamble to the notification and it is pointed out that all the matters alleged to have been made to appear to the Central Government relate to some supposed act or conduct of the petitioners.
The contention is repeated that the act and conduct of individual persons can never be regarded as definite matters of public importance.
We are unable to accept this argument as sound, for as we have already stated, the act or conduct of individuals may assume such dangerous proportions as may well affect the public well being and thus become a definite matter of public importance.
We do not, therefore, agree that the notification should be struck down for the absence of a definite matter of public importance calling for an inquiry.
The point which is next urged in support of these appeals and which has given us considerable anxiety is that the petitioners and their companies have been arbitrarily singled out for the purpose of hostile and discriminatory treatment and subjected to a harassing and oppressive inquiry.
The provisions of article 14, 305 it is contended, protect every person against discrimination by the State, namely, against the law as well as the executive action and this protection extends to State action at all its stages.
The petitioners ' grievance is that the Government had started discrimination even at the earliest stage when it conceived the idea of issuing the notification.
Reference is made to the Memorandum filed by the Bombay Shareholders ' Association before the Bhaba Committee showing that the same or similar allegations had been made not only against the petitioners and their companies but against other businessmen and their companies and that although the petitioners and their companies and those other persons and their companies were thus similarly situate, in that allegations had been made against both, the Government arbitrarily applied the Act to the petitioners and their companies and issued the notification concerning them but left out the others from its operation.
It is true that the notification primarily or even solely affects the petitioners and their companies but it cannot be overlooked that Parliament having left the selective application of the Act to the discretion of the appropriate Government, the latter must of necessity take its decision on the materials available to it and the opinion it forms thereon.
The appropriate Government cannot in such matters be expected to sit down and hold a judicial inquiry into the truth of the materials brought before it, and examine the informants on oath in the presence of the parties who are or may be likely to be affected by its decision.
In matters of this kind the appropriate Government has of necessity to act upon the information available to it.
It is the best judge of ' the reliability of its source of information and if it acts in good faith on the materials brought to its notice and honestly comes to the conclusion that the act and conduct of the petitioners and the affairs of their companies constitute a definite matter of public importance calling for an inquiry with a view to devise measures for preventing the recurrence of such evil, this Court, not being in possession of all the facts will, 39 306 we apprehend, be slow to adjudge the executive action to be bad and illegal.
We are not unmindful of the fact that a very wide discretionary power has been conferred on the Government and, indeed, the contemplation that such wide powers in the hands of the executive may in some cases be misused or abused and turned into an engine of oppression has caused considerable anxiety in our mind.
Nevertheless, the bare possibility that the powers may be misused or abused cannot per se induce the court to deny the existence of the powers.
It cannot be overlooked that Parliament has confided this discretion, not to any petty official but to the appropriate Government itself to take action in conformity with the policy and principle laid down in the Act.
As this Court 'has said in Matajog Dobey vs H. C. Bhari (1), " a discretionary power is not necessarily a discriminatory power and that abuse of power is not to be easily assumed where the discretion is vested in the Government and not in a minor official.
" We feel sure, however, that if this law is administered by the Government " with an evil eye and an unequal hand " or for an oblique or unworthy purpose the arms of this Court will be long enough to reach it and to strike down such abuse with a heavy hand.
What, then, we inquire, are the salient facts here ? The Central Government appointed investigators to scrutinise the affairs of three of the petitioners ' concerns.
Those investigators had made their reports to the Central Government.
The Central Government had also the Bhaba Committee Report and all the Memoranda filed before that Committee.
It may also have had other information available to it and on those materials it formed its opinion that the act and conduct of the petitioners and the affairs of their companies constituted a definite matter of public importance which required a full inquiry.
Up to this stage there is no question of legal proof of the allegations against the petitioners as in a court of law.
The only question is: do those allegations if honestly believed, constitute a definite matter of public importance ? We are unable to say that they do not.
(1) , 932.
307 Reference is again made to the several matters enumerated in the five clauses set out in the first, preamble to the notification and it is urged that those matters do not at all disclose any intelligible differentia on the basis of which the petitioners and their companies can be grouped together as a class.
On the part of the Union of India reference is made to the affidavits affirmed by Shri H. M. Patel, the Principal Secretary to the Finance Ministry of the Government of India purporting to set out in detail as the background thereof, the circumstances which led to the issue of the impugned notification and the matters recited therein and the several reports referred to in the said affidavit.
Learned counsel for the petitioners take the objection that reference cannot be made to any extraneous matter and that the basis of classification must appear on the face of the notification itself and reliance is placed on certain observations in the dissenting judgments in Chiranjitlal Chowdhury 's case (1) and in item (2) of the summary given by Fazl Ali J. in his judgment in F. N. Balsara 's case (2).
In Chiranjitlal Chowdhury 's case (1) the majority of the Court read the preamble to the Ordinance which was replaced by the Act which was under consideration there as part of the Act and considered the recitals, reinforced as they were by the presumption of validity of the Act, as prima facie sufficient to constitute an intelligible basis for regarding the company concerned as a class by itself and held that the petitioner there had not discharged the onus that was on him.
The dissenting Judges, after pointing out that the petition and the affidavit did not give any indication as to the differentia on the basis of which the company had been singled out, went on to say that the statute also did not on the face of it indicate any basis of classification.
This was included in cl.
(2) of the summary set out in the judgment in F. N. Balsara 's case (2).
Those observations cannot, therefore, be read as meaning that the classification must always appear on the face of the law itself and that reference cannot be made to (1) (2) ; 308 any extraneous materials.
In fact in Chiranjitlal Chowdhury 's case (1) parliamentary proceedings, in so far as they depicted the surrounding circumstances and furnished the background, were referred to.
In Kathi Raning Rawat 's case (2) the hearing was adjourned in order to enable the respondent to put in an affidavit setting forth the material circumstances.
In Kedarnath Bajoria 's case (3) the situation brought about by the war conditions was taken notice of The same may be said of the cases of A. Thanyal Kunju Musaliar vs V. Venkitachulam Potti (4) and Pannalal Binjraj vs Union of India (5).
In our judgment, therefore, there can be no objection to the matters brought to the notice of the court by the affidavit of Shri H. M. Patel being taken into consideration along with the matters specified in the notification in order to ascertain whether there was any valid basis for treating the petitioners and their companies as a class by themselves.
Learned counsel for the petitioners next urges that even if the matters referred to in Shri H. M. Patel 's affidavits and those appearing on the face of the notification are taken into consideration one cannot deduce therefrom any differentia which may be taken to distinguish the petitioners and their companies from other persons and their companies.
The qualities and characteristics imputed to the petitioners and their companies are not at all peculiar or exclusive to them but are to be found equally in other persons and companies and yet they and their companies have been singled out for hostile and discriminatory treatment leaving out other persons and companies which are similarly situate.
There is no force in this argument.
Parliament has confided the task of the selective application of the law to the appropriate Government and it is, therefore for the appropriate Government to exercise its discretion in the matter.
It is to be expected and, until the contrary is proved, it is to be presumed that the Government, which is responsible to Parliament, will act honestly, properly and in conformity with the (1) ; (2) ; (3) ; (4) ; (5) ; 309 policy and principle laid down by Parliament.
It may well be that the Central Government thought that even if one, or more of the particular qualities and characteristics attributed to the petitioners and their companies may be found in another person or company, the combination of those qualities and characteristics which it thought were present in the petitioners and their companies was of a unique nature and was not present in any other person or company.
In its appreciation of the material facts preparatory to the exercise of the discretion left to it by Parliament the Central Government may have thought that the evil was more pronounced in the petitioners and their concerns than any other person or concern and that the need for an inquiry was more urgent and clear in the case of the petitioners and their companies than in the case of any other person or company.
What is the gist and substance of ' the allegations against the petitioners and their companies ? They are that a small group of persons had from before 1946 acquired control over a number of companies including a blanking company and an insurance company ; that some of these companies were private companies and the others were public companies in which the public had invested considerable moneys by buying, shares; that the financial years of some of these companies were different from those of the others; that the funds of ' the limited companies were utilised in purchasing shares in other companies having large reserve funds with a view to get control over them and to utilise those funds for acquiring shares in other companies or otherwise utilise those funds for the personal benefit of these individuals; that the shares were acquired on blank transfer deeds and were not registered in the names of the companies with whose funds they were purchased so as to permit the same shares to be shown in the balance sheets of the different companies having different financial years; that after 1951 several of these companies were taken into voluntary liquidation or their assets were transferred to another company under some pretended scheme of ' arrangement or re organisation; that after getting control of 310 a company they appointed some of themselves as managing director or selling agent on high remuneration and after a while cancelled such appointment on paying fabulous amounts as and by way of compensation; that funds of one company were transferred to another company to cover up the real financial position.
It is needless to add other allegations to explain the matter.
The question before us is not whether the allegations made on the face of the notification and in the affidavits filed on behalf of the Union of India are true but whether the qualities and characteristics, if honestly believed to be found in the petitioners, are so peculiar or unique as to constitute a good and valid basis on which the petitioners and their companies can be regarded as a class by themselves.
We are not of opinion that they do not.
It is not for us to say on this application and we do not in fact say or even suggest that the allegations about the petitioners and their concerns are at all well founded.
It is sufficient for our present purpose to say that the facts disclosed on the face of the notification itself and the facts which have been brought to our notice by the affidavits afford sufficient support to the presumption of constitutionality of the notification.
There being thus a presumption of validity in favour of the Act and the notification, it is for the petitioners to allege and prove beyond doubt that other persons or companies similarly situate have been left out and the petitioners and their companies have been singled out for discriminatory and hostile treatment.
The petitioners have, in our opinion, failed to discharge that onus.
Indeed nowhere in the petitions is there even an averment that there are other persons or companies similarly situate as the petitioners and their companies.
It has to be remembered that the allegations set forth in the memorandum submitted by the Bombay Shareholders ' Association to the Bhaba Committee have not been proved by legal evidence.
And further that report itself contains matters which may be taken as calculated to lend support to the view that whether regard is had to the combination of a variety of evils or to their degree, the petitioners may quite conceivably 311 be grouped as a class by themselves.
In our judgment the plea of the infraction of the equal protection, clause of our Constitution cannot be sustained.
The next contention is that the notification is bad, because the action of the Government in issuing it was mala fide and amounted to an abuse of power.
Learned counsel appearing for the petitioner, who is the appellant in Civil Appeal No. 455 of 1957, makes it clear that no personal motive or illwill against the petitioners is imputed to any one, but he points out that the Bhaba Committee had been set up and the Companies Act has been remodelled and, therefore, the present Commission was not set up for any legitimate purpose.
The main idea, according to learned counsel, was to obtain information which the Government could not get by following the ordinary procedure under the Code of Criminal Procedure and this ulterior motive clearly makes the governmental action mala fide.
This point has been further emphasised by learned counsel appearing for the petitioners, who are appellants in Civil Appeals Nos. 456 and 457 of 1957.
He has drawn our attention to the affidavits filed by his clients and contends that it was well known to the Government that none of them was concerned in promoting or managing any of the companies and their position being thus well known to the Government, their inclusion in the notification was both outside the power conferred by the Government and also constituted a mala fide exercise of the power conferred on it.
No substantial ground in support of this point has been brought before us and we are not satisfied that the circumstances referred to in the notification and the affidavits filed on behalf of the Union of India, may not, if true, be the basis of a further inquiry into the matter.
It will be for the Commission to inquire into the allegations and come to its own findings and make its report containing its recommendations.
It is not desirable that we should say anything more on this point.
All that we need say is that the charge of mala fides has not been brought home to the Government.
312 A point was taken that the original notification was defective in that it did not fix the time within which the Commission was to complete its report and that a subsequent notification fixing a time could not cure that defect.
We do not think there is any substance in this too.
The third notification quoted above amended the original notification by fixing a time.
There was nothing to prevent the Government from issuing a fresh notification appointing a Commission and fixing a time.
If that could be done, there was no reason why the same result could not be achieved by the combined effect of two notifications.
In any case the amending notification taken together with the original notification may be read as a fresh notification within the meaning of section 3 of the Act, operative at least from the date of the later notification.
It is feebly argued that the notification is bad as it amounts to a delegation of essential legislative function.
Assuming that there is delegation of legislative function, the Act having laid down its policy, such delegation of power, if any, is not vitiated at all, for the legislation by the delegates will have to conform to the policy so laid down by the Act.
Lastly a point is raised that the notification is bad because it violates article 23 of the Constitution.
It is frankly stated by the learned counsel.
that this point is rather premature at this stage and that he desires to reserve his client 's right to raise it in future.
No other point has been urged before us and for reasons stated above the appeals Nos. 455, 456 and 457 of 1957 are dismissed with costs.
Appeals Nos.
656, 657 and 658 of 1957 succeed only in part, namely, to the extent that only the word , " by way of redress or punishment " occurring in the latter portion of el.
(10) will be deleted so that the latter portion of cl.
(10) will read as: " and the action which in the opinion of the Commission should be taken. . . to act as a preventive in future cases " as indicated above.
We make no order as to the costs of these three appeals.
C. A. Nos. 455, 456 and 457 of 1957 dismissed.
C. A. Nos. 656, 657 and 658 of 1957 Partly allowed.
| In exercise of the powers conferred upon it by section 3 of the Commissions of Enquiry Act, 1952, the Central Government by a notification dated December 11, 1956, appointed a Commission of Inquiry to inquire into and report in respect of certain companies mentioned in the Schedule attached to the notification and in respect of the nature and extent of the control and interest which certain persons named in the notification exercised over these companies.
By subsequent notifications the Central Government made all the provisions of sub sections
(2), (3), (4) and (5) Of section 5 Of the Act applicable to the Commission and fixed a period Of 2 years from February 11, 1957, as the period within which the Commission was to exercise its function and to make its report.
The four persons named filed three applications under article 226 of the Constitution before the Bombay High Court questioning the validity of the Act and of the notification and praying for writs for quashing the same.
The High Court dismissed the applications and ordered that the said notification was legal and valid except as to the last part of cl. 10 thereof which empowered the Commission to recommend the action which should be taken as and by way of securing redress or punishment or to act as a preventive in future cases.
The petitioners as well as the Union of India filed appeals : Held, that the Act wag ' valid and intra vires and that the notification was also valid excepting the words " as and by way of securing redress or punishment " in cl. 10 thereof which went beyond the Act.
The Act was enacted by Parliament under entry 94 of List I and entry 45 of List III of the Seventh Schedule of the Constitution which relate to inquiries for the purposes of any of the matters in List I and in Lists 11 and III respectively.
The inquiry which may be set up by a law made under these entries is not limited, 280 in its scope and ambit, to future legislative purposes only.
Such a law may also be for administrative purposes and the scope of the inquiry under such a law will cover all matters which may properly be regarded as ancillary to such inquiries.
The Act does not delegate to the Government any arbitrary or uncontrolled power and does not offend article 14 Of the Constitution.
The discretion given to the Government to set up a Commission of Inquiry is guided by the policy laid down in the Act that the executive action is to be taken only when there exists a definite matter of public importance into which an inquiry is necessary.
Kathi Raning Rawat vs State of Saurashtra, [1952] section C. R. 435, applied.
The Commission is merely to investigate, record its findings and make its recommendations which are not enforceable proprio vigore.
The inquiry or report cannot be looked upon as judicial inquiry in the sense of its being an exercise of judicial function properly so called and consequently Parliament or the Government cannot be said to have usurped the functions of the judiciary.
The notification was well within the powers conferred on the Government by section 3 Of the Act and did not go beyond the provisions of the Act.
The conduct of an individual person or company or a group of individual persons or companies may, in certain circumstances, become a definite matter of public importance within the meaning Of section 3(i) and call for an inquiry.
Besides, section 3 authorises the Government to appoint a Commission.
of Inquiry not only for the purpose of making an inquiry into a definite matter of public importance but also for the purpose of performing such functions as may be specified in the notification.
It has not been established that the petitioners and their companies have been arbitrarily singled out for the purpose of hostile and discriminatory treatment and subjected to a harassing and oppressive inquiry.
In matters of this kind the Government has of necessity to act upon the information available to it.
It is the best judge of the reliability of the source of the information and if it acts in good faith and honestly comes to the conclusion that the act and conduct of the petitioners and the affairs of their companies constitute a definite matter of public importance the Court will be slow to adjudge the action to be bad and illegal.
The bare possibility that the powers may be misused or abused cannot Per se make the power bad.
The power having been entrusted to the Central Government and not to any petty official, abuse of power cannot be easily assumed.
In determining whether there is any intelligible differentia on the basis of, which the petitioners and their companies have been grouped together it is permissible to look not only at the facts appearing in the notification but also the facts brought to the notice of the Court upon affidavits.
The facts in the present case 281 afford sufficient support to the presumption of constitutionality of the notification and the petitioners have failed to discharge the onus which was on them to prove that other people or companies, similarly situated have been left out and that the petitioners and their companies have been singled out for discriminatory and hostile treatment.
The recommendations of the Commission of Inquiry are of great importance to the Government in order to enable it to make up its mind as to what legislative or administrative measures should be adopted to eradicate the evil found or to implement the beneficial objects it has in view.
There can be no objection to the Commission recommending the imposition of some form of punishment which will, in its opinion, be sufficiently deterrent to delinquents in future.
But the Commission cannot be asked to make recommendations for taking any action " as and by way of securing redress or punishment " in respect of wrongs already done or committed as this is the function of a Court of law.
Even though the original notification appointing the Commis sion did not fix the time within which the Commission was to complete its report the Government could validly do so by a subsequent notification.
|
Summarize this legal judgement text concisely | minal Appeals Nos.
34 to 36 of 1956.
Appeal by special leave from the judgment and order dated July 1, 1955, of the Bombay High Court in Criminal Revision Applications Nos.
351 to 353 of 1955 arising out of the judgment and order dated November 5, 1954, of the Court of the Presidency Magistrate 14th Court at Girgaum, Bombay in Cases Nos.
328 to 330/P of 1954.
H. J. Umrigar and A. G. Ratnaparkhi, for the appellant.
M. section K. Sastri and R. H. Dhebar, for the respondent.
March 24.
The following Judgment of the Court was delivered by SUBBA RAO J.
These appeals by special leave are directed against the judgment of the High Court of 252 Judicature at Bombay made in three connected Criminal Revision applications and raise the question of the maintainability of prosecution of a person for an offence committed under section 24(1)(b) of the Bombay Sales Tax Act, 1946 (Bom.
V of 1946) (hereinafter referred to as the repealed Act).
The facts that give rise to the appeals may be briefly stated: The appellant, Sri Kapur Chand Pokhraj, was the proprietor of Messrs. N. Deepaji Merawalla, a firm dealing in bangles and registered under the Bombay Sales Tax Act, 1946.
He did not disclose the correct turnover of his sales to the Sales Tax Department in the three quarterly returns furnished by him to the said Department on September 30, 1950, December 31, 1950, and March 31, 1951, respectively.
He maintained double sets of books of accounts and knowingly furnished false returns for the said three quarters to the Sales Tax Officer and thereby committed an offence under section 24(1)(b) of the repealed Act.
Under that Act, sanction of the Collector was a condition precedent for launching of prosecution in respect of an offence committed under section 24(1) of the said Act.
The said Act was repealed by the Bombay Sales Tax Act, 1952 (Bom.
XXIV of 1952), which was published on October 9, 1952.
On December 11, 1952, the Bombay High Court declared the Act of 1952 ultra vires and the State .of
Bombay preferred an appeal against the judgment of the Bombay High Court to the Supreme Court.
On December 22, 1952, the State Government, in order to get over the dislocation caused by the Bombay judgment, issued the Bombay Sales Tax Ordinance II of 1952, where under it was provided that the 1946 Act was to be deemed to have been in existence up to November 1, 1952.
On December 24, 1952, another Ordinance, Ordinance III of 1952, was promulgated extending the life of the Act of 1946.
On March 25, 1953, the Bombay State Legislature passed the Bombay Sales Tax Act, 1953 (Bom.
III of 1953), (hereinafter referred to as the repealing Act), repealing the Act of 1946 and the Ordinance III of 1952.
The material fact to be noticed is that the Act III of 1953, though it repealed the earlier Act and the Ordinance extending 253 the life of that Act, made provision for an offence similar to that covered by section 24(1) of the repealed Act, prescribed a similar procedure for prosecuting persons committing the said offence and saved the liabilities incurred under the repealed Act.
During the period when the Ordinance III of 1952 was in force, the State Government issued a notification under section 3 of that Ordinance appointing the Additional Collector of Bombay to be a Collector under the said Ordinance.
On July 4, 1953, i.e., after Act III of 1953 came into force, Mr. Joshi, the Additional Collector of Bombay, granted sanction for the prosecution of the appellant in respect of the offence committed by him under section 24(1)(b) of the repealed Act.
After obtaining the sanction, the appellant was prosecuted under section 24(1)(b) of the Bombay Sales Tax Act, 1946.
Before the Presidency Magistrate the appellant pleaded guilty to the charge.
The learned Magistrate accepted his plea and convicted him for the offence for which he was charged and sentenced him to pay a fine of Rs. 200, in default to suffer one month 's rigorous imprisonment.
The State of Bombay preferred a Revision against the said Order to the High Court of judicature at Bombay praying that the sentence imposed on the appellant be enhanced on the ground that as the appellant kept double sets of accounts and intentionally furnished false information, the interest of justice required that substantive and heavy sentence should be imposed on him.
Before the High Court, the appellant pleaded that by the repeal of the Sales Tax Act, 1946, the offence, if any, committed by him was effaced and that in any view the prosecution was defective inasmuch as sanction had been given by the Additional Collector and not by the Collector of Sales Tax.
The contentions did not find favour with the learned Judge of the High Court.
In rejecting them, the learned Judge enhanced the sentence passed upon the appellant to rigorous imprisonment for a period of one month in each of the three cases in addition to the fine already imposed by the Magistrate.
He directed the substantive sentence of imprisonment in all the three cases to be concurrent.
The appellant obtained special leave 254 from this Court to prefer the above appeals against the judgment of the High Court.
The learned Counsel for the appellant raised before us the same contentions which his client unsuccessfully raised before the High Court.
We shall now proceed to deal with them seriatim.
The main argument of the learned Counsel was that the Bombay Sales Tax Act, 1953 (Bom.
III of 1953) in repealing the Act of 1946 did not save penalties in respect of offences committed under that Act and therefore no prosecution was maintainable in respect of an offence committed under the Act of 1946.
A clearer conception of the argument can be had by looking at the relevant saving provisions enacted in Act III of 1953 and also the relevant sections of the Bombay General Clauses Act.
Section 48(2) of the Bombay Sales Tax Act, 1953 reads: " Notwithstanding the repeal of the said Act and the said entries, the said repeal shall not affect or be deemed to affect (i) any right, title, obligation or liability already acquired, accrued or incurred; (ii) any legal proceeding pending on the 1st day of November, 1952 in respect of any right, title, obligation or liability or anything done or suffered before the Raid date; and any such proceeding shall be continued and disposed of, as if this Act had not been passed; (iii)the recovery of any tax or penalty which may have become payable under the said Act and the said entries before the said date; and all such taxes or penalties or arrears thereof shall be assessed, imposed and recovered, so far as may be, in accordance with the provisions of this Act; ".
Section 7 of the Bombay General Clauses Act says: " Where this Act, or any Bombay Act made after the commencement of this Act, repeals any enactment hitherto made or thereafter to be made, then, unless a different intention appears, the repeal shall not (a) revive anything not in force or existing at the time at which the repeal takes effect; or (b) affect the previous operation of any enactment 255 so repealed or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation,, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed, as if the repealing Act had not been passed." A comparative study of the aforesaid provisions indicates that while under section 7 of the Bombay General Clauses Act, there is a specific saving of any penalty, forfeiture or punishment incurred in respect of any offence committed under the enactment repealed, as distinct from civil rights and liabilities, under section 48 of Act III of 1953, there is no separate treatment of Civil and Criminal matters; while under the former provisions legal proceedings are saved, under the latter provisions legal proceedings pending on November 1, 1952, in respect of rights acquired or liabilities incurred under the repealed Act are saved.
By such a study of the two provisions, the argument proceeds, it is clear that the enactment of a specific saving clause in the repealing Act indicates a " different intention " excluding the operation of section 7 of the General Clauses Act and the omission under section 48 of the repealing Act of a clause similar to el.
(d) of section 7 of the General Clauses Act, demonstrates that the liability saved excludes criminal liability.
In our view the consideration of the provisions of section 7 of the General Clauses Act need not detain us, for section 48(2)(i) of the repealing Act affords a complete answer to the question raised.
Under that clause, the repeal did not affect any right, title or obligation or liability already acquired, accrued or I incurred, The words liability 256 incurred " are very general and comprehensive and ordinarily take in both civil and criminal liability.
In Criminal Law the term " liability covers every form of punishment to which a man subjects himself by violating the law of the land.
There is no reason why the all comprehensive word should not carry its full import but be restricted to civil liability alone ? The context does not compel any such limitation.
Indeed, there is no conceivable ground to impute to the Legislature the intention to wipe out the offences committed under the repealed Act, when it expressly retained the same offences under the repealing Act.
If there was any justification for preserving Civil liabilities incurred under the repealed Act, there was an equal justification to save criminal liabilities incurred under that repealed Act.
The fact that section 7 of the Bombay General Clauses Act provided separately in different clauses for Criminal and Civil liabilities, while section 48(2) of the repealing Act clubbed them together in one clause is not decisive of the question raised, as, for ought we know, section 48 might be an attempt by the Legislature at precise drafting by omitting unnecessary words and clauses.
Nor the circumstance that a special provision is made under section 48(2) of the repealing Act for pending proceedings is indicative of any conscious departure by the Legislature from the established practice embodied in section 7 of the General Clauses Act indicating an intention to save only offences under the repealed Act in respect of which legal proceedings were pending on a specified date.
It is more likely, as the learned Judge of the Bombay High Court pointed out, that el. 2 was enacted to obviate the argument that once a case is sent up the liability merges in the proceedings launched and has to be saved specially.
On a fair reading of the terms of the saving clause in section 48(2) of the repealing Act, we cannot give a restricted meaning to the words" liability incurred", especially when the scheme of the Act does not imply that the Legislature had any intention to exclude from the saving clause criminal liability incurred under the repealed Act.
We, therefore, hold that the liability incurred 257 i.e. the offence committed, under the repealed Act, is covered by the saving clause embodied in section 48 of the repealing Act.
In this view it is not necessary to express our view whether, by reason of the saving clause enacted in section 48 of the repealing Act, the Legislature indicated a different intention within the meaning of section 7 of the Bombay General Clauses Act so as to exclude its operation in construing the provisions of the repealing Act.
Even so, the learned Counsel contended that the appellant, who committed the offence under the repealed Act, should be prosecuted only with the previous sanction of the Collector as provided by that Act, but as the sanction in the present case was given by the Additional Collector, the Magistrate had no jurisdiction to take cognizance of the offence.
To appreciate this argument it would be necessary to notice the provisions relating to sanction in the repealing Act and in the Acts and Ordinances that preceded it. " BOMBAY SALES TAX ACT, 1946.
" Section 24 (1)(b): Whoever fails,without sufficient cause, to submit any return as required by, section 10 or know ingly submits a false return,. . . . . . shall, in addition to the recovery of any tax that may be due from him be punishable with simple imprisonment which may extend to six months or with fine not exceeding one thousand rupees or with both; and when the offence is a continuing one, with a daily fine not exceeding fifty rupees during the period of the continuance of the offence." Section 24(2): No Court shall take cognizance of any offence under this Act, or under the rules made thereunder, except with the previous sanction of the Collector and no Court inferior to that of a Magistrate of the Second Class shall try any such offence." " Section 2(a) : " Collector " means the Collector of Sales Tax appointed under sub section (1) of Section 3." " Section 3(1) : For carrying out the purposes of 33 258 this Act, the State Government may appoint any person to be a Collector of Sales Tax and such other persons to assist him as the State Government thinks fit.
" ORDINANCE No. II of 1952: Under this Ordinance, Bombay Act V of 1946 and the entries relating to the said Act in the third schedule to the Bombay Merged States (Laws) Act, 1950 were deemed to have continued to be in force up to and inclusive of November 1, 1952.
ORDINANCE III OF 1952: "Section 36.
Offences and Penalties: whoever (b) fails without sufficient cause, to furnish any return or statement as required by section 13 or 18 or knowingly furnishes a false return or statement,. . . in addition to the recovery of any tax that may be due from him, be punishable with simple imprisonment which may extend to six months or with fine not exceeding two thousand rupees or with both; and when the offence is a continuing one, with a daily fine not exceeding one hundred rupees during the period of the continuance of the offence." " Section 37.
Cognizance of offences.
No Court shall take cognizance of any offence punishable under section 36 or under any rules made under this Ordinance except with the previous sanction of the Collector and no Court inferior to that of a Magistrate of the Second Class shall try any such offence." " Section 2(6): " Collector " means the Collector of Sales Tax appointed under section 3." " Section 3(1): For carrying out the purposes of this Ordinance, the State Government may appoint any person to be a Collector of Sales Tax, and such other persons to assist him as the State Government thinks fit.
" BOMBAY SALES TAX ACT, 1953 (Act III of 1953): " Section 36: Whoever (b) fails without sufficient cause, to furnish any return or statement as required by Section 13 or 18 or 259 knowingly furnishes a false return or statement. . shall, in addition to the recovery of any tax that may be due from him, be punishable with simple imprisonment which may extent to six months or with fine not exceeding two thousand rupees or with both; and when the offence is a continuing one, with a daily fine not exceeding one hundred rupees during the period of the continuance of the offence." "Section 49(2): Any appointment, notification, notice, order, rule, regulation or form made or issued or deemed to have been made or issued under the Ordinance hereby repealed shall continue in force and be deemed to have been made or issued under the provisions of this Act.
in so far as such appointment, notification, notice, order, rule, regulation or form is not inconsistent with the provision of this Act, unless it has been already, or until it is superseded by an appointment, notification, notice, order, rule, regulation or form made or issued under this Act." THE BOMBAY SALES TAX (AMENDMENT) ACT, 1956.
(BOMBAY ACT NO.
XXXIX OF 1956) Section 3.
Amendment to section 3 of Bom.
III of 1953 : In section 3 of the said Act, for sub section (1), the following sub section shall be and shall be deemed ever to have been substituted, namely: (1) for carrying out the purpose of this Act, the State Government may appoint (a) a person to be the Collector of Sales Tax, and (b) one or more persons to be Additional Collectors of Sales Tax, and (c) such other persons to assist the Collector as the State Government thinks fit." NOTIFICATION ISSUED BY THE STATE GOVERNMENT UNDER SECTION (3) OF THE ORDINANCE III OF 1952: "Government of Bombay is pleased to declare the Additional Collector of Sales Tax, Bombay State, Bombay, as " Collector of Sales Tax, Bombay State, Bombay " for purposes of the Bombay Sales 260 Tax (No. 2) Ordinance, 1952 (Bombay Ordinance No. III of 1952).
" It will be seen from the aforesaid provisions that under the Acts as well as under the Ordinances, knowingly furnishing a false return or statement is made an offence punishable with simple imprisonment or fine or with both.
The only difference is that under the Ordinance and the Act of 1953, the maximum amount of fine is increased from Rs. 1,000 to Rs. 2,000.
Under the Ordinance as well as under the Acts, no Court can take cognizance of the said offence except with the previous sanction of the Collector.
The term Collector " is defined in similar terms in the Ordi nance as well as in the Acts, i e., a person appointed as ,"Collector " by the State Government.
The notification issued by the State Government under Ordinance 11I of 1952, appointing the Additional Collector as Collector of Sales Tax must be deemed to have continued to be in force under the Bombay Sales Tax Act, 1953, by reason of section 49 (2) of that Act, as it is common case that no fresh notification was made under that Act repealing that made under that Ordinance.
Shortly stated, the Bombay Act III of 1953, introduced the same offence and provided for the same machinery that its predecessors contained.
On the basis of the aforesaid provisions, the argument of the learned Counsel for the appellant is that as the State Government appointed the Additional Collector as Collector of Sales Tax in exercise of the power conferred on it under the Ordinance III of 1952 and not under the power conferred on it by the repealed Act, the sanction given by the Additional Collector to prosecute the appellant is invalid.
The first answer to this contention is that, as the State Government had the power to appoint any person including ' an Additional Collector as Collector of Sales Tax both under the repealed Act as well as the Ordinance III of 1952, the appointment may reasonably be construed to have been made in exercise of the relevant power in respect of the offence saved under the Ordinance.
The second answer is more fundamental.
There is an essential distinction between an offence and the 261 prosecution for an offence.
The former forms part of the substantive law and the latter of procedural law.
An offence is.
an aggregate of acts or omissions punishable by law while prosecution signified the procedure for obtaining an adjudication of Court in respect of such acts or omissions.
Sanction or prior approval of an authority is made a condition precedent to prosecute in regard to specified offences.
Prosecution without the requisite sanction makes the entire proceeding ab initio void.
It is intended to be a safeguard against frivolous prosecutions and also to give an opportunity to the authority concerned to decide in the circumstances of a particular case whether prosecution is necessary.
Sanction to prosecute for an offence is not, therefore, an ingredient of the offence, but it really pertains to procedure.
In Maxwell 's Interpretation of Statutes, the following passage appears at page 225: " Although to make a law punish that which, at the time when it was done, was not punishable, is contrary to sound principle, a law which merely alters the procedure may, with perfect propriety, be made applicable to past as well as future transactions.
" In the instant case when the repealing Act did not make any change either in the offence or in the procedure prescribed to prosecute for that offence and expressly saved the offence committed under the repealed Act, the intention can be legitimately imputed to the Legislature that the procedure prescribed ' under the new Act should be followed, even in respect of offences committed under the repealed Act.
If so, it follows that, as sanction pertains to the domain of procedure, the sanction given by the Additional Collector appointed by the State as Collector of Sales Tax was valid.
Even so, it was contended that the notification appointing the Additional Collector as Collector of Sales Tax issued under Ordinance No. 11 of 1952 would not enure to the prosecution launched under Act III of 1953.
This argument ignored the express provisions of section 49 (2) of the said Act (already extracted supra), which in clear and express terms laid down 262 that notifications issued or orders made under the repealed Ordinance would be deemed to have been made or issued under the provisions of the Act and would continue to be in force until superseded by appropriate orders or notifications under the new Act.
It was not suggested that any fresh notification revoking that made under the Ordinance was issued under the repealing Act.
If so, it follows that the notification issued under the Ordinance appointing the Additional Collector as Collector of Sales Tax continued to be in force when the said Collector gave sanction to pro secute the appellant.
In this view it is not necessary to consider the scope of the Bombay Sales Tax (Amendment) Act, 1956.
Lastly, a strong plea was made for reducing the sentence of imprisonment given by the High Court to that of fine.
It was said that the Magistrate in exercise of his discretion gave the sentence of fine and the High Court was not justified in enhancing the same to imprisonment without giving any reasons which compelled them to do so.
Reliance was placed in this context on two decisions of this Court Dalip Singh vs State of Punjab (1) and Bed Raj vs The State of Uttar Pradesh (2).
In the former case, the Sessions Judge convicted each of the 7 accused under section 302, Indian Penal Code read with section 149, Indian Penal Code.
As the fatal injuries could not be attributed to any one of the accused, he refrained from passing a sentence of death, but instead he convicted them to imprisonment for life.
The High Court, without giving any reasons, changed their sentences from transportation to death.
Bose J. who delivered.
the judgment of the Court, in holding that the High Court should not have interfered with the discretion exercised by the Sessions Judge, made the following observation at page 156: " But the discretion is his and if he gives reasons on which a judicial mind could properly found, and appellate Court should not interfere.
The power to enhance a sentence from transportation to death should very rarely be exercised and only for the strongest (1) ; (2) ; 263 possible reasons.
It is not enough for an appellate Court to say, or think, that if left to itself it would have awarded the greater penalty because the discretion does not belong to the appellate Court but to the trial Judge and the only ground on which an appellate Court can interfere is that the discretion has been improperly exercised, as for example, where no reasons are given and none can be inferred from the circumstances of the case, or where the facts are so gross that no normal Judicial mind would have awarded the lesser penalty.
" In the latter case, the appellant along with another was convicted by the Sessions Judge under section 304 Indian Penal Code and sentenced to three years ' rigorous imprisonment.
On appeal the High Court enhanced the sentence to ten years.
In enhancing the sentence, the learned Judges gave the reason that the deceased was unarmed and the attack was made with a knife and it could not be said that the appellant did not act in a cruel or unusual manner.
This Court, in allowing the appeal on the question of sentence, made the following observation at page 588: " A question of a sentence is a matter of discretion and it is well settled that when discretion has been properly exercised along accepted judicial lines, an appellate Court should not interfere to the detriment of an accused person except for very strong reasons which must be disclosed on the face of the judgment. . .
In a matter of enhancement there should not be interference when the sentence passed imposes substantial punishment.
Interference is only called for when it is manifestly inadequate.
" These observations are entitled to great weight.
But it is impossible to lay down a hard and fast rule, for each case must depend upon its own facts.
Whether in a given case there was proper exercise of judicial discretion by the trial Judge depends upon the circumstances of that case.
In the present case, the appellant kept double sets of account books and submitted false returns for successive quarters, omitting from the turn over shown by him in the returns substantial amounts.
Under section 24(1) of the Act, infringement of 264 the provisions of the Act is made punishable.
The offences under that section are of different degrees of moral turpitude.
They range from a mere infringement of a rule to conscious and deliberate making of false returns.
For all the offences, the section fixes the maximum punishment of simple imprisonment which may extend to six months.
The magistrate, who tries the offenders under that section, is given a wide discretion to could the punishment in such a way as to make it commensurate with the nature of the offence committed.
Though the appellant adopted a syste matic scheme to defraud the State by keeping double sets of account books and therefore deserved deterrent punishment, the learned Magistrate, presumably because the appellant pleaded guilty, without giving any reasons, gave him the lenient punishment of fine of Rs. 200.
It is obvious that the sentence should depend upon the gravity of the offence committed and not upon the fact that the accused pleaded guilty or made an attempt to defend the case.
In the circumstances the High Court was certainly justified in enhancing the sentence from fine to imprisonment and fine and it had given good reasons for doing so.
The High Court thought and, in our view, rightly that as the appellant had kept double sets of account books, it was eminently a case in which a substantive sentence ought to have been imposed.
The Magistrate has improperly exercised his discretion within the meaning of the aforesaid observations of this Court and therefore, the High Court was certainly within its right to enhance the sentence.
But the High Court committed a mistake in awarding a sentence of rigorous imprisonment for a period of one month, which it is not entitled to do under the provisions of section 24(1) of the Act.
Under that section the Court had jurisdiction only to give a maximum sentence of simple imprisonment extending to 6 months but had no power to impose a sentence of rigorous imprisonment.
This mistake, if any, should go to the benefit of the appellant, for the High Court might have imposed a sentence of longer period of simple imprisonment if it had realised that it had, no power to sentence 265 the appellant to rigorous imprisonment.
Be it as it may, as the High Court had no power to impose a sentence of rigorous imprisonment we change the sentence from rigorous imprisonment to simple imprisonment for a period of one month in each case.
With this modification the appeals are dismissed.
Appeals dismissed.
| The appellant was registered under the Bombay Sales Tax Act, 1946.
He maintained double sets of account books and knowingly furnished, for the period September 30, 1950 to March 31, 1951, false returns to the Sales Tax Officer and thereby committed an offence under section 24(1)(b) of the Act.
Under the Act sanction of the Collector was necessary before cognizance of the offence could be taken by a Court.
The I946 Act was repealed by the Bombay Sales Tax Act, 1952, but the 1952 Act was declared ultra vires by the Bombay High Court.
Thereupon the Bombay Sales Tax Ordinance 11 Of 1952 was promulgated which provided that the 1946 Act was to be deemed to have been in existence up to November 1, 1952.
This was followed by Ordinance 111 of 1952 which further extended the life of the 1946 Act.
Thereafter, the Bombay Sales Tax Act, 1953 was passed which repealed both the 1946 Act and Ordinance III of 1952.
The 1953 Act made provision for an offence similar to that covered by section 24(1)(b) of the Act, prescribed a similar procedure for prosecuting persons committing the said offence and saved liabilities incurred under the 1946 Act.
During the period when Ordinance III of 1952 was in force the State Government issued a notification appointing the Additional Collector to be a Collector under the Ordinance, and the Additional Collector granted sanction for the prosecution of the appellant.
The appellant was tried by the Presidency Magistrate before whom he pleaded guilty.
The Magistrate accepted the plea, convicted him under section 24(1)(b) of the 1946 Act and sentenced him to a fine of Rs. 200, in default to suffer one month 's rigorous imprisonment.
The State preferred a revision to the High Court for enhancement of the sentence.
The appellant contended that by the repeal of the 1946 Act the offence was effaced and that the prosecution was defective inasmuch as sanction was given by the Additional Collector and not by the Collector as required by the 1946 Act.
The High Court repelled both these contentions and enhanced the sentence to rigorous imprisonment for one month in addition to the fine already imposed 251 Held, that the offence under section 24(1)(b) of the 1946 Act was covered by the saving clause in section 48 of 953 Act and the appellant could be convicted of that offence.
The saving by section 48 of the 1953 Act of " any liability incurred " under the 1946 Act saved both civil and criminal liability.
Held, that the sanction given by the Additional Collector was a valid sanction for the prosecution of the appellant.
The notification issued under Ordinance III of 1952 appointing the Additional Collector as Collector must be deemed to have been made in exercise of the relevant power in respect of the offence saved by the Ordinance.
Further, the notification must be deemed to have continued in force under the 1953 Act by reason of section 49(2) of that Act.
Sanction pertains to the domain of procedure and the procedure prescribed under the new 1953 Act must be followed even in respect of offences committed under the repealed 1946 Act.
Held further, that in the circumstances of the case the High Court was justified in enhancing the sentence.
The sentence should depend upon the gravity of the offence and not upon the fact that the accused pleaded guilty or attempted to defend the case.
As the appellant had kept double sets of account books, it was eminently a case in which a substantive sentence ought to have been imposed, and the Magistrate improperly exercised his discretion in awarding a sentence of fine only.
But the High Court was wrong in awarding rigorous imprisonment as section 24(1)(b) provided only for simple imprisonment.
|
Summarize this legal judgement text concisely | Appeal No. 84 of 1957.
Appeal from the judgment and decree dated November 7, 1955, of the Bombay High Court in Appeal No. 629 of 1955, arising out of the judgment and decree dated August 9, 1955, of the.
City Civil Court, Bombay, in Suit No. 2178 of 1954.
A.V. Viswanatha Sastri and I. N. Shroff, for the appellants.
Purshotam Tricumdas and C. P. Lal, for the respondents.
March 31.
The following Judgment of the Court was delivered by IMAM J.
The sole question considered and decided by the High Court was whether the suit filed by the appellants in the City Civil Court could be entertained by that Court, having regard to the provisions of section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (hereinafter referred to as the Act).
The High Court was of the opinion that the City Civil Court had no jurisdiction to entertain the suit.
It did not pronounce any opinion on the merits of the appellants ' case.
The only question which requires con sideration in this appeal is whether the High Court correctly decided that the City Civil Court had no jurisdiction to entertain the suit filed by the appellants.
The first plaintiff in the suit before the City Civil Court, was a tenant of the premises in question under the first defendant.
The second and third plaintiffs were persons to whom the said premises were sublet by 369 the first plaintiff.
The first defendant as landlord of the premises in suit gave notice to quit to the first plaintiff on December 6, 1947.
Thereafter, he filed suit ' No. 483/4400 of 1948 in the Court of Small Causes Bombay on April 29,1948, whereby he sought to evict the first plaintiffs To that suit the first defendant also made the second and the third plaintiffs parties alleging that they were trespassers and had no right to be on the premises.
The Small Cause Court held that the second and third plaintiffs were not lawful subtenants and the subletting by the first plaintiff to them being contrary to law the latter had deprived himself of the protection of the Act.
It accordingly passed a decree for eviction of all the plaintiffs of the present suit.
An appeal against the decree was unsuccessful and a revisional application to the High Court of Bombay was summarily dismissed by that Court.
Thereafter, the present suit No. 2178 of 1954 was filed by the appellants in the Bombay City Civil Court on September 20, 1954.
In this suit the appellants prayed for a declara tion that the first plaintiff was a tenant of the defendants and was entitled to protection under the Act and that the second and the third plaintiffs were lawful subtenants of the first plaintiff and were entitled to possession, use and occupation of the premises as subtenants thereof.
The City Civil Court held that it had jurisdiction to entertain the suit but dismissed the suit on the ground that there bad been no lawful subletting, by the first plaintiff of the premises to the second and the third plaintiffs as the provisions of section 10 of the Bombay Rents, Hotel Rates and Lodging House Rates (Control) Act, 1944 (Bombay Act No. VII of 1944) (hereinafter referred to as the Bombay Rents Act, 1944) had not been properly complied with.
Against that decision the appellants appealed to the Bombay High Court which was dismissed.
The High Court disagreed with the view of the Judge of the City Civil Court that he had jurisdiction to entertain the suit but did not record any decision on the merits of the appellants ' case.
The preamble of the Act states that it was expedient 47 370 to amend and consolidate the law relating to the control of rents and repairs of certain premises, of rates of hotels and lodging houses and of evictions.
The entire provisions of the Act read as a whole show that the Act was passed to achieve that purpose.
The Act defines " landlord " to mean " any person who is for the time being, receiving, or entitled to receive, rent in respect of any premises whether on his own account or on account, or on behalf, or for the benefit of any other person or as a trustee, guardian, or receiver for any other person or who would so receive the rent or be entitled to receive the rent if the premises were let to a tenant ; and includes any person not being a tenant who from time to time derives title under a landlord; and further includes in respect of his subtenant a tenant who has sublet any premises " and " tenant " to mean " any person by whom or on whose account rent is payable for any premises and includes (a) such subtenants and other persons as have derived title under a tenant before the coming into operation of this Act, (a) any person to whom interest in premises has been transferred under the proviso to section 15, (b) any person remaining, after the determination of the lease, in possession, with or without the assent of the landlord, of the premises leased to such person or his predecessor who has derived title before the coming into operation of this Act, (c) any member of the tenant 's family residing with him at the time of his death as may be decided in default of agreement by the Court.
" Section 12 gives protection to a tenant from eviction if he pays or is ready and willing to pay standard rent and permitted increases.
Section 13 states the grounds upon which the landlord is entitled to recover possession of any premises.
Amongst the numerous grounds one is if the tenant had since the coming into operation of the Act sublet the whole or part of the premises or assigned or transferred in any other manner his interest therein.
Section 14 states: ,,Where the interest of a tenant of any premises is determined for any reason, any subtenant to whom the premises or any part thereof have been lawfully 371 sublet before the coming into operation of this Act shall subject to the provisions of this Act, be deemed to become the tenant of the landlord on the same terms and conditions as he would have held from the tenant if the tenancy had continued.
" Section 28 of the Act deals with jurisdiction of courts and it states: " (1) Notwithstanding anything con tained in any law and notwithstanding that by reason of the amount of the claim or for any other reason, the suit or proceeding would not, but for this provision, be within its jurisdiction, (a) in Greater Bombay, the Court of Small Causes, Bombay, (aa) in any area for which, a Court of Small Causes is established under the Provincial Small Cause Courts Act, 1887, such Court and (b) elsewhere, the Court of the Civil Judge (Junior Division) having jurisdiction in the area in which the premises are situate or, if there is no such Civil Judge, the court of the Civil Judge (Senior Division) having ordinary jurisdiction, shall have jurisdiction to entertain and try any suit or proceeding between a landlord and a tenant relating to the recovery of rent or possession of any premises to which any of the provisions of this Part apply and to decide any application made under this Act and to deal with any claim or question arising out of this Act or any of its provisions and subject to the provisions of subsection (2), no other court shall have jurisdiction to entertain any such suit, proceeding or application or to deal with such claim or question." Section 29 deals with appeals.
It provides that there will be no further appeal from the appellate order.
Section 29A, however, states that nothing contained in sections 28 or 29 shall be deemed to bar a party to a suit, proceeding or appeal mentioned therein in which a question of title to premises arises and is determined, from suing in a competent court to establish his title to such premises.
The plaint in the suit filed by the appellants in the City Civil Court clearly asserts that the first plaintiff was entitled in law to sublet the premises in question to the second, and third plaintiffs and that there had been a lawful subletting of the premises to them.
It 372 was not necessary for the first plaintiff to comply with the provisions of section 10 of the Bombay Rents Act, 1944.
It further alleged that the Appeal Court of Small Causes of Bombay erred in holding that the first plaintiff could sublet the premises only if he had complied with the provisions of section 10 of the aforesaid Act.
According to para.
11 of the plaint the plaintiffs asserted that they were always ready and willing to pay the rent in respect of the said premises and to observe and perform the terms and conditions of the tenancy.
Paragraph 12 states the declaration which the plaintiffs prayed for in the suit, which is in the following terms: " The plaintiffs submit that they are entitled to a declaration that 1st plaintiff is a tenant of the said premises within the meaning of the Bombay Rents, Hotel and Lodging House Rates Control Act of 1947, and that the 2nd and 3rd plaintiffs are entitled to the possession, use and occupation of the said premises as the lawful subtenants of the 1st plaintiff in respect of the said premises".
Clauses (a) and (b) of para.
18 of the plaint contain the relief sought by the plaintiffs.
They are in substance what is stated in para.
12 though separately stated for the first plaintiff and second and third prayer in cl.
(c) of the defendants, their plaintiffs respectively.
The para an injunction against servants or agents restraining them from proceeding further with the execution of the decree of the Court of Small Causes in suit No. 483/4400 of 1948.
It is manifest from the assertion in the plaint and the nature of the relief asked for that the plaintiffs based their case on the provisions of the Act.
According to them, the Act gave the first plaintiff protection and the second and third plaintiffs were entitled to remain in possession as subtenants of the first plaintiff.
They accordingly sought to avoid eviction by seeking an injunction against the execution of the decree for eviction.
One of the grounds upon which a landlord is permitted to evict a tenant under section 13 of the Act is that he has since the coming into operation of the Act, sublet the premises or assigned or transferred in any other manner his interest therein.
The 373 Act, however, saved a subletting before its commencement, provided the premises had been lawfully sublet.
"Tenant " in the Bombay Rents Act, 1944, means " any person by whom or on whose account rent is payable for any premises, and includes every person I from time to time deriving title under a tenant.
" It was never pretended here or in the High Court, as indeed it could not be, that outside the Act a subtenancy would continue to subsist and the sub tenant would become the tenant when the principal tenancy itself had been lawfully terminated.
As the definition of "tenant " in the Bombay Rents Act, 1944, included a subtenant, that Act required, under section 10, certain conditions to be complied with for the creation of a lawful subtenancy, as a statutory status of a tenant was being conferred on a subtenant unknown to the ordinary law.
Even a lawful termination of the principal tenancy would not affect the subtenant.
In suit No. 483/4400 it was finally held by the Appeal Court that the first plaintiff had not lawfully sublet the premises and as his tenancy had been terminated he and his subtenants were liable to be evicted.
The plaintiffs seek for a redetermination of these very questions in the suit filed by them in the City Civil Court.
The plaintiffs rely upon section 29A of the Act in justification of the suit filed by them in the City Civil Court.
According to them, questions of title are expressly allowed to be reagitated in a competent Civil Court other than those specified in section 28 even if such a question arose and was determined by a court exercising jurisdiction under that section.
This contention of the plaintiffs makes it necessary to construe the provisions of sections 28 and 29A of the Act.
In a suit for recovery of rent where admittedly one party is the landlord and the other the tenant, section 28 of the Act explicitly confers on courts specified therein jurisdiction to entertain and try the suit and expressly prohibits any other court exercising jurisdiction with respect thereto.
Similarly, in a suit relating to possession of premises where the relationship of landlord and tenant admittedly subsists between the parties, jurisdiction to entertain and try such a suit is in the 374 courts specified in section 28 and no other.
All applications made under the Act are also to be entertained and disposed of by the courts specified in section 28 and no other.
In all such suits or proceedings the courts specified in section 28 also have the jurisdiction to decide all claims or questions arising out of the Act or any of its provisions.
The words employed in section 28 make this quite clear.
Do the provisions of section 28 cover a case where in a suit one party alleges that he is the landlord and denies that the other is his tenant or vice versa and the relief asked for in the suit is in the nature of a claim which arises out of the Act or any of its provisions ? The answer must be in the affirmative on a reasonable interpretation of section 28.
Suit No. 483/4400 of the Court of Small Causes, Bombay was admittedly by a landlord.
Eviction of the tenant and those to whom he had sublet the premises was sought on the ground that the latter were trespassers and the former was not entitled to remain in possession, that is to say, that none of the defendants to that suit were protected from eviction by any of the provisions of the Act.
The suit, in substance, was a denial of the right of the defendants as tenants.
The claim of the defendants was that they were protected by the provisions of the Act.
In such a suit the claim of the defendants was one which arose out of the Act or any of its provisions and only the courts ,specified in section 28 and no other could deal with it and decide the issue.
The present suit filed in the City Civil Court raised in substance a claim to the effect that the plaintiffs were the tenants of the premises within the meaning of the Act.
Such a claim was one which arose out of the Act or any of its provisions.
The suit related to possession of the premises and the right of the landlord to evict any of the plaintiffs was denied on the ground that the first plaintiff was a tenant within the meaning of the Act and the premises had been lawfully sublet by him to the second and third plaintiffs.
The City Civil Court was thus called upon to decide whether the first plaintiff was a tenant of the premises within the meaning of the Act and whether he had 375 lawfully sublet the same to the second and third plaintiffs.
The City Civil Court, therefore, had to determine whether the plaintiffs had established their claim to be in possession of the premises in accordance with the provisions of the Act.
As the tenancy of the first plaintiff had been terminated by the landlord, this plaintiff could resist eviction only if he established his right to continue in possession under the provisions of the Act.
On the termination of the tenancy of the first plaintiff, outside the provisions of the Act, the subtenancy would come to an end and the landlord would be entitled to possession.
This could be denied to him only if the second and third plaintiffs could establish that the premises had been lawfully sublet to them and under section 14 of the Act they must be deemed to be tenants of the premises.
in other words, the City Civil Court could not decree the suit of the plaintiffs unless their claim to remain in possession was established under the Act or any of its provisions.
Independent of the Act the plaint in this suit disclosed no cause of action.
Section 28 obviously contemplates the filing of any suit relating to possession.
of any premises to which any of the provisions of Part 11 of the Act apply between a landlord and a tenant and it authorizes the court to deal with any claim or question arising out of the Act or any of its provisions in such a suit.
The suit of the plaintiffs filed in the City Civil Court certainly is one relating to possession of premises to which the provisions of Part 11 of the Act apply and in that suit claims and questions arising out of the Act or any of its provisions had to be dealt with.
It was, however, suggested that the suit in the City Civil Court was not one between a landlord and a tenant because the defendants of this suit did not admit that the plaintiffs were the tenants of the premises in question.
Section 28 applies to a suit where admittedly the relationship of landlord and tenant within the meaning of the Act subsists between the parties.
The plaint in the suit in the City Civil Court admits that the defendants were landlords of the premises at various stages and the plaintiffs were their tenants.
The suit, therefore, was 376 essentially a suit between a landlord and a tenant.
The suit did not cease to be a suit between a landlord and a tenant merely because the defendants denied the claim of the plaintiffs.
Whether the plaintiffs were the tenants would be a claim or question arising out of the Act or any of its provisions which had to be dealt with by the court trying the suit.
On a proper interpretation of the provisions of section 28 the suit contemplated in that section is not only a suit between a landlord and a tenant in which that relationship is admitted but also a suit in which it is claimed that the relationship of a landlord and a tenant within the meaning of the Act subsists between the parties.
The courts which have jurisdiction to entertain and try such a suit are the courts specified in section 28 and no other.
No doubt section 29A expressly provides that nothing contained in section 28 or section 29 shall be deemed to bar a party to a suit, proceeding or appeal, mentioned therein, in which a question of title to premises arises and is determined, from suing in a competent court to establish his title to such premises.
Even if it be assumed that a claim to a right to tenancy of premises is a question of title to the premises, is that a title which section 29A permits a party to establish in a com petent court other than that specified in section 28 ? If it is possible to avoid a conflict between the provisions of section 28 and section 29A on a proper construction thereof, then it is the duty of a court to so construe them that they are in harmony with each other.
It is possible to conceive of cases where in a suit under section 28 a question of title to premises which does not arise out of the Act or any of its provisions may be determined incidentally.
Any party to the suit aggrieved by such a determination would be free to sue in a competent court to establish his title to such premises by virtue of the provisions of section 29A.
On the other band, in a suit where a question of title entirely arises out of the Act or any of its provisions, the jurisdiction to try such a suit was exclusively vested in the courts specified in section 28 and no other.
That is to say, a title which could not be established outside the Act but 377 which arose under the provisions of the Act by virtue of a claim made thereunder must be determined by a court specified in section 28 and a title de hors the Act may be determined in any other court of competent jurisdiction.
The Act purported to amend and consolidate the law relating to the control of rents of certain premises and of evictions.
It defined " landlord " and " tenant " to have a meaning wider in scope and concept than those words have under the ordinary law.
Any one, who was a landlord or a tenant, as defined in the Act, would have to conform to the provisions of the Act and all claims to such a status would have to be determined under the provisions of the Act as they would be claims arising out of it.
The Act specially provided that the courts specified in section 28 shall have the jurisdiction to deal with any claim or question arising out of the Act or any of its provisions and expressly excluded any other court from having such jurisdiction.
It is difficult to accept the suggestion that the legislature intended, after setting up special courts under section 28 to deal with such matters, that the same should be reagitated and redetermined in another suit by a court not specified in section 28.
By enacting section 29A the legislature clearly intended that no finality should be attached to the decision of a court trying a suit under section 28 on a question of title de hors the Act.
The provisions of the Act, on the other hand, clearly indicate that all claims or questions arising out of the Act or any of its provisions, even though they may be in the nature of a title to the premises, were to be determined by the courts specified in section 28 and no other.
Some reference was made to section 49 of the which provides that recovery of possession of any immovable property under Ch.
VII of the Act shall be no bar to the institution of a suit in the High Court for trying the title thereto.
The provisions of this section render no assistance in the matter of interpretation of sections 28 or 29A.; Chapter VII of the deals with the recovery of possession of 48 378 immovable property from a person including a tenant.
The provisions of section 41 onwards prescribe a summary mode for recovery of possession which could even be stayed by the Small Cause Court if the provisions Of section 47 were complied with.
Indeed, under section 41 no claims or rights are determined.
In such a situation it is clearly understandable that nothing contained in Ch.
VII could be a bar to the institution of a suit in the High Court for trying the title to the immovable property.
In a suit under section 28 the court has to determine all questions relating to recovery of rent or relating to possession and all claims or questions arising out of the Act or any of its provisions.
Section 29 provides for an appeal against the decision of the court.
Under Ch.
VII of the there is no provision for an appeal against an order directing recovery of possession.
In our opinion, the High Court correctly decided that the suit filed by the plaintiffs, who are the appellants in this appeal, could not be determined by the City Civil Court.
On behalf of the appellants a request was made that if the appeal should fail, they may be given some time to vacate the premises.
The High Court in dismissing the appeal had directed " Decree not to be executed for a fortnight ".
In granting special leave this Court had granted an ex parte stay, staying the execution of the decree in suit No. 483/4400 of 1948 of the Court of Small Causes, Bombay until the 16th day of January, 1956 and had directed that the stay application be posted for hearing on that date.
On that (lay the application for stay was allowed on two conditions being fulfilled and on the non compliance of which the stay order would stand vacated.
On February 19, 1957, another order was passed by this Court when its attention was drawn to the non compliance of the conditions stated in the order of January 16, 1956, on the part of the appellants.
The stay order was not vacated as the appellants were ordered to do certain things and because of the undertaking given by them that they would deliver forthwith possession of the premises to the respondents in 379 the event of the appeal being dismissed or decided against them.
Having regard to the undertaking given, as also the fact that execution of the decree in suit No. 483/4400 of the Court of Small Causes, Bombay has been delayed long enough.
, we are unable to accede to the request made by the appellants.
The appeal is accordingly dismissed with costs.
Appeal dismissed.
| A who was a tenant of N sub let the premises to B and C. N filed a suit for ejectment against A, B and C in the Court of Small Causes, Bombay, on the ground of illegal sub letting.
The suit was decreed.
Thereafter, A, B and C filed the present suit in the Bombay City Civil Court for a declaration that A was a tenant of N and was protected from eviction by the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, and that B and C were lawful sub tenants of A and were as such entitled to possession, use and occupation of the premises.
The City Civil Court held that it had jurisdiction to entertain the suit but dismissed it on the ground that there was no lawful subletting.
On appeal, the Bombay High Court held that the City Civil Court had no jurisdiction to entertain the suit and dismissed the appeal without going into the merits : Held, that the High Court was right in holding that section 28 of the Act barred the City Civil Court from entertaining the suit.
Section 28 explicitly confers on courts specified therein jurisdiction to entertain a suit between a landlord and a tenant in respect of a claim which arose out of the Act or any of its provisions, 368 and expressly prohibits any other court exercising jurisdiction with respect thereto.
In the present suit the claim being one which arose out of the Act, and the City Civil Court not being a court specified in section 28, it could not entertain the suit.
Though section 29A of the Act allows questions of title to be regarded in a civil court, it applies only to titles which do not arise out of the Act or any of its provisions; and titles which could riot be established outside the Act but which arose under the provisions of the Act by virtue of a claim made thereunder must be determined by a court specified in section 28.
|
Summarize this legal judgement text concisely | minal Appeal No. 134 of 1955.
Appeal by special leave from the judgment and order dated ' January 13, 1955, of the Patna High Court in Criminal Appeal No. 339 of 1953, arising out of the judgment and order dated May 22, 1953, of the Court of the Special Judge at Gaya in Special Case No. 3 of 1952.
C. K. Daphtary, Solicitor General of India, A. K. Dutta and section P. Varina, for the appellant.
H. J. Umrigar and Ratnaparkhi, A. G., for the respondent.
March 21.
The Judgment of the Court was delivered by 197 section K. DAS J.
This appeal by special leave has been brought by the State of Bihar from the judgment and order of a learned single Judge of the High Court of Patna, dated January 13, 1955, by which the learned Judge set aside the conviction and sentence passed against the present respondent Basawan Singh and acquitted him of a charge under section 161, Indian Penal Code, on which charge he had been convicted by the learned Special Judge of Gaya by his judgment and order, dated May 22, 1953.
It is necessary to state here very briefly the salient facts of the prosecution case.
One Bhagwan Das (prosecution witness No. 7) had a ration shop at a short distance from police station Arwal in the district of Gaya.
One of the persons entitled to receive rationed articles from the said shop was Mahabir Prasad (prosecution witness No. 10), who was a brother of a businessman named Parmeshwar Prasad (prosecution witness No. 11).
Mahabir Prasad held a ration card for ten units, and on October 4, 1951, he purchased five maunds of wheat on the strength of his ration card from the shop of Bhagwan Das.
A cash memo was issued for the purpose, and the sale was entered in the register of the shop.
Mahabir Prasad carried the wheat in four bags on two ponies.
He himself went ahead on a cycle and the ponies followed him.
A gentleman named Ram Singhasan Singh, stated to be the Secretary of Arwal Thana Congress Committee, sent an information to the police station to the effect that Bhagwan Das had sold the wheat in what was called the " black market ".
On receipt of this information, Basawan Singh, who is respondent before us and who was at that time subinspector of police attached to the said police station, instituted a case under section 7 of the Essential Supplies (Temporary Powers) Act, 1946, against Bhagwan Das and Mahabir Prasad.
He seized the wheat which was being carried on the two ponies, went to the shop of Bhagwan Das and questioned him about the transaction.
Bhagwan Das denied the charge of blackmarketing and alleged that the transaction was a bona fide sale on the strength and authority of a ration 198 card.
He showed the duplicate copy of the cash memo and the entry in the sale register to the respondent.
The respondent then checked the stock of wheat in thee shop of Bhagwan Das and found that the stock tallied with the relevant entry in the, stock register.
In the meantime Mahabir Prasad who had been sent for also came to the shop with his cash memo and ration card.
These were shown to the respondent who, however, arrested both Bhagwan Das and Mahabir Prasad and took them to the police, station.
It was alleged that at the police station the respondent demanded Rs. 500 as a bribe from Mahabir Prasad.
Mahabir Prasad could not pay the amount, but said that he would consult his brother Parmeshwar Prasad and the latter would come and pay to the respondent whatever sum was thought necessary.
Both Bhagwan Das and Mahabir Prasad were then released on bail.
On the next day Bhagwan Das was called to the police station and a bribe Rs. 500 was demanded from him also.
It was alleged that the respondent told Bhagwan Das that if he did not pay the amount, the respondent would harass him; but if Bhagwan Das paid the amount, the respondent would submit a final report and no case would be started against him.
Bhagwan Das expressed his inability to pay such a, big amount and it was alleged that ultimately the amount was reduced to Rs. 300.
Bhagwan Das, however, did not pay it for some time, and the prosecution case was that the respondent took wheat from the shop of Bhagwan Das, without payment of any price, between the date October 26, 1951, and November 30, 19 1 ;in this way, seven maunds and ten seers of wheat it was alleged, were taken by the respondent from the shop of Bhagwan Das, though the sales were noted in the sale register in the names of various persons.
On December 1, 1951, the respondent, it was stated, agreed to accept Rs. 50 from Bhagwan Das in addition to the wheat already taken by him, in full satisfaction of the demand of Rs. 300.
When Bhagwan Das found that he had no other alternative but to pay the amount demanded by the 199 respondent, he decided to approach the Anti Corruption Department of the Government of Bihar.
One section P. Mukherji, Deputy Secretary to the Government of Bihar, was then in charge of the Department.
Bhagwan Das met Mukherji on two dates, December 3, 1951, and December 5, 1951, and filed a written petition to him.
Mukherji sent for his Deputy Superintendent of Police, a gentleman named Dharnidhar Misra, who was also attached to the Anti Corruption Department.
Bhagwan Das produced before Mukherji five Government currency notes of Rs. 10 each, the numbers of which were noted in his written petition.
Mukherji put his initials on these notes and then returned them to Bhagwan Das.
Mukherji then requested the District Magistrate of Patna to depute a first class Magistrate, and one Rudra Dev Sahai was so deputed.
It was settled that on December 8, 1951, at about 7 p.m. the bribe money in the shape of the initialled notes would be paid to the respondent, and it was arranged that Bhagwan Das would meet the officers from Patna on the canal road from Patna to Arwal at some distance from the police station.
Nothing, however, happened on December 8, 1951, because the respondent was away from the police station.
On the next day, that is December 9, 1951, the officers from Patna, namely Mukherji, Misra and Sahai, met Bhagwan Das at the appointed place at about 6.30 p.m.
Bhagwan Das then told the officers that Parmeshwar Prasad had also arrived there for paying Rs. 50 as bribe to the respondent for the release of the wheat which had been seized and which was still at the police station.
Parmeshwar Prasad was then brought to Mukherji at about 7.30 p.m.
Mukherji questioned him and recorded his statement which was endorsed by the Magistrate, Rudra Dev Sahai.
Parmeshwar Prasad then produced five notes of Rs. 10 each, the numbers of which were also noted in the statement.
The notes were then initialled by Mukherji.
After this, the party went to the police station.
The officers who had dressed themselves as ordinary villagers any posed to be relatives of Bhagwan Das squatted on the ground a few feet away 200 from the verandah of the quarters which the respondent occupied, and Bhagwan Das and Parmeshwar Prasad stood on the steps of the verandah where the respondent met them.
Leaving out details, which are not necessary for our purpose, what happened then was this.
Bhagwan Das paid Rs. 50 in currency notes which the respondent took in his left hand.
Parmeshwar Prasad also paid his amount in notes to the respondent.
The officers were then called.
The Magistrate and the Deputy Superintendent of Police disclosed their identity, and the Deputy Superintendent told the respondent that he had received a bribe.
The respondent tried to throw away the currency notes, but the 'Deputy Superintendent of Police caught hold of his left palm and the Magistrate caught hold of his right hand.
There was a scuffle, and the respondent was brought down from the verandah and was taken to an open place south west of the police station.
Nine currency notes were found 'in the hand of the respondent and they tallied with the numbers noted down earlier.
One currency note was not found till a search was made by means of a petromax lantern in the presence of two search witnesses, Ganesh Prasad (prosecution witness No. 5) and Janki Sao (prosecution witness No. 4).
The search was made at about 9 p.m. and the missing note was found in a crumpled condition in the southwestern corner of the verandah.
A report of the whole incident was then prepared by the Deputy Superintendent of Police and handed over to the officer in charge of Arwal police station.
The case was then investigated into by another Deputy Superintendent of Police one Hasan of Aurangabad.
After completion of investigation the Deputy Inspector General of Police, C.I.D., accorded sanction to the prosecution of the respondent on April 1, 1952.
Thereafter, the respondent was tried by the Special Judge of Gaya who, by his judgment and order dated May 22, 1953, found the respondent guilty of the offence under section 161, Indian Penal Code, and sentenced him to rigorous imprisonment for one year only.
It may be here stated that the defence of the 201 respondent was that in the case against Bhagwan Das and Mahabir Prasad, he had submitted a final report on October 8, 1951, to the effect that there was a mistake of fact with regard to the allegation of black marketing and that the case should be entered as false ', mistake of fact ", This report was supported by the Inspector of Police, Jehanabad, and accepted by the Sub divisional Magistrate on October 19, 1951.
The respondent denied that he ever demanded any bribe from either of the two aforesaid persons or that he had accepted as a bribe ten currency notes from Bhagwan Das and Parmeshwar Prasad on December 9, 1951.
It was suggested that the officers did not actually see what had happened on the steps of the verandah and were, deluded into thinking that nine currency notes were recovered from him and, with regard to the crumpled note found on the verandah, it was suggested that Bhagban Das might have planted it, when he bowed down before the respondent The learned Special judge accepted the prosecution evidence as trustworthy and rejected the defences as unworthy of credences.
Against his conviction the respondent filed an appeal to the High Court and the learned single Judge, who heard the appeal, acquitted the respondent on the main ground that there was no independent witness to support the testimony of the " raiding party " consisting of the two bribe givers, Bhagwan Das and Parmeshwar Prasad, and the two Magistrates and the police officer, namely.
Mukherji, Sahai and Misra.
The learned Judge referred to the decision of this Court in Rao Shiv Bahadur Singh vs State of Vindhya Pradesh (1), and he expressed the view that that decision laid down an invariable rule that in cases of this nature the testimony of those witnesses who form what is called the "raiding party" must be discarded, unless that testimony is corroborated by independent witnesses.
He then posed the question if there were any independent witnesses in the present case, and observed " There are no independent witnesses on the transaction itself.
It was submitted, however, that there (1) 26 202 are search witnesses and they are independent; indeed they are.
But they have proved nothing except this that at the quarters of the appellant a ten rupee note crushed was found and a few other articles.
They did not prove the transaction nor they were present at the time of the occurrence itself.
The prosecution case depends for all practical purposes on the evidence of the witnesses who are members of the raiding party.
" The principal questions which fall for decision in this appeal are: (1) whether the learned Judge is right in his view that the decision in Rao Shiv Bahadur Singh (1), lays down any universal or inflexible rule that the testimony of witnesses who form the raiding party must be discarded, unless corroborated by independent witnesses; (2) if not, what is the correct rule with regard to such testimony in cases of this nature; and (3) whether the learned Judge is right in his view that there is no independent corroboration of the testimony of the witnesses of the raiding party in the present case.
But before we consider these three ques tions, it is advisable to dispose of the findings of fact which have been affirmed on appeal or arrived at by the learned Judge.
In his judgment the learned Judge has observed: " The first point to be determined in this case is whether Bhagwan Das was in fact, arrested in connection with the case under the Essential Supplies (Temporary Powers) Act.
That has been well proved and it has not been challenged.
It is also established that the appellant did arrest Bhagwan Das as well as Mahabir Prasad and that on that very day Bhagwan Das was released.
It is also well established that Bhagwan Das had gone to Mr. Mukherji at Patna and related an incident and as a result of that a trap was laid and on the alleged date of occurrence the three officers, namely, Mr. Mukherji, Mr. Sahai and Mr. Misra, had gone to the Arwal police station followed by the Gorkha Police.
It is also well established that the appellant on the date of occurrence was in his quarters and that it is also established beyond doubt that Bhagwan Das and Parmeshwar were with the appellant in his quarters that evening.
(1) 203 It is also established that the three officers were just near the quarters of the appellant and they were dressed in dhotis, kurtas, etc., like "dehaties".
It is further established that the appellant was caught by Mr. Misra and Mr. Sahai and in his possession were found the nine notes of Rs. 10 each and that it was established that one Rs. 10 note was found in the verandah of the quarters.
It is, therefore, not necessary to discus& the evidence on these points because, as I have said, these facts are well established and admitted before me in the course of the argument.
" It is fairly obvious from the observations quoted above that the learned Judge accepted the testimony of the witnesses of the raiding party as to the essential parts of the prosecution case and in particular, their evidence to the effect that nine initialled notes of Rs. 10 each were found in the possession of the respondent; this finding which is tantamount to accepting the prosecution case as correct militates against his later observation that in the absence of independent corroboration, he cannot accept the testimony of the witnesses of the raiding party.
We say this without meaning any disrespect, but the learned Judge perhaps thought that the witnesses of the raiding party were intrinsically trustworthy and gave true evidence, yet he based his order of acquittal on what he thought was the effect of the decision in Rao Shiv Bahadur Singh (1), namely, the adoption of an inflexible rule, in the words of the learned Judge, " that the evidence of the raiding party is necessarily tainted. . and on their evidence alone, it would be difficult to carry the guilt home " to the respondent.
In two respects on questions of fact, the learned Judge expressed a view different from that of the trial Court: first, with regard to the motive or reason for the bribe and secondly, with regard to the purchase of 7 maunds 10 seers of wheat, without payment, between the dates October 26, 1951 to November 30,1951.
As to motive, the learned Judge referred to the circumstance that the respondent had already submitted a final report on (1) 204 October 8, 1951, which was accepted by the Sub divisional Magistrate on October 19, and, therefore, there was no case pending against Bhagwan Das and Mahabir Prasad and the motive for the bribe could not be what was alleged by the prosecution.
The learned Judge then indulged in a highly speculative finding to the effect that the " possession of the nine notes can be reasonably explained by the fact that his (the present respondent 's) advice was sought for a land dispute between the relations " (meaning thereby the two Magistrates and the Deputy Superintendent of Police who posed as relations of Bhagwan Das).
This line of reasoning adopted by the learned Judge completely overlooks certain salient facts and circumstances on which the trial Court had relied.
The trial Court had found, on the evidence given in the case, that Bhagwan Das had no information that the case against him had ended in a final report; besides the wheat seized had not been released and Mahabir Prasad naturally wanted the wheat back.
Then, again, there was nothing to prevent the respondent from demanding a bribe even after the submission of a final report, saying that he would otherwise harass Bhagwan Das and Mahabir Prasad, and, lastly, it was nobody 's case, nor was there any evidence in support of it, that the nine notes were accepted by the respondent for giving legal advice in a land dispute.
The suggestion of a land dispute was made to allay any suspicion as to the pre sence of Mukherji, Sahai and Misra, who were dressed as ordinary villagers; none of the witnesses said that the nine notes were paid for advice in connection with a land dispute.
The respondent himself did not suggest that he had accepted nine notes for giving legal advice; his case was that no notes were found on him.
In this state of the evidence the learned Judge was clearly in error in holding that the motive for the bribe was something other than what was alleged by the prosecution.
His finding on this point is based on no evidence and is mere speculation.
As to the 7 maunds and 10 seers of wheat, the learned Judge found that the prosecution had not satisfactorily proved that the respondent was supplied 205 with wheat without payment.
The trial Court pointed out, however, that at least two of the entries in the sale register of Bhagwan Das (exhibit 10/10 and 11/11) stood in the name of the respondent, and it was not the respondent 's case that he had paid for the wheat referred to in the two entries.
Whatever be the correct finding with regard to the sale or supply of these 7 maunds and 10 seers of wheat, we agree with the trial Court that the prosecution case is not essentially or vitally dependent on the sale or supply of 7 maunds 10 seers of wheat free of cost to the respondent.
The charge against the respondent is the acceptance of Rs. 100 as a bribe from Bhagwan Das and Parmeshwar Prasad on December 9, 1951.
That charge does not necessarily depend upon the truth or otherwise of the supply of 7 maunds and 10 seers of wheat between certain earlier dates.
Having dealt with the findings of fact, we proceed now to consider the principal questions which arise in this appeal.
We take first the decision in Rao Shiv Bahadur Singh (1).
It is not necessary to recapitulate all the facts of that case; it is sufficient to state that in the trap that was laid in that case, the most important witness was one Nagindas who offered the sum of Rs. 25,000, and the two important witnesses of the raiding party were Pandit Dhanraj, Superintendent, Special Police Establishment, Delhi, and Shanti Lal Ahuja, Additional District Magistrate, Delhi.
Nagindas, who was acting on behalf of his master Sir Chinubhai did not have the money to offer as a bribe, and the money was provided by the police authorities which money was offered by Nagindas in that case.
The first point for consideration in the case was whether Nagindas and one Pannalal, who was also a servant of Sir Chinubhai and who accompanied Nagindas, were accomplices and, therefore, their evidence should be treated on that basis.
This was answered in the negative, on the ground that neither of them was a willing party to the giving of the bribe and, therefore, they did not have the necessary criminal intent to be treated as abettors or accomplices.
(1) 206 This brings out the first distinction which has to be made: the distinction between a witness who is an accomplice and one who is not.
How the evidence of an accomplice is to be treated is no longer open to any doubt; the matter has been dealt with in a large number of decisions, and as was observed by this Court in Rameshwar vs The State of Rajasthan (1), the rule laid down in Rex vs Baskerville (2), with regard to the admissibility of the uncorroborated evidence of an accomplice is also the law in India.
The rule is that such evidence is admissible in law; but it has long been a rule of practice, which has virtually become equivalent to a rule of law, that the judge must warn the jury of the danger of convicting a prisoner on the un corroborated testimony of an accomplice.
In Rameshwar 's case(l) it was pointed out: " The only clarification necessary for purposes of this country is where this class of offence is sometimes tried by a judge without the aid of a jury.
In these cases it is necessary that the Judge should give some indication in his judgment that he has had this rule of caution in mind and should proceed to give reasons for considering it unnecessary to require corroboration on the facts of the particular case before him and show why he considers it safe to convict without corroboration in that particular case.
" If the witnesses are not accomplices, what then is their position ? In Rao Shiv Bahadur Singh 's case (3) it was observed, with regard to Nagindas and Pannalal, that they were partisan witnesses who were out to entrap the appellant in that case, and it was further observed: " A perusal of the evidence. . leaves in the mind the impression that they were not witnesses whose evidence could be taken at its face value.
" We have taken the observations quoted above from a full report of the decision, as the authorised report does not contain the discussion with regard to evidence.
It is thus clear that the decision did not lay down any universal or inflexible rule of rejection even with regard to the evidence of witnesses who may be called partisan or interested witnesses.
It is plain and obvious (1) ; 385 (3) (2) 207 that no such rule can be laid down; for the value of the testimony of a witness depends on diverse factors,, such as, the character of the witness, to what extent and in what manner he is interested, how he has fared in cross examination, etc.
There is no doubt that the testimony of partisan or interested witnesses must be scrutinised with care and there may be cases, as in Rao Shiv Bahadur Singh 's case (1), where the Court will as a matter of prudence look for independent corroboration.
It is wrong, however, to deduce from that decision any universal or inflexible rule that the evidence of the witnesses of the raiding party must be discarded, unless independent corroboration is available.
With regard to the other two witnesses, Pandit Dhanraj and Shanti Lal Ahuja, it was observed that the former was a willing tool in the hands of Nagindas, and the latter reduced himself to the position of a police witness; therefore, their evidence " was not such as to inspire confidence in the mind of the Court ".
Here again no universal or inflexible rule is being laid down.
It should be noticed that in Rao Shiv Bahadur Singh 's case (1) the police authorities provided the money, and that was taken into consideration in assessing the value of the testimony of Pandit Dhanraj and Shantilal Ahuja.
In the case before us, no such consideration arises, because the money was provided by Bhagwan Das and Parmeshwar Prasad, and the officers went there to see what happened.
We must make it clear that we do not wish it to be understood that we are deciding in this case that if the money offered as a bribe is provided by somebody other than the bribe giver, it makes a distinction in principle.
That question does not arise for decision here.
All that we say and have said so far is that in assessing the value of the testimony of a witness, diverse factors must arise for consideration and the comparative importance of this or that factor must depend on the facts or circumstances of each case.
No standard higher or stricter than this can be laid down, or was laid down in Rao Shiv Bahadur Singh 's decision (1).
We must advert here to two other aspects of that decision.
It was observed there in clear and emphatic (1) 208 words that it is the duty of the police authorities to prevent crimes being committed; but it is no part of their business to provide the instruments of the offence.
With these observations we are in agreement.
In Brannan vs Peck (1), a police officer went inside a public house and made a bet on a horse, which act amounted to an offence.
The motive in making that bet was to detect the offence under the Street Betting Act, 1906, which was being committed by the accused person in that case.
In these circumstances, Goddard C. J. made the following observations: " I hope the day is far distant, when it will become a common practice in this country for police officers to be told to commit an offence themselves for the purpose of getting evidence against someone ".
We also express the same hope for our country, but must hasten to add that in the case before us no offence was committed by any of the three officers, Mukherji, Sahai and Misra, in order to get evidence against the respondent.
This point was again emphasised in a later decision of this Court in Ramjanam Singh vs The State of Bihar (2).
It was therein observed: " The very best of men have moments of weakness and temptation, and even the worst, times when they repent of an evil thought and are given an inner strength to set Satan behind them and if they do, whether it is because of caution, or because of their better instincts, or because some other has shown them either the futility or the wickedness of wrongdoing, it behaves society and the State to protect them and help them in their good resolve; not to.
place further temptation in their way and start afresh a train of criminal thought which had been finally set aside.
This is the type of case to which the strictures of this Court in Shiv Bahadur Singh vs State of Vindhya Pradesh, ; at p. 334 apply.
" The other aspect of the decision in Rao Shiv Bahadur Singh 's case (3) is the employment of Magistrates as witnesses of police traps.
Here again, we are in full agreement with the view that the independence and impartiality of the judiciary requires that Magistrates (1) (3) (2) A.I.R. 1956 S.C. 643,651.
209 whose normal function is judicial should not be relegated to the position of partisan witnesses and " required to depose to matters transacted by them in their official capacity unregulated by any statutory rules of procedure or conduct whatever At the same time it is necessary to make some distinctions.
In a large part of the country now, the directive principle laid down in article 50 of the Constitution has been implemented, and there has been a separation of the judiciary from the executive.
The principles on which the employment of Magistrates as witnesses of police traps has been condemned have hardly any application where the Magistrates concerned are executive Magistrates who perform no judicial functions or where the officers concerned are officers of the Anti Corruption Department whose duty it is to detect offences of corruption.
In the case before us, Mukherji and Misra belonged to such a department.
Moreover, however inexpedient it may be to employ Magistrates as trap witnesses, their evidence has to be judged by the same standard as the evidence of other partisan or interested witnesses, and the inexpediency of employing Magistrates as trap witnesses cannot be exalted into an inflexible rule of total rejection of their evidence, in the absence of independent corroboration.
The learned Solicitor General referred in the course of his arguments to the difficulty of detecting corruption cases and of securing conviction in such cases.
We do not think that such a consideration should influence the mind of a judge.
Whatever be the difficulties, admissible evidence given in a case must be judged on its own merits, with due, regard to all the circumstances of the case.
In some of the cases which have been cited at the bar a distinction has been drawn between two kinds of 'traps ' legitimate and illegitimate as In re M. section Mohiddin (1), and in some other cases a distinction has been made between tainted evidence of an accomplice and interested testimony of a partisan witness and it has been said that the degree of corroboration necessary is higher in respect of tainted evidence than for partisan (1) 27 210 evidence (see Ram Chand Tolaram Khatri vs The, ,State (1)).
We think that for deciding the questions before us, such distinctions are somewhat artificial, and in the matter of assessment of the value of evidence and the degree of corroboration necessary to inspire confidence, no rigid formula can or should be laid down.
For the aforesaid reasons, we think that the learned Judge of the High Court did not correctly appreciate the effect of the decision in Rao Shiv Bahadur Singh 's case (2 ) and he was in error in thinking that that decision laid down any inflexible rule that the evidence of the witnesses of the raiding party must be discarded in the absence of any independent corroboration.
The correct rule is this : if any of the witnesses are accomplices who are particeps criminis in respect of the actual crime charged, their evidence must be treated as the evidence of accomplices is treated; if they are not accomplices but are partisan or interested witnesses, who are concerned in the success of the trap, their evidence must be tested in the same way as other interested evidence is tested by the application of diverse considerations which must vary from case to case, and in a proper case, the Court may even look for independent corroboration before convicting the accused person.
If a Magistrate puts himself in the position of a partisan or interested witness, he cannot claim any higher status and must be treated as any other interested witness.
This brings us to the last question: if in the present case, there is any independent corroboration.
We have pointed out that the two search witnesses Janki Sao and Ganesh Prasad (prosecution witnesses 4 and 5) were independent witnesses, who had nothing to do with the raiding party.
They found one crumpled ten rupee note, one of the series initialled by Mukherji and the numbers of which were noted in the statements of Bhagwan Das and Parmeshwar Prasad, at the southwestern corner of the verandah, where the respondent when seized by the raiding party tried to throw away the notes.
In our view, the evidence of the two search (1) A.I.R. 1956 Bom.
(2) 211 witnesses does provide independent corroboration, in a material particular, to the testimony of the raiding, party.
The crumpled note, one of the series testified ' to by the raiding party, could not come of itself to the verandah ; it could be found where it was actually found only if the testimony of the raiding party was true.
The learned Judge said that the search witnesses came later and did not see the actual transaction, that is, the giving and taking of the bribe.
That is correct; but independent corroboration does not mean that every detail of what the witnesses of the raiding party have said must be corroborated by independent witnesses.
As was observed by Lord Reading in Baskerville 's case (1) even in respect of the evidence of an accomplice, all that is required is that there must be " some additional evidence rendering it probable that the story of the accomplice is true and that it is reasonably safe to act upon it ".
In Rameshwar vs The State of Rajasthan (2), to which we have referred in an earlier paragraph, the nature and extent of corroboration required, when it is not considered safe to dispense with it, have been clearly explained and it is merely necessary to reiterate that corroboration need not be by direct evidence that the accused committed the crime; it is sufficient even though it is merely by circumstantial evidence of his connection with the crime.
While referring to the findings of fact we have pointed out that the learned Judge himself accepted as correct the prosecution case in its essential parts.
There is in our opinion no difficulty in accepting the testimony ' of the raiding party in this case, supported as it is by the independent testimony of the two search witnesses.
Learned counsel for the respondent has urged before us, as a last resort, that we should not exercise the extraordinary jurisdiction vested in this Court by article 136, in a case of acquittal by the High Court, unless exceptional or special circumstances are shown to exist or substantial and grave injustice has been done.
He has drawn attention to our decision in The (1) (2) ; , 385. 1 212 State Government, Madhya Pradesh vs Ramkrishna Ganpatrao Limsey and others (1).
In this case, the learned Judge accepted as correct all the essential facts constituting the offence with which the respondent was charged, but he passed an order of acquittal on a misconception as to the effect of a decision of this Court.
We have no doubt whatsoever that this is a fit case for the exorcise of our jurisdiction under article 136 of the Constitution.
In view of the findings of fact arrived at by the learned Judge, the only reasonable conclusion is that the respondent is guilty of the offence with which he was charged and the order of acquittal is clearly erroneous.
A point about the validity of the order sanctioning prosecution of the respondent was urged before the learned Special Judge, who held that the sanction was in order.
This point was not dealt with in the High Court.
But learned counsel for the respondent has frankly conceded before us that he cannot successfully urge that point here.
It is, therefore, un necessary to remand the appeal for a further hearing on merits.
The result, therefore, is that this appeal is allowed.
The judgment and order of the learned single Judge of the High Court of Patna, dated January 13, 1955, are set aside; the respondent is convicted of the offence under section 161, Indian Penal Code, and sentenced to rigorous imprisonment for one year, namely, the same sentence as was passed by the learned Special Judge of Gaya.
The respondent must now surrender to serve out his sentence.
Appeal allowed.
| The respondent, a sub inspector of police, was charged with acceptance of Rs. 100 as a bribe from two persons, B and P, for dropping a case which he had instituted against B under the Essential Supplies (Temporary Powers) Act, 1946.
The prosecution case was that when the demand for the bribe made by the respondent could not be avoided, B and P approached the Anticorrosive Department, and it was arranged that the respondent should be paid at the police station the bribe money in the shape of currency notes produced by B and P and initialled by M, who was in charge of the Anti Corruption Department, and that M, along with a Deputy Superintendent of the Department and a first class Magistrate, should be at the police station at the time of payment, dressed as ordinary villagers ; that as soon as the amounts in notes were received by the respondent the officers disclosed their identity, that thereupon the respondent tried to throw away the currency notes but that as a result of the officers catching hold of his hands the notes were found in his hand except one which was missing and that as a result of a search made in the presence of two search witnesses later the missing note was also found.
The respondent was tried by the Special judge who accepted the prosecution evidence and found him guilty of the offence under section 161 of the Indian Penal Code.
On appeal to the High Court the learned single judge who disposed of the appeal held that the respondent could not be convicted because (1) there was no independent witness to support the testimony of the " raiding party " consisting of the two bribegivers and the three officers, (2) the search witnesses did not prove the transaction nor were they present at the time of the occur rence, and (3) the decision in Rao Shiv Bahadur Singh vs State of Vindhya Pradesh, , had laid down an invariable rule that in cases of this nature the testimony of those witnesses who form what is called " the raiding party " must be discarded, unless that testimony is corroborated by independent witnesses.
The State appealed by special leave : Held, (1) that the evidence of the two search witnesses provided independent corroboration in a material particular to 196 the testimony of the raiding party, because the missing currency note, one of the series testified to by the raiding party, could be found where it was actually found only if the testimony of the raiding party was true.
(2)that corroboration need not be by direct evidence that the accused committed the crime; it is sufficient even though it is merely by circumstantial evidence of his connection with the crime.
Rameshwar vs The State of Rajasthan, ; , followed.
(3)that the decision in Rao Shiv Bahadur Singh vs State of Vindhya Pradesh, , has not laid down any inflexible rule that the evidence of the witnesses of the raiding party must be discarded in all cases in the absence of any independent corroboration.
The correct rule is that if any of the witnesses are accom plices, their evidence is admissible in law but the judge must warn the jury of the danger of convicting the accused on the uncorroborated testimony of an accomplice ; if the case is tried without the aid of a jury, the judge should indicate in his judgment that he had this rule of caution in mind and give reasons for considering it unnecessary to require corroboration; if, however, the witnesses are not accomplices but are merely partisan or interested witnesses, who are concerned in the success of the trap, their evidence must be tested in the same way as any other interested evidence is tested, and in a proper case, the Court may look for independent corroboration before convicting the accused person.
If a Magistrate puts himself in the position of a partisan or interested witness, he cannot claim any higher status and must be treated as any other interested witness.
|
Summarize this legal judgement text concisely | Appeal No. 128 of 1954.
Appeal from the judgment and decree dated January 25, 1951, of the Nagpur High Court in L. P. Appeal No. 10 of 1945, arising out of the judgment and decree dated March 29, 1945, of the said High Court in Second Appeal No. 453 of 1941, against judgment and decree dated April 5, 1941, of the Addl.
District Judge, Yeotmal in Civil Appeal No. 47 A of 1940 arising out of the judgment and decree dated September 14, 1940, of the Addl.
Sub Judge, First Class, Yeotmal in Civil Suit No. 72 A of 1940.
Radhey Lal, for the appellant.
P. N. Bhagwati, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for respondent No. 1.
R. H. Dhebar, for respondent No. 2. 1958.
March 31.
The following Judgment of the Court was delivered by SINHA J.
The main question in controversy in this appeal on a certificate of fitness granted by the High Court of Judicature at Nagpur (as it then was), is 335 whether the provisions of the Berar Land Revenue Code, 1928 (which will hereinafter be referred to as the Code), bar the suit out of which this appeal arises.
In order to appreciate the points in controversy in this appeal, it is necessary to state the following facts: One Bhagchand Jairamdas was the occupant of a plot, situated in the District town of Yeotmal in what was then called the Province of Central Provinces and Berar, measuring 1,91,664 square feet in area, on which stood a ginning factory and its appurtenant buildings.
Bhagchand aforesaid had executed a mortgage bond in favour of one Abubakar.
The mortgagee aforesaid instituted a suit on the original side of the Bombay High Court, being Civil Suit No. 1543 of 1934, to enforce the said mortgage.
A Receiver was appointed on October 20, 1936, during the pendency of the suit in respect of the mortgaged properties including the plot described above.
The land and the buildings and the factory, have been valued by the courts below at about Rs. 70,000.
The revenue payable in respect of the plot in question, at the rate of Rs. 129 per year, appears to have remained in arrears for two years, namely, 1936 37 and 1937 38.
The Sub Divisional Officer of Yeotmal, functioning as the Deputy Commissioner under the Code, sold at auction the plot in question, free of all encumbrances, on December 17, 1937, without impleading or giving notice to the Receiver who was in charge of the estate of Bhagechand, as aforesaid.
At that auction, Kanhaiyalal, the appellant, purchased the property for Rs. 270 only.
The sale in his favour was confirmed on January 26, 1938, bit, it appears that the then Receiver had sent Rs. 275 by a cheque to the Sub Divisional Officer concerned, in full payment of the arrears of land revenue, and thus, to have the sale set aside.
But it was received two days after the confirmation of the sale.
Before the confirmation of the sale, the Receiver had made an application on Januaryt 19, 1938, to the Sub Divisional Officer, offering to pay the arrears, but it appears that through some bungling in the office, the attention of the Sub Divisional Officer was not drawn to the application until after the 336 confirmation of the sale.
The Receiver then applied for a, review of the order confirming the sale, and the Sub Divisional Officer allowed the application and set aside the sale.
The Deputy Commissioner, Yeotmal, and the Commissioner, Berar, also upheld the order setting aside the sale.
Thereupon, the auction purchaser, Kanhaiyalal, moved in revision the Financial Commissioner who was then the highest Revenue authority under the Code, against the order of the Commissioner, and ultimately, the order setting aside the sale, was vacated by the Financial Commissioner on the ground that there was no application under s.155 or section 156 of the Code.
The then Receiver, having ultimately failed in having the sale of the valuable properties by the revenue authorities, set aside, instituted the suit out of which this appeal arises, impleading the Provincial Government of Central Provinces and Berar, as the first defendant, Kanhaiyalal, the auction purchaser, as the second defendant, and Dulichand Bhagchand as the third defendant.
He prayed for a declaration that the auction sale held on December 17, 1937, was void, on a number of grounds including the grounds that no notice of demand had been sent to the Receiver who was in charge of the property; that the attachment and sale proclamation had not been effected according to law, and that though the revenue authorities were aware of the appointment of a Receiver of the property, by the Bombay High Court, they did not implead the Court Receiver.
This suit was contested on the preliminary ground that it was barred 157 and 192 of the Code.
That with the trial court and the onal District Judge, Yeotmal).
High Court of Judicature at Nagpur, the case was heard by a Single Judge, Nivogi J. who allowed the appeal by judgment dated March 29, 1945.
On a Letters Patent appeal by the auction purchaser, Kanhaiyalal, the matter was heard by a Division Bench (Mangalmurti and Deo JJ.) The Bench affirmed the decision of the learned Single 337 Judge, and held that the suit was not barred.
Hence, this appeal.
It was urged on behalf of the appellant, the auction purchaser, who was the second defendant in the suit, and who only is interested in having the sale in question, sustained by the Court, that the sale without notice to the Receiver or without impleading him, was not void but only irregular, and secondly, that in any event, the suit was barred by the provisions of sections 157 and 192 of the Code.
The first defendant, the State Government, which was represented by Mr. Dhebar, prayed that, in any event, there should be no order for costs either in favour of or against the Government.
On behalf of the plaintiff respondent, it was urged that property in the hands of a Receiver is custodia legis, and is exempt from all judicial processes except to the extent that the Court which has appointed the Receiver, may accord permission to the Receiver or to third parties to institute proceedings in respect of the property;, that no permission of the Bombay High Court which had appointed the Receiver, having been taken for the sale of the property, the sale held without such a permission, is a nullity; that, at any rate, such a sale was not a mere irregularity but an illegality and could be avoided by suit; that there being no valid attachment of the property with notice to the Receiver, the attachment itself was illegal, and on that ground also, the sale was void; and lastly, that the suit was not barred by the provisions of the Code, as held by the High Court.
The facts as set out above, are not in controversy.
During the time that the proceedings culminating in the sale of the property, had been pending in the Revenue Courts, the Receiver was in effective control and management of the property.
The revenue authorities had been apprised of the fact that the Receiver appointed by the Bombay High Court, was in charge of the property.
As a matter of fact, an attempt had been made by the revenue authorities, in the first instance, to approach the Collector of Bombay for realising the 43 338 arrears of land revenue in respect of the plot in question, but the mistake was that no approach was made to the Bombay High Court or even to the Receiver for paying up the arrears of the Government demands.
It was certainly the duty of the Receiver to see to it that all public demands in respect of the properties in his charge, were paid in due time, and in.
this case, certainly, the arrears in respect of the year 1937 38, which fell due in August, 1938, accrued in his time, if not also the arrears in respect of the previous year 1936 37.
If the Receiver had been more vigilant, or if the revenue authorities had made the demand from the Receiver in respect of the arrears, they may have been paid up in due course without the necessity of putting the property to sale.
So far as the Indian Courts are concerned, it is settled law that a sale held without making attachment of the property, or without duly complying with the provisions of the law relating to attachment of property, is not void but only voidable.
Rule 52 of 0.
21 of the Code of Civil Procedure, requires that where the property is in the custody of any court or public officer, attachment shall be made by a notice to such court or officer.
But the absence of such a notice would not render the sale void ab initio, because the jurisdiction of the court or the authority ordering the sale, does not depend upon the issue of the notice of attachment.
It is also settled law that proceedings taken in respect of a property which is in the possession and management of a Receiver appointed by Court under 0. 40, r. I of the Code of Civil Procedure, without the leave of that Court, are illegal in the sense that the party proceeding against the property without the leave of the Court concerned, is liable to be committed for contempt of the Court, and that the proceedings so held, do not affect the interest in the hands of the Receiver who holds the property for the benefit of the party who, ultimately, may be adjudged by the Court to be entitled to the same.
The learned counsel for the respondent was not able to bring to our notice any ruling of any Court in India, holding that a sale held without notice to the Receiver or 339 without the leave of the Court appointing the Receiver in respect of the property, is void ab initio.
In the instant case, we do not think it necessary to go into the question raised by the learned counsel for the respondents that a sale of a property in the hands of the Court through its Receiver, without the leave of the Court, is a nullity.
The American Courts appear to have taken the view that such a sale is void.
In our opinion, it is enough to point out that the High Court took the view that the sale was voidable and could be declared illegal in a proper proceeding or by suit.
We shall assume for the purposes of this case that such a sale is only voidable and not void ab initio.
On the assumption that the sale held in this case without the leave of the Court and without notice to the Receiver, is only voidable and can be declared illegal on that very ground, the suit had been instituted for the declaration that the sale by the revenue courts was illegal.
The plaint was subsequently amended by adding the relief for recovery of possession, because in the meanwhile, the auction purchaser had obtained delivery of possession of the property through the revenue authorities, some time in 1940.
The general rule that property in custodia legis through its duly appointed Receiver is exempt from judicial process except to the extent that the leave of that court has been obtained, is based on a very sound reason of public policy, namely, that there should be no conflict of jurisdiction between different Courts.
If a court has exercised its power to appoint a Receiver of a certain property, it has done so with a view to preserving the property for the benefit of the rightful owner as judicially determined.
If other Courts or Tribunals of co ordinate or exclusive jurisdiction were to permit proceedings to (lo on independently of the Court which has placed the custody of the property in the hands of the Receiver, there was a likelihood of confusion in the administration of justice and a possible conflict of jurisdiction.
The Courts represent the majesty of law, and naturally, therefore, would not do anything to weaken the rule of law, or to permit any proceedings 340 which may have the effect of putting any party in jeopardy for contempt of court for taking recourse to unauthorised legal proceedings.
It is on that very sound principle that the rule is based.
Of course, if any Court which is holding the property in custodia legis through a Receiver or otherwise, is moved to grant permission for taking legal proceedings in respect of that property, the Court ordinarily would grant such permission if considerations of justice require it.
Courts of justice, therefore, would not be a party to any interference with that sound rule.
On the other hand, all Courts of justice would be only too anxious to see that property in custodia legis is not subjected to uncontrolled attack, while, at the same time, protecting the rights of ' all persons who may have claims to the property.
After making these general observations, we have to examine the provisions of the Code, to find out how far that general rule of law is affected by those provisions.
The Berar Land Revenue Code provides that " land revenue assessed oil any land shall be a first charge on that land and on the crops, rents and profits thereof " (section 131).
Section 132 makes the occupant in respect of the land in question " primarily liable for the payment of the land revenue ", but section 133 provides that in case of default of payment of land revenue by the person who is 'primarily liable ', " the land revenue including arrears shall be recoverable from any person in possession of the land.
" Hence, in this case, the revenue authorities could legally call upon the Receiver to pay the arrears of land revenue, and as pointed out above, it would have been the duty of the Receiver to pay up those arrears.
Under section 135, the Receiver would be deemed to be a, I defaulter ' in respect of the land revenue.
Section 140 makes the statement of account, certified by the Deputy Commissioner or the Tahsildar, conclusive evidence of the existence of the arrears and of the person shown therein as the defaulter, for the purposes of the Chapter in which the section finds a place, namely, Chapter XII, headed as, " Realization of Land Revenue ".
One of the modes laid down in 341 s.141 (e) of the Code for the recovery of arrears land revenue, is " attachment and sale of the, holding on which the arrear is due.
" If a sale is held under the provisions of section 141 (c), section 149 (2) provides that such a sale " shall transfer the holding free of all encur brances imposed on it. . . .
Thus, the appellant, if the sale in his favour was a valid on acquired the property said to be worth Rs. 70,000, from from all encumbrances including the mortgage money due on the property, and for which the suit in the Bombay High Court had been instituted, even though he paid Rs. 270 only for it.
The principal question for determination in the appeal, therefore, is whether, in view of the special provisions of the Land Revenue Code, the presesuit could be entertained by the civil court.
It beyond question that the Code lays down a special machinery for the realization of Government reven which has been declared as the paramount charge the property.
It lays down a summary procedure for the realization of public revenue, and all question coming within the purview of the Code, must I determined according to the procedure laid down that Code.
Hence, in so far as the Code has laid do," specific rules of procedure, those rules and no other must apply in the determination of all controversies coming strictly within the terms of the statute One thing is absolutely clear, namely that the Code does not lay down any specific rules in respect of pro party which has been placed in custodia legis.
The Code contemplates regular payment of Government revenue by the owner, possessor or the occupant, the property in respect of which Government revenue is payable.
It also takes notice of devolution of interest by transfer or succession, but it does notice contemplate the inter position of a Receiver in respect of the property subject to the payment of Government revenue.
This aspect of the matter becomes important because the only point for determination 'in, the appeal, is whether the auction sale held under the Code, without the leave of the Court or without notice to the Receiver appointed by the Court, should affair 342 Le interest which the Bombay High Court had, by pointing the Receiver, sought to protect, if the sale favour of the appellant, stands.
The mortgagee 's security for the payment of the mortgage debt, in the vent of the auction sale being sustained, is to that tent adversely affected without his having any voice the matter.
Perhaps, if the Receiver were not there, the mortgagee may have been more vigilant and by have taken timely steps to pay the Government demand in respect of the property if only for conserving it for satisfying his own dues on the mortgage.
It has been strenuously argued on behalf of the appellant that the present suit cannot be maintained in few of the provisions of the Code, particularly, 157 and 192 which we now proceed to examine.
action 157 is in these terms: " 157.
(1) If no application under section 156 is made within the time allowed therefor, all claims on the ground of irregularity or mistake shall be barred.
(2) Nothing in sub section (1) shall bar the institution of a suit in the civil court to set aside a sale on the ground of fraud or oil the ground that the arrear for which the property is sold was not due.
" his section makes reference to proceedings under the previous.
Section 156 contemplates an application for setting aside the sale " on the ground of some material irregularity or mistake in publishing or conducting it ", at the instance of a person " whose interests are affected by the sale ".
Assuming that in the instant case, the Receiver is a person whose interest can be said to have been affected by the sale, the ground on which he could have moved the Revenue athorities for setting aside the sale, was limited to material irregularity or mistake in publishing or Inducting the sale.
This provision proceeds on the assumption that the necessary parties have been apprised of the proceedings relating to the realization Government revenue.
It assumes that the proceedings have been properly taken, but there may have been some material irregularity or mistake at a later age of the proceedings, namely, in publishing or enducting the sale.
It is clear that the ground on 343 which the present suit is based, would not be covered by the crucial words quoted above, on which alone section 156 could be availed of " Publishing " the sale has reference to that part of the proceedings which relates to the sale proclamation, and conducting ' the sale has reference to acts or omissions, at a still later stage, of some officer or public authority who is entrusted with holding the sale.
It is clear, therefore, that the provisions of section 156 are out of the way of the plaintiff in this suit.
So also are the provisions of section 155 which relate to an application for setting aside a sale on deposit of arrears within 30 days from the date of the sale.
An application under section 155 can only be made by a person "either owning such property or holding an interest therein by virtue of a title acquired before such sale ".
A Receiver appointed under 0.
40 of the Code of Civil Procedure, unlike a Receiver appointed under the Insolvency Act, does not own the property or hold any interest therein by virtue of a title.
He is only the agent of the court for the safe custody and management of the property during the time that the court exercises jurisdiction over the litigation in respect of the property.
Section 157(1) of the Code, 'which positively bars a suit, is in express terms, confined to " all claims oil the ground of irregularity or mistake ".
It does not cover grounds other than those for example, if a sale is attacked on the ground that the owner of the property was dead at the date of the sale, or that there had been some fraud in connection with the sale proceedings, or that he had been kept out of ' his remedy under the Code by some fraudulent act, or that there was really no arrear due in respect of the property sold, or such allied grounds suits based on grounds like these, would not be within the prohibition of section 157(1).
Section 157(2) specifically saves certain suits of the kind referred to therein, but it does not necessarily follow that suits not directly within the terms of sub section
(2) of section 157, are covered by the provisions of the positive bar laid down by section 157(1).
There may be a tertium quid between the grounds covered by section 157(1) and section 157(2).
It is clear that 344 the present suit is not covered either by the terms of section 157(1) or those of section 157(2).
As already indicated, the position emerging in the present controversy, is not covered by the express provisions of section 157.
But it has been argued on behalf of the appellant that even though the provisions of section 157 do not cover the ground raised in the present suit, section 192(1) of the Code, bars the suit.
Section 192(1) is in these terms: " 192.
(1) Except as otherwise provided in this Law, or in any other enactment for the time being in force, no civil court shall entertain any suit instituted or application made to obtain a decision or order on any matter which, the Provincial Government or any Revenue Officer .
is, by this Law, empowered to determine, decide or dispose of; and in particular and without prejudice to the generality of this provision, no civil court shall exercise jurisdiction over any of the following matters: " It is not necessary to set out the clauses (a) to (p) under sub section
(1) of section 192, because none of those clauses, has been claimed clearly to cover the present suit.
Learned counsel for the appellant contended that setting aside a sale has been specifically provided for by the Code, which the several authorities under the Code have been empowered to determine, decide or dispose of, within the meaning of the section.
There is no doubt that the matter of the setting aside of a sale by payment of the arrears under section 155, and on the specific grounds under section 156, as discussed above, has been provided for in the Code, but, as already observed, the suit does not raise any ground which is covered by the specific provisions of the Code for setting aside a sale.
Strictly speaking, this is a suit for a declaration that the sale held by the revenue courts, does not affect the interests which are in the custody of the Court through its Receiver, and for recovery of possession as against the auction purchaser who is alleged to be in wrongful possession of the property which should have continued in possession of the Receiver, under the directions of the Bombay High Court.
In short, this is not a suit simpliciter to 345 set aside the sale held by the revenue authorities but a suit for a declaration and a consequential relief A suit for such a declaration on the grounds taken by the Receiver and for possession, is not a matter, which the several authorities under the Code, have been empowered to determine, decide or dispose of.
But the learned counsel for the appellant further contended that section 192 takes in its sweep all the relevant provisions of the Code bearing on the rights of the Receiver to have a sale set aside.
Undoubtedly, it is so, but, as pointed out above, the Receiver could not have brought the present controversy within the terms of any one of those sections.
In this connection, reliance was also placed on the provisions of sections 32, 38 and 159 of the Code.
In our opinion, those sections have no bearing on the present controversy.
Section 32 deals with appeals and appellate authorities, and lays down the hierarchy of officers to deal with an appeal.
Section 38 prescribes the authorities to deal with revisional matters, and section 159 conserves the power of the Deputy Commissioner to pass orders suo moto that is to say, where no application has been made under section 155 or section 156, or even beyond the period of thirty days, which is the prescribed period for making applications under those sections.
Thus, if the leave of the Bombay High Court had been taken to initiate proceedings under the Code, for the realization of Government revenue, or if the Receiver had been served with the notice of demand, it would have been his bounden duty to pay up the arrears of land revenue and to continue paying Government demands in respect of the Property in his charge, in order to conserve it for the benefit of the parties which were before the Court in the mortgage suit.
If such a step had been taken, and if the Receiver, in spite of notice, had allowed the auction sale to be held for non payment of Government demands, the sale would have been valid and subject only to such proceedings as are contemplated under sections 155 and 156 of the Code.
In that case, there would have been no conflict of jurisdiction, and therefore, no question 44 346 of infringing the sound principle discussed above.
But the absence of the leave of the Court and of the necessary notice to the Receiver, makes all the difference between a valid and an illegal sale.
The High Court has also relied upon the well known rule of natural justice audi alteram partem as another reason for holding the sale to be illegal.
It is not necessary for the purposes of this case to pronounce upon the difficult question of how far a principle of natural justice can override the specific provisions of a statute.
For the reasons given above, we agree with the High Court in its conclusion that the auction sale impugned in this case, was illegal, and that the suit was not barred by the provisions of the Code.
The appeal is, accordingly, dismissed with costs to the Receiver who alone has contested the appeal.
Appeal dismissed.
| The appellant was the auction purchaser of the property at a revenue sale held under the provisions of the Berar Land Revenue Code, 1928, for recovery of land revenue due.
The property at the time of the attachment and sale was in the possession of a Receiver appointed under Or. 40, R. i of the Code of Civil Procedure by the Bombay High Court.
Notice to the Receiver, however, was not given of the attachment and sale of the property, nor was any leave of the Court taken for the sale.
In a suit instituted by the Receiver for a declaration that the sale was a nullity or, at any rate, was illegal and liable to be set aside, the auction purchaser contended that the sale without notice to 334 the Receiver or without impleading him was not void but only voidable and that, in any event, the suit was barred by the provisions of sections I57 and 192 of the Berar Land Revenue Code, 1928: Held, (i) that the sale was illegal in the absence of the leave of the Court and the necessary notice to the Receiver; (2) that the suit was not barred by any of the provisions of the Code.
Sub section (1) of section I57 of the Code which bars the institution of a suit to set aside a sale is confined only to claims on the ground of irregularity or mistake in publishing or conducting the sale as referred to in section 56, and suits based on other grounds, including those referred to in sub section
(2) Of section 157, are not within the prohibition of sub section
Section 192 of the Code is not applicable as the suit is not one simpliciter to set aside the sale held by the revenue authorities, but one for a declaration and consequential relief on the grounds taken by the Receiver not covered by the specific provisions of the Code for setting aside the sale which the several authorities under the Code have been empowered to determine, decide or dispose of within the meaning of section 192(I).
|
Summarize this legal judgement text concisely | minal Appeal No. 146 of 1954.
Appeal from the judgment and order dated the 27th November 1954 of the Court of Judicial Com 683 missioner at Ajmer in Criminal Appeal No. 15 of 1954 arising out of the judgment and order dated 25th August 1954 of the Court of Special Judge at Ajmer in Criminal Case No. 5 of 1953.
B. P. Maheshwari, for the appellant.
C. K. Daphtary, Solicitor General for India, Porus A. Mehta, H. R. Khanna and B. H. Dhebar, for the respondent.
September 21.
The Judgment of the Court was delivered by BHAGWATI J.
This Appeal with a certificate of fitness under article 134(1)(c) of the Constitution against the decision of the Judicial Commissioner at Ajmer raises an important question as to the connotation of the word "officer" contained in section 21(9), Indian Penal Code.
The appellant was a Class III servant employed as a metal examiner, also called Chaser, in the Railway Carriage Workshops at Ajmer.
I He was charged under section 161, Indian Penal Code with having accepted from one Nanak Singh currency notes of the value of Rs. 150 as illegal gratification as a motive for securing a job for one Kallu.
He was also charged under section 5(1)(d) of Act II of 1947 with abusing his position as a public servant and obtaining for himself by corrupt or illegal means pecuniary advantage in the shape of Rs. 150 from the said Nanak Singh.
He was further charged with having committed an offence under section 420, Indian Penal Code for having induced the said Nanak Singh to deliver to him currency notes of the value of Rs. 150 by dishonest representation that be could secure a job for the said Kallu.
The learned Special Judge, State of Ajmer, who tried him in the first instance for the said offences convicted him of the offence under section 161, 'Indian Penal Code as also the offence under section 5(1) (d) of Act II of 1947 and sentenced him to suffer rigorous imprisonment for six months and one year respectively in regard to the same, both the sentences to run concurrently.
In so far, 684 however, as it was not proved that the appellant did not believe when he accepted the money that he could secure or would try to secure a job for Kallu, it was held that no case under section 420, Indian Penal Code was made out and he was acquitted of that charge.
The appeal taken to the Judicial Commissioner, State of Ajmer, by the appellant failed and on the 10th December, 1954, the learned Judicial Commissioner granted to the appellant a certificate of fitness for appeal on two main grounds, viz., (1) whether the appellant was an "officer" within the meaning of clause (9) of section 21, Indian Penal Code, and (2) whether the provisions of section 137 of the Railways Act excluded all railway servants from the definition of public servants except for purposes of Chapter ' IX, Indian Penal Code.
Concurrent findings of fact were reached by both the Courts below on the question as to whether the appellant accepted Rs. 150 from Nanak Singh as and by way of illegal gratification and these findings could not be and were not challenged before us by the learned counsel for the appellant.
The only questions which were canvassed before us were the two legal points which formed the basis of the certificate of fitness for appeal granted by the learned Judicial Commissioner, State of Ajmer, to the appellant.
The second question has now become academical in the facts of the present case by virtue of a decision of this Court in Ram Krishan vs Delhi State(1), which lays down that before the amendment of section 137 of the Railways Act by Act 17 of 1955 railway servants were treated as public servants only for the purposes of Chapter IX, Indian Penal Code, but in any event they were public servants under the Prevention of Corruption Act (Act II of 1947).
In so far as the appellant has, in our opinion, been rightly convicted of the offense under section 5(1)(d) of Act If of 1947 and awarded the sentence of rigorous imprigonment for one year, the question whether he was rightly convicted of the offence under section 161, (1) ; 685.
Indian Penal Code for which he was awarded the lesser sentence of six months ' rigorous imprisonment has become merely academical and the only question which remains to be considered by us here is whether he was an "officer" within the meaning of section 21 (9), Indian Penal Code.
The provisions of law in regard to the first question may be conveniently set out at this stage: Section 2 of the Prevention of Corruption Act II of 1947 provides: "for the purposes of this Act "public servant" means a public servant as defined in section 21 of the Indian Penal Code".
Section 21, Indian Penal Code provides so far as is relevant for the purposes of the present appeal: "The words 'public servant ', denote a person falling under any of the descriptions hereinafter following, namely, Ninth. . . . and every officer in the service or pay of the Government or remunerated by fees or commission for the performance of any public duty".
There is no doubt that the appellant was.
in the service or pay of the Government and was performing the duty of a metal examiner known as Chaser in the Railway Carriage Workshops at Ajmer and was thus performing a public duty.
It was, however, contended that the appellant was not an officer within the meaning of that term as used in section 21(9), Indian Penal Code.
An Officer, it was contended, on the authority of Reg.
vs Ramajirav jivbajirav and another(1), meant one to whom was delegated by the supreme authority some portion of its regulating and coercive powers and who was appointed to represent the State in its relations to individual subjects.
According to the dictum of West, J., the word "officer" meant some person employed to exercise to some extent and in certain circumstances a delegated function of Government.
He was either himself armed with some authority or repre (1) XII Bom.
H.C.R. 1. 386 sentative character or his duties were immediately auxiliary to those of some one who was so armed.
It was, therefore, contended that the appellant being a metal examiner known as Chaser in the Railway Carriage Workshops had not delegated to him by the supreme authority some portion of its regulating and coercive powers nor was he appointed to represent the State in its relations to individual subjects.
He was neither armed with some authority or representative character nor were his duties immediately auxiliary to those of some one who was so armed.
He was not employed to exercise to some extent and in certain circumstances the delegated function of Government and, therefore, was not an "officer" within the meaning of that term as used in section 21(9), Indian Penal Code.
If he was thus not an officer of the Government, he could not be a public servant within the meaning of section 21, Indian Penal Code nor could he be a public servant for the purposes of Act 11 of 1947 and could not be convicted of the offence under section 5(1)(d) of Act II of 1947.
It has to be noted, however, that the case before the learned Judges of the High Court of Bombay in 12 Bombay High Court Reports 1, concerned an Izaphatdar, that is a lessee, of a village who bad undertaken to keep an account of its forest revenue and pay a certain proportion to the Government, keeping the remainder for himself and the question 'that arose for the consideration of the Court was whether such a person was an officer within the meaning of section 21(9), Indian Penal Code.
It was in this context that the aforesaid observations were made by West, J., and the Court came to the conclusion that Deshmukhs and Deshpandes would be sufficiently within the meaning of the clause they being appointed to perform for the State a portion of its functions or to aid those who were its active representatives but not so an Izaphatdar or the lessee such as the accused.
He was not an officer but a mere contractor bound by his engagement but not by the terms of his office or employment to pay a certain proportion to the Government.
There was no delegation to him of any 687 authority for coercion or interference nor was he an assistant appointed to help any one who was vested with such authority.
The duties which he performed were contractual duties frauduler deception in the discharge of which might subject him to punishment for cheating but not duties attached to any office conferred on him or his predecessor in title, failure to perform which with integrity could make him liable, as an officer, to the special penalties prescribed for delinquent public servants.
This decision in 12 Bombay High Court Reports 1, came to be considered by the Calcutta High Court in Nazamuddin vs Queen Empress(1).
The petitioner in that case was a peon attached to the office of the Superintendent of the Salt Department in the district of Mozafferpur and he had been convicted under section 161, Indian Penal Code.
The contention urged on behalf of the petitioner was that he did not fall within the terms of the last portion of clause (9) of section 21, Indian Penal Code which declared "every officer in the service or pay of Government" was a public servant be cause he was not an officer.
The case of Reg.
vs Ramajirav Jivbajirav(2) was cited in support of that contention and the learned Judges of the Calcutta High Court observed at page 346 as under: "The learned Judges in that case had to consider whether a lessee from Government was on the conditions of his lease a public servant and, in doing so, they considered generally the meaning of the term "officer".
It was there held that an officer means "some person employed to exercise, to some extent and in certain circumstances, a delegated function of Government.
He is either armed with some authority or representative character, or his duties are immediately auxiliary to those of some person who is so armed".
The meaning which we are asked to put on these words seems to us to be too narrow as applied to the present case.
The peon who has been convicted as a public servant is in service and pay of the Government, and he is attached to the office of the Superintendent of the Salt Department.
The exact (1) I.L.R. (2) XII Bom.
H.C.R. 1.
688 nature of his duties is not stated, because this objection was not taken at the trial.
, but we must take it that, from the nature of his appointment, it was his duty to carry out the orders of his official superior, who undoubtedly is a public servant, and in that capacity to assist the Superintendent in the performance of the public duties of his office.
In that sense he would be an officer of Government, although he might not possibly exercise "any delegated function of the Government".
Still his duties would be "immediately auxiliary to those of the Superintendent who is so armed".
We think that an "officer in the service or pay of Government" within the terms of section 21 of the Penal Code is one who is appointed to some office for the performance of some pulice duty.
In this sense the peon would come within section 21, cl. 9".
The true test, therefore, in order to determine whether a person is an officer of the Government, is: (1) whether he is in the service or pay of the Government, and (2) whether he is entrusted with the performance of any public duty.
If both these requirements are satisfied it matters not the least what is the nature of his office, whether the duties he is performing are of an exalted character or very humble indeed.
As has been stated in Bacon 's Abridgment at Vol.
6, page 2, in the article headed "Of the nature of an officer and the several kinds of officers": "The word "officium ' principally implies a duty, and in the next place, the charge of such duty; and that it is a rule that where one man 'bath to do with another 's affairs against his will, and without his leave, that this is an office, and he who is in it is an officer".
The next paragraph thereafter may also be referred to in this context: "There is, a difference between an office and an employment, every office being an employment; but there are employments which do not come under the denomination of offices; such as an agreement to, make hay, herd a flock, &c which differ widely from that of steward of a manor" &c. (Vide 12 Bombay High Court Reports at page 5).
689 This was the sense in which the decision in 12 Bombay High Court Reports 1, was understood by the learned Judges of the Lahore High Court in Ahad Shah vs Emperor(1) when they observed at page 157: "But it is not enough that a person should be in the pay or service of Government to Constitute him a public servant within the meaning of section 21 (ninthly), I.P.C. He must also be an "Officer".
That expression is not, of course, to be restricted to its colloquial meaning of a Commissioned or non Commissioned Officer; it means a functional or holder of some "officium" or office.
The office may be one of dignity or importance; it may equally be humble.
But whatever its nature, it is essential that.
the person holding the office, should have in some degree delegated to him certain functions of Government".
The question for consideration before the learned Judges of the Lahore High Court was whether a Quarter Master 's 'clerk was a public servant within the meaning of that expression in section 21, Indian Penal Code.
On the facts elicited before them the learned Judges came to the conclusion that the Quarter Master 's clerk as such was just a Babu and no more an officer than a labourer or menial employed and paid by Government to do public work (See Queen vs Nachimuttu(2).
if therefore on the facts of a particular case the Court comes to the conclusion that a person is not only in the service or pay of the 'Government but is also performing a public duty, he has delegated to him the functions of the Government or is in any event performing duties immediately ' auxiliary to those of some one who is an officer of the Government and is therefore 'an officer ' of the Government within the meaning of section 21(9), Indian Penal Code.
Applying this test to the facts of the case before us, we find that the appellant was a Class III servant and was employed as a metal examiner known as Chaser in the Railway Carriage Workshop.
He was working under the Works Manager who was certainly (1) A.I.R. 1918 Lah.
(2) I.L.R. 7 Madras 18, 690 an officer of the Government and the duties which he performed were immediately auxiliary to those of the Works Manager who, beside being an officer of the Government was also armed with some authority or representative character qua the Government.
The appellant was thus, even on a narrow interpretation of the dicta of West, J. in 12 Bombay High Court Reports 1, an officer in the service or pay of the Government performing as such a public duty entrusted to him by the Government and was therefore, a public servant within the meaning of section 21 of the Indian Penal Code.
This being the true legal position, this contention of the appellant also does not avail him and the first question must be answered against him.
The appellant was, therefore, an officer within the meaning of section 21(9) and therefore a public servant within the meaning of section 21, Indian Penal Code and being such public servant be fell within the definition of a public servant contained in section 2 of the Prevention of Corruption Act II of 1947.
He was, therefore, on the facts and circumstances of the case, rightly convicted under section 5(1) (d) of Act II of 1947.
His conviction and the sentence imposed upon him by the Courts below were therefore quite in order and this appeal must therefore stand dismissed.
| The appellant was a Class III servant employed as a metal examiner, also called chaser, in the Railway Carriage Workshop at Ajmer.
He accepted a sum of Rs. 150 as illegal gratification for securing a job for some person.
He was charged under section 5(1)(d) of the Prevention of Corruption Act, 1947 (Act II of 1947).
The appellant contended that he was not an "officer" within the meaning of the term used in section 21(9) of the Indian Penal Code and so could not be a public servant for purposes of Act II of 1947.
It was found that the appellant was working under the Works Manager who was certainly an officer of the Government and the duties which he performed were immediately auxiliary to those of the Works Manager who was also armed with some authority or representative character qua the Government.
Held, that the appellant was an officer within the meaning of section 21(9) of the Indian Penal Code and, therefore, a public servant within the meaning of section 2 of Act 11 of 1947.
The true test in order to determine whether a person is an officer of the Government, is: " .
(1) whether he is in the service or pay of the Government and (2) whether he is entrusted with the performance of any,public duty.
The public duty may be either,a function of the Government delegated to him or may be a duty immediately auxiliary to that of someone who is an officer of the Government.
vs Ramajirav Jivbajirav ([1875] XII Bom.
H.C.R. 1), explained.
Nazamuddin V. Queen Empress, ([1900] I.L.R. and Ahad Shah vs Emperor (A.I.R. 1918 Leh. 152), relied on
|
Summarize this legal judgement text concisely | iminal Appeals Nos.
60 and 61 of 1956.
Appeal by special leave from the judgment and order dated August 4, 1955, of the Allahabad High Court in Criminal Appeal No. 298 of 1955 and Referred No. 31 of 1955 with connected Criminal Appeals Nos. 299 and 307 of 1955 arising out of the judgment and order dated February 28, 1955, of the Court of Sessions Judge, Meerut in Criminal Sessions rial o. 142 of 1954.
Jai Gopal Sethi, section C. Saran and G. C. Mathur, for appellants in Criminal Appeal No. 60 of 1956.
J.N. Bannerji and P. C. Agarwala, for the appellant in Criminal Appeal No. 61 of 1956.
H.J. Umrigar and C. P. Lat, for the respondents in both Appeals.
October 3.
The Judgment of the Court was delivered by GOVINDA MENON J.
On September 6, 1955, this court granted the appellants herein, special leave to appeal under article 136(1) of the Constitution from the judgment and order dated August 4, 1955, of the 736 Allahabad High Court, in Criminal Appeal No. 298 of 1955 (Reference No. 31 of 1955) connected with Criminal Appeals Nos. 299 and 307 of 1955, limited to the question whether the failure to comply with the rules relating to the submission of the police case diary, vitiates the entire trial and what the consequences of such failure are.
It is in pursuance to the leave so granted, that Criminal Appeal No. 60 of 1956, has been preferred by accused Nos. 4, 7, I, 3, 5 & 2 (Niranjan Singh, Tikam Singh, Kharak Singh, Harpal Singh, Sardar Singh and Satpal Singh) respectively in Sessions 3 Trial No. 142 of 1954, in the court of Session at Meerut and Criminal Appeal No. 61 of 1956, is preferred by accused No. 6 (Udaibir Singh) in the same Sessions trial.
Appellants 1 to 3 in Criminal Appeal No. 60 of 1956 (accused Nos. 4, 7 & 1, Niranjan Singh, Tikam Singh and Kbarak Singh) have been sentenced to the extreme penalty of the law and the remaining appellants in that appeal sentenced to im prisonment for life.
The appellant (accused No. 6) in Appeal No. 61 of 1956, has also been sentenced to death.
On the night between February 28, and March 1, 1954, a dacoity took place in the house of Atal Singh in the village of Akheypur in which about twenty dacoits took part and considerable property was looted and taken away by the dacoits.
During the course of this incident four members of the family of Atal Singh, including himself, were shot dead and another received gun shot wounds as a result of which be died subsequently in the hospital.
Four other members of the family received gun shot wounds and incised wounds at the hands of the dacoits but they survived as a result of treatment in the hospital.
The prosecution case was that among the dacoits who took part were the seven appellants in these two appeals, as well as two others; and of them accused No. I (Kharak Singh), accused No. 4 (Niranjan Singh), accused No. 6 (Udaibir Singh) and accused No. 7 (Tikam Singh) were armed with guns and as such were responsible for the shooting and murders.
The two others, namely, Achhpal Singh and Deoki Saran alias 737 Beg Saran, who figured as accused Nos. 8 & 9 respectively in the court of Sessions, were acquitted by the learned Sessions Judge, who, after an analysis of the large volume of evidence, found that all the appellants herein were guilty of an offence under section 396 of the Indian Penal Code and sentenced accused Nos. 1, 4, 6 and 7 (Kharak Singh, Niranjan Singh, Udaibir Singh and Tikam Singh) to death and accused Nos. 2, 3 & 5 (Satpal Singh, Harpal Singh and Sardar Singh).to imprisonment for life as hereinbefore mentioned.
On appeal to the High Court of Judicature at Allahabad, the learned Judges (Asthana and Roy JJ.) confirmed the convictions and sentences and dismissed the appeals.
As stated already, leave to appeal to this court under article 136 was granted restricted to the question outlined by us at the beginning.
The prosecution case is that the village of Akheypur is a factious one in which one Narain Singh, the brother of the 4th accused, was the leader of one party and Atal Singh, one of the deceased, was the leader of the other.
Consequently the dacoity and murders in the house of Atal Singh took place as a matter of revenge.
Shortly stated, the case put forward on behalf of the prosecution is that the appellants and others, some of whom were armed with guns, raided the house of Atal Singh on the night in question.
The inmates of the house and others were inflicted injuries and the dacoits after looting ?he house carried away valuable property.
It is not suggested that if the facts spoken to by the prosecution witnesses, who are eye witnesses, are true, then an offence under section 396 of the Indian Penal Code has not been amply proved; but the only question is whether the appellants took part in the crime.
That a dacoity took place in the house of Atal Singh admits of no doubt and the appellants do not deny the occurrence, but it is the case of accused Nos. 4 and 7 (Niranjan Singh and Tikam Singh) that while the dacoity was in progress, they, along with the other residents of the village, had gone to the enclosure of Sardara Singh and Daryao Singh, close to the house of Atal Singh, armed with guns with the object 738 of giving assistance and succour to the inmates of the house and it was they who opened fire from that place on the dacoits, compelling them to take to their heels as a result of the firing, and that after the dacoits had left the scene of occurrence, they, as.
well as others, proceeded to Atal Singh 's house where Dharam Singh and other persons requested them to go to the Police Station at Kithore on their motor cycle in order to make a report to the police.
It is further alleged that both of them went to Kithore police station and reported the occurrence to the Sub Inspector Dalbir Singh (P.W. 28) who was in charge of the police station and on the direction given by him, they went to the police station Garhmukteshwar to give information.
, In short, the defence is that these two accused were good Samaritans who tried to help the family of Atal Singh in their hour of dire need and not the assailants.
The other appellants denied the charge.
It is not necessary, in view of the concurrent conclusions arrived at by the trial court and by the learned Judges of the High Court, to restate with any elaboration the details of the incident which culminated in the dacoity and murders.
In addition to the corroborating pieces of evidence, there are eye witnesses who have identified some or all the accused at the scene of crime and it may also be stated that some of them had received injuries at the hands of the miscreants.
We have also a dying declaration, Exhibit P 50, recorded by P.W. 20, a Magistrate, who also had recorded the statements of Ganga Saran (P.W. 2) and Ranbir (P.W. 18) when they were in a serious condition anticipating that they might not survive the injuries but which they fortunately did.
The earliest information of the crime (exhibit P. 1) was given by Samey Singh (P.W. 1) at the Police Station Kithore at about 2 a.m. on March 1, 1954.
It does not contain any details of the incident and is confined to the statement that a dacoity was being committed at the house of Atal Singh in the village and that the informant had rushed from the village 730 for making a report.
That guns were being fired has also been recorded in it.
P.W. 28 Dalbir Singh, who was Sub Inspector of Police and the Station House Officer of Police Station Kithore at that time, received the information, and reached the scene of dacoity at about 2 30 a.m., whereupon Jhamel Kaur (P.W. 4) handed over to him the list of the looted property (exhibit P. 2).
According to this witness, he immediately examined P. W. 2 and other witnesses on the spot and recorded their statements.
The injured persons were sent to the hospital and inquests were held over the dead bodies of Rohtas Singh, Tejpal Singh, Atal Singh and Charan Singh in the presence of witnesses.
Between 2 30 a.m. and 7 or 7 30 a.m., P.W. 28, according to him, did a considerable amount of work, such as recording the statements of all the available witnesses, sending the injured persons to the hospital after taking their statements, holding inquests over the dead bodies, inspecting the scene of dacoity, finding lead shots and wads there, and taking such .things into custody, etc.
By about 7 or 7 30 a.m. the Senior Superintendent of Police, the Deputy Superintendent of Police and other police officials reached the place of incident on bearing of the dacoity and by the time of their arrival, according to P.W. 28, he had finished the preliminary work.
He also deposes that the parchas of the case diary for the period between March I and March 7, 1954, were sent all together to the Superintendent of Police only on March 7, and not as is enjoined by the rules every day as and when the day 's recording is complete.
We shall advert to the arguments of the learned counsel about this circumstance at a later stage.
The prosecution case depends, mainly if not solely, on the identification of the various accused persons by some or all of the prosecution witnesses, in addition to the dying declaration Exhibit P. 50 and the corroborating statements of P.W. 2, vide Exhibit P. 49) and P.W. 18 (vide Exhibit P. 48).
We may here summarise in very sbort outline the details of identification by the witnesses.
P. W. 2 Ganga Saran identified accused Nos. 1, 3, 4, 5 and 7 96 740 (Kharak Singh, Harpal Singh, Niranjan Singh, Sardar Singh and Tikam Singh).
Dharam Singh P. W. 3 identified accused No. 6(Udaibir Singh) among the dacoits and also deposes that Atal Singh told him that accused No. 7 (Tikam Singh) had shot him with a gun.
P. W. 4 Mst.
Jhamel Kaur, in addition to giving a list of the looted property (Exhibit P. 2), identified accused Nos. 2 & 6 (Satpal Singh and Udaibir Singh).
P. W. 5 (Richpal Singh) states that among the dacoits, there were accused Nos. 2, 4, 5, 6 and 7 (Satpal Singh, Niranjan Singh, Sardar Singh, Udaibir Singh and Tikam Singh).
P. W. 7.
(Om Pal) found among the dacoits accused Nos.
2,6 and 7.
The, deposition of P. W. 9 is to the effect that he identified accused No. 6 (Udaibir Singh) and also that Atal Singh told him that accused No. 7 (Tikam Singh) had shot him.
P. W. 10 Jagbir Singh identified accused No. 1 (Kharak Singh).
All the appellants before us were identified by W. 11 (Ganga Bal), and P. W. 18 (Rdnbir) was able to identify accused No. 6 Udaibir Singh.
The result of the above analysis is that each one of the accused has been identified by one or more of the prosecution witnesses.
Accused No. I (Kharak Singh) is identified by P.W. 2, P.W. 10 and P.W. 1 1; accused No. 2 (Satpal Singh) is identified by P.W. 4) P.W. 5, P.W. 7 and P.W. 11; accused No. 3 (Harpal Singh) is identified by P.W. 2 and P.W. 11; accused No. 4 (Niranjan Singh) is identified by P.W. 2, P.W 5 and P. W. 1 1; accused No. 5 (Sardar Singh) by P.W. 2, P.W. 5 and P.W. 11; accused No. 6 (Udaibir Singh) by P.W. 4, P.W., 5, P.W. 7, P.W. 9, P.W. 11 and P.W. 18; and accused No. 7 (Tikam Singh) is identified by P.W. 2, P.W. 5, P.W. 7, P.W. 9 and P.W. 11.
The learned Sessions Judge accepted the testimony of these witnesses and disbelieved the story put, forward by the accused and in this he had the concurrence of the High Court.
Such being the case, this court would not be justified in re opening the finding about the guilt of the appellants if no question of law is involved, or if the conclusion is not preverse or opposed to principles of natural justice or revolt 741 ing to judicial conscience.
But Mr. Jai Gopal Sethi, counsel for the appellants, strenuously contended that in view of the failure of the Sub Inspector P.W. 28 to comply with para.
109 of Ch.
XI of the Uttar Pradesh Police Regulations, which lays down that when the investigation is closed for the day, a copy of the case diary for the day should be sent to the superior police officers, there has been an infraction of a mandatory rule of law which has resulted in prejudice and if that is so, the findings regarding the guilt of the accused should be re opened and this court should reassess and assay the evidence to find out how far the guilt of the appellants has been proved beyond reasonable doubt.
The question, therefore, is whether the action of the Sub Inspector amounts to a violation of a statutory duty enjoined on him.
If the Uttar Pradesh Police Regulations were a set of rules framed under any statute, and as such have the force of law, then a violation of any rule thereunder, may either amount to an illegality or an irregularity which may or may not vitiate the proceedings.
The Police Act, '1861 was enacted to reorganize the police and to make it a more efficient instrument for the prevention and detection of crimes, whereby the State Government is given authority to appoint police officers, such as the Inspector General, ete,.
Under section 12 of that Act the Inspector General of Police may, from time to time, subject to the approval of the State Government, frame such rules and orders as he shall deem expedient relative to the organization, classification and distribution of the police force, the places at which the members of the force shall reside, and the particular services to be performed by them; their inspection, the description of arms, accoutrements and other necessaries to be furnished to them; the collecting and communicating by them of intelligence and information, and all such other orders and rules relative to the police force as the Inspector General shall, from time to time, deem expedient for preventing abuse or neglect of duty, and for rendering such force efficient in the discharge of its duties.
It is not as if 742 these police regulations are rules framed by the Inspector General in accordance with section 12; but they are the result of the State Government laying down the mode of conduct and how the officers have to perform their duties.
Rule 109 in Chapter XI dealing with the investigation of crimes enjoins upon the police officers when an investigation is closed for the day to note the time and place at which it closed and also lays down that throughout the investigation the diary must be sent daily to the Police Superintendent on all days on which any proceedings are taken.
If the investigating officer is not himself in charge of the station, the diary must be sent through the officer in charge except when this will cause delay.
It also directs the police officer to study carefully sections 162 and 173 of the Code of Criminal Procedure.
Nowhere in the rules is it stated that there is any statutory authority for the framing of rule 109, nor is it said to form any addition to a statute, even though some other rules are expressly stated to be statutory ones.
Such being the case, it is clear that rule 109 has no statutory ' foundation but is only an injunction by the executive Government to the police officers as to how they must regulate their work and conduct themselves during the course of investigation.
Mr. Jai Gopal Sethi, who appeared for the appellants in Criminal Appeal No. 60 of 1956, 'and Dr. Banerjee, who appeared for the appellant accused No. 6, in Appeal No. 61 of 1956, put their case in this way: According to the police officer P.W. 28, he recorded the statements of all the eye witnesses before day break, and in case the diary under section 172 containing the statements recorded under section 162 had been sent to the superior police officers every day, then that fact would vouchsafe for the correctness of that document and it would not be possible for the officer to change or alter the statements of witnesses as it suited his desire if he wanted to do so at a later stage.
In the present case since admittedly the case diary and the details of work during the course of seven days had not been sent to the superior police officers for a period of one week, it is suggested that it is possible that it might be considered a false document because it was not prepared then and there containing statements recorded as and when they were made.
In that case, both the learned counsel contend that the opportunity of cross examinidg the witnesses and finding out whether the names of the accused were given at the earliest point of time has been lost to the defence.
The result of this, according to the learned counsel, has caused 'irreparable prejudice which cannot be condoned or regularised.
But the learned counsel have not been able to show to us that para.
109 of Ch.
XI of the Police Regulations has the force of law.
In this connection reference may be made to Ch.
XLV of the Code of Criminal Procedure dealing with illegal and irregular proceedings and to section 529 laying down irregularities which do not vitiate proceedings, while section 530 concerns irregularities which vitiate proceedings.
Section 537 is to the effect that subject to the provisions contained in the previous sections of that Chapter no finding, sentence or order passed by a Court of competent jurisdiction shall be reversed or altered under Ch.
XXVII or on appeal or revision on account of among other things any error, omission or irregularity in the complaint, summons, warrant, proclamation, order, judgment or other proceedings before or during trial or in any inquiry or other proceedings under the Code.
There is an Explanation added that "in determining whether any error, omission or irregularity in any proceeding under this Code has occasioned a failure of justice, the Court shall have regard to the fact whether the objection could and should have been raised at an earlier stage in the proceedings".
It is true that the objection was taken before the learned Sessions Judge and, therefore, the Explanation cannot be applied.
In these circumstances and on the footing that the Uttar Pradesh Police Regulations, are merely directions regarding the course of conduct, can it be stated that a breach of it would vitiate the trial? The Code of Criminal Procedure in laying down the omissions or irregularities which either vitiate the proceedings or not does not anywhere 744 specifically say that a mistake committed by a police officer during the course of the investigation can be said to be an illegality or irregularity.
Investigation is certainly not an inquiry or trial before the court and the fact that there is no specific provision either way in ch.
XLV with respect to omissions or mistakes committed during the course of investigation except with regard to the holding of an inquest is, in our opinion, a sufficient indication that the legislature did not contemplate any irregularity in investigation as of sufficient importance to vitiate or otherwise form any infirmity in the inquiry or trial.
The learned counsel for the State of Uttar Pradesh invited our attention to a few cases which show that even violation of the provisions of the Code would not amount to an illegality.
The decisions of their Lordships of the Judicial Committee reported in Pulukuri Kotayya and otheers vs King Emperor (1) and Zahiruddin vs King Emperor (2) lay down that a breach of sections 162 and 172 of the Code does not amount to an illegality.
If therefore such an omission could not vitiate a trial, it is all the more reasonable that a failure to conform to a rule of conduct prescribed by the State Government on police officers cannot in any way interfere with the legality of a trial.
That failure to investigate an offence does not necessarily prejudice an accused and therefore any mistake or omission in conducting investigation cannot vitiate a trial has been laid down in Hafiz Mohammad Sani and Others vs Emperor(3).
At p. 152, Adami J. observes as follows: "There can be no doubt that the Sub Inspector in his procedure disobeyed certain provisions of the law, and for that he could be punished, if the authorities deemed it fit, but I cannot find that his failure was to the prejudice of the petitioners.
Nor can I see how failure properly to conduct an investigation into an offence can vitiate a trial which was started on the final report after the investigation".
(1) [1948] L.R. 74 I.A. 65.
(2) [1947) L.R. 74 I.A. 80, (3) A.I.R. 1931 Pat.
150, 745 We are in agreement with these observations.
In a recent case reported in Tilkeshwar Singh and Others vs The State of Bihar(1), Venkatarama Ayyar J. expressed the opinion that "while the failure to comply with the requirements of section 161(3) might affect the weight to be attached to the evidence of, the witnesses, it does not render it inadmissible".
He referred to the case of Bejoy Chand vs The State(2) and agreed with the observations of the Calcutta High Court therein.
We have no hesitation in following those observations.
Our attention was also drawn to the case of Gajanand and Others vs State of Uttar Pra desh(3), which contains statements of law helpful for the decision of this case.
We are not prepared to say that because P.W. 28 did not send copies of his diary to the superior officers every day, the same should be considered as a suspicious document unworthy of credit.
The learned Judges of the High Court and the court of first instance have cast no doubt upon the genuineness of the case diary and that being the case it is not open to us without any compelling reasons to say that it is spurious or suspicious.
In the circumstances, we do not feel justified in holding that the omission of P.W. 28 is a violation of the provisions of a statute or a rule having the force of law which renders the trial invalid.
Holding therefore the point on which the special leave had been granted, against the appellants, we order that the appeals be dismissed.
Appeals dismissed.
(1) ; , 1047, 1048.
(2) A.I.R. 1950 Cal. 363.
(3) A.I R. , 699.
| Rule 109 of the Uttar Pradesh Police Regulations dealing with the investigation of crimes enjoins upon the police officer when an investigation is closed for the day to note the time and place at which it closed and also lays down that throughout the investigation the diary must be sent daily to the Superintendent of Police on all days on which any proceedings are taken.
The question that had to be decided by the court was as to whether the appellants took part in the dacoity and the case of the prosecution depended mainly on the identification of the appellants.
It was found that the investigating officer did not send the case diary daily to the Superintendent of Police but only all together at the end of the period of investigation.
It was contended for the appellants that the case diary could not be relied upon as it enabled the officer to make alterations during the course of the period of investigation and that as there had been an infraction of r. 109 of (1) ; ; 735 the Uttar Pradesh Police Regulations which had resulted in prejudice, the whole trial was vitiated thereby.
Held:(1) Rule 109 of the Uttar Pradesh Police Regulations has no statutory foundation but is only an injunction by the executive Government to the police officers as to how they must regulate their work and conduct themselves during the course of investigation and a failure to comply with the rule relating to the submission of the police diary cannot vitiate the trial.
Hafiz Mohammad Sanii and others vs Emperor (A.I.R. 1931 Patna 15O), approved.
Observations in Tilkeshwar Singh and others vs The State of Bihar ([1955] 2 S.C.R. 1043), followed.
(2) It could not be said in the absence of compelling reasons that because the investigating officer did not send the case diary to the superior officers every day the same is unworthy of credit particularly in view of the fact that the courts below have cast no doubt upon its genuineness.
|
Summarize this legal judgement text concisely | Appeals Nos. 118 119of 1956.
Appeal from the judgment and decrees dated September 27, 1951, of the Patna High Court in Appeal from Original Decrees Nos. 252 and 254 of 1948, arising out of the judgment and decrees dated May 11, 1948, of the Court of Subordinate Judge Dhanbad in Title Suits Nos. 16 and 50 of 1945 respectively.
1403 M. C. Setalvad, Attorney General for India, Kshitindra Nath Bhattacharya, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the appellant.
N. C. Chatterjee, section C. Bannerjee and P. R. Chatterjee, for respondents Nos. 7 to 13.
P. K. Chatterjee, for respondents Nos.
2 4 and 6 (Minors).
Gauri Dayal, for respondent No. 5. 1958.
February 25.
The following Judgment of the Court was delivered by KAPUR J.
In these two appeals brought by leave of the Patna High Court against a judgment and two decrees of that court a common and the sole question for decision is one of adverse possession.
Two cross suits were ' brought in the Court of the Subordinate Judge, Dhanbad, raising common questions of fact and law.
The appellant and respondent Manilal Becharlal Sangvi were defendants in one (Suit No. 16 of 1945) and plaintiffs in the other (Suit No. 50 of 1945).
Respondents Nos. 1 3 were the plaintiffs in the former suit and defendants in the latter.
The other respondents were defendants in the latter suit and were added as plaintiffs at the appellate stage under 0. 1, r. 10, Code of Civil Procedure in the appeal taken against the decision in the former suit.
Both the suits were decreed against the appellant and respondent Manilal Bacharlal Sangvi who took two appeals to the High Court at Patna.
Both these appeals were dismissed by one judgment dated September 27, 1951, but two decrees were drawn up.
Against this judgment and these decrees the appellant has brought two appeals to this Court which were consolidated and will be disposed of by this judgment.
The facts necessary for the decision of these two appeals are that on November 26, 1894 Gang, Narayan Singh, a zamindar and proprietor of pargana Katras granted to Ram Dayal Mazumdar a lease of "the coal and coal mining rights" in two plots of land, one in mouza Katras and the other in mouza Bhupatdih.
On November 6, 1894 he granted a similar lease in plots 1404 contiguous to the plots in the lease mentioned above to Bhudar Nath Roy.
In Suit No. 32 of 1896 boundaries between these two sets of plots were fixed and this was shown in a map which was incorporated in ,,the decree passed in that suit.
On the death of Ram Dayal, his sons Prafulla, Kumud, Sarat, Sirish and Girish inherited the leasehold rights which they on October 19, 1918, granted by means of a registered patta and kabulliat to Lalit Mohan Bose for a term of 999 years.
One Bennett who along with one Bellwood had obtained a coal mining lease from Raja Sakti Narayan Singh of Katrasgarh on September 5, 1917, trespassed on the northern portion of the land within the area leased to Lalit Mohan Bose and sank two inclines and two airshafts and dug out coal from this area.
This gave rise to a dispute between the parties which was amicably settled and the area trespassed was returned to the possession of Lalit Mohan Bose.
This fact was denied by the appellant and Manilal Becharlal Sengvi respondent in their written statement and in their plaint.
Lalit Mohan Bose died in 1933 leaving a will of which the executors were his widow, Radha Rani and his brother Nagendra Nath Bose.
They leased out 17 bighas of land in possession of Lalit Mohan Bose to Keshabji Lalji in 1933.
The remaining portion of the area leased to Lalit Mohan Bose was given on lease on March 15, 1938, to Brojendra Nath Ghose and Vishwa Nath Prasad respondents and to Ram Chand Dubey but the possession thereof had been given to them in July 1937 and they (the above two respondents) and Ram Chandra Dubey carried on colliery business in the name and style of West Katras Colliery.
On the death of Ram Chandra Dubey his estate was inherited by his sons and widow who on June 25, 1944, sold their right, title and interest to Nagendra Nath Bose.
These three, i.e., Brojendra Nath Ghose, Vishwa Nath Prasad and Nagendra Nath Bose were the plaintiffs in Suit No. 16 of 1945.
As stated above Raja Sakti Narayan Singh leased an area of 256 bighas to Bennett and Bellwood on September 5, 1917, and they assigned their rights to 1405 the New Katras Coal Company Limited.
This Company worked the coal mine for some time but went into liquidation and in Execution Case No. 293 of 1922 the right, title and interest of the company were sold and purchased by Nanji Khengarji father in law.
of Shrimati Kashi Bai appellant and by one Lira Raja.
In August 1923 Nanji Khengarji and Lira Raja effected a partition, the western portion of the leased coal field fell to the share of Nanji Khengarji and the eastern portion to Lira Raja.
The former carried on the business in the name and style of Khengarji Trikoo & Co. and the Colliery came to be known as Katras New Colliery.
On the death of Nanji Khengarji in 1928 his son Ratilal Nanji inherited the estate and on his death in September 1933 the estate passed to the appellant reemati KashiBai,widow of Ratilal.
In December 1944 she (Sreemati Kashi Bai) entered into a partnership with Manilal Becharlal Sengvi respondent.
On March 24, 1945 Brojendra Natb.
Ghose, Vishwa Nath Prasad and Nagendra Nath Bose respondents Nos.
1 3 as plaintiffs Nos.
1 3 brought a suit (Suit No. 16 of 1945) against Sreemati Kashi Bai, defendant No. 1, now appellant and against Manilal Becharlal Sengvi defendant No. 2 now respondent No. 10 for fixation of the intermediate boundary and for possession of the area trespassed upon by the defendants and for compensation for coal illegally removed by the latter and also for an injunction.
They alleged that the defendants had wrongfully taken possession of the area in dispute shown in the map attached to the plaint and had illegally removed coal from their mine.
The defendants in their written statement of June 29, 1945, denied the allegations made by the plaintiffs.
They pleaded that the area in dispute was acquired by Nanji Khengarji and Lira Raja and had been worked by them and they had been in sole, exclusive, uninterrupted and undisturbed possession of the area openly to the knowledge of the plaintiffs in that suit and had therefore acquired title by adverse possession.
The claim of ownership which they had set up as a result 1406 of acquisition from Bennett and Bellwood was negatived by the courts below and is no longer in dispute before us, the sole point that survives being one of adverse possession.
The cross suit No. 50 of 1945 was brought by the defendants in Suit No. 16 of 1945, i.e., Shrimati Kashi Bai (appellant) and Manilal Becharlal Sengvi (respondent) against the three plaintiffs of suit No. 16 of 1945 (respondents Nos.
I to 3) and against heirs of Lalit Mohan Bose and against Purnendu Narayan Singh son of the original grantor Raja Sakti Narayan Singh.
The allegations by the plaintiff in this suit ( No. 50 of 1945) were the same as their pleas as defendants in Suit No. 16 of 1945.
The two suits were tried together with common issues.
The learned Subordinate Judge decreed Suit No. 16 of 1945 and dismissed Suit No. 50 of 1945 which were thus both decided in favour of respondents Nos.
I to 3.
He held that the land in suit was included in the area leased to respondents Nos.
I to 3, i.e., Brojendra Nath, Vishwa Nath Prasad and Nagendra Nath Bose and therefore the area in which two inclines of seam No. 9 were situate formed part of the area leased to them and that encroachment by the appellant and Manilal Becharlal Sengvi respondent on the land in dispute was proved.
As to adverse possession he held that the two inclines and airshafts had been sunk in 1917 by Bennett in seam No. 9; that there had been no continuous working of the seam by Khengarji Trikoo & Co., except from the year 1923 to 1926 and from 1931 to 1933, working was again begun in 1939 but how long it was continued had not been proved and that the working of this seam had restarted in 1944.
He also found that the disputed area was confined to seam No. 9.
From these facts he was of the opinion that there was no dispossession of the respondents Nos. 1 to 3 and no adverse possession had been established as against them.
He further held that the working of a part of seam (No. 9) would not give to the trespasser the right to the entire seam even if continuous possession was proved.
In regard to compensation the learned Subordinate Judge held that 1407 respondents Nos.
I to 3 were entitled to it as from December 1944 and the amount would be determined by the appointment of a Commissioner in a subsequent proceeding.
The High Court on appeal confirmed the findings of the trial Court and held that the land in dispute was part of the land leased to respondents Nos.
I to 3; that the appellant and Manilal Becharlal Sangvi respondent had encroached upon the land in dispute; that the working of the seam had not been continuous and it had only been worked for the periods mentioned above.
The High Court also held that even if there was continuous possession and working of the mine no title by adverse possession could be acquired to the whole of the mine.
In the High Court the validity of the lease in favour of the respondents Nos.
I to 3 was raised because of section 107 of the Transfer of Property Act but as the question had not been raised or agitated in the trial Court, the High Court allowed defendants 4 to 10 of Suit No. 50 of 1945 to be added in the appeal arising out of Suit No. 16 of 1945 " for complete adjudication of the issues and to avoid multiplicity of proceedings ".
This question is also no longer in dispute before us.
The appellant has brought two appeals against the judgment and two decrees of the High Court of Patna.
As the question of ownership of the land in dispute has been decided in favour of the respondents by both the courts below, that question has not been raised before us and the controversy between the parties is confined solely to the question of adverse possession.
On behalf of the appellant the learned AttorneyGeneral submitted that the carrying on of the mining operations in the area in dispute even though intermittent as found by the courts below could only lead to one inference that the possession of the area as well as of the mine was of the appellant and as she had prescribed for the requisite period of 12 years, her possession had matured into ownership by adverse possession.
In our opinion the operations carried on by the appellant were inconsistent with the continuous, open and hostile possession or with the assertion of 1408 hostile title for the prescribed period of 12 years necessary to constitute adverse possession.
It was contended that for the purpose of adverse possession in regard to a coal mine it was not necessary that it should have been worked for 12 years continuously and it was sufficient if the appellant had carried on mining operations for a period of 12 years even with long stoppages as in the instant case.
But we are unable to accept this contention.
Even though it may not be necessary for the purpose of establishing adverse possession over a coal mining area to carry on mining operation continuously for a period of 12 years, continuous possession of the mining area and the mine would be a necessary ingredient to establish adverse possession.
What has been proved by the appellant is that the two inclines opened by Bennett were worked in 1917 or 1918 by the predecessor in interest of the appellant, there were no mining operations till 1923 when they were restarted and were continued till 1926.
The operations ceased in 1926 and were recommenced in 1931 and carried on till 1933 when they ceased again till 1939 and whether they were carried on in 1939 or not is not quite clear but there were no operations from 1939 to 1944 when they were recommenced by the appellant, During the period when there were no mining operations no kind of possession of the appellant has been proved and thus the presumption of law is not rebutted that during the period when the operations had ceased to be carried on the possession would revert to the true owner.
Nageshuar Bux Roy vs Bengal Coal Co. (1) which was relied upon by the learned Attorney General does not support his contention.
In that case the company claiming adverse possession had placed facts which were consistent with the assertion of rights to minerals in the whole village to which the company claimed adverse possession.
They openly sank pits at three different places, two of them being 1/2 mile distant from the 3rd.
The company selected the places where they were to dig up the pits at their own discretion, (1) [1930] L.R. 58 I.A. 29, 1409 brought their plant or machinery on the ground and erected bungalows for their employees.
There was no concealment on the part of the company and they behaved openly as persons in possession of not one pit but all mineral fields underlying the whole village and they throughout claimed to be entitled to sink pits anywhere in the village they chose.
The, company was under a bona fide belief that under their lease they were entitled to work the minerals anywhere in the area.
In these circumstances the Privy Council held the suit to be barred by article 144 of the Limitation Act as the company had been in adverse possession of the minerals under the whole village for more than 12 years.
It was pointed out by Lord Macmillan at p. 35, "possession is a question of fact and the extent of possession may be an inference of fact ".
And at p. 37 it was observed: " Their Lordships are not at all disposed to negative or to weaken the principle that as a general rule where title is founded on an adverse possession the title will be limited to that area of which actual possession has been enjoyed.
But the application of this general rule must depend upon the facts of the particular case.
" The finding in favour of adverse possession in that case must be confined to the facts of that particular case.
Another case relied upon by the learned AttorneyGeneral was Secretary of State for India vs Debendra Lal Khan(1).
There a zamindar claimed title to a fishery in a navigable river by adverse possession against the Crown.
It was held that possession may be adequate in continuity so as to be adverse even though the proved acts of possession do not cover every moment of the period.
That was a case dealing with fisheries.
It is true that to establish adverse possession nature of possession may vary.
In the instant case no such possession has been proved which taking into consideration the nature of possession and the nature of the object possessed would lead to the only inference that the appellant had perfected her (1) [1933] L.R. 61 I.A. 78.
1410 title by adverse possession.
Intermittent working of the mine in the manner and for the period described above is wholly insufficient to establish possession which would constitute adverse possession or would lead to an inference of adverse possession and we are in agreement with the view expressed by the High Court and would therefore dismiss these appeals with costs.
One set of costs between the two appeals except as to Court fees.
Appeals dismissed.
| The appellants and the respondents were lessees of coal mining rights in adjoining areas.
In 1917 the predecessors in interest of the appellants trespassed into a portion Df the lands leased to the predecessors in interest of the respondents, sank two inclines and two air shafts and (lug out coal therefrom.
There were no mining operations till 1023 when they were restarted and continued till 1926, and were recommenced in 1931 and carried on till 1933.
In 1939 the mine was worked for a short time.
In 1944 the operations were recommenced by the appellants.
In 1945 the respondents brought a suit for fixation of the intermediate boundary, for possession of the area trespassed upon and for compensation for coal illegally removed by the appellants.
The appellants contended, inte alia, that they had been in sole, exclusive, uninterrupted possession of the area in dispute openly to the knowledge of the respondents and had acquired title by adverse possession: Held, that the intermittent working of the mine in the manner and for the period carried out by the appellants or their predecessors in interest was wholly insufficient to establish possession which could constitute adverse possession.
During the period when there were no mining operations no, kind of possession of the appellants was proved and the presumption that during such periods possession reverted to the true owner was not rebutted.
Nageshwar Bux Roy vs Bengal Coal CO , [1930] L.R. 58 I.A. 29 and Secretary of State for India vs Debendra Lal Khan, [1933] L.R. 61 I.A. 78, distinguished.
|
Summarize this legal judgement text concisely | Appeals Nos.253 to 255 of 1955.
Appeals from the judgment and decree dated November 30, 1954, of the former Nagpur High Court in Misc.
Petitions Nos. 245, 279 and 308 of 1954.
N. C. Chatterjee and G. C. Mathur, for the appellant in C. A. No. 253 of 1955.
G. C. Mathur, for the appellant in C. A. Nos. 254 and 255 of 1955.
B. Sen, section B. Sen and 1.
N. Shroff, for the respondents in C. A. Nos. 253 and 254 of 1950 and for the State of Madhya Pradesh (Intervener).
C. K. Daphtary, Solicitor General of India and R. H. Dhebar, for the respondents in C. A. No. 255 of 1955 and for the State of Bombay (Intervener).
N. section Bindra and T. M. Sen, for the State of Punjab (Intervener).
April 3.
The judgment of section R. Das C. J., Venkatarama Aiyar, section K. Das and A. K. Sarkar JJ.
was delivered by Venkatarama Aiyar J. Bose J. delivered a separate judgment.
VENKATARAMA AIYAR J.
These are appeals against the judgment of the High Court of Nagpur in writ applications filed by the appellants impugning the validity of certain provisions of the Central Provinces and Berar Sales Tax Act, 1947 (C. P. & Berar 21 of 1947), hereinafter referred to as the Act, imposing sales tax on materials used in construction works.
It will be convenient to refer to these provisions at this stage.
Section 2(b) of the Act defines " contract " as including " any agreement for carrying out for cash or deferred payment or other valuable consideration the construction, fitting out, improvement or repair of any building, road, bridge or other immovable property or the installation or repair of any machinery 430 affixed to a building or other immovable property ".
Section 2(c) of the Act defines " dealer " as including a person who carries on the business of supplying goods.
In section 2 (d), " goods " are defined as including " all materials, articles and commodities whether or not to be used in the construction, fitting out, improvement or repair of immovable property ".
Section 2(g) defines sale " as follows: " " Sale " with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods made in course of the execution of a contract, but does not include a mortgage, hypothecation, charge or pledge; and the word 'purchase ' shall be construed accordingly.
" Section 2(h) defines " sale price " as including the amount payable to a dealer as valuable consideration for the carrying out of any contract, less such portion, representing the proportion of the cost of labour to the cost of materials, used in carrying out such contract, as may be prescribed.
" Turnover " is defined in section 2(j) as including the aggregate amount of the sale price received or receivable by a dealer in respect of the supply of goods in the carrying out of any contract.
The charging section is section 4(a), and it provides that dealers whose turnover exceeded certain limits shall be liable to pay tax in accordance with the provisions of the Act on all sales effected after the commencement of the Act.
Rule 4 of the Sales Tax Rules, 1947, provides that " in calculating the sale price for the purpose of sub cl.
(ii) of cl.
(h) of section 2, a dealer may be permitted to deduct from the amounts payable to him as valuable consideration for carrying out a contract, a sum not exceeding such percentages as may be fixed by the Commissioner for different areas subject to the following maximum percentages ", and then follows a scale of percentages to be allowed in respect of different classes of contracts.
Acting on these provisions, the authorities constituted under the Act called upon the contractors within the State to furnish returns in respect of their receipts 431 from contract works for the purpose of assessment of sales tax, to which the appellants replied by instituting the proceedings, out of which the present appeals arise.
The appellant in Civil Appeal No. 253 of 1955 is a contractor doing business in the construction of buildings and roads for the Military and Public Works Department in the State of Madhya Pradesh, and he filed M. P. No. 245 of 1954 challenging the validity of the assessment which the respondents proposed to make, on two grounds.
He contended firstly that the Provincial Legislature had authority under Entry 48 of List 11, Sch.
VII of the Government of India Act, 1935, to impose tax only on sale of goods, that the supply of materials in works contracts was not a sale within that Entry, and that the provisions of the Act, which sought to impose a tax thereon treating it as a sale, were therefore ultra vires; and secondly that he was entitled to exemption under item 33 in Sch.
11 to the Act as enacted by Act XVI of 1949, and that the notification of the Government dated September 18, 1950, withdrawing that exemption was unconstitutional and void.
To appreciate this contention, it is necessary to refer to section 6 of the Act, which is as follows: 6 (1) " No tax shall be payable under this Act on the sale of goods specified in the second column of Schedule 11, subject to the conditions and exceptions, if any, set out in the corresponding entry in the third column thereof.
(2) The State Government may, after giving by notification not less than one month 's notice of their intention so to do, by a notification after the expiry of the period of notice mentioned in the first notification amend either Schedule, and thereupon such Schedule shall be deemed to be amended accordingly.
" Item 33 in Sch.
11 as originally enacted was " Goods sold by the Crown ".
This was amended by Act XVI of 1949 by substituting for the above words " Goods sold to or by the Crown ".
By an Adaptation Order of 1950, the words "State Government" were substituted for "Crown", and item 33 became "Goods sold to or by the State Government " In exercise of 432 the power conferred by section 6 (2) of the Act, the State issued a notification on September 18, 1950, amending item 33 by substituting for the words " Goods sold to or by the State Government " the words " Goods sold by the State Government ".
The resultant position is that the appellant who was entitled to exemption under Act XVI of 1949 in respect of goods sold to the Government could no longer claim it by reason of the notification aforesaid.
Now, the ground of his attack was that it was not open to the Government in exercise of the authority delegated to it under section 6 (2) of the Act to modify or alter what the Legislature had enacted.
The appellant accordingly claimed that the proceedings which the respondents proposed to take for assessment of sales tax were incompetent, and prayed that an appropriate writ might be issued restraining them from proceeding with the same.
In Civil Appeal No. 254 of 1955, the appellants are the Jabalpur Contractors ' Association, which is a registered body and certain contractors, and they filed M. P. No. 279 of 1954 questioning the validity of the proposed assessment on the same grounds as in M. P. No. 245 of 1954.
The appellant in Civil Appeal No. 255 of 1955, is the Madhya Pradesh Contractors ' Association, Nagpur, which is again a registered body, and it filed M. P. No. 305 of 1954, challenging the legality of the proceedings for assessment on the same grounds as in M. P. No. 245 of 1954.
All these three petitions were heard together, and by their judgment dated November 30, 1954, the learned Judges held that the expression " sale of goods" in Entry 48 was wide enough to coverall transactions in which property in the moveables passed from one person to another for money, and that, accordingly, in a building contract there was a sale within Entry 48 of the materials used therein, and that the provisions of the Act imposing tax thereon were valid.
But the learned Judges also held that the tax could be levied only on the actual value of the materials to be determined on an enquiry into the matter, and that the definition of " price " in section 2 (h) (ii) and r. 4 framed pursuant thereto were ultra vires 433 in that they laid down artificial rules for fixing the same by deducting certain percentages from out of the total receipts on account of labour.
As regards the notification dated September 18, 1950, the learned Judges held that it was within the authority conferred by the statute and was valid.
In the result, the impugned provisions of the Act were held to be valid except as to the definition of " price " in section 2 (h) (ii) and r. 4 of the Sales Tax Rules, 1947.
It is against this judgment that the above appeals have been preferred on a certificate granted by the High Court under article 132(1) of the Constitution.
Two contentions have been urged in support of the appeals : (1) that the Provincial Legislature has no authority in exercise of its power under Entry 48 to impose a tax on the supply of materials in works contracts as such supply cannot be said to be also of those materials within that Entry ; and (2) that the notification dated September 18, 1950, is bad as being an constitutional delegation of legislative authority.
As regards the first contention, the question is now concluded by the decision of this Court in The State of Madras vs Gannon Dunkerley & Co. (Madras) Ltd. (1) in which it has been held that the expression " sale of goods " in Entry 48 has the same meaning which it has in the Indian , that in a building contract there is no sale of materials as such, and that it is therefore ultra vires the powers of the Provincial Legislature to impose tax on the supply of materials.
Mr. B. Sen appearing for the respondents has argued that even if the expression " sale of goods " in Entry 48 is construed in the sense which it has in the , that might render the impugned provisions of the Act ultra vires only in respect of a building contract which is one and indivisible, that there might be contracts which might consist of two distinct agreements, one for the sale of materials and another, for work and labour, and that in such a case, it would be competent to the State to impose tax on the sale of materials even construing that word in its (1) ; 55 434 narrow sense, and that these are matters which must be left to be investigated by the appropriate authorities.
That undoubtedly is the correct legal position as observed in The State of Madras vs Gannon Dunkerley & Co. (Madras) Ltd. (1), and accordingly, when a question arises as to whether a particular works contract could be charged to sales tax, it will be for the authorities under the Act to determine whether the agreement in question is, on its true construction, a combination of an agreement to sell and an agreement to work, and if they come to the conclusion that such is its character, then it will be open to them to pro ceed against that part of it which is a contract for the sale of goods, and impose tax thereon.
(2) We have next to consider the contention that the notification dated September 18, 1950, is bad as constituting an unconstitutional delegation of legislative power.
In the view which we have expressed above that there is in a works contract no sale of materials as such, it might seem academic to enter into a discussion of this question ; but as there may be building contracts in which it is possible to spell out agreements for the sale of materials as distinct from contracts for work and labour, it becomes necessary to express our decision thereon.
Mr. Chatterjee appearing for the appellant in Civil Appeal No. 253 of 1955 contends that the notification in question is ultra vires because it is a matter of policy whether exemption should be granted under the Act or not, and a decision on that question must be taken only by the Legis lature, and cannot be left to the determination of an outside authority.
While a power to execute a law, it was argued, could be delegated to the executive, the power to make it must be exercised by the Legislature itself, and reliance was placed on the observations in Hampton J R & Co. vs United States (2), Panama Refining Co. vs Ryan (3), and Schechter vs United States (4), as supporting this position.
It was also contended that the grant of a power to an outside authority to (1) ; (2) ; ; , 629.
(3) ; ; , 458.
(4) ; ; 435 repeal or modify a provision in a statute passed by the legislature was unconstitutional, and that, in consequence, the impugned notification was bad in that, in reversal of the policy laid down by the legislature in Act XVI of 1949 that sales to Government should be excluded from the operation of the Act, it withdrew the exemption which had been granted thereunder, and the observations in re The etc.
(1), and the decision in Rajnarain Singh vs The Chairman, Patna Administration Committee, Patna and another (2), were strongly relied on as establishing this contention.
Mr. N. C. Chatterjee particularly relied on the following observations of Bose J. at p. 301 in Rajnarain Singh 's case (2) : " In our opinion, the majority view was that an executive authority can be authorised to modify either existing or future laws but not in any essential feature.
Exactly what constitutes an essential feature cannot be enunciated in general terms, and there was some divergence of view about this in the former case, but this much is clear from the opinions set out above; it cannot include a change of policy.
" On these observations, the point for determination is whether the impugned notification relates to what may be said to be an essential feature of the law, and whether it involves any change of policy.
Now, the authorities are clear that it is not unconstitutional for the legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be laid, the rates at which it is to be charged in respect of different classes of goods, and the like.
In Powell vs Appollo Candle Company Limited the question arose as to whether section 133 of the Customs Regulation Act of 1879 of New South Wales which conferred a power on the Governor to impose tax on certain articles of import was an unconstitutional delegation of legislative powers.
In holding that it was not, the Privy Council observed: "It is argued that the tax in question has been (1) ; , 787, 982, 984 (3) (2) ; 436 imposed by the Governor and not by the Legislature who alone had power to impose it.
But the duties levied under the Order in Council are really levied by the authority of the Act under which the Order is issued.
The Legislature has not parted with its perfect control over the Governor, and has the power, of course, at any moment, of withdrawing or altering the power which they have entrusted to him.
In these circumstances, their Lordships are of opinion that the judgment of the Supreme Court was wrong in declaring Section 133 of the Customs Regulation Act of 1879 to be beyond the power of the Legislature.
" In Syed Mohamed & Co. vs The State of Madras (1), the question was as to the vires of rules 4 and 16 framed under the Madras General Sales Tax Act.
Section 5 (vi) of that Act had left it to the rule making authority to determine at which single point in the series of sales by successive dealers the tax should be levied, and pursuant thereto, rules 4 and 16 had provided that it was the purchaser who was liable to pay the tax in respect of sales of hides and skins.
The validity of the rules was attacked on the ground that it was only the legislature that "as competent to decide who shall be taxed, and that the determination of that question by the rule making authorities was ultra vires.
The Madras High Court rejected this conntetion, and held on a review of the authorities that the delegation of authority under section 5 (vi) war, within permissible constitutional limits.
In Hampton J. R. & Co. vs United States (2), which was cited on behalf of the appellant, the question arose whether section 315(b) of the Tariff Act, 1922, under which the President had been empowered to make such increases and decreases in the rates of duty as were found necessary for carrying out the policies declared in the statute was an unconstitutional delegation, and the decision was that such delegation was not unconstitutional.
We are therefore of the opinion that the power conferred on the State Government by section 6(2) to amend the schedule relating to exemption is in consonance with the accepted legislative practice relating to the topic, and is not unconstitutional.
(1) (1952) 3 S.T.C. 367 (2) ; ; , 629.
437 The contention of the appellant that the notification in question is ultra vires must, in our opinion, fail on another ground.
The basic assumption on which the argument of the appellant proceeds is that the power to amend the schedule conferred on the Government under section 6(2) is wholly independent of the grant of exemption under section 6(1) of the Act, and that, in consequence, while an exemption under section 6(1) would stand, an amendment thereof by a notification under section 6(2) might be bad.
But that, in our opinion, is not the correct interpretation of the section.
The two sub sections together form integral parts of a single enactment, the object of which is to grant exemption from taxation in respect of such goods and to such extent as may from time to time be determined by the State Government.
Section 6(1), therefore, cannot have an operation independent of section 6(2), and an exemption granted thereunder is conditional and sub ject to any modification that might be issued under section 6(2).
In this view, the impugned notification is intra vires and not open to challenge.
But on our finding on the first question that the impugned provisions of the Act are ultra vires the powers of the Provincial Legislature under Entry 48 in List 11 in the seventh Schedule, we should set aside the orders of the Court below, and direct that the respondents be restrained from enforcing the provisions of the Central Provinces and Berar Sales Tax Act, 1947, in so far as they seek to impose a tax on construction works.
It should be made clear, however, in accordance with what we have already stated, that the prohibition against imposition of tax is only in respect of contracts which are single and indivisible and not of contracts which are a combination of distinct contracts for sale of materials and for work, and that nothing that we have said in this judgment shall bar the sales tax authorities from deciding "whether a particular contract falls within one category or the other and imposing a tax on the agreement of sale of materials, where the contract belongs to the latter category.
The parties will bear their own costs throughout, 438 BOSE J. I agree except that I prefer not to express an opinion about the validity of the power conferred on the State Government by section 6(2) of the Central Provinces and Berar Sales Tax Act, 1947, to amend the schedule in the way in which it has been amended here.
I would leave that open for future decision.
Appeals allowed.
| section 4(a) of the Central Provinces and Berar Sales Tax Act; 1947, provided that every dealer whose turnover exceeded certain limits shall be liable to pay tax in accordance with the provisions of the Act on all sales effected after the commencement 428 of the Act ; and by section 2(g) Of the Act, " sale . means any transfer of property in goods .
including a transfer of property in goods made in course of the execution of a contract.
Under section 6(1) of the Act no tax was payable on the sale of goods specified in Sch.
11 to the Act and section 6(2) enabled the State Government by notification to amend the schedule.
Item 33 in Sch.
11 as amended by Act XVl of 1949 and as adapted by the Adaptation Order of 195o, was " Goods sold to or by the State Government ".
In exercise of the power conferred by section 6(2) of the Act, the Government issued a notification on September 18, 1950, amending item 33 by substituting the words " Goods sold by the State Government ".
The appellant, a contractor doing business in the construction of buildings and roads for the Military and Public Works Department in the State of Madhya Pradesh, challenged the validity of the assessment which the respondent proposed to make on the appellant under the provisions of the Central Provinces and Berar Sales Tax Act, 1947, on the grounds (1) that the Provincial Legislature had no authority under Entry 48 Of List II, Sch.
VII of the Government of India Act, 1935, to impose a tax on the supply of materials in works contracts and that the provisions of that Central Provinces and Berar Sales Tax Act which sought to impose a tax thereon treating it as a sale were ultra vires, and (2) that he was entitled to exemption under item 33 in Sch.
11, to tile Act and that the notification of the Government dated September 18, 1950, withdrawing that exemption was bad as being an unconstitutional delegation of legislative authority : Held, that the expression "sales of goods" in Entry 48 has the same meaning which it had in the Indian , that in a building contract there is no sale of materials as such, and that it is therefore ultra vires the powers of the Provincial Legislature to impose tax on the supply of materials.
The State of Madras vs Gannon Dunkerley & Co. (Madras) Ltd., ; , followed.
Per Das C. J., Venkatarama Aiyar, section K. Das and A. K. Sarkar JJ It is not unconstitutional for the legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be laid, the rates at which it is to be charged in respect of different classes of goods, and the like.
The power conferred on the State Government by section 6(2) of the Act to amend the Schedule relating to exemption is in consonance with the accepted legislative practice relating to the topic, and is not unconstitutional.
Sub sections (1) and (2) of section 6 together form integral part of a single enactment the object of which is to grant exemption from taxation in respect of such goods and to such extent as may from time to time be determined by the State Government, and an 429 exemption granted under section 6(1) is conditional and subject to any notification that might be issued under section 6(2).
The notification dated September 18, 1950, is therefore intra vires.
|
Summarize this legal judgement text concisely | Appeal No.321 of 1957.
456 Appeal by special leave from the judgment and order dated June 13, 1956, of the Assam High Court in Civil Rule No. 80 of 1955.
Ranadeb Chaudhury and D. N. Mukherjee, for the appellant.
N. C.Chatterjee, and Naunit Lal, for respondents Nos. 2 and 3.
Naunit Lal, for respondent No. 1. 1958.
April 7.
The following Judgment of the Court was delivered by KAPUR J. This is an appeal by special leave brought by J. K. Chaudhuri for and on behalf of the Governing Body of Guru Charan College, Silchar (which will be referred to in this judgment as the College) against a judgment and order of the High Court of Judicature in Assam dated June 13, 1956, dismissing the appellant 's petition under article 226.
It raised the question as to the nature and extent of the jurisdiction of the Executive Council of the University of Gauhati in regard to disciplinary action taken by the Governing Body of the College against its Principal, R. K. Datta Gupta, respondent No. 1.
In 1937, respondent No. I was appointed Professor of Mathematics in the college.
He was appointed Vice Principal in 1947 and Principal in 1950.
Due to certain representations made to the Governing Body against respondent No. 1, a committee was appointed by the Governing Body to enquire into the allegations.
This committee held several sittings and made a report after considering which the Governing Body held a prima facie case made out against him, placed him under suspension and called upon him to answer the charges within 15 days.
This he failed to do but later on submitted an explanation which was duly considered.
As fresh material was disclosed after the suspension, respondent No.1 was called upon to give a further explanation.
He then requested for the previous charges being decided before enquiry into fresh charges was made.
The Governing Body held a meeting on November 1, 1953, and after considering 457 the matter found him guilty of moral turpitude and dishonesty and also gross negligence of duty, inefficiency and insubordination and ordered his dismissal as Principal and Professor of Mathematics of the college.
r, On November 30, 1953, respondent No. I filed a suit being Title Suit No. 282 of 1953, in the Court of Munsif Sadar, Silchar, challenging the legality of the proceedings of the committee appointed by the Governing Body and of the proceedings and decision taken by it and prayed for an injunction restraining the Governing Body from appointing another Principal.
He also applied for a temporary injunction.
This suit was transferred to the Court of the Subordinate Judge U. A. D., at Silchar and was renumbered as Title Suit No. 10 of 1954 which has not yet been decided.
On November 11, 1953, respondent No. I made a representation to the Vice Chancellor of the Gauhati University against his dismissal and prayed that the Governing Body be directed not to fill up the post of Principal pending the disposal of his appeal which was filed on November 30, 1953, and which was a reiteration of the allegations made by him in the plaint in the suit in the Court of Munsif Sadar.
The Executive Council of the University, i. e., respondent No. 2 thereupon appointed under para.
3(h) of the Statutes framed under section 21(g) of the Gauhati University Act (Assam XV1 of 1947) (hereinafter called the Act) a committee, respondent No. 3, consisting of the Vice Chancellor, the Director of Public Instruction and the Legal Remembrance of the State of Assam to report on the propriety of the action taken.
After considering the matter and giving full opportunity to both sides respondent No. 3 on March 30, 1955, made a report to respondent No. 2 that: " there was no reasonable ground justifying the dismissal of Shri R. K. Datta Gupta from the post of the Principal, Guru Charan College Silchar.
" On April 20,1955, this report was accepted by respondent No. 2 and it passed the following resolution : ". . .
Resolved that the findings of the Committee be accepted and in view of the facts that Sri R. K. Datta Gupta was not dismissed on any 458 reasonable grounds, the Governing Body be directed to reinstate him before 31st July, 1955.
" Against this order the Governing Body of the college filed a petition under article 226 in the High Court of Assam but the petition was dismissed on June 13,1956.
Although in the High Court the appellant challenged the power of the University to interfere with the decision of the Governing Body of the college removing respondent No. I both from Principalship and from Professorship of Mathematics, in this Court the arguments were confined to the former only.
The two categories, it was submitted, were distinct and were dealt with in the Act and the Statute made thereunder separately.
The Principal was merely the administrative head of the 'College and a teacher solely engaged in imparting instructions.
The Act therefore contemplates their discharging different functions.
To support this contention, various provisions of the Act and the Statutes made under the Act were referred to.
The words " Principal " and " Teacher" ' are defined in section 2 of the Act : " 2 (h) I Principal ' means the head of a College, and includes where there is no Principal, the person for the time being duly appointed to act as Principal, and, in the absence of the Principal, a Vice Principal duly appointed as such.
. . . . . . . 2(k) 'Teacher ' includes Professors, Readers, Lecturers and other persons imparting instructions in the University or in any College or Hall The distinction finds further support from other provisions of the Act which maintain a clear distinction between a Principal ' and a ' Teacher '.
Section 9 of the Act deals with the constitution of the Court which has three classes of members: Ex Officio members, Life Members and Other Members.
Principals fall under class I and are mentioned in sub section
(vii).
Teachers come under the heading I Other Members ' enumerated in class 111.
In sub section
(xiv) representation is given to 'Teachers ' elected from their own body who are not Professors or Readers of the University.
459 Similarly in the constitution of the Executive Council contained in section 12, a distinction is maintained between Principals who are in class 1, i. e., Ex officio members and Professors of the University who are in,; class 11, i. e., Other members.
Amongst the former have to be included two Principals of recognised colleges elected from their own body and in Class 11 representation is given to Professors of the University and none to the teachers.
Therefore wherever the provisions of the Act mention the word a 'Principal ' or a 'Teacher ' two distinct entities are indicated and one is not to be included in the other.
The Statutes made under section 21(g) of the Act also maintain this distinction in their various clauses and where the word 'principal ' occurs it is used in its distinctive and restrictive sense and where the word I teacher ' or the phrase 'member of the teaching staff , or any other similar word or phrase is used the reference is to a teacher and not to a principal.
Clause I of the Statute requires the existence of a Governing Body for each college not maintained by the University.
Clause 2 (a) gives its constitution which includes the Principal and the Vice Principal as ex officio members and so also two representatives of the teaching staff to be elected annually showing that a Principal as such is distinct from a member of the teaching staff which must necessarily mean employees of colleges engaged in the teaching of various subjects.
Clause 2 (c) nominates the Principal as the Secretary of the Governing Body.
Sub cls.
(a), (b), (c) and (d) of el.
3 deal with a teacher 's appointment, pay, scales of pay, probation and period of appointment.
Sub el.
(e) deals with increments.
It provides: " An increment according to the pay scale will be drawn as a matter of course. . . .
The increment may be withheld on the ground of unsatisfactory work of an employee. . . . " The word 'employee ' here must necessarily refer to a teacher because it provides for increments according to pay scales and the withholding of increments for unsatisfactory work of an employee dealt with in the first four sub clauses which in terms apply to a teacher.
460 Sub cl.
(f) deals with the period of service.
Sub cls (i) and (ii) are as follows: " (i) The services of a permanent employee shall not be determined except on reasonable grounds.
(ii) The services of a permanent employee shall not be terminated in the course of an academic session except on very special grounds, such as moral turpitude, proved incapacity and inefficiency.
If the Governing Body of a college considers it advisable that the services of a permanent employee should be terminated on any of the grounds mentioned in clause (g) (ii), the matter shall be forthwith reported to the Executive Council ".
The use of the phrase 'academic session ' indicates that the 'Permanent employee ' must be a person connected with teaching for otherwise it lacks meaning.
The language of sub cl.
(g) (iii) which is as follows: "A teacher whose services are dispensed with on grounds other than those mentioned in clause (g) (ii) shall be paid compensation equal to as many months ' pay as the number of completed years of his service, subject to a maximum of twelve months ' pay " further supports this interpretation that a 'permanent employee ' mentioned in sub el.
(g) (ii) refers to a teacher and to no one else.
This is further strengthened by the use of the word 'teacher ' in sub cl.
(g) (iv) which provides for the procedure for an enquiry where a teacher has to be dismissed, suspended or reduced in pay.
Sub cl.
(g) (v) reserves to the Executive Council of the University the power to enquire into causes of dismissal of a teacher whether on its own motion or on an appeal by the teacher.
Sub el.
(h) which is in the following words: "All cases of dismissal, suspension, or any other serious grievance of the teaching staff will be considered by a Committee of the following members uses the words " teaching staff " and this again shows that the reference is to the teacher and not to a Principal because el. 3 taken as a whole clearly deals with the conditions of service of a teacher, compensation to be paid to him and the procedure to be followed 461 in cases of disciplinary action taken against him.
These words cannot in the context in which they appear in the Statutes or in the context of the language of the Act itself have reference to anybody other than a member of the teaching staff, i. e., teacher.
It shows therefore that in cl. 3 of the Statute where the expression used is " permanent employee " or the "teacher" or " teaching staff " the reference is to members of the college who are teachers as such and it hag no application to any other employee of the college such as a Principal.
Deka J. was of the opinion that as respondent No. I held two capacities that of the Principal and membership of the teaching staff, respondent No. 2 could order his restoration to both the offices because the two capacities could not be separated.
As shown above the two capacities are distinct with separate functions and have been separately dealt with in the Act and the Statutes under the Act and the learned judge was in error in holding otherwise.
Sarjoo Parshad C. J. gave to the phrase I permanent employee ' used in the Statutes an extended meaning so as to include a Principal as well as a college teacher.
This again is an interpretation which is contrary to the interpretation which stems from the analysis we have given above and is therefore erroneous.
Relying on sub el, 3(h) of the Statutes counsel for respondent No. 2 contended that as respondent No. I was a so a member of the teaching staff being a Professor of Mathematics his case fell within the wordsor any other serious grievance of the teaching staffThese words refer to grievances which a memberof the teaching staff may have in his capacity of ateacher and not in any other capacity and these words cannot be extended to include the grievances of a teacher in connection with something which is dehors the words of the clause and would not therefore include his grievances which he may have if he is also the Principal.
As has been pointed out above the relevant provisions of the Act and of the Statutes made under 59 462 s.21(g) of the Act show the separate capacities of the Principal and the Teacher.
The jurisdiction of respondent No. 2 to interfere with the action taken by the Governing Body arises only in the case of a teacher and would not extend to a case where the same person holds these two offices, as there is no provision in the, Act or the Statutes giving the University such power to interfere.
Consequently so far as Respondent No. 2 interfered with the action taken by the Governing Body against respondent No. 1 in his capacity as the Principal of the college it acted without jurisdiction and therefore that part of the order of respondent No. 2 and the judgment of the High Court to that extent cannot be sustained and must be set aside as respondent No. 2 there acted in excess of jurisdiction.
We would, therefore, allow this appeal, modify the order of the High Court and hold that the order of respondent No. 2 in regard to respondent No. I qua his office as Principal was without jurisdiction and the order of reinstatement of respondent No. 1 by the University to the post of Principal must be set aside.
As the special leave was directed against the judgment of the High Court both in regard to the office of Principal and the office of teacher of the college and it was at the stage of arguments that the case was confined to the ' Principal ' of the college, the proper order for costs should be that the parties do bear their own costs in this Court as well as in the High Court.
Appeal allowed.
| R was appointed Professor of Mathematics in a College affiliated to the Gauhati University.
He was later appointed Principal of the College.
On complaints being made against R the Governing Body of the College held an enquiry and ordered his dismissal as Principal and Professor of Mathematics.
R made representations to the Vice Chancellor of the Gauhati University and the Executive Council of the University appointed a committee to report on the propriety of the action taken.
Upon the report of the committee that there was no reasonable ground justifying the dismissal of R, the Executive Council passed a resolution directing the Governing Body to reinstate R : Held, that the Executive Council acted without jurisdiction in so far as it interfered with the action taken against R as the Principal of the College.
The Gauhati University Act, 1947, and the Statutes framed under section 21(g) thereof made a distinction between a Principal and a teacher.
Clause 3(g)(v) Of the Statutes empowered the Executive Council to interfere only with the action taken by the Governing Body of an affiliated College against a teacher and not with action taken against a Principal.
|
Summarize this legal judgement text concisely | Appeal No. 398 of 1956.
Appeal from the judgment and order dated March 19, 1956, of the Bombay High Court in Appeal No. 45 of 1955, arising out of the judgment and order dated March 23, 1956, of the said High Court in its Ordinary Original Civil.
Jurisdiction in Suit No. 468 of 1951.
M. C. Setalvad, Attorney General for India, N. P. Nathwani, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellants.
Purshottam Tricumdas, K. K. Desai and I. N. Shroff, for the respondents.
March 31.
The Judgment of the Court was delivered by 348 BHAGWATI J.
This appeal with a certificate of fitness is directed against the judgment and decree passed by the High Court,of Judicature at Bombay in appeal from its ordinary Original Civil Jurisdiction confirming, though on different grounds, the judgment and decree passed by a single Judge of that High Court in Suit No. 468 of 1951 instituted by the appellants (Original Plaintiffs) to recover from the respon dents (Original Defendants) a sum of Rs. 1,80,099 8 0 with interest and costs.
Since the year 1932 the first appellant has been a member of the East India Cotton Association Ltd., (hereinafter referred to as " the Association " ) as the sole 'proprietor of the firm of Messrs. Narrondass Manordass There in after referred to as "the member firm").
The first appellant along with other partners carried on business in partnership in Bombay inter alia as Cotton Merchants and Commission Agents in the name and style of Messrs. Narrondass Manordass, the 2nd appellant (hereinafter referred to as " the partnership firm ").
The respondents are a partnership firm and also a member of the Association.
Between September 23, 1947, and December 10, 1947, the member firm sold to the respondents 2,300 bales of Broach Vijay Fine 3/4" Navsari and/or Bardoli 7/8" Cotton for March/April 1948 Delivery.
Out of these 2,300 bales, 1,100 bales were disposed of by means of " Havalas " and in respect of the remaining 1,200 bales, there were cross contracts.
In the result when the time for " Delivery " arrived, sales in respect of 700 bales remained outstanding and the member firm was liable to give delivery of 700 bales to the respondents.
As however, the member firm failed to give delivery of the said 700 bales to the respondents, under the relevant by laws of the Association, the respondents " Invoiced Back " these 700 bales to the member firm on May 3, 1948, and as a result of this " Invoicing Back " a sum of Rs. 1,07,530 8 0 became due and payable by the member firm to the respondents and with regard to the transactions of all the 2,300 bales taken together an aggregate sum of Rs. 1,79,749 8 0 became due and payable by the 349 member firm to the respondents.
In respect of this sum of Rs. 1,79,749 8 0, the respondents sent to the member firm eight separate " Debit Notes " in respect of varying amounts and finally a consolidated debit note for Rs. 1,79,749 8 0.
It appears that the contract notes in respect of these transactions had been signed by one Ramanlal Nagindas who had been employed as a salesman in the Ready Cotton Department of the partnership firm.
The appellants contended that the said Ramanlal Nagindas had no authority to enter into the said transactions or to sign contract notes in respect thereof on behalf of the appellants and also that the said contracts were not in accordance with the by laws of the Association and they therefore denied their liability in respect of the said transactions.
The partnership firm, however, as the beneficiary under the said contracts decided to pay the amounts claimed by the respon dents without prejudice to the rights and contentions of both the parties.
On May 7, 1948, the said sum of Rs. 1,79,748 8 0 was paid by the partnership firm and was received by the respondents in terms of the letter addressed by the respondents on the said date: "The payment is made by you and accepted by us without prejudice to the rights and contentions of both the parties in respect thereof.
" A further sum of Rs. 350 being the amount of penalty for the alleged failure to tender the aforesaid 700 bales of the said contracts of Broach/Vijay March/April 1948 Delivery, was also paid by the partnership firm to the respondents on June 6, 1948, without prejudice to their aforesaid contentions.
The said Ramanlal Nagindas had entered into similar transactions with several other merchants and some of them claimed arbitration under by law 38 A of the Association.
Petitions were thereupon filed by the member firm in the High Court at Bombay being Petitions Nos.
A/51, A/52, A/55 and A/56 of 1949 under section 33 of the Indian Arbitration Act inter alia for a declaration that there existed no valid and enforceable arbitration agreement between the parties.
Mr. Justice Shah delivered judgment in the said petitions 350 on August 20, 1950, holding inter alia that the said contracts were void as being not in accordance with the by laws of the Association and allowed those petitions.
The respondents to the petitions thereupon filed petitions under article 136 of the Constitution for special leave to appeal to this Court against the said judgment of Mr. Justice Shah.
These petitions were, however, dismissed by this Court on or about April 6, 1951.
The appellants thereafter by their attorney 's letter dated May 2, 1951, called upon the respondents to return the said sum of I Is.
1,80,099 8 0 (being the aggregate of the said two sums of Rs. 1,79,749 8 0 and Rs. 350.) with interest thereon at the rate of 6 per cent.
per annum.
The respondents failed and neglected to pay to the appellants the said sum or any part thereof with the result that on May 7, 1951, the appellants filed the suit against the respondents for repayment to them of the said sum with interest and costs.
In the plaint as filed the appellants averred that the said contracts were void under the Bombay Cotton Contracts Act, 1932, as being not in accordance with the by laws of the Association inter alia in the following respects: (1) The contract notes produced by the respondents omitted to state the difference of Rs. . above or below the settlement rate of hedge contracts for the purpose of periodical settlements as required by by laws 139 and 141; and (2) no provision was made in any of the aforesaid contract notes with regard to the measurement of bales as required by the official form for delivery contracts prescribed in bylaw 80.
The respondents in their written statement contended that there was no by law which required any person to agree upon any difference above or below the settlement rate of hedge contracts for the purpose of periodical settlements and to state the same.
They further contended that the relative provisions contained in the official contract form had become obsolete as at all material times there were no hedge contracts bearing different numbers and in practice the said contracts were not put through periodical settlements.
351 They also contended that at all material times there was no by law which required any person to agree upon any specific measurements in respect of the bales agreed to be purchased inasmuch as the operation of by law 101 in regard thereto had been suspended by the Board since November 30, 1942.
After the suit reached hearing the appellants amended the plaint by averring that by reason of the said payments having been made by them and accepted by the respondents without prejudice to the rights and contentions of both the parties there was an implied agreement between them that in the event of the appellant 's establishing that they were not bound to pay the said sums to the respondents and that the respondents were not entitled to the payment thereof the respondents would repay or return the same to the appellants.
This plea was traversed by the respondents in the supplemental written statement which they filed.
The learned trial Judge followed the judgment of Mr. Justice Shah and held that the omission of the clause regarding measurement in the contract notes did not alter the character or legal effect of the contracts.
He similarly held that the omission of any reference in the contracts to the amount of difference above or below the settlement rate of hedge contracts in the last term of the contract notes rendered the contracts void.
He however was of the opinion that there was no implied agreement between the parties of the nature alleged by the appellants and that the payment made by appellants to the respondents was voluntary and therefore dismissed the appellants ' suit with costs.
The appellants preferred ail, appeal against this decision and the appellate Court dismissed the appeal and confirmed the decree passed by the learned trial Judge, though on different grounds.
The appellate Court agreed with the learned trial Judge that the omission of the term regarding measurement in the contract notes did not affect the character or legal affect of the contracts.
In regard to the omission to fill up the difference above or below the settlement rate 352 fixed for the hedge contracts in the last clause of the contract notes, however, the appellate Court was of the opinion that there was no obligation on the parties to agree to add or deduct the difference above or below the settlement rate as contended by the appellants.
If the parties did agree then the contract form provided that the agreement should be set out therein.
If, however, they did not agree then the first part of cl.
(2) of by law 141 would come into play and the settlement of the delivery contract would go through on the basis of the settlement rate of the hedge contract.
The omission to fill up the difference was thus of no consequence and did not invalidate the contracts.
The appellate Court also differed from the trial Judge on the question of the implied agreement and held that if the appellants succeeded in establishing that the respondents were not entitled to receive the payments the respondents were bound to repay the sums paid by the appellants to them.
In view, however, of the conclusion reached that the contracts were not void, the appellate Court dismissed the appeal.
The provisions of the Bombay Cotton Contracts Act, 1932 (Bom.
IV of 1932) and the by laws of the Association which fall to be considered by us may now be referred to: Section 8(1) (Bombay Cotton Contracts Act, 1932): " Save as hereinafter provided in this Act, any contract (whether either party thereto is a member of a recognized cotton association or not) which is entered into after the date on which this Act comes into operation and which is not in accordance with the by laws of any recognized cotton association shall be void.
" By law 80 of the Association: " Forward contracts between members how made: Delivery Contracts between members shall be made on the official form given in the Appendix.
Hedge contracts between members may be verbal or in writing and when in writing shall be in one or other of the forms given in the Appendix.
Whether verbal or written all contracts shall be subject to the by laws, 353 provided that in the case of Delivery Contracts By laws 149 to 163 inclusive shall not apply.
The specimen of the official contracts form in triplicate as used in 1947 48 (Vide Exhibit " D ") contained the following terms amongst others: No. Contract Note From Brokers To Messrs. . . . .
We have this day bought by your order and for your account subject to the By laws of the East India Cotton Association Ltd. From Messrs. (. ) bales of Cotton at Rs. per candy, delivered in Bombay in full pressed bales.
Measurement. tons/per 100 bales.
(For delivery contracts only).
for the purpose of periodical settlement of this contract we agree to a difference of Rs. above/below the settlement rate of hedge contract No. Remarks. Bombay. 194 No. Contract Note From Brokers To Messrs. . . . .
We have this day sold by your order and for your account subject to the By laws of the East India Cotton Association Ltd. To Messrs. (. ) bales of. Cotton. at Rs. per candy, delivered in Bombay in full pressed bales.
Measurement. tons/per 100 bales.
(For delivery contracts only).
For the purpose of periodical settlement of this contract we agree to a differ ence of Rs . above/below the settlement rate of hedge con tract No. Remarks . Bombay . 194 The contract notes which are rendered between the member firm and the respondents, however, contained no term as to measurement and so far as the last clause was concerned the blanks in regard to the difference of Rs. above or below the settlement rate of hedge contract No. were not filled in.
The relevant by laws in connection with these two terms contained in the official contract form were by law 101, and by laws 139 and 141: By law: 101.
Claims for excess measurement.
In respect of all Forward Contracts, measurement 45 354 shall approximate 13 1/2 tons per 50 bales provided that in respect of Forward Contracts, other than Hedge Contracts, the parties may agree upon any other measurement.
In all Forward Contracts, for any port the rate or rates of freight for any excess measurement over 13 1/2 tons per 50 bales shall be fixed by the Board from time to time and unless otherwise fixed the rate for such excess for all ports shall be Rs. 15 per ton in respect of each lot of 50 bales measuring more than 13 1/2 tons but not more than 14 1/2 tons and in respect of each lot of 50 bales measuring more than 14 1/2 tons Rs. 35 per ton for any excess over 13 1/2 tons.
No allowance for excess measurement shall be payable by the seller: (a) unless the buyer has given to the seller reasonable notice fixing an appointment for measurement, or (b) unless the buyer submits a claim to the seller within 6 weeks after the complete lot has been weighed over.
The Board shall have power from time to time and at any time to suspend the operation of this Bylaw as regards measurements.
By law: 139. "Settlement Days.
All Delivery Contracts other than those excepted under By laws 136 and Hedge Contracts shall be subject to periodical settlements through the Clearing House and in every case the parties to the contract must be members of the Association.
Settlements of differences due on open contracts and of other liabilities to be settled through the Clearing House shall be made once weekly on days which shall be fixed by the Board and notified in a calendar to be published annually.
The day on which Balance Sheets are required to be submitted to the Clearing House shall be known as Settlement Day.
" By law: 141.
Settlement rates. (1) For the purpose of these settlements, settlement prices for all positions of the Hedge Contract shall be fixed by the Board on or about the third working day immediately preceding Settlement 355 Day.
The prices so fixed shall be I P. M. prices on the day of fixation.
(2)In the case of Delivery Contracts, the settlement price of the Hedge Contract shall be the basis for the periodical settlement.
Such allowances as shall be agreed upon by the parties in their contract to cover any difference, between the cotton contracted for and the cotton which is the basis of the Hedge Contract shall be added to or deducted from the said settlement price.
In the case of contracts for descriptions which are not tenderable against the Hedge Contract the parties may either agree in their contract upon an allowance above or below the Hedge Contract for the purpose of their periodical settlement or may apply to the Board to fix settlement rates.
. . . . . . . . . . .
The only question for our determination in this appeal is whether the contracts between the parties were not in accordance with the by laws of the Association and therefore void.
There is no doubt that all the contracts were subject to the by laws of the Association.
The question still remains whether they were in accordance with the by laws because if they were not in accordance with those by laws they would be void.
The expression " not in accordance with " has been the subject of judicial interpretation in Radhakisson Gopikisson vs Balmukund Ramchandra (1).
Their Lordships of the Privy Council there held that the form prescribed was not a stereotyped one and that literal compliance with it was not essential.
The only thing required was that the contract notes must contain all the terms and conditions set out in the form in order to comply with it.
Their Lordships were of the opinion that substantial compliance with the form would be enough and if such sufficient compliance with the by laws was found in a particular case that would save the contracts from being declared void as not being in accordance with the by laws.
It was, however, urged on behalf of the appellants that by law 80 prescribes the form in which the contracts were to be entered into and all the terms and (1) (1932) L.R. 60 I.A. 63.
356 conditions incorporated in the official contract form had to be strictly complied with, that the omission of the term as to measurement as also the omission to fill in the blanks in regard to difference of Rs. above or below the settlement rate of hedge contract No. . . . were such departures from the form prescribed as would render the contracts void because it could not be then said that there was sufficient compliance with the statutory form.
Reliance was placed in support of this contention on Burchell vs Thompson (1), Ex parte Stanford, In re Barber (2), Thomas vs Kelly (3) and Parsons vs Brand & Cols vs Dickson (4).
The principle emerging from these decisions was enunciated to be that if the document executed by and between the parties departed from a characteristic part of the form prescribed or made a difference in the legal effect of the instrument, it would not be in accordance with the form and would therefore be void.
It would all depend upon the materiality of the particular term which is incorporated in the form.
If the non compliance with the requirements of the form were such as to make the document something else by reason of a characteristic part of the form not being followed or the document would lose some legal effect which it would have had if the proper words had been inserted therein, it cannot be said that there is sub stantial compliance with the statutory form.
Considering the term as to measurement in this light, it appears that the same had its basis in the requirements of the trade in regard to the pressing of the bales.
The bales which were the subject matter of these forward delivery contracts were either meant for transport within the country or export outside the country.
The bales were to be fully pressed so as to occupy the minimum space either in transport by rail or by steamer and initially they were bound with hoops.
The baling hoops were however difficult to obtain from Japan and therefore the bales came to be bound with ropes made of cotton, jute coir and hemp.
The bales thus bound otherwise than with hoops (1) (3) (4) , 357 occupied more space and difficulties were encountered by the merchants because of their being obliged to pay extra insurance and freight charges in respect of such bales.
Not only did the railways charge more for the transport of such bales, the shipping companies also did so and the insurance companies charged higher rates for insurance because the bales were not pressed in a manner which would minimise the risks of insurance.
All these factors brought about a situation creating difficulties between the purchasers and the sellers of cotton and these difficulties had to be resolved by the Association.
by law 101 had proceeded on the basis of cotton bales being bound with hoops, the approximate measurement in tons as agreed and understood in the trade being, 13 1/2 tons per 50 bales.
That was the standard measurement.
It was open however to the parties to agree upon any other measurement.
If any measurement other than the standard measurement was agreed to, an adjustment had to be made by reason of such difference in measurement and by law 101 provided that certain amount therein specified had got to be paid by the seller to the purchaser as and by way of allowance for such excess measurement.
Towards October, 1942, the situation in regard to the baling hoops deteriorated so much that it was thought desirable that bales bound with ropes should be permitted to be tendered under the by laws of the Association and that the operation of by law 101 as regards measurements should be suspended.
There were heavy fluctuations in the prices of the materials permitted to be used, and it was therefore thought advisable to fix certain allowances from time to time or before the beginning of the delivery periods taking into consideration the extra insurance and freight charges, if any, in respect of such bales.
A sub committee appointed by the Association made a report in this behalf on October 29, 1942, and on November 20 1942, the Board of Directors of the Association passed a resolution approving the recommendations of the subcommittee with this modification that the allowance to be prescribed in the price of bales bound with ropes 358 as against the price of bales bound with hoops as provided in by laws 96 and 119, be fixed before the commencement of the season and not be altered from time to time.
The Board of Directors issued a notice on November 30, 1942, suspending the operation of bylaw 101 as regards the measurement until further notice.
The position as it obtained at the time when the suit contracts were entered into was that by law 101 as regards measurement had been suspended and there was no necessity so far as the by laws went to make any mention in the contracts in regard to the same.
If the claim for excess measurement had not to be entertained, it was not at all necessary to mention the measurement in the contract forms and there would be substantial compliance with the contract form, even though no measurement was mentioned therein, the very basis for the mention of such measurement having disappeared.
It was, however, urged on behalf of the appellants that measurement was an essential part of the description of the goods sold and the suspension of by law 101 made it all the more necessary that the measurement should be specified in the contract form itself.
The standard measurement which had been mentioned in by law 101 had disappeared and it would therefore be necessary to mention in the contract form what was the measurement on the basis of which the price of the contract had been fixed by and between the parties.
If the bales actually tendered measured more in weight than what was actually agreed upon, the purchaser would be entitled to obtain from the seller an allowance for such excess measurement and that was the reason why it was necessary after the suspension of by law 101 to mention the agreed measurement between the parties.
This argument however ignores the fact that simultaneously with the suspension of the operation of the by law 101, by laws 96 and 119 which referred to forward and hedge contracts respectively were altered and provision was made therein to incorporate measures consequent upon the tender of bales bound with ropes 359 in place of bales bound with hoops.
The consequences of such tenders were worked out in the by laws as thus amended and allowances in the price of bales bound with ropes as against the price of bales bound with hoops were also provided for.
These allowances were in accordance with the resolution of the Board dated November 20, 1942, to be fixed before the commencement of the season and if such allowances were provided for there was nothing further to be done in regard to the difference in measurement, if any.
If the situation which obtained after November 20, 1942, provided for a tender of bales bound with ropes instead of bales bound with hoops in fulfilment of the contracts entered into between the parties, that was well known to all the members of the Association and it was open to them while fixing the prices themselves to take count of the extra charges for insurance and freight which would be payable by the purchaser in the event of bales bound with ropes being tendered instead of bales bound with hoops.
It, therefore, follows that the omission to mention the measurements in the contract notes did not render the contracts not in accordance with the by laws.
There was no such by law in operation at the time and even otherwise there was no need whatever to incorporate in the contract notes any term as to measurement.
It could not therefore be said that there was any departure from an essential or a characteristic part of the contract form or that the legal effect of the contracts was changed so as to invalidate the same.
When we come to the term in regard to the differences of Rs. . . above or below the settlement rate of hedge contract No. . . we find that that had reference to periodical settlements of contracts through the clearing house.
In accordance with bylaw 139 all delivery contracts other than those excepted under by law 136 and hedge contracts were subject to periodical settlements through the Clearing House which settlements had to be made once weekly on days fixed by the Board.
If the contracts had got to go through the clearing house in this manner it was necessary also that settlement rates should be fixed 360 and by law 141(1) provided that settlement prices for all positions of the hedge contract should be fixed by the Board.
The settlement prices thus fixed were to be taken as the basis for the periodical settlement of delivery contracts and it was further provided in bylaw 141(2) that such allowance as shall be agreed upon by the parties in their contracts to cover any difference between the cotton contracted for and the cotton which was the basis of the hedge contract shall be added to or deducted from the said settlement prices.
This was the basis of the provision contained in the relevant term of the contract form.
In the case of contracts for descriptions not renderable against the hedge contract it was open to the parties either to agree upon an allowance above or below the hedge contract or they would make an application to the Board to fix the settlement rates.
Whenever there was an agreement in this behalf the parties were to mention the difference thus agreed into the contract form and the periodical settlements of delivery contracts were to be effected on that basis.
The question arises as to whether the parties were bound to enter into any such agreement at the time they entered into the contracts.
It was contended on behalf of the appellants that such an agreement was necessary because it would otherwise involve the parties into payment of large sums of money on the settlement day next after the day of the contract.
The hedge contracts appertained to cotton of the lowest average and if the quality of cotton which was the subject matter of the contract between the parties was, as was usual, of a higher variety, it would involve the payment of large amounts by way of differences on the next settlement day, which certainly would not be within the contemplation of the contracting parties.
If that was so, the parties would agree to a difference between the rates of the cotton contracted for and the cotton which was the basis of the hedge contract and this difference above or below would serve to minimize the incidence of such payment on the next settlement day.
It was, therefore, submitted that it was incumbent on the parties when entering into a contract to 361 fill in this term as to differences.
If they agreed upon such differences the blank had to be filled in accordingly; but even though they did not agree upon any such differences, it was necessary for them to mention in the contract form that the difference above or below the rate of the hedge contract agreed upon by them was nil.
It was contended on the other hand on behalf of the respondent that there was no obligation on the parties entering into the contract to fill in that term.
If they agreed upon the difference all well and good but if they did not agree upon the difference, the first part of by law 141(2) stepped in and the consequences had to be worked out as if there was no agreement and the differences had to be paid on the settlement day next ensuing on the basis of the difference between the contract rates and rates of hedge contract, even though it may involve a payment of a substantial amount all at once.
According to this submission, in the case of contracts for descriptions tenderable againt the hedge contract two positions arose: viz., (1) parties to the contract may not agree to any difference in which case it would not be necessary to fill in that term in the contract note or (2) they may agree to the difference in which event the difference would be mentioned in the contract note.
In the case of contracts for descriptions which were not renderable against the hedge contract three positions would arise, viz., (1) the parties may not agree upon any difference in which event it would not be necessary to fill in the term as to difference in the contract notes; (2) the parties may agree upon such difference and that would have to be mentioned in the contract notes or (3) the parties could apply to the Board to fix the settlement rates.
It appears that the contention urged on behalf of the appellants would be more in consonance with business idea, , because no business man would think of immediately forking out a large sum of money on the next ensuing settlement day.
It would be tantamount to paying the price of the goods or a substantial part thereof long before the due date of delivery ever 46 362 arrived.
While recognizing the necessity of arriving at an agreement in this manner we are, however, not impressed with the argument that in the event of no such agreement as to the difference having been reached it would even so be necessary to mention in the contract note that the difference agreed upon was nil.
When the parties entered into the transactions all the terms and conditions of the contract would certainly be negotiated and agreed upon between them.
It would be open to them, in view of the by laws above referred to, to agree upon the difference above or below the settlement rate of hedge contracts for the purpose of facilitating the settlements through the clearing house.
But if no such difference above or below the settlement rate of hedge contracts were agreed upon between the parties, it would not necessarily follow that the word nil had got to be mentioned in the contract notes.
The very fact that no difference above or below the settlement rate of hedge contracts was agreed upon in the manner contemplated would be enough to spell out an agreement that no such difference was to be computed in arriving at the settlement rates in respect of these contracts.
If that was the true position it would be Superfluous to write the word " nil " as contended for by the appellants and the consequences, of such non mention would be the same as if the difference agreed upon was nil.
By law 141 (2) could then be worked out without any difficulty and the settlement rates in the case of delivery contracts would be fixed on the basis of the settlement price of the hedge contracts taking into account the facts that there was either no difference which was agreed upon or that the difference agreed upon was a specific one which was mentioned in the contract notes.
It was however pointed out on behalf of the respondents that the official contract form contained the expression " above/below the settlement rate of hedge contract No. .
Even though this may have been in consonance with the position as it obtained when the hedge contracts of five different varieties were in vogue, involving the specification of hedge contracts as Nos.
I to 5, that position substantially chanced 363 when hedge contracts of these 5 varieties were abolished and in their place and stead was substitute, a hedge contract called the 1.
The five varieties of hedge contracts were also for different deliveries which did not necessarily coincide one with the other and these contracts were not on the market all at one time, With the result that it would be necessary if the requirements of the contract form had to be complied with to fill in the blank not only by describing the hedge contract number, whether it was one or the other of the numbers I to 5 but also the particular hedge contract of a particular delivery.
Even if it may be assumed that the blank to be filled in in this behalf required a mention not only of the hedge contract No but also of a particular delivery thereof, all that went by the board when the I. C. C. was substituted in place of the hedge contract Nos.
I to 5.
The old contract form which had been prescribed by by law 80 was continued without any change being effected therein by virtue of such substitution and if at all the parties to a contract were to fulfill the requirements of the contract form, it would be necessary for them to strike out the words " hedge contract No and put in their place and stead the word " 1. C. C. " Even there the 1.
C. C. appertained to different deliveries which were not on the market all at one time.
The months of delivery were nowhere required to be filled in in the contract form, whether the contract form required the parties to have regard to the hedge contract No or the I. C. C., and to that extent, it can be said that the parties were expected to rely upon their commonsense and the practice of the trade as to what particular delivery was contemplated when the contracts were entered into between them.
All this goes to show that the parties to the contract were not tied down to a literal compliance with the terms contained in the official contract form but were required to act according to the position as it then obtained and if they substantially complied with the requirements of the contract form that was enough.
If the hedge contract No was not in vogue in the 364 market they need not conform to that provision in the official contract form but could make the necessary changes in accordance with the type of hedge contract which was then in vogue.
Similarly, they would have to record in the contract form the agreement reached between them in regard to the difference of Rs. above or below the settlement rate of the hedge contract No. if they came to a particular agreement in that behalf.
if, however, no such agreement was reached between the parties and here the effect of no agreement having been arrived at in regard to such difference would be the same as if the agreement between them was that the difference was to be nil no mention need be made of such difference in the contract form.
The result of either of the two latter positions would be that if the contracts were to pass through the Clearing House the settlement rates would be determined on the basis of the settlement price of the hedge contract fixed by the Board for those various settlements and the parties would have to pay to or receive from one another the differences calculated on the difference between the contract rates and those settlement rates.
The whole of this discussion, however, is academic by reason of the fact that in practice delivery contracts were not put through any periodical settlements and at all material times the operation of this term in the official contract form ' had become obsolete.
This position was not disputed on behalf of the appellants and their counsel stated before the Court that he did not wish to dispute the fact that delivery contracts were at no time submitted to periodical settle ments in the Association.
The effect of this procedure being adopted in the Association was tacitly to suspend the operation of these by laws as to periodical settlements in respect of delivery contracts and it would be superfluous, nay absurd, on the part of the business people entering into contracts subject to the by laws of the Association to incorporate in the contract form provisions which had become obsolete.
If the contracts were not to pass through the periodical settlements in the Clearing House no question would 365 ever arise of settlement rates requiring to be fixed, much less of the basis of such settlement rates being determined, or of the difference of Rs. above or below the settlement rate of hedge contracts being ever agreed upon between the parties.
If under those circumstances, the parties did not fill in those blanks which required to be filled in in the official contract form on the basis of by laws 139 and 141 being in operation, it could not be said that they had failed to substantially comply with the requirements of the official contract form.
The official contract form had to be filled in so far as it was practicable.
The operation of these by laws was in effect suspended and by the tacit understanding of the trade they were to be treated as if they did not exist.
It could not therefore be urged that the parties were put to the necessity of agreeing to such differences, if having regard to the circumstances that prevailed, it was impracticable to do so and if these blanks were not filled in as originally contemplated the contract notes could certainly not be impeached as being not in accordance with the by laws of the Association.
It was, however, urged on behalf of the appellants that if the parties to the contracts intended not to comply with the requirements of by laws 139 and 141 that would by itself vitiate the contracts because in that event the contracts would certainly be not in accordance with the by laws of the Association.
The parties in that event intended to perpetrate an illegality at the very inception of the contracts and the contracts were therefore void.
There is considerable force in this argument but we do not feel called upon to consider the same in view of the fact that that was not the ground on which the validity of the suit contract was challenged in the plaint.
We are therefore of the opinion that the omission to fill in those blanks in the contract notes did not spell any departure from an essential or a characteristic part of the contract form nor was the legal effect of the contracts in any manner changed thereby rendering the contracts void within the meaning of section 8 of the Bombay Cotton Contracts Act, 1932.
366 Both these grounds of attack against the validity of the contracts in question therefore fail and we are of the opinion that the contracts entered into between the appellant, , and the respondents were not void as alleged.
The appellants were therefore not entitled to recover from the respondents the said sum of Rs. 1,80,099 8 0 or any part thereof as alleged or at all and we are of the opinion that the appellate Court was right in rejecting the appellants ' claim.
We cannot part with this appeal without observing that the whole difficulty has been created by reason of the Association not having made the necessary alterations in the contract form in accordance, with the situation as it obtained.
from time to time.
When by law 101 was suspended in operation the Association ought to have deleted the term as to measurement from the contract form.
When the by laws 139 and 141 were virtually abrogated by reason of the delivery contracts not being subjected to periodical settlements in the Clearing House, the Association ought to have similarly deleted the last clause from the official contract form which required the difference of Rs above or below the settlement rates of hedge contract No to be filled in by the parties.
Equally untenable west he retention of the expression " Hedge Contract No when the five different varies of hedge contracts were abolished and one hedge contract named 1.
C. C. was substituted therefor.
We fully endorse the observations made by the appellate Court in the course of its judgment: " We have had occasion to point out in the past how badly the by laws of the East India Cotton Association are drafted and how clumsily the forms also settled, and the present form is an illustration of what we have had occasion to say in the past.
" The manner in which the official contract form which had been settled when the by laws of the Association came first to be promulgated has been retained in its pristine glory in spite of the various changes made in the operation of the by laws and the practice of the trade only enhances the difficulties of the parties and enables the parties who are so minded to raise all 367 sorts of disputes tenable or otherwise in order to avoid their liability in respect of the transactions effected by them in the Association.
It may be hoped that the Association will take effective steps to bring the official contract form in conformity with the bylaw,% in operation from time to time and the practice of the trade prevailing in the Association.
The result therefore is that this appeal fails and must stand dismissed with costs throughout.
Appeal dismissed.
| Sub section (1) of section 8 of the Bombay Cotton Contracts Act, 1932, provides: " Save as hereinafter provided in this Act, any contract . which is entered into after the date on which this Act comes into operation and which is not in accordance with the by laws of any recognized cotton association shall be void ".
In respect of the transactions in cotton entered into between the parties, the appellants had to pay the respondents a sum of money for failure to give delivery of the cotton bales under the 347 contracts, but the payment was made without prejudice to the rights and contentions of the parties.
Subsequently, the appellants sued the respondents for recovery of the amount on the footing that the contracts were void under section 8(1) of the Bombay Cotton Contracts Act, 1932, as being not in accordance with the by laws of the East India Cotton Association Ltd., of which both the parties were members, in as much as the contract notes did not company with the terms contained in the official contract form provided by the by laws of Association, by reason of the omission to fill in the blanks relating to measurements and difference above or below the settlement rate.
The respondents contended that the relevant provisions contained in the official contract form bad either become obsolete or were suspended at all material times.
The evidence showed that according to the practice of the trade the parties to the contract were not tied down to a literal compliance with the terms contained in the official contract form but were required to act according to the position as it then obtained and that it was sufficient if they substantially complied with the requirements of the contract form : Held, that in the circumstances of the case the official contract form had to be filled in so far as it was practicable and that the omission to fill in the blanks in the contract notes did not spell any departure from an essential or a characteristic part of the contract form; consequently, the legal effect of the contracts was not in any manner changed so as to render the contracts void as not being in accordance with the by laws of the Association, within the meaning of section 8 of the Bombay Cotton Contracts Act, 1932.
Radhakisson Gopikisson vs Balmukund Ramchandra, (1932) L. R. 60 I. A. 63, relied on.
|
Summarize this legal judgement text concisely | Appeal No. 177 of 1954.
Appeal from the judgment and decree dated October 9, 1950 of the Bombay High Court in First Appeals Nos. 361 & 363 of 1948 from Original Decree arising out of the judgment and decree dated July 31, 1946, of the Court of Special Tribunal, Mangalvedhe in Special Suit No. 1322 of 1938.
L. K. Jha, Rameshwar Nath, J. B. Dadachanji and section N. Andley, for the appellant.
K. R. Bengeri and K. R. Chaudhari, for the respondent.
April 14.
The following Judgment of the Court was delivered by SINHA J. This is a defendants ' appeal by leave granted by the High Court of Judicature at Bombay from the decision of that Court, dated October 9, 1950, in two cross appeals from the decision of the Special Judge of the Special Tribunal Court at Mangalvedhe, dated July 31, 1946, in Special Suit No. 1322 of 1938.
Of the two cross appeals, the First Appeal No. 361 of 1948, by the appellants, was dismissed, and the First 481 Appeal No. 363 of 1948, by the plaintiff, was allowed.
The plaintiff respondent had instituted another suit, being suit No. 1894 of 1937, which was also tried along with Special Suit No. 1322 of 1938.
The former suit stands dismissed as a result of the judgment of the High Court, and no appeal has been brought against that judgment to this Court.
The suit out of which this appeal arises (Special Suit No. 1322 of 1938), was instituted under the provisions of the Sangli State Agriculturists Protection Act, granting certain reliefs from indebtedness to agriculturists of that State which was then outside what used to be called " British India ".
The suit as originally framed, prayed for accounts in respect of two mortgages, though there were really three mortgages, to be described in detail hereinafter, and for possession of the, lands comprised in those mortgages.
The first, defendant filed his written statement on January 6, 1940, contesting the suit mainly on the ground that the plaintiff had no title to the mortgaged properties in view of the events that had happened; that the mortgaged properties had been sold at auction and purchased by the defendant 's father who, thus, became the full owner thereof; and that he had sold most of the properties to other persons who were holding those properties as full owners.
Defelidant No. 3 who also represents the original mortgagee, filed a separate written statement supporting the first defendant.
Of the defendants who are transferees from the original mortgagees or their heirs only defendant No. 8 filed his written statement on March 26, 1940, substantially supporting the first defendants written statement and adding that he had purchased the bulk of the mortgaged properties after acquisition of full title by the mortgagees themselves more than 12 years before the institution of the suit, and that, therefore, it was barred by limitation.
The trial court dismissed the suit by its judgment dated November 26, 1941, with costs.
On appeal by the defeated plaintiff, the Special Bench of the High Court of Sangli State, by its judgment dated June 13, 1944, remanded the suit for a fresh trial after having permitted the plaintiff to amend the plaint so as to 482 include the relief for redemption.
It appears that during the pendency of the suit after remand, an application was made in February, 1945, for making substitution in place of defendant No. 2 who had died meanwhile, but the application was refused by the Court on the ground that the suit had abated as against that defendant.
After reframing the issues and rehearing the ,lase, the trial court, by its judgment and decree dated July 31, 1946, dismissed the suit as against defendants 6 to 9 who were holding portions of the mortgaged properties by sale deeds of the years 1919 and 1922, for more than 12 years, as barred by limitation under article 134 of the Limitation Act.
The Court decreed the suit in respect of the mortgaged portion of R. section No. 1735, having an area of 16 acres and 21 gunthas, as against defendant No. 3, and R. section No. 334 against defendant No. 1 's heirs.
Each party was directed to bear its own costs throughout.
From that decision, the defendants preferred a first appeal, being First Appeal No. 361 of 1948, and the plaintiff filed a crossings, being First Appeal No. 363 of 1948, in the High Court of Judicature at Bombay.
Both the appeals were heard together along with two other cross appeals arising out of the other suit mentioned above.
The High Court, by its judgment and decree dated October 9, 1950, dismissed the defendants ' appeal No. 361 of 1948, and allowed the plaintiff 's appeal No. 363 of 1948, with costs, holding that article 148 and not article 134 of the Limitation Act, applied to the suit, and that, therefore, it was not barred by limitation.
In the result, the plaintiff 's suit was decreed in its entirety.
Hence, this appeal by the defendants.
A number of Questions of fact and law have been raised by the learned counsel for the appellants, but before we proceed to deal with them, it is convenient to dispose of the preliminary points in bar of the suit.
At the fore front of his submissions, the learned counsel for the appellants contended that the suit was outside the jurisdiction of the Special Court created under the Sangli State Agriculturists Protection Act I of 1936.
With reference to the provisions of that Act, it was contended that the Act authorized the Special Court to 483 take accounts and to reopen closed transactions only up to the year 1915, and that as the transactions which were the subject matter of the suit, were of the years 1898, 1900 and 1901, the Special Court was not competent to go into those transactions and grant any relief to the agriculturist plaintiff.
In our opinion, there is no substance in this contention.
The Sangli Act referred to above, had chosen the year 1915 as the dateline beyond which the court was not competent to grant any relief to agriculturists, by way of reopening of closed transactions.
But that does not mean that the court itself was incompetent to grant any other relief in respect of transactions of a date prior to 1915.
If the legislature had intended to limit the jurisdiction of the Special Court, as contended on behalf of the appellants, nothing would have been easier than to say in express terms that the court 's jurisdiction to grant relief was limited to transactions of that year and after, but there are no such words of limitation in any part of the statute.
The operative portion of the statute does not contain any such provision.
In our opinion, therefore, the Special Court was competent to entertain the suit for redemption, though it would not be competent to reopen those transactions even if any such question of reopening closed transactions had been raised.
But it is manifest that no such question arose out of the pleadings in this case.
Hence, those words of limitation are wholly out of the way of the plaintiff.
It may be mentioned that no such plea of want of jurisdiction of the trial court, had been raised in the pleadings or in the issues in the courts below.
This ground was raised, for the first time, in the statement of case in this Court.
The preliminary objection to the jurisdiction of the trial court is, thus, overruled.
It was next contended that the suit was barred by limitation of one year under article 12 of the Limitation Act.
The point arose in this way.
The properties sought to be redeemed were mortgaged, as will presently appear, successively under three bonds of the years 1898, 1900 and 1901, by the plaintiff 's father, Gundi (omitting all reference to his brothers).
484 It appears that there was a decree for money of the year 1903, in favour of a third party who is not before us.
Gundi had been stied as the original defendant, but after his death, his place was taken by his brother Sadashiv as his heir and legal representative.
In execution of the decree, the mortgaged properties were auction purchased by the mortgagee 's Fulchand, son of the first defendant as it appears from the sale certificate, Exh.
D 56, dated October 31, 1907.
On the basis of this auction purchase, it, has been contended on behalf of the mortgagee that unless the sale were set aside, it would bind Gundi and his successor in interest, the plaintiff.
The High Court has held that article 12 is out of the way of the plaintiff because neither the plaintiff nor her father was a party to the sale.
If Gundi himself were a party to the execution proceedings, the sale as against him, would bind his estate and his successor in interest.
But it appears that Gundi was substituted by his brother Sadashiv in the execution proceedings.
If Sadashiv could not be the representative in interest of Gundi, as will presently appear, he could not have represented Gundi 's estate, and, therefore, the gale as against him, would be of no effect as against the plaintiff.
Bat it was argued in answer to this contention that the decision of the Privy Council in the case of Malkarjun Bin Shidramappa Pasare vs Narhari Bin Shivappa (1), is an authority for the proposition that even if the property was sold by substituting a wrong person as the legal representative of the judgment debtor, the sale would bind the estate of the judgment debtor as much as if the right legal representative had been brought on the record of the execution proceedings.
Assuming that the decision of the Privy Council in Malkarjun 's case (supra) is correct, and that it is not subject to the infirmities of an ex parte judgment, asimay well be argued, that decision is clearly distinguishable so far as the present case is concerned.
In Malkarjun 's case, the executing court had been invited to decide the question as to who was the true legal representative of the judgment debtor, and the court, after (1) (1900) L.B. 27 1, A. 216 485 judicially determining that controversy, had brought on record the person who was adjudged to be the true legal representative.
The sale was held to be of the property of the judgment debtor through his legal representative, after the adjudication by the court.
The Privy Council held that though the decision of the court on the question as to who was the true legal representative, was wrong, it was a decision given in that litigation which affected the judgment debtor and his true legal representative, unless set aside in due course of law.
In the present case, there was no such adjudication.
From the scanty evidence that we have on this part of the case, it appears that Gundi, the original defendant, had died and had been, without any controversy, substituted by his brother, Sadashiv.
The court had not been invited to determine any controversy as between Sadashiv and the true legal representative of Gundi deceased.
In execution proceedings, the property was sold as that of Sadashiv the substituted judgment debtor.
It was a moneysale and passed only the right title and interest of Sadashiv, if it bad any effect at all.
Malkarjun 's case (supra), therefore, is of no assistance to the appellants.
The plaintiff, Gundi 's daughter, not being affected in any way by the sale aforesaid, it is not necessary for her to sue for setting aside the sale.
She was entitled, as she has done, to ignore those execution proceedings, and to proceed on the assumption, justified in law, that the sale had not affected her inheritance.
The suit is, therefore, not barred by article 12 of the Limitation Act.
It was next contended that even if article 12 was not available to the defendants by way of a bar to the suit, the suit was certainly barred under article 134 of the Limitation Act.
Under article 134, the plaintiff has to sue to recover possession of immovable property mortgaged and, afterwards, transferred by the mortgagee for a valuable consideration, within 12 years from the date the " transfer becomes known to the plaintiff ".
On the other hand, it has been contended on behalf of the plaintiff that the usual 486 rule of 60 years ' limitation under, article 148 of the Limitation Act, governs the present case.
On this part of the case, the defendants suffer from the initial difficulty that the sale deeds relied upon by them in aid of the plea of limitation under article 134, have not been brought on the record of this case, and, therefore, the Court is not in a position to know the exact terms of the sale deeds.
This difficulty, the appellants sought to overcome by inviting our attention to the statements made in paragraph 8 of the plaint.
But those are bald statements giving the reasons why the defendants other than the original mortgagee, were being impleaded as defendants.
There is no clear averment in that paragraph of the plaint about the extent of the interest sold by those sale deeds and other transfers referred to therein.
The Court is, therefore, not in a position to find out the true position.
Those sale deeds themselves were the primary evidence of the interest sold.
If those sale deeds which are said to be registered documents, were not available for any reasons, certified copies thereof could be adduced as secondary evidence, but no foundation has been laid in the pleadings for the reception of other evidence which must always be of a very weak character in place of registered documents evidencing those transactions.
Article 134 of the Limitation Act contemplates a sale by the mortgagee in excess of his interest as such.
The legislature, naturally, treats the possession of such transferees as wrongful, and therefore, adverse to the mortgagor if he is aware of the transaction.
Hence, the longer period of 60 years for redemption of the mortgaged property in the hands of the mortgagee or his successor in interest, is cut down to the shorter period of 12 years ' wrongful possession if the transfer by the mortgagee is in respect of a larger interest than that mortgaged to him.
In order, therefore, to attract the operation of Art,. 134, the defendant has got affirmatively to prove that the mortgagee or his successor in interest has transferred a larger interest than justified by the mortgage.
If there is no such proof, the shorter period under article 134 is not available to the 487 defendant in a suit for possession after redemption.
A good deal of argument was addressed on the question as to upon whom lay the burden to prove the date of the starting point of limitation under that article.
It was argued on behalf of the defendants appellants that as it is a matter within the special knowledge of the plaintiff, the plaint should disclose the date on which the plaintiff became aware of the transfer.
On the other hand, it was contended on behalf of the plaintiff respondent that it is for the defendants to plead and prove the facts including the date of the knowledge which would attract the bar of limitation under article 134.
As we are not satisfied, for the reasons given above, that article 134 is attracted to the present case, it is not necessary to pronounce upon that controversy.
It is, thus, clear that if articles 12 and 134 of the Limitation Act, do not stand in the way of the plaintiff 's right to recover posses. ,ion, the only other Article which will apply to the suit, is article 148.
It is common ground that if that Article is applied, the suit is well within time.
Before dealing with the factual aspects of the case, it is necessary to deal with another plea in bar of the suit raised on behalf of the appellants.
It is contended that the suit is bad for defect of parties in so far as the heirs of the second defendant are concerned.
It appears from the order dated March 27, 1946, passed by the trial court during the pendency of the suit after remand, that the second defendant died on April 26, 1943, that is to say, while the appeal before the Bombay High Court was pending in that Court before remand.
The then appellant who was the plaintiff, did not take steps to bring on record the legal representatives of that defendant.
An attempt was made by the plaintiff later on to get his heirs substituted on the record, but the Court upheld the defendants objection and did not allow substitution to be made.
It was, therefore, noted that the appeal which was then pending in the High 'Court, had abated as against defendant No. 2, and that, the order of remand made after his death and in the absence of his legal representatives, would not affect them.
Therefore, it was 488 contended that the whole suit would abate, because, in the absence of the heirs of the deceased defendant No. 2, the suit was imperfectly constituted under 0. 34, r.
I of the Code of Civil Procedure.
That rule requires that " all persons having an interest either in the mortgage security or in the right of redemption shall be joined as parties. .
The original mortgagee.
under the three mortgages, was Kasturchand Kaniram.
The defendant No. 1 has contested this suit by filing a separate written statement of his own as the successor in interest of the original mortgagee.
It does not appear from the pleadings that the second defendant was a joint mortgagee with the first defen dant or his ancestors.
The only statement in the plaint in para.
8, with reference to the second defendant, is that the " Lands R. section No. 1735 has gone to the share of defendant No. 2.
Defendant No. 3 looks after all the transactions of defendant No. 2 and the shop running under the name of ' Kaniram Kasturchand ' has gone to the share of defendant No. 3 ".
Thus, it is not a case of the first defendant being joint with the other defendants including defendant No. 2 who is not now represented on the record.
If defendant No. 2 had any distinct interest, that, on the plaint, appears to be confined to R. section No. 1735.
In the written statement filed on behalf of the third defendant, it is stated in para.
9 that the mortgaged portion of R. section No. 1735 which, according to the plaint, was the property of the second defendant, was really in possession of the third defendant as owner.
It would, thus, appear that even in respect of that plot, the second defendant had no subsisting interest.
This claim of the third defendant is strengthened by the fact that the second defendant did not file any written statement challenging he statement aforesaid of the third defendant or claiming any interest in that plot or any other part of the mortgaged property.
The second defendant had remained ex parte throughout, apparently because he had no interest in the property to be redeemed.
In any view of the matter, his heirs are not parties to this suit, and any determination in this suit will not bind them.
But it does appear that 489 the second defendant had no subsisting interest, if he had any at any anterior period, in any portion of the mortgaged property.
It was also contended that the original defendant No. 8 died, and in his place defendants Nos.
8a to 8g were substituted.
It appears that of the seven persons substituted on the record as the legal representatives of the original defendant No. 8, only defendants 8e, 8f and 8g were served, and the others, namely, 8a, 8b, 8c and 8d were not served.
On those facts, it was contended that the suit for redemption was bad in the absence of all the necessary parties.
It was sought, at one stage of the arguments, to be argued that the suit had abated against defendant No. 8, and this argument, in the High Court, was met by the observation that under O. XXII, r. 4, Code of Civil Procedure, it was enough to bring on record only some out of the several legal representatives of a deceased party, on the authority of the judgment of the Bombay High Court in Mulchand vs Jairamdas (1).
But on the facts stated above, there was no room for the application of r. 4, O. XXII of the Code.
All the legal representatives, at any rate, all those persons who were said to be the legal representatives of the deceased defendant No. 8, had been substituted.
Thus, the requirements of O. XXTI had been fulfilled.
If, subsequently, some of the heirs, thus substituted, are not served, the question is not one of abatement of the suit or of the appeal, but as to whether the suit or the appeal was competent in the absence of those persons.
It does not appear that the absent parties were really necessary parties to the suit or the appeal in the sense that they were jointly interested with the others already on the record in any portion of the mortgaged property.
In what circumstances they were not served or ordered to be struck off from the record, does not clearly appear from the printed record before us.
The defendant No. 8e who happens to be the brother of the original defendant No. 8, has only filed a written statement claiming that he and his vendor, defendant No. 7, had been in possession for more than 12 years, and that (1) , 490 the suit was, on that count, barred by limitation.
None of the other defendants who had been brought on the record in place of the original defendant No. 8, has appeared in the suit or in the appeal to contest the claim of defendant No. 8e that he was in possession of that portion of the property, namely, 6 acres and 32 gunthas out of R. section No. 242 (old survey No. 233).
Renee, there was no question of abatement of the suit or the appeal.
The only question which may or may not be ultimately found to be material on a proper investigation, may be whether the decree to be passed in this case, would be binding on those who had not been served.
For ought we know it may be that they were not interested in the plot sought to be redeemed.
On these findings, it must be held that the preliminary objections raised on behalf of the defendants in bar of the suit, must be overruled.
Hence, the whole suit cannot be held to be incompetent for the reason that the heirs of defendant No. 2 have not been brought on the record.
Having, thus, disposed of the specific pleas in bar of the suit, we now turn to the contentions bearing on the factual aspects of the controversy.
It was contended that the plaintiff who is admittedly the daughter of Gundi, has not established her title to the mortgaged properties.
In this connection, it is convenient to set out the essential facts in relation to the three mortgage.
deeds in question.
The first mortgage is dated June 4, 1898, in favour of Kasturchand Kaniram, executed by Gundi, son of Appa, for the sum of Rs. 700, the amount borrowed by him, mortgaging 7 survey numbers with an aggregate area of 43 acres and 38 gunthas.
It was a mortgage with possession for a period of 4 years, with Gundi 's two brothers Sadashiv and Rama as sureties for the repayment of the amount borrowed which was the personal responsibility of Gundi under the terms of the document.
But the property mortgaged is admittedly the ancestral land of the three brothers.
The second mortgage between the same parties in respect of the same properties, bears the date May 25, 1900.
It secures a further advance of Rs. 300 to the mortgagor, the payment of which debt 491 is again assured by his two brothers Sadashiv and Rama as sureties.
The third mortgage bond is for a further advance of Rs. 200 to the mortgagor Gundi, with his brothers aforesaid again figuring as sureties.
It would, thus, appear that all the three mortgages are between the same parties as mortgagor and mortgagee, and the two brothers of the mortgagor join in executing the mortgages as sureties, the property given in mortgage belonging to all the three brothers.
The total advance of Rs. 1,200 under those three mortgages, was made to the principal debtor, Gundi.
It appears that, of the three brothers, Rama died first, and then Gundi, some time in 1903, survived by his two daughters the plaintiff and defendant No. 13.
The plaintiff 's case is that the common ancestor, Appa, in his lifetime, had effected a partition amongst his three sons aforesaid, giving them each specific portions of his lands, reserving a portion for the maintenance of his wife.
Those transactions are exhibits P 43, P 44, P 45 and P 46, all dated August 31 or September 1, 1892, and, apparently, forming parts of the same transaction.
These are formal documents giving details of the lands allotted to each one of the three brothers and to their mother by way of maintenance.
The common recital in these documents, is that the executant of the documents, Appa, had three sons Gundi, Sadashiv and Rama, in order of seniority " who cannot pull on together The document further recites: ".Hence, separation having been effected with your consent, (I have) divided in every way and given you the estate, the land, the assets etc.
, pertaining to the one third share.
The same are as under. " Then follow the details of the properties separately allotted to each of them.
The plaintiff 's case is that ever since 1892 the date of the documents aforesaid the three branches of the family had become separate in estate, if not also divided in all respects, and that on the death of Raina, Guildi and his brother Sadashiv inherited his one third share in equal moieties, that is to say , on the death of their mother and their brother, the two brothers became owners of half and half of the ancestral 492 property left by Appa who appears to have died soon after the alleged partition.
The plaintiff 's case further is that the principal mortgagor in all those three transactions aforesaid, was Gundi, and his two brothers had joined only as sureties by way of additional security in favour of the mortgagee, It has been contended on the other hand on behalf of the defendants appallants that, in the first instance, the documets of 1892, referred to above, do not evidence an actual partition by metes and bounds, but only represent an arrangement by way of convenience for more efficient and peaceful management of the family property, and that, alternatively, if those documents are claimed to have the efficacy of partition deeds, they are inadmissible in evidence for want of registration.
The courts below have held that those documents are inadmissible in evidence as regular deeds of partition which they purport to be, in view of the provisions of the Registration Act.
But those transactions have been used for the collateral purpose of showing that from that time, the three brothers became separate in estate, and evidencing the clear intention on the part of each one of them to live as separated members, each with one third share in the paternal estate.
In this connection, reliance was placed on behalf of the appellants ' upon what was alleged to be the subsequent conduct of the three brothers after 1892, as evidenced by the three mortgage bonds themselves and the saledeed exhibit D 54 dated June 17, 1909.
By the last named document, Sadashiv purported to sell to Fulchand Kasturchand, son of the original mortgagee, practically the whole of the mortgaged properties, for a sum of Rs. 1,500.
The recitals in the sale deed would certainly make it out that the three brothers were joint in estate, and that the sale deed was being executed to pay off the personal loans of Gundi and Rama during the Years 1900 to 1903, plus the loans taken by the vendor himself.
Finally, the deed proceeds to make the following very significant declaration as to the status of the members of the so called joint family: "As I have sold to you my right, title and interest in the above said lands, neither I nor my heirs and 493 executors of my will have any right whatsoever over the said property.
As I am the male heir in the joint family by survivorship nobody except me has any interest in the aforesaid lands.
I have sold to you whatever interest I had in the said, lands.
" It was further contended that even strangers to the family treated the brothers as joint in estate as shown by the execution proceedings and the sale certificates of the years 1903 to 1907, whereby Sadashiv was substituted as the sole heir and legal representative of the defendant Gundi, in the suit for money which resulted in the, auction sale referred to above, of the ear 1907.
If the transaction of the year 1892, is admissible in evidence, for the purpose for which the document was used in the courts below, namely, to prove separation in estate, there is no room for ambiguity, and the position is clear that the three brothers had become separate.
Further recitals in those documents that specific portions of the ancestral property had been allotted to the three brothers separately, being in the nature of a partition deed by the father in his life time, and being unregistered, are inadmissible in evidence to prove such a partition.
But the plaintiff 's case does not depend upon proof of actual partition by metes and bounds.
In the absence of any ambiguity, the later transactions would not be relevant except to show that there was a subsequent reunion amongst the brothers, which is no party 's case.
But it was argued on behalf of the appellants that those documents exhibits P series aforesaid are not admissible in evidence even for the limited purpose of showing separation in estate.
The question, therefore, is whether those documents " purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property", within the meaning of section 17(1) (b) of the Registration Act.
No authority has been cited before us in support of this contention.
Partition in the 63 494 Mitakshara sense may be only a severance of the joint status of the members of the coparcenary, that is to say, what was ' once a joint title, has become a divided title though there has been no division of any properties by metes and bounds.
Partition may also mean what ordinarily is understood by partition amongst co sharers who may not be members of a Hindu coparcenary.
For partition in the former sense, it is not necessary that all the members of the joint family should agree, because it is a matter of individual volition.
If a coparcener expresses his individual intention in unequivocal language to separate himself from the rest of the family, that effects a partition, so far as he is concerned, from the rest of the family.
By this process, what was a joint tenancy, has been converted into a tenancy in common.
For partition in the latter sense of allotting specific properties or parcels to individual coparceners, agreement amongst all the coparceners is absolutely necessary.
Such a partition may be effected orally, but if the parties reduce the transaction to a formal document which is intended to be the evidence of the partition, it has the effect of declaring the exclusive title of the coparcener to whom a particular property is allotted by partition, and is, thus, within the mischief of section 17(1) (b), the material portion of which has been quoted above.
But partition in the former sense of defining the shares only without specific allotments of property, has no reference to immovable property.
Such a transaction only affects the status of the member or the members who have separated themselves from the rest of the coparcenary.
The change of status from a joint member of a coparcenary to a separated member having a defined share in the ancestral property, may be effected orally or it may be brought about by a document.
If the document does not evidence any partition by metes and bounds, that is to say, the partition in the latter sense, it does not come within the purview of section 17(1) (b), because so long as there has been no partition in that sense, the interest of the separated member continues to extend over the whole joint property as before.
Such a transaction 495 does not purport or operate to do any of the things referred to in that section.
Hence, in so far as the documents referred to above are evidence of partition only in the former sense, they are not compulsorily registrable under section 17, and would, therefore, not come within the mischief of section 49 which prohibits the reception into evidence of any document " affecting immoveable property ".
It must, therefore, be held that those documents have rightly been received in evidence for that limited purpose.
Lastly, it was contended that if those documents of the year 1892 are admissible to prove separation amongst the three brothers, then, oil the death of one of the three, namely, Rama, and of their mother, the entire ancestral properties including the mortgaged properties, vested in the two brothers in equal shares.
Both by the auction purchase of the year 1906 (D 57 D) and the sale deed (exhibit D 54 of the year 1909), Sadashiv 's moiety share in the mortgaged property, was purchased by Fulchand aforesaid.
The plaintiff, therefore, could only claim the other moiety share of her father, Gundi.
In our opinion, there is no answer to this contention because it is clear upon a proper construction of the three mortgage bonds and on the plaintiff 's own case that the entire ancestral properties and not only Gundi 's share, had been mortgaged.
The appeal will, therefore, be allowed to the extent of the half share rightly belonging to Sadashiv, and the decree for possession after redemption will be confined to the other half belonging to the plaintiff 's father.
In the result, the appeal is allowed to the extent indicated above.
As success between the parties, has been divided, they are directed to bear their own costs throughout.
Appeal allowed in part.
| This was an appeal by the defendants in a suit for possession on redemption of certain mortgages instituted in the Court of the Special judge exercising jurisdiction under the Sangli State Agriculturists Protection Act (1 of 1936).
Their case was that the mortgaged properties had been sold at auction and purchased by their father who had sold most of them to other persons more than 12 years before the institution of the suit and as such the suit was barred by limitation.
The trial Court dismissed the suit.
On appeal the High Court of Sangli permitted the plaintiff to amend the plaint originally filed so as to include the relief for redemption and remanded the suit.
The trial court, thereafter, decreed the suit in part, holding that the claim in respect of portions only of the mortgaged properties was barred by limitation.
Both the parties appealed to the High Court of Bombay and the appeals were heard together.
The High Court dismissed the defendant 's appeal and allowed the plaintiff 's appeal holding that article 148 and not article I34 Of the Limitation Act applied.
In the result, the plaintiff 's suit was decreed in its entirety.
Held, that the preliminary objection that the Special judge had no jurisdiction under the Sangli State Agriculturists Protection Act to entertain the suit must be overruled.
The fixing of ,915 as the date line by the Act had reference to such reliefs as could be had only by way of reopening of closed transactions and could not, therefore, preclude the Special Judge from granting other reliefs in respect of transactions entered into prior to 1915.
Nor could it be contended in bar that the plaintiff was bound in the first instance to set aside an auction sale of the mortgaged properties in execution of a money decree in which she was not substituted in place of her deceased father as his true heir and legal representative nor made a party and no controversy was raised by the parties nor decided by the Court as to who was the true legal representative.
The plaintiff was entitled to ignore the sale and the suit was not barred under article 12 of the Limi tation Act.
480 Malkarjun Bin Shidramappa Pasare vs Narhari Bin Shivappa, (1900) L.R. 27 I.A. 216, doubted and distinguished.
In order that article I34 of the Limitation Act might be attracted to a suit for possession on redemption, it was necessary for the defendant to prove affirmatively that the mortgagee or his succesor in interest had transferred a larger interest than was justified by the mortgage.
Where, as in the present case, this was not done, article 134 could not apply and the only other article which could apply was article 148 Of the Limitation Act.
Under the Mitakshara School of Hindu Law partition may be either (1) a severance of the joint status of the coparcenary by mere defining of shares but without specific allotments or (2) partition by allotment of specific properties by metes and bounds according to shares.
The latter, if reduced to writing becomes compulsorily registrable under section I7(1)(b) of the Indian Registration Act but the former does not.
Consequently, in the present case such unregistered docu ments as were adduced by the plaintiff for the limited purpose of proving partition in the former sense did not fall within the mischief Of section 49 of the Indian Registration Act and were admissible in evidence.
|
Summarize this legal judgement text concisely | Appeal No. 150 of 1954.
Appeal from the judgment and decree dated March 21, 1950, of the Court of Judicial Commissioner at Ajmer in Civil First Appeal No. 13 of 1948, arising out of the judgment and decree dated March 30, 1948, of the Court of Sub Judge 1st Class, Ajmer, in Civil Suit No. I of 1947.
Tarachand Brijmohan Lal, for the appellant.
section section Deedwania and K. L. Mehta, for the respondents.
April 15.
The Judgment of the Court was delivered by SARKAR J.
This appeal arises out of a suit for the redemption of a mortgage dated August 1, 1899.
The property mortgaged was a four roomed shop with certain appurtenances, standing on a piece of land measuring 5 yards by 15 yards in Naya Bazar, Ajmere.
The mortgage was created by Purshottamdas who is now dead and was in favour of Dhanrupmal, a respondent in this appeal.
The mortgage instrument stated that the property had been usufructuarily mortgaged in lieu of Rs. 6,300 of which Rs. 5,750 had been left with the mortgagee to redeem a prior mortgage on the same and another property.
It also provided that on redemption of the prior mortgage, the possession of the shop would be taken over and retained by the mortgagee, Dhanrupmal, who would appropriate its rent in lieu of interest on the money advanced by him and the possession of the other property covered by the prior mortgage, being a share in a Kachery would be made over to the mortgagor, Purshottamdas.
The provisions in the mortgage instrument on which the present dispute turns were in these terms: 511 " I or my heirs will not be entitled to redeem the property for a period of 85 years.
After the expiry of 85 years we shall redeem it within a period of six months.
In case we do not redeem within a period of six months, then after the expiry of the stipulated period, 1, my heirs, and legal representatives shall have no claim over the mortgaged property, and the mortgagee shall have no claim to get the mortgage money and the lagat (i. e., repairs) expenses that may be due at the time of default.
In such e, case this very deed will be deemed to be a sale deed.
There will be no need of executing a fresh sale deed.
The expenses spent in repairs and new constructions will be paid along with the mortgage money at the time of redemption according to account produced by the mortgagee.
" The mortgagee, Dhanrupmal, duly redeemed the earlier mortgage and, went into possession of the shop while possession of the Kacheri was delivered to the mortgagor.
On April 12, 1939, Dhanrupmal assigned his rights under the mortgage to Motilal who died later, and whose estate is now represented by his sons, who are the other respondents in this appeal. 'The estate of Purshottamdas, the original mortgagor, is now represented by his son, the appellant.
On January 2, 1947, the appellant filed the suit in the Court of the Sub Judge, Ajmere, against the respondents.
The suit was contested by the sons of Motilal, the assignee of the mortgage, who are the only respondents appearing in this appeal and whom we shall hence, hereafter refer to as the respondents.
They said that the suit was premature as under the mortgage contract there was no right of redemption for eighty five years after the date of the mortgage, that is to say, till August 1, 1984.
The learned Sub Judge, purporting to follow a decision of the Judicial Commis sioner, Ajmere, to whom he was subordinate, held that the provision postponing redemption for eightyfive years was invalid as it amounted to a clog on the equity of redemption.
He, therefore, passed a preliminary decree for redemption.
On appeal, the learned Judicial Conmmissioner, Ajmere, held, that the decision 512 which the Sub Judge had purported to follow was, distinguishable.
He examined a large number of cases on the subject and came to the conclusion that the provision in question did not amount to a clog on the equity of redemption.
He, therefore, allowed the appeal and dismissed the appellant 's suit.
From this decision the appeal to this Court arises.
It is admitted that the case is governed by the Transfer of Property Act.
Under section 60 of that Act, at any time after the principal money has become due, the mortgagor has a right on payment or tender of the mortgage money to require the mortgagee to reconvey the mortgage property to him.
The right conferred by this section has been called the right to redeem and the appellant sought to enforce this right by his suit.
Under this section, however, that right can be exercised only after the mortgage money has become due.
In Bakhtawai Begum vs HusainiKhanam (1), also the same view was expressed in these words: " Ordinarily, and in the absence of a special condition entitling the mortgagor to redeem during the term for which the mortgage is created, the right of redemption can only arise on the expiration of the specified period.
" Now, in the present case the term of the mortgage is eighty five years and there is no ' stipulation entitling the mortgagor to redeem during that term.
That term has not yet expired.
The respondents, therefore, contend that the suit is premature and liable to be dismissed.
The appellant 's answer to this contention is that the covenant creating the long term of eightyfive years for the mortgage, taken along with the provision that the mortgagor must redeem within a period of six months thereafter or not at all and the other terms of the mortgage and also the circumstances of the case, is really a clog on the equity of redemption and is therefore invalid.
He contends that, in the result the mortgage money had been due all along and the suit was not premature.
(1) (1913) L.R. 41 I.A. 84, 89.
513 The rule against clogs on the equity of redemption is that, a mortgage shall always be redeemable and a mortgagor 's right to redeem shall neither be taken away nor be limited by any contract between the parties.
The principle behind the rule was expressed by Lindley M. R. in Santley vs Wilde (1) in these words: " The principle is this: a mortgage is a conveyance of land or an assignment of chattles as a security for the payment of a debt or the discharge of some other obligation for which it is given.
This is the idea of a mortgage: and the security is redeemable on the payment or discharge of such debt or obligation, any provision to the contrary notwithstanding.
That, in my opinion, is the law.
Any provision inserted to prevent redemption on payment or performance of the debt or obligation for which the security was given is what is meant by_ a clog or fetter on the equity of redemption and is therefore void.
It follows from this, that "once a mortgage always a mortgage ".
The right of redemption, therefore, cannot be taken away.
The Courts will ignore any contract the effect of which is to deprive the mortgagor of his right to redeem the mortoage.
One thing, therefore, is clear, namely, that the term in the mortgage contract, that on the failure of the mortgagor to redeem the mortgage within the specified period of six months the mortgagor will have no claim over the mortgaged property, and the mortgage deed will be deemed to be a deed of sale in favour of the mortgagee, cannot be sustained.
It plainly takes away altogether, the mortgagor 's right to redeem the mortgage after the specified period.
This is not permissible, for " once a mortgage always a mortgage " and therefore always redeemable.
The same result also follows from section 60 of the Transfer of Property Act.
So it was said in Mohammad Sher Khan vs Seth Swami Dayal (2) : "An anomalous mortgage enabling a mortgagee after a lapse of time and in the absence of redemption to enter and take the rents in satisfaction of the interest.
would be perfectly valid if it did not also hinder an (1) (2) (1921) L.R. 49 1,A. 60, 65.
514 existing right to redeem.
But it is this that the present mortgage undoubtedly purports to effect.
It is expressly stated to be for five years, and after that,period the principal money became payable.
This, under section 60 of the Transfer of Property Act, is the event on which the mortgagor had a right on payment of the mortgage money to redeem.
The section is unqualified in its terms, and contains no saving provision as other sections do in favour of contracts to the contrary.
Their lordships therefore see no sufficient reason for withholding from the words of the section their full force and effect.
" Under the section, once 'the right to redeem has.
arisen it cannot be taken away.
The mortgagor 's right to redeem must be deemed to continue even after the period of six months has expired and the attempt to confine that right to that period must fail.
The term in the mortgage instrument providing that the mortgage can be redeemed only within the six months and not thereafter must be held period of to be invalid and ignored.
The learned Judicial Commissioner took the same view and this has not been challenged in this appeal on behalf of the respondents.
With this term however this case is not really con cerned.
Learned advocate for the appellant directed his attack on the term in the instrument of mortgage that it will not be redeemable for eighty five years.
He contended that this term amounts to a clog on the equity of redemption.
We wish to observe here that the learned advocate did not contend that the invalidity, as we have earlier held, of the term taking away the right to redeem the mortgage after the period of six months makes the term fixing the period of the mortgage at eighty five years invalid.
This latter term stands quite apart.
It only fixes the time when the principal sum is to become due, that is, when the right to redeem will accrue and has, therefore, nothing to do with a term which provides when that right will be lost.
The invalidity of one does not make the other also invalid.
The term providing that the right to redeem will arise after eightyfive years does not, of course, take 515 away the mortgagor 's right to redeem and is not, therefore, in that sense, a clog on the equity of redemption.
It does, however prevent accrual of the right to redeem for the period mentioned.
Is it then, in so far as it prevents the right to redeem from accruing for a time, a clog ? As we have already said, the right to redeem does not arise till the principal money becomes due.
When the principal sum is to become due must of course depend on the contract between the parties.
In the present case the parties have agreed that the right to redeem will arise eightyfive years after the date of the mortgage, that is to say, the principal money will then become due.
The appellant says that he should be relieved from this bargain that he has made.
This is the contention that has to be examined.
The rule against clogs on the equity of redemption no doubt involves that the Courts have the power to relieve a party from his bar 'gain.
If he has agreed to forfeit wholly his right to redeem in certain circumstances, that agreement will be avoided.
But the Courts have gone beyond this.
They have also relieved mortgagors from bargains whereby the right to redeem has not been taken away but restricted.
The question is the term now under consideration such that a Court will exercise its power to grant relief against it ? That depends on the extent of this power.
It is a power evolved in the early English Courts of Equity for a special reason.
All through the ages the reason has remained constant and the Court 's power is therefore limited by that reason.
The extent of this power has, therefore, to be ascertained by having regard to its origin.
It will be enough for this purpose to refer to two authorities on this question.
In a very early case, namely, Vermon vs Bethell Earl of Northington L. C. said, " This court, as a court of conscience, is very jealous of persons taking securities for a loan, and converting such securities into purchases.
And therefore I take it to be an established rule, that a mortgagee can never provide at the time of making the (1) ; , 113; ; ,839.
516 loan for any event or condition on which the equity of redemption shall be discharged, and the conveyance absolute.
And there is great reason and justice in this rule, for necessitous men are not, truly speaking, free men, but, to answer a present exigency, will submit to any terms that the crafty may impose upon them.
" In comparatively recent times Viscount Haldane L. C.repeated the same view when he said in G. and C. Kreglinger vs New Patagonia Meat and Cold Storage Company Ltd. (1): This jurisdiction was merely a special application of a more general power to relieve against penalties and to could them into mere securities.
The case of the common law mortgage of land was indeed a gross one.
The land was conveyed to the creditor upon the condition that if the money he had advanced to the feoffor was repaid on a date and at a place named, the fee simple would revest in the latter, but that if the condition was not strictly and literally fulfilled he should lose the land forever.
What made the hardship on the debtor a glaring one was that the debt still remained unpaid and could be recovered from the feoffor notwithstanding that he had actually forfeited the land to the mortgagee.
Equity, therefore, at an early date began to relieve against what was virtually a penalty by compelling the creditor to use his legal title as a mere security.
My Lords, this was the origin of the jurisdiction which we are now considering, and it is important to bear that origin in mind.
For the end to accomplish which the jurisdiction has been evolved ought to govern and limit its exercise by equity judges.
That end has always been to ascertain, by patrol evidence if need be, the real nature and substance of the transaction, and if it turned out to be in truth one of mortgage simply, to place it on that footing.
It was, in ordinary cases, only where there was conduct which the Court of Chancery regarded as unconscientious that it interfered with freedom of contract.
The lending of money, on mortgage or otherwise, was looked 517 on with suspicion, and the court was on the alert to discover want of conscience in the terms imposed by lenders.
" The reason then justifying the Court 's power to relieve a mortgagor from the effects of his bargain is its want of conscience.
Putting it in more familiar language the Court 's jurisdiction to relieve a mortgagor from his bargain depends on whether it was obtained by taking advantage of any difficulty or embarrassment that he might have been in when he borrowed the moneys on the mortgage.
Was the mortgagor oppressed ? Was he imposed upon ? If he was, then he may be entitled to relief.
We then have to see if there was anything unconscionable in the agreement that the mortgage would not be redeemed for eightyfive years.
Is it oppressive ? Was he forced to agree to it because of his difficulties ? Now this question is essentially one of fact and has to be decided on the circumstances of each case.
It would be wholly unprofitable in enquiring into this question to examine the large number of reported cases on the subject, for each turns on its own facts.
First then, does the length of the term and in this case it is long enough being eightyfive years itself lead to the conclusion that it was an oppressive term ? In our view, it does not do so.
It is not necessary for us to go so far as to say that the length of the term of the mortgage can never by itself show that the bargain was oppressive.
We do not desire to say anything on that question in this case.
We think it enough to say that we have nothing here to show that the length of the term was in any way dis advantagous to the mortgagor.
It is quite conceivable that it was to his advantage.
The suit for redemption was brought over forty seven years after the date of the mortgage.
It seems to us impossible that if the term was oppressive, that was not realised much earlier and the suit brought within a short time of the mortgage.
The learned Judicial Commissioner felt that the respondents ' contention that the suit had been brought as the price of landed property had gone up after the war, was 66 518 justified.
We are not prepared to say that he was wrong in this view.
We cannot also ignore, as appears from a large number of reported decisions, that it is not uncommon in various parts of India to have long term mortgages.
Then we find that the property was subject to a prior mortgage.
We are not aware what the term of that mortgage was ' But we find that mortgage included another property which became freed from it as a result of the mortgage in suit.
This would show that the mortgagee under this mortgage Was not putting any pressure on the mortgagor.
That conclusion also receives support from the fact that the mortgage money under the present mortgage was more than that under the earlier mortgage but the mortgagee in the present case was satisfied with a smaller security.
Again, no complaint is made that the interest charged, which was to be measured by the rent of the property, was in any manner high.
All these, to our mind, indicate that the mortgagee had not taken any unfair advantage of his position as the lender, nor that the mortgagor was under any financial embarrassment.
It is said that the mortgage instrument itself indicates that the bargain is hard, for, while the mortgagor cannot redeem for eighty five years, the mortgagee is free to demand payment of his dues at any time he likes ' This contention is plainly fallacious.
; There is nothing in the mortgage instrument permitting the mortgagee to demand any money, and it is well settled that the mortgagee 's right to enforce the mortgage and the mortgagor 's right to redeem are co extensive.
Then it is said that under the deed the mortgagee can spend any amount on repairs to the mortgage property and in putting up new constructions there and the mortgagor could only redeem after paying the expenses for these.
We are unable to agree that such is the effect of the mortgage instrument.
We cannot lose sight of the fact that the mortgaged shop and the area of the land on which it stood were very small.
It was not possible to spend a large.
sum on repairs or construction there.
Furthermore, having agreed to 85 years as the term of the mortgage, the parties must 519 have imagined that during this long period repairs and constructions would become necessary.
It is only such necessary repairs as are contemplated by the instrument and we do not consider that it is hard on the mortgagor to have to pay for such repairs and construction when he redeems the property and gets the benefit of the repairs and construction.
Neither do we think that there is anything in the contention that under the document the mortgagor was bound to accept whatever was shown in the mortgagee 's account as having been spent on the repairs and con struction.
That is not, in our view, the effect of the relevant clause which reads, " The expenses spent in repairs and new constructions will be paid. according to the account produced by the mortgagee.
" All that it means is that in claiming moneys on account of repairs and construction the mortgagee will have to show from his account that he spent these moneys.
It is really a safeguard for the mortgagor.
It was also said that all the terms in the deed were for the benefit of the mortgagee and that showed that the bargain was a hard one.
We do not think that all the terms were for the benefit of the mortgagee, or that what there was in the instrument was for his benefit and indicated that the mortgagee had forced a hard bargain on the mortgagor.
We have earlier said how the bargain appears to us to have been fair and one as between parties dealing with each other on equal footing.
We have no evidence in this case of the circumstances existing at the date of the mortgage as to the pecuniary condition of the mortgagor or as to anything else from which we may come to the conclusion that the mortgagee had taken advantage of the difficulties of the mortgagor and imposed a hard bargain on him.
It was said that the fact that the property was subject to a prior mortgage at the date of the mortgage in suit indicates the impecunious position of the mortgagor.
We are unable to agree with this contention.
Every debtor is not necessarily impecunious.
The mortgagor certainly derived this advantage from that mortgage that he was able to free from the earlier mortgage the kacheri and he has been in enjoyment of it ever since.
520 That, to our mind, indicates that the bargain had been freely made, There was nothing else to which our attention was directed as showing that the bargain was hard.
We, therefore, think that the bargain was a reasonable one and the eighty five years term of the mortgage should be enforced.
We then come to the conclusion that the suit was premature and ' must fail.
In the result we dismiss this appeal with costs.
Appeal dismissed.
| The rule against clogs on the equity of redemption embodied in section 60 of the Transfer of Property Act empowers the Court not only to relieve a mortgagor of a bargain whereby in certain circumstances his right to redeem the mortgage is wholly taken away, but also where that right is restricted.
The extent of this latter power is, however, limited by the reason that gave rise to it, namely, the unconscionable nature of the bargain, which, to a court of equity, would afford sufficient ground for relieving the mortgagor of his burden, and its exercise must, therefore, depend on whether the bargain, in the facts and circumstances of any particular case, was one imposed on the mortgagor by taking advantage of his difficult and impecunious position at the time when lie borrowed the money.
Vermon vs Bethell, ; ; and D. and C. Kreglinger vs New Patagonia Meat and Cold Storage Company, Ltd., , relied on.
Santley vs Wilde, (1913) L. R. 41 I. A. 84 and Mohammad Sher Khan vs Seth Swami Dayal, (1912) L. R. 49 I. A. 60, refer red to.
Consequently, in a suit, for redemption where the mortgage deed, by two distinct and independent terms provided that (1) the mortgage shall not be redeemed for eightyfive years and (2) that it could be redeemed only after that period and within six months thereafter, failing which the mortgagor would cease to have any claim on the mortgaged property and the mortgage deed would be deemed to be a deed of sale in favour of the mortgagee, and it was clearly evident from the facts and circumstances of the case that the bargain was quite fair and one as between parties dealing with each other on an equal footing : Held, that the term providing for a period of eightyfive years was not a clog on the equity of redemption, and the mere length of the period could not by itself lead to an inference that the bar.
gain was in any way oppressive or unreasonable.
The term was enforceable in law and the suit for redemption, filed before the expiry of the period was premature.
Held, further, that the term that on the failure of the mortgagor to redeem within the specified period of six months, he 65 510 would lose his right to do so and the mortgage deed was to be deemed to be a deed of sale in favour of the mortgagee, was clearly a clog on the equity of redemption and as such invalid but its invalidity could not in any way affect the validity of the other term as to the period of the mortgage, that stood clearly apart.
|
Summarize this legal judgement text concisely | Appeal No. 149 of 1956.
Appeal by special leave from the judgment and order dated December 22, 1954, of the former Nagpur High Court in Misc.
Civil Case No. 36 of 1954.
R. J. Kolah, J. M. Thakar, Ramesh A. Shroff, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellant.
H. N. Sanyal, Additional Solicitor General of India, K.N. Rajagopala Sastri and R. H. Dhebar, for the respondent.
April 25.
The Judgment of the Court was delivered by VENKATARAMA AIYAR J.
This is an appeal against the judgment of the High Court of Nagpur in a reference under section 66(1) of the Indian Income tax Act, 1922, hereinafter referred to as the Act.
The appellant is the sole proprietor of a firm called Bansilal Abirchand Kasturchand, which carries on business as money lenders, dealers in shares and bullion and commission agents in Bombay, Calcutta and other places.
He is a resident of Bikaner, and manages the 692 business at the several places through agents.
During the relevant period, the agent of the firm at Bombay was one Chandratan, who held a power of attorney dated May 13, 1944, conferring on him large powers of management including authority to operate on bank accounts.
During the period, November 15, 1944, to November 23,1944, the agent withdrew from the firm 's bank account sums aggregating to Rs. 2,30,636 4 0, and applied them in satisfaction of his personal debts incurred in speculative transactions.
On November 25, 1944, the cashier of the firm sent a telegram to the appellant informing him of the true state of affairs.
Thereupon, the appellant went to Bombay on December 3, 1944, and on the 4th, cancelled the power of attorney given to the agent, and by notice dated December 6, 1944, called upon him to pay the amounts withdrawn by him.
The agent replied on December 8, 1944, admitting the misappropriation of the amounts and pleading for mercy.
On January 16,1945, the appellant filed a suit against him in the High Court of Bombay for recovery of Rs. 2,30,636 4 0 and that was decreed on February 20, 1945.
A sum of Rs. 28,000 was recovered from Chandratan and adjusted towards the decree and the balance of Rs. 2,02,442 13 9 was written off at the end of the accounting year as irrecoverable.
Before the Income tax authorities, the dispute related to the question whether this amount of Rs. 2,02,442 13 9 was an admissible deduction.
The Tribunal found that the amount in question represented the loss sustained by the appellant owing to misappropriation by his agent, Chandratan, but held on the authority of the decision in Curtis vs J. & G. Oldfield, Limited (1) that it was not a trading loss and therefore could not be allowed.
On the application of the appellant, the Tribunal referred the following question of law for the decision of the High Court, Nagpur: Whether the said sum of Rs. 2,02,442 13 9 being part of the amount embezzled by the assessee 's Munim is allowable as a deduction under the Indian Income (1) 693 tax Act either under Section 10(1) or under the general principles of determining the profit and loss of the assessee or Section 10(2)(xv) ? " The learned Judges held that the case was governed by the decision in Curtis vs J. & G. Oldfield, Limited (1), and answered the question against the appellant.
An application under section 66(A)(2) for a certificate was also dismissed and thereafter, the appellant applied for and obtained leave to appeal to this Court under article 136, and that is how the appeal comes before us.
The question whether moneys embezzled by an agent or employee are allowable as deduction in computing the profits of a business under section 10 of the Act has come up for consideration frequently before the Indian courts, and the decisions have not been quite uniform.
Before discussing them, it is necessary that we should examine the principles that are in law applicable to the determination of the question.
Three grounds have been put forward in support of the claim for deduction: (1) that the los 3 sustained by reason of embezzlement is a bad debt allowable under section 10(2)(xi) of the Act; (2) that it is a business expense falling within section 10(2)(xv) of the Act; and (3) that it is a trading loss, which must be taken into account in computing the profits under section 10(1) of the Act.
As regards the first ground, the authorities have consistently held that the deduction is not admissible under section 10(2)(xi) of the Act, and that, in our view, is correct.
A debt arises out of a contract between the parties, express or implied, and when an agent misappropriates monies belonging to his employer in fraud of him and in breach of his obligations to him, it cannot be said that he owes those monies under any agreement.
He is no doubt liable in law to make good that amount, but that is not an obligation arising out of a contract, express or implied.
Nor does it make a difference that in the accounts of the business the amounts embezzled are shown as debits, the amounts realised towards them, if any, as credits, and the balance is finally written off.
They are merely journal entries adjusting the accounts and do not import a contractual liability.
(1)(1925) 694 Nor can a claim for deduction be admitted under section 10(2)(xv), because moneys which are withdrawn by the employee out of the business till without authority and in fraud of the proprietor can in no sense be said to be " an expenditure laid out or expended wholly and exclusively " for the purpose of the business.
The controversy therefore narrows itself to the question whether amounts lost through embezzlement by an employee are a trading loss which could be deducted in computing the profits of a business under section 10(1).
It is to be noted that while section 10(1) imposes a charge on the profits or gains of a trade, it does not provide how those profits are to be computed.
Section 10(2) enumerates various items which are admissible as deductions, but it is well settled that they are not exhaustive of all allowances which could be made in ascertaining profits taxable under section 10(1).
In Incometax commissioner vs chitnavis (1), the point for decision was whether a bad debt could be deducted under section 10(1) of the Act, there having been in the Act, as it then stood, no provision corresponding to section 10(2)(xi) for deduction of such a debt.
In answering the question in the affirmative, Lord Russel observed: " Although the Act nowhere in terms authorizes the deduction of bad debts of business, such a deduction is necessarily allowable.
What are chargeable in income tax in respect of a business are the profits and gains of a year; and in assessing the amount of the profits and gains of a year account must necessarily be taken of all losses incurred, otherwise you would not arrive at the true profits and gains.
" It is likewise well settled that profits and gains which are liable to be taxed under section 10(1) are what are understood to be such according to ordinary commercial principles.
,The word " profits. . is to be understood ", observed Lord Halsbury in Gresham Life Assurance Society vs Styles (2), " in its natural and proper sense in a sense which no commercial man would misunderstand ".
Referring to these observa (1) (1932) L. R. 59 I.A. 290, 296, 297.
(2)(1892) A.C. 309, 315 ; , 188.
695 tions, Lord Macmillan said in Pondicherry Railway Co.v.
Income tax Commissioner (1):" English authorities can only be utilized with caution in the consideration of Indian income tax cases owing to the differences in the relevant legislation, but the principle laid down by Lord Chancellor Halsbury in Gresham Life Assurance Society V. Styles (2), is of general application unaffected by the specialities of the English tax system.
" The result is that when a claim is made for a deduction for which there is no specific provision in section 10(2), whether it is admissible or not will depend on whether, having regard to accepted commercial practice and trading principles, it can be said to arise out of the carrying on of the business and to be incidental to it.
If that is established, then the deduction must be allowed, provided of course there is no prohibition against it, express or implied, in the Act.
These being the governing principles, in deciding whether loss resulting from embezzlement by an employee in a business is admissible as a deduction under section 10(1) what has to be considered is whether it arises out of the carrying on of the business and is incidental to it.
Viewing the question as a businessman would, it seems difficult to maintain that it does not.
A business especially such as is calculated to yield taxable profits has to be carried on through agents, cashiers, clerks and peons.
Salary and remuneration paid to them are admissible under section 10(2)(xv) as expenses incurred for the purpose of the business.
If employment of agents is incidental to the carrying on of business, it must logically follow that losses which are incidental to such employment are also incidental to the carrying on of the business.
Human nature being what it is, it is impossible to rule out the possibility of an employee taking advantage of his position as such employee and misappropriating the funds of his employer, and the loss arising from such misappropriation must be held to arise out of the carrying on of business and to be incidental to it.
(1) (1931) L.R. 58 I.A. 239, 252.
(2) , 315; , 188 696 And that is how it would be dealt with according to ordinary commercial principles of trading.
At the same time, it should be emphasised that the loss for which a deduction could be made under section 10(1) must be one that springs directly from the carrying on of the business and is incidental to it and not any loss sustained by the assessee, even if it has some connection with his business.
If, for example, a thief were to break overnight into ,he premises of a moneylender and run away with funds secured therein, that must result in the depletion of the resources available to him for lending and the loss must, in that sense, be a business loss, but it is not one incurred in the running of the business, but is one to which all owners of properties are exposed whether they do business or not.
The loss in such a case may be said to fall on the assessee not as a person carrying on business but as owner of funds.
This distinction, though fine, is very material as on it will depend whether deduction could be made under section 10(1) or not.
We may now examine the authorities in the light of the principles stated above.
In Jagarnath Therani vs Commissioner of Income tax (1), the facts were that the assessee who was carrying on business entrusted a sum of Rs. 25,000 to his gumastha for payment to a creditor, but he embezzled it.
The question referred for the opinion of the High Court was whether that sum could be allowed as deduction in the computation of profits.
In answering it in the affirmative, the learned Judges observed that according to the practice obtaining in England, sums embezzled by employees were allowed as deductions and referred to statements of the law to that effect from Sanders ' Income tax and Super tax, Murray and Carters ' Guide to Income tax Practice and to the following passage in Snellings ' Dictionary of Income tax and Super Tax Practice: ,,If a loss by embezzlement can be said to be necessarily incurred in carrying on the trade it is allowable as.
deduction from profits.
In an ordinary case it springs directly from the necessity of deputing (1)(1925) I.L.R. 4 Pat.
697 certain duties to an employee, and should therefore be allowed.
" They accordingly allowed the deduction as "a loss incidental to the conduct of the business".
In Ramaswami Chettiar vs Commissioner of Income Tax, Madras (1), the assessee was carrying on banking business in several places in India and in Burma.
On October 21, 1926 thieves broke into the strong room in the business premises at Moulmiengyum and stole cash and currency notes of the value of Rs. 9,335.
The question was whether this amount could be allowed as a deduction.
It was held by the majority of the Jndges that it could not be.
In the judgment of the learned Chief Justice, the law was thus stated: " If any one is paid a sum due to him as profits and he puts that in his pocket and on his way home is robbed of it, it would be, I think, difficult to contend that such a loss was incidental to his business.
Still more so when he has reached his home and put those profits in a strong room or some other place regarded by him to be a place of safety.
1 can well understand that, in cases where the collection of profits or payment of debts due is entrusted to a gumastha or servant for collection and that person runs away with the money or otherwise improperly deals with it, the assessee should be allowed a deduction because such a loss as that would be incidental to his business.
He has to employ servants for the purpose of collecting sums of money due to him and there is the risk that such servant may prove to be dishonest and instead of paying the profits over to him, convert them to his own use.
But I cannot distinguish the present case from the case of any professional man or trader who, having collected his profits, is subsequently robbed of them by a stranger to his business.
In this case, none of the thieves were the then servants of the assessee, although one of them had formerly been his cook. " These observations, while they support the right of the asssee to deduction of loss resulting from (1)(1930) I.L. R. , 906, 907.
698 embezzlement by an employee, also show the extent and limits of that right.
In Bansidhar Onkarmal V. Commissioner of Incometax (1), there was a theft of money by an accountant, but it took place after the office hours, and it was held, following the decision in Ramaswami Chettiar vs Commissioner of Income tax (2) that it could not be allowed as a deduction under section 10(1) of the Act, as it was not incidental to the carrying on of the trade.
But it was observed by Narasimham J. who delivered the leading judgment that it might have made a difference if the theft had been by the accountant during the office hours.
In Venkatachalapathy Iyer vs Commissioner of Income tax (3), the assessees were a firm of merchants engaged in the business of selling yarn.
Its accountant was one Rajarathnam lyengar, whose duty it was to receive cash on sales, make disbursements and maintain accounts.
He duly entered all the transactions in the cash book but when striking the balance at the end of each day he short totalled the receipts and overtotalled the disbursements and misappropriated the difference.
The question was whether the amounts thus embezzled could be deducted.
On a review of the authorities, Satyanarayana Rao and Raghava Rao JJ. held that the loss was incidental to the carrying on of the business and should be allowed.
The appellant contends that this decision is decisive in his favour ; but the learned Judges of the Court below were of the opinion that on the facts it was distinguishable and that the present case fell within the decision in Curtis vs J. & G. Oldfield, Limited (4).
It is necessary to examine the decision in Curtis vs
J. & G. oldfield (4) somewhat closely, as the main controversy in the Indian courts has been as to what was precisely determined therein.
There, the facts were that the managing director of a company who was in exclusive control of its business, had, availing himself of his position as such managing director, withdrawn large amounts from time to time and applied them to his own personal affairs.
This went on for (1) (3) (2) Mad. 904, 906, 907.
(4) 699 several years prior to his death, and thereafter, the fraud was discovered, and the amounts overdrawn by him were written off as irrecoverable.
The question was whether these amounts could be allowed as a deduction, and it was answered in the negative by Rowlatt J.
Now, it should be observed that the learned Judge did not say that amounts embezzled by an employee in the course of business would not be admissible deductions.
On the other hand, he observed: " I quite think, with Mr. Latter, that if you have a business. in the course of which you have to employ subordinates, and owing to the negligence or the dishonesty of the subordinates some of the receipts of the business do not find their way into the till, or some of the bills are not collected at all, or something of that sort, that may be an expense connected with and arising out of the trade in the most complete sense of the word." He went on to observe: " I do not see that there is any evidence at all that there was a loss in the trade in that respect.
It simply means that the assets of the Company moneys which the Company had got and which had got home to the Company, got into the control of the Managing Director of the Company, and he took them out.
It seems to me that what has happened is that he has made away with, receipts of the Company de hors the trade altogether in virtue of his position as Managing Director in the office and being in a position to do exactly what he likes." Thus, what the learned Judge really finds is that the embezzlement was not connected with the carrying on of the trade but was outside it, and on that finding, the decision can only be that the deduction should be disallowed.
But the learned Judges in the Court below would appear to have read the above observations as meaning that, as a rule of law, embezzlements made prior to the receipts of the amounts by the assessees would be incidental to the carrying on of the trade and therefore admissible, but that embezzlements 89 700 made after receipt are not connected with the carrying on of the trade and are therefore inadmissible.
We do not so read those observations.
It is a question turning on the facts of each case whether the embezzlement in respect of which deduction is claimed took place in the carrying on of the business, and the observations of the learned Judge that it did not so take place have reference to the facts of that case, and can afford no assistance in deciding whether in a given case the embezzlement was incidental to the conduct of the business or not.
Now, in Curtis vs J. & G. Oldfield Limited(1), the company was doing business in wine and spirit, and in such a business it is possible to hold that when once the price is realised and put into the bank, the trading has ceased and that the subsequent operations on the bank account are not incidental to the carrying on of the trade.
But here, we are dealing with a banking business, which consists in making advances, realising them and making fresh advances, and for that purpose, it is necessary not merely to deposit amounts in banks but also to withdraw them.
That is to say, a continuous operation on the bank account is incidental to the conduct of the business.
The theory that when once moneys are put into the bank they have " got home " and that their subsequent withdrawal from the bank would be de hors the business, will be altogether out of place in a business such as banking.
It will be a wholly unrealistic view to take of the matter, to hold that the realisations have reached the till when they are deposited in the bank, and that that marks the terminus of the business activities in money lending.
It should also be mentioned that in Curtis vs J. & 'G. oldfield (1) though the assessee was a company, it was found that the shares were all held by the members of the Oldfield family, that the company had no auditor and no minutes book, that there was Cc an almost entire absence of balance sheets ", and that one of the members, Mr. J. E. Oldfield, was in management with wide powers.
In view of the fact that he (1) 701 had a large number of shares in the company and that it was in substance a private company, his withdrawals would be more like a partner overdrawing his account with the firm than an agent embezzling the funds of his employer, and it could properly be held that such overdrawing has nothing to do with the trading activities of the firm, whose profits are to be taxed.
It would, therefore, be an error to suppose that the observations made by Rowlatt J. in the above context could be regarded as an authority for the broad proposition that as a matter of law, and irrespective of the nature of business, there could be no business activities with reference to moneys after they have been collected, and that, in consequence, embezzlement thereof could not be incidental to the carrying on of business.
And we should further add that it would make no difference in the admissibility of the deduction whether the employee occupies a subordinate position in the establishment or is an agent with large powers of management.
Subsequent to the decision now under appeal, the Bombay High Court had occasion to consider this question in Lord 's Dairy Farm Ltd. vs Commissioner of Income tax (1).
On a review of the authorities including the decision in Curtis vs J. & G. Oldfield, Limited (2), Chagla C. J. and Tendolkar J. held that loss caused to a business by defalcation of an employee was a trading loss, and that it could be deducted under section 10(1).
In Motipur Sugar Factory Ltd. vs Commissioner of Income tax (3), an employee who had been entrusted with the funds of a company for purposes of distribution among sugarcane growers in accordance with statutory rules, was robbed of them on the way.
It was held by Ramaswami and Sahai JJ.
that the loss was incidental to the conduct of the trade, and must be allowed.
We agree with the decisions in Venkatachalapathy Iyer vs Commissioner of Incometax (4), Lord 's Dairy Farm Ltd. vs Commissioner of Income tax (1) and Motipur Sugar Factory Ltd. vs Commissioner of Income tax(3).
(1) (1925) 9 Tax Cas. 319.
(3) 702 It was argued for the respondent that there was no evidence, much less proof, that when Chandratan withdrew funds from the bank, he did so for the purpose of making any advance, and that, therefore, the withdrawal could not be held to have been for the conduct of the trade.
That, in our opinion, is not necessary.
When once it is established that Chandratan was in charge of the business, that he had authority to operate on the bank accounts, and that he with drew the moneys in the purported exercise of that authority, his action is referable to his character as agent, and any loss resulting from misappropriation of funds by him would be a loss incidental to the carrying on of the business.
It was also contended that the power of attorney dated May 13, 1944, under which Chandratan was constituted agent related not only to the business of the appellant but also to his private affairs, and that there was no proof that the embezzlement was in respect of the business assets of the appellant and not of his private funds.
No such question was raised before the Income tax authorities, and their finding assumes that the moneys which were misappropriated were business funds.
We are also not satisfied that, on its true construction,, the authority conferred on the agent by the power of.attorney extended to the personal affairs of the appellant.
In the result, we are of opinion that the loss sustained by the appellant as a result of misappropiriation by Chandratan is one which is incidental to the carrying, on of his business, and that it should therefore deducted in computing the profits under section 10(1) of the, Act.
In this view, the order of the lower court must be set aside and the reference answered in the, affirmative.
The appellant will get his costs of this appeal and of the reference in the Court below.
appeal allowed.
| The appellant engaged an agent for the purposes of carrying on his business and conferred on him large powers of manage ment including authority to operate on bank accounts.
While acting under such authority the agent withdrew moneys from the bank and used them for the discharge of his personal debts.
The appellant was able to recover from the agent only a part of the amount misappropriated by him, and the balance had to be written off at the end of the accounting year as irrecoverable.
The question was whether the amount which was misappropriated and found irrecoverable was allowable as a deduction under the Indian Income tax Act in determining the profits of the appellant.
Held, that the amount in question is not allowable either as a bad debt under section 10(2)(Xi) or as a business expenditure under section 10(2)(XV) Of the Indian Income tax Act, 1922.
It can, however, be deducted in computing the profits of the appellant under 691 section 10(1) of the Act as a loss incidental to the carrying on of his business.
Where an agent or an employee of a businessman in charge of the business is given authority to operate on the bank accounts and withdraws moneys in the purported exercise of that authority, his action is referable to his character as such authorised agent or employee and any loss resulting from misappropriation of the money by him would be one incidental to the carrying on of the business, and it is not necessary to show that the money was withdrawn for the conduct of the business.
Curtis vs J. & G. Oldfield, and Rama swami Chettiar vs Commissioner of Income tax, Madras, Mad. 904, explained and distinguished.
Venkatachalapathy Iyer vs Commissioner of Income tax, , Lord 's Dairy Farm Ltd. vs Commissioner of Incometax, and Motipur Sugar Factory Ltd. vs Commissioner of Income tax, , approved.
|
Summarize this legal judgement text concisely | l Appeal No.5 of 1958.
Appeal by special leave from the judgment and order dated September 26, 1956, of the former Nagpur High Court in Letters Patent Appeal No. 66 of 1956, arising out of the judgment and order dated April 14, 1956, of the said High Court in Misc.
Petition No. 6 of 1956.
M. C. Setalvad, Attorney General of India, B. Sen, D. B. Padhya and I. N. Shroff, for the appellants.
R. V. section Mani, for the respondent.
April II.
The Judgment of the Court was delivered by S.K. DAS J.
This is an appeal by special leave.
The appellants before us are the Nagpur Electric Light and Power Co. Ltd. (hereinafter referred to as the Company), a public limited company having its registered office at Nagpur in Madhya Pradesh, its Manager, and Assistant Manager.
The respondent, Shreepathi Rao, joined the service of the Company as a typist on a salary of Rs. 30 per month in July, 1936.
He rose in rank from time to time and was appointed Deputy Head Clerk in 1947 in the grade of Rs. 120 10 225.
Since 1952 he has been receiving a basic salary of Rs. 245 per month.
On November 28, 1955, an explanation was called for from him with regard to the issue of certain bills to consumers of electricity called ".high tension consumers ", without having certain " notes for the information of consumers " printed at the back of the bills.
The respondent submitted his explanation on the next day, marking a copy thereof to one of the directors of the Company.
On December 2,1955, he was again asked to explain why he marked a copy of his explanation to one of the directors.
The respondent submitted an explanation in respect of this matter also.
On the same date, he was again asked to explain as to how and why certain " double adjustments " had been made in the accounts of 1954 relating to the consumers ' department of the Company, the allegation being that a sum of Rs. 1,05,894 7 7 which represented the amount of bills of the Central Railway had been deducted twice in the accounts.
The respondent submitted an explanation on December 3, 1955, in which he said that the charge was vague and that, after 1949, he was not in any way concerned with the preparation of summaries and annual statements of accounts of the consumers department.
On December 5, 1955, an order of suspension was made against the respondent which stated that the order was to take immediate effect and to remain in force until further orders, pending some investigation against the respondent.
Two days later, on December 7, 1955, a memorandum was served on the respondent terminating his services with effect from January 31,1956.
The memorandum, so far as it is relevant for our purpose, read We hereby give you notice under Standing Order 16(1) that your services will stand terminated as from 31st January, 1956.
The Company 's Managing Director is satisfied that it is not in the interests of the business of the Company to disclose reasons ' for terminating your services.
" On December 19, 1955, a notice was served on the Company on behalf of the respondent wherein it was stated that the order of suspension dated December 5, 1955, and the order of termination dated December 7, 1955, were illegal and ultra vires and a request was made to withdraw the said orders and reinstate the respondent within 24 hours, failing which the respondent said that he would take legal action in the matter.
On December 26, 1955, the Company sent a reply to the notice denying the allegations, and the company further stated that it had no desire to enter into a discussion with the respondent as to the propriety of the orders passed.
On January 2, 1956, the respondent filed a petition under article 226 of the Constitution in the High Court 466 at Nagpur in which he prayed for the issue of appropriate writs or directions quashing the orders of suspension and termination dated December 5, 1955, and December 7, 1955, respectively and asking for certain other reliefs.
This petition was heard by a learned single Judge on certain preliminary objections raised by the present appellants, and, by an order dated April 14, 1956, he upheld the preliminary objections and dismissed the petition.
The preliminary objections taken were these: it was urged that the service of the respondent was terminated in accordance with the Standing Orders of the Company, approved by the relevant authorities under the provisions of the (XX of 1946), hereinafter referred to as the central Act, and also under the provisions of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947 (C. P. and Berar Act XXlll of 1947), hereinafter called the local Act; and if the respondent had any grievance against the said Standing Orders, his only remedy was to get the Standing Orders amended as provided for in the relevant Act, but he had no right to move the High Court under article 226 of the Constitution for quashing the orders passed against him or for reinstatement, etc.
Alternatively, it was urged that if the Standing Orders did not apply in the case of the respondent as was the respondent 's case, then the Ordinary law of master and servant applied, and the only remedy of the respondent was to sue the Company in damages for wrongful dismissal.
On these preliminary objections the learned Judge held (1) that the respondent was not an employee within the meaning of the Standing Orders and therefore his case was not governed by the Standing Orders; (2) that the relationship between the appellants and the respondent was contractual and not statutory and the remedy of the respondent was to sue the Company in damages for wrongful dismissal; and (3) as for amendment of the Standing Orders so as to include the respondent and persons in his category, the only remedy open to the respondent was to take action under the relevant Act by approaching a recognised union to move in the matter.
467 On the dismissal of his petition, the respondent preferred an appeal under el.
10 of the Letters Patent.
This appeal was heard and allowed by a Division Bench on September 26, 1956, on the findings that (1) the Standing Orders did not apply to the respondent, though he was an employee within the meaning of that expression in section 2 (1) of the local Act ; (2) the conditions of the respondent 's service were governed by the provisions of the local Act and on a breach thereof, the respondent had a right to move the High Court for appropriate orders under article 226 of the Constitution; and (3) as the termination of the service of the respondent was without statutory authority, it must be vacated.
The Division Bench accordingly allowed the appeal, quashed the orders of suspension and termination of service and declared that the respondent continued to bean employee of the Company on terms which were applicable to him on the date of his suspension, namely, December 5, 1955.
There was also a direction to the Company to pay back wages to the respondent.
The appellants herein then moved this Court and obtained special leave to appeal from the order of the Division Bench, dated September 26, 1956.
The present appeal has been brought in pursuance of the order granting special leave to the appellants.
The first and foremost question which arises for decision in this appeal is whether the Standing Orders of the Company apply to the respondent.
We have already stated and it is not in dispute that the Standing Orders were approved by the certifying officer under the provisions of the central Act and by the Labour Commissioner under section 30 of the local Act.
It is necessary to explain here the general scheme of the provisions of the two Acts under which the Standing Orders were approved.
Under the central Act, the expression " Standing Orders " means rules relating to matters set out in the Schedule, and section 3 requires that within six months from the date on which the central Act becomes applicable to an industrial establishment the employer shall submit to the certifying officer five copies of the draft Standing Orders proposed by him 468 for adoption in his industrial establishment.
Sub section (2) of section 3 lays down that provision shall be made in such draft for every matter set out in the Schedule which may be applicable to the industrial establishment and where model Standing Orders have been prescribed, the draft shall so far as practicable, in conformity with such model.
The Schedule refers to the matters which are to he provided by Standing Orders, and item 8 of the Schedule relates to " termination of employment, and the notice thereof to be given by employer and workman We may state here that the central Act contains a definition of " workman " which, at the material time in this case, meant any person employed in any industrial establishment to do any skilled or unskilled, manual or clerical, labour for hire or reward, but did not include any member of the armed forces.
Sections 4 to 10 of the central Act deal with (a) conditions for certification of Standing Orders, (b) certification of Standing Orders, (e) appeals, (d) date of operation of Standing Orders, (e) register of Standing Orders, (f) posting of Standing Orders and (g) duration and modification of Standing Orders.
There are similar provisions in the local Act,Chapter IV of which deals with Standing Orders.
Sub section (1) of section 30 of the local Act lays down Every employer, in respect of any industry to which this Act has been made applicable under subsection (3) of section 1, shall, within two months of the (late of such notification, submit to the Labour Commissioner for approval, in such manner as may be prescribed, a copy of the Standing Orders concerning the relations between him and his employees with regard to all industrial matters mentioned in Schedule 1.
" Item 8 of Schedule I of the local Act is again " termination of employment, notice to be given by employer and employee ".
The other sub sections of section 30 lay down the procedure to be followed for the approval of Standing Orders by the Labour Commissioner, appeal by an aggrieved person, etc.
Sections 31 and 32 lay down the procedure for an amendment of the Standing Orders either at the instance of the employer or at the 469 instance of a representative of employees.
It is worthy of note that sub section
(1) of section 30 requires every employer to submit to the Labour Commissioner a copy of the Standing Orders concerning the relations between him and his employees with regard to all industrial matters mentioned in Schedule 1.
The local Act defines the expression " employee " and, at the relevant time, it meant 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.
It is worthy of note that the definition of " employee " in the local Act corresponds more or less to the definition of " workman " under the central Act.
There are some minor differences in the definition of the two expres sions in the two Acts, but with those differences we are not concerned in the present case.
The Standing Orders with which we are concerned in the present case came into force on November 14, 1951, and it is convenient at this stage to refer to the relevant Standing Orders.
Standing Order No. 2 defines certain expressions used in the Standing Orders.
It states In these Orders, unless there is anything repugnant in the subject or context (a) " employees " means all persons, male or female, employed in the Office or Mains Department or Stores or Power House or Receiving Station of the Company, either at Nagpur or at Wardha whose names and ticket numbers are included in the departmental musters.
(b) " The Manager " means the person appointed as such and includes the Assistant Manager and in relation to Wardha establishment " the Resident Engineer ".
(c) " Ticket " includes a Card, pass or token.
(d) " Workman " means such categories of employees as may from time to time be declared to be " Workman " by the Management ".
Standing Order No. 3 classifies employees into certain categories and Standing Order No. 4 deals with tickets.
In substance, it says that every workman, permanent 6 470 or temporary, shall have a ticket or card, and an apprentice shall have an apprentice card; the tickets or cards issued shall be surrendered when the workman is discharged or ceases to belong to the class of employment for which the card or ticket is issued.
It is to be noticed that under the definition clause " workman " means such categories of employees as may from time to time be declared, to be workmen by the management and Standing Order No. 4 makes it clear that every workman, permanent or temporary, will have a ticket.
Standing Order No. 16 deals with termination of employment, and cl.
(1) thereof, relevant for our purpose, must be quoted in full " For terminating the employment of a permanent employee, a notice in writing shall be given either by the employer or the employee, giving one calendar month 's notice.
The reasons for the termination of the services will be communicated to the employee in writing, if he so desires at the time of discharge, unless such a communication, in the opinion of the Management, may directly or indirectly lay the company and the Management or the person signing the communication open to criminal or civil proceedings at the instance of the employee, or the Company 's Managing Director is satisfied that it is not in the interests of the business of the Company to disclose the reasons and so orders in writing.
" Now, it is not in dispute that the respondent is a 'workman ' within the meaning of the Central Act and an 'employee ' as defined in the local Act.
controversy before us is as to whether he is an employee ' within the meaning of the Standing Orders.
Admittedly, no ticket has been issued to the respondent by the Company; his ticket number cannot, therefore, be included in the departmental muster.
The learned Judges of the High Court held that the inclusion of the name and ticket number in the departmental muster was an essential characteristic of an ' employee ' as defined for the purpose of the Standing Orders, and the mere fact of employment in the Office, Mains Department, Stores, Power House or Receiving Station of the Company was not enough to make a, 471 person so employed an 'employee ' within the meaning of the Standing Orders, and as the respondent did not fulfil the necessary condition of having his name and ticket number included in the departmental ' muster, he was not an 'employee ' as defined for the Standing Orders, which did not therefore apply to him.
On behalf of the appellants, it is contended that regard being had to the context and the entire body of the Standing Orders, the aforesaid view of the High Court is not correct, and on a proper construction, inclusion of the name and ticket number in the departmental muster is not an essential characteristic of an 'employee ' as defined for the Standing Orders.
It is rightly pointed out that if the possession of a ticket and a ticket number is taken as an essential characteristic of an ' employee ', then there is hardly any difference between an 'employee ' and a 'workman ' as defined in the Standing Orders; because a 'workmen ' means such categories of employees as may from time to time be declared to be workmen, and under Standing Order No. 4 all workmen must have tickets.
If a person em ployed by the company must have a ticket before he can be an employee, and if workmen are such categories of employees as have tickets, the distinction between the two disappears and.
it is difficult to understand why two definitions were necessary.
On a consideration, however, of ' the subject or context of the Standing Orders, read in their entirety and in harmony with one another, it becomes at once clear why two definitions are necessary and what is the distinction between the two classes , employees ' and ' workmen ' in the landing Orders.
The expression ' employee ' denotes a larger group namely, all persons, male or females who are employed in the Office, Mains Department, Stores, Power House, or Receiving Station of the Company, either at Nagpur or Wardha. 'Workmen ' denotes a smaller group, viz., such categories of employees as have been declared to be workmen, and who must have a ticket.
Such a distinction is clearly intelligible in an industrial establishment, where for security and other reasons a system of tickets or passes is necessary for those who 472 work in the Power House or Mains Department or other places where essential machinery is installed while others, such as the clerical staff, may work in an office building where security demands are either nonexistent or much less insistent.
This distinction means that all 'workmen ' are 'employees ', but all ` employees ' are not 'workmen ' for the purpose of the Standing Orders, and the inclusion of ticket numbers in the departmental musters will be applicable to those employees only to whom tickets have been issued; but such inclusion is not an essential characteristic of an employee.
Let us now see if such a distinction is consistent with the Standing Orders as a whole.
Standing Order No. 3, which classifies employees, defines a probationer in cl.
(c) and says that a probationer means an employee who is appointed in a clear vacancy on probation for a period not exceeding twelve months, etc.
Standing Order No. 4 does not require the issue of a ticket to a probationer; yet a probationer is an employee.
It is thus obvious that the Standing Orders do make a distinction between `employees ' and ` workmen ', and there may also be employees who have no tickets.
Some of the Standing Orders apply to workmen only, e. g., Standing Orders 12, 13, 14 and 15.
Other Standing Orders apply to all employees, whether they are workmen or not.
Standing Order No. 16 falls in the latter category ; it applies to all employees.
Standing Order No. 8 (b), we think, makes the position still more clear.
It says " Any employee, who after marking his attendance or presenting his ticket, card, or token, as the case may be, is found absent from his proper place of work during working hours without permission or without any sufficient reason, shall be liable to be treated as absent for the period of his absence.
" If every employee has to have a ticket, it is difficult to understand why this Standing Order should make a distinction between an employee who marks his attendance and another who presents his ticket, card or token.
Such a distinction is easily understandable when some employees do not possess a ticket, card or token, 473 so that they merely mark their attendance; while those who possess a ticket, card or token present it.
It has been suggested that Standing Order No. 4 is not exhaustive in the matter of issue of tickets; it talks of an issue of a ticket to every permanent workman, a card to every badli workman, a temporary ticket to every temporary workman, and an apprentice card to every apprentice.
It does not prescribe the issue of a pass or token, though the definition of a 'ticket ' includes a pass or token.
The suggestion further is that Standing Order No. 2 (a) itself authorises the issue of tickets to other employees, so that there may be one kind of tickets issued to workmen under standing Order No. 4 and another kind of tickets to other employees under Standing Order No. 2 (a).
On this view, it, is suggested that the alternatives mentioned in Standing Order No. 8 (b) really amount to an option given to an employee either to mark his attendance or present his ticket.
It is, however, difficult to understand the necessity of an option of this kind when every employee must have a ticket, particularly when the exercise of such an option is likely to defeat the very purpose for which tickets are issued in an industrial establishment.
We do not, however, think that the case of the respondent is in any way strengthened by holding that Standing Order No. 2 (a) itself authorises the issue of tickets to employees other than workmen.
Even on that construction, the failure of the Company to issue tickets under Standing Order No. 2 (a) will not deprive the employees of their real status as employees and of the benefit of the Standing Orders.
The direction for the issue of tickets will, in that view of the Standing Order, be an enabling provision only and not an essential characteristic of an employee.
Further, Standing Order No. 4 provides for the surrender of tickets issued thereunder but Standing Order No. 2 (a), if it is construed as enabling the Company to issue tickets, makes no provision for the surrender of tickets when the employee ceases to be an employee.
This absence of any provision for surrender applicable to such tickets 474 clearly implies that issue of tickets is not contemplated by the Standing Order No. 2 (a) itself.
On behalf of the respondent, however, the main argument has been of a different character.
It has been argued that there need not be one set of Standing Orders for all employees, and the Standing Orders in question being confined to those employees to whom tickets had been issued, the respondent who had no ticket was outside their purview, and the result was that the Company had committed a breach of the statutory provision in section 30 of the local Act in the sense that no Standing Orders had been made in respect of the respondent and employees like him to whom tickets had not been issued.
It hag been argued that, therefore, no action could be taken against the respondent either under the Standing Orders or even under the ordinary law of master and servant.
We are unable to accept this argument as correct.
We have pointed out that the Standing Orders themselves make a distinction between 'employees ' and `work men ', and there may also be employees who have no tickets.
To hold that the Standing Orders apply to those employees only to whom tickets have been issued will make employees synonymous with workmen a result negatived by two separate definitions given in Standing Order No. 2.
The central Act as well as the local Act contemplate the making of Standing Orders for all employees in respect of matters which are required to be dealt with by Standing Orders.
The Standing Orders in question were not objected to as being defective or incomplete by workmen, and they have been approved by the appropriate authority and they must be construed with reference to their subject or context.
In the absence of compelling reasons to the contrary, it should be held that they apply to all employees for whose benefit they have been made.
We see no compelling reasons for holding that the Standing Orders do not apply to the respondent.
In our view, and having regard to the subject or context of the Standing Orders, the words whose names and ticket numbers are included in the departmental musters " in Standing Order No. 2 (a) do 475 not lay down any essential characteristic of employee and are applicable only in cases where tickets have been issued to an employee.
The essential content of the definition of an employee is employment in the Office, Mains Department, eta., of the Company either at Nagpur or Wardha, and that of a workman the necessary declaration by the Company which would entitle him to a ticket under Standing Order No. 4.
There is also another relevant consideration which must be borne in mind in construing the Standing Orders in question.
Section 30 of the local Act imposes a statutory obligation on the employer to make, Standing Orders in respect of all his employees and a breach of the statutory obligation involves a criminal liability.
That being so, the court would be justified, if it can reasonably do so, to construe the Standing Orders so as to make them consistent with the compliance of the said statutory obligation.
We are not unmindful of the principle that in construing a statutory provision or rule, every word occurring therein must be given its proper meaning and weight.
The necessity of such an interpretation is all the more important in a definition clause.
But even a definition clause must derive its meaning from the context or subject.
In Courts vs The Kent Waterworks Company (1), the question for consideration was the interpretation of the appeal clause in an Act for Paving, Cleansing, Lighting, etc., of the Town and Parish of Woolwich (47 Geo.
III, Sess. 2, cap.
By the 16th section of the statute, " the commissioners are to make rates upon all and every the person or persons who do or shall hold, occupy, possess, etc., any land within the parish ".
The statute also gave a right of appeal to any person or persons aggrieved by any rate.
, but the appeal clause required the person or persons appealing against a rate to enter into a recognisance; the question was if this requirement was intended to exclude corporations from the purview of the ap.
peal clause, as corporations, it was urged, cannot enter, into a recognisance.
In interpreting the appeal clause, Bayley J. observed (1) ; ; 476 "But assuming that they cannot enter into a recognizance, yet if they ire persons capable of being aggrieved by and appealing against a rate, I should say that that part of the clause which gives the appeal applies to all persons capable of appealing, and that the other part of the clause which requires a recognizance to be entered into applies only to those persons who are capable of entering into a recognizance, but is inapplicable to those who are not." The same principle of interpretation was applied in Perumal Goundan vs The Thirumalarayapuram Jananukoola Dhanasekhara Sangha Nidhi (1), in construing the Explanation to O. XXXIII, r. 1, of the Code of Civil Procedure, which says inter alia that " a person is a pauper. . when he is not entitled to property worth one hundred rupees other than his necessary wearing apparel and the subject matter of the suit ".
The question was if the aforesaid provision applied to companies.
It was held that it would be wrong to construe the provision to mean that only persons who possess wearing apparel can sue as paupers.
We are of the view that the same rule of construction should apply in the present case, and the words " whose names and ticket numbers are included in the depart.
mental musters " occurring in Standing Order No. 2(a) should be read as " whose names and ticket numbers, if any, are included in the departmental musters " and should apply in the case of those employees only who possess tickets and whose ticket numbers are capable of being entered in departmental musters; they are not intended to exclude employees who do not possess tickets or to whom tickets have not been issued and consequently whose names only are so entered.
The learned Judges of the High Court were influenced by the circumstance that in an earlier case D. C. Dungore vs section section Dandige Miscellaneous Petition No. 134 of 1954 decided by the same High Court on September 23, 1955) the Company took tip the stand that the Standing Orders applied to employees to Whom tickets had been issued a stand different from and inconsistent with that taken in the present case, (1) Mad.
477 It may be pointed out, however, that 1).
C. Dungore of the earlier case was not an employee within the meaning of the relevant Act, and there could be no Standing Orders in respect of his conditions of service.
Moreover, in the matter of construction of a statutory provision no question of estoppel arises, and the learned Judges had pointed out that the respondent himself thought that the Standing Orders applied to all employees.
We have rested our decision as to the applicability of the Standing Orders not on what the appellants or the respondent thought at one time or another, but on a true construction of the Standing Orders themselves, including the definition clause in Standing Order No. 2(a).
We take the view that the Standing Orders apply to the respondent.
This is really decisive of the appeal, because if the Standing Orders apply to the respondent and his service has been terminated in accordance with Standing Order No. 16(1), the writ application which the respondent made to the High Court must fail.
The learned Attorney General appearing for the appellants addressed us on the scope and ambit of article 226 of the Constitution, and he contended that even if the respondent had been wrongfully dismissed by his private employer, the proper remedy was by mean,,; of a suit and not by invoking the special writ jurisdiction of the High Court.
These contentions raise important questions, but we do not think that we are called upon to decide them in this case.
Lastly, it has been urged oil behalf of the respondent that even if we hold that the Standing Orders apply to the respondent, we should remand the case to the High Court for a decision on merits of other points raised by the respondent, because the question whether the Standing Orders apply or not was treated as a preliminary issue by the High Court and no decision was given on other points.
We asked learned Advocate for the respondent what other points remain for decision oil his writ application, once it is held that the Standing Orders apply to the respondent and 6 478 his service has been terminated in accordance with Standing Order No. 16(1).
Learned Advocate then referred us to Standing Order No. 18, which provides for penalties for misconduct, and submitted that the provisions thereof have not been complied with by the appellants.
He particularly referred to cl.
(e) of Standing Order No. 18 and submitted that the order of suspension passed against the respondent was in violation of the safeguards mentioned therein.
The short answer to this argument is that no penalty for mis conduct has been imposed on the respondent under Standing Order No. 18.
The Company paid his salary to the respondent from the date of suspension to January 31, 1956, which also showed that no order was passed by way of punishment for misconduct.
The Company chose to terminate the service of the respondent in accordance with Standing Order No. 16, and did not think fit to proceed against the respondent for any alleged misconduct, and it was open to the Company to do so.
So far as Standing Order no 16.
is concerned, all the requirements thereof have been complied with.
That being the position, no other point remains for decision in the present case.
The result, therefore, is that the appeal succeeds and is allowed.
The judgment and order of the High Court dated September 26, 1956, are set aside and the writ petition of the respondent is dismissed.
In view of the stand which the appellants had taken in the earlier case with regard to the Standing Orders, we think it proper to say in this case that the parties must bear their own costs throughout.
Appeal allowed.
| The services of the respondent, an employee of the appellant company, were terminated in accordance with the Standing Orders of the company, approved by the appropriate authorities under the provisions of the , and the Central Provinces and Berar Industrial Disputes Settlement Act, 1947.
Standing Order NO. 2(a) defined " employees " as " all persons . employed in the Office or Mains Department or Stores or Power House or Receiving Station of the Company . whose names and ticket numbers are included in the departmental musters ".
The Standing Orders also defined the term " workman " and provided that every workman should have a ticket.
No ticket had been issued to the respondent by the company, and consequently his ticket number was not included in the departmental muster.
The respondent challenged the validity of the order terminating his services by an application made before the High Court under article 226 of the Constitution on the grounds, inter alia, that the Standing Orders in question were confined to those employees only to whom tickets were issued, and that as no ticket was issued to him he was not an employee within the meaning of the Standing Orders which did not therefore apply to him and, consequently, the termination of his services under Standing Order No. 16(1) was illegal: Held, (1) that the words " whose names and ticket numbers are included in the departmental musters " occurring in Standing Order NO. 2 (a) should be read as " whose names and ticket numbers, if any, are included in the departmental musters "; Cortis vs The Kent Water Works Company ; ; ; and Perumal Goundan vs The Thirumalarayapuram jananukoola Dhanasekhara Sangha Nidhi, Mad. 624, applied.
(2)that under the Standing Orders, in which a distinction is made between 'employees ' and 'workmen ', while every workman must have a ticket, there may be employees who may have no tickets the possession of which is not an essential characteristic of an employee; and, (3)that the Standing Orders apply to all employees for whose benefit they have been made.
464 Accordingly, the Standing Orders were applicable to the respondent and the termination of his service in accordance with Standing Order No. 16(1) was valid and, therefore, the application made by him to the High Court must fail.
|
Summarize this legal judgement text concisely | Appeal No. 76 of 1958.
Appeal by special leave from the judgment and order dated September 26, 1957, of the Election Tribunal, Dharwar, in Election Petition No. 52 of 1957.
G. section Pathak, H. J. Umrigar and G. C. Mathur, for the appellant.
P. Ram Reddy, for respondent No. 1.
G. section Pathak and section, section Shukla, for the interveners.
April 22.
The Judgment of the Court was delivered by BHAGWATI J.
This is the 4th of the series of Civil Appeals before us arising out of election petitions and involving the interpretation of the relevant sections of the Representation of the People Act, 1951 (hereinafter referred to as " the Act ").
The decision of this appeal turns on the construction of section 97 'of the Act and also on the jurisdiction of the Election Tribunals to allow withdrawal or abandonment of part of the claims before them.
The appellant and respondents 1 to 3 were the contesting candidates for election to the Mysore Legislative Assembly from the Dharwar Constituency in the last General Elections.
The appellant was the Congress candidate and the first respondent was the candidate of the Lok Sevak Sangh party.
The result of the election was declared on March 3, 1957, and the appellant was declared elected by a majority of 1,727 votes.
On April 14, 1957, the first respondent pre sented to the Election Commission a Petition, being Election Petition No. 52 of 1957 under section 80 of the Act wherein besides claiming a declaration that the election of the appellant was void he claimed a further declaration that he, the first respondent, had been duly elected as he had secured the next highest number of valid votes.
The Election Petition was published in 613 the official gazette and was then referred to the Election Tribunal for trial. 'The appellant and the respondents Nos. 2 and 3 received a notice from the Election Commission requiring them to appear before the Tribunal on or before July 20, 1957.
On the said date, the first respondent submitted before the Election Tribunal what purported to be an application under 0. 23, r. 1, of the Code of Civil Procedure to the following effect : " The petitioner hereby abandons part of his claim namely " that it be further declared that the petitioner has been duly elected as the petitioner has secured the next highest number of valid votes.
" The petitioner confines his claim, therefore, to have the election of respondent No. 1 declared void and to have costs of the proceedings awarded to him.
" On July 25, 1957, the appellant filed his objections to the said application contending inter alia, that by reason of the fact that the first respondent had claimed in his Election Petition a declaration that he was duly elected, the appellant and the other respondents to the Election Petition had acquired a right under section 97 of the Act, to file recrimination against the first respondent subject of course to compliance with the necessary statutory provisions in that behalf, and that such right to file recrimination could not be affected by the purported abandonment of the relief by the first respondent.
On July 29, 1957,.
the appellant gave notice of his recrimination under section 97.
The said notice was accompanied by the statement and necessary particulars as required by section 97 read with section 83 of the Act and was given within 14 days from the date of the commencement of the trial, viz., July 20, 1957.
The particulars of corrupt practices under section 123(1) (a) and (b) and section 123(6) of the Act thus given by the appellant comprised corrupt practices of bribery and using of motor vehicles for the conveyance of voters to the poll which if proved would have led to his disqualification for standing as a candidate and from.
being a member of the Legislature for a period of six years counting from the date on which the finding of the Election Tribunal as to such practice took effect under the Act (Vide section 140).
614 On August 1, 1957, the first respondent filed an objection to the above mentioned notice under section 97 wherein he contended inter alia that the appellant was not entitled to give evidence in recrimination as the claim for further declaration had been abandoned by him.
There had been a vacancy for a Legislative Assembly seat from a neighbouring constituency on account of the death of Shri B. R. Tambakad on June 26, 1957, and the first respondent decided to con test the election in the vacancy, filed his nomination paper for the said vacancy on September 17,1957, and was duly elected on October 16, 1957, as a member of the Mysore Legislative Assembly from the Kalaghatgi Constituency.
The application of the first respondent under 0. 23, r. 1, of the Code of Civil Procedure.
, the notice of recrimination given by the appellant under section 97 and the objection filed by the first respondent to the same came up for hearing before the Election Tribunal, Dharwar, and the Tribunal framed the following issues: " (1) Whether the 1st respondent is entitled to abandon a part of his claim in the manner he has done ? (2) If so, whether the appellant will be entitled to give notice to the Tribunal of his intention to give evidence to prove that the election of the first respondent would have been void if he had been the returned candidate ? (3) Whether the notice of recrimination given by the appellant is barred by limitation ? " The Tribunal held that by virtue of the provisions of section 90(1) of the Act the procedure prescribed by the Code of Civil Procedure had been made applicable to proceedings in election petitions and as such under the provisions of 0. 23, r. 1, of the Code of Civil Procedure the first respondent had a right to abandon a part of his claim.
It further held that in view of the abandonment of part of the claim by the first respondent, viz., that he be declared as the duly elected candidate, neither the appellant nor respondents Nos. 2 and 3 would be entitled to give notice of recrimination under 615 section 97 and consequently the appellant would not be entitled to give evidence to prove that the election of the first respondent would have been void if he had been the returned candidate.
It also held that the notice of recrimination given by the appellant was not barred by limitation, inasmuch as under explanation to section 90(4) the trial of the petition was deemed to commence on the date fixed for the appellant and the respondents Nos. 2 and 3 to appear before the Tribunal, viz., July 20, 1957, and the notice of recrimination had been given by the appellant within 14 days thereof.
The Tribunal accordingly ordered that the abandonment of a part of his claims aforesaid should be noted on the petition and further ordered that the appellant could not give evidence to prove that the election of the first respondent would have been void if he had been the returned candidate inasmuch as on the abandonment of that part of the claim by the first respondent the recrimination put in by the appellant did not survive.
The appellant applied for and obtained on January 13, 1958, from this Court special leave to appeal under article 136 of the Constitution to appeal against the decision of the Election Tribunal and that is how this Civil Appeal No. 76 of 1958 has come before us.
Section 97 of the Act reads as under : " Recrimination when, seat claimed: (1) When in an election petition a declaration that any candidate other than the returned candidate has been duly elected is claimed, the returned candidate or any other party may give evidence to prove that the election of such candidate would have been void if he bad been the returned candidate and a petition had been presented calling in question his election: Provided that the returned candidate or such other party as aforesaid shall not be entitled to give such evidence unless he has, within fourteen days from the date of the commencement of the trial, given notice to the Tribunal of his intention to do so and has also given the security and the further security referred to in sections 117 and 118 respectively.
(2) Every notice referred to in sub section (1) shall 616 be accompanied by the statement and particulars required by section 83 in the case of an election petition and shall be signed and verified in like manner.
Under the terms of this section a right of recrimination accrues to the returned candidate or any other party to the Election Petition where the petitioner besides claiming a declaration that the election of all or any of the returned candidates is void, claims a further declaration that any candidate other than the returned candidate has been duly elected.
Would it then be open to the petitioner to abandon that part of 'the relief which claimed such further declaration so as to deprive the returned candidate or any other party to the petition of the right of recrimination which has thus accrued to him; or in other words, has the Election Tribunal the power to allow the petitioner to withdraw or abandon a part of his claim as aforesaid thus rendering the exercise of the said right of recrimination nugatory ? It is necessary at the outset, therefore, to understand the nature and scope of an Election Petition.
As has been observed by us in the judgment just delivered in Civil Appeals Nos. 763 & 764 of 1957 and Civil Appeal No. 48 of 1958: " An election contest is not an action at law or a suit in equity but is a purely statutory proceeding unknown to the common law and that the court possesses no common law power.
" An election petition is not a matter in which the only persons interested are candidates who strove against each other at the elections.
The public also are substantially interested in it and this is not merely in the sense that an election has news value.
An election is an essential part of the democratic process.". . . . .
An election petition is not a suit between two persons, but is a proceeding in which the constituency itself is the principal party interested.
617 (Vide Jagan Nath vs Jaswant Singh (1), A. Sreenivasan vs Election Tribunal, Madras (2), The Tipperary case (3)).
An Election Petition presented to the Election Commission is scrutinised by it and if the Election Commission does not dismiss it for want of compliance with the provisions of section 81, section 82 or section 117 of the Act, it accepts the same and causes a copy thereof to be published in the official gazette and a copy thereof to be served by post on each respondent.
The respondents to the petition not only get notice of the same but the constituency as a whole receives such notice by publication thereof in the official gazette so that each and every voter of the constituency and all parties interested become duly aware of the fact of such Election Petition having been presented.
A copy of the Election Petition published in the official gazette would also show to all of them that the petitioner in a particular Election Petition, in addition to claiming a declaration that the election of all or any of the returned candidates is void, has also claimed a further declaration that he himself or any other candidate has been duly elected.
The whole constituency is thus alive to the fact that the result of the election duly declared is questioned on various grounds permitted by law with the likely result that the election of all or any of the returned candidates may be declared void and the petitioner or any other candidate may be declared duly elected, in place and stead of the returned candidate.
The constituency may have an interest in either maintaining the status quo or if perchance the election of the returned candidate is set aside, in seeing that some other deserving candidate is declared elected in his place and stead and not necessarily the petitioner or any other candidate sponsored by him whose election could be challenged on any of the grounds mentioned in section 100(1).
It is this interest of the constituency as a whole which invests the proceedings before the Election Tribunals with a characteristic of their own and differentiates them from (1) ; , 895.
(2) (1955) II E.L.R. 278, 293.
(3) ,23. 618 ordinary civil proceedings.
Once this process has been set in motion by the petitioner he has released certain forces which even he himself would not be able to recall and he would be bound to pursue the petition to its logical end.
It may be that he may not be able to substantiate his claim for a declaration that the election of all or any of the returned candidates is void.
In that event he would of course fail and no question would arise of his obtaining a further declaration that lie himself or any other candidate has been duly elected.
All the grounds urged in the Election Petition against the returned candidates under section 100(1) of the Act would fail and the election would stand.
The voters would thus be vindicated.
If the petitioner, however, succeeds in establishing his first claim and the election of the returned candidate is declared void, the question would necessarily arise when such a further declaration has been claimed by him whether he himself or any other candidate should be declared duly elected.
In that event, the occasion would arise for considering whether the petitioner himself or any other candidate sponsored by him should be declared duly elected.
If the election of the petitioner or such other candidate could have been challenged on any of the grounds mentioned in section 100(1) such election would certainly have been void if he had been a returned candidate and the petition had been presented calling in question his election.
A recrimination could there.
fore be filed by the returned candidate or any other party to the petition under section 97.
The requisite notice under section 97 would be accompanied by the statement and particulars required by section 83 in the case of an election petition and signed and verified in like manner.
, This notice would be, in effect, a counter ' petition presented by the returned candidate or any other party to the petition accompanied by the statement and particulars required by section 83 in the case of ,in election petition and would also be supported by the deposit of security and further security referred to in sections 117 and 118 of the Act.
The election contest would then not only be between the petitioner on the one hand and the returned candidate on the other but 619 also between the returned candidate or any other party to the petition and the candidate who has been sponsored by the petitioner for such election.
An election contest as aforesaid would result in the declaration of the properly qualified candidate as duly elected and the maintenance of the purity of the elections in which the constituency as a whole is vitally interested and no person would get elected by flagrant breaches of the election law or by corrupt practices.
This is the purpose of a recrimination and the right to file a recrimination accrues to the returned candidate or any other party to the petition the moment an election petition is presented containing a claim for a further declaration that the petitioner himself or any other candidate has been duly elected.
The proviso to section 97(1) merely enacts conditions for the exercise of such right of recrimination and states that the returned candidate or such other party is not to be entitled to give such evidence unless he has, within fourteen days from the date of commencement of the trial, given notice to the Tribunal of his intention to do so and has also given the security and the further security referred to in sections 117 and 118 respectively.
If these conditions are fulfilled in the manner therein specified the returned candidate or such other party will be entitled to give such evidence which right of course would not be capable of being exercised if either of these two conditions has not been fulfilled.
The accrual of this right, however, is not postponed till the fulfilment of these conditions.
It accrues the moment an election petition containing a claim for such further declaration is presented to the Election Commission.
If once such a right has accrued to the returned candidate or any other party to the petition, can that right be affected by the petitioner seeking to withdraw or abandon that part of his claim, viz., a claim for a further declaration that he himself or any other candidate has been duly elected ? If it were permissible for him to withdraw or abandon a part of his claim on the analogy of 0. 23, r. 1, of the Code of Civil Procedure, 79 620 he would make a virtue of necessity and withdraw or abandon that part of his claim so as to avoid any investigation in the Election Petition itself in regard to himself or any other candidate sponsored by him on any of the grounds mentioned in section 100(1) including corrupt practices within the meaning of section 123 which if proved would entail a disqualification for standing as a candidate or even for voting for a period of 6 years under sections 140 and 141(b).
So far as withdrawal of petitions is concerned there are specific provisions enacted in the Act beginning with section 108.
Section 108 deals with the withdrawal of petitions before the appointment of Tribunals and provides that an election petition may be withdrawn only by leave of the Election Commission if an application for its withdrawal is made before any Tribunal has been appointed for the trial of such petition.
Section 109 deals with the withdrawal of petitions after the appointment of Tribunals and enacts that where an application for withdrawal of an election petition is made after a Tribunal has been appointed for the trial of such petition, the election petition may be withdrawn only by leave of the Tribunal and a notice of such an application fixing a date for the hearing of the application is to be given to all other parties to the petition and is to be published in the official gazette.
Section 110 prescribes the procedure for withdrawal of petitions before the Election Commission or the Tribunal and section 110(2) provides that no application for withdrawal is to be, granted if in the opinion of the Election Commission or of the Tribunal, as the case may be, such application has been induced by any bargain or consideration which ought not to be allowed.
If such an application is granted, notice of the withdrawal is to be published in the official gazette by the Election Commission or by the Tribunal as the case may be; and a person who might himself have been a petitioner may, within fourteen days of such publication apply to be substituted as petitioner in place of the party withdrawing, and upon compliance with the conditions of section 117 as to security, is to be entitled to be so substituted and to continue the proceedings 621 upon such terms as the Tribunal may think fit.
When an application for withdrawal is granted by the Tribunal and no person has been substituted as, petitioner in place of the party withdrawing as above, the Tribunal is to report the fact to the Election Commission and thereupon the Election Commission shall publish the report in the official gazette.
This will ring the curtain on the election contest and the result of the election which has been duly declared will no more be liable to be disturbed.
There are also provisions enacted in the Act which provide for the consequences of the death of a sole petitioner or of the survivor of several petitioners or the death or withdrawal of opposition by the sole respondent therein.
Section 112 provides that an election petition shall abate on the death of a sole petitioner or of the survivor of several petitioners.
If an election petition thus abates before a Tribunal has been appointed for the trial of the petition, notice of the abatement shall be published in the official gazette by the Election Commission (Vide section 113).
If on the other hand an election petition abates after a Tribunal has been appointed for the trial of the petition, notice of the abatement has to be published in the official gazette by the Tribunal (Vide section 114).
The death of a sole petitioner or of the survivor of several petitioners, however, does not spell the termination of the proceedings and section 115 provides that after a notice of the abatement of an election petition is published under section 113 or section 114 any person who might himself have been a petitioner may, within fourteen days of such publication, apply to be substituted as petitioner and upon compliance with the conditions of section 117 as to security shall be entitled to be so substituted and to continue the proceedings upon such terms as the Tribunal may think fit.
The position as it obtains on the death or withdrawal of opposition by a respondent is worked out in section 116 which provides that if before the conclusion of the trial of an election petition the sole respondent dies or gives notice that he does not intend to oppose the petition or any of the respondents dies or gives such notice and 622 there is no other respondent who is opposing the petition the Tribunal shall cause notice of such event to be published in the official gazette, and thereupon any person who might have been a petitioner may, within fourteen days of such publication, apply to be substituted in place of such respondent to oppose the petition, and shall be entitled to continue the proceedings upon such terms as the Tribunal may think fit.
The above provisions go to show that an election petition once filed does not mean a contest only between the parties thereto but creates a situation which the whole constituency is entitled to avail itself of.
Any person who might himself have been a petitioner is entitled to be substituted, on the fulfilment of the requisite conditions and upon such terms as the Tribunal may think fit, in place of the party with drawing and even the death of the sole petitioner or of the survivor of several petitioners does not put an end to the proceedings, but they can be continued by any person who might himself have been a petitioner.
Even if the sole respondent dies or gives notice that he does not intend to oppose the petition or any of the respondents dies or gives such notice and there is no other respondent who is opposing the petition, a similar situation arises and the opposition to the petition can be continued by any person who might have been a petitioner, of course on the fulfilment of the conditions prescribed in section 116.
These provisions therefore show that the election petition once presented continues for the benefit of the whole constituency and cannot come to an end merely by the withdrawal thereof by the petitioner or even by his death or by the death or withdrawal of opposition by the respondent but is liable to be continued by any person who might have been a petitioner.
If, therefore, an election petition duly presented cannot be thus withdrawn by the petitioner, is there any warrant for the contention that even though he may not be able to withdraw his petition in the manner aforesaid he can at least abandon a part of his claim on the analogy of 0. 23, r. 1, of the Code of Civil 623 Procedure? The whole petition cannot be withdrawn; but would it not be possible for the petitioner to withdraw or abandon a part of his claim as above? The provisions of section 90 of the Act are sought to be relied upon in support of this contention.
Section 90(1) provides that subject to the provisions of the 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 to the trial of suits, provided however that the Tribunal shall have the discretion to refuse for reasons to be recorded in writing to examine any witness or witnesses if it is of the opinion that their evidence is not material for the decision of the petition or that the party tendering such witness or witnesses is doing so on frivolous grounds or with a view to delay the proceedings.
Under section 90(2) the provisions of the , shall subject to the provisions of this Act, be deemed to apply in all respects to the trial of an election petition.
Section 90(4) provides that any candidate not already a respondent shall, upon application made by him to the Tribunal within fourteen days from the date of commencement of the trial and subject to the provisions of section 119, be entitled to be joined as a respondent.
Section 90(5) provides that the Tribunal may, upon such terms as to costs and otherwise as it may deem fit, allow the particulars of any corrupt practice alleged in the petition to be amended or amplified in such manner as may in its opinion be necessary for ensuring a fair and effective trial of the petition, but shall not allow any amendment of the petition which will have the effect of introducing particulars of a corrupt practice not previously alleged in the petition.
It is clear from the above that the section only provides for the procedure for the trial of election petitions by the Tribunals.
It provides for the examination of witnesses, the rules of evidence to be followed, the joinder of candidates not already respondents as respondents and the amendment or amplification of particulars of a corrupt practice already alleged in the petition.
The powers of a Tribunal are, however, separately dealt with in section 92 624 which enacts that the Tribunal shall have the powers which are vested in a court under the Code of Civil Procedure, when trying a suit in respect of the following matters: (a) discovery and inspection; (b) enforcing the attendance of witnesses, and requiring the deposit of their expenses; (e) compelling the production of documents; (d) examining witnesses on oath; (e) granting adjournments; (f) reception of evidence taken on affidavit; and (g) issuing commissions for the examination of witnesses, and may summon and examine suo motu any person whose evidence appears to it to be material; and shall be deemed to be a civil court within the meaning of sections 480 and 482 of the Code of Criminal Procedure, 1898.
It will be noticed that the procedure for trial before the Tribunal and the powers of the Tribunal are treated separately thus distinguishing between the procedure to be followed by the Tribunal and the powers to be exercised by it.
There are also other provisions to be found in the Act which relate to place of trial (section 88); Power of Election Commission to withdraw and transfer Petitions (section 89); appearance before Tribunal (section 91); documentary evidence (section 93); answering of criminating questions and certificate of indemnity (section 95) and expenses of witnesses (section 96).
The effect of all these provisions really is to constitute a self contained Code governing the trial of election petitions and it would appear that in spite of section 90(1) of the Act, the provisions of 0. 23, r. 1, of the Code of Civil Procedure, would not be applicable to the trial of election petitions by the Tribunals.
If the withdrawal of a petition cannot be permitted and any person who might have been a petitioner is entitled to continue the proceedings, on a parity of reasoning, the withdrawal of a part of the claim also could not be permitted without allowing another person who might have been a petitioner an opportunity of proceeding with that part of the claim by substituting himself in place and stead of the petitioner who withdraws or abandons the same.
If the constituency as a whole is interested in the petition presented before the Election Tribunal no such withdrawal or abandonment of a part of the claim could ever be permitted without giving an 625 opportunity to any person who might have been a petitioner to continue the proceedings and pursue the petition to its logical conclusion.
The provisions of 0. 23, r. 1, of the Code of Civil Procedure also contain inherent evidence which militates against this contention.
Order 23, r. 1, sub rule (2), provides for liberty being given by the Court to a party withdrawing or abandoning a part of his claim to file a fresh suit on the same cause of action, if so advised.
In the very nature of things such liberty could not be reserved to a petitioner in an election petition.
The provisions above referred to in regard to withdrawal of petitions do not provide for the same and if they do not do so, can it be urged that the provisions of 0. 23, r. 1, sub rule (2), though they may not apply to the cases of withdrawal of petitions may nevertheless apply where the petitioner withdraws or abandons a part of his claim ? If these provisions do not apply to the withdrawal or abandonment of a part of the claim in the case of an election petition, could it then be urged that nevertheless the other provisions of O. 23, r. 1, would apply and the petitioner would be at liberty to withdraw or abandon a part of his claim ? On a due consideration of all these provisions, we are of opinion that the provisions of O. 23, r. 1, do not apply to the election petitions and it would not be open to a petitioner to withdraw or abandon a part of his claim once an election petition was presented to the Election Commission, more so when such a withdrawal or abandonment of a part of the claim would have the effect of depriving the returned candidate or any other party to the petition of the right of recrimination which had accrued to him under section 97 of the Act.
This is also the position in England.
Halsbury 's Laws of England, 3rd Ed., Vol.
14, para.
451, p. 258, contains the following passage under the caption Amendment of petition " : " The withdrawal of that portion of a petition which claims the seat cannot, however, be effected by way of amendment because the rights of the electors would be affected by their not having the opportunity of substituting another petitioner.
626 See also the passage at ibid p. 300, para.
541 : " It seems that where the petition prays the seat, recriminatory evidence may be offered, notwithstanding, that the prayer for the seat is abandoned at the trial.
The case of Aldridge vs Hurst (1) elucidates this position.
Grove J. in that case observed as follows: " Numerous provisions of the Act have reference not merely to the individual interests or rights of petitioners or respondents, but to rights of electors, of constituencies, and of the public, in purity of election and in having the member seated who is duly returned by a majority of proper votes.
It appears to us also that the scope of the Act is, that petitions should not be mere pleadings, nor framed for the purpose of intimidating or in any way inducing, the respondent to abandon his seat; still less, of course, should they be collusive; but that they should be real, well considered, and not lightly withdrawn either in whole or part . . . . . . . .
These section show that not mearely may the candidate who is not returned claim the seat, or in other words claim to have been duly elected, but that any other voter might claim the seat for a candidate who has not been returned.
" This right petitioning shows that the Act contemplates, in regard to petitions, not merely the rights of candidates not returned, but the rights of the constituency to insure that the person really elected should be their member; and this without the cost and disturbance of a new election, as the judge 's decision in favour of such claim is final." " It appears to us that it would be an infringement of this right, if, a petition having been presented by one person (in this case a candidate) claiming the Beat, the claim to the seat could be withdrawn by the mere motion of the person presenting it, after the twenty one days, when no other petition could be presented, and thus the voters be prevented from claiming (1) , 413, 414. 415, 417 627 the seat for one who may be the duly elected representative; or, on the other hand, from shewing by means of the recriminative charges which put in issue the claim, that the claimant is not a person entitled to the seat by that election or that he is disqualified for future elections; such withdrawal not being accompanied by the power to substitute another person as petitioner, by means of which the inquiry might be gone into at the trial. " " It appears to us that the withdrawal of this portion of the prayer of the petition is in pari materia with, even if it is not within, the provisions of the Act relative to the withdrawal of a whole petition." " It is also to be observed that, although petitions may be presented at the last moment, it is commonly known in the county or borough that such petitions are likely to be presented ; and if any suspicion exists that they are sham petitions, means are taken by those who are in earnest to lodge petitions; and the entire withdrawal of collusive petitions is guarded against by the provisions of the Act to which we have alluded." " In one point of view it is an argument against our allowing this prayer to be withdrawn, that, if there be no power under the withdrawal clauses to substitute a person for the petitioner as to this prayer, the constituency will be without means of proving either that the petitioner is the duly elected member, or to answer his allegation that he is elected, or to shew that he is unfit to serve in a future parliament, he himself having raised this issue by claiming the seat.
" It is, therefore, clear that there is no power in the Election Commission to allow a petitioner to withdraw or abandon a part of his claim either by having resort to the provisions of 0. 23, r. 1, of the Code of Civil Procedure or otherwise.
If that is so, the right of recrimination which has once accrued to the returned candidate or any other party to the petition under section 97 of the Act cannot be taken away, and the returned candidate or any other party to the petition would in 80 628 such circumstances be entitled to give evidence to prove that the election of the petitioner or any other candidate sponsored by him would have been void if he had been the returned candidate and a petition had been presented calling in question his election.
The counter petition which has in effect been thus filed by the returned candidate or any other party to the petition must be allowed to proceed and the right of recrimination should continue to be exercised notwithstanding the attempted abandonment of a part of his claim by the petitioner with the inevitable result that if any corrupt practice within the meaning of section 123 were proved against the petitioner or any other candidate sponsored by him it would entail upon him the disqualification for standing as a candidate or even for voting for a period of 6 years under sections 140 and 141(b).
In the present case, such proof on the part of the appellant would have not only entailed upon the lst respondent a disqualification for voting but even for standing as a candidate for a period of six years, with the inevitable consequence that his election to the Mysore Legislative Assembly from the Kalaghatgi constituency on October 16, 1957, would have been void and lie would have been unseated.
We have, therefore, come to the conclusion that the order passed by the Election Tribunal allowing abandonment of a part of the claim by the first respondent and precluding the appellant from giving evidence to prove that the election of the first respondent would have been void if he had been the returned candidate was clearly erroneous and liable to be set aside.
We accordingly allow the appeal and reverse the order passed by the Election Tribunal dated September 26, 1957.
The Election Tribunal shall proceed with the trial of the election petition on the claims as they were originally included in the petition and will also allow the appellant to exercise his right of recrimination under section 97 of the Act.
The first respondent will pay the appellant 's costs of this appeal and the costs thrown away before the Election Tribunal.
Appeal allowed.
| A, the unsuccessful candidate at an election, filed an elec tion petition against B, the successful candidate, claiming a declaration ' that the election of B was void and that lie had been duly elected as he had secured the next highest number of valid votes.
On the first date of the hearing before the Election Tribunal A submitted an application under 0. 23, r. 1, of the Code of Civil Procedure abandoning the relief claiming the seat.
B objected to the abandonment and filed a notice of recrimination under section 97 of the Representation of the People Act, 1951, accompanied by the statement and necessary particulars.
A contended that B was not entitled to give evidence in recrimination as the claim for the seat had been abandoned.
The Tribunal held that section 90(1) of the Act had made the procedure prescribed by the Code of Civil Procedure applicable to proceedings in election petitions and as such A had a right under 0. 23, r. 1, of the Code to abandon a part of his claim and that A having abandoned his claim for the seat B was no longer entitled to recriminate Held, that the provisions of the Act constitute a self con tained code governing the trial of an election petition and in spite of section 90(1) of the Act, the provisions 0.
23, r. 1, of the Code of Civil Procedure were not applicable to the trial of an election petition by the Tribunal ; and it was not open to A to withdraw or abandon a part of his claim once an election petition had been presented to the Election Commission, particularly when such a withdrawal or abandonment of a part of the claim would have had the effect of depriving B of the right of recrimination which had accrued to him under section 97 Of the Act.
The right of recrimination accrued to B the moment the election petition was presented to the Election Commission containing the claim for 'the seat, and it was not open to A to defeat this right by withdrawing or abandoning the claim for the seat.
An election petition once filed does not mean a contest only between the parties thereto but continues for the benefit of the whole constituency and cannot come to an end merely by the withdrawal thereof by the petitioner or even by his death or 78 612 by the death or withdrawal of opposition by the respondent but is liable to be continued by any person who might have been a petitioner.
|
Summarize this legal judgement text concisely | Appeals Nos.165 168 of 1956.
Appeals from the judgment and order dated March 22, 1955, of the Mysore High Court in Writ Petitions Nos. 20 to 22 and 25 of 1954.
788 H. N. Sanyal, Addl.
Solicitor General of India, R. Ganapathy Iyer and R. H. Dhebar, for the appellant.
A. V. Viswanatha Sastri, K. R. Choudhury and G. Gopalakrishnan, for the respondent.
April 28.
The Judgment of the Court was delivered by S.K. DAS J.
These four appeals brought by the Income tax Officer, Special Circle, Bangalore, on a certificate granted by the High Court of Mysore, are from the judgment and order of the said High Court dated March 22, 1955, by which it quashed certain proceedings initiated, and orders of assessment made, against the respondent assesse in the matter of reassessment of income tax for the years 1945 46, 1946 47, 1947 48, and 1948 1949.
The relevant facts are these.
The respondent K. N. Guruswamy was carrying on business as an excise contractor in the Civil and Military Station of Bangalore, hereinafter called the retroceded area, in Mysore.
He was assessed to income tax for each of the four years mentioned above under the law then in force in the retroceded area by the Income tax Officer having jurisdiction therein.
For 1945 46 the original assessment was made on February 12,1946, for 1946 47 on January 21, 1949, for 1947 48 on January 22, 1949, and for 1918 49 also sometime in the year 1949.
The tax so assessed was duly paid by the assessee.
On January 5, 1954, more than four years after, the Income tax Officer, Special Circle, Bangalore, served a notice on the assessee under section 34 of the Indian Income tax Act, 1922, for the purpose of assessing what was described as escaped ' or 'under assessed ' income chargeable to income tax for the said years.
The assessee appeared through his auditors and contested the jurisdiction of the Income tax Officer to issue the notice or make a re assessment under section 34 of the Indian Income tax Act, 1922.
On February 19, 1954, the Income tax Officer overruled the assessee 's objection, and made a re assessment order for the year 1945 46.
On February 25, 1954, the assessee filed four writ petitions in the Mysore High Court in 789 which he challenged the jurisdiction of the Income tax Officer to take proceedings under section 34 or to make an order of re assessment in such proceedings; he asked, for appropriate orders or writs quashing the pending proceedings for three years and the order of re assessment for 1945 46.
During the pendency of the cases in the High Court, the Income tax Officer was permitted to make an assessment order for 1946 47, subject to the condition that if the assessee succeeded in establishing that the Income tax Officer had no jurisdiction, that order would also be quashed.
The High Court heard all the four petitions together, and by its judgment and order dated March 22, 1955, allowed the writ petitions and quashed the proceedings in assessment as also the two orders of reassessment, holding that the Income tax Officer had no jurisdiction to initiate the proceedings or to make the orders of re assessment.
The High Court, however, granted a certificate that the cases were fit for appeal to this Court, and these four appeals have been brought on that certificate.
Before us, the appeals have been heard together and will be governed by this judgment.
For a clear understanding and appreciation of the issues involved in these appeals, it is necessary to set out, in brief outline, the political and constitutional changes which the retroceded area has from time to time undergone; because those changes had important legal consequences.
Under the Instrument of Transfer executed sometime in 1881, when there was installation of the Maharaja of Mysore by what has been called " the rendition of the State of Mysore ", the Maharaja agreed to grant to the Governor General in Council such land as might be required for the establishment and maintenance of a British cantonment and to renounce all jurisdiction therein.
Pursuant to that agreement, the retroceded area was granted to the Governor General in Council, and jurisdiction therein was exercised by virtue of powers given by the Indian (Foreign Jurisdiction) Order in Council, 1902, made under the Foreign Jurisdiction Act, 1890.
The laws administered in the area included various enactments made applicable thereto from time to 790 time by the promulgation of notifications made under the aforesaid Order in Council, and one of such enactments was the Indian Income tax Act, 1922.
The year 1947 ushered in great political and constitutional changes in India, which affected not merely what was then called British India but also the Indian States, such as Mysore etc.
The Indian Independence Act, 1947, brought into existence two independent Dominions, India and Pakistan, as from August 15, 1947.
The Act, however, received Royal assent on July 18, 1947.
Section 7 set out the consequences of the setting up of the two new Dominions: one such consequence was that the suzerainty of His Majesty over the Indian States lapsed, and with it lapsed all treaties, agreements etc., between His Majesty and the rulers of Indian States, including all powers, rights, authority or jurisdiction exercisable by His Majesty in an Indian State by treaty, grant, usage, suffrage etc.
In view of the aforesaid provision perhaps in anticipation of it, the retroceded area was given back to the State of Mysore on July 26, 1947 by a notification Made by the Crown Representative under the Indian (Foreign Jurisdiction) Order in Council, 1937.
This did not, however, mean that the Mysore laws at once came into force in the retroceded area.
On August 4, 1947, the Maharaja of Mysore enacted two laws: the Retrocession (Application of Laws) Act 1947, being Act XXIII of 1947, and the Retrocession (Transitional Provisions) Act, 1947 being Act XXIV of 1947.
The combined effect of these laws was this: all laws in force in the retroceded area prior to the the date of retrocession, which was July 26, 1947, continued to have effect and be operative in the retroceded area (vide section 3 of Act XXIII of 1947) and the Mysore officers were given jurisdiction to deal with proceedings under the laws in force prior to the date of retrocession (see section 12 of Act XXIV of 1947).
This state of affairs continued till June 30, 1948, on which date was promulgated the Mysore Income tax and Excess Profits Tax (Application to the Retroceded Area) (Emergency) Act, 1948, being Act XXXI of 1948.
Section 3 of this Act said 791 "Notwithstanding anything to the contrary in section 3 of the Retrocession (Application of Laws) Act, 1947, (i) the Mysore Income tax Act, 1923, and (ii) the Mysore Excess Profits Tax Act, 1946, except sub section (4) of section 2, and all rules, orders and notifications made or issued tinder the aforesaid Acts and for the time being in force shall with effect from the first day of July, 1948, and save as otherwise provided in this Act, take effect in the Retroceded Area to the same extent and in the same manner as in the rest of Mysore.
" Section 6 said " Subject to the provisions of this Act, the Indian Income tax Act, 1922, and the Excess Profits Tax Act, 1940, as continued by the Retrocession (Application of Laws) Act, 1947, are hereby repealed.
" The repeal of the Indian Income tax Act, 1922, effected by section 6 aforesaid, was subject to other provisions of Act XXXI of 1948, and one such provision which is material for the dispute before us was contained in section 5, the relevant portion whereof was in these terms " section 5.
Notwithstanding anything to the contrary in the Mysore Income tax Act, 1923, or the Mysore Excess Profits Tax Act, 1946, (a). . . . . . . . . . (b)in respect of the total income or profits chargeable to income tax or excess profits tax in the Retroceded Area prior to the first day of July, 1948, but which has not been, assessed until that date, the provisions of the Indian Income tax Act, 1922,and the Excess Profits Tax Act, 1940, as in force in the Retroceded Area immediately before that date shall apply to proceedings relating to the assessment of such in come or profits until the stage of assessment, and the determination of the income tax and excess profits tax payable thereon, and the Mysore Income tax Act, 1923, or the Mysore Excess Profits Tax Act, 1946, as the case may be, shall apply to such proceedings after that stage ; 101 792 (c). . . (d). . . (e). . .
The effect of sections 3, 5 (b) and 6 of Mysore Act, XXXI of 1948, inter alia, was that though the Indian Incometax Act, 1922, stood repealed and the Mysore Incometax Act, 1923, came into effect from July 1, 1948 the former Act as in force in the retroceded area prior to July 1, 1948, continued to apply in respect of the total income chargeable to income tax in the retroceded area prior to July 1, 1948 but which had not been assessed until that date, and it further applied to all proceedings relating to the assessment of such income until the stage of assessment and the determination of incometax but the Mysore Act, 1923, applied to such proceedings after that stage.
On August 5, 1948, was promulgated the Retroceded Area (Application of Laws) Act, LVII of 1948, which came into effect from August 15, 1948.
Sections 3 and 4 of Act LVII of 1948, are material for our purpose and may be quoted "section 3.
Except as hereinafter in this Act provided, (3) all laws in force in Mysore shall apply to the Retroceded Area; and (b)the laws in force in the Retroceded Area immediately before the appointed day shall not, from that day, have effect or be operative in the Retroceded Area,." " section 4.
The enactments in force in Mysore which are set out in the first column of Schedule A to this Act shall apply to the Retroceded Area subject to the modifications and restrictions specified in the second column of the said Schedule and, the provisions of this Act.
" Schedule A, paragraph (2), sub paragraph (b) repeated ' in substance what was stated earlier in section 5 (b).
of Act XXXI of 1948.
It read " 2.
Notwithstanding anything to the contrary in the Mysore.
Income tax Act, 1923, or the Mysore Excess Profits Tax Act, 1946 (a). . . . 793 (b) in respect of the total income or profits chargeable to income tax or excess profits tax in the Retroceded Area prior to the first day of July 1948, but which has not been assessed until that date, the provisions of the Indian Income tax Act, 1922, and the Excess Profits Tax Act, 1940, as in force in the Retroceded Area immediately before that, date shall apply to proceedings relating to the assessment of such income or profits until the stage of assessment, and the determination of the income tax and excess profits tax payable thereon, and the Mysore Incometax Act, 1923, or the Mysore Excess Profits Tax Act, 1946, as the case may be, shall apply to such proceedings after that stage; " There were further far reaching political and constitutional changes in 1949 50.
The Maharaja of Mysore had acceded to the Dominion of India in 1947; this, however, did not empower the Dominion legislature to impose any tax or duty in the State of Mysore or any part thereof.
By a proclamation dated November 25, 1949, the Maharaja of Mysore accepted the Constitution of India, as from the date of its commencement, as the Constitution of Mysore, which superseded and abrogated all other constitutional provisions inconsistent therewith and in force in the State.
On January 26, 1950, the Constitution of India came into force, and Mysore became a Part B State within the Constitution of India.
On February 28, 1950, there was a financial agreement between the Rajpramukh of Mysore and the President of India in respect of certain matters governed by articles 278, 291, 295 and 306 of the Constitution.
Under article 277 of the Constitution, however, all taxes which immediately before the commencement of the Constitution were being levied by the State continued to be so levied, notwithstanding that those taxes were mentioned in the Union List, until provision to the contrary was made by Parliament by law.
Such law was made by the Finance Act, 1950, by which the whole of Mysore including the retroceded area became " taxable territory " within the meaning of the Indian Income tax Act, 1922, from April 1, 1950, and the 794 Indian Income tax Act again came into force in the retroceded area from the aforesaid date.
Section 13 of the Finance Act, 1950, dealt with repeals and savings.
As the true scope and effect of sub section
(1) of section 13 is one of the questions at issue before us, it is necessary to read it.
" If immediately before the 1st day of April, 1950, there is in force in any Part B State other than Jammu and Kashmir or in Manipur, Tripura or Vindhya Pradesh or in the merged territory of CoochBehar any law relating to income tax or super tax or tax on profits of business that law shall cease to have effect except for the purposes of the levy, assess ment and collection of income tax and super tax in respect of any period not included in the previous year for the purposes 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 may be, the levy, assessment and collection of the tax on profits of business for any chargeable accounting period ending on or before the 31st day of March, 1949: Provided that any reference in any such law to an officer, authority, tribunal or court shall be construed as a reference to the corresponding officer, authority, tribunal or court appointed or constituted under the said Act, and if any question arises as to who such corresponding officer, authority, tribunal or court is, the decision of the Central Government thereon shall be final.," Now, the legal effect of the constitutional changes referred to above, so far as it has a bearing on the present dispute, may be briefly summarised as follows: the Indian Income tax Act, 1922, remained in force in the retroceded area till June 30, 1948 ; from July 1, 1948, the Mysore Income tax Act, 1923, applied, subject to this saving that the Indian Income tax Act continued to apply in respect of the total income chargeable to income tax in the retroceded area prior to July 1, 1948, and the provisions of that Act as in force in the retroceded area prior to that date applied to all proceedings relating to the assessment of such income 795 upto the stage of assessment and determination of income tax payable thereon.
This position continued till April 1, 1950, when the Finance Act, 1950, came into force and the Indian Income tax Act, 1922, again came into force in the retroceded area, subject to the saving mentioned in section 13(1) thereof.
The principal question before us, as it was before the High Court, is one of jurisdiction.
Did the Income tax Officer concerned have jurisdiction to issue the notice under section 34 of the Indian Income tax Act, 192 and to make a re assessment order pursuant to sue notice ? The High Court pointed out that though the notice did not clearly say so, the Income tax Officer clearly acted under section 34 of the Indian Income tax Act, 1922, as it was in force in the retroceded area prior to July 1, 1948, and the writ applications were decided on that footing.
The four main lines of argument on which the respondent assessee rested his contention that the Incometax Officer concerned had no jurisdiction were these : firstly, it was urged that section 34 of the Indian Incomtax Act, 1922, was not saved by section 13(1) of the Finance Act, 1950, because what was saved was the prior law " for the purposes of the levy, assessment and collection of income tax ", which expression did not include re assessment proceedings; secondly, it was argueed that, even otherwise, the financial agreement made between the President of India and the Rajpramukh of Mysore on February 28, 1950, which received constitutional sanctity in article 278 of the Constitution rendered the impugned proceedings unconstitutional and void; thirdly, it was submitted that the Indian Income tax Act, 1922, as in force in the retroceded area stood repealed on June 30, 1948, by Mysore Act XXXI of 1948, and the saving provisions in section 5(b) thereof or in paragraph (2), sub paragraph (b), of Schedule A to Mysore Act LVII of 1948, did not save section 34 in so far as it permitted re assessment proceedings in respect of years in which there had been an assessment already; and lastly, it was contended that after June 30, 1948, and until April 1, 1950, the Income tax Officer in the retroceded area could re open 796 the assessment under section 34 of the Mysore Incometax Act, 1923, within a period of four years specified therein, but there was no authority to re open the assessment under section 34 of the Indian Income tax Act.
Following its own decision, City Tobacco Mart and Others vs Income tax Officer, Urban Circle, Bangalore (1), on certain earlier writ petitions (nos. 52 and 53 of 1953 and 105 and 106 of 1954), the High Court held in favour of the assessee on the construction of section 13 (1) of the Finance Act, 1950 and also oil the effect of the saving provisions in section 5 (b) of Mysore Act XXXI of 1948, and paragraph (2), sub paragraph (b) of Schedule A to Mysore Act LVII of 1948.
On these findings, it held that the Income tax Officer concerned had no jurisdiction or authority to start the impugned pro ceedings or to make the impugned orders of assessment.
It did not feel called upon to pronounce on the validity of the argument founded on the financial agreement dated February 28, 1950.
In Civil Appeals 143 145 of 1954, Civil Appeals 27 to 30 of 1956 and Civil Appeals 161 to 164 of 1956, Lakshmana Shenoy vs The Income tax Officer, Ernakulam (2), in which judgment has been delivered today, we have fully considered the arguments as to the true scope and effect of section 13(1) of the Finance Act, 1950, and of the financial agreement of February 28, 1950, taken along with the recommendations of the Indian States Finances, Enquiry Committee.
We have held therein that the expression I levy, assessment and collection of income tax in section 13 (1) is wide enough to comprehend re assessment proceedings under section 34 and that the financial agreement aforesaid, on a true construction of the recommendations of the Enquiry Committee, does not render the impugned proceedings Unconstitutional and void.
That decision disposes of these two arguments in the present appeals.
The two additional points which remain for consideration depend on the interpretation to be put on the saving provisions in section 5(b) of Mysore Act XXXI of 1948 and paragraph (2), sub paragraph (b) of Schedule (1) A.I.R. 1955 MYS.
(2) [1959] S.C.R. 751.
797 A to Mysore Act LVII of 1948.
These provisions are expressed in identical terms, and the question is if they save section 34 of the Indian Income tax Act with regard to re assessment proceedings.
We think that they do.
It is worthy of note that the saving provisions say that the Indian Income tax Act, 1922, as in force in the retroceded area prior to July 1, 1948, shall apply in respect of the total income chargeable to income tax prior to that date and it shall apply to proceedings relating to the assessment of Such income, until the stage of assessment and determination of income tax payable thereon. 'Total income ' means the total amount of income, profits and gains computed in the manner laid down in the Act, and there are no good reasons why the word 'assessment ' occurring in the saving provisions should be restricted in the manner suggested so as to exclude proceedings for assessment of escaped income or under assessed income.
On behalf of the assessee our attention has been drawn to the words "in respect of the total income chargeable to income tax. . but which has not been assessed until that date " occurring in the saving provisions and the argument is that, those words show that there was no intention to permit reopening of assessments which had been made already.
We are unable to accept this argument.
In its normal sense, I to assess ' means 'to fix the amount of tax or to determine such amount '.
The process of re assessment is to the same purpose and is included in the connotation of the term " assessment ".
The reasons which led us to give a comprehensive meaning to the word " assessment " in section 13 (1) of the Finance Act, 1950, operate equally with regard to the saving provisions under present consideration.
We agree with the view expressed in Hirjibhai Tribhuvandas vs Income tax Officer, Rajnandgaon and another (1), that section 34 of the Income _tax Act contemplates different cases in which the power to assess escaped income has been given; where there has been no assessment at all, the, term " assessment " may be appropriate and where there was assessment at too low a rate or with (1) A.I.R. 1957 M.P. 171.
798 unjustified exemptions, the term re assessment ' may be appropriate, and it may have been necessary to use two different terms to cover with clarity the different cases dealt with in the section ; but this does not mean that the two terms should be treated as mutually exclusive or that the word 'assessment ' in the saving provisions should be given a restricted meaning.
The object of the saving provisions was obviously to make the prior law available in all cases in which the income was assessed or was assessable according to that law before July 1, 1948, and it is difficult to see why only a part of the process of assessment should be saved and the other part repealed.
We, therefore, hold that the saving provisions save section 34 of the Indian Income tax Act, 1922, in its entirety, as it was in force in the retroceded area prior to July 1, 1948, and the contention of the respondent that it stood repealed from that date is not correct.
As to the period of limitation, it would be the period laid down in section 34 of the Indian Income tax Act as it was in force in the retroceded area prior to July 1, 1948.
The result, therefore, is that these appeals succeed and the judgment and order of the High Court of Mysore dated March 22, 1955, are set aside and the writ petitions filed by the respondent assessee are dismissed.
The appellant will get his costs in this Court and the High Court.
Appeals allowed.
| The respondent was carrying on business as an excise con tractor in the Civil and Military Station of Bangalore in the State of Mysore, called the retroceded area.
The jurisdiction ' over this area was originally exercised by the Governor General in Council by virtue of an agreement with the Maharaja of Mysore, and the income tax law applicable was the Indian Income tax Act, 1922.
On July 26, 1947, the retroceded area was given back to the State of Mysore but the income tax law in force in that area prior to that date continued to have effect and be operative till June 30, 1948, on which date was promulgated the Mysore Income tax Act and Excess Profits Tax (Application to the Retroceded Area) (Emergency) Act, 1948, the effect of which was that the Indian Income tax Act, 1922, stood repealed and the Mysore Income tax Act, 1923, came into force subject to certain saving provisions.
On August 5, 1948, was promulgated the Retroceded Area (Application of Laws) Act, 1948.
Between 1947 and 1950 there were political and constitutional changes which ultimately resulted in Mysore becoming a Part B State within the Constitution of India.
The legal effect of these changes was that the income tax law applicable to the retroceded area till June 30, 1948, was the Indian Income tax Act, 1922 ; from July 1, 1948, the Mysore Income tax Act, 1923, became applicable except that the Indian Income tax Act continued to apply in respect of the total income chargeable to income tax in the retroceded area prior to July 1, 1948, and the provisions of that Act as in force in the retroceded area prior to that date applied to all proceedings relating to the assessment of such income upto the stage of assessment and determination of income tax payable thereon.
This position continued till April 1, 1950, when the Finance Act, 1950, came into force and as a result the Indian Income tax Act, 1922, became applicable again to the retroceded area, subject to the saving provisions of section 13(1) of the former Act.
In respect of the assessment for the four years between 1945 and 1949, the respondent was assessed to income tax under the law then in force in that area; subsequently, in 1954 the Income tax Officer served a notice on the respondent under section 34 of the Indian Income tax Act, 1922, for the purpose of assessing " escaped " or " under assessed " income chargeable to income tax for the said years.
The respondent challenged the jurisdiction of the Income tax Officer to take proceedings under section 34 or to make an order of re assessment on the grounds inter alia (1) that section 34 Of the Indian Income tax Act, 1922, was not saved by section 13(1) of the Finance Act, 1950, because what was saved was the prior law " for the purposes of the levy, assessment and collection of income tax ", which expression did not include re assessment proceedings, (2) that the 787 financial agreement made between the President of India and the Rajpramukh of Mysore dated February 28, 1950, rendered the impugned proceedings unconstitutional and void, (3) that the Indian Income tax Act, 1922, as in force in the retroceded area stood repealed on June 30, 1948, by the Mysore Income tax and Excess Profits (Application to the Retroceded Area) (Emergency) Act, 1948, and the saving provisions in section 5(b) thereof or in para (2), sub para (b) of Sch.
A to the Retroceded Area (Application of Laws) Act, 1948, did not save section 34 in so far as it permitted re assessment proceedings in respect of years in which there had been an assessment already, and (4) that after June 30, 1948, and until April 1, 1950, the Income tax Officer in the retroceded area could re open the assessment under section 34 Of the Mysore Income tax Act, 1923, within a period of four years specified therein, but there was no authority to re open the assessment under section 34 Of the Indian Income tax Act.
Held : (1) that the expression " levy, assessment and collection of income tax " in section 13(1) Of the Finance Act, 1950, was wide enough to comprehend re assessment proceedings under section 34 Of the Indian Income tax Act, 1922, and that the financial agreement between the President of India and the Rajpramukh of Mysore, on a true construction of the recommendations of the Indian States Finance Enquiry Committee, did not render the impugned proceedings unconstitutional or void ; Lakshmana Shenoy vs The Incomc tax Officer, Ernakulam, [1959] S.C.R. 751, followed.
(2) that the saving provisions in the Mysore Income tax and Excess Profits (Application to the Retroceded Area) (Emergency) Act, 1948, and the Retroceded Area (Application of Laws) Act, 1948, made the prior law available in all cases in which the income was assessed or was assessable according to that law before July 1, 1948, and, therefore, they saved section 34 of the Indian Income tax Act, 1922, with regard to re assessment proceedings ; City Tobacco Mart and Others vs Income tax Officer, Urban Circle, Bangalore, A.I.R. 1955 Mys.
49, overruled.
Hirjibhai Tribhuwandas vs Income tax Officer, Rajnandgaon and another, A.I.R. 1957 M. P. 171, approved.
(3) that the Income tax Officer had the authority to re open the assessments in the present case because the period of limitation was that laid down in section 34 of the Indian Income tax Act, as it was in force in the retroceded area prior to July 1, 1948.
|
Summarize this legal judgement text concisely | n No. 128 of 1957.
Petition under Article 32 of the Constitution of India for enforcement of Fundamental Rights.
Gopal Singh, for the petitioner.
N. section Bindra and T. M. Sen, for the respondents.
April 7.
The Judgment of the Court was delivered by VENKATARAMA AIYAR J.
This is a petition under article 32 of the Constitution, and the question that is raised therein for our decision is as to the validity of certain provisions of the East Punjab General Sales Tax Act, 1948 (East Pb.
XLVI of 1948), hereinafter referred to as the Act, imposing a tax oil the supply of materials in construction works treating it as a sale.
It will be convenient at this stage to refer to the relevant provisions of the Act.
Section 2(c) defines contract " as meaning, " Any agreement for carrying out for cash or deferred payment or other valuable consideration(i) the construction, fitting out, improvement, or repair of any building, road, bridge or other immovable property; or (ii) the installation or repair of any machinery affixed to a building or other immovable property. . . ." "Dealer " is defined in section 2((d) as any person engaged in the business of selling or supplying goods.
Section 2(h) defines " sale " as meaning " any transfer 440 of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of a contract. . . " Turnover " is defined in section 2(j) as including " the carrying out of any contract, less such portion as may be prescribed of such amount, representing the usual proportion of the cost of labour to the cost of materials used in carrying out such contract ".
Section 4(1) enacts that, ". . every dealer whose gross turnover during the year immediately preceding the commencement of this Act exceeded the taxable quantum shall be liable to pay tax under this Act on all sales effected after the coming into force of this Act.
" Section 5 provides that the tax shall be levied every year on the taxable turnover of a dealer at such rates as the Provincial Government may by notification direct.
Rule 28 prescribes the mode of computing the taxable consideration with reference to contracts as provided in sub cl.
(ii) of el.
(i) of section 2.
The petitioners are a firm of building contractors.
In December, 1956, they entered into a contract with the Military Engineering Services Department of the Government for the construction of certain buildings known as " Married accommodation " at Ambala Cantonment and received a sum of Rs. 32,000 on January 31, 1957, as advance.
On February 14, 1957, the assessing authority, Jullundur District issued a notice intimating the petitioners that as they had failed to apply for registration under section 7 of the Act assessment would be made under section 18, sub section
(2), for the periods commencing from April 1, 1955, onwards, and calling upon them to produce their account books and attend the hearing on February 16, 1957.
Thereupon, the petitioners filed the present petition under article 32 of the Constitution challenging the legality of the assessment proceedings, the main ground of attack being that the legislature of the Province of Punjab had under Entry 48 in List II of Sch.
VII to the Government of India Act, 1935, no power to impose tax on the supply of materials in construction works as there was no sale in fact or in law of those 441 materials, and that the provisions of the Act which sought to do it were ultra vires.
This question is now concluded by the decision of this Court in The State of Madras V. Gannon Dunkerley & Co. (Madras) Ltd. (1) wherein it has been held that the expression " sale of goods" in Entry 48 has the same import which it bears in the Indian , that in a building contract there is no sale of materials as such, and that accordingly the Provincial Legislature had no power to impose a tax thereon under Entry 48.
In this view, we have now to consider the contention advanced by Mr. Bindra for the respondents that the building contract entered into by the petitioners with the Government was not an agreement simpliciter for the construction of works, but that on its true construction, it comprised a distinct agreement for the sale of materials.
If that can be established, it is not disputed that the respondents would have 'a right to tax the transaction even apart from the impugned provisions.
The question is whether the contract of the petitioners with the Government for construction was one and indivisible, or whether it was a combination of an agreement for sale of materials and an agreement for work and labour.
The evidence placed before us leaves us in no doubt as to the true character of the contract.
The tenders which where called for and received were for executing works for a lump sum, and in his acceptance of the tender of the petitioners dated December 15, 1956, the Deputy Chief Engineer stated : " The above tender was accepted by me on behalf of the President of India for a lump sum of Rs. 9,74,961.
" How this amount is made up is given in Annexure E to the reply statement.
It will be seen therefrom that the petitioners were to construct nine blocks, and the amounts are worked out treating each of the blocks as one unit, and the figures are totalled up.
It is impossible on this evidence to hold that there was any agreement for sale of the materials as such by the petitioners to the Government.
(1) ; 56 442 For the respondents reliance was placed on the rules appearing in the printed General Conditions of Contracts issued by the Government.
Rule 33 which was particularly relied on provides: " All stores and materials brought to the Site shall become and remain the property of Government and shall not be removed off the Site without the prior written approval of the G. E.
But whenever the works are finally completed, the contractor shall at his own expense forthwith remove from the Site all surplus stores and materials originally supplied by him and upon such removal, the same shall retest in and become the property of the Contractor.
" It is argued that the true effect of this provision vesting the materials in the Government is that those materials must be taken to have been sold to it.
That this is not the true meaning of the rule will be clear when regard is had to other provisions in the rules.
Thus, the materials which are used in the construction must be approved by the authorities as of the right quality, and they could be condemned even after the construction is completed if they are not according to contract or of inferior quality, in which case the contractor has to remove them and rebuild with proper materials.
Terms such as these and those in r. 33 quoted above are usually inserted in building contracts with the object of ensuring that materials of the right sort are used in the construction and not with the intention of purchasing them.
If r. 33 is to be construed as operating by way of sale of materials to the Government when they are brought on the site, it must follow that the surplus materials remaining after the completion of the work must be held to have been resold by the Government to the contractor, and that is not contended for.
In Tripp vs Armitage (1), a builder who had been engaged to construct a hotel became insolvent, and dispute arose between the assignees in bankruptcy and the proprietors of the hotel as to the title to certain wooden sash frames which had been delivered by the insolvent on the premises of the hotel and had been (1) ; ; , 16O3.
443 approved by the clerk and returned to the insolvent for the purpose of being affixed.
The contention on behalf of the proprietors was that the goods having been approved by their surveyor, they must be held to have been appropriated to the contract and the property therein passed to them.
In negativing this contention, Parke B. observed: " It is said that the approbation of the surveyor is sufficient to constitute an acceptance by the defendants; but that approbation is not given eo animo at all; it is only to ascertain that they are such materials as are suitable for the purpose; and notwithstanding that approval, it is only when they have been put up, and fixed to the house, in performance of the larger contract, that they are to be paid for." In Reid vs Macbeth & Gray(1), the facts were similar.
The dispute related to certain plates which had been prepared by contractors to be fitted in a ship.
These plates had been passed by the surveyor and were marked with the number of the vessel and with marks showing the position which each plate was to occupy in the vessel.
The ship owners laid claim to these plates on the ground that by reason of the approval by their surveyor and by the markings the property therein must be held to have passed to them, and that accordingly the assignees in bankruptcy of the contractors could not claim them.
That contention war, negatived by the House of Lords, who hold that the facts relied on did not establish a contract of sale of the materials apart from the contract to construct the ship, and that the title to the materials did not as such pass to the shipowners.
The position is the same in the present case.
Rule 33 has not the effect of converting what is a lump sum contract for construction of buildings into a contract for the sale of materials used therein.
It must therefore be held following the decision in The State of Madras vs Gannon Dunkerley & Co. (Madras) Ltd. (2) that there has been no sale of the materials used by the petitioners in their constructions, and that no tax could be levied thereon.
(1) (2) ; 444 Counsel for the petitioners raised two other contentions, but they are unsubstantial and may be shortly disposed of.
One was that in the definition of " turnover " in section 2 (j), el.
(ii) which is what is applicable to the present case, there is no reference to sale of goods, and that, accordingly, even if Entry 48 in List II is to be interpreted in a wide sense, the provision as actually enacted does not, in fact, tax the supply of materials in works contracts, treating it as a sale.
But the charging section is section 4 (1), which makes it clear that the tax is on the gross turnover in respect of sales effected after the coming into force of the Act, and the obvious intention is to include the supply of materials in works contracts within the category of taxable turnover.
It was next contended that the definition of " dealer in section 2 (d) required that the person should be engaged in the business of selling or supplying goods, that the petitioners who were building contractors were not engaged in the business of selling or supplying goods but of constructing buildings, and that therefore they were not dealers within that definition, and that as under section 4 the tax could be imposed only on a dealer, the petitioners were not liable to be taxed.
But if the supply of materials in construction works can be regarded as a sale, then clearly building contractors are engaged in the sale of materials, and they would be within the definition of " dealers " under the Act.
There is no substance in this contention either.
The petitioners, however are entitled to succeed on the ground that the impugned provisions are not within the authority conferred by Entry 48, and a writ of prohibition should accordingly issue restraining the respondents from taking proceedings for assessment of tax in respect of materials supplied by the petitioners in construction contracts.
We direct the parties to bear their own costs, Petition allowed.
| The petitioners who were building contractors in the State of Punjab were assessed to tax by the sales tax authorities on the supply of materials in construction works treating it as a sale, acting under the provisions of the East Punjab General Sales Tax Act, 1948.
The petitioners challenged the legality of the assessment proceedings on the grounds, inter alia, that the legislature of the Province of Punjab had, under Entry 48 in List II of Sch.
I 'll to the Government of India Act, 1935, no power to impose tax on the supply of materials in construction works as there was no sale in fact or in law of those materials, and that the provisions of the Act which sought to do it were ultra vires.
The assessing authorities contended that on a true construction of the building contract entered into by petitioners with the Government it comprised a distinct agreement for the sale of materials and particularly relied on r. 33 of printed General Conditions of Contracts issued by the Government : Held, that there was no sale as such of the materials used in the constructions by the petitioners and that no tax could be levied thereon.
439 Rule 33 which provides that the materials brought to the site shall become the property of the Government but that when the works are finally completed the surplus materials shall revert and become the property of the contractor, has for its object that materials of the right sort are used in the construction and has not the effect of converting what is a lump sum contract for construction of buildings into a contract for the sale of materials used therein.
State of Madras vs Gannnon Dunkerley & Co. (Madras) Lid.
, ; , followed.
Tripp vs Armitage, ; and Reid vs Macbeth
|
Summarize this legal judgement text concisely | 58, 83, 84, 103, 117, 126, 127, 128, 248, 144 & 145 of 1956 & 129 of 1957.
Petitions under Article 32 of the Constitution of India for enforcement of Fundamental Rights.
H. J. Umrigar, N. H. Hingorani and A. G. Ratnaparkhi, for the petitioners in all the petitions except Petition No. 103 of 1956.
The impugned Acts infringe the fundamental rights under article 19(1)(g) of the petitioners who are butchers, tanners, gut merchants, curers and cattle dealers to carry on their respective trades.
Where, as in the present case, the enactment on the face of it violates a fundamental right the burden lies on those who support it to show that it falls within the purview of cl.
(6) of article 19.
Saghir, Ahmed vs The State of U.P., ([1955] 1 S.C.R. 707 at 726); 632 Chiranjitlal Chowdhuri vs The Union of India, ([1950] S.C.R. 869 at 891 892).
The impugned Acts put a total ban on the trade and business of the petitioners who kill only cattle.
Total prohibition of a trade which is not immoral or obnoxious can never be reasonable restriction within the meaning of el.
(6) of article 19.
Chintaman Rao vs The State of Madhya Pradesh, ([1950] S.C.R. 759 at 765); R.M. Sheshadri vs The District Magistrate ( ; at 689, 690); Cooverjee B. Bharucha vs The Excise Commis sioner, ( ; ; Rashid Ahmed.
The Municipal Board, Kairana, ([1950] S.C.R. 566).
Total ban on the slaughter of cattle is not in the interests of the general public.
Animal husbandry will suffer by a total ban.
There is shortage of fodder and pasture in the country and the useless and uneconomic cattle will deprive the useful cattle of these things.
Setting up of Gosadans for the uneconomic cattle will be a tremendous waste of public money.
[Counsel referred to various official reports in this connection.] The impugned Acts create an odious discrimination between butchers and persons dealing solely in cows, bulls, etc., and those dealing in sheep and goats, and offend article 14.
These Acts which single out the petitioners ' community which kills only cows, bulls, etc., are hostile and discriminatory legislation.
Ye Cong Eng vs Trinidad, ; at 1071); Fowler vs Rhode Island, ; ; Lane vs Wilson; , at 1287); Ligget Co. vs Baldrige, ; The impugned Acts also contravene article 25 as they prohibit the Mussalmans from performing the religious practice of the community to sacrifice the cow on the occasion of Bakr Id. Ratilal Panachand Gandhi vs The State of Bombay, ([1954] S.C.R. 1055 at 1063).
The directive principles of State policy set out in article 48 can never override fundamental rights.
The State of Madras vs Sm.
Champakam Dorairajan, ([1951]) S.C.R. 525 at 530); Saghir Ahmed 's Case, ( [1955] ) 1 S.C.R. 707 at 727).
The impugned Acts traverse, beyond the directive principles in article 48.
633 The Bihar and the Madhya Pradesh Acts which affect inter State trade in cattle and beef offend article 301 and are void as the assent of the President was riot taken before enacting them.
Frank Anthony and K. L. Mehta, for the petitioners in Petition No. 103 of 1956.
Section 9 of the U. P. Prevention of Cow Slaughter Act makes the slaughtering of cattle a cognisable and non bailable offence.
This and other provisions of the Act are ex facie restrictions on the right of the petitioners to carry on their trade.
The onus is on the respondents to show that the restrictions are reasonable restrictions in the interests of the general public.
Chintaman Rao vs The State of Madhya Pradesh, ([1950] section C. R. 759 at 763); Seghir Ahmed vs The State of U. P., ([1955] 1 section C. It.
707 at 726).
The legislation is colourable and mala fide and is inspired by religious motives.
State of Madras vs V. G. Rao, ([1952] section C. R. 597).
Article 48 in so far as its imposes blanket ban on cow would have to yield to article 19 (1) (g).
The restrictions in the Act amount to total prohibition and extinction of the trade of beef butchers.
Saghir Ahmed 's case; Dwarka Prasad Laxmi Narain vs The State of U. P., ( ; , Fairmout Creamery Co. vs Minnesota, ; it 897).
The impugned Act offends article 14 as it discriminates against the beef butchers.
These butchers have a legal right to slaughter cow for food or sacrifice.
Naubahar Singh vs Qadir Bux, (A. 1.
R. 1930 All. 753); Shahbazkhan vs Umrao Puri, (I. L. R. 30 All. 181); Emperor vs
Muhammad Yakub, (I. L. R. 32 All.
C. K. Daphtary, Solicitor General of India, with Mahabir Prasad, Advocate General of Bihar and section P. Varma (respondent in Petitions Nos. 58, 83 and 84 of 1956), and with R. H. Dhebar, for the State of Bombay (respondent in Petition No. 117 of 1956).
The legislature has thought fit that slaughter of cattle should be stopped in the inter states of animal husbandry and public policy.
It is not for the Court to say that such a policy should not have been adopted.
Both on the question of policy at id the extent of the restrictions 634 the Court should interfere only if it is convinced that in no view of the matter could the restrictions be reasonable.
There are two conflicting opinions on this controversial matter, i. e., whether there should be total ban or only partial ban.
In such a case the opinion of the legislators must prevail and the Court should not interfere where there is controversy as to facts.
State of Madras vs V. G. Rao, ([1952] section C. R. 597 at 606); The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh, ([1952] section C. R. 889 at 941); Arumugham vs State of Madras, (I. L. R. [1953] Mad. 937).
Unless it can be said that the restrictions have no bearing on the object sought to be achieved the legislation must be upheld.
Article 37 enjoins the State to apply the directive principles of State policy in Part IV of the Constitution in making law.
, The legislation is in accordance with the direction given in article 48.
The object of the legislation is not to control any trade or industry but to improve the breed of cattle and to organise animal husbandry and agriculture.
Unless the legislation directly hits trade or business it does not infringe article 19 (1) (g).
A. K. Gopalan vs The State, ( ; at 101); Ram Singh vs The State of Delhi, ( [1951] section C. R. 451 at 455 457); R. section Ram Jawaya Kapur vs The State of Punjab, ([1955] 2 KS.
C. R. 225); State of Bombay vs R. M. D. Chamar baugwala, ( A. I. R. at 721).
B.Sen and R. H. Dhebar, for the State of Bombay (respondent in Petitions Nos.
126 to 128 and 248 of 1956), and for the State of Madhya Pradesh (respondent in Petition No. 144 of 1956).
M.Adhicary, Advocate General for the, State of Madhya Pradesh and I. N. Shroff, for the State of Madhya Pradesh (respondent in Petition No. 145 of 1956), adopted the arguments of C. K. Daphtary.
H. N. Sanyal, Additional Solicitor General of India, G.C. Mathur and C. P. Lal, for the State of U. P. (respondent in Petitions Nos. 103 of 1956 and 129 of 1957).
The provisions of the U. P. Act have a reasonable relation to the purpose in view i. e. the directive 635 in article 48 and consequently the Act cannot be said to offend article 19 (1) (g).
Chintaman Rao vs The State of Madhya Pradesh, ([1950] section C. R. 759 at 763).
According to the facts and figures given in the Gosamvardhan Enquiry Committee 's Report the cattle population was actually decreasing and total ban on slaughter was necessary to protect and preserve the cattle.
The State of U. P. had made ample provisions for looking after the decrepit cattle, and such cattle also was not uneconomic as it yielded hides and manure.
The U. P. Act which prohibits the slaughter of cattle but not that of buffaloes does not offend article 14 as the discrimination is based upon proper classification.
The buffalo does not require any protection.
The female buffalo is in no danger as its yield of milk is very high.
The he buffalo is not very useful for draught purposes and there is no need to protect it.
Besides, the buffalo population is steadily increasing.
The U. P. Act does not violate article 25.
Article 25 of our Constitution is similar to article 8 of the Irish Constitution.
There is no religious compulsion on the Mussalmans to sacrifice a cow on Bakr Id Day.
Thakurdas Bhargava, as amicus curiae.
The directive principles of State policy in Part IV of the Constitution are superior to fundamental rights and the enactments which are in pursuance of the directions given by article 48 are valid and constitutional even though they may infringe the fundamental rights of the petitioners.
The total ban on cow slaughter in the impugned Acts is justified and is in the interests of the general public.
The facts and figures given in the official reports are inaccurate, and there is no real shortage of fodder or pasture land.
There is shortage of milk in the country and it is essential to protect the cow.
The bullock takes the largest share in meeting the power requirement for our agricultural production.
Cow dung manure contributes about rupees 63 crores per year to our national income.
H.J. Umrigar, in reply.
Frank Anthony, also replied.
636 1958.
April 23.
The Judgment of the Court was delivered by DAS C. J.
These 12 petitions under article 32 of our ,Constitution raise the question of the constitutional validity of three several legislative enactments banning the slaughter of certain animals passed by the States of Bihar, Uttar Pradesh and Madhya Pradesh respectively.
The controversy concerning the slaughter of cows has been raging in this country for a number of years and in the past it generated considerable illwill amongst the two major communities resulting even in riots and civil commotion in some places.
We are, however, happy to note that the rival contentions of the parties to these proceedings have been urged before us without importing into them the heat of communal passion and in a rational and objective way, as a matter involving constitutional issues should be.
Some of these petitions come from Bihar, some from U. P. and the rest from Madhya Pradesh, but as they raise common questions of law, it will be convenient to deal with and dispose of them together by one common judgment.
Petitions Nos.
58 of 1956, 83 of 1956 and 84 of 1956 challenge the validity of the Bihar Preservation and Improvement of Animals Act, 1955 (Bihar 11 of 1956), hereinafter referred to as the Bihar Act.
In Petition No. 58 of 1956 there are 5 petitioners, all of whom are Muslims belonging to the Quraishi community which is said to be numerous and an important section of Muslims of this country.
The members of the community are said to be mainly engaged in the butchers ' trade and its subsidiary undertakings such as the sale of hides, tannery, glue making, gut making and blooddehydrating, while some of them are also engaged in the sale and purchase of cattle and in their distribution over the various areas in the State of Bihar as well as in the other States of the Union of India.
Petitioners Nos. 1 and 2 are butchers and meat vendors who, according to the petition, only slaughter cattle and not sheep or goats and are called " Kasais " in contradistinction to the " 'Chicks " who slaughter 637 only sheep and goats.
After slaughtering the cattle these petitioners sell the hides to tanners or bide merchants who are also members of their community and the intestines are sold to gut merchants.
It is said that there are approximately 500 other Kasais in Patna alone apart from 2 lacs of other Kasais all over the State of Bihar.
The correctness of these figures is not admitted by the respondent State but we do not doubt that the number of Kasais is considerable.
Petitioner No. 3 is the owner of a tanning factory and Petitioner No. 4 is a gut merchant, while Petitioner No. 5 is the General Secretary of Bihar State Jamiatul Quraish.
In petition No. 83 there are 180 petitioners residing at different places in the State of Bihar who are all Muslims whose occupation is that of Kasais or cattle dealers or exporters of hides.
In Petition No. 84 there are 170 petitioners all residents of Patna District who are also Muslims belonging to the Quraishi community and who carry on business as Kasais or dealers of cattle.
All the petitioners in these three petitions are citizens of India.
The Bill, which was eventually passed as the Bihar Act, was published in the Bihar Gazette on April 20, 1953.
The scheme of the Bill, as originally drafted, was, it is said, to put a total ban only on the slaughter of cows and calves of cows below three years of age.
The Bill was sent to a Select Committee and its scope appears to have been considerably enlarged, as will be seen presently.
The Bill, as eventually passed by the Bihar Legislature, received the assent of the Governor on December 8, 1.955, and was published in the Official Gazette on January 11, 1956.
Section 1 of the Act came into force immediately upon such publication, but before any notification was issued under sub section
(3) of section 1 bringing the rest of the Act or any part of it into force in the State or any part of it, the present petitions were filed in this Court challenging the consti tutional validity of the Act.
On applications for an interim order restraining the State of Bihar from issuing a notification under section 1(3) of the Act bringing the Act into operation having been made in these petitions, the respondent State, by and through the learned 638 Solicitor General of India, gave an undertaking not to issue such notification until the disposal of these petitions and, in the premises, no order was considered necessary to be made on those applications.
Petition No. 103 of 1956 has been filed by two petitioners, who are both Muslims residing in Uttar Pradesh and carrying on business in that State, the first one as a hide merchant and the second as a butcher.
Petitioners in Petition No. 129 are eight in number all of whom are Muslims residing and carrying on business in Uttar Pradesh either as gut merchants or cattle dealers, or Kasais or beef vendors or bone dealers or hide merchants or cultivators.
All the petitioners in these two applications are citizens of India.
By these two petitions the petitioners challenge the validity of the Uttar Pradesh Prevention of Cow Slaughter Act, 1955 (LT. P. 1 of 1956), hereinafter referred to as the U. P. Act and pray for a writ in the nature of mandamus directing the respondent State of Uttar Pradesh not to take any steps in pursuance of the U. P. Act or to interfere with the fundamental rights of the petitioners.
Petitions Nos. 117 of 1956, 126 of 1956, 127 of 1956, 128 of 1956, 248 of 1956, 144 of 1956 and 145 of 1956 have been filed by 6, 95, 541, 58, 37, 976 and 395 petitioners respectively, all of whom are Muslims belonging to the Quraishi Community and are mainly engaged in the butchers ' trade and its subsidiary undertaking such as the supply of hides, tannery, glue making, gutmaking and blood dehydrating.
Most of them reside at different places which, at the dates of the filing of these petitions were parts of the State of Madhya Pradesh, but which or parts of which have, in the course of the recent re organisation of the States, been transferred to and amalgamated with the State of Bombay.
In consequence of such re organisation of the States the State of Bombay has had to be substituted for the respondent State of Madhya Pradesh in the first five petitions and to be added in the sixth petition, for a part of the district in which the petitioners resided had been so transferred, while the State of Madhya Pradesh continues to be the respondent in the seventh 639 petition.
By these petitions the petitioners %II of whom are citizens Of India, challenge the validity of the C. P. and Berar Animal Preservation Act, 1949 (C. P. and Berar Lll of 1949), as subsequently amended.
In order to appreciate the arguments advanced for and against the constitutional validity of the three impugned Acts it will be necessary to refer to the relevant provisions of the Constitution under or pursuant to which they have been made.
Reference must first be made to article 48 which will be found in Chapter IV of the Constitution which enshrines what are called the directive principles of )State policy.
Under article 37 these directive principles are not enforceable by any court of law but are nevertheless fundamental in the governance of the country and are to be applied by the State in making laws.
Article 48 runs thus: Organisation 48.
The State shall endeavour of agriculture and to organise agriculture 'and animal husbandry.
animal husbandry oil modern and scientific lines and shall, in parti cular, take steps for preserving and improving the breeds, and prohibiting the slaughter, of cows and calves and other milch and draught cattle.
" The principal purpose of this article, according to learned counsel for the petitioners, is to direct the ,State to endeavour to organise agriculture and animal husbandry on modern and scientific lines and the rest of the provisions of that article are ancillary to this principal purpose.
They contend that the States are required to take steps for preserving and improving the breeds and for prohibiting the slaughter of the animals specified therein only with a view to implement that principal purpose, that is to say, only as parts of the general scheme for organising our agriculture and animal husbandry on modern and scientific lines.
Learned counsel for the petitioners refer to the marginal note to article 48 in support of their contention on this part of the case.
They also rely on entry 15 640 in List II of the Seventh Schedule to the Constitution.
That entry reads: " Preservation, protection and improvement of stock and prevention of animal diseases; veterinary training and practice.
" There is no separate legislative head for prohibition of slaughter of animals and that fact, they claim, lends support to their conclusion that the prohibition of the slaughter of animals specified in the last part of article 48 is only ancillary to the principal directions for preservation, protection and improvement of stock, which is what is meant by organising agriculture and animal husbandry.
Learned counsel for the respondents and Pandit Thakurdas Bhargava, who appears as amicus cutriae, on the other hand, maintain that the article contains three distinct and separate directions, each of which should, they urge, be implemented independently and as a separate charge.
It is not necessary for us, on this occasion, to express a final opinion on this question.
Suffice it to say that there is no conflict between the different parts of this article and indeed the two last directives for preserving and improving the breeds and for the prohibition of slaughter of certain specified animals represent, as is indicated by the words " in particular ", two special aspects of the preceding general directive for organising agriculture and animal husbandry on modern and scientific lines.
Whether the last two directives are ancillary to the first as contended for by learned counsel for the peti tioners or are separate and independent items of directives as claimed by counsel on the other side, the directive for taking steps for preventing the slaughter of the animals is quite explicit and positive and contemplates a ban on the slaughter of the several categories of animals specified therein, namely, cows and calves and other cattle which answer the description of milch or draught cattle.
The protection recommended by this part of the directive is, in our opinion, confined only to cows and calves and to those animals which are presently or potentially capable of yielding milk or of doing work as draught cattle but does not, from the very nature of the purpose for which it is obviously recommended, extend to cattle which at 641 one time were milch or draught cattle but which have ceased to be such.
It is pursuant to these directive principles and in exercise of the powers conferred by articles 245 and 246 of the Constitution read with entry 15 in List 11 of the Seventh Schedule thereto that the, Legislatures of Bihar, Uttar Pradesh and Madhya, Pradesh have respectively enacted the statutes which are challenged as unconstitutional.
In order properly, to appreciate the meaning and scope of the impugned Acts it has to be borne in mind that each one of those Acts is a law with respect to " preservation, protection and improvement of stock ", and their constitutional validity will have to be judged in that context and against that background.
Keeping this consideration in view, we proceed now to examine the relevant provisions of the three Acts.
The title of the Bihar Act is " An Act to provide for the preservation and improvement of certain animals in the State of Bihar." Sub section (3) of section 1 provides that that section shall come into force at once and the remaining provisions of the Act or any of them shall come into force on such date as the State Government may, by notification, appoint and that different dates may be appointed for different provisions and for different areas.
Section 2 is the definition section and the following definitions are to be noted: (a) " Animal " means (i)bull, bullock, cow, heifer, buffalo, calf, sheep, goat and any other ruminating animal; (ii) poultry; and (iii) elephant, horse, camel, ass, mule, dog, swine and such other domesticated animals as may be specified in this behalf by the State Government by notification in the Official Gazette; (b). . . . . . . . . . (c) " bull " means an uncastrated male above the age of three years belonging to the species of bovine cattle ; (d) " bullock " means a castrated male above the age of three years belonging to the species specified in clause (e)" calf " means a female or a castrated or 642 uncastrated male, of the age of three years and below belonging to the species specified in clause (c); (f). . . . . . . . . . (g) " cow " means a female above the age of three years belonging to the species specified in clause (e) ; Section 3, which is the principal section for the purposes of the Bihar Petitions, runs as follows: " 3.
Prohibition of slaughter of cow, calf, bull or bullock.
Notwithstanding anything contained in any law for the time being in force or in any usage or custom to the contrary, no person shall slaughter a cow, the calf of a cow, a bull or a bullock; Provided that the State Government may, by general or special order and subject to such conditions as it may think fit to impose, allow the slaughter of any such animal for any medicinal or research purposes.
" Section 4 provides for penalties for contravention or attempted contravention or abetment of contravention of any of the provisions of section 3.
The remaining provision; in the following three chapters are not material for our present purpose.
It will be noticed that the words " bull ", " bullock ", " calf " and " cow" have been defined in cls.
(c), (d), (e) and (g) of section 2 as belonging to the species of bovine cattle.
The expression " species of bovine cattle " is wide enough to in elude and does in ordinary parlance include buffaloes,(male, or female adults or calves).
Therefore, the corresponding categories of buffaloes, namely, buffalo bulls, buffalo bullocks, buffalo calves and she buffaloes must be taken as included in the four defined categories of the species of bovine cattle and as such within the prohibition embodied in section 3 of the Act.
It is to be, noted, however, that the allegations in the petitions and the affidavits in opposition proceed on the assumption that buffaloes (male or female adults or calves) were not within the protection of the section and, indeed, when the attention of learned counsel for the petitioners was drawn to the reference to the " species of bovine cattle " in each of the four definitions, they 643 still made an attempt to support the latter view by suggesting that if buffaloes were to be included within the words defined in cls.
(c), (d), (e) and (g), then there was no necessity for specifying it separately in the definition of " animal " in el.
This argument does not appear to us to be sound at all, for, then, on a parity of reasoning it was wholly unnecessary to specify heifer " in the definition of " animal ".
If heifer is not to be included in the definition of cow " because heifer " is separately enumerated in 'the definition of animal " then an astounding result will follow, namely, that the operative part of section 3 will not prohibit the slaughter of " heifer " at all a result which obviously could not possibly have been intended.
The obvious reason for the enumeration of the different categories of animals in the definition of " animal " must have been to provide a word of wide import so that all those sections where the wider word " animal " is used may apply to the different kinds of animals included within that term.
If the intention of the Bihar legislature was to exclude buffaloes (male or female adults or calves) from the protection of section 3 then it must be said that it has failed to fulfil its intention.
The U. P. Act is intituled " An Act to prohibit the slaughter of COW and its progeny in Uttar Pradesh.
" The preamble to the Act recites the expediency " to prohibit and prevent the slaughter of cow and its progeny in Uttar Pradesh".
Although the 17.
P. Act has been made under entry 15 in List 11 and presumably pursuant to the directives contained in article 48 nowhere in the Act is there any express reference whatever to the " preservation, protection or improvement of stock.
" Section 2 defines " beef " as meaning the flesh of cow but does not include the flesh of cow contained in sealed containers and imported as such in Uttar Pradesh.
Clause (b) is very important, for it defines " cow " as including a bull, bullock, heifer, or calf.
Section 3, which is the operative section runs thus: 3.
Notwithstanding anything contained in any 82 644 other law for the time being in force or any usage or custom to the contrary, no person shall slaughter or cause to be slaughtered or offer or cause to be offered for slaughter any cow in any place in Uttar Pradesh." Two exceptions are made by section 4 in respect of cows suffering from contagious or infectious disease or which is subjected to experimentation in the interest of medical or public health research.
Section 5 prohibits the sale or transport of beef or beef products in any form except for medicinal purposes and subject to ' the provisions of the exception therein mentioned.
Section 6, on which counsel for the State relies, provides for the establishment, by the State Government or by any local authority wherever so directed by the State Government, of institutions as may be necessary for taking care of uneconomic cows.
Under section 7 the State Government may levy such charges or fees, as may be prescribed for keeping uneconomic cows in the institutions.
Section 8 provides for punishment for contravention of the provisions of sections 3, 4 and 5.
Section 9 makes the offences created by the Act cognisable and non bailable.
Section 10 gives power to the State Government to make rules for the purpose of carrying into effect the provisions of the Act.
It should be noted that the U. P. Act protects the " cow ", which, according to the definition, includes only bulls, bullocks, heifer and calves.
There is no reference to the species of bovine cattle and, therefore, the buffaloes (male or female adults or calves) are completely outside the protection of this Act.
The C. P. and Berar Act of 1949 was originally intituled " An Act to provide for preservation of certain animals by controlling the slaughter thereof," and the preamble recited that it was " expedient to provide for the preservation of certain animals by controlling the slaughter thereof." ,Animal " was defined in section 2 as meaning an animal specified in the schedule.
The schedule specified the following categories of animals, namely, (1) bulls, (2) bullocks, (3) cows, (4) calves, (5) male and female buffaloes and (6) buffalo calves.
Section 4 originally prohibited the slaughter 645 of an " animal " without certificate.
There was then no total ban on the slaughter of any animal as defined.
,In 1951, the C. P. and Berar Animal Preservation Act, 1949, was amended by the Madhya Pradesh Act XXIII of 1951.
By this amending Act the words, " by prohibiting or " were added to the long title and the preamble before the word " controlling " and a new clause was added to section 2 as el.
(i) (a) defining " cow " as including a female calf of a cow and sub section
1 of section 4 was amended so as to read as follows: "(1) Notwithstanding anything contained in any other law for the. time being in force or in any usage to the contrary, no person (a) shall slaughter a cow; or (b) shall slaughter any other animal unless he has obtained in respect of such other animal a certificate in writing signed by the executive authority and the veterinary officer for the area in which the animal is to be slaughtered that the animal is fit for slaughter." Thus a total ban was imposed on the slaughter of cows and female calf of a cow and the male calf of a cow, bull, bullock, buffalo (male or female adult or calf) could be slaughtered on obtaining a certificate.
The Act was further amended in 1956 by Act X of 1956 substituting for the amended definition of " cow " introduced by the amending Act of 1951 as cl.
(1)(a) of section 2 of the C. P. and Berar Animal Preservation Act, 1949, a new definition of " cow " as including a male or female calf of a cow, bull, bullock or heifer and a new schedule specifying only (1) cows, (2) male and female buffaloes and (3) buffalo calves was substituted for the original schedule to the Act.
Shortly put the position in Madhya Pradesh has been this: while under the C. P. and Berar Animal Preservation Act, 1949, as it originally stood, the slaughter of all categories of animals mentioned in the original schedule were only controlled by the requirement of a certificate from the appropriate authority before the actual slaughter, by the amending Act XXIII of 1951, a total ban was imposed on the slaughter of " cows " which was then defined as including only a female calf of a 646 cow and the slaughter of all other categories of animals coming within the original schedule was controlled and finally after the amending Act X of 1956, there is now a total ban on the slaughter of " cows " which by the new definition includes a male or female calf of a cow, bull, bullock or heifer so that the male and female buffaloes and buffalo calves (male and female) can still be slaughtered but on certificate issued by the proper authorities mentioned in the Act.
The Madhya Pradesh Act X of 1956, amending the C. P. and Berar Animal peservation Act, 1949, received the assent of the Governor on May 18, 1956.
The C. P. and Berar Animal Preservation Act, 1949, as amended up to 1956, is hereinafter referred to as the Madhya Pradesh Act. ' To sum up, under the Bihar Act there is in the State of Bihar a total ban on slaughter of all categories of animals of the species of bovine cattle.
In Uttar Pradesh there is, under the If.
P. Act, a total ban on the slaughter of cows and her progeny which include bulls, bullocks, heifer or calves.
The buffaloes (male or female adults or calves) are completely outside the protection of the Act.
In the present Madhya Pradesh and the districts which formerly formed part of Madhya Pradesh but have since been transferred to the State of Bombay and where the Madhya Pradesh law including the Madhya Pradesh Act still applies, there is a total ban on the slaughter of cow, male or female calves of a cow, bulls, bullocks, or heifers and the slaughter of buffaloes (male or female adults or calves) are controlled in that their slaughter is permitted under certificate granted by the proper authorities mentioned in the Act.
No exception has been made in any of these three Acts permitting slaughter of cattle even for bona fide religious purposes such as has been made, say, in the Bombay Animal Preservation Act, 1948 (Bom.
LXXXI of 1948).
As already stated the petitioners, who are citizens of India, and Muslims by religion, mostly belong to the Quraishi community and are generally engaged in the butchers ' trade and its subsidiary undertakings such as supply of hides, tannery, glue making, gut making 647 and blood de hydrating, Those, who carry on the butchers trade, are mostly.
Kasais who, the petitioners say kill only cattle but not ship or goat which are slaughtered by other persons known as Chicks.
Learned counsel appearing for the petitioners challenge the, constitutional validity of the Acts respectively applicable to them on three grounds, namely, that they offend the fundamental rights guaranteed to them by articles 14 ' 19(1)(g) and 25.
Learned counsel appearing for the respondent States, of course, seek to support their respective enactments by controverting the reasons advanced by learned counsel for the petitioners.
Bharat Go Sevak Samaj, All India AntiCow Slaughter Movement Committee, Sarvadeshik Arya pratinidhi Sabha and M. P. Gorakshan Sangh put in petitions for leave to intervene in these proceedings.
Under Order XLI, rule 2, of ' the Supreme Court Rules intervention is permitted only to the Attorney General of India or the Advocates General for the States.
There is no other express provision for permitting a third party to intervene in the proceedings before this Court.
In practice, however, this Court, in exercise of its inherent powers, allows a third party to intervene when such third party is a party to some proceedings in this Court or in the High Courts where the same, or similar questions are in issue, for the decision of this Court will conclude the case of that party.
In the present case, however, the peti tioners for intervention are not parties to any proceedings and we did not think it right to permit them formally to intervene in these proceedings; but in view of the importance of the questions involved in these proceedings we have heard Pandit Thakurdas Bhargava, who was instructed by one of these petitioners for intervention, as amicus curiae.
We are deeply indebted to all learned counsel appealing for the parties and to Pandit Thakurdas Bhargava for the valuable assistance they have given us.
Before we actually take tip and deal with the alleged infraction of the petitioners ' fundamental rights, it is necessary to dispose of a preliminary question raised by Pandit Thakurdas Bhargava.
It will be recalled 648 that the impugned Acts were made by the States in discharge of the obligations laid on them by article 48 to endeavour to organise agriculture and animal husbandry and in particular to take steps for preserving and improving the breeds and prohibiting the slaughter of certain specified animals.
These directive principles, it is true, are not enforceable by any court of law but nevertheless they are fundamental in the governance of the country and it is the duty of the State to give effect to them.
These laws having thus been made in discharge of that fundamental obligation imposed on the State, the fundamental rights conferred on the citizens and others by Chapter III of the Constitution must be regarded as subordinate to these laws.
The directive principles, says learned counsel, are equally, if not more, fundamental and must prevail.
We are unable to accept this argunent as sound.
Article 13(2) expressly says that the State shall not make any law which takes away or abridges the rights conferred by Chapter III of our Constitution which enshrines the fundamental rights.
The directive principles cannot over ride this categorical restriction imposed on the legislative power of the State.
A harmonious interpretation has to be placed upon the Constitution and so interpreted it means that the State should certainly implement the directive principles but it must do so in such a way that its laws do not take away or abridge the fundamental rights, for otherwise the protecting provisions of Chapter III will be " a mere rope of sand ".
As this Court has said in the State of Madras vs Smt.
Champakam Dorairajan (1) , "The directive principles of State policy have to conform to and run as subsidiary to the Chapter on Fundamental Rights".
Coming now to the arguments as to the violation of 4 the petitioners ' fundamental rights, it will be convenient to take up first the complaint founded on article 25(1).
That article runs as follows: " Subject to public order, morality and health and to the other provisions of this Part, all persons are equally entitled to freedom of conscience and the right freely to profess, practise and propagate religion".
(1) ; 531 649 After referring to the provisions of el.
(2) which lays down certain exceptions which are not material for our present purpose this Court has, in Ratilal Panachand Gandhi vs The State of Bombay (1) explained the meaning and scope of this article thus: " Thus, subject to the restrictions which this article imposes, every person has a fundamental right under our Constitution not merely to entertain such religious belief as may be approved of by his judgment or conscience but to exhibit hisbelief and ideas in such overt acts as are enjoinedor sanctioned by his religion and further to propagatehis religious views for the edification of others.
Itis immaterial also whether the propagation is made by a person in his individual capacity or on behalf of any church or institution.
The free exercise of religion by which is meant the performance of outward acts in pursuance of relgious belief, is, as stated above, subject to State regulation imposed to secure order, public health and morals of the people.
" What then, we inquire, are the materials placed before us to substantiate the claim that the sacrifice of a cow is enjoined or sanctioned by Islam ? The materials before us are extremely meagre and it is surprising that on a matter of this description the allegations in the petition should be so vague.
In the Bihar Petition No. 58 of 1956 are set out the following bald allegations: That the petitioners further respectfully submit that the said impugned section also violates the fundamental rights of the petitioners guaranteed tinder Article 25 of the Constitution in as much as on the occasion of their Bakr Id Day, it is the religious practice of the petitioners ' community to sacrifice a cow on the said occasion.
The poor members of the community usually sacrifice one cow for every 7 members whereas it would require one sheep or one goat for each member which would entail considerably more expense.
As a result of the total ban imposed by the impugned section the petitioners would not even be allowed to make the said sacrifice which is a practice (1) [1954] S.C.R. 1055, 1062 1063.
650 and custom in their religion, enjoined upon them by 'the Holy Quran, and practised by all Muslims from time immemorial and recognised as such in India.
" The allegations in the other petitions are similar.
,These are met by an equally bald denial in para.
21 of the affidavit in opposition.
No affidavit has been filed by any person specially competent to expound the relevant tenets of Islam. 'No reference 'is made in the petition to any particular Surah of the Holy Quran which, in terms, requires the sacrifice of a cow.
All that was placed before us during the argument were Surah XXII, Verses 28 and 33, and Surah XXII,.
What the Holy book enjoins is that people should pray unto the Lord and make sacrifice.
We have no affidavit before us by any Maulana explaining the implications of those Verses or throwing any light on this problem.
We, however, find it laid down in Hamilton 's translation of Hedaya Book XLIII at p. 592 that it is the duty of every free Mussulman, arrived at the age of maturity, to offer a sacrifice on the Yd Kirban, or festival of the sacrifice, provided he be then possessed of Nisab and be not a traveller.
The sacrifice established for one person is a goat and that for seven a cow or a camel.
It is therefore, optional for a Muslim to sacrifice a goat for one person or a cow or a camel for seven persons.
It does not appear to be obligatory that a person must sacrifice a cow.
The very fact of an option seems to run counter to the notion of an obligatory duty.
It is, however, pointed out that a person with six other members of his family may afford to sacrifice a cow but may not be able to afford to sacrifice seven goats.
So there may be an economic compulsion although there is no religious compulsion.
It is also pointed out that from time immemorial the Indian Mussalmans have been sacrificing cows and this practice, if not enjoined, is certainly sanctioned by, their religion and it amounts to their practice of religion protected by article 25.
While the petitioners claim that the sacrifice of a cow is essential, the State denies the obligatory nature of the religious practice.
The fact, emphasised by the respondents, cannot be 651 disputed, namely, that many Mussalmans do not sacrifice a cow on the Bakr Id Day.
It is part of the known history of India that the Moghul Emperor Babar saw the wisdom of prohibiting the slaughter of cows as and by way of religious sacrifice and directed his son Humayun to follow this example.
Similarly Emperors Akbar, Jehangir, and Ahmad Shah, it is said, prohibited cow slaughter.
Nawab Hyder Ali of Mysore made cow slaughter an offence punishable with the cutting of the hands of the offenders.
Three of the member of the Gosamvardhan Enquiry Committee set up by the Uttar Pradesh Government in 1953 were Muslims and concurred in the unanimous recommendation for total ban on slaughter of cows.
We have, however, no material on the record before us which will enable us to say, in the face of the foregoing facts, that the sacrifice of a cow on that day is an obligatory overt act for a Mussalman to exhibit his religious belief and idea.
In the premises, it is not possible for us to uphold this claim of the petitioners.
The next complaint is against the denial of the equal protection of the law.
It is thus formulated: The petitioners are Muslims by religion and butchers (Kasais) by occupation and they carry on the trade of selling beef.
The impugned Acts prejudicially affect only the Muslim Kasais who kill cattle but not others who kill goats and sheep and who sell goats ' meat and mutton.
It is, therefore, clear that only the Muslim Kasais, who slaughter only cattle but not sheep or goats, have been singled out for hostile and discriminatory treatment.
Their further grievance is that the U. P. Act makes a distinction even between butchers who kill cattle and butchers who kill buffaloes and the Madhya Pradesh Act also makes a like discrimination in that slaughter of buffaloes is permitted, although under certificate, while slaughter of cows, bulls, bullocks and calves are totally prohibited.
In the premises the petitioners contend that the law which permits such discrimination must be struck down as violative of the salutary provisions of article 14 of the Constitution.
83 652 The meaning, scope and effect of article 14, which is the equal protection clause in our Constitution, has been explained by this Court in a series of decisions in cases beginning with Chiranjitlal Choudhury vs The Union of India (1) and ending with the recent case of Ram Krishna Dalmia and others vs Sri Justice section R.Tendolkar (2).
It is now well established that while article 14 forbids class legislation it does not forbid reasonable classification for the purposes of legislation and that in order to pass the test of permissible classi fication two conditions must be fulfilled, namely, (i) 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) such differentia must have a rational relation to the object sought to be achieved by the statute in question.
The classification, it has been held, may be founded on different bases, namely, geographical, or according to objects or occupations or the like and what is necessary is that there must be a nexus between the basis of ' classification and the object of the Act under consideration.
The pronouncements of this Court further establish, amongst other things, that there is always a presumption in favour of the constitutionality of an enactment and that the burden is upon him, who attacks it, to show that there has been a clear violation of the constitutional principles.
The courts, it is accepted, must presume 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 that its discriminations are based on adequate grounds.
It must be borne in mind that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest and finally that in order to sustain the presumption of constitutionality the Court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation.
We, therefore, proceed to examine (1) ; (2) ; 653 the impugned Acts in the light of the principles thus enunciated by this Court.
The impugned Acts, it may be recalled, have been made by the States in discharge of the obligations imposed on them by article 48.
In order to implement the directive principles the respective Legislatures enacted the impugned Acts in exercise of the powers conferred on them by article 246 read with entry 15 in List II of the Seventh Schedule.
It is, therefore, quite clear that the objects sought to be achieved by the impugned Acts are the preservation, protection and improvement of livestocks.
Cows, bulls, bullocks and calves of cows are no doubt the most important cattle for the agricultural economy of this country.
Female buffaloes yield a large quantity of milk and are, therefore, well looked after and do not need as much protection as cows yielding a small quantity of milk require.
As draught cattle male buffaloes are not half as useful as bullocks.
Sheep and goat give very little milk compared to the cows and the female buffaloes and have practically no utility as draught animals.
These different categories of animals being susceptible of classification into separate groups on the basis of their usefulness to society, the butchers who kill each category may also be placed in distinct classes according to the effect produced on society by the carrying on of their respective occupations.
Indeed the butchers, who kill cattle, according to the allegations of the petitioners themselves in their respective petitions, form a well defined class based on their occupation.
That classification is based on an intelligible differentia which places them in a well defined class and distinguishes them from those who kill goats and sheep and this differentia has a close connection with the object sought to be achieved by the impugned Act, namely, the preservation, protection and improvement of our livestock.
The attainment of these objectives may well necessitate that the slaughterers of cattle should be dealt with more stringently than the slaughterers of, say, goats and sheep.
The impugned Acts, therefore, have adopted a classification on sound and intelligible basis and can quite clearly stand the test laid down in 654 the decisions of this Court.
Whatever objections there may be against the validity of the impugned Acts the denial of equal protection of the laws does not, prima facie, appear to us to be one of them.
In any case, bearing in mind the presumption of constitutionality attaching to all enactments founded on the recognition by the court of the fact that the legislature correctly appreciates the needs of its own people there appears to be no escape from the conclusion that the petitioners have not discharged the onus that was on them and the challenge under article 14 cannot, therefore, prevail.
Learned counsel for the petitioners then take their final stand on article 19(1)(g).
Immediately learned counsel for the respondents counter the charge by saying that article 19(1)(g) can hit only the law which purports to directly violate its provisions.
The impugned Acts, we are reminded, have been made in implementation of the directive principles laid down in article 48 and are laws with respect to matters set forth in entry 15 of List II and it is emphasised that the sole purpose of these enactments is to secure the preservation, protection and improvement of stock and that its real aim is not to take away or abridge the rights guaranteed by article 19(1)(g).
If at all, these enactments may only indirectly and incidentally affect those, rights but that circumstance cannot alter their real nature and purpose.
Reliance is placed in support of this contention on the following observations of Kania C. J. in A. K. Gopalan vs The State (1).
" If there is a legislation directly attempting to control a citizen 's freedom of speech or expression, or his right to assemble peaceably and without aims, etc., the question whether that legislation is saved by the relevant saving clause of article ' 19 will arise.
If, however, the legislation is not directly in respect of any of these subjects, but as a result of the operation of other legislation, for instance, for punitive or preventive detention, his right under any of these sub clauses is abridged, the question of the application of article 19 does not arise.
The true approach is only to consider the directness of the legislation and not what will (1) ; , 101.
655 be the result of the detention otherwise valid, on the mode of the detenue 's life.
" This part of the argument advanced on behalf of the respondents is further sought to be reinforced by the fact that the above observations of Kania C. J. had subsequently been adopted by this Court in Ram Singh vs
The State of Delhi (1).
Those observations of Kania C. J. should, in our opinion, be read in the context of the facts of those cases.
It should be remembered that both these cases arose out of orders made under the .
Article 22, which is to be found in Chapter III of the Constitution, recognises the necessity for preventive detention, however odious it may be.
The purpose of the Act under which the detention orders had been made in those cases, was to prevent the persons concerned from acting in any manner prejudicial to one or other of the three impor tant matters specified therein.
The effect of the execution of the orders was to deprive those persons of their liberty according to procedure established by law.
Preventive detention, like punitive detention, having taken away the personal liberty of those persons they could not claim the rights under article 19(1)(a) to (e) and (g) for those were the rights of free men.
It was, therefore, considered that the primary and direct object of the , being, inter alia, to secure the security of the State and maintenance of law and order, its impact on the fundamental rights was indirect and, therefore, the Act could not be challenged for breach of the fundamental rights under article 19(1).
The position in the cases now before us is quite different.
The last part of the directive principles embodied in article 48 require the State to take steps for prohibiting the slaughter of the specified animals and this directive can only be carried out by prohibiting the petitioners and other butchers (Kasais) from.
slaugh tering them.
There can be no mistake about the directness of these legislations vis a vis the petitioners and other butchers and the effect of these legislations on their rights is direct and instantaneous as soon as they are brought into force.
The title of the U. P. Act (1) [1951]1 S.C.R. 451, 456 457.
656 does not even attempt to conceal the directness of its impact on the butchers of Uttar Pradesh.
The argument of learned counsel for the respondents on this point cannot be accepted and the question of the alleged violation of article 19(1)(g) has to be dealt with on merits.
The complaint of the petitioners under article 19 (1) (g) is that the impugned Acts, if enforced, will compel them at once to close down their business and will, in effect, amount to a complete denial of their right to carry oil their occupation, trade or business in spite of the mandatory provisions of article 19(1)(g).
The objection is elaborated thus: The livelihood of a butcher of cattle depends on the existence of many factors.
First he has to purchase the cattle which he will slaughter.
The statistics will show that a large number of cattle are slaughtered for food every year.
According to Table 11 on p. 24 of the Report on the Marketing of Cattle in India 18,93,000 heads of cattle and 6,09,000 buffaloes were slaughtered in the year 1948.
Taking that 7 goats are the equivalent in flesh of cow or buffalo these butchers who slaughter 25,02,000 bovine cattle will have to find 7 times that number of goats or sheep, that is to say, they will have to have 1,75,14,000 extra goats and sheep per year.
This it is said, is not available in India.
Then the butchers will have to find buyers for this enormous quantity of goats ' meat or mutton the price of which, according to the figures given at p.12 of the Expert Committee '. , Report, is very much higher than that of beef.
Poorer people may afford to buy beef occasionally but goat , ' meat or mutton will be beyond their reach and consequently there will not be a market for sale of the meat of so many goats and sheep and the butchers will have to reduce the number of goats and sheep for purposes of slaughter and that will reduce their income to a negligible figure.
Further, what will they do with the skins of so many goats, and sheep ? They will not have ready sale in the market as hides of cows and buffaloes have, for the latter are used in the manufacture of boots, shoes, suit cases, belts and other leather goods while the skins of goats and sheep will be useless 657 for such purpose.
The same considerations will apply to the guts.
There is, therefore, no escape, say learned counsel for the petitioners from the inevitable conclusion that a total ban on the slaughter of all animals belonging to the species of bovine cattle will bring about a total prohibition of the business and occupation of the butchers (Kasais).
Clause (6) of article 19, no doubt, protects the operation of the existing laws in so far as they impose and do not prevent the State from making any law imposing, in the interest of the general public, reasonable restrictions on the exercise of the right conferred by article 19(1)(g).
But restrictions, they say, cannot extend to total prohibition and reference is made to the observations to be found in some of the decisions of this Court.
The contention is that the State may regulate but cannot annihilate a business which a citizen has a right to carry on.
The rival contention is thus formulated: The dictionary meaning of the word " butcher " is " slaughterer of animals for food, dealer in meat".
It is one of the three well known occupations included in the homely phrase, " the butcher, the baker, the candlestick maker".
The expression " butcher ", as popularly understood now, has no reference to any particular animal.
The term is now applicable to any person who slaughters any animal for food.
Taken in this larger sense, the facts alleged in the petitions do not, according to learned counsel for the respondents, indicate that any of the impugned Acts has the effect of completely stopping the petitioners ' businesses.
They seek to illustrate their point thus: Take the case of piece goods merchants.
Some may deal in country made piece goods and others may import and sell piece goods manufactured, say, in England or Japan.
Some may deal in dhotis and saris and others may confine their activities to the purchase and sale of long cloth or other varieties of piece goods.
They are, however, all piece goods merchants.
Suppose in the interest of our indigenous textile industry and to protect the best interests of the general public it becomes necessary to stop the import of foreign cloth altogether.
Such stoppage will not prevent any cloth 658 merchant from carrying on his trade or business as cloth merchant, for he can still deal in cloth and piecegoods manufactured in India.
Will any piece goods merchant, whose business was only to import foreign piece goods for sale in India, be heard to complain that the stoppage of import of foreign cloth has completely prevented him from carrying on business as a piece goods merchant and, therefore, such stoppage of import of foreign cloth being more than a mere restriction violates his fundamental right under article 19(1)(g) ? Where, they ask, will the argument lead us ? Suppose that the import of one particular variety of piece goods, say saris, is stopped but import of dhotis and all other varieties of piece goods are allowed.
On a reasoning at par with that urged in the last case should not a dealer who imports only that variety of piece goods the import of which has been stopped be entitled to say that his business has been completely stopped ? Suppose the State in the interest of Khadi and cottage industries imposes a ban on the manufacture or sale of cloth of a very fine count, will a merchant who deals only in fine cloth be entitled to say that as he deals only in fine cloth, the ban has completely prohibited the carrying on of his business ? The truth of the matter, they submit, is that the ban on the import of foreign cloth or on the manufacture of cloth of very fine count is only a restriction imposed on the piece goods business, for the ban affects one or more of the segments of that business but leaves the other segments untouched.
There is, therefore, only some restriction imposed on piece goods merchants in that they cannot deal in certain kinds of piece goods, but they are not wholly prevented from carrying on piece goods business.
The position, they say, is the same in the case of butchers (Kasais).
The butchers ' business, they point out, has several segments and a ban on one segment may be complete prohibition of the activities of that segment, for restriction is complete as far as it extends, but in the larger context of the butchers ' business such a ban, they submit, operates only as a restriction.
Far less, it is said can a dealer in hides, complain that the ban 659 imposed on the slaughter of cattle and buffaloes prevent him from, carrying on his, business as a hide merchant, for he call still carry on his business in ,fallen hides.
Indeed the statistics collected in the Report of Marketing of Hides in India, Second Edition, p.9, show that the percentage of fallen hides to the total cattle population is 8.8 whereas the percentage of slaughtered hides to the total cattle population is 1.4.
same argument has been advanced regarding gut merchants and other dealers in subsidiary things.
It is not necessary for us to dilate upon or to express any opinion on the rival contentions as abstract pro.
positions .
The matter has to be dealt with objectively.
What do the Acts actually provide ? In Uttar Pradesh the petitioners can freely slaughter buffaloes (male or female adults or calves) and sell their meat for food.
It is also open to them to slaughter goats and sheep and sell the meat.
Therefore, so far as the butchers of Uttar Pradesh are concerned, there A,, obviously no total prohibition of their occupation but only some restrictions have been imposed on them in respect of one part of their occupation, namely, the slaughter of cows, bulls, bullocks, and calves of cows.
In Madhya Pradesh the Act, it is true, totally forbids the slaughter of cows including bulls, bullocks and cows but permits the slaughter of buffaloes (male or female adults or calves) under certain conditions.
Therefore, in Madhya [Pradesh also there is no law totally prohibiting the carrying on of the business of a butcher.
In Bihar there is, no doubt, a total ban against the slaughter of all animals belonging to the, species of bovine cattle which includes buffaloes (male or female adults or calves) but it is still possible for the butchers of Bihar to slaughter goats and sheep and sell goats ' meat and mutton for food.
As will be seen hereafter the total ban on the slaughter of bulls, bullocks, buffaloes (male or female adults or calves) irrespective of their age or usefulness is, in our view, not a reasonable restriction imposed on, the butchers (Kasais) in the interest of the general public and that being, therefore, void, no question can arise, even in 660 Bihar, of any total prohibition of the rights of butchers to carry on their occupation or business.
In this view of the matter we need express no final opinion on the vexed question as to whether restrictions permissible under cl.
(6) of article 19 may extend to total prohibition.
That question was left open by this court in Saghir Ahmed vs The State O. U. P. and others (1) and in The State of Bombay vs R. M. D. Chamarbaugwala (2) and in the view we have taken on the facts and construction of the several Acts under consideration, does not call for an answer in disposing of these petitions.
The question that calls for an answer from us is whether these restrictions are reasonable in the interests of the general public.
Clause (6) of article 19 protects a law which imposes in the interest of the general public reasonable restrictions on the exercise of the right conferred by sub cl.
(g) of cl.
(1) of article 19.
Quite obviously it is left to the court, in case of dispute, to determine the reasonableness of the restrictions imposed by the law.
In determining that question the court, we conceive, cannot proceed on a general notion of what is reasonable in the abstract or even on a consideration of what is reasonable from the point of view of the person or persons on whom the restrictions are imposed.
The right conferred by sub cl.
(g) is expressed in general language and if there had been no qualifying provision like el.
(6), the right so conferred would have been an absolute one.
To the person who has this right any restriction will be irksome and may well be regarded by him as unreasonable.
But the question cannot be decided on that basis.
What the court has to do is to consider whether the restrictions imposed are reasonable in the interests of the general public.
In the State of Madras vs V. 0.
Row (3) this court has laid down the test of reasonableness in the following terms: " It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned , (1) ; , 724.
(2) ; (3) ; , 607. 661 and no abstract standard, or general pattern, of reason ableness can be laid down as applicable to all cases.
The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict.
In evaluating such elusive factors and forming their own conception of what is reasonable, in all the circumstances of a given case, it is inevitable that the social philosophy and the scale of values of the judges participating in the decision should play an important part, and the limit to their interference with legislative judgment in such cases can only be dictated by their sense of responsibility and self restraint and the sobering reflection that the Constitution is meant not only for people of their way of thinking but for all, and that the majority of the elected representatives of the people have, in authorising the imposition of the restrictions, considered them to be reasonable." These observations have been adopted by this Court in later cases, e. g., The State of West Bengal vs Subodh Gopal Bose (1) and Ebrahim Vazir Mavat vs The State of Bombay (2).
In this connection it will also be well to remember the observation of Mahajan J. in The State of Bihar vs Maharajadhiraj Sir Kameshwar Singh of Dharbangha (3), namely, that " the legislature is the best judge of what is good for the community, by whose suffrage it comes into existence. .
This should be the proper approach for the court but the ultimate responsibility for determining the validity of the law must rest with the court and the court must not shirk that solemn duty cast on it by the Constitution.
We have, therefore, to approach the problem now before us in the light of the principles laid down by this Court.
The avowed object of each of the impugned Acts is to ensure the preservation, protection, and improvement of the cow and her progeny.
This solicitude (1) (1954] S.C.R. 587, 627.
(2) ; , 949 950, (3) , 041. 662 arises out of the appreciation of the usefulness of cattle in a predominantly agricultural society.
Early Aryans recognised its importance as one of the most indispensable adjuncts of agriculture.
It would appear that in Vedic times animal flesh formed the staple food of the people.
This is attributable to the fact that the climate in that distant past was extremely cold and the Vedic Aryans had been a pastoral people before they settled down as agriculturists.
In Rg.
Vedic times goats, sheep, cows, buffaloes and even horses were slaughtered for food and for religious sacrifice and their flesh used to be offered to the Gods.
Agni is called the " eater of ox or cow " in Rg.
Veda (VIII.
43, 11).
The staying of a great ox (Mahoksa) or a " great Goat " (Mahaja) for the entertainment of a distinguished guest has been enjoined in the Satapatha Brahmana (111.
4. 1 2).
Yagnavalkya also expresses similar view (Vaj 1. 109).
An interesting account of those early days will be found in Rg.
Vedic Culture by Dr. A. C. Das, Ch. 5, pp.
203 5, and in the History of Dharmasastras (Vol.
II , Part II) by P. V. Kane at pp.
772 773.
Though the custom of slaughtering of cows and bulls prevailed during the Vedic period, nevertheless, even in the Rg.
Vedic times there seems to have grown up a revulsion of feeling against the custom.
The cow gradually came to acquire a special Sanctity and was called " Aghnya " (not to be slain).
There was a school of thinkers amongst the Rsis, who set their face against the custom of killing such useful animals as the cow and the bull.
High praise was bestowed on the cow as will appear from the following verses from Rg.
Veda, Book VI, Hymn XXVIII (Cows) attributed to the authorship of Sage Bhardvaja: " 1.
The kine have come and brought good fortune; lot them rest in the cow pen and be happy near US.
Here let them stay prolific, many coloured, and yield through many morns their milk for Indra.
O cows, ye fatten e 'en the worn and wasted, and make the unlovely beautiful to look on.
Prosper my house, ye with auspicious voices, your power is glorified in our assemblies.
663 7.
Crop goodly pasturages and be prolific; drink pure sweet water at good drinking places.
Never be thief or sinful man your master, and may the dart of Rudra still avoid you.
(Translation by Ralph Griffith).
Verse 29 of Hymn 1 in Book X.of Atharva Veda forbids cow slaughter in the following words: " 29.
The slaughter of an innocent, O Kritya, is an awful deed, Slay not cow, horse, or man of ours.
" Hymn 10 in the same Book is a rapturous glorification of the cow: " 30.
The cow is Heaven, the cow is Earth, the cow is Vishnu, Lord of life, The Sadhyas and the Vasus have drunk the outpourings of the cow.
Both Gods and mortal men depend for life and being on the cow.
She hath become this universe; all that the sun ,surveys is she.
" P.V. Kane argue,, that in the times of ' the Rg.
Veda only barren cows,if at all, were killed for sacrifice or meat and cows yielding milk were held to be not fit for being killed.
It is only in this way, according to him, that one can explain and reconcile the apparent conflict between the custom of killing COWS for food and the high praise bestowed oil the cow in Rg.
Vedic times.
It would appear that the protest raised against the slaughter of cows greatly increased in volume till the custom was totally abolished in a later age.
The change of climate perhaps also make the use of beef food unnecessary and even injurious to health.
Gradually cows became indicative of the wealth of the owner.
The Neolithic Aryans not having been acquainted with metals, there were no coins in current use in the earlier stages of their civilisation, but as they were eminently a pastoral people almost every family possessed a sufficient number of cattle and 'some of them exchanged them for the necessaries of their life,.
The value of cattle (Pasu)was, therefore, very great with the early Rg.
Vedic Aryans.
The ancient Romans also used the word pecus or pecu (pasu) in the sense of wealth or money.
The English words, 664 " Pecuniary " and " impecunious ", are derived from the Latin root pecus or pecu, originally meaning cattle.
The possession of cattle in those days denoted wealth and a man was considered rich or poor according to the large or small number of cattle that he owned.
In the Ramayana King Janaka 's wealth was described by reference to the large number of herds that he owned.
It appears that the cow was gradually raised to the status of divinity.
Kautilya 's Arthasastra has a special chapter (Ch.
XXIX) dealing with the "superintendent of cows" and the duties of the owner of cows are also referred to in Ch.
XI of Hindu Law in its sources by Ganga Nath Jha.
There can be no gainsaying the fact that the Hindus in general hold the cow in great reverence and the idea of the, slaughter of cows for food is repugnant to their notions and this sentiment has in the past even led to communal riots.
It is also a fact that after the recent partition of the country this agitation against the slaughter of cows has been further intensified.
While we agree that the constitutional question before us cannot be decided on grounds of mere sentiment, however passion ate it may be, we, nevertheless, think that it has to be taken into consideration, though only as one of many elements, in arriving at a judicial verdict as to the reasonableness of the restrictions.
Cattle in India, it is said, has a treble role to play, namely, (i) to produce milk for food, (ii) bulls for draught and (iii) manure for agriculture.
It is necessary to advert to the arguments advanced under each head.
According to the 1951 census there were 15,60,00,000 heads of cattle and 4,00,00,000 of buffaloes making a total of 19,60,00,000 or roughly 20,00,00,000 of animals belonging to the species of bovine cattle.
In India there are 123 heads of cattle including buffaloes per square mile and 43 heads to every 100 persons.
Out of the total cattle population of 15,60,00,000 and buffalo population of 4,00,00,000 there were in Bihar 1,52,97,000 cattle and 33,16,000 buffaloes, in Madhya Pradesh 1,48,58,000 heads of cattle and 26,00,000 buffaloes and in Uttar Pradesh 2,35,13,000 heads of cattle and 92,50,000 buffaloes.
665 The total distribution of cattle and buffaloes, according to age, sex and work, was as follows: Males Cattle Buffaloes Breeding bulls 6,52,0003,06,000 Working bullocks 5,88,18,00060,36,000 Bulls and bullocks over three years not in use for breed ing and work, i. e., useless.
27,35,0004,66,000 Young stock under once year.
97,63,000 28,70,000 Young stock one to three years of age.
1,22,57,000 23,84,000 Total 8,42,25,000 1,20,02,000 Females Breeding cows, i.e., cows, over 3 years kept for breeding or milk production.
4,67,23,000 2,10,08,000 Cows over 3 years used for work.
23,17,000 5,34,000 Cows over 3 years not in use for work or breeding purposes, i. e., useless.
12,02,0003,15,000 Young stock over 1 year.
93,05,00042,02,000 Young stock 1 to 3 years of age.
1,25,44,00052,83,000 Total 7,20,91,000 3,13,42,000 Grand total 15,63,16,000 4,33,44,000 As stated in the Report on the Marketing of Cattle in India issued by the Directorate of Marketing and Inspection, Ministry of Food and Agriculture, Government of India, 1956, the proportion of males in cattle is a little more than half of the total cattle population whilst in the case of buffaloes, females predominate and are about 3/4 of the total.
For agricultural purposes male cattle are generally preferred for their comparative lightness and active nature.
Of the total 39,57,000 unserviceable heads of cattle in India there were 5,35,000 in Bihar, 1,55,000 in Madhya Pradesh and 1,84,000 in Uttar Pradesh.
Of the total 7,81,000 666 unserviceable buffaloes there were 1,20,000 in Bihar, 15,000 in Madhya Pradesh and 28,000 in Uttar Pradesh.
Although, according to the census figures given above, our cattle wealth is, in number, the highest in the world the milk production is perhaps the lowest.
According to the figures given in the Second Five Year Plan, at the beginning of the First Five Year Plan the milk output was over 1,80,00,000 ton,;.
The average yield of milk per cow in India was 413 pounds which is about the lowest of any country in the world as against 8,000 pounds in the Netherlands, 7,000 pounds in Australia, 6,000 pounds in Sweden and 5,000 pounds in the U.S.A. Out of the total yield she buffaloes give 54% while cows give only 42%.
Buffalo milk is richer in fat, 6 to 7% as compared to 4.5% of fat in the cow 's milk,.
But cows milk is richer in other important content.
,, and is more easily digestible.
The average per capita consumption of milk and milk products was worked out by the First Five Year Plan at 5.5 ounces, i.e., about 2.5 chhataks or 1/6 of a seer per day, though 10 ounces are recommended by nutrition experts.
In the Facts and Figures about Bihar published in 1955 by the Department of Public Relations, the average annual.
milk yield is stated to be 620 lbs.
per cow and 1,526 lbs.
per buffalo.
It is recognised in Human Nutrition vis a vis Animal Nutrition in India, a Memorandum prepared by the Nutrition Advisory Committee of the Indian Council of Medical Research and the Animal Committee of the Indian Council of Agricultural Research that the performance of Indian much animals, particularly of cows, is extremely poor and that from a more economic point of view there does not seem to be any justification for maintaining animals yielding 2 pounds of milk or less per day and perhaps these animals would better be eliminated.
But, as the Memorandum also says, one should realise, before such a drastic action is taken, the consequences that may follow from the adoption of this policy, for if the animals giving 2 pounds or less of milk are condemned as unsuitable it will mean elimination of more than 90% of the present day much cows and loss of about 70,00,000 tons out of 97,00,000 tons of annual 667 gross production of milk from this group, besides a large number of bullocks that they will bear.
According to the table of the human food requirement recommended by the Nutrition Advisory Committee of the Indian Council of Medical Research 10 ounces of milk per adult unit per day is necessary to make tip a balanced diet.
The total human population, according to 1951 census, was 35,68,00,000 which, at the current rate of increase, was estimated to have reached the figure of 37,76,00,000 in 1956.
Treating children below 10 years of age as 0.83 of adult value, the total adult unit is calculated at 31,30,00,000.
At the rate of 10 ounces of milk per adult per day we Would require 3,23,00,000 tons of milk per annum.
It is clear, therefore, that in India, where a large section of tile population consists of vegetarians, there is a huge shortage in the supply of milk.
Cows and other milch cattle, therefore, are of very great value to this country.
If milk yielding capacity were the only consideration the comparatively smaller number of female buffaloes which produce 54% of the total milk supply of our country would obviously have deserved a far greater preference over the cows in our estimation.
But, as pointed out by Pandit Thakurdas Bhargava, there is another important consideration which is perhaps more important from the standpoint of human food supply.
It is the bullock that takes the largest share in meeting the power requirements for our agricultural production.
Based perhaps on age old experience Indian agriculturists habitually prefer a cow bullock to a buffalo bullock.
As a result of the evolutionary process of trial and error, we find in this country about 10 cow bullocks for every buffalo bullock as is shown by the 1951 census figures set out above.
If this relative distribution is considered unavoidable for our crop production, we may expect no change in the existing ratio in the population of the two species unless a revolution can be brought about in our methods and practice of land cultivation.
According to the Report on the Marketing of Cattle in India, 1956, p. 22, animals are utilised in India under four heads:(1) used for cultivating6,54,22,000 (2) used 85 668 for carting in urban areas 11,80,000 (3) used as pack animals 67,705 and (4) used in oil crushers, etc.4,30,000, making up the total of 6,70,99,705.
As against this we have, according to the 1951 census figures set out above, 5,88,18,000 working bullocks and 60,36,000 working he buffaloes, aggregating to 6,48,54,000.
There is therefore a shortage of 22,45,705 bullocks including buffaloes which presumably represent the dry cows and female buffaloes put to agricultural labour, as shown in the Second Five Year Plan at pp.
281 282.
It is true that tractors have begun to be used but they are still of a negligible number and for many years to come the country will have to depend upon animal power for her agricultural operations in order to grow enough food for meeting the demands of the fast growing human population.
In Uttar Pradesh, according to the 1951 census, there were 2,35,12,839 heads of cattle and 92,50,488 buffaloes, making a total of 3,27,63,327.
The total area of Uttar Pradesh was 7,22,78,809 acres out of which 4,92,30,120 acres were under cultivation.
If a pair of bullocks can be taken on an average to cover 10 acres the total area under cultivation will require 98,46,000 bullocks.
The 1951 census figures show 1,15,00,000 of bullocks which are slightly in excess of the number of bullocks required for the purposes of cultivation only.
Indeed both in Uttar Pradesh and in Bihar, according to the First Five Year Plan, p. 247, there was a surplus of about 40,00,000 of bullocks while in the Punjab and Pepsu the number available was just adequate to meet the demands.
If, however, account is taken of the other purposes for which bullocks may be used, namely, for carting or as pack animals or for working oil crushers or drawing water from the wells for irrigation purposes, the total available animal power will fall short of the requirements.
In addition to that we have to keep in view the necessity for further expansion of the cultivated area to meet the food requirements of the fast growing population, and in that case the deficit will go up still further.
In Bihar, according to the Facts and Figures, 1956, the total number of animal population of the bovine species were: 669 Cattle Cows and oxen (adults) 1,15,64,310 Cows and oxen (young stock) 37,33,166 Buffaloes (adult) 23,78,293 Buffaloes (young stock) 9,37,582 The number of working cattle andbuffaloes works out to one for every 6 acres of net area under cultivation.
It follows, therefore, that our working animals are perhaps just about sufficient to supply the power to keep our agricultural operations up to the necessary standard, but the demand for food is growing and more lands will have to be brought under cultivation and we shall require a far large number of these animals.
There are in India, 6,50,000 breeding bulls and 3,10,000 breeding buffaloes.
There are 4,63,40,000 breeding cows and 2,09,90,000 breeding buffaloes.
According to the First Five Year Plan, 1).
274, approximately 750 farm bred bulls of known pedigree are distributed annually by the Government in different States for developing and improving the draught as well as the milch breeds.
Besides there are some approved bulls belonging to private owners.
But the existing number of private bulls meets less than 0.
15% of the total requirements of the country.
According to the Report on the Marketing of Cattle in India, p. 9, service bulls number approximately 6,52,000 or about 0.4% of the total cattle in the country.
In the absence of an arrangement to castrate or remove the inferior bulls before a pedigree bull is located in an area, the progeny of the pedigree bulls have access to scrub, which nullifies the efficiency achieved in the first generation.
It is, therefore, clear that the breeding bulls (cattle and buffaloes) are insufficient to meet the requirements.
It is true that the practice of artificial insemination has been introduced in some centres but for many years to come Indian animal husbandry will have to depend on the ordinary breeding bulls.
We are in short supply of them.
The third utility of these animals (cattle and buffaloes) is the dung.
The First Five Year Plan at p. 255 670 records that 80,00,00,000 tons of dung are available per annum.
50% of this is used as fuel by cultivators and the other 50% is used as manure.
If suitable supplies of fuel could be made available to the cultivators then the entire quantity of dung could be used for manure.
It is doubtful, however, if the cultivators would be in a position to pay for the fuel and utilise the entirety of the dung for manure.
Cattle urine is also useful for the nitrogen, phosphates and potash contents in it.
In terms of money the dung and the urine will account for a large portion of the agricultural income in India.
Indeed Pandit Thakurdas Bhargava appearing as amnicus curiae has claimed Rs. 63,00,00,000 per year as the contribution of the dung of these animals to the national income.
The discussion in the foregoing paragraphs clearly establishes the usefulness of the cow and her progeny.
They sustain the health of the nation by giving them the life giving milk which is so essential an item in a scientifically balanced diet.
The working bullocks are indispensable for our agriculture, for they supply power more than any other animal.
Good breeding bulls are necessary to improve the breed so that the quality and stamina of the future cows and working bullocks may increase and the production of food and milk may improve and be in abundance.
The dung of the animal is cheaper than the artificial manures and is extremely useful.
In short, the backbone of Indian agriculture is in a manner of speaking the cow and her progeny.
Indeed Lord Linlithgow has truly said " The cow and the working bullock have on their patient back the whole structure of Indian agriculture. " (Report on the Marketing of Cattle in India, p. 20).
If, therefore, we are to attain sufficiency in the production of food, if we are to maintain the nation 's health, the efficiency and breed of our Cattle population must be considerably improved.
To attain the above objectives we must devote greater attention to the preservation, protection and improvement of the stock and organise our agriculture and animal husbandry on modern and scientific lines.
We have, therefore, to examine the provisions of the impugned Acts and 671 ascertain whether they help in achieving the said objectives, or are calculated to hinder that process.
In that context all the considerations above alluded to must enter the judicial verdict and if the impugned Acts further the aforesaid purpose then only can the restrictions imposed by the impugned Acts be said to be reasonable in the interest of the general public.
We turn now to the other side of the picture.
In examining the conspectus of the problem the Court cannot overlook the fact, emphasised in the petition, that the petitioners and a very large number of similarly situated persons, even if their number does not come up to the figure mentioned in the petition, are butchers (Kasais) by occupation and make an income of about Rs. 150 to Rs. 200 per month and that they will be seriously affected, if not completely thrown out of occupation, by the impugned Acts.
It is true, for reasons hereinbefore stated, that they cannot complain that they have been completely deprived of their occupation or business but the enactments, if valid, will compel them to make fresh arrangements for the supply of animals which are permitted to be slaughtered for food.
Theoretically it may not be impossible for them to do so, but in practice it is more than likely to cause considerable inconvenience to them and may even involve extra expenses for them.
The hide merchants, who, they say in the petition, have made their arrangements for the supply to them of hides of slaughtered animals up to 95 % of their requirements, may find it difficult to make fresh arrangements for procuring fallen hides.
The same observations may be made about the gut merchants.
The immediate effect of the operation of these Acts is to cause a serious dislocation of the petitioners ' business without any compensatory benefit.
In Saghir Ahmad vs The State of U. P. (1), at p. 727 this Court observed, with respect to the persons engaged in running buses for carrying passengers: " One thing, however, in our opinion, has a decided hearing on the question of reasonableness and that is the immediate effect which the legislation is likely to (1)[1955] 1 S.C.R. 707,724.
672 produce.
Hundreds of citizens are earning their livelihood by carrying on this business on various routes within the State of Uttar Pradesh.
Although they carry on the business only with the aid of permits, which are granted to them by the authorities under the Motor Vehicles Act, no compensation has been allowed to them under the Statute.
" Similar inconvenience may easily be supposed to have befallen the petitioners and others of their class and the immediate and possibly adverse impact of the impugned Acts on their occupation or business must, therefore, be taken into account as one Of the important factors in judging the reasonableness or otherwise of the said Acts.
There is also no getting away from the fact that beef or buffalo meat is an item of food for a large section of the people in India and in particular of the State of Bihar and Uttar Pradesh.
Table 11 at p. 24 of the Report on the Marketing of Cattle in India shows that in the year 1948 the annual demand for cattle and buffaloes for purposes of food was: 1.8,93,000 heads of cattle and 6,09,000 buffaloes.
These figures indicate that beef and buffalo flesh are used for food by a large section of the people in India.
It is wellknown that poorer sections of Muslims, Christians and members of the Scheduled Castes and Tribes consume beef and buffalo flesh.
There is also a limited demand for beef by the foreign population.
Buffaloes yield comparatively coarse and tough meat of inferior quality and consequently the demand for beef is greater than that for buffalo flesh.
Further the price of the buffalo flesh is 20 to 40% less than that of beef.
The prices of beef and buffalo meat are much cheaper than that of mutton or goat 's meat and consequently beef and buffalo flesh come within the reach of the poorer people perhaps for a day or two in the week.
According to the figures given in the Report of the Expert Committee at 1).
12, in 1938 in Bombay the prices were Rs. 0 3 9 per pound of beef, Rs. 0 2 0 per pound of buffalo flesh and Rs. 0 5 6 for mutton and goats ' flesh.
In 1950 these prices went up respectively to Rs. 0 12 0, Rs. 0 11 0 and Rs. 1 3 0.
673 The comparatively low prices of beef, and buffalo flesh, which are nearly half of that of mutton or goats ' flesh, is the main reason for their demand.
Habit is perhaps secondary.
Learned counsel for some of: the petitioners cited the case of the boys and girls residing in boarding houses attached to the Anglo Indian schools where the only meat which the boarding school authorities can afford to supply as part of the diet of the growing children is beef and that only on a day or two in the week.
The Acts, if enforced, will prevent them.
from having even this little bit of nourishment and amenity.
It is true that after the partition of the country the Muslim population has decreased and further that some Muslims may not habitually take beef or buffalo flesh, but even so a large section of the poorer people belonging to the Muslim, Christian and Scheduled Castes communities do consume beef and buffalo flesh.
And this is not merely a matter of amenity or luxury but is at any rate partially ', a matter of necessity.
Table VII set out at p. 32 of the Memorandum on Human Nutrition vis a vis Animal Nutrition in India recommends one ounce of meat daily whereas the available quantity is much less and the attainable quantity under the new plan may be 1/3 ounce or a little more.
Poorer people, therefore, who can hardly afford fruit or milk or ghee are likely to suffer from malnutrition, if they are deprived of even one out ice of beef or buffalo flesh which may sometimes be within their reach.
This aspect of the matter must also be taken into account in assessing the reasonableness of the provisions of the impugned Acts.
The number of cattle and buffaloes not fit for breeding or working has already been set out.
Further particulars in detail are available from Appendices II and III to the Report on the Marketing of Cattle in India.
The figures given there show that according to the 1951 census the total number of unserviceable male cattle was 27,35,000 and that of female cattle was 12,02,000.
Out of these there were in Bihar 2,93,000 male and2,42,000 female, in Madhya Pradesh 1,24,000 male and31,000 female and in Uttar Pradesh 674 1,63,000 male and 21,000 female.
The unserviceable buffaloes in the whole of India, according to 1951 census, were 7,81,000 out of which 4,66,000 were males and 3,15,000 were females.
Out of the total there were in Bihar 61,000 male buffaloes and 59,000 female, buffaloes, in Madhya Pradesh 10,000 male and 5,000 female, in Uttar Pradesh 16,000 male and 12,000 female.
According, to the First Five Year Plan, p. 273, the overall estimates made by the Cattle Utilisation Committee show that about 10 % of the cattle population in India or roughly 1,14,00,000 adults were unserviceable or unproductive.
The Report of the Cattle Preservation and Development Committee also put the figure of old, decrepit and unproductive cattle at 10% of the total population.
Pandit Thakurdas Bhargava does not accept the correctness of these figures.
It is difficult to find one 's way out of the labyrinth of figures and it will be futile for us to attempt to come to a figure of unserviceable agricultural animals which may even be approximately correct.
For our purpose it will suffice to say that there is a fairly large number of cattle and buffaloes which are not of any use for breeding or working purposes.
The position may be accepted as correctly summed up at p. 274 of the First Five Year Plan where it is stated, inter alia, that there is a deficiency of good milch cows and working bullocks and that there exists a surplus of useless or inefficient animals.
The presence of a large number of useless and inefficient cattle in the midst of the good ones affect our agricultural economy in two ways.
In the first place and this is the crux of the matter this surplus stock is pressing upon the scanty fodder and feed resources of the country and is an obstacle to making good the deficit,.
As pointed out by the expert Committee Report at p. 59 the greatest handicap in improving our cattle wealth is the lack of resources in feeding them.
Any effort to improve cattle will fail unless they are properly fed.
The table set out on that very page of that Report records a deficiency of 6,00,00,000 tons, i. e., 33% in straw or Kadbi 10,40,00,000 tons, i.e., 13% in green fodder and 2,65,20,000 tons, i. e., 675 70% in concentrates (i. e., oil cakes, bran, oil seeds, maize ' barley and gram, etc.).
It is pointed out that the figures shown against green fodder are not the quantities which are presently available but! which can be made available if forest ' resources are fully, tapped.
According to this Report even if the forest resources are fully utilised there will still be a deficiency of 13% in the supply.
The actual availability of this item is limited by the fact that green fodder is, only available during the monsoon months and much of this is wasted by the lack of country wide arrangements for its conservation.
The estimated requirements and the present supply of food stuffs for animals is also given in Table V at p. 23 of the Memorandum on Human Nutrition vis a vis Animal Nutrition in India which tallies with and is more or less about the same as those given in the Report of the Expert Committee above referred to.
Table V also shows a deficiency of 6,00,00,000 tons of straw or Kadbi 1,78,00,000 tons of green fodder.
The shortage of concentrates, i. e., oil cakes, maize, barley, gram, cotton seed and bran vary between 8,50,000 to 71,17,000 tons.
According to the estimate given in the First Five Year Plan at p. 273 the quantity of fodder available is about 75% of requirements while available concentrates of feeds would suffice only for about 28 % of 1 the cattle.
The, figures given at p. 24 of the report of the Gosamvardhan Enquiry Committee set up by, the Uttar Pradesh Government are interesting.
The total cattle: and buffalo population in, Uttar Pradesh is estimated at 3,27,63,327.
The scientific food requirements of this total population, according to, the Western standard, are: first set out.
Then begins a: process of scaling down, for the above scale is, considered to be somewhat lavish for our low sized village cattle.
The Indian standard, according to this report, will, require much less and the figures, according to Indian standards, are next set out.
Evidently these, figures also, show a, very big gap between, requirements and the available, quantities.
So the report says that event, this may, be reduced and what is significantly 86 676 described as the " critical limit " is then set out.
It is not quite intelligible why an Indian cow should not require even an Indian standard of ration.
Be that as it may, even for the " critical limit " the quantity available is far too short.
The gap between the critical limit and what is available is respectively 1,80,00,000 tons of dry matter, 15,00,000 tons of protein and 28,61,70,00,000 therms.
It is conceded that the requirements of mixed population of 3,27,63,327 heads of animals may be taken as representing 2,71,30,000 adult units and with the present available supply of straw, green feed and concentrates these adult units cannot be fully fed even on the critical limit standard.
The available supply can support only 1,59,20,000 adult units leaving 1, 1 2, 1 0,000 units unfed.
It is recognised by this Report that with an increase in cattle population and better prophylactic treatment against contagious diseases, the trend of population will be towards an increase and the deficiency in nutrition will become still more pronounced.
The remedy suggested is that attention be paid urgently towards the production of more fodder from cultivated land and utilisation of all marginal and sub marginal land for augmenting food and fodder sources.
With a large population of animals in which the majority is not yielding adequate and prompt returns to the owners, the animals are naturally allowed to fenad for themselves and to subsist on whatever the agriculturist is able to provide from his scanty sources for the maintenance of his stock.
Naturally, therefore, the problem of substantial precentage of uneconomical cattle has cropped up along with that of stray, wild, old, diseased and uneconomical animals.
These old and useless animals roaming about at pleasure in search of food are a nuisance and a source of danger in the countryside.
They grow wild and become a menace to the crop production.
As pointed out by the Report of the Expert Committee, the danger was actually seen by the members of that Committee in Pepsu where, it is significant to note, the slaughter is banned completely.
677 The presence of a large number of old and useless animals also has a bad effect on the quality of the breed.
There is a tendency for this population to multiply and bring into being progeny of a very inferior kind which is bound to adversely affect the production of milk or bullock power.
It is absolutely necessary that this surplus cattle should be separated from the good and robust animals and a total ban on slaughter of cattle and buffaloes will contribute towards worsening the present condition.
The Cattle Preservation and Development Committee set up by the Government of India in 1948 at p. 47 of its Report recommended, as a panacea for the evil menace of useless cattle, a scheme for the establishment of cattle concentration camp for the old and useless cattle.
It is this scheme which subsequently came to be known by the name of Gosadans.
At pp.
48 and 49 are set out the estimates of cost of establishing and running a camp to house 2,000 cattle.
The non recurring cost on land, cattle sheds, staff and servants ' quarters is shown at Rs. 32,000 and the recurring cost, namely, salary of manager, stock man, chaukidars.
and others on the establishment together with allowances is shown at Rs. 13,000 per year and it is hoped that a sum of Rs. 5,000 will be derived from the sale of hides, manure, etc.
According to the Report of the Expert Committee each Gosadhan housing 2,000 heads of cattle would have to have 4,000 acres of land which would permit of a rotational and controlled grazing practice and provision has to be made for the surplus grass during the rainy season to be preserved for the scarcity months.
There should be thatched sheds for protection of the cattle against weather and wild animals and fodder is to be cultivated on a small part of the 4,000 acres.
By the end of 1954, when the Report of the Expert Committee came to be made, the cost had gone up from what they were in 1948 when the Cattle Preservation and Development Committee Report had been made.
The estimated cost, according to the Report of the Expert Committee, of establishing and running of a Gosadan for 2,000 heads of cattle is shown as: nonrecurring 678 Rs. 50,000, and recurring Rs. 25,000 per year.
On this basis the recurring cost alone will work out at Rs. 12.50 per head of cattle per annum for preserving useless cattle.
The figures given in the Gosamvardhan Enquiry Committee 's Report are interesting.
Taking the total number of cattle,% in Uttar Pradesh not used for breeding or work at 1,83,276 in 1951, the State will require 91 Gosadans each with a housing capacity for 2,000 heads of cattle.
Even taking one acre per animal instead of two acres per animal as recommended by the Expert Committee Report, 91 Gosadan,s will require nearly 2,00,000 acres of land.
The cost of 91 Gosadans will be non recurring Rs. 45,50,000 and recurring Rs. 22,75,000 per annum.
It appears from the revised model for Gosadans for 500: heads of cattle to be run by the State Governments set out in Appendix II to the Proceedings of the Fifth Annual General Meeting of the Central Council of Gosamvardhan held at Now Delhi on February 21, 1957, that the non recurring cost will be Rs. 39,000 and the recurring running cost will be Rs. 12,000.
It is estimated that there will be an income of Rs. 2,500 from the sale of hides, etc.
Allowing this, the net annual recurring cost will be Rs. 9,500 for 500 heads of cattle which works out at Rs. 19 per head of cattle per annum.
As regards Gosadans to be run by private institutions it is said in the same Appendix II that those institutions will be given a subsidy of Rs. 18 per head per annum out of which 75% would %,be contributed by the Centre and the remaining 25% by the State.
Thus for the preservation of the useless cattle the country will pay Rs. 19 or Rs. 18 per head of such useless cattle per annum, whereas our total national expenditure on education (Central and States including local bodies) in 1955 1956 was only Rs. 4 9 per capita as against Rs. 104.6 per capita in the United Kingdom and Rs. 223.7 per capita in the United States of America and our target for 1957 1958 works out at Rs. 5 per capita per annum.
It will be noticed that in none of the schemes is even a pice provided for fodder.
The idea evidently is that the cattle will be left there to fend for themselves on whatever grass or 679 other green feed they can get by grazing.
If one remembers that though green fodder may be available in the monsoon months, there will be a dearth, of them in the dry months, one will at once see that the segregating of the cattle in the concentration camp will only be to leave them to a fate of slow death.
The very idea that these animals should eke out their livelihood by grazing and that Gosadans should be located in out of the way places, appeared to the authors of the Memorandum on Human Nutrition vis a vis Animal Nutrition at p. 47, to belie the humanitarian considerations on the basis of which the scheme was conceived.
Theory apart, the Gosadan scheme has 'been tried and the result is not at all encouraging.
The First Five Year Plan, obviously as an experimental measure, provided for the establishment of 160 Gosadans each housing 2,000 heads of cattle, at a cost of about Rs. 97,00,000.
The Planning Commission recognised that these measures would touch only the fringe of the problem and the success of the movement would depend on the amount of public support, especially from charitable institutions that it received.
The sheer weight of the figures of expenses compelled the Gosamvardhan Enquiry Committee to recognise that if the unwanted and uneconomic cows and their progeny have to be effectively saved from slaughter, the responsibility had to be shared by the individual, the community and so on, for it would be utterly impracticable to expect that the burden of collection of such animals from villages and transporting them to the Gosadans would be within the exclusive means and competence of the State.
That Committee certainly expected the State to share a particular portion of the expenditure which legitimately fell in its sphere of responsibility, but the Committee felt, and said so in so many words, that by far the most substantial portion of the responsibility should rest on the owners and the community itself for it was but equitable to expect that if the cow had to be really saved from slaughter the cost on this account should be equitably borne by the people and the State.
This 680 part of the Report of the Gosamvardhan Enquiry Committee reads like wishful thinking and amounts to only hoping for the best.
When the conscience of the individual or the community did not prevent the Hindu owner from selling his dry cow to the butcher for a paltry sum of Rs. 30 to Rs. 40 per head, when the Hindu sentiment for the divinity and sanctity attributed to the cow has to be propped up by legislative compulsion, when according to its own Report at p. 41 the Dharmada and Brit collected by the Hindu busi nessmen on each commercial transaction ostensibly for the benefit of the cow is not made available in full and finally when Goshalas have had to be closed down for want of funds and public support, when the country cannot spend more than Rs. 5 per capita per annum on the education of the people, it seems to be somewhat illogical and extravagant, bordering on incongruity, to frame a scheme for establishment of Gosadans for preserving useless cattle at a cost of Rs. 19 or Rs. 18 per head per annum and which will, for its success, admittedly have to depend on the same elusive and illusory public support or 75% subsidy from the Central Government.
What has been the result of the experiment? According to the Report of the Expert Committee since the First Five Year Plan only 17 Gosadans had been started in Bihar, Uttar Pradesh, Pepsu, Coorg, Bhopal, Kutch, Vindhya Pradesh, Tripura and Saurashtra put together.
Not even one of these 17 establishments is fully stocked.
There are only about 5,293 animals in these 17 Gosadans instead of 34,000.
According to the Gosamvardhan Enquiry Committee 's Report, only two Gosadans had been established up to the date of that Report in Uttar Pradesh.
The Second Five Year Plan (p. 283) shows that out of the 160 Gosadans for which provision had been made in the First Five Year Plan, only 22 Gosadans had been established.
According to the Facts and Figures about Bihar, 1955, p. 88, three Gosadans had been established at Berwadih, Nirmali and Monghyr where there were about 700 uneconomic animals at that time instead of 6,000 which should have been there as per the estimated capacity for each Gosadan.
681 What, in the view of the several committees, is the conclusion ? According to the Memorandum on Human Nutrition Vis a vis Animal Nutrition in India, p. 4, the present scheme of establishing Gosadans for segregating old and useless animals can serve only a limited, purpose and if extended countrywide, it is likely to hinder rather than help the problem of disposing of, the surplus animals.
At p. 47 the authors of this Memorandum appear to have felt that in advocating, the adoption of Gosadan Scheme on a countrywide, basis, sufficient consideration had not been given to its practical aspects.
It is pointed out that according to the present estimate the total number of useless animals is four times the number the Second Five Year Plan had estimated and that consequently, having regard to the huge size of our cattle population the existing number of the useless section would remain unchanged for many years to come and that a sum of Rs. 3,04,00,000 will be required only for pounding such animals.
The Expert Committee 's Report is quite definite and emphatic.
Paragraph 133 of that Report at P. 62 clearly expresses the opinion that Gosadans do not offer a solution to the problem.
To house and maintain all these animals, thousands of Gosadans on lakhs of acres of land would be needed.
In addition to the huge nonrecurring expenses, a very high recurring annual expenditure would have to be incurred.
, In view of this and in view of the indifferent response from the States in setting up Gosadans, the Expert Committee came to the conclusion that the Gosadan scheme was not likely to offer any solution for the problem of useless cattle and that it would be far more desirable to utilise the limited resources of the country to increase the efficiency of the useful cattle.
The Report of the Cattle Preservation and Development Committee did not recommend the immediate total ban on the slaughter of all cattle.
They recommended the establishment of concentration camps, later on euphemistically called Gosadans, and though total ban was the ultimate objective, it did not, for the moment, prohibit the slaughter of animals over the age of 14 years and of animals of any age 682 permanently unfit for work or breeding owing, to age or, deformity.
In para.
134 of the Expert Committee 's Report at, p. 63 it, is stated clearly that the total ban on the slaughter of all cattle would not be in the best interests of the country as it is merely a negative and not a positive approach to the problem.
They consider that a constructive approach to the problem will be, to see that no useful animal is slaughtered and that the country 'section resources are fully harnessed to produce better and more efficient cattle.
Neither the First Five Year Plan nor the Second Five Year Plan accepted the idea of a total ban on the slaughter of cattle.
Indeed, according to the Second Five Year Plan, a total ban will help the tendency for the number of surplus cattle to increase and, in their view, a total ban on the slaughter of all cows, calves and other milch and draught cattle will defeat the very object of the directive principles embodied in article 48 of the Constitution.
We find from para.
6 on p. 283 of the Second Five Year Plan that the Gosadan scheme did not make any, real or satisfactory progress and that altogether 22 Gosadans housing only 8,000 cattle had been established by the States up to the date of that document and even then many of the States had encountered difficulty in, securing the areas of land needed for their; operations.
The Planning Commission considered that it would be impossible to establish enough of these Gosadans and they reached the conclusion that in defining the scope.
of the ban on the slaughter of cattle the States should take a, realistic view of the fodder resources available in the country.
and the extent to which they can get the.
co operation of voluntary organisations to bear the main responsibility for, maintaining unserviceable, and unproductive cattle with a measure of assistance from the Goverment land general support from; the people.
, As already stated, ' the, Memorandum on Human Nutrition vis a vis, Animal.
Nutrition at p. 4 expressed the view that the Gosadan scheme can, serve only a limited purpose and, if extended countrywide was likely, to hinder, rather than help the problem of disposing of the, surplus animals, appart From the huge initial cost.
A, large, concentration of 683 useless animals within a restricted area, the authors of that Memorandum feared, might lead to considerable soil erosion due to overgrazing and there might be every possibility of contagious and parasitic diseases spreading from these animals to the surrounding area.
It is only the Gosamvardan Enquiry Committee which had recommended an immediate total ban on the slaughter of all cattle, irrespective of age or sex.
It should, however, be noted that even that Committee did not recommend such a total ban as a measure independent of all other considerations.
Its recommendation in this behalf was linked up with and was a part of a scheme which depended, for its success, on a variety of imponderable matters, like public enthusiasm and support for the establishment and maintenance of Gosadans in a high state of working, efficiency, the capacity of the State to bring more lands under cultivation, reclamation of the jungle lands and the like.
It may be noted also that although in some of the States total ban has been imposed on the slaughter of cattle, many of the States have not con sidered it necessary to impose such a blanket ban.
Thus the Assam Cattle Protection Act, 1950, the Bombay Animal Preservation Act, 1948, the West Bengal Animal Slaughter Control Act, 1950, the Hyderabad Slaughter of Animal Act, 1950, the Travancore Cochin Notification permit slaughter of cattle and buffaloes over specified years of age.
Even the Madhya Pradesh Act, as criminally enacted, did not place a total ban on the slaughter of all cattle.
In earlier times there being enough of pastures and smaller human and cattle population and restricted needs, it was possible to rear large and valuable herds and organise a system of balanced economy as far as agricultural development was concerned.
Thus, while the country was producing enough grain for the requirement of the human population there was an adequate area available for plentiful grazing of animals, which, supplemented by fodder available from agricultural production, assisted in developing the types of quality animals required for the needs of the 87 384 times and the area in question (Report of the Gosamvardhan Enquiry Committee).
The position has considerably changed since then.
There has been a large increase in human population and famines and epidemics having been largely brought under control, there has been an increase in the animal population also.
Already there is a competition between man and the animal for the available land.
The growing human population needs more food for which more land is required.
The refugee problem has yet to be solved and sufficient land has to be found for settling the refugees therein.
With organised facilities for artificial fertilisers and the introduction of scientific methods of cultivation agricultural production is expected to increase and the problem of food for human consumption may be capable of a satisfactory solution.
But as regards the cattle feed the gap between the requirement and the available quantities is so wide that there is little possibility, in any foresee able future, of the country producing enough to feed them adequately.
To summarise: The country is in short supply of milch cattle, breeding bulls and working bullocks.
If the nation is to maintain itself in health and nourishment and get adequate food, our cattle must be improved.
In order to achieve this objective our cattle population fit for breeding and work must be properly fed and whatever cattle food is now at our disposal and whatever more we can produce must be made available to the useful cattle which are in presenti or will in futuro be capable of yielding milk or doing work.
The maintenance of useless cattle involves a wasteful drain on the nation 's cattle feed.
To maintain them is to deprive the useful cattle of the much needed nourishment.
The presence of so many useless animals tends to deteriorate the breed.
Total ban on the slaughter of cattle, useful or otherwise, is calculated to bring about a serious dislocation, though not a complete stoppage, of the business of a considerable section of the people who are by occupation butchers (Kasais), hide merchants and so on.
Such a ban will also deprive a large section of the people of what may 685 be their staple food.
At any rate, they will have to forego the little protein food which may be within their means to take once or twice in the week.
Preservation of useless cattle by establishment of Gosadans is not, for reasons already indicated, a practical proposition.
Preservation of these useless animals by sending them to concentration camps to fend for themselves is to leave them to a process of slow death and does no good to them.
On the contrary, it hurts the best interests of the nation in that the useless cattle deprive the useful ones of a good part of the cattle food, deteriorate the breed and eventually affect the production of milk and breeding bulls and working bullocks, besides involving an enormous expense which could be better utilised for more urgent national needs.
We are not unmindful of the fact that beef and buffalo flesh from calves under one year of age.
heifers and young castrated stock yielding meat of a superior quality fetch comparatively higher prices in the market and, therefore, the tendency of the butchers naturally is to slaughter young calves.
This circumstance clearly warns us that calves, heifers and young castrated stock (cattle and buffalo) which will in future supply us milk and power for purposes of agriculture require protection.
We also do not fail to bear in mind that for very good and cogent reasons cows also require protection.
Cows give us milk and her progeny for future service.
Unfortunately, however, the average milk yield of a cow, as already stated, is very much less than that of a she buffalo.
As the Gosamvardhan Enquiry Committee 's Report points out, despite all the veneration professed for the cow, when it comes to the question of feeding, the she buffalo always receives favoured treatment and the cow has to be satisfied with whatever remains after feeding the she buffaloes, bullocks, and calves in order of priority.
The growth of cities and heavy demand for milk in the urban areas have contributed to the slaughter of good stock.
For want of space no freshly calved animal can be brought in without getting rid of one that had gone dry.
Salvage facilities not being available or, if available, 686 being uneconomical, the professional gowalas, who are mostly, if not wholly, Hindus, find it uneconomical to maintain the cow after she goes dry and consequently sell her to the butcher for slaughter at Rs. 30 to Rs. 50 per head, irrespective of her age and potential productivity, and import a fresh cow.
The veneration professed for the sanctity attached to the cow does not prevent them from doing so.
In big towns the municipal regulations are stringent and slaughter is permitted only of unserviceable and unproductive animals.
Instances are not uncommon, however, that to get an animal passed for slaughter, the teeth or the rings round the horns of the animal are tampered with and sometimes a cow is even maimed in order that she may be passed by the veterinary inspector as fit for slaughter.
Cows, which are rejected by the inspector, are taken out of the limits of the cities and slaughtered in the rural areas.
As slaughter is not confined to registered slaughter houses, the number of useful animals which are slaughtered cannot be given accurately.
It is estimated in the Report of the Expert Committee at p. 2 that at least 50,000 high yielding cows and she buffaloes from cities of Bombay, Calcutta and Madras alone are sent annually for permature slaughter and are lost to the country.
The causes of slaughter of useful cattle are enumerated at pp. 2, 3, and 9 of that Report, namely, lack of space in the cities and suburban areas, long dry period, want of arrangement for breeding bulls at the proper time, the anxiety to get as much milk out of the cow as possible, the high cost of maintenance of cows in the cities and the difficulties in the matter of obtaining adequate fodder.
For these reasons many animals are sent to the slaughter houses through sheer economic pressure and are replaced by fresh animals imported from breeding areas.
The danger of such premature slaughter is greater for the cow, for being an animal with a scanty yield of milk it does not pay the owner to maintain her through the long dry period and hence there is an inducement for adopting even cruel practices to get her passed by the inspectors.
But a dry she buffalo is well worth preserving and maintaining 687 in expectation of rich return at the next lactation.
Besides, buffaloes for slaughter will not fetch as good a price as cows would do.
Likewise there will not be much inducement to the agriculturist or other owner to part with the breeding bulls or working bullocks (cattle and.
buffalo) as long as they are serviceable.
For their sheer usefulness and their high market value as breeding or working animals the breeding bulls and working bullocks, as long as they are fit, are, to the agriculturists, worth more than the price of their flesh in gold.
There can hardly be any inducement for maiming valuable animals which, as breeding bulls or working animals, can at any time fetch from the agriculturists a price higher than what the maimed ones will fetch from the butchers.
The breeding bulls and working bullocks (cattle and buffaloes) do not, therefore, require as much protection as cows and calves do.
The next question is as to what should be the scope of the ban on the slaughter of animals.
One view is that the slaughter of all animals (cattle and buffaloes) of all categories should be regulated by the State and that animals below a specified age or not suffering from some natural deformity should not be allowed to be slaughtered.
Drastic and stringent regulations have been imposed by municipal laws and have been tried but experience shows that they are not sufficient at least to protect the cow.
It has been found to be extremely difficult to enforce the regulations for inadequacy of staff and veterinary inspectors, little or no check on the veterinary inspectors who succumb to the pressure or inducements of the butchers and pass animals not really useless as and for useless and aged animals.
A large percentage of the animals not fit for slaughter are slaughtered surreptitiously outside the municipal limits.
For reasons of economy rapacious gowalas or callous agriculturists find it uneconomical to maintain the dry cow and even resort to cruel practices and maim the cow in order to get her passed for slaughter.
As already stated, the she buffalo and the breeding bulls and working bullocks (both cattle and buffaloes) for their value, present and 688 future, do not ruin the same amount of danger as a dry cow does.
Regulation of slaughter of animals above a specified age may not be quite adequate protection for the cow but may be quite sufficient for the breeding bulls and working bullocks and the she buffaloes.
These considerations induce us to make an exception even in favour of the old and decrepit cows.
The counsel for the petitioners, be it said to their credit, did not contend otherwise.
After giving our most careful and anxious consideration to the pros and cons of the problem as indicated and discussed above and keeping in view the presumption in favour of the validity of the legislation and without any the least disrespect to the opinions of the legislatures concerned we feel that in discharging the ultimate responsibility cast on us by the Constitution we must approach and analyse the problem in an objective and realistic manner and then make our pronouncement on the reasonableness of the restrictions imposed by the impugned enactments.
So approaching and analysing the problem, we have reached the conclusion (i) that a total ban on the slaughter of cows of all ages and calves of cows and calves of she buffaloes, male and female, is quite reasonable and valid and is in consonance with the directive principles laid down in article 48, (ii) that a total ban on the slaughter of she buffaloes or breeding bulls or working bullocks (cattle as well as buffaloes) as long as they are as milch or draught cattle is also reasonable and valid and (iii) that a total ban on the slaughter of she buffaloes, bulls and bullocks (cattle or buffalo) after they cease to be capable of yielding milk or of breeding or working as draught animals cannot be supported as reasonable in the interest of the general public.
We now proceed to test each of the impugned Acts in the light of the aforesaid conclusions we have arrived at The Bihar Act, in so far as it prohibits the slaughter of cows of all ages and calves of cows and calves of buffaloes, male and female, is valid.
The Bihar Act makes no distinction between she buffaloes, bulls and bullocks (cattle and buffaloes) which are useful as milch or breeding or draught animals and those which are not and indiscriminately prohibits slaughter of she buffaloes, bulls and bullocks (cattle and buffalo) irrespective of their age or usefulness.
In our view the ban on slaughter of she buffaloes, breeding bulls and working bullocks (cattle.
and buffalo) which are useful is reasonable but of those which are not useful is not valid.
The question as to when a she buffalo, breeding bull or working bullock (cattle and buffalo) ceases to be useful and becomes useless and unserviceable is a matter for legislative determination.
There is no provision in the Bihar Act in that behalf.
Nor has our attention been drawn to any rule which may throw any light on the point.
It is, therefore, not possible to apply the doctrine of severability and uphold the ban on the slaughter of she buffaloes, breeding bulls and working bullocks (cattle and buffalo) which are useful as milch or breeding or working animals and strike down the ban on the slaughter of those which are useless.
The entire provision banning the slaughter of she buffaloes, breeding bulls, and working bullocks (cattle and buffalo) has, therefore, to be struck down.
The result is that we uphold and declare that the Bihar Act in so far as it prohibits the slaughter of cows of all ages and calves of cows and calves of buffaloes, male and female, is constitutionally valid and we hold that, in so far as it totally prohibits the slaughter of she buffaloes, breeding bulls and working bullocks (cattle and buffalo), without prescribing any test or requirement as to their age or usefulness, it infringes the rights of the petitioners under article 19 (1) (g) and is to that extent void.
As regards the U. P. Act we uphold and declare, for reasons already stated, that it is constitutionally valid in so far as it prohibits the slaughter of cows of all ages and calves of cows, male and female, but we hold that in so far as it purports to totally prohibit the slaughter of breeding bulls and working bullocks without prescribing any test or requirement as to their age or usefulness, it offends against article 19 (1) (g) and is to that extent void.
690 As regards the Madhya Pradesh Act we likewise declare that it is constitutionally valid in so far as it prohibits the slaughter of cows of all ages and calves of cows, male and female, but that it is void in so far as it totally prohibits the slaughter of breeding bulls and working bullocks without prescribing any test or requirement as to their age or usefulness.
We also hold that the Act is valid in so far as it regulates the slaughter of other animals under certificates granted by the authorities mentioned therein.
In the premises we direct the respondent States not to enforce their respective Acts in so far as they have just been declared void by us.
The parties will bear and pay their own costs of these applications.
Petitions partly allowed.
| The Bihar Preservation and Improvement of Animals Act ,955, put a total ban on the slaughter of all categories of animal,, of the species of bovine cattle.
The U. P. Prevention of Cow Slaughter Act, 1955, put a total ban on the slaughter of cows and her progeny which included bulls, bullocks, heifers and calves.
The C. P. and Berar Animal Preservation Act, 1949, placed a total ban on the slaughter of cows, male or female calves of cow, bulls, bullocks, and heifers and the slaughter of buffaloes (male or female, adults or calves) was permitted only under a certificate granted by the proper authorities.
No exception was made in any of these Acts permitting slaughter of cattle even for bona fide religious purposes.
These three Acts were enacted in pursuance of the directive principles of State policy contained in article 48 Of the Constitution.
The petitioners, who were engaged in the butcher 's trade and its subsidiary undertakings, challenged the constitutional validity of the three Acts on the grounds that they infringed their funda mental rights guaranteed under articles 14, 19(1)(g) and 25 of the Constitution.
The respondents contended that the impugned Acts were constitutional and valid as they were made in consonance with the directive principles of Art 48 which were superior to the fundamental rights and that the impugned Acts did not offend article 14, 19(1)(g) or 25 Held, (i) that a total ban on the slaughter of cows of all ages and calves of cows and of she buffaloes, male and female, was quite reasonable and valid; (ii)that a total ban on the slaughter of she buffaloes or breeding bulls or working bullocks (cattle as well as buffaloes), as long as they were capable of being used as milch or draught cattle, was also reasonable and valid; and (iii) that a total ban on the slaughter of she buffaloes, bulls 630 and bullocks (cattle or buffalo) after they ceased to be capable of yielding milk or of breeding or working as draught animals was not in the interests of the general public and was invalid.
The directive in article 48 for taking steps for preventing the slaughter of animals is quite explicit and positive and contemplates a ban on the slaughter of the several categories of animals specified therein, namely, cows and calves and other cattle which answer the description of milch or draught cattle.
The protection is confined only to cows and calves and to those animals which are presently or potentially capable of yielding milk or of doing work as draught cattle but does not extend to cattle which at one time were milch or draught cattle but which have ceased to be such.
The directive principles of State policy set out in Part IV of the Constitution have to conform to and run as subsidiary to the fundamental rights in Part 111.
State of Madras vs Smt.
Champakam Dorairajan, [1951] S.C.R. 525, followed.
The ban on the slaughter of cows even on the slaughter day did not violate the fundamental rights of the petitioners under article 25 as it had not been established that the sacrifice of a cow on that day was an obligatory overt act for a Mussalman to exhibit his religious belief and idea.
Ratilal Panachand Gandhi vs The State of Bombay, [1954] S.C.R. 1055, applied.
The impugned Acts which affected only the butchers who slaughtered cattle and not the butchers who slaughtered sheep or goats, did not offend article 14 Of the Constitution.
The different categories of animals being susceptible of classification into separate groups on the basis of their usefulness to society, the butchers who kill each category may also be placed in distinct classes according to the effect produced on society by the carrying on of their respective occupations.
This classification is based on an intelligible differentia which places the petitioners in a well defined class and distinguishes them from those who slaughter sheep or goats and this differentia has a close connection with the object sought to be achieved by the im pugned Acts, namely, the preservation, protection and improvement of livestock.
In determining the question of the.
reasonableness of restrictions imposed on the fundamental rights conferred by article 19(1)(g) the Court cannot proceed on a general notion of what is reasonable in the abstract or even on the consideration of what is reasonable from the point of view of the person or persons on whom the restrictions are imposed.
What the Court has to do is to consider whether the restrictions imposed are reasonable in the interests of the general public.
The test of reasonableness has been laid down in State of Madras vs I. G. Row, [1952] S.C.R. 597 at 602.
It should also be remembered that the legislature 631 is the best judge of what is good for the community.
Though a constitutional question cannot be decided on the grounds of the sentiment of a section of the people, it has to be taken into consideration, though only as one of the elements, in arriving at a judicial verdict as to the reasonableness of the restrictions.
The effect of the impugned Acts on the fundamental rights of the petitioners under article 19(1)(g) is direct and instantaneous as soon as the Acts are brought into force, and it has to be determined whether they can be justified under cl.
(6) of article 19 The country is in short supply of milch cattle, breeding bulls and working bullocks, and a total ban on the slaughter of these which are essential to the national economy for the supply of milk, agricultural working power and manure is a reasonable restriction in the interests of the general public.
But a total ban on the slaughter of useless cattle, which involves a wasteful drain on the nation 's cattle feed which is itself in short supply and which would deprive the useful cattle of much needed nourishment, cannot be justified as being in the interests of the general public.
Under O. XLI r. 2, Of file Supreme Court Rules intervention is permitted only to the Attorney General of India or the Advocates General for the States.
There is no other provision for permitting a third party to intervene in the proceedings before the Supreme Court.
In practice, however, the Supreme Court, in exercise of its inherent powers, allows a third party to intervene when such third party is a party to some proceedings in the Supreme Court or in the High Courts where the same or similar questions are in issue, for the decision of the Supreme Court will conclude the case of that party.
|
Summarize this legal judgement text concisely | Appeals Nos. 143 to 145 of 1954, 27 to 30 and 161 to 164 of 1956.
Appeals from the judgment and order dated September 14, 1953, of the former Travancore Cochin High Court in Original Petitions Nos. 53, 56 and 57 of 1952.
Appeals from the judgment and order dated December 14, 1954, of the Mysore High Court in C. P. Nos.
755 52 and 53 and W. P. Nos. 105 and 106 of 1954.
Appeals from the judgment and order dated March 22, 1955, of the Mysore High Court in Writ Petition No. 122 of 1954 and order dated April 7, 1955, in W.P. Nos. 35, 36 and 37 of 1955.
K.S. Krishnaswami Iyengar, M. U. Isaac and Sardar Bahadur, for the appellants in C. As.
143 45 of 1954.
H. N. Sanyal, Addl.
Solicitor General of India, B. Gana pathy Iyer and R. H. Dhebar, for the appellants in C. As.
27 30 and 161 164 of 1956.
R. Ganapathy Iyer and R. H. Dhebar, for the respondent in C. As.
143 145 of 1954.
A. V. Viswanatha Sastri and G. Gopalakishnan, for the respondents in C. As.
27 30 of 1956.
A. V. Viswanatha Sastri, K. R. Choudhury and G. Gopalakri shnan, for the respondents in C. As.
161 164 of 1956.
April 28.
The Judgment of the Court was delivered by S.K. DAS J.
This judgment relates to and governs eleven appeals which for convenience have been classified into two groups.
The first group may be called the group of Travancore Cochin appeals, and within this group fall Civil Appeals Nos. 143 to 145 of 1954.
The, second group may be called the group of Mysore appeals and within this group are eight appeals, namely, Civil Appeals Nos.
27 to 30 of 1956 and 161 to 164 of 1956.
By reason of the circumstance that certain common questions of law and fact arise in all these eleven appeals, they have been heard one after the other; but it will be convenient and will avoid confusion if we state the facts relating to the Travancore Cochin group first and then deal with the questions arising therefrom.
We shall then state the additional facts of the Mysore group of appeals, and answer the questions arising therefrom, in so far only as they have not been answered already in relation to the Travancore Cochin group.
It may be here added 756 that in the Travancore Cochin appeals (Civil Appeals 143 to 145 of 1954) the appellant is the assessee, A. N. Lakshmana Shenoy, of Messrs. New Guna Shenoy Company, Ernakulam, and the two respondents are the Income tax Officers of Ernakulam in Cochin and of Kottayam in Travancore.
In the other group of appeals, namely, the Mysore appeals, the appellants are the Income tax Officers of certain income tax circles in Bangalore and the respondents are assessees who carry on business within the jurisdictional area of the said Income tax Officers.
In the Travancore Cochin appeals, the High Court of Travancore Cochin came to a decision against the assessee, while in the Mysore appeals the High Court of Mysore came to an opposite conclusion on identical questions of law; that is why in the first group of appeals the assessee is the appellant and in the second group the appellants are the Income tax Officers.
Travancore Cochin appeals: We proceed now to deal with the Travancore Cochin appeals.
The assessee, A. N. Lakshmana Shenoy, is a hardware merchant who carried on his trade and business for several years in the then States of Travancore and Cochin, with his headquarters at Ernakulam in Cochin.
He was assessed to income tax in both the States under the income tax law in force there, namely, the Cochin Income tax Act of 1117 M. E. (hereinafter referred to as the Cochin Act) and the Travancore Income tax Act of 1121 M. E. (hereinafter referred to as the Travancore Act).
He was so assessed by the Incometax Officer at Ernakulam for the Cochin State and the Income tax Officer at Kottayam for the Travancore State.
It is a matter of history that Cochin and Travancore were formerly independent States, and till the lapse of paramountcy, the Crown as represented by and operating through the political authorities provided the nexus between those States and the Central Indian Government.
The Indian Independence Act, 1947, released the States from their obligation to the Crown; but in August, 1947, the Rulers of the two States acceded to the Dominion of India.
This was followed by a process of 757 two fold integration the consolidation of the States into sizeable administrative units and their democratisation.
On May 27, 1949, the Rulers entered into a covenant which was concurred in by the Government of India.
By that covenant the Rulers agreed that as from the first day of July, 1949, the States of Travancore and Cochin should be united in and form one State with a common executive, legislature and judiciary by the name of the United State of Travancore and Cochin.
The covenant further provided that " there shall be a Rajpramukh for the United State and the Ruler of Travancore shall be the first Rajpramukh; the executive authority of the United State shall be exercised by the Rajpramukh and there shall be a council of ministers to aid and advise him ".
Article IX of the covenant said that " the Rajpramukh shall within a fortnight of the appointed day execute on behalf of the United State an Instrument of Accession in accordance with the provisions of section 6 of the Government of India Act, 1935, and in place of the earlier Instruments of Accession of the covenanting States; and he shall by such Instrument, accept as matters with respect to which the Dominion Legislature may make laws for the United State all the matters mentioned in List I and List III of the Seventh Schedule to the said Act, except the entries in List I relating to any tax or duty ".
There was a proviso to the Article which said that nothing in the Article shall be deemed to prevent the Rajpramukh from accepting any or all of the entries in the said List I relating to any tax or duty as matters with respect to which the Dominion Legislature may make laws for the United State.
On July 14, 1949, a supplementary Instrument was executed by the Rajpramukh by which he accepted, on behalf of the United State, all matters enumerated in List I and List III of the Seventh Schedule to the Government of India Act, 1935, as matters in respect of which the Dominion Legislature might make laws for the United State, subject, however, to "the proviso that nothing contained in the said lists or in any other provision of the Government of India Act, 1935, shall be deemed to empower the 758 Dominion Legislature to impose any tax or duty in the territories of the United State.
The result was that in spite of the integration and accession of the United State to the Dominion of India, the Cochin Act continued to be in force in the territory formerly known as Cochin and the Travancore Act in the territory known as Travancore.
On November 24, 1949, there was a proclamation by the Rajpramukh which stated that in the best interests of the United State of Travancore and Cochin it was desirable that the constitutional relationship established between the United State and the Dominion of India shall not only be continued, but the relation as between that State and the contemplated Union of India shall be further strengthened ; it was then stated that the Constitution of India as drafted by the Constituent Assembly of India which included duly appointed representatives of the United State provided a suitable basis for strengthening the relation between the two States.
The proclamation then went on to say ' 'And whereas by virtue of the power vested in it under the Covenant establishing this State, the Legislative Assembly of the State has resolved that the Constitution framed by the Constituent Assembly of India be adopted by this State.
I now hereby declare and direct That the Constitution of India shortly to be adopted by the Constituent Assembly of India shall be the Constitution for the United State of Travancore and Cochin as for the other parts of India and shall be enforced as such in accordance with the tenor of its provisions.
That the provisions of the said Constitution shall as from the date of its commencement, supersede and abrogate all other constitutional provisions inconsistent therewith which are at present in force in this State.
" The Constitution of India came into force on January 26, 1950, and on that date Travancore Cochin became one of the Part B States within the Constitution of India.
Under that Constitution the subject of "taxes on income other than agricultural income" was 759 included in the Union Legislative List and Parliament alone ' had exclusive power to; make laws in respect thereof All laws in force in the territory of Travancore Cochin became subject to the Constitution of lndia when it came into force; but article 277 of the Constitution enaccted " Any taxes, duties, cesses or fees which immediately before the commencement of this Constitution, were being lawfully levied by the Government of any State or by any municipality or other local authority or body for the purposes of the State municipality, district or other local area may, notwithstanding that those taxes, duties, cesses or fees are mentioned in the Union List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parliament by law.
The result of the aforesaid provision of the Constitution was that the taxes leviable under the Cochin Act or the Travancore Act continued to be so levied until provision to the contrary was made by Parliament by law.
Such provision was made by the Finance Act, 1950 (XXV of 1950).
Section 3 of that Act extended the Indian Income tax Act, 1922, to the whole of India except the State of Jammu and Kashmir, with effect from April 1, 1950.
The interpretation of section 13 (1) of this Finance Act, 1950, is one of the questions argued in these appeals, and the relevant provision of that sub section must be quoted in full "If immediately before the 1st day of April, 1950, there, is in force in any Part B State other than Jammu and Kashmir, or in, Manipur, Tripura or Vindhya Pradesh or in the merged territor of CoochBehar any law relating to income tax or super tax or tax on profits of business, that law shall cease to have effect except for the purposes 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 purposes 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 may be, the levy, assessment and collection of 97 760 the tax on profits of business for any chargeable accounting period ending on or before the 31st day of March 1949.
Provided that any reference in any such law to an officer, authority, tribunal or court shall be construed as a reference to the corresponding officer, authority, tribunal or court appointed or constituted under the said Act, and if any question arises as to who such corresponding officer, authority, tribunal or court is, the decision of the Central Government thereon shall be final: ".
So far we have traced the constitutional history of the integration of Travancore Cochin, its accession to the Dominion of India and finally its acceptance of the Constitution of India whereby it became a Part B State within the Constitution of India.
We now go back to the story of the assessments made on the assessee.
The income of the assessee for the two accounting years, 1122 and 1123 M.E. (corresponding to the years ending on August 16, 1947, and August 16, 1948, respectively) was assessed in the two assessment years, 1123 and 1124 M.E. in accordance with the Cochin Act by the Income tax Officer at Ernakulam by his orders dated July 28, 1949, and January 31, 1950, respectively.
These assessments, the assessee alleged, became final and he paid the taxes accordingly.
Similarly, the income of the assessee in Travancore for the accounting years 1122 and 1123 M.E. was assessed under the Travancore Act for the assessment years 1123 and 1124 by the Income tax Officer, Kottayam, by his orders dated April 11, 1949, and July 30, 1949, and these assessments also, according to the assessee, became final and he paid the taxes accordingly.
The income of the assessee for the accounting year 1124 M.E.was assessed under the Indian Incometax Act ' 1922, in the assessment year 1951 52 by the Income tax Officer, Ernakulam, by his order dated January 21, 1952.
The account books of the assessee were rejected as unreliable and the Income tax Officer, Ernakulam, made a " best of judgment " assessment.
This assessment order is Ext.
VIII in the record.
The assessee appealed against it and, subsequently, on 761 December 14, 1953, that is, subsequent to the decision on the three writ petitions filed in the High Court of Travancore Cochin, the Appellate Assistant Commissioner, Trivandrum, passed an order which has been produced before us with an application for taking it on the record.
We accepted the application and both the assessment order, Ext.
VIII dated January 21, 1952, and the appellate order dated December 14, 1953, will be duly considered by us.
On February 12, 1952, the Income tax Officer, Ernakulam, issued four notices to the assessee, two under section 44 of the Cochin Act and two under section 47 of the Travancore Act stating therein that in consequence of definite information which had come into his possession, he had discovered that the income of the assessee assessable to income tax for the assessment years 1123 and 1124 M. E. had been under assessed and the Income tax Officer, therefore, proposed to re assess the said income; the assessee was asked to submit a return in respect of his total world income, for the two years in question.
On March 14, 1952, the Income tax Officer, Kottayam, issued two similar notices to the assessee under section 47 of the Travancore Act stating therein that he had discovered in consequence of definite information which had come into his possession that the income of the assessee for the two years 1123 and 1124 assessable to income tax had either escaped assessment or had been under assessed or had been assessed at too low a rate and therefore be proposed to re assess the said income.
Presumably, the Incometax Officer, Kottayam, issued the two notices, because it was doubtful if the Income tax Officer, Ernakulam, had authority to issue notices to the assessee under the Travancore Act.
Nothing, however, turns upon this, so far as the appeals before us are concerned.
On June 16, 1952, the assessee filed a writ petition in the High Court of Travancore Cochin in which he challenged the jurisdiction of the Income tax Officer, Ernakulam, to re assess his income for the two assessment years, 1123 and 1124 M. E.
On the very day on which the assessee filed his writ petition, the Incometax Officer, Ernakulam, made an " escaped income " 762 assessment under section 44 of the Cochin Act for the assessment year 1123.
This ' order was communicated to the assessee on June 17,1952, and the assessee filed a second writ petition in, the High Court TravancoreCochin ion June 19, 1952, in which he again challenged the, jurisdictions of the Income tax Officer, Erhakulam to make the assessment Linder section 44 of the Cochin Act and further said ' that %the assessment was made in spite of his application for adjournment 'and an 'order of stay passed by the High Court on June 17, 1952.
On June 20, 1952 the assessee filed a third writ petition in the Travancore Cochin High Court in respect of the two notices issued to him by the Income tax Officer, Kottayam.
By this writ petition the assessee challenged the jurisdiction of the Income tax Officer, Kottayam, to issue the two notices; in question under section 47 of the Travancore Act.
;These three writ petitions, numbered as original petitions 53, 56 and 57 of 1952, were dealt with together by the TravancoreCochin High Court and a Bench of three Judges of the said High Court held by their judgment and order dated September 14, 1953, that the, two Income tax Officers concerned had jurisdiction to re assess the income of the assessee for the: two assessment years 1123 and 1124 M. E.
They accordingly dismissed the writ petitions, but without costs.
They, however, gave a certificate that the cases were fit for appeal to the Supreme Court under article 133 of ' the Constitution and on that certificate the three appeals, which we have called Travancore Cochin appeals, have been brought to this Court, from the judgment and order of the High Court of Travancore Cochin dated September 14, 1953.
In the High Court three main points were urged on behalf of the assessee : the first point taken was that with the passing of the Finance Act, 1950, which made Travancore Cochin a " taxable territory " within the meaning of the Indian Income tax Act, 1922, incometax laws of Travancore and Cochin became void and inoperative and Parliament could not, under section 13, keep alive the Income tax Acts of Travancore and 'Cochin, or any, provisions thereof, inconsistent with 763 the Constitution Section 13 of the Finance Act, 1950,was, therefore, invalid in so far as it tried to keep alive the Cochin Act or the Travancore Act for the purpose of levy, assessment and collection of incometax, for, the period referred to therein.
The second contention was that even if section 13 of the Finance Act, 1950,was valid and kept alive the provisions of the Cochin Act and the Travancore Act, it did so only " for the purpose of the levy, assessment and collection of income tax and super tax " in respect of the period mentioned in the section, and section 13(1) did not have the, effect of saving the provisions of the Travancore Act or Cochin Act for, the purpose of " re assessment of income tax and super tax ".
The third contention urged was that neither of the two Income tax Officers concerned had any definite information in consequence of which they came to any discovery that the income of the assessee for the two years in question had been under ' assessed or escaped assessment or had been assesed at too low a rate.
It was contended on behalf of the assessee that the statements in the notices with regard to definite information etc.
were only " a pretence to clutch at jurisdiction " and the very foundation of the action sought to be taken by the Income.
tax Officers under section 44 of the Cochin Act or section 47 of the Travancore Act was non existent.
The learned Judges of the High Court negatived the aforesaid contentions, and as we have already stated, the writ petitions.
Before us the first point urged on behalf of the assessee in the High Court has not been pressed.
The other two points, namely, (1) the true construction of section 13(1) of the Finance Act, 1950, and (2) tile absence of any foundation for the action sought to be taken under section 44 of the Cochin Act or section 47 of the Travancore Act have been pressed with great vehemence.
A third point which was specifically raised in the Mysore appeals in the High Court there and which arises in the Travancore Cochin appeals also, has been taken :before us, though it was not specifically taken in the High Court of Travancore Cochin.
We have allowed learned counsel for the assessee to raise the point, as 764 it involves a pure question of law.
The point is this.
In the wake of accession and political integration of the States and Unions of States with India arose the problem of federal financial integration.
The States ,and Unions of States, so long as they continued as separate units, had retained their own pre existing public finance structures.
They had one common feature, distinguishing them from the Provinces of India, in that except in respect of certain matters covered by the Standstill Agreements, the States were free to follow their own policies in matters of federal finance and taxation, that is to say, in the field of public finance, such as customs, income tax, central excise, railways, posts and telegraphs etc.
When the question of integration of these States with India arose, naturally the question of extinguishing the special rights and obligations of the States in the field of federal finance and of making good to them the net gap in their revenues also arose.
By a resolution dated October 22, 1948, the Government of India appointed a committee of experts, referred to as the Indian States Finances Enquiry Committee, to consider the problem of federal finance.
The Committee 's terms of reference were, inter alia, as follows " To examine and report upon: (1)the present structure of Public Finance in Indian States and Unions of States; (2)the desirability and feasibility of integrating Finance in Indian States and Unions of States with that of the rest of India, to the end that a uniform system of Federal Finance may be established throughout the Dominion of India; (3)whether, and if so, the extent to which the process of integrating Federal Finance in the Indian States and Unions with that of the rest of India should be gradual and the manner in which it should be brought about; and the machinery required for his purpose, especially as regards the legislative groundwork and the administrative Organisation necessary for the imposition, assessment and collection of federal taxes; ".
The Committee submitted a report in due course and 765 made certain recommendations.
On the basis of those recommendations certain agreements were entered into between the President of India and the Rajpramukhs, including the Rajpramukh of Travancore Cochin and the Rajpramukh of Mysore.
We shall refer in somewhat greater detail to these agreements, particularly the agreements entered into by the Rajpramukhs of Travancore Cochin and Mysore.
The contention on behalf of the assessee is that these agreements with Part B States with regard to certain financial matters received constitutional sanctity in article 278 of the Constitution (now repealed by the Constitution (Seventh Amendment) Act, 1956).
Article 278, so far as it is relevant for our purpose, was in these terms " 278 (1).
Notwithstanding anything in the Constitution, the Government of India may, subject to the provisions of clause (2), enter into an agreement with the Government of a State specified in Part B of the First Schedule with respect to (a)the levy and collection of any tax or duty leviable by the Government of India in such State and for the distribution of the proceeds thereof otherwise than in accordance with the provisions of this Chapter ; (b). . (c). . and, when an agreement is so entered into, the provisions of this Chapter shall in relation to such State have effect subject to the terms of such agreement.
" The argument on behalf of the assessee is that the recommendations of the Indian States Finances Enquiry Committee which were accepted by the Rajpramukh of Travancore Cochin in the agreement entered into by the Rajpramukh with the President of India on February 25, 1950, were designed to secure " legal continuity of pending proceedings " and " finality and validity of completed proceedings " under the preexisting State legislation ; therefore, section 13(1) of the Finance Act, 1950, should be so construed as to be in consonance with the aforesaid agreement, and, in the alternative, if section 13(1) is construed to be at variance with the aforesaid financial agreement, it should be 766 held to be void by reason of the; provisions; of articles 278 and 295 of the Constitution.
We proceed now to a consideration in detail of the arguments urged before us on behalf of the assessee in the Travancore Cochin appeals.
In logical sequence the point as to the absence of foundation for the action taken by the two Income tax Officers of Ernakulam and Kottayam in the matter of the issue, of" notices.
for reassessment, comes first and we propose now to deal with it.
It is necessary at this stage to set out the two sections under which the Income tax Officers proposed to take action against the assessee.
The two sections are section 44 of the Cochin Act and section 47 of the Travancore Act.
Section, 44 of the Cochin Act, so far as it is relevant for our purpose, is in these terms " 44(1) If in consequence of definite information which has come, into his possession the Income tax Officer discovers, that income ' profits or gains chargeable to income tax have escaped assessment in any year, or have been under assessed, or have been assessed at too low a rate, or have been the subject of excessive relief under this Act the Income tax Officer way, in any case in which he has reason to believed that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars thereof, at any time within eight years, and in any other case at any time within four years of the end of that year, serve, on the person liable to pay tax on such income, profits or gains, or, in the case of a. company, on the principal officer thereof, a notice containing all or any of the requirement, which may be included in a notice under sub section (2) of section 27, and, may proceed to assess or re assess such income profits or gains, and the provisions of this Act shall so far as may be, apply, accordingly,as if the notice were a notice issued under that sub section.
" Section 47 (1) of the Travancore Act is identical ill terms and need not therefore be, quoted.
It is worthy, of note that the terms of the.
aforesaid two sections are similar to section 34 of, the Indian Income tax Act, 1922, as it,.stood after the amending Act of 1939 and, before the amendments of 1948.
The two requisites conditions 767 for the application of the section are contained in the first part, and they are: firstly, there must be definite information which has come into possession of the Income tax Officer and, secondly, in consequence of that information, the Income fax Officer discovers that,, income, profits or gains chargeable to income tax have escaped assessment in any year etc.
It is only when these two conditions are fulfilled that the Income tax Officer can take necessary action under section 44.
The question before us is whether these two conditions were fulfilled in the cases out of which the TravancoreCochin appeals have arisen.
As in the High Court so also before us, the only document on which the Income tax Officers relied for this part of their case is Ext.
This document, according to the Income tax Officers, furnished the definite information in consequence of which they made the necessary discovery.
Learned counsel for the assessee has taken us through Ext.
VIII, Ext.
A (statement of the case submitted by the assessee to the Appellate Assistant Commissioner) and the order of the Appellate Commissioner, dated December 14, 1953, and he has contended that (1) Ext.
VIII does not relate to the years in question and cannot, therefore, constitute definite information for those years; (2) it gives certain highly speculative grounds for discrediting the account books of the assessee, which grounds have not been accepted by the Appellate Assistant Commissioner; and (3) in any view, it contained no information on which the Income tax Officers could be said to have made any discovery.
As to (1) above, the High Court rightly pointed out that Ext.
VIII contained information of a kind which disclosed a definite and systematic pattern of transactions for avoidance of tax not only in respect of the year covered by the order but spread over years anterior to it.
Secondly, Ext.
VIII disclosed, according to the Income tax Officers concerned, a systematic suppression of cash Bales., a regular trade in purchase and sale of controlled commodities at profiteering rates, passing bogus bills for purchases, understating stocks, segregating stocks 98 768 for clandestine sales, and selling goods to the branches at artificial book losses.
There can be no doubt that all this information, if honestly believed, would reasonably support the opinion of the Income tax Officers that there is a discovery of " escaped " income etc., within the meaning of section 44 of the Cochin Act and section 47 of the Travancore Act.
But learned counsel for the assessee argues that while it may be right to say that Ext.
VIII prima facie contains the kind of information which will satisfy the conditions of section 44 of the Cochin Act and section 47 of the Travancore Act, we must take note of the fact that according to the Appellate Assistant Commissioner, as shown by his order dated December 14, 1953, the so called information contained in Ext.
VIII was really non existent, and the information being non existent, there was no foundation for the action taken by the Income tax Officers.
We are unable to accept this argument as correct.
Apart from the consideration that the order of the Appellate Assistant Commissioner was not available when the Income tax Officers issued their notices, we think that the argument overstates the effect of the order of the Appellate Assistant Commissioner.
It is true that the Appellate Assistant Commissioner considered in detail the various criticisms of the Income tax Officer with regard to the account books along with the explanations offered on behalf of the assessee; but he expressed his final conclusion in the following words: " I have given my careful consideration to the various adverse criticisms of the Income tax Officer and to the Advocate 's answers thereto.
I have also looked into the accounts and other revelant papers.
As a result, I am satisfied that the Income tax Officer 's criticisms are in most cases not at all well founded and that the Advocate has successfully met almost every point raised by the former.
In fact, the Income tax Officer himself admitted at the time of the hearing that has order was shown to be quite vulnerable.
But he contended that it would not be enough if the Advocate merely answered the specific criticisms in the order and that the case should be looked at as a whole and a decision should be arrived at as to whether on such 769 a comprehensive view the appellant 's accounts could be regarded as completely faultless and worthy of unquestioned acceptance.
Seen from this broad angle, it cannot of course be said that the accounts are free from defects.
There is firstly no stock book for uncontrolled goods and the accuracy of the inventories of opening and closing stocks of such goods is therefore open to doubt.
Again, whatever may be the appellant 's reasons for not recording full details for cash sales, there is the admitted fact that the cash sales stand partly unvouched and details as to the names and addresses of purchasers are not available for the major part of the year, and there is therefore no possibility of satisfying one self whether all the cash sales have been duly brought to account.
There is also the further fact that at least some of the purchases are not satisfactorily vouched and that the rates of gross profit disclosed by the accounts both at the head office and the branches are not quite adequate.
These, in my opinion, are sufficient grounds for discrediting the book results and resorting to an estimate of the turnover as well as the gross profit.
" It cannot, therefore, be Raid that the order of the Appellate Assistant Commissioner washed out the entire information contained in Ext.
VIII so as to strike at the very root of the jurisdiction of the Income tax Officers concerned to issue the notices in question.
It is to be remembered that there is a distinction between receipt of definite information as a consequence of which a discovery is made and a notice is issued, and the final determination as to the liability or extent of liability for escaped assessment etc.
We accept as correct the view expressed in Firm Jitanram Nirmalram vs Commissioner of Income tax (1), that the phrase " definite information " cannot be construed in a universal sense and its meaning must depend on and vary with the circumstances of each case.
There is no doubt, however, that the information must be definite, that is, more than mere guess, gossip or rumour.
There must also be a causal connexion between the information and the discovery; but " discovery " in (1) A.I.R. 1952 Pat.
770 the context of the section does not mean a conclusion of certainty at the stage of notice.
What is necessary at that stage is that the Income tax Officer should have formed an honest belief upon materials which reasonably support such belief.
This, in our opinion, is the correct view, and judged from that standpoint, Ext.
VIII fulfilled the requirements of section 44 of the Cochin Act and section 47 of the Travancore Act.
We now turn to the construction of section 13 (1) of the Finance Act, 1950.
The argument on this point has meandered over a wide area; but it is really dependent on the meaning to be given to the expression for the purposes Of the levy, assessment and collection of income tax and super tax " occurring in the section.
Does the word 'assessment ' include 're assessment ' ? The contention of the assessee is that it does not.
The Travancore Cochin High Court did not accept this contention, but the Mysore High Court did in favour of the respondents in the Mysore appeals.
The general scheme of the Cochin Act and the Travancore Act is the same as that of the Indian Income tax Act, 1922, and for a clear understanding of the meaning of the expression 'levy, assessment and collection of income tax ', it is best to explain the general scheme of these Income tax Acts with reference to the Indian Income tax Act, 1922, which served more or less as their model.
Section 3 is the charging section which imposes liability in respect of " the total income of the previous year of every individual etc.", and 'total income ' means the 'total amount of income, profits and gains computed in the manner laid down in the Act '.
It is clear that so far as the charging section is concerned, the liability does not cease unless the total income, profits and gains have been computed in the manner laid down in the Act.
Section 4 states inter alia that subject to the provisions of the Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived.
Leaving out the sections which deal with Income tax authorities we come to the sections in Chapter 111, which explain what is 771 taxable income under different heads.
Chapter IV deals with deductions and assessment, and the words 'assessment ' and Ire assessment ' occur in several sections of this Chapter.
Under section 22(2) the Incometax Officer must serve notice on any person whose total income is in the Income tax Officer 's opinion of such an amount as to render such person liable to income tax, requiring him to furnish a return in the prescribed form of his total income during the previous year.
Sub section (4) authorises the Income tax Officer to serve on any person upon whom a notice has been served under sub section
(2) a further notice requiring him to produce accounts and documents, subject to the limitation that he shall not require the production of any accounts relating to a period more than three years prior to the year previous to the year of assessment.
Section 23 provides for the making of the assessment.
Sub section (1) requires the Income tax Officer, if he is satisfied that the return made under section 22 is correct and complete, to assess the total income and to determine the sum payable.
Under sub section
(2) if the Income tax Officer has reason to believe that the return is incorrect or incomplete he must serve on the person who made the return a notice requiring him either to attend at the Income tax Officer 's office or to produce any evidence relied on in support of the return.
Sub section (3) provides that the Income tax Officer, after hearing such evidence as the person who made the return may produce and such other evidence as the Income tax Officer may require on specified points shall by an order in writing assess the total income and determine the sum payable.
Subsection (4) makes provision for an assessment by the Incometax Officer to the best of his judgment if the assessee fails to make a return or to comply with the terms of the notices issued to him.
This whole procedure, it may be recalled, not only applies on first assessment but is also prescribed by section 34 if for any reason income, profits or gains have escaped assessment or have been assessed at too low a rate.
Section 27 deals with cancellation of assessment in certain circumstances, and states " the Income tax Officer shall cancel the 772 assessment and proceed to make a fresh assessment in accordance with the provisions of section 23 ".
Section 29 talks of a notice of demand to the person liable to pay the tax etc.
, the notice specifying the sum so payable.
Section 30 gives a right of appeal from certain orders.
Section 31 deals with.
hearing of appeals and states inter alia that the appellate authority may set aside the assessment, and direct the Income tax Officer to make.
a fresh assessment.
Section 33 provides for appeals against the orders of the Appellate Assistant Commissioner and sections 33A and 33B give powers of revision to the Commissioner.
In appropriate cases the Commissioner can cancel the assessment and direct a fresh assessment.
Then comes section 34 which corresponds to section 44 of the Cochin Act and section 47 of the Travancore Act.
In substance it deals with income which has escaped assessment for one reason or another and says in the operative part that the Income tax Officer " may proceed to assess or re assess such income, profits or gains etc.
" There has been some argument before us as to the meaning of the juxtaposition of the words " assess or re assess " occurring in the section, and it has been contended that a distinction has obviously been drawn between income which has totally escaped assessment and income which has been under assessed or assessed at too low a rate etc., and the word 'assess ' appropriately applies to the former case and the word ' re assess ' to the latter case.
Two other sections which are relevant for our purpose are sections 66 and 67.
Section 66 (7) says that notwithstanding that a reference has been made under this section to the High Court, income tax shall be payable in accordance with the assessment made in the case.
The word 'assessment ' here undoubtedly includes 're assessment '.
Section 67 which bars civil suits says that no suit shall be brought in any civil court to set aside or modify any assessment made under the Act.
Here again 'assessment ' must include 're assessment ', for it cannot have been the intention that a civil suit shall lie in respect of a reassessment under section 34 but not in respect of an assessment.
This brief resume of the relevant provisons of the 773 Income tax Act clearly establishes that the word assessment ' has to be understood in each section with reference to the context in which it has been used.
In some sections it has a comprehensive meaning and in some a somewhat restricted meaning, to be distinguished from a 're assessment ' or even a 'fresh assessment '.
Now, the question is in what sense has the word assessment ' been used in section 13(1) of the Finance Act, 1950.
Two circumstances may be noticed at once,.
The long title says that the Finance Act, 1950, is an Act to give effect to the financial proposals of the Central Government for the year beginning on April 1, 1950, and in section 13(1) the collocation of words is " levy, assessment and collection of income tax".
In our opinion, both these circumstances point towards a comprehensive meaning; for it could not have been intended, as part of the proposal of the Central Government, that those whose income had totally escaped assessment should be liable but those who had been under assessed should go soot free.
We can see nothing in the words of the section which would justify such a distinction: we say this quite apart from the argument that section 13(1) should be interpreted in consonance with the financial agreement entered into between the Rajpramukh and the President, an argument to which we shall presently advert.
Moreover, the collocation of the words, levy, assessment, and collection ' indicates that what is meant is the entire process by which the tax is ascertained, demanded and realised.
On behalf of the assessee it has been contended that (1) the Income tax Act makes a distinction between a normal or original assessment under section 23, a fresh assessment under section 27 and a re assessment or second assessment under section 34 and (2) inasmuch as section 13 (1) uses the word I assessment only, it must be taken to have been used in a restricted sense.
In support of these contentions great reliance has been placed on the decision of the Privy Council in Commissioner of Income tax, Bombay Presidency and Aden vs Khemchand Ramdas (1).
The Mysore High Court also referred (1)(1938) L.R. 65 I.A. 236, 248.
774 to this decision in support of its view on the construction of section 13 (1).
We are unable to accept these contentions as correct; nor do we think that the decision cited supports the view expressed by the Mysore High Court.
The facts in Khemchands case (1) were briefly these.
The firm of Khemchand applied to the Incometax Officer to have the firm registered, the consequence of such registration being that the profits of the firm would not be assessable to super tax.
On January 17, 1927, the Income tax Officer assessed the firm to income tax for the year 1926 27 under section 23, sub section
(4) of the Act; but no super tax was imposed as the firm having applied for registration was registered.
Notice of demand for the amount assessed was made in 1927.
Subsequently, the Commissioner ordered the cancellation of registration, and directed the Income tax Officer to take necessary action thereupon.
On May 4, 1929, the Income tax Officer imposed super tax and issued a notice of demand in May, 1929.
The question in the appeal was whether the Income tax authorities had any jurisdiction to assess Khemchand 's firm to super tax for the year 1926 27.
Their Lordships pointed out that the powers of the Commissioner tinder section 33 could only be exercised subject to the provisions of the Act, of which the provisions in sections 34 and 35 were important.
They held that it was debatable whether the circumstances of the case were such as to bring it within section 34 and so far as section 35 was concerned, the Income tax Officer was hopelessly barred by time.
In that context, their Lordships said: " It is possible that the final assessment may not be made until some years after the close of the fiscal year.
Questions of difficulty may arise and cause considerable delay.
Proceedings may be taken by way of appeal and cause further delay.
Until all such questions are determined, and all such proceedings have come to an end, there can be no final assessment.
But when once a final assessment is arrived at, it cannot, in their Lordships ' opinion, be reopened except in the circumstances detailed in sections 34 and 35 of the Act (to which reference is made hereafter) and within the time (1)[1938] L. R. 65 I. A. 236. 775 limited by those sections.
In the present case the liability of the respondents both for income tax and for super tax wag determined by the Income tax Officer on January 17, 1927.
In the order made by him on that date he assessed the respondents to income tax at the maximum rate, but as the respondents were at that time a registered firm he held, as he was bound to hold, that no super tax was to be levied.
On some date before the end of March, 1927, he served on the respondents a notice of demand for the tax that he had determined was properly leviable.
The assess ment having been made under section 23, sub section
(4), no appeal lay in respect of it.
The assessment of the respondents was therefore final both in respect of income tax and super tax.
Their liability in respect of both taxes had been finally determined, and none the less because the question of their liability to supertax had been determined in their favour.
It was, indeed, contended before their Lordships that the assessment could not be regarded as having been determined inasmuch as the Commissioner might at any time, and apparently after any lapse of time, however long, cancel the registration of the respondents as a registered firm and so subject the respondents to liability to pay super tax.
Their Lordships would, in any case, hesitate long before acceding to a contention that would lead to so extravagant results.
In their opinion, however, the contention cannot prevail.
The Commissioner 's powers under section 33 can only be exercised subject to the provisions of the Act, of which the provisions in sections 34 and 35 are in this respect of the greatest importance.
" These observations lend no support to the view that the word" assessment" must always bear a particular meaning in the Income tax Act.
On the contrary, at p. 247 of the report, their Lordships said: " These two questions are so closely related to one another that they can conveniently be considered together.
In order to answer them it is essential to bear in mind the method prescribed by the Act for making an assessment to tax, using the word assessment 99 776 in its comprehensive sense as including the whole procedure for imposing liability upon the tax payer.
The method consists, of the following steps.
In the first place, the taxable income of the tax payer has to be computed.
In the next place, the sum payable by him.
on the basis of such computation has to be determined.
Finally, a notice of demand in the prescribed form, specifying the sum so payable, has to be served upon the tax payer.
" If the word ' assessment ' is taken in its comprehensive sense, as we think it should be taken in the context of section 13(1) of the Finance Act, 1950, it would include I re assessment ' made under the provisions of the Act.
Such 're assessment ' will without doubt come within the expression 'levy, assessment and collection of income tax '.
In his speech in Commissioners For General Purposes of Income Tax For City of London vs Gibbs and Others (1), Lord Simon has pointed out that the word 'assessment ' is used in the English Incometax Code in more than one sense; and sometimes within the bounds of the same section, two separate meanings of the word may be found.
One meaning is the fixing of the sum taken to represent the actual profit and the other the actual sum in tax which the taxpayer is liable to pay.
It has been contended before us that the Finance Act and the Income tax Act should be read together as forming one Code, and so read the words I assessment ' and I re assessment 'acquire definite and distinct connotations.
We are unable to agree, for the reasons which we have already given, that even if we read the Finance Act along with the Income tax Act the word ' assessment ' can be given a restricted meaning.
To repeat those reasons: the income tax code itself uses the word assessment in different senses, and in the context and collocation of the words of the Finance Act, the word 'assessment ' is capable of bearing a comprehensive meaning only.
We can find no good.
reasons for holding that in the matter of levy, assessment and collection of income tax, the Finance Act, 1950, contemplated that some persons should enjoy a,, (1)[1942] A.C. 402, 406. 777 privilege and escape payment of the full tax leviable under the provisions of the relevant Act.
On this point we approve of the decision in Firm L. Hazari Mal vs Income tax Officer, Ambala (1), where Bhandari C. J., said "These three expressions 'levy ', 'assessment ' and 'collection ' are of the widest significance and embrace in their broad sweep all the proceedings. for raising money by the exercise of the power of taxation. .
This brings us to the third question.
Is there any thing in the financial agreement of February 25, 1950, and the recommendations of the Indian States Finances Enquiry Committee, which would restrict the meaning of the expression 'levy, assessment and collection of income tax '? Or, in the alternative, bring section 13(1) of the Finance Act, 1950, into conflict with articles 278 and 295 of the Constitution? The relevant portion of the agreement between the President of India and the Rajpramukh of TravancoreCochin dated February 25, 1950, states: " Now, therefore, the President of India and the Rajpramukh of Travancore Cochin, have entered into the following agreement, namely : The recommendations of the Indian States Finances Enquiry Commitee, 1948 49 (hereinafter referred to as the Committee) contained in Part I of its report read with Chapters, 1, 11 and III of Part 11 of its Report, in so far as they apply to Travancore Cochin (hereinafter referred to as the State) together with the recommendations contained in the Comittee 's Second Interim Report, are accepted by the Parties hereto, subject to the following modifications.
" The modifications which follow have no bearing on the question at issue and need not be set out.
Now, let us examine the relevant recommendations of the Committee, which are accepted by the Parties and form part of the agreement.
These recommendations are summarised in para.
9 of the annexure to Part I of the Committee 's report, and are set out below "Our suggestions concerning certain legal and 778 other matters of general importance, affecting most federal subjects including taxes on income), which will arise in connection with federal financial integration in all States, have been set out in paragraph 11 of Chapter 11 in Part 11 of our Report.
Those relating to legal matters are, however, re produced below for convenient reference: " (5) Apart from the constitutional requirement in connection with the integration of federal finances in States vide paragraphs 37 and 40 Part I of our Report certain important issues of a legal nature will arise in connection with the actual taking over of " federal " subjects in the States by the Centre.
This is a difficult subject upon which we are not qualified to offer competent advice.
We have endeavoured, however, to indicate below the main features of what we conceive will be required in order to establish " continuity of proceedings " in regard to all " federal " subjects whether relating to revenues, expenditure or Service Departments at the point of their transition from the States to the Centre;. (a)Almost every " federal " subject is dealt with in the State as in the rest of India, under powers conferred by appropriate legislation consisting of relevant Codes, Acts, Ordinances and Statutory Rules and Regulations.
Subject to the limitations indicated below, which are designed to secure legal " continuity " of pending proceedings and " finality and validity " of completed proceedings under the pre existing State legislation , we think the whole body of State legislation relating to " federal " subjects should be repealed and the corresponding body of Central legislation extended proprio vigore to the States, with effect from the prescribed date or as and when the administration of particular " federal " subject is assumed by the Centre.
(b)For the above purpose, as well as for future "federal" administration in States, it may be necessary specifically to extend not merely the legislative, but also the executive and administrative competence of the Centre, its officers and " authorities ", and the judicial authority of its Courts, to the territories of the States.
779 (c)Such State Courts (except Courts of final appeal from orders of the State High Courts) as may in fact correspond to particular grades and classes of "British Indian" Courts (Civil and Criminal) may have to be statutorily " recognised " as " corresponding judicial authorities " for purpose of dealing with cases arising in the States under the " federal " laws of the Union of India; and the Supreme Court in India will have to be made the Court of final appeal from decisions of the State High Courts to the same extent as in the case of Provincial High Courts.
(d) Those sections of the various Indian Acts and Ordinances which set out their territorial " extent of application " will require amending so as to include State territories with effect from the prescribed date.
(e)It will be necessary to provide that all matters and proceedings pending under, or arising out of, the preexisting State Acts shall be disposed of under those Acts, by so far as may be, the " corresPonding authorities ", (nominated by the Chief Executive Authority) under the corresponding Indian Acts.
" In view of the fact that the members of the Committee themselves felt that the legal issues involved in the actual taking over of " federal " subjects in the States by the Centre constituted a difficult subject on which they were not qualified to offer competent advice and their further statement that they were merely endeavouring to indicate the main features of what they considered to be required in order to establish " continuity of proceedings ", it has been argued before us on behalf of the Income tax authorities that it would be wrong to treat the recomendations as binding statutory rules, even though the financial agreement between the high contracting Parties states generally that the recommendations are accepted; it is contended that the Committee in express terms states that the recommendations merely endeavour to indicate the main features of what the Committee thought was required, and they should not be placed on a pedestal higher than what the Committee itself did.
We think that there is much force in this contention; but in the view which we have taken of these 780 recommendations, we do not think that it is necessary to decide finally what constitutional sanctity they have acquired by reason of their acceptance in the financial agreement and the provisions of article 278 of the Constitution.
Assuming but without deciding that they have binding force, what is their true meaning and effect? The argument on behalf of the assessee is that cl.
(a) of the recommendations is the operative clause, and inasmuch as it talks of " continuity of pending proceedings " and " finality and validity of completed proceedings " tinder the pre existing State legislation, the true effect is that all assessment proceedings which have become complete and finance I by the issue of a demand notice under section 29 of the Indian Income tax Act (or corresponding section of the Cochin Act or Travancore Act) are saved under the clause and cannot be reopened; and only proceedings actually pending on the relevant date can be continued thereunder.
We are unable to accept, this as the true meaning and effect of clause (a).
What is worthy of special notice is that cl.
(a) specifically says that the clauses which follow it are the limitations or qualifications subject to which the whole body of State legislation is to be repealed, and they are designed to secure two objects continuity of pending proceedings and finality and validity of completed proceedings; therefore, cl.
(a) is not the operative clause, and it merely indicates the reasons or objects for which certain limitations or qualifications are suggested on the proposal to repeal the State legislation.
Clause (a) is followed by cls.
(b), (c), (d) and (e).
Clause (b) which deals with executive and administrative competence of Incometax Officers and judicial authority of Courts need not detain us.
So also cls.
(c) and (d), which have little bearing on the problem before us.
Clause (e) is important, and it states that " all matters and proceedings pending under, or arising out of, the pre existing State Acts shall be disposed of under those Acts etc.
" That a proceeding for re assessment under section 44, Cochin Act, or section 47, Travancore Act, is a proceeding arising out of the pre existing State Acts admits of no doubt, and is clearly covered by cl.
We see no good grounds 781 why full effect should not be given to it; it is one of the limitations, as stated in cl.
(a), subject to which the State law is to be repealed.
The matter is made still more clear by what is stated in the paragraph that immediately follows, viz. paragraph 10 of the annexure to the report of the Committee.
That paragraph states " The recommendation made in the last two subparagraphs quoted above should be understood as requiring that all income, profits and gains accruing or arising in States, of all periods which are " previous years " of the States ' assessment years 1949 50 or earlier should, subject to the provisions of section 14(2)(c) of the Indian Income tax Act, be assessed wholly in accordance with the States ' laws and at the States ' rates, respectively, appropriate to the assessment years concerned etc." really no doubt left in the matter.
The Committee did not restrict the limitations they were suggesting, to a proceeding which was actually pending on the date of repeal of the State law; it gave a wider meaning to pending proceedings that is, "proceedings pending under and arising out of the preexisting State Acts".
It is to be remembered that where an assessment starts with a notice under section 34 of the Indian Income tax Act (or corresponding section of the Cochin or Travancore Act), all the relevant provisions of that Act apply as effectively as where the assessment starts with a notice under section 22 (2) or corresponding section of the Cochin or Travancore Act in the ordinary course.
It is also not disputed that the assessment made under section 34 in any year subsequent to the relevant assessment year must be made as if it were made in the relevant assessment year, and the assessment must be based on the provisions of the Act as it stood in the year in which the income ought to have been assessed.
Having regard to these considerations, we find no difficulty in holding that a re assessment proceeding under section 44, Cochin Act, or section 47, Travancore Act, is a proceeding which comes under cl.
(e) of the recommendations of the 782 Committee, and must be disposed of under the preexisting State law.
Section 13 (1) of the Finance Act, 1950, gives effect to that recommendation.
There is, therefore, nothing in the recommendations which would restrict the meaning of the expression " levy, assessment and collection of income tax " in section 13 (1) of the Finance Act; nor do they bring section 13 (1) into conflict with articles 278 and 295 of the Constitution.
We accordingly hold that there is no substance in any of the three points urged on behalf of the assessee in the Travancore Cochin appeals.
Mysore Appeals.
These are eight appeals and the relevant facts are these.
Civil Appeals 27 to 30 of 1956 arise out of four writ petitions numbered 52 and 53 of 1953, and 105 and 106 of 1954, which were dealt with together in the Mysore High Court by a common judgment dated December 14, 1954.
Civil Appeals 161 to 164 also arise out of four writ petitions (No. 122 of 1954 and nos.
35 to 37 of 1955) filed in the same High Court.
The orders passed in those writ petitions were that they were governed by the aforesaid decision dated December 14, 1954.
ln the result, all the writ petitions were allowed with costs.
In all these cases the petitioners, who are respondents before us, were assessed to income tax under the Mysore Income tax Act, 1923 (hereinafter called the Mysore Act) for different years previous to the integration of Mysore with India, and the assessment proceedings were completed and closed under the Mysore Act by demand notices issued by the Income tax Officers concerned.
But subsequent to the integration of Mysore, notices under section 34 of the Mysore Act were issued against the petitioners, and they challenged the jurisdiction of the Income tax Officers to issue such notices.
Section 34 of the Mysore Act states " If for any reason, income, profits or gains chargeable to income tax has escaped assessment in any year, or has been assessed at too low a rate, the Income tax Officer may at any time within four years of the end of that year, serve on the person liable to 783 pay tax on such income, profits or gains, or in the case of a company, on the principal officer thereof, a notice I containing all or any of the requirements which may be included in a notice under sub section 2 of section 22, and may proceed to assess, or re assess such income, profits or gains, and provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub section: Provided that the tax shall be charged at the rate at which it would have been charged, had the income, profits or gains, not escaped assessment, or full assessment, as the case may be.
" It corresponds to section 34 of the Indian Income tax Act as it stood prior to the amending Act of 1939 and the general scheme of the Mysore Act was the same as that of the Indian Income tax Act, 1922, as it stood before 1939.
The two grounds on which the jurisdiction of the Income tax Officers was challenged were (1) Under the Finance Act, 1950, the Mysore Act stood repealed on and from April 1, 1950, and section 13 (1) of the Finance Act kept alive the Mysore Act for the purpose of levy; assessment and collection of incometax etc.
for the period mentioned therein, but did not save section 34 of the Mysore Act for the purpose of reassessment of income tax; therefore, the notices issued under section 34 of the Mysore Act were without jurisdiction and authority.
(2) Even otherwise, the financial agreement between the President of India and the Rajpramukh of Mysore on February 28, 1950, which received constitutional sanctity in article 278 of the Constitution rendered the initiation of such re assessment proceedings against the respondents unconstitutional and void.
The learned Chief Justice of the Mysore High Court upheld ground No. (1) and considered it unnecessary to pronounce on the second ground.
Mallapa J., in a separate but concurring judgment expressed the view that having regard to the wording of section 13 (1) of Finance Act, 1950, and the financial agreement of February 28, 1950, he had no doubt that section 13 (1) did 100 784 not provide for re assessment under section 34 of the Mysore Act.
The process of integration of Mysore with India was similar to.
that of Travancore Cochin.
The State of ,.Mysore acceded to the Dominion of India by an Instrument of Accession executed on August 9, 1947, and accepted by the Governor General on August 16, 1947.
A supplementary Instrument of Accession was executed on June 1, 1949.
By a Proclamation dated November 25, 1949, the Constitution of India to be adopted by the Constituent Assembly of India was accepted for Mysore, and on January 26,1950, Mysore became a Part B State within the Constitution of India.
A similar financial agreement was entered into by the Rajpramukh with the President of India on February 28, 1950.
On April 1, 1950, the Finance Act, 1950, applied the Indian Income tax Act, 1922, to Mysore, subject to the provisions of section 13 thereof.
In dealing with the Travancore Cochin appeals, we have fully dealt with the two grounds on which the respondent assessees in the Mysore appeals challenged the jurisdiction of the Income tax Officers concerned to issue the notices under.
section 34 of The Mysore Act.
Two additional points urged in support of ground No. (1) maybe stated here.
It has been urged that the proviso to section 34 of the Mysore Act brings out the distinction between I assessment ' and ' re assessment '; and secondly, it is contended that the jurisdiction under section 34 is limited to ascertainment of extra income not assessed and the section does not confer jurisdiction to make a new assessment, for taxing whole of that assessment, under the Act.
Learned counsel for the assessees has invited our attention to In re Kashi Nath Bagla (1); Madhavjee Damodar Thackersay and Another vs Commissioner of Income Tax, BOMBAY(2) and Anglo French Textile Co. Ltd. vs Commissioner of Income Tax, Madras, No. 4 (3).
The real question for decision in these appeals is the true scope and effect of section 13 (1) of the Finance Act, and on that question the additional points ' mentioned (1) A. 1.
R. 1932 All.
(2) (3) [1950] 18 785 above throw very little light.
There is, indeed, a dis tinction between an original or normal assessment under section 23 and a re assessment under section 34; but we ' have shown that the word " assessment " has been used in more than one sense in Income tax law, and( so far as section 13 (1) of the Finance Act, 1950, is concerned, there is no doubt that the expression I levy, assessment and collection of income tax ' has been used in a comprehensive sense so as to include the whole procedure for imposing liability upon the taxpayer.
Result : The final result, therefore, is (a) the TravancoreCochin appeals (Civil Appeals 143 to 145 of 1954) are dismissed with costs; and (b) the Mysore appeals (Civil Appeals 27 to 30 of 1956 and Civil Appeals 161 to 164 of 1956) are allowed and the judgment and orders of the Mysore High Court are set aside.
The appellants in these Mysore appeals will be entitled to their costs in this Court and the High Court of Mysore.
Appeals Nos. 143 to 145 dismissed.
Appeals No. 27 to 30 and 161 to 164 allowed.
| Section 13(1) of the Finance Act, 1950, provided If immediately before the 1st day of April, 1950, there is in force in any Part B State. any law relating to income tax or supertax or tax on profits of business, that law shall cease to have effect except for the purposes 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 purposes 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 may be, the levy, assessment and collection of the tax on profits of business for any chargeable accounting period ending on or before the 31st day of March, 1949.
" The appellant, a merchant carrying on his business in the erstwhile States of Travancore and Cochin, was assessed to income tax for the two accounting years 1122 M. E. (1946 1947) and 1123 M. E. (1947 1948) under the income tax law in force there, namely, the Travancore Income tax Act of 1121 M. E. and the Cochin Income tax Act of 1117 M. E. Between 1947 and 1950 there were constitutional changes resulting in the integration of the two States, formation of the United State of Travancore and Cochin, accession of the latter to the Dominion of India, and finally, its acceptance of the Constitution of India whereby it became a Part B State within the Constitution of India.
The question of financial integration was considered by the Indian States Finances Enquiry Committee and on the basis of the recommendations made by it a financial agreement was entered into on February 25, 1950, between the President of India and the Rajpramukh of the State of Travancore Cochin.
By article 277 of the Constitution taxes leviable under the Travancore Income tax Act or the Cochin Income tax Act continued to be so levied until provision to the contrary was made by Parliament by law.
Such provision was made by the Finance Act, 1950, which extended the Indian Income tax Act, 1922, to the State of Travancore Cochin, but by section 13(1) saved certain provisions of the Travancore and Cochin Income tax Acts.
In respect of the assessment for the accounting year 1124 M. E. the Income tax Officer of Ernakulam rejected the appellant 's books of account as unreliable and made a " best of judgment " assessment by his order dated January 11, 1952.
On February 12, 1952, the Income tax Officer, Ernakulam, issued four notices to the appellant, two under section 44 Of the Cochin Income tax Act and two under section 47 of the Travancore Income tax Act stating therein that in consequence of definite information which had come into his possession, he had discovered that the income of the appellant 753 for the assessment years 1123 and II24 M. E had been under assessed and that he proposed to re assess the said income ; and the appellant was asked to submit a return in respect of his total world income for the two years in question.
The appellant challenged the jurisdiction of the Income tax Officer to re assess his income and contended (1) that the assessment order dated January 11, 1952, made by the Income tax Officer for the accounting year 1124 M. E. being the only document on which the Income tax Officer relied for issuing a notice to the appellant, the requisite conditions for the application of the statutory provisions were lacking, (2) that section 13(1) of the Finance Act, 1950, did not have the effect of saving the provisions of the Travancore Income tax Act or the Cochin Income tax Act for the purpose of re assessment of income tax, and (3) that the financial agreement made between the President of India and the Raj pramukh dated February 25, 1950, which received constitu tional sanctity in article 278 of the Constitution, rendered the initiation of such re assessment proceedings unconstitutional and void : Held, (1) that though the meaning of the phrase " definite information " in section 44 (1) Of the Cochin Income tax Act and section 47(1) Of the Travancore Income tax Act, must depend on the circumstances of each case, there must be a casual connection between the information and the discovery, referred to in the sections ; but discovery does not mean a conclusion of certainty at the stage of notice ; it is enough if the Income tax Officer forms an honest belief.
Accordingly, the assessment order dated January 11, 1952, which disclosed a definite and systematic pattern of transactions for avoidance of tax not only in respect of the year covered by the order but spread over years anterior to it, amounted to information which, if honestly believed, would reasonably support the opinion of the Income tax Officer that there was a discovery of " escaped " income, etc., within the meaning of the sections ; Firm jitanyam Niymalram vs Commissioner of Income tax, A. 1.
R. 1952 Pat.
163, approved.
(2)that the expression " levy, assessment and collection of income tax " in section 13(1) Of the Finance Act, 1950, was wide enough to comprehend re assessment proceedings under section 47 of the Travancore Income tax Act and section 44 Of the Cochin Income tax Act; Commissioner of Income tax, Bombay Presidency and Aden vs Khemchand Ramdas, (1938) L. R. 65 1.
A. 236, explained.
Firm L. Hazari Mal vs Income tax Officer, Ambala, A. 1.
R. 1957 Punjab 5, approved.
(3)that on a true construction of the recommendations of the Indian States Finances Enquiry Committee, the financial 754 agreement between the President of India and the Rajpramukh did not render the impugned proceedings unconstitutional or void.
In the connected appeals, the respondents who were merchants doing business in the State of Mysore, were assessed to income tax under the Mysore Income tax Act, 1923, for the years prior to the integration of Mysore with India.
But subsequent to the integration of Mysore notices under section 34 Of the Mysore Income tax Act were issued against them for re assessment of income tax for the years prior to the integration.
The respondents contended that the Income tax Officer had no jurisdiction to issue such notices on the grounds (1) that under the Finance Act, 1950, the Mysore Income tax Act, 1923, stood repealed on and from April 1, 1950, and section 13(1) of the former Act kept alive the Mysore Act for the purpose of levy, assessment and collection of income tax, etc., for the period mentioned therein, but did not save section 34 Of the Mysore Income tax Act for the purpose of re assessment of income tax and, therefore, the notices issued under section 34 were without jurisdiction and authority, (2) that the financial agreement between the President of India and the Rajpramukh of Mysore, dated February 28, 1950, rendered the initiation of such re assessment proceedings unconstitutional and void, and (3) that the jurisdiction under section 34 Of the Mysore Income tax Act was limited to ascertainment of extra income not assessed and the section did not confer jurisdiction to make a new assessment under the Act.
Held, (1) that the Finance Act, 1950, empowered the Income tax Officer to take proceedings under section 34 Of the Mysore Income tax Act, for re assessment, for the prior years, of the under estimated or escaped income; (2)that the financial agreement dated February 28, 1950, did not render the proceedings for re assessment, unconstitu tional or void; and (3)that though there was a distinction between an original or normal assessment under section 23 and a re assessment under section 34 of the Mysore Income tax Act, the expression " levy, assessment and collection of income tax " in section 13(1) of the Finance Act, 1950, had been used in a comprehensive sense so as to include the whole procedure for imposing liability upon the assessee.
|
Summarize this legal judgement text concisely | Appeal No. 128 of 1955.
Appeal by special leave from the judgment and order dated March 5, 1953, of the Bombay High Court in I. T. R. No. 40 of 1952.
H. N. Sanyal, Additional Solicitor General of India, K. N. Rajagopala Sastri and R. H. Dhebar, for the appellant.
B. R. L. Aiyangar, for the respondent.
April 28.
The Judgment of the Court was delivered by GAJENDRAGADKAR J.
This is an appeal by the Commissioner of Income tax, Bombay, by special leave and it raises a short question of law under section 33B of the Income tax Act.
The respondent assessee had been registered as a firm under section 26A of the Act for the year 1946 47.
For the assessment years 1947 48, 1948 49 and 1949 50, the Income tax Officer made the assessment on the respondent on June 7, 1949, June 7, 1949, and September 23, 1949, respectively under section 23(3) of the Act.
The Income tax Officer made an estimate about the profits of the respondent under the proviso to section 13 and computed the total income of the respondent at Rs. 95,053, Rs. 93,430 and Rs. 83,752 for the said years respectively.
The respondent had applied for and obtained renewal of registration of the firm.
The Income tax Officer had also passed an order under section 23(6) of the Act and allocated the shares of the various parties.
Against the said assessment orders the respondent preferred an appeal to the Appellate Assistant Commissioner.
On November 4, 1950, the Appellate 91 716 Assistant Commissioner reduced the respondent 's estimated profit by Rs. 28,250 in the assessment year 1947 48 and by Rs. 19,000 in the assessment year 1948 49.
The respondent 's appeal in regard to the assessment year 1949 50 was pending before the Appellate Assistant Commissioner.
Meanwhile it had come to the notice of the Commissioner of Income tax that the respondent firm which had been granted renewal of registration by the Income tax Officer was not a firm which could be registered under the Act as one of the partners of the firm was a minor.
The Commissioner then took action under section 33B(1) of the Act and issued notice to the respondent to show cause why the assessments made under section 23(3) of the Act and the registration granted under section 26A should not be cancelled.
After hearing the parties, the Commissioner passed an order under section 33B(1) on June 5, 1951 by which he cancelled the registration of the firm under section 26A and directed the Income tax Officer to make fresh assessments against the respondent as an unregistered firm for all the three years.
As a result of this revisional order passed by the Commissioner of Income tax, the Income tax Officer passed fresh orders.
The respondent preferred five appeals to the tribunal; two of these were against the orders passed by the Appellate Assistant Commissioner under section 31 and related to the assessment years 1947 48 and 194849; while the remaining three challenged the orders passed by the Commissioner of Income tax under section 33B(1) of the Act and related to the assessment years 1947 48, 1948 49 and 1949 50.
In these three appeals, with which we are concerned, the respondent had urged that the Commissioner was not competent in law to pass an order setting aside an assessment which had been confirmed or modified by the Appellate Assistant Commissioner; that the orders passed by the Commissioner under section 33B(1) were bad in law as they directed the Income tax Officer to pass an order in a particular manner and that the orders passed by the Income tax Officer subsequent to the cancellation of the respondent 's registration were bad in law as they were passed with 717 out giving notice to, or hearing, the respondent.
On January 2, 1952, the tribunal upheld the contentions raised by the respondent and allowed the appeals.
The appellant then moved the tribunal under section 66(1) of the Act for referring the questions specified in its application for the opinion of the High Court.
The tribunal accordingly framed the following three questions and referred them to the High Court of, Bombay: " 1.
Whether on the facts and circumstances of the case the Commissioner of Income tax acting under section 33B(1) can set aside the orders passed by the Appellate Assistant Commissioner, for the assessment years 1947 48 and 1948 49 ? 2.Whether on the facts and circumstances of the case the order passed by the Commissioner of Income tax dated 5th June, 1951, is bad in law as it directs the Income tax Officer to pass an order in a particular manner ? 3.Whether on the facts and circumstances of the case orders passed by the Income tax Officer dated 21 6 52 are bad in law, as fresh notices as required by Sections 22 and 23 of the Income tax Act were not given by the Income tax Officer to the assessee ? " This matter was heard by the High Court on March 5, 1953.
In regard to the assessments made for the years 1947 48 and 1948 49 the High Court held that the question raised by the appellant was concluded by the judgment already delivered by it in the Commissioner of Income Tax, Bombay North vs Tejaji Farasram Kharawala (1).
In Tejaji 's case the High Court had held that when an appeal is provided from a decision of the tribunal and the appeal court, after hearing the appeal, passes an order, the order of the original court ceases to exist and is merged in the order of the appeal court; and although the appeal court may merely confirm the order of the trial court, the order that stands and is operative is not the order of the trial court but the order of the appeal court.
In that view of the matter, since the Income tax Officer 's order (1) 718 granting registration to the respondent was assumed to have merged in the appellate order, the revisional power of the Commissioner could not be exercised in respect of it.
The same view has been taken in the majority decision of the Patna High Court in Durgabati and Narmadabala Gupta vs Commissioner of Income tax (1).
In respect of the Income tax Officer 's order renewing registration to the respondent for the year 1949 50, the High Court took the view that the revisional power of the Commissioner could not be exercised even in respect of this order because the propriety or the correctness of this order was open to consideration by the Appellate Assistant Commissioner in the respondent 's appeal then pending before him, Commissioner of Income tax vs Amritlal Bhogilal (subnom) (2).
In respect of this order the High Court had framed an additional question.
It was in these terms: " Whether the order of the Commissioner acting under section 33B(1) setting aside the order of the Income tax Officer where an appeal against that order was pending before the Appellate Assistant Commissioner was valid? " The High Court answered this additional question also in favour of the assessee.
In the result the High Court held that the Commissioner 's order cancelling the respondent 's registration for all the three years in question was invalid.
That is why the High Court did not think it necesssary to answer the remaining two questions framed by the tribunal.
The application subsequently made by the appellant to the High Court for a certificate under section 66A (2) was rejected by the High Court.
Thereupon the appellant applied for and obtained special leave from this Court on March 22, 1954.
The appellant 's contention is that the view taken by the High Court that the Commissioner of Income tax could not have exercised his revisional power in respect of the Income tax Officer 's order granting registration to the respondent with regard to all the three years in question is based on a misconstruction of the relevant provisions of s.33B of the Act.
Section 33B (1) which confers revisional power on (1) (2) 719 the Commissioner provides that the Commissioner may call for and examine the record of any proceeding under the Act and if he considers that any order passed therein by the Income tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and, after making and causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify including an order enhancing or modifying the assessment or cancelling the assessment or directing a fresh assessment.
Sub section (2) provides that orders of re assessment made under section 34 cannot be revised under section 33B (1) and adds that the said revisional power cannot be exercised after the lapse of two years from the date of the order sought to be revised.
Sub section (3) gives the assessee the right to prefer an appeal to the appellate tribunal against the Com missioner 's revisional order within the prescribed period; and sub section
(4) provides for the procedure for filing such an appeal.
In the present appeal two short questions fall to be decided under section 33B (1).
Does the order passed by the Income tax Officer granting registration to the assessee firm continue to be an order passed by the Income tax Officer even after the assessee 's appeal against the assessment made by the Income tax Officer on the basis that the assessee was a registered firm has been disposed of by the Appellate Assistant Commissioner ? In other words, where the appeal preferred by an assessee against his assessment has been considered and decided by the Appellate Assistant Commissioner, does the order of registration along with the subsequent order of assessment merge in the appellate order ? If, in law, the order of registration can be said to merge in the final appellate order, then clearly the Commissioner 's revisional power cannot be exercised in respect of it.
This question arises in respect of the registration order in regard to the two assessment years 1947 48 and 1948 49.
The other question which also falls to be decided is whether the order of registration in respect of the assessment year 720 1949 50 can be made the subject matter of the exercise of the Commissioner 's revisional power even though the assessee 's appeal against the assessment for the said year is pending before the Appellate Assistant Commissioner at the material time.
There can be no doubt that, if an appeal is provided against an order passed by a tribunal, the decision of the appellate authority is the operative decision in law.
If the appellate authority modifies or reverses the decision of the tribunal, it is obvious that it is the appellate decision that is effective and can be enforced.
In law the position would be just the same even if the appellate decision merely confirms the decision of the tribunal.
As a result of the confirmation or affirmance of the decision of the tribunal by the appellate authority the original decision merges in the appellate decision and it is the appellate decision alone which subsists and is operative and capable of enforcement; but the question is whether this principle can apply to the Income tax Officer 's order granting registration to the respondent.
In dealing with this question it would be necessary first to refer to the relevant provisions of the Act in regard to the granting of registration.
Section 26A of the Act lays down the procedure for the registration of firms.
An application has to be made by the firm in that behalf specifying the particulars prescribed by the said section and by the material rules framed under the Act.
If registration is granted by the Income tax Officer it enables the Income tax Officer to adopt the procedure prescribed by section 23 (5) (a) for making assessment orders in respect of the registered firm.
If a firm is not registered the Income tax Officer is required to follow the procedure prescribed by section 23 (5) (b) in making assessment orders in respect of unregistered firms.
A firm is an assessee under section 2 (2) whether it is registered under section 26A or not.
The Act does not impose an obligation on firms to apply for and obtain registration.
The Act in terms does not purport to define the effect of registration nor does it enumerate the rights of parties on registration of firms.
Section 23 (5) (a) and (b) provide for, the machinery for 721 collecting or recovering the tax and in no sense can they be treated as charging sections.
Broadly stated, even if a firm is registered in pursuance of an application made under section 26A, no difference arises in the liability of the firm or its individual partners to be taxed for the total income as may be determined by the Income tax Officer under sections 3 and 4 of the Act.
The computation of taxable income is not at all affected by the machinery provided by section 23 (5).
The decision in Shapurji Pallonji vs Commissioner of Income Tax, Bombay (1) on which Mr. Ayyangar himself relied clearly brings out and emphasizes this position.
It is true that the Income tax Officer is empowered to follow the two methods specified in section 23 (5) (a) and (b) in determining the tax payable by registered and unregistered firms respectively and making the demand for the tax so found due; but this does not affect the computation of taxable income.
It is important to bear in mind that the order granting registration to an assessee firm is an independent and separate order and it merely affects or governs the procedure to be adopted in collecting or recovering the tax found due.
It is not disputed that the registration granted by the Income tax Officer to an assessee firm can be cancelled by him either under section 23 (4) or under r. 6B.
It is also clear that the Income tax Officer 's order granting registration can be cancelled by the Commissioner under section 33B (1).
The argument for the respondent, however, is that, as a result of the decision of the appeal preferred by him against the Income tax Officer 's order of assessment, the order of registration passed by the Income tax Officer in favour of the respondent has ceased to be the order passed by the Income tax Officer as such.
It is therefore necessary to inquire whether the order of registration passed by the Income tax Officer can be challenged by the department before the Appellate Assistant Commissioner where the assessee firm has preferred an appeal against the order of assessment.
The decision of this question would obviously depend upon the relevant provisions of the (1)[1945] 13 722 Act in respect of appeals to the Appellate Assistant Commissioner and the powers of the Appellate Assistant Commissioner.
Section 30 (1) gives the assessee the right to prefer appeals against the orders specified in the said section.
The assessee firm can, for instance, object to the amount of income assessed under section 23 or section 27.
The assessee firm can also object to the order passed by the Income tax Officer refusing to register it under section 23 (4) or section 26A.
It can likewise object to the cancellation by the Income tax Officer of its registration under section 23 (4).
It is significant that, whereas an appeal is provided against orders passed by the Income tax Officer under section 23 (4) or section 26A either refusing to register the firm or cancelling registration of the firm, no appeal can be filed by the department against the order granting registration.
Indeed it is patent that the scheme of the Act in respect of appeals to the Appellate Assistant Commissioner is that it is only the assessee who is given a right to make an appeal and not the department.
Thus there can be no doubt that the Income tax Officer 's order granting registration to a firm cannot become the subjectmatter of an appeal before the Appellate Assistant Commissioner.
The next question which must be considered is whether the Income tax Officer 's order granting registration to a firm can be challenged by the department during the hearing of the firm 's appeal against the final order of assessment made by the Income tax Officer ? The powers of the Appellate Assistant Commissioner are to be found in section 31 of the Act.
Section 31 (3) (a) authorises the Appellate Assistant Commissioner to confirm, reduce, enhance or annul the assessment under appeal.
Under section 31 (3) (b), wide powers are given to the appellate authority to set aside the assessment or direct the Income tax Officer to make fresh assessment after making such further enquiry as the Income tax Officer may think fit or as the Appellate Assistant Commissioner may direct.
The Appellate Assistant Commissioner is also given the authority, in the case of an order cancelling the registration of the firm under sub section
(4) of section 23 or 723 refusing to register a firm under sub section
(4) of section 23 or section 26A or to make a fresh assessment under section 27, to confirm such order or cancel it and direct the Incometax Officer to register the firm or to make a fresh assessment as the case may be.
This section further lays down that, at the hearing, of an appeal against the order of an Income tax Officer, the Income tax Officer shall have the right to be heard either in person or by his representative.
It is thus clear that wide powers have been conferred on the Appellate Assistant Commissioner under section 31.
It is also clear that, before the appellate authority exercises his powers, he is bound to hear the Income tax Officer or his represent.
ative.
It has been urged before us by Mr. Ayyangar that these provisions indicate that, in exercise of his wide powers the Appellate Assistant Commissioner can, in a proper case, after hearing the Income tax Officer or his representative, set aside the order of registration passed by the Income tax Officer.
We are not prepared to accept this argument.
The powers of the Appellate Assistant Commissioner, however wide, have, we think, to be exercised in respect of the matters which are specifically made appealable under section 30(1) of the Act.
If any order has been deliberately left out from the jurisdiction of the Appellate Assistant Commissioner it would not be open to the appellate authority to entertain a plea, about the correctness, propriety or validity of such an order.
Indeed, if the respondent 's contention is accepted, it would virtually give the department a right of appeal against the order in question and there can be no doubt that the scheme of the Act is not to give the department a right of appeal to the Appellate Assistant Commissioner against any orders passed by the Income tax Officer.
The order granting registration can be cancelled by the Income tax Officer himself either under r. 6B or under section 23(4).
It may be cancelled by the Commissioner in exercise of his revisional power under section 33 B; but it cannot be cancelled by the Appellate Assistant Commissioner in exercise of his appellate jurisdiction under section 31 of the Act.
It is true that, 92 724 in dealing with the assessee 's appeal against the order of assessment, the Appellate Assistant Commissioner may modify the assessment, reverse it or send it back for further enquiry ; but any order that the Appellate Assistant Commissioner may make in respect of any of the matters brought before him in appeal will not and cannot affect the order of registration made by the Income tax Officer.
If that be the true position, the order of registration passed by the Income tax Officer stands outside the jurisdiction of the Appellate Assistant Commissioner and does not strictly form part of the proceedings before the appellate authority.
Even after the appeal is decided and in consequence the appellate order is the only order which is valid and enforceable in law, what merges in the appellate order is the Income tax Officer 's order under appeal and not his order of registration which was not and could never become the subject matter of an appeal before the appellate authority.
The theory that the order of the tribunal merges in the order of the appellate authority cannot therefore apply to the order of registration passed by the Income tax Officer in the present case.
In this connection we may refer to the argument which Mr. Ayyangar seriously pressed before us.
He contended that, when the Appellate Assistant Commissioner hears the assessee 's appeal, he is himself computing the total taxable income of the assessee and, in discharging his obligation in that behalf, he may be entitled to consider all relevant and incidental questions.
In support of this argument Mr. Ayyangar referred us to the decision in Rex vs The Special Commissioner of Income Tax (ex parte Elmhirst) (1).
The point which arose before the King 's Bench Division in this case was whether, when a notice of appeal has been given, it was open to the assessee to withdraw his appeal and the Court held that once notice of appeal is given the appellate authority was entitled and indeed bound to see that a true assessment of the amount of the taxpayer 's liability was arrived at.
We are unable to see how this decision can really help the (1) 725 respondent in the present case.
When an appeal is taken before the Appellate Assistant Commissioner undoubtedly he is bound to examine the case afresh but that cannot bring within the purview of his appellate jurisdiction matters which are deliberately left out by the Act.
If section 30(1) does not provide for an appeal against a particular order, legislature obviously intends that the correctness of the said order cannot be impeached before the appellate authority.
The jurisdiction and powers of the appellate authority must inevitably be determined by the specific and relevant provisions of the Act.
In this connection it may be useful to compare the relevant and material features of the revisional powers conferred on the Commissioner by sections 33A and 33B respectively.
The Commissioner 's revisional power under section 33A cannot be exercised to the prejudice of the assessee in any case.
It can be exercised in respect of orders passed by any authority subordinate to the Commissioner; but in no case can the revisional order prejudicially affect the assessee.
It is significant that the explanation to section 33A expressly provides that the Appellate Assistant Commissioner shall be deemed to be an authority subordinate to the Commissioner.
In other words, in exercise of this revisional power the Commissioner may modify or reverse in favour of the assessee even the orders passed by the Appellate Assistant Commissioner.
The position Under section 33B, however, is different.
The Commissioner 's revisional power under section 33B can be exercised only in respect of orders passed by the Income tax Officer.
The appellate orders are outside the purview of section 33B.
That is one important distinction between the two revisional powers.
The other important distinction is that, whereas under section 33A the revisional jurisdiction cannot be exercised to the prejudice of the assessee, under section 33B the Commissioner can, in exercise of his revisional power, make orders to the prejudice of the assessee.
It is not disputed that under section 33B erroneous orders passed by the Income tax Officer which are prejudicial to the revenue can be revised by the Commissioner.
Now, 726 the Income tax Officer 's order registering the firm is not appealable and so it cannot become the subjectmatter of an appeal before the Appellate Assistant Commissioner.
Such an order can therefore be revised by the Commissioner under section 33B whenever he considers that it has been erroneously passed.
In the present case there is no doubt that the, respondent firm cannot be validly registered in view of the fact that one of its partners is a minor and so, on the merits, the Commissioner 's order is clearly right.
We must accordingly hold that the High Court was in error in taking the view that the Commissioner had no authority to set aside the registration order passed by the Income tax Officer granting registration to the respondent for the years 1947 48 and 1948 49.
The case in regard to the subsequent year 1949 50 presents no difficulty.
The appeal preferred by the respondent against the Income tax Officer 's assessment order in respect of this year was pending at the material time before the Appellate Assistant Commissioner; and so no question of merger arose in respect of the order granting renewal of registration for this period.
There can be no doubt that even on the theory of merger the pendency of an appeal may put the order under appeal in jeopardy but until the appeal is finally disposed of the said order subsists and is effective in law.
It cannot be urged that the mere pendency of an appeal has the effect of suspending the operation of the order under appeal.
The High Court, however, appears to have taken the view that the revisional power is an extraordinary power and can be exercised only for unusual and extraordinary reasons.
It was also assumed by the High Court that, in the pending appeal, the department would have an alternative remedy because, according to the High Court, the department could have challenged the validity or the propriety of the respondent 's registration and could have asked the Appellate Assistant Commissioner to cancel it.
As we have already pointed out, the department could not challenge the validity of the registration order in the assessee 's appeal before the appellate authority and so the argument that the. 727 department had an alternative remedy is not correct.
It is clear from the judgment of the High Court that it is the assumption that the department had an alternative remedy which weighed with the learned judges in reaching their final conclusion.
Then the argument that the extraordinary revisional power must be exercised only for extraordinary reasons is really not very material.
Whether or not the revisional power can be exercised in a given case must be determined solely by reference to the terms of section 33B itself.
Courts would not be justified in imposing additional limitations on the exercise of the said power on hypothetical considerations of policy or the extraordinary nature of the power.
We must, therefore, hold that the High Court was also in error in holding that the Commissioner was not authorised in cancelling the order of the respondent 's registration for the year 1949 50.
The result is that the view taken by the High Court must be reversed and the first question framed by the tribunal as well as the additional question framed by the High Court must be answered in favour of the appellant.
Then there remain two other questions which were framed by the tribunal but have not been considered by the High Court.
The learned counsel appearing for both the parties agree that we need not remit these two questions to the High Court with the direction that the High Court should deal with them in accordance with law; it has been conceded before us that, if the principal question about the Commissioner 's power under section 33B(1) to cancel the respondent 's registration is answered in favour of the appellant, then the two remaining questions would become academic and answers to them would also have to be in favour of the appellant.
It is true, by his order the Commissioner purported to set aside the assessment orders made under section 23(3) and section 55 and directed the Incometax Officer to make fresh assessments according to law for each of the years in question.
If this part of the order is literally construed it would clearly be open to the objection raised by the respondent.
The assessment orders passed by the Income tax Officer for the years 1947 48 and 1948 49 had been modified by the 728 Appellate Assistant Commissioner and in that sense they had ceased to be the orders of assessment passed by the Income tax Officer himself and so the Commissioner could not have exercised his revisional power under section 33B(1) in respect of the said appellate orders but we are inclined to think that the Commissioner did not intend to set aside the assessments in this sense.
It is clear from the order read as a whole that, having cancelled the respondents registration, the Commissioner wanted to direct the Income tax Officer to make suitable consequential amendment in regard to the machinery or procedure to be adopted to recover the tax payable by the respondent.
In fact it is conceded that, in his subsequent order, the Income tax Officer has accepted the figure of the taxable income of the respondent as determined by the appellate authority for the relevant years and has proceeded to act under section 23(5)(b) on the basis that the respondent is an unregistered firm.
Therefore we cannot hold that the order passed by the Commissioner is bad in law on the ground that " he directed the Income tax Officer to pass the order in a particular manner ".
The answer to question No. 2 would accordingly be in the.
negative.
Then as regards question No. 3, it is difficult to understand how this question can be said to arise from the proceedings before the tribunal.
This question challenges the validity of the procedure adopted by the Income tax Officer in passing fresh orders against the respondent.
This proceeding is clearly subsequent to the impugned order of the Commissioner under section 33B(1) and so we are unable to see how the tribunal allowed the respondent to raise this contention in appeals which had been filed by the respondent against the Commissioner 's order under section 33B(1).
Besides, it has been fairly conceded by Mr. Ayyangar before us that, when the Income tax Officer merely proceeded to adopt a different machinery to recover the tax due from the respondent in consequence of the cancellation of the respondent 's registration, there was no occasion or need to issue another notice against the respondent.
We must accordingly answer question No. 3 also in the negative.
729 In the result all the questions framed in this case are answered in favour of the appellant.
The order passed by the High Court is set aside and the appeal is allowed with costs throughout.
Appeal allowed.
| The respondent firm was assessed to income tax for the assessment years 1947 48, 1948 49 and 1949 50 under section 23(3).
The Income tax Officer renewed the registration of the firm under section 26A of the Income tax Act and passed an order under section 23(6) allocating the shares of the various partners.
The respondent preferred appeals against the orders of assessment to the Appellate Assistant Commissioner.
Oil November 4, 1950, the Appellate Assistant Commissioner partly accepted the appeals in respect of the assessment years 1947 48 and 1948 49 but the appeal in respect of the assessment year 1949 50 was still pending.
Meanwhile after issuing notice to the parties and hearing them the Commissioner, acting under section 33B(1), passed an order on June 5, 1952, cancelling the registration granted under section 26A on the ground that one of the partners of the firm was a minor, and directed the Income tax Officer to make fresh assessments for the three years.
The respondent preferred appeals to the Appellate Tribunal which were allowed.
On the application of the appellant the Tribunal referred, under section 66(1) of the Act, three questions to the High Court of Bombay.
In regard to the assessment years 1947 48 and 1948 49 the High Court held that the orders of the Income tax Officer granting registration had merged in the appellate orders of the Assistant Appellate Commissioner and the revisional power of the Commissioner under section 33B(1) could not be exercised in respect of them.
With regard to the renewal of registration for the year 1949 50 the High Court held that the Commissioner could not exercise his revisional power as the propriety of this order was open to consideration by the Appellate Assistant Commissioner in the respondent 's appeal pending before him.
The appellant obtained special leave and appealed: Held, that the Commissioner had the authority under section 33B(1) to set aside the orders of registration made by the Income tax Officer.
An order of the Income tax Officer granting registration was not appealable before the Appellate Assistant Commissioner.
Such an order could be cancelled by the Commissioner in exercise of his revisional powers under section 33B(1) ; but it could not be cancelled by the Appellate Assistant Commissioner even in the exercise of his appellate jurisdiction when dealing with an appeal by an assessee.
The theory that the order of a tribunal merges in the order of the appellate authority did not apply to the order of registration passed by the Incometax Officer.
Commissioner of Income tax, Bombay North vs Tejaji Farasram Kharawala, , referred to.
Durgabati and Narmadabala Gupta vs Commissioner of Income tax, , disapproved.
But the Commissioner has no power while exercising his revisional jurisdiction under section 33B(1) of the Act to set aside the assessment orders.
The Commissioner, in the present case, did 715 not really intend to set aside the assessment orders but merely to direct the Income tax Officer to make suitable consequential amendments in regard to the machinery or procedure.
to be adopted to recover the tax payable by the respondent.
The registration or non registration of a firm does not at all affect the computation of taxable income; it merely governs the procedure to be adopted in recovering the tax found due.
Shapurji Pallonji vs Commissioner of Income tax, Bombay, , referred to.
|
Summarize this legal judgement text concisely | Appeal No.122 of 1956.
Appeal from the judgment and order dated March 5, 1954, of the Bombay High Court in Appeal from its Original Jurisdiction Misc.
Application No. 1 of 1954.
H. N. Sanyal, Addl.
Solicitor General, G. N. Joshi and R. H. Dhebar, for the appellants.
N. A. Palkhivala, section N. Andley, J. B. Dadachanji, P. L. Vohra and Rameshwar Nath, for the respondent.
April 28.
The Judgment of the Court was delivered by GAJENDRAGADKAR J.
This is an appeal by the Income tax Officer, Companies Circle I (1), Bombay and the Union of India and it raises a short question about the construction of section 35 of the Income tax Act read with section 1, sub section
(2) and section 13 of the Indian Income tax (Amendment) Act, 1953 (XXV of 1953).
It arises in this way.
The Income tax Officer, by his assessment order made on October 9, 1952, for the assessment year 1952 53, assessed the respondent, the Bombay Dyeing and Manufacturing Co. Ltd., under the Act.
In the said assessment order the respondent, was given credit for Rs. 50,603 15 0 as representing interest at 2% on tax paid in advance under section 18A of the Act.
This credit was given to the respondent in pursuance of the provisions contained in section 18A, sub section
(5) of the Act as it then stood.
On May 24, 1953, the Amendment Act came into force.
Section 1, sub section
(2) of the Amendment Act provides that " subject to any special provision made in this behalf in the Amendment Act, it shall be deemed to have come into 705 force on the first day of April, 1952 ".
By section 13 of the Amendment Act, a proviso was added to section 18A (5) of the Act.
The effect of the amendment made by the insertion of the said proviso to section 18A (5) was that the.
assessee was entitled to get interest at 2% not on the whole of the advance amount of tax paid by him as before but only on the difference between the payment made and the amount at which the assessee was assessed to tax under the regular assessment under section 23 of the Act.
After the Amendment Act was passed, the first appellant exercised his power under section 35 of the Act and purported to rectify the mistake apparent from the record in regard to the credit for Rs. 50,603 15 0 allowed by him to the assessee.
The first appellant held that the assessee was really entitled to a credit of only Rs. 21,157 6 0 by way of interest on tax paid in advance as a result of the retrospective operation of the amendment made in section 18A (5) by the Amendment Act.
In accordance with this order a notice of demand under section 29 of the Act was issued against the assessee for the sum of Rs. 29,446 9 0 on the ground that the assessee had been given credit for this excess amount through mistake.
Aggrieved by this notice of demand, the respondent filed a petition in the High Court of Bombay on January 4, 1954, under article 226 of the Constitution praying for a writ against the appellants inter alia prohibiting them from, enforcing the said rectified order and the said notice of demand.
It appears that this petition was admitted by Tendolkar J. on January 6, 1954, and a rule issued on it.
Thereafter the said petition was referred to a Division Bench by the Hon 'ble the Chief Justice for final disposal.
Accordingly on March 5, 1954, the petition was heard by Chagla C. J. and Tendolkar J. and a writ was issued against the appellants.
The High Court held that section 35 of the Act had no application to the facts of the case because the mistake apparent from the record contemplated by the said section is not a mistake which is the result of the amendment of the law even though the amending law may be retrospective in operation.
In other words, in the opinion of the High Court, the 706 mistake mentioned by section 35 had to be apparent on the face of the order and it can only be judged in the light of the law as it stood on the day ,When the order was passed.
The appellants then applied for and obtained a certificate from the High Court on October 8, 1954; on their behalf it is urged ' that the High Court of Bombay has erred in law in taking the view that the appellant No. I was not entitled to rectify the mistake in question under section 35 of the Act.
Thus the short question which arises before us in the present appeal is whether an order which was proper and valid when it was made can be said to disclose a mistake apparent from the record if the said order would be erroneous in view of a subsequent amendment made by the Amendment Act when the Amendment Act is intended to operate retrospectively ? It is unnecessary to refer to the provisions of section 18A (5) as well as the provision of the proviso which was subsequently added by section 13 of the Amendment Act.
It is common ground that, in the absence of the subsequently inserted proviso, the assessee would be entitled to obtain a credit for Rs. 50,603 15 0.
It is also common ground that, if the subsequently inserted proviso covered the assessee 's case, he would be entitled to a credit only of Rs. 21,156 9 0.
It is thus obvious that the order giving the relevant credit to the assessee was valid when it was made and that it would be erroneous under the subsequent amendment.
Under these circumstances, was the first appellant justified in exercising his power of rectification under section 35 of the Act ? In deciding this question it would be necessary to determine the true legal effect of the retrospective operation of the Amendment Act.
Section 1, sub section
(2) of the Amendment Act expressly provides that subject to the special provisions made in the said Act it shall be deemed to have come into force on the first day of April 1952.
The result of this provision is that the amendment made in the Act by s, 13 of the Amendment Act must, by legal fiction, be deemed to have been included in the principal Act as from the first of 707 April, 1952, and this inevitably means that, at the time when the Income tax Officer passed his original order on October 9, 1952, allowing to the respondent credit for Rs. 50,603 15 0, the proviso added by section 13 of the Amendment Act must be deemed to have been inserted in the Act.
As observed by Lord Asquith of Bishopstone in East End Dwellings Co. Ltd. vs Finsbury Borough Council (1), " if you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it.
One of those in this case is emancipation from the 1939 level of rents.
The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs ".
Thus, there can be no doubt that the effect of the retrospective operation of the Amendment Act is that the proviso inserted by the said section in section 18A (5) of the Act would, for all legal purposes, have to be deemed to have been included in the Act as from April 1, 1952.
But it is urged for the respondent that the retrospective operation of the relevant provision is not intended to affect completed assessments.
It is conceded that, if any assessment proceedings in respect of the assessee 's income for a period subsequent to the first of April 1952 were pending at the time when the Amendment Act was passed, the proviso inserted by section 13 would govern the decision in such assessment proceedings; but where an assessment proceeding has been completed and an assessment order has been passed by the Income tax Officer against the assessee, such a completed assessment would not be affected and cannot be reopened under section 35 by virtue of the retrospective operation of the Amendment Act.
In support of this contention, reliance is placed on the observations of the Privy Council in Delhi Cloth and (1) , 132.
90 708 General Mills Co. Ltd. vs Income tax Commissioner, Delhi and Anr.
Lord Blanesburg who delivered the judgment of the Board referred to the Board 's earlier decision in the Colonial Sugar Refining Company vs Irving (2) where it was in effect laid down that, while provisions of a statute dealing merely with matters of procedure may properly, unless that construction be textually inadmissible, have retrospective effect attributed to them, provisions which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment.
The learned Judge then added that " Their Lordships have no doubt that the provisions which, if applied retrospectively, would deprive of their existing finality orders which, when that statute came into force, were final, are provisions which touch existing rights.
" The argument for the respondent is that the assessee has obtained a right under the order passed by the Income tax Officer to claim credit for the specified amount under section 18A(5) and the said right cannot be taken away by the retrospective operation of section 13 of the Amendment Act.
The same argument is put in another form by contending that the finality of the order passed by the Incometax Officer cannot be impaired by the retrospective operation of the relevant provision.
In our opinion, this argument does not really help the respondent 's case because the order passed by the Income tax Officer under section 18A(5) cannot be said to be final in the literal sense of the word.
This order was and continued to be liable to be modified under section 35 of the Act.
What the Income tax Officer has purported to do in the present case is not to revise his order in the light of the retrospective amendment made by section 13 of the Amendment Act alone, but to exercise his power under section 35 of the Act; and so the question which falls to be considered in the present appeal.
centres round the construction of the expression "mistake apparent from the record " used in section 35.
That is why we think the principle of the finality of the orders or the sanctity of (1)[1927] L.R. 54 I.A. 421.
(2)[1905] A.C. 369.
709 the existing rights cannot be effectively invoked by the respondent in the present case.
The respondent then urged that the Amendment Act should not be given greater retrospective operation than its language and its general scheme render necessary.
This convention is based on the provisions of section 3, sub section
(2), section 7, sub section
(2) and section 30, sub section
(2) of the Amendment Act.
Where the Amendment Act intended that its provisions should affect even concluded orders of assessment it is expressly so provided.
Since section 13 does not specifically authorise the reopening of concluded assessments it should be held that its retrospective operation is not intended to cover such concluded assessments.
That in brief is the argument.
We are, however, not satisfied that this argument is wellfounded.
Let us examine the three provisions of, the Amendment Act on which the argument rests.
Section 3, sub section (1) of the Amendment Act makes several additions and modifications in section 4 of the principal Act.
Section 3, sub section (2) then provides that, the amendments made by sub cl.
(3) of cl.
(b) of sub section
(1) shall be deemed to be operative in relation to all assessments for any year whether such assessments have or have not been concluded before the com mencement of the Amendment Act of 1953.
It would be noticed that the main object of this sub section is to extend the retrospective operation of the relevant provisions of the Amendment Act beyond the first of April 1952 mentioned by section 1, sub section
(2) of the Amendment Act.
Since it was intended to provide for such further retrospective operation of the relevant provision the legislature thought it advisable to clarify the position by saying that the said extended retrospective operation would cover all assessments whether they had been completed or not before the commencement of the Amendment Act.
Section 7, sub section
(1) adds two provisos to section 9 of the principal Act by cls.
(a) and (b).
Sub section (2) of section 7 then lays down that the amendments made in cl.
(a) of sub section
(1) shall be deemed to be operative for any assessment for the year ending the 31st day of March, 1952, whether made before or after the commencement of this Act and, where any such 710 assessment has been made before such commencement, he Income tax Officer concerned shall revise it whenever necessary to give effect to this amendment.
The position under section 30, sub section
(2) of the Amendment Act is substantially similar.
By sub section
(1) of this section certain additions and amendments are made in the schedule to the principal Act by cls.
(a), (b), (c) and (d).
sub section
(2) then provides for the retrospective operation of the amendment made by sub section
(1) in terms similar to those used in section 7, sub section
It is clear that the Provisions in sections 7 and 30 are intended for the benefit of the assessees and so the legislature may have thought it necessary to confer on the Income tax Officer specific and express power to revise his orders in respect of the relevant assessments wherever necessary to give effect to the amendments in question.
The effect of this provision is to make it obligatory on he Income tax Officer to revise his original orders in he light of the amendments and also to confer on the assessee right to claim such revision.
It may be con ceded that in respect of the other retrospective provisions of the Amendment Act such a power to revise the earlier orders cannot be claimed or exercised by the Income tax Officer.
In other words, a distinction can be drawn between there two provisions of the Amendment Act and the rest in respect of the power which the Income tax Officer can purport to exercise to give effect to the amendments made by the Amendment Act.
Whereas, in respect of the amendments made by section 7 and section 30 of the Amendment Act, the Income tax Officer can and must revise his earlier orders covered by section 7, sub section
(2) and section 30, sub section
(2), such a power of revision has not been conferred on him in the matter of giving effect to the other amendments made in the Amendment Act.
Even so, we do not think it would be legitimate or reasonable to hold that the provisions of section 7(2) and section 30(2) lead to the infference that the retrospective operation of the other provisions of the Amendment Act is not intended to affect concluded assessments in any manner whatever.
In this connection, it would be pertinent to remember that the power to revise which has been conferred on 711 the Income tax Officer by section 7(2) and section 30(2) of the Amendment Act is distinct and independent of the power to rectify mistakes which the Income tax Officer can exercise under section 35 of the Act.
It is in the light of this position that the extent of the Income tax Officer 's power under section 35 to rectify: mistakes apparent from the record must be determined; and in doing so, the scope and effect of the expression " mistake apparent from the record " has to be ascertained.
At the time when the Income tax Officer applied his mind to the question of rectifying the alleged mistake, there can be no doubt that he had to read the principal Act as containing the inserted proviso as from April 1, 1952.
If that be the true position then the order which he made giving credit to the respondent for Rs. 50,603 15 0 is plainly and obviously inconsistent with a specific and clear provision of the statute and that must inevitably be treated as a mistake of law apparent from the record.
If a mistake of fact apparent from the record of the assessment order can be rectified under section 35, we see no reason why a mistake of law which is glaring and obvious cannot be similarly rectified.
Prima facie it may appear somewhat strange that an order which was good and valid when it was made should be treated as patently invalid and 'wrong by virtue of the retrospective operation of the Amendment Act.
But such a result is necessarily involved in the legal fiction about the retrospective operation of the Amendment Act.
If, as a result of the said fiction we must read the subsequently inserted proviso as forming part of section 18A(5) of the principal Act as from April 1, 1952, the conclusion is inescapable that the order in question is inconsistent with the provisions of the said proviso and must be deemed to suffer from a mistake apparent from the record.
That is why we think that the Income tax Officer was justified in the present case in exercising his power under section 35 and rectifying the said mistakes.
Incidentally we may mention that in Moka Venkatappaiah vs Additional Income Tax Officer, Bapatla (1), the High Court of Andhra has taken the same view.
(1)(1957) 712 In this connection it would be useful to refer to the decision of the Privy Council in the Commissioner of [Income Tax, Bombay Presidency and Aden vs Khemchand Ramdas (1).
In Khemchand 's case, the assessees were registered as a firm and they were assessed under section 23(4) on an income of Rs. 1,25,000 at the maximum rate.
Being a registered firm no super tax was levied.
A notice of demand was also made before March 1927.
On February 13, 1928, the Commissioner, in exercise of his powers under section 33, cancelled the order registering the assessee as a firm and directed the Income tax Officer to take necessary action.
The Income tax Officer accordingly assessed the firm to super tax on May 4, 1929.
The Privy Council held that the assessment made on January 17, 1927, was final both in respect of the income tax and super tax.
The fresh action taken by the Income tax Officer on May 4, 1929, was out of time though it had been taken in pursuance of the directions of the Commissioner and that the order of May 4, 1929, was one which the Income tax Officer had no power to make.
One of the points raised before the Privy Council was whether, under the relevant circumstances the Income tax Officer had power to make the impugned order in view of the provisions of sections 34 and 35 of the Act.
The Privy Council dealt with this question on the footing that the Commissioner 's order cancelling the registration had been properly made.
On this basis their Lordships thought that it was unnecessary to consider whether the. case would attract the provisions of section 34 " inasmuch as in Their Lordships ' opinion the case clearly would have fallen within the provisions of section 35 had the Income tax Officer exercised his powers under the section within one year from the date on which the earlier demand was served upon the respondents ".
The judgment shows that Their Lordships took the view that looking at the record of the assessments made upon the respondents as it stood after the cancellation of the respondents ' registration and the order effecting the cancellation would have formed part of the record it would be apparent that a mistake (1)(1938) L.R. 65 I.A. 236. 713 had been made in stating that no super tax was leviable.
This decision clearly shows that the subsequent cancellation of the assessees ' registration was held by Their Lordships of the Privy Council to form part of the record retrospectively in the light of the said subsequent event, and the order was deemed to suffer from a mistake apparent from the record so as to justify the exercise of the rectification powers under section 35 of the Act.
It is because Their Lordships thought that section 35 would have been clearly applicable that they did not decide the question as to whether section 34 could also have been invoked.
This decision lends considerable support to the view which we are disposed to take about the true meaning and scope of the expression " the mistake apparent from the record " occurring in section 35.
We must accordingly hold that the High Court of Bombay was in error in coming to the conclusion that the notice issued by the Income tax Officer calling upon the respondent to pay 9the sum of Rs. 29,446 9 0 was not warranted by law.
The result is the order passed by the High Court issuing a writ against the appellant is set aside and the appeal is allowed with costs throughout.
Appeal allowed.
| The Income tax Officer, by his order dated October 9, 1952, assessed the respondent for the assessment year 1952 53 and gave him credit for Rs. 50,603 15 0 as representing interest on tax paid in advance under section 18 A(5) of the Income tax Act.
On May 24, 1953, the Indian Income tax (Amendment) Act, 1953, came into force adding a proviso to s.18 A(5) of the Act to the effect that the assessee was entitled to interest not on the whole of the advance tax paid by him but only on the difference between the payment made and the amount assessed.
The Amendment Act provided that it shall be deemed to have come into force on April 1, 1952.
The Income tax Officer, acting under section 35 of the Act, rectified the assessment order holding that the assessee was entitled to a credit of only Rs. 21,157 6 0 by way of interest on tax paid in advance as a result of the retrospective operation of the amendment in section 18 A(5), and issued a notice of demand against the assessee for the balance of Rs. 29,446 9 0.
The assessee filed a petition in the High Court of Bombay.
under article 226 of the Constitution praying for a writ prohibiting the appellants from enforcing the rectified order and notice of demand.
The High Court issued the writ holding that section 35 was not applicable to the case as the mistake mentioned in section 35 had to be apparent on the face of the order and the question could only be judged in the light of the law as it stood on the day when the order was, passed: Held, that the Income tax Officer was justified in exercising his powers under section 35 and rectifying the mistake.
As a result of, the legal fiction about the retrospective operation of the Amendment Act, the subsequently inserted proviso must be read as.
forming part of section 18 A(5) of the principal Act as from April 1, 1952, and consequently the order of the income tax Officer dated October 9, 1952, was inconsistent with the provisions of the proviso, and suffered from a mistake apparent from the record.
Commissioner of Income tax, Bombay Presidency and Aden vs 704 Khemchand Ramdas, (1938) L.R. 65 I.A. 236 and Moka Venkatap paiah vs Additional Income tax Officer, Bapatla, (1957)32 I.T.R. 274, referred to.
The order passed by the Income tax Officer under section 18 A was not final in the literal sense of the word; it was and con tinued to be liable to be modified under section 35.
It is also not correct to say that the retrospective operation of the amended s.18 A(5) was not intended to affect concluded transactions.
|
Summarize this legal judgement text concisely | Appeal No. 230 of 1956.
Appeal by special leave from the judgment and order dated April 12, 1955, of the Orissa High Court in 0.
J. C. No. 60 of 1952.
C. K. Daphtary, Solicitor General of India, R. Ganapathi Iyer and R. H. Dhebar, for the appellants.
section N. Andley, J. B. Dadachanji and Rameshuar Nath, for the respondent.
April 15.
The Judgment of Das C. J. and 523 Venkatarama Aiyar J. was delivered by Das C. J.
The Judgment of section K. Das and Vivian Bose JJ.
was delivered by section K. Das J. Sarkar J. delivered a separate judgment.
DAS C. J.
We agree that this appeal must be allowed in part but we prefer to rest our judgment on one of the material points on a ground which is different from that adopted by our learned Brother section K. Das J. in the judgment which has just been delivered by him and which we have had the advantage of perusing.
The Orissa Sales Tax Act, 1947 (Orissa XIV of 1947), hereinafter referred to as the said Act received the assent of the Governor General on April 26, 1947, when section I of 'the Act came into force.
On August 1, 1947, a Notification was issued by the Government of Orissa bringing the rest of the said Act into force in the Province of Orissa, as it was then constituted.
Section 4, as it stood at all times material to this appeal, ran as follows: " 4(1) Subject to the provisions of sections 5, 6, 7 and 8 and with effect from such date as the Provincial Government may, by notification in the Gazette, appoint, being not earlier than thirty days after the date of the said notification, every dealer whose gross turnover during the year immediately preceding the commencement of this Act exceeded Rs. 5,000 shall be liable to pay tax under the Act on sales effected after the date so notified: Provided that the tax shall not be payable on sale involved in the execution of a contract which is shown to the satisfaction of the Collector to have been entered into by the dealer concerned on or before the date so notified.
(2)Every dealer to whom subsection (1) does not apply shall be liable to pay tax under this Act with effect from the commencement of the year immediately following that during which his gross turnover first exceeded Rs. 5,000.
(3)Every dealer who has become liable to pay tax under this Act shall continue to be so liable until the expiry of three consecutive years, during each of 524 which his gross turnover has failed to exceed Rs. 5,000 and such further period after the date of such expiry as may be prescribed and on the expiry of this latter period his liability to pay tax shall cease.
(4)Every dealer whose liability to pay tax has ceased under the provisions of sub section (3) shall again be liable to pay tax under this Act with effect from the commencement of the year immediately following that during Which his gross turnover again exceeds Rs. 5,000.
" On August 14, 1947, a notification was issued by the Government of Orissa appointing September 30, 1947, as the date with effect from which that sub section was to come into force in the then province of Orissa.
On January 1, 1948, by a covenant of merger executed by its ruler, the feudatory State of Pallahara merged into the province of Orissa.
In exercise of the powers delegated to it by the Government of India under what was then known as the Extra Provincial Jurisdiction Act, 1947, the Government of Orissa on December 14, 1948, issued a notification under section 4 of that Extra Provincial Jurisdiction Act, extending the Orissa Sales Tax Act to the territories of the erstwhile feudatory States, including Pallahara which had merged into the province of Orissa.
On March 1, 1949, a notification under section 1(3) was issued by the Government of Orissa bringing sections 2 to 29 of the said Act into force in the added territories.
On the same day another notification was issued under section 4(1) of the Act, which was in the following terms: In exercise of the powers conferred by Sub section (1) of Section 4 of the Orissa Sales Tax Act, 1947 (Orissa Act XIV of 1947) as applied to Orissa State, the Government of Orissa are pleased to appoint the 31st March, 1949, as the date with effect from which every dealer whose gross turnover during the year ending the 31st March, 1949, exceeded Rs. 5,000 shall be liable to pay tax under the said Act on sales effected after the said date.
" It was after this notification had been.
issued that the respondents were sought to be made liable to tax.
The respondents were assessed under the said Act 525 for five quarters ending respectively on September 30, 1949, December 31, 1949, June 30, 1950, September 30, 1950, and December 31, 1950.
It will be noticed that the first two quarters related to a period prior to the commencement of the Constitution and the remaining three quarters fell after the Constitution came into force.
The Sales Tax Officer, Cuttack having assessed the respondents to Sales Tax under the said Act for each and all of the said five quarters and the respondent 's several appeals against the said several assessment orders under the said Act having been dismissed on April 12, 1952, the respondents filed a petition under article 226 of the Constitution in the Orissa High Court praying, inter alia, for a writ in the nature of a writ of certiorari for quashing the said assessment orders and for prohibiting the appellants from realising the tax so assessed or from making assessments on them in future.
The contention of the respondents before the High Court was that the notification issued by the Government of Orissa on March 1, 1949, under section 4(1) being invalid in that it ran counter to the provisions of that sub section, no part of the charging section came into force and consequently they were not liable to tax at all for any of the five quarters.
As regards the three quarters following the commencement of the Constitution, they urged an additional plea, namely, that the assessment orders for those three quarters were invalid by reason of the provisions of article 286 of the Constitution.
The High Court accepted both these contentions and by its judgment and order pronounced on April 12, 1955, cancelled the assessments.
The Sales Tax Officer, Cuttack, and the Collector of Commercial Taxes.
Cuttack, have appealed against the judgment and order of the High Court.
As regards the assessment orders for the three post ' Constitution quarters, the decision of the High Court purports to have proceeded on the decision of this Court in the State of Bombay vs United Motors (India) Ltd. (1).
We find ourselves in complete agreement with (1) ; 67 526 our learned Brother section K. Das J. for reasons stated by him that the assessment orders for the three post Constitution quarters were hit by cl.
(1) of article 286 and also section 30 (1) (a) (1) of the Act and were rightly held by the High Court to be without jurisdiction.
It is with regard to the assessment orders for the two pre Constitution quarters that we have come to a conclusion different from that to which our learned Brother has arrived.
We proceed to state our reasons.
The impugned notification, as hereinbefore stated, was issued on March 1, 1949, under section 4 (1) of the said Act.
Under that sub section every dealer whose gross turnover during the year immediately preceding the commencement of the Act exceeded Rs. 5,000 would be liable to pay the tax under the Act on sales effected after the date " so notified ", that is to say, the date which the provincial Government might by notification in the Gazette appoint.
It is clear, therefore, that section 4 (1) by its own terms determined the persons on whom the tax liability would fall but left it to the provincial Government only to appoint the date with effect from which the tax liability would commence.
It follows, therefore, that the only 'power conferred by section 4 (1) on the Government was to appoint, by a notification in the Official Gazette, a date with effect from which the tax liability would attach to the dealers described and specified in the sub section itself as the persons on whom that liability would fall.
The Government of Orissa issued the notification, hereinbefore quoted, " in exercise of the powers conferred by sub section (1) of section 4 " and appointed March 31, 1949, as the date with effect from which the tax liability would commence.
It was none of the business of the Government of Orissa to say on what class of dealers the tax liability would fall, for that had been already determined by the sub section itself Therefore, by the notification the Government of Orissa properly exercised its powers under sub section
(1) in so far as it appointed March 31, 1949, as the date, but it exceeded its powers by proceeding to say that all dealers whose gross turnover during the year ending 527 March 31, 1949, exceeded Rs. 5,000 should be liable to pay tax under the Act.
This part of the notification clearly ran counter to the sub section itself, for under that sub section it is only those dealers whose gross turnover exceeded Rs. 5,000 " during the year immediately preceding the commencement of this Act " that became liable to pay the tax.
For the purposes of the five assessment orders it made no difference whether the Act is taken to have commenced on December 14, 1948, when it was extended to the feudatory States by notification under section 4 of the Extra Provincial Jurisdiction Act, 1947, or on March 1, 1949, when the notification under section 1 (3) was issued, for in either case the year immediately preceding the commencement of this Act was April 1, 1947, to March 31, 1948.
The position, therefore, is that by the earlier part of the impugned notification the Government of Orissa properly and rightly exercised its power in appointing March 31, 1949, as the date with effect from which the liability to pay tax under the Act would commence, but by its latter part did something more which it had no business to do, i. e., to indicate, contrary to the sub section itself, that those dealers whose gross turnover during the year ending on March 31, 1949, would be liable to pay tax under the Act.
The notification in so far as it purports to determine the class of dealers on whom the tax liability would fall, was certainly invalid.
The question that immediately arises is as to whether the whole notification should be adjudged invalid as has been done by the High Court and as is proposed to be done by my learned Brother section K. Das J. or the two portions of the notification should be severed and effect should be given to the earlier part which is in conformity with section 4(1) and the latter part which goes beyond the powers conferred by the subsection to the Government of Orissa should be rejected.
Immediately the question of severability arises.
Are the two portions severable ? We find no difficulty in holding that the portion of the notification which went beyond the powers conferred on the Government of Orissa is quite clearly and easily severable from that 528 which was within its powers.
It cannot possibly be said that had the Government of Orissa known that it had no power to determine the persons on whom the tax liability would fall it would not have appointed a date at all.
In our view there is no question of the two parts being inextricably wound up.
We, therefore, hold that the notification, in so far as it appointed March 31, 1949, as the date with effect from which liability to pay tax would commence was valid and the rest of the notification was invalid and must be treated as surplus without any legal efficacy.
The result, therefore, is that the charging section was effectively brought into force and the entire charging section became operative and dealers could be properly brought to charge under the appropriate part of the charging section.
It is true that the notification having also stated that the dealers, whose gross turnover exceeded 5,000 (luring the year ending March 31, 1949, would be liable to pay the tax, the sales tax authorities naturally applied their mind to the question whether during the year ending March 31, 1949, the gross turnover of the respondents exceeded the requisite amount, but did not inquire into the question whether the respondent 's gross turnover exceeded Rs. 5,000 during the year immediately preceding the commencement of the Act which in this case was the financial year from April 1, 1947 to March 31, 1948.
If the matter stood there, it would have been necessary to send the case back to the Sales Tax Officer to enquire into and ascertain whether the quantum of the gross turnover of the respondents during the last mentioned financial year ending on March 31, 1948, exceeded Rs. 5,000 or it did not.
But a remand is not called for because it appears from the judgment under appeal that it was conceded that for the period April 1, 1949, till the commencement of the Constitution on January 26, 1950, the respondents would have been liable to pay sales tax provided a valid notification had been issued, under sub section
(1) of section 4.
This concession clearly amounts to an admission that the gross turnover of the respondents during the financial 529 year ending on March 31, 1948, which was the year immediately preceding March 31, 1949, exceeded Rs. 5,000.
We have already held that the notification ' issued under section 4(1) in so far as it appointed March 31, 1949, as the date with effect from which the liability to pay sales tax would commence was good and valid in law.
That finding coupled with the concession mentioned above relieves us from the necessity of remanding the case to the sales tax authorities.
Even if we assume, contrary to the aforesaid concession, that the gross turnover of the respondents during the financial year ending on March 31, 1948, did not exceed Rs. 5,000 and, therefore, section 4 (1) did not apply to them the respondents will still be liable to pay the sales tax for the two pre Constitution quarters under section 4 (2).
For reasons stated above we hold that the assessment orders for the three post Constitution quarters were invalid and we accordingly agree that this appeal, in so far as it is against that part of the order of the High Court which cancelled the assessment orders for those three post Constitution quarters, should be dismissed.
We further hold that the assessments for the two pre Constitution quarters were valid for reasons stated above and accordingly we agree in allowing this appeal in so far as it is against that part of the order of the High Court which cancelled the assessment orders for the two pre Constitution quarters Oil the ground that the notification issued under section 4 (1) of the Act was wholly invalid.
Under the circumstances of this case we also agree that the parties should bear their own costs in the High Court as well as in this Court.
section K. DAS J.
This appeal on behalf of the assessing authorities, Cuttack, has been brought pursuant to an order made on January 17, 1956, granting them special leave to appeal to this Court from the judgment and order of the High Court of Orissa dated April 12,1955, by which the High Court quashed certain orders of assessment of sales tax made against the respondent.
The short facts are these.
The respondent, Messrs.B. C. Patel and Co., is a partnership firm carrying on 530 the business of collection and sale of Kendu leaves.
The firm has its headquarters at Pallahara, which was formerly one of the Feudatory States of Orissa and merged in the.
then province of Orissa by a merger agreement dated January 1, 1948.
The Sales Tax authorities, Cuttack, in the State of Orissa, assessed the respondent to sales tax in respect of sales of Kendu leaves which took place for five quarters ending on September 30, 1949, December 31, 1949, June 30, 1950, September 30, 1950 and December 31, 1950.
It should be noted that two of the aforesaid quarters related to a period prior to the commencement of the Constitution, and the remaining three quarters were post Constitution.
The facts which the Sales Tax authorities found were (I.) that the respondent collected Kendu leaves in Orissa and sold them to various merchants of Calcutta, Madras and other places on receipt of orders from them, (2) that the goods were sent either f. o. r. Talcher or f. o. r. Calcutta, and (3) the sale price was realised by sending the bills to the purchasers for payment.
The admitted position was that the goods were delivered for consumption at various places out side the State of Orissa.
The Sales Tax authorities proceeded on the footing that all the sales took place in Orissa even though the goods were delivered for con sumption at places outside Orissa.
By five separate assessment orders dated May 31, 1951, the Sales Tax Officer, Cuttack, held that the sales having taken place in Orissa, the respondent was clearly liable to sales tax for the pre Constitution period and, for the post Constitution period, though the sales came within cl.
(2) of article 286 of the Constitution, the respondent was liable to sales tax under the Sales Tax Continuance Order, 1950, made by the President.
These findings were affirmed by the Assistant Collector of Sales Tax, Orissa, on appeal, by his order dated April 12, 1952.
The respondent assessee then filed a petition under article 226 of the Constitution in the High Court of Orissa and prayed for the issue of a writ of certiorari or other appropriate writ quashing the aforesaid orders of assessment.
The case of the respondent before the High Court was that the assessment orders.
, both with 531 regard to the pre Constitution and post Constitution periods, were invalid and without jurisdiction.
The High Court accepted the case of the respondent and held that the assessment orders for the entire period were invalid and without jurisdiction.
The present appeal has been brought from the aforesaid judgment and order of the High Court of Orissa dated April 12, 1955.
Though before the Sales Tax authorities and in the High Court, an attempt was made on behalf of the respondent assessee to show that there were no completed sales in Orissa and what took place in Orissa was a mere agreement to sell, that question is no longer at large before us.
The Sales Tax authorities found against the respondent on that question and the High Court did not consider it necessary to decide it on the petition filed by the respondent.
The High Court proceeded on certain other grounds pressed before it by the respondent, and we proceed now to consider the validity of those grounds.
The grounds are different , in respect of the two periods, pre Constitution, and post Constitution, and it will be convenient to take these two periods separately.
But before we do so, it is necessary to state some facts with regard to the enactment and enforcement of the Orissa Sales Tax Act, 1947 (Orissa XlV of 1947), hereinafter referred to as the Act, in the old province of Orissa and the ex Feudatory State of Pallahara.
The Act received the assent of the Governor General on April 26, 1947, and was first published in the Orissa Gazette on May 14,1947.
Section I came into force at once in the old province of Orissa and sub section
(3) of that section said that " the rest of the Act shall come into force on such date as the Provincial Government may, by notification in the Gazette, appoint ".
The Provincial Government of Orissa notified August 1, 1947, as the date on which the rest of the Act was to come into force in the province of Orissa.
It is neces sary at this stage to refer to the charging section, namely section 4 of the Act, which is set out below as it stood at the relevant time: " 4.
(1) Subject to the provisions of sections 5, 6, 7 532 and 8 and with effect from such date as the Provincial Government may, by notification in the Gazette, appoint, being not earlier than thirty days after the date of the said notification, every dealer whose gross turnover during the year immediately preceding the commencement of this Act exceeded Rs. 5,000 shall be liable to pay tax under the Act on sales effected after the date so notified.
(2) Every dealer to whom subsection (1) does not apply shall be liable to pay tax under this Act with effect from the commencement of the year immediately following that during which his gross turnover first exceeded Rs. 5,000.
(3)Every dealer who has become liable to pay tax under this Act shall continue to be so liable until the expire of three consecutive years, during each of which his gross turnover has failed to exceed Rs. 5,000 and such further period after the date of such expiry as may be prescribed and on the expiry of this latter period his liability to pay tax shall cease.
(4)Every dealer whose liability to pay tax has ceased under the provision of sub section (3) shall again be liable to pay tax under this Act with effect from the commencement of the year immediately following that during which his gross turnover again exceeds Rs. 5,000.
" It is to be noticed that for a liability to arise under sub section (1) of section 4, a notification by the Provincial Government is necessary, and the notification must fix the date from which every dealer whose gross turnover during the year immediately preceding the commencement of the Act exceeded Rs. 5,000 shall be liable to pay tax under the Act on sales effected after the date so notified.
Such a notification was issued for the old province of Orissa on August 30, 1947, and September 30,1947, was fixed as the date with effect from which every dealer whose gross turnover during the year ending March 31, 1947, exceeded Rs. 5,000 was made liable to pay tax under the Act on sales effected after the said date.
This was the position in the old province of Orissa.
We have already stated that the 533 ex Feudatory State of Pallahara was merged into the old province of Orissa by a merger agreement dated January 1, 1948.
After the merger of Pallahara in the old province of Orissa, the Government of Orissa under the delegated authority of the Central Government and exercising the powers under section 4 of the Extra Provincial Jurisdiction Act, 1947 (XLVII of 1947) (as it was then called) applied the Act to the former Orissa States including Pallahara by a notification dated December 14, 1948.
The only modification made in applying the Act to the Orissa States was to substitute the words " Orissa States "for the words " Province of Orissa ", wherever they occurred in the Act.
, By merely applying the Act to the Orissa States on December 14, 1948, all sections of the Act did not come into force in that area at once, since a notification under sub section
(3) of section 1 was necessary to bring into force sections 2 to 29.
Such a notification was issued on March 1, 1949.
The notification was in these terms: " In exercise of the powers conferred by sub section (3) of section 1 of the Orissa Sales Tax Act, 1947 (Orissa Act XIV of 1947), as applied to Orissa States, the Government of Orissa are pleased to appoint the 1st day of March, 1949, as the date on which sections 2 to 29 of the said Act shall come into force The position therefore was this.
Section 1 of the Act came into force in Pallahara on December 14, 1948, and the remaining sections came into force on March 1, 1949, namely, those sections which dealt with the liability of a dealer to pay sales tax, set tip a machinery for collection of the tax and dealt with other ancillary matters.
A notification under sub section
(1) of section 4 was also necessary for a liability to arise under that sub section in the said area, and such a notification was issued on March 1, 1949.
That notification must be quoted in full, as one of the points for our decision is the validity of the notification.
The notification read: " In exercise of the powers conferred by sub section (1) of section 4 of the Orissa Sales Tax.
Act, 1947 (Orissa Act XIV of 1947), as applied to Orissa States, the Government of Orissa are pleased to 68 534 appoint the 31st March, 1949, as the date with effect from which every dealer whose gross turnover during the year ending the 31st March, 1949, exceeded Rs. 5,000 shall be liable to pay tax under the said Act on sales effected after the said date ".
Two other provisions of the Act must be referred to here.
The word "dealer" is defined in section 2(c) in these terms : " 'dealer ' means any person who carries on the business of selling or supplying goods in Orissa, whether for commission, remuneration or otherwise and includes any firm or a Hindu joint family, and any society, club or association which sells or supplies goods to its members; ".
The word " year " is defined ins.
2(j) and means the financial year.
Now, with regard to the pre Constitution period the High Court has found that the notification under subs.
(1) of section 4 dated March 1, 1949, was an invalid notification and therefore the respondent was not liable to tax under that subsection in respect of the transactions which took place in the pre Constitution period.
The reason why the High Court has held that the notification in question was invalid must now be stated.
The scheme of sub section
(1) of section 4 is, firstly, to fix a date, not earlier than thirty days after the date of the notification, from which the liability is to commence; and, secondly, to impose a liability on, every dealer whose gross turnover during the year immediately preceding the commencement of the Act exceeded Rs. 5,000.
The tax liability is on transactions of sale which take place after the notified date (which must necessarily be after the commencement of the Act); but in determining on which class of dealers, the incidence of taxation will fall, the crucial period as mentioned in the sub section itself is the year immediately preceding the commencement of the Act.
Therefore, the subsection contemplates two.
matters, one of which may be called the 'relevant date ', and the other 'relevant period '.
So far as the old province of Orissa was concerned, there was no difficulty.
The notification fixed September 30, 1947, as the relevant date, and the year immediately preceding 535 the commencement of the Act in the old province of Orissa was the relevant period, viz., the financial year 1946 47, i. e., April 1, 1946 to March 31, 1947.
Therefore dealers whose gross turnover exceeded Rs. 5,000 in 1946 47, became liable under sub section
(1) of section 4 to tax on transactions of sale after September 30, 1947, in the old province of Orissa.
The notification for the Orissa States, however, fixed March 31, 1949, as the relevant date ; but in determining the class of dealers who would be subject to the liability, it took the year ending March 31, 1949, as the relevant period.
This was clearly a mistake, because under sub section
(1) of section 4 the crucial year is the year immediately preceding the commencement of the Act.
The Act commenced in the Orissa States either on December 14, 1948, or on March 1, 1949, and the financial year immediately preceding was the year 1947 48, i. e., April 1, 1947 to March 31, 1948.
The notification would have been in consonance with the subsection, if it had mentioned the year ending March 31, 1948, (instead of March 31, 1949) as the crucial year for determining the class of dealers who would be subject to the liability under sub section
(1) of section 4.
This mistake in the notification is the ground on which the High Court held that the assessments for the two quarters of the pre Constitution period were invalid and without jurisdiction.
The learned Solicitor General who has appeared for the appellants has conceded that a mistake was made in the notification.
However, lie has argued firstly, that the mistake was immaterial and secondly, that the assessment orders for the pre Constitution period were justified under sub section
(2) of s: 4.
As to the first argument that the mistake was immaterial, he has submitted that the liability to tax arose tinder the sub section and not under the notification, and any mistake in the notification did not affect such liability; lie has also submitted that the words and figures which gave rise to the mistake were mere surplusage and could be severed from the rest of the notification.
We are unable to accept this argument.
For a liability to arise under sub section (1) of section 47 the issue of a; 536 notification is an essential prerequisite, and unless the notification complies with the requirements of the subsection, no liability to tax can arise under it.
The notification not only fixed the relevant date, but fixed the relevant period for determining the class of dealers who would be subject to the liability.
In doing so, it made a mistake, the result of which was that the notification was not in conformity with the law.
We do not think that it can be severed in the way suggested by the learned Solicitor General.
Now, we come to the second argument whether the pre Constitution assessment orders are justified under sub section
(2) of section 4.
The High Court held that they were not, and gave two reasons for its view: one was that, subsections (1) and (2) were mutually exclusive and the other was based on the opening words of sub section
(2), which says that " every dealer to whom sub section (1) does not apply etc.
" The High Court expressed the view that if the notification under sub section (1) were correctly drawn up, the subsection would have applied to the respondent ; therefore, the opening words of sub section
(2) barred the application of the sub section to the respondent.
At first sight, there appears to be some force in this view.
But on a closer examination we do not think that the view expressed by the High Court is correct.
Sub sections (1) and (2) are mutually, exclusive only in the sense that they do not operate in the same field ; that is, the relevant periods for their application are different.
The relevant period for the application of sub section
(1) is " the year immediately preceding the commencement of the Act.
" Sub section (2) however does not require any notification, and under it every dealer is liable to pay tax under the Act with effect from the commencement of the year immediately following that during which his gross turnover first exceeded Rs. 5,000.
Obviously, the relevant period for the application of sub section
(2) is the year immediately following that during which the gross turnover of a dealer first exceeded Rs. 5,000.
The contrast between the two subsections is this: for sub section
(1) the crucial year is the year immediately preceding the commencement of 537 the, Act; but for sub section
(2) the crucial, year is the year in which the dealer 's gross turnover first exceeded Rs. 5,000.
We agree that for the same relevant year both sub sections (1) and (2) cannot apply, because sub section
(2) says " Every dealer to whom subs.
(1) does not apply etc." Let us, for example, take the year 1946 47 in the old province of Orissa.
That was the year immediately preceding the commencement of the Act in that area, and sub section
(1) applied to all dealers whose gross turnover exceeded Rs. 5,000, first or otherwise, in that year; sub section
(2) did not apply to such dealers even if their gross turnover exceeded Rs. 5,000 for the first time, in that year; because where sub section
(1) applies, sub section
(2) does not apply.
But what is the case before us? The year immediately preceding the commencement of the Act in the Pallahara area was 1947 48, and sub section
(1) would have applied to the respondent if the notification had mentioned that year.
But it did not, and the result was that it was not necessary to find if the respondent 's gross turnover exceeded Rs. 5,000 in 1947 48.
What was found was that the respondent 's gross turnover exceeded Rs. 5,000 in 1948 49, that is, the year ending March 31,, 1949, which was not the year immediately preceding the commencement of the Act in the Pallahara area.
Obviously, therefore, sub section
(1) did not apply to the respondent; but he clearly came under sub section
The Act came into force in the Orissa States on March 1, 1949.
By March 31, 1949, the respondent 's gross turnover exceeded Rs. 5,000.
He was, therefore, liable to pay tax under sub section (2 ) with effect from the commencement of the year immediately following March 31, 1949, that is, from April 1, 1949.
It has been argued for the respondent that the word `first ' in sub section
(2) means ` first ' after the commencement of the Act.
Assuming this to be correct, the respondent still comes under sub section
(2) because even if the Act came into force on March 1, 1949, the respondent 's gross turnover first exceeded Rs. 5,000 in the year ending March 31, 1949 which was after the commencement of the Act.
538 We are, therefore, of the view that all the requirements of sub section
(2) are fulfilled in this case, and the two assessment orders made against the respondent for the pre Constitution period were validly made under sub section
(2) of section 4 of the Act.
The effect of the invalid notification under sub section
(1) was that there was no liability thereunder, and no dealers were liable to pay tax under that sub section.
But that did not mean that any dealer who properly came under sub section
(2) was free to escape his liability to pay tax.
Surely, the position cannot be worse than what it would have been if the Provincial Government had failed to issue a, notification under sub section
We now turn to the post Constitution period.
The short ground on which the High Court held the assessment orders for this period to be invalid was based on the decision of this Court in The State of Bombay vs The United Motors (India) Ltd. (1) Said the High Court: " Clause (1) of Article 286 prohibited a State from taxing a sale unless such sale took place within the State as explained in the Explanation to the clause of the Article.
Similarly, clause (2) of that Article restricted the power of a State to tax a sale which took place in the course of inter State trade or commerce '.
Doubtless, by virtue of the proviso to that clause an Order by the President may save taxation on such inter State sales till the 31st March, 1951.
The recent S.C. p. 252 hap, settled the law regarding the true scope of these two clauses of the Article.
Where a transaction of sale involves inter State elements if the goods are delivered for consumption in a particular State that State alone can tax the sale by virtue of clause (1) of that Article and by a legal fiction that sale becomes `intra State sale '.
Clause (2) of Article 286 applies to those transactions of sale involving inter State elements which do not come within the scope of clause (1) of that Article.
On the admitted facts of the present case, clause (1) of Article 286 would apply.
The sales involve inter State elements inasmuch as the buyers are outside Orissa, price is paid outside Orissa and (1) ; 539 goods are delivered for consumption outside Orissa.
Hence, by virtue of clause (1) of Article 286 as explained by their Lordships of the Supreme Court, the State of Orissa is not competent to tax such transactions of sale.
" The learned Solicitor General has rightly pointed out that in a later decision of this Court in The Bengal Immunity Company Limited vs The State of Bihar and Others (1), which was, not available to the High Court when it delivered its judgment, the view expressed in the United Motors, case (2) was departed from in so far as the earlier decision held that cl.
(2) of article 286 of the Constitution did not affect the power of the State in which delivery of goods was made to tax inter State sales or purchases of the kind mentioned in the Explanation to cl.
(1) and the effect of the Expla nation was that such transactions were saved from the ban imposed by article 286 (2).
The learned Solicitor General, therefore, contends that on the basis of the later decision, the assessments made should be held to be valid under the Sales Tax Continuance Order 1950, made by the President, even though the sales took place in course of inter State trade or commerce.
It is necessary to state here that by the Adaptation of Laws (Third Amendment) Order, 1951, made by the President in exercise of the power given by cl.
(2) of article 372 of the Constitution, section 30 was inserted in the Act to bring it into accord with the Constitution, from January 26, 1950.
Section 30 which in substance reproduced article 286 of the Constitution, as it then stood, was in these terms " 30.
(1) Notwithstanding anything contained in this Act (a) a tax on sale or purchase of goods shall not be imposed under this Act, (i) where such sale or purchase takes place outside the State of Orissa; 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 (1) (2) ; 540 shall not, after the 31st day of March, 1951, be imposed where such sale or purchase takes place in the course of inter State trade or commerce except in so far as Parliament may by law otherwise provide.
(2) The explanation to clause (1) of Article 286 of the Constitution shall apply for the interpretation of sub clause (i) of clause (a) of sub section (1).
We are of the view that the Bengal Immunity decision (1) does not really help the learned Solicitor General to establish his contention that the assessments for the post Constitution period were valid.
The admitted position was that the goods sold were delivered for consumption at various places outside the State of Orissa.
Therefore, under cl.
(1) (a) of article 286 read with the Explanation as also under section 30 of the Act, the sales were outside Orissa.
It is true that the Bengal Immunity decision (1) took a view different from that of the earlier decision in so far as it held that inter State sales were converted into intra State sales by the Ex planation; but it was pointed out that the States ' power with respect to a sale or purchase might be hit by one or more of the bans imposed by article 286.
With reference to the different clauses of article 286, it was observed in the majority judgment of the Bengal Immunity decision(1): " These several bans may overlap in some cases but in their respective scope and operation they are separate and independent.
They deal with different phases of a sale or purchase but, nevertheless, they are distinct and one has nothing to do with and is not dependent on the other or others.
The States ' legislative power with respect to a sale or purchase may be, hit by one or more of these bans.
Thus, take the case of a sale of goods declared by Parliament as essential by a smaller in West Bengal to a purchaser in Bihar in which goods are actually delivered as a direct result of such sale for consumption in the State of Bihar.
A law made by West Bengal without the assent of the President taxing this sale will be unconstitutional because (1) it will offend Article 286 (1) (a) as the gale has taken place outside the territory by virtue of the (1) 541 Explanation to clause (1) (a), (2) it will also offend Article 286 (2) as the sale has taken place in the course of inter State trade or commerce and (3)such law will also be contrary to Article 286 (3) as the goods are essential commodities and the President 's assent to the law was not obtained as required by clause (3) of Article 286.
This appears to us to be the general scheme of that article.
" (see pp.
638 639 of the report).
At p. 647 of the report, it was further observed " The operative provisions of the several parts of Article 286, namely, clause (1) (a), clause (1) (b), clause (2) and clause (3) are manifestly intended to deal with different topics and, therefore, one cannot be projected or read into another.
On a careful and anxious consideration of the matter in the light of the fresh arguments advanced and discussions held oil the present occasion we are definitely of the opinion that the Explanation in clause (1) (a) cannot be legitimately extended to clause (2) either as an exception or as a proviso thereto or read as curtailing or limiting the ambit of clause (2).
" As to the President 's order, it was stated at p. 656: " It will be noticed that under that proviso the President 's order was to take effect " notwithstanding that the imposition of such tax is contrary to the provisions of this clause ".
This non obstante clause does not, in terms, supersede clause (1) at all and, therefore, prima facie, the President 's order was subject to the prohibition of clause (1) (a) read with the Explanation.
" Obviously, therefore, even on the Bengal Immunity decision.
(1) the assessments for the post Constitution period in this case were hit by cl.
(1) (a) of article 286 as also section 30 (1) (a) (i) of the Act and were rightly held to be without jurisdiction.
The result, therefore, is that in our view this appeal should succeed in part, as we hold that the assessments for the two quarters of the pre Constitution period were valid under sub section
(2) of section 4 of the Act and the (1) 69 542 assessments for the post Constitution period were invalid.
In view of the divided success of the parties we further think that they should bear their own costs in the High Court and in this Court.
SARKAR J.
The respondents are a firm of merchants carrying on business in a part of the State of Orissa which was formerly the feudatory State of Pallahara.
This State of Pallahara had merged in the Province of Orissa under an agreement with the Government of India, dated January 1, 1948.
On December 14, 1948, the Government of Orissa under the powers conferred by section 4 of the Extra Provincial Jurisdiction Act, 1947, and with the permission of the Government of India, issued a Notification applying the Orissa Sales Tax Act, 1947 (Orissa XIV of 1947), passed by the Legislature of Orissa, to the areas which previously constituted the feudatory States including Pallahara, then merged in Orissa.
The respondents were assessed to sales tax under this Act in respect of their sales which took place during five quarters between July 1, 1949 and December 31, 1950.
They had appealed under the provisions of the Act to higher authorities from the original orders of assessment, but were unsuccessful.
They then applied to the High Court of Orissa on November 11.
1952, for an appro priate writ directing the Sales Tax Officer the assessing authority and one of the appellants herein, to refrain from realizing the tax or from giving effect to the assessment orders in any manner whatsoever and quashing such orders and also prohibiting future assessment.
By its judgment delivered on April 12, 1955, the High Court allowed the petition and cancelled the assessment orders.
From that judgment the present appeal has come to this Court.
The question that I propose to discuss in this judgment is whether the respondents are liable to pay tax under the provisions of the Act in the circumstances which existed in this case and to which, I shall refer a little later.
The sections of the Act under which the tax is sought to be levied are set out below: S.1.
(1) This Act may be called the Orissa Sales Tax Act, 1947.
543 (2) It extends to the whole of the Province of Orissa.
(3)This section shall come into force at once and the rest of this Act shall come into force on such date as the Provincial Government may, by notification in the Gazette, appoint.
In this Act, unless there is anything repugnant in the subject or context, (j) " year " means the financial year.
section 4.
(1) Subject to the provisions of sections 5, 6, 7 and 8 and with effect from such date as the Provincial Government may, by notification in the Gazette, appoint, being not earlier than thirty days after the date of the said notification, every dealer whose gross turnover during the year immediately preceding the commencement of this Act exceeded Rs. 5,000 shall be liable to pay tax under the Act on sales effected after the date so notified: Provided that the tax shall not be payable on sale involved in the execution of a contract which is shown to the satisfaction of the Collector to have been entered into by the dealer concerned on or before the date so notified.
(2)Every dealer to whom sub section (1) does not apply shall be liable to pay tax under this Act with effect from the commencement of the year immediately following that during which his gross turnover first exceeded Rs. 5,000.
(3)Every dealer who has become liable to pay tax under this Act shall continue to be so liable until the expiry of three consecutive years, during each of which his gross turnover has failed to exceed Rs. 5,000 and such further period after the date of such expiry as may be prescribed and on the expiry of this latter period his liability to pay tax shall cease.
(4)Every dealer whose liability to pay tax has ceased under the provisions of sub section (3) shall again be liable to pay tax under this Act with effect from the commencement of the year immediately following that during which his gross turnover again exceeds Rs. 5,000.
544 It is conceded that the respondents are dealers within the meaning of the Act.
The term " turnover " is defined in the Act but for the purpose of this judgment it can be taken in its popular sense.
It is also unnecessary to consider sections 5, 6, 7 and 8 of the Act, for nothing turns on them in this appeal.
Section I of the Act came into force in the Pallahara area on December 14, 1948, by virtue of the notification of that date mentioned earlier.
Oil March 1, 1949, the Government of Orissa issued under section 1 (3) of the Act a notification, being Notification No. 2267/F appointing that date as the date on which the, rest of the Act would come into force in the Pallahara area.
It is not in dispute that March 1, 1949, has to be considered as the date of the commencement of the Act in the Pallahara area.
That is the result of the definition of the commencement of an Act given in section 2 (8) of the Orissa General Clauses Act, 1937.
As will have been noticed section 4 (1) of the Act required a date to be appointed before liability under it could arise.
Such a date had been appointed by the Government of Orissa before the Act was applied to the areas previously belonging to the feudatory States and the Government felt that this appointment of a date would not be an appointment for these areas.
The case before us has proceeded oil the basis that appointment was not a proper appointment under this section for these areas.
In fact, the Government of Orissa had oil March 1, 1949, issued a Notification No. 2269/F, purporting to appoint a date under section 4 (1) for the areas previously covered by the feudatory States including the Pallahara State, then merged in Orissa.
That Notification is in these terms: In exercise of the powers conferred by sub section (1) of Section 4 of the Orissa ,Sales Tax Act, 1947 (Orissa Act XIV of 1947), as applied to Orissa States, the Government of Orissa are pleased to appoint the.
31st March, 1949, as the date with effect from which every dealer whose gross turnover during the year ending the 31st March, 1949, exceeded Rs. 5,000 shall be liable to pay tax under the said Act on sales effected after the said date.
601 might have retired from the contest on a re appraisement of his prospects at the election as compared with those of the deceased contesting candidate.
When death removed that contesting candidate from the field, a person who had given notice of retirement from the contest as aforesaid may as well re consider his position and feel that as compared with the other surviving candidates he would have fair prospects of success at the election and if an election is held after the countermanding of the poll by the returning officer, he might just as well put forward his candidature and it is provided that in that event he shall not be ineligible for being nominated as a candidate for election after such countermanding ; and there is perfectly good reason for the same, because otherwise, withdrawal or retirement might possibly be considered a disqualification or refusal to seek election.
This brings us to the provisions as to retirement front contest under section 55A.
A candidate might not have withdrawn his candidature within the period prescribed and his name might have been included in the list of contesting candidates published by the returning officer under section 38.
Being thus a contesting candidate duly declared as such he would be entitled to go to the poll.
He may, however, as a result of the election campaign find himself in the predicament that his prospects at the election are meagre and he might even have to face the situation of having to forfeit his security deposit if he went to the poll.
There may be a number of motives operating in his mind which it is not necessary to discuss and be may just as well withdraw his candidature and retire from the field.
A locus poenitentiae is therefore given to him under section 55A to retire from the contest by giving notice in the prescribed form which has to be delivered to the returning officer on any day not later than 10 days prior to the date fixed for the poll.
If a candidate thus retires from the contest, he decides not to go to the poll and the provision is made in the rules for the correction of the list of contesting candidates so that no elector shall in the absence of necessary information waste his vote upon him.
A 602 copy of such notice is to be affixed by the returning officer to his notice board and in the polling station "and each of the remaining, contesting candidates or his agent is to be supplied with such copy and the notice has also got to be published in the official gazette.
Such retirement from contest might result in the number of remaining contesting candidates becoming equal to the number of seats to be filled and section 55A (6) and (7) work out the situation as it would then obtain with reference to sections 53 and 54 and provide that in that event the returning officer is to forth with declare such candidates to be duly elected to fill those seats and countermand the poll a fresh election being necessary only in the event of filling the remaining seat or seats, if ' any.
If, however, a poll has to be taken under section 53(1) in spite of the retirement of a contesting candidate or candidates from contest is aforesaid the process of election continues in spite of such retirement and the question any arise as to what would happen if any of the contesting candidates who has thus retired dies before the commencement of the poll.
If there was nothing more, section 52 would apply and the returning officer upon being satisfied of the fact of the death of the candidate Would have to countermand the poll and report the fact to the Election.
Commission and also to the appropriate authority.
Provision is therefore made in section 55A (5) that any person who has given a notice of retirement under section 55A (2) is deemed not to be a contesting candidate for the purposes of section 52.
This is a deeming provision and creates a legal fiction.
The effect of such a legal fiction however is that a position which otherwise would not obtain is deemed to obtain under those circumstances.
Unless a contesting, candidate who had thus retired from the contest continued to be a contesting candidate for the purposes of election and the effect of the death of such contesting (Candidate was " contemplated in section 52, it would not have been found necessary to enact section 55A (5).
It is because such a contesting, candidate who retires from the 603 contest under section 55A (2) continues to be a. contesting candidate for the purposes of election that it has been considered necessary to provide for the consequence of his death and to exclude such a candidate from the category of contesting candidates within the meaning of the term as used in section 38 of ' the Act, that is to say, candidates who were included in the list of validly nominated candidates and who had not with drawn their candidature within the period prescribed and who had been included in the list of ' candidates prepared and published by the returning, officer in the manner prescribed.
This provision, therefore warrants the conclusion that a contesting candidate whose name was included in the list under section 38 but who retires from the contest under section 55A (2) continues to be a contesting candidate for the purpose of the Act though by reason of such retirement it would be unnecessary for the constituency to cast its votes in his favour at the poll.
Such candidate continues to be contesting candidate for the purposes of the Act, notwithstanding his retirement from the contest under section 55A (2).
When we come to the provisions of Part VI of the Act relating to disputes regarding election, we find that there is no definition given in section 79 of the expression " contesting candidate ", though there are definitions of " candidate " and " returned candidate " to be found therein.
An election petition calling in question any election can be presented by any candidate at such election or any elector on one, or more of the grounds specified in sections 100 (1) and 101 to the Election Commission and a petitioner in addition to calling in question the election of the returned candidate, or candidates may further claim a declaration that he himself or any other candidate has been duly elected.
Where the petitioner claims such further declaration, he must join as respondents to his petition all the contesting candidates other than the petitioner and also any other candidate against whom allegations of any corrupt practices are made in the petition.
The words " other than the petitioner " are meant to exclude the petitioner when he happens to be one of 604 the contesting candidates who has been defeated at the polls and would not apply where the petition is filed for instance by an elector.
An elector filing such a petition would have to join all the contesting candidates whose names were included in the list of contesting candidates prepared and published by the returning officer in the manner prescribed under section 38, that is to say, candidates who were included in the list of validly nominated candidates and who had not withdrawn their candidature within the period prescribed.
Such contesting candidates will have to be joined as respondents to such petition irrespective of the fact that one or more of them had retired from the contest tinder section 55A (2).
If the provisions of section 82 which prescribes who shall be joined as respondents to the petition are not complied with, the Election Commission is enjoined under section 85 of the Act to dismiss the petition and similar are the consequences of noncompliance with the provisions of section 117 relating to deposit of security of costs.
If the Election Commission however does not do so and accepts the petition, it has to cause a copy of the petition to be published in the official gazette and a copy thereof to be served by post on each of the respondents and then refer the petition to an election tribunal for trial.
Section 90 (3) similarly enjoins the Election Tribunal to dismiss an election petition which does not comply with the provisions of section 82 or section 117 notwithstanding that it has not been dismissed by the Election Commission under section 85.
Section 90 (3) is mandatory and the Election Tribunal is bound to dismiss such a petition if an application is made before it for the purpose.
Turning now to section 117, we find that it is a provision relating to the deposit of security for the costs of the petition.
When a petitioner presents an election petition to the Election Commission under section 81 he is to enclose with the petition a Government Treasury receipt showing that a deposit of one thousand rupees has been made by him either in a Government Treasury or in the Reserve Bank of India in favour of the Secretary to the Election Commission as security 605 for the costs of the petition.
The Government Treasury receipt must show that such deposit has been actually made by him either in a Government Treasury or in the Reserve Bank of India; it must also show that it has been so made in favour of the Secretary to the Election Commission and it must further show that it has been made as security for the costs of the petition.
These are the three requirements of the section which have to be fulfilled.
The question, however, arises whether the words " in favour of the Secretary to the Election Commission " are mandatory in character so that if the deposit has not been made in favour of the Secretary to the Election Commission as therein specified the deposit even though made in a Government Treasury or in the Reserve Bank of India and as security for the costs of the petition would be invalid and of no avail.
If, for instance, the petitioner made the deposit either in a Government Treasury or in the Reserve Bank of India in favour of the Election Commission itself and obtained a Government Treasury receipt in regard to the same, could it be contended that in spite of such a deposit having been made, the said Government Treasury receipt was not in conformity with the requirements of section 117 and the petitioner could be said not to have complied with the requirements of that section so as to involve a dismissal of his petition under section 85 or section 90 (3) ? The extreme case illustrated above has been taken by us only in order to demonstrate to what lengths a literal compliance with the provisions of section 117 can be pushed.
The petition is to be presented to the Election Commission, the security for the costs of the petition has to be given to the Election Commission and section 121 provides for an application to be made in writing to the Election Commission for payment of costs by the person in whose favour the costs have been awarded and yet, even though the deposit may have been made by a petitioner in favour of the Election Commission and a Government Treasury receipt evidencing the same be enclosed along with his 77 606 petition the provisions of section 117 of the Act can be said not to have been complied with merely because the deposit was made in favour of the Election Commission and not in favour of the Secretary to the Election Commission.
The relationship between the Election Commission on the one hand and the Secretary to the Election Commission on the other need not be scrutinized for the purposes of negativing this contention.
It is enough to say that such a contention has only got to be stated in order to be negatived.
It would be absurd to imagine that a deposit made either in a Government Treasury or in the Reserve Bank of India in favour of the Election Commission itself would not be sufficient compliance with the provisions of section 117 and would involve a dismissal of the petition under section 85 or section 90 (3).
The above illustration is sufficient to demonstrate that the words " in favour of the Secretary to the Election Commission " used in section 117 are directory and not mandatory in their character.
What is of the essence of the provision contained in section 11.7 is that the petitioner should furnish security for the costs of the petition, and should enclose along with the petition a (Government Treasury receipt showing that a deposit of one thousand rupees has been made by him either in a Government Treasury or in the Reserve Bank of India, is at the disposal of the Election Commission to be utilised by it in the manner authorised by law and is under its control and payable on a proper application being made in that behalf to the Election Commission or to any person duly authorised by it to receive the same, be he the Secretary to the Election commission or any one else.
If, therefore it can be shown by evidence led before the Election Tribunal that the government Treasury receipt or the chalan which was obtained by the petitioner and enclosed by him along with his petition presented to the Election Commission was such that the Election Commission could on a necessary application in that behalf be in a position to realise the said sum of rupees one thousand for payment of the costs to the successful party it would be sufficient compliance 607 with the requirements of section 117.
No such literal compliance with the terms of section 117 is at, all necessary as is contended for on behalf of the appellant before us.
As regards the amendment of a petition by deleting the averments and the prayer regarding the declaration that either the petitioner or an other candidate has been.
duly elected, so as to cure lie defect of nonjoinder of the necessary parties as respondents, we may only refer to our judgment * about Io be delivered in Civil Appeal No. 76 of 1958, where the question is discussed at considerable length.
Suffice it to say here that the Election Tribunal has no power to grant such an amendment, be it by way of withdrawal or abandonment of a part of the claim or otherwise, once, an Election Petition has been presented to the Election (commission claiming such further declaration.
Considering Civil Appeal No. 763 of 1957 in the light of the observations made above, we find that sundararaja Pillai whose name was included in the list of contesting candidates prepared and published by the returning officer under section 38 but who retired from the contest under section 55A (2) before the commencement of the poll was included in the expression " contesting candidate " used in section 82 and was by reason of the first respondent claiming a further declaration that the second respondent had been duly elected, a necessary party to the petition.
Inasmuch as he was not joined as a respondent, the petition was liable to be dismissed under section 90(3) of the Act.
This defect could not be cured by any amendment of the petition seeking to delete the claim for such further declaration and the Election Tribunal was clearly in error in allowing such amendment on the grounds disclosed in 1.
A. No. 3 of 1957 or otherwise.
In regard to the deposit of security, however, the position was quite different.
According to the evidence given by K. Nataraja Mudaliar, head accountant in.
charge of the Madurai Taluk sub Treasury, the amount was kept in the Election Revenue deposit and the monies were at the disposal of the Election Commission ; also that the Election Commission or anyone * Basappa vs Ayyappa, see p. 6ii, post. 608 authorised by the Election Commission in that behalf could draw the said monies and no one else could withdraw the same without such authority.
If that was so, there was sufficient compliance with the requirements of section 117 and there could be no question of dismissing the petition for noncompliance with the provisions of that section.
Having regard therefore to the conclusion reached above in regard to the non compliance with the provisions of section 82, Civil Appeal No. 763 of 1957 will be allowed, the orders of dismissal made by the High Court on the writ petitions Nos. 531 of 1957 and 532 of 1957 will be set aside, the orders passed by the Election Tribunal dated July 5, 1957, will be vacated and the Election Petition No. 147 of 1957 will be dismissed with costs.
As the appellant has failed in his contention in regard to the provisions of section 117, we feel that the proper order for costs should be that each party do bear and pay his own costs here as well as in the High Court.
Civil Appeal No. 764 of 1957 also shares a similar fate.
The first respondent therein did not join as party respondents to his petition the two candidates whose names had been included by the returning officer in the list of contesting candidates but who had subsequently retired from the contest before the commencement of the poll.
They were necessary parties to the petition in so far as the first respondent had claimed a further declaration that he himself be declared duly elected under section 101.
The Election Petition No. 74 of 1957 filed by him, was thus liable to be dismissed for non joinder of necessary parties under section 90(3) of the Act.
This appeal will also be accordingly allowed, the orders passed by the High Court in Writ Petitions Nos. 573 and 574 of 1957 will be set aside, the orders passed by the Election Tribunal on July 13,1957, will be vacated and Election Petition No. 74 of 1957 will be, dismissed.
The first respondent will pay the appellants costs throughout.
So far as Civil Appeal No. 48 of 1958 is concerned, the difficulty which faces the appellant is that we 609 have nothing on the record of the appeal to show what were the exact terms of the deposit made by the second respondent under section If 7.
The copy of the chalan which is cyclostyled at p. 45 of the record is deficient in material particulars and does not throw any light on the question.
The appellant no doubt made an application to the Election.
Tribunal to try his objection as regards the non compliance with the provision, , of that section as a preliminary objection and determine whether the second respondent had complied with the provisions of section 117 and if not to dismiss his petition.
The Election Tribunal, however, did not decide this preliminary objection but ordered that the trial of the petition (lo proceed.
The High Court before whom the Writ Petition M. J. No. 480 of 1957 was filed also came to the same conclusion as it thought that the matter could be decided at the time of hearing itself and dismissed the application.
We are of opinion that both the Election Tribunal and the High Court were wrong in the view they took.
If the preliminary objection was not entertained and a decision reached thereupon, further proceedings taken in the Election Petition would mean a full fledged trial involving examination of a large number of witnesses on behalf of the and respondent in support of the numerous allegations of corrupt practices attributed by him to the appellant.
his agents or others working on his behalf; examination of a large member of witnesses by or on behalf of the appellant controverting the allegations made against him; examination of witnesses in support of ' the recrimination submitted by the appellant against the 2nd respondent; and a large number of visits by the appellant from distant places like Delhi and Bombay to Ranchi resulting in not only heavy expenses and loss of time and diversion of the appellant from his public duty in the various fields of ' activity including those in the House of the People.
It would mean unnecessary harassment and expenses for the appellant which could certainly be avoided if the preliminary objection urged by him was decided at the initial stage by the Election Tribunal, 610 We are therefore of the opinion that the orders passed by the High Court in M. J. C. No. 480 of 1957 and by the Election Tribunal in Election Petition No. 341 of 1957 were wrong and ought to be set aside.
The Election Tribunal will decide the preliminary objection in regard to the non compliance with the provisions of section 117 by the 2nd respondent in the light of the observations made above and deal with the same according to law.
The parties will be at liberty to lead such further evidence before the Election Tribunal as they may be advised.
The costs of both the parties, here, as well as in the courts below will be costs in the Election Petition to be dealt with by the Election Tribunal hereafter and will abide the result of its decision on the preliminary objection.
Appeal,s allowed.
Appeal No. 48 of 1958 remanded.
| This appeal by the Sales Tax authorities was directed against the judgment and order of the Orissa High Court, passed under article 226 of the Constitution, quashing five orders of assessment covering five quarters made against the respondents who carried on the business of collection and sale of Kendu leaves in the erstwhile Feudatory State of Pallaliara to which, on its merger into the province of Orissa on January 1, 1948, the provisions of the Orissa Sales Tax Act, 1947, were extended on March 1, 1949.
On the same date the Government of Orissa issued a notification under section 4(1) of the Act which was in the following terms: " In exercise of the powers conferred by sub section (1) of Section 4 Of the Orissa Sales Tax Act, 1947 (Orissa Act XIV of 1947), as applied to Orissa State, the Government of Orissa are pleased to appoint the 31st March, 1949, as the date with effect from which every dealer whose gross turnover during the year ending the 31st March, 1949, exceeded Rs. 5,000 shall be liable to pay 521 under the said Act on sales effected after the said date Section 4 Of the Act, inter alia, provided : " (1) . with effect from such date as the Provincial Government may by notification in the Gazette, appoint, being not earlier than 'thirty days after the date of the said notification, every dealer whose gross turnover during the year immediately preceding the commencement of this Act exceeded Rs. 5,000 shall be liable to pay tax under the Act on sales effected after the date so notified. (2) Every dealer to whom sub section (1) does not apply shall be liable to pay under this Act with effect from the commencement of the year immedi ately following that during which his gross turnover first exceeded Rs. 5,000 ".
The goods were admittedly delivered for consumption at various places outside the State and the Sales Tax Officer as well as the Assistant Collector in appeal, proceeding on the basis that the sales took place in the State, held that the respondents were liable to Sales Tax for all the five quarters, two of which fell before the commencement of the Constitution and three thereafter.
The contention of the respondents before the High Court was that the notification under section 4(1) Of the Act was invalid as it ran counter to the provisions of that sub section and no part of that charging section could, therefore, come into force.
It was further contended that the assessment for the three quarters following the commencement of the Constitution was invalid by reason or article 286 of the Constitution.
The High Court found entirely in favour of the assessee : Held (per Das C. J., Venkatarama Aiyar, section K. Das and Vivian Bose, jj.), that the decision of the High Court in so far as it related to the three post Constitution quarters was correct and must be upheld.
The orders of assessment for those quarters contravened both article 286 of the Constitution and section 30(r)(a)(1) of the Orissa Sales Tax Act and were without jurisdiction and must be set aside.
So far as the two pre Constitution quarters were concerned, the assessees were clearly liable under section 4(2) of the Act.
Per Das C. J. and Venkatarama Aiyar J.
The first part of the impugned notification, appointing the date from which the liability was to commence, was in consonance with section 4(1) Of the Act and, therefore, clearly intra vires, whereas the second part, indicating the class of dealers on whom the liability was to fall, went beyond that section and must, therefore, be held to be ultra vires and invalid.
But since the two parts were severable, the invalidity of the second part could in no way affect the validity of the first part which brought the charging section into operation and the assessees were liable for the two pre Constitution quarters under section 4(1) as well.
Per section K. Das and Vivian Bose JJ.
It would not be correct to say that the second part of the notification was a mere surplusage severable from the rest of the notification.
Liability to pay the 522 tax under section 4(1) of the Act could arise only on the issue of a valid notification in conformity with the provisions of that sub section and as there was no such notification the assessees were not liable under section 4(1) Of the Act which did not come into operation.
Subsections (1) and (2) Of section 4 are mutually exclusive, and their periods of application being different both could not apply at the same time and no notification was necessary to bring into operation sub section
(2) Of the Act.
The goods having been admittedly sold and delivered for consumption outside the State of Orissa, under article 286 (1)(a) read with the Explanation as also under section 30(1)(a)(1) of the Act, the sales were outside the State of Orissa and, consequently, the assessment for the three post Constitution quarters were without jurisdiction.
The State of Bombay vs The United Motors (India) Ltd., ; and The Bengal Immunity Company Limited vs The State of Bihar, , relied on.
Per Sarkar J.
There could be no liability under section 4(1) Of the Act till a date was appointed thereunder, and where the notification, as in the instant case, fixing such a date, was not in terms of that sub clause, there was no fixing of a date at all and the sub clause could not come into play and no liability could arise under it.
It was impossible to ignore the second part of the notification in question as a mere surplusage since the notification read as a whole had one meaning and another without it.
The Government could not be heard to say that what it had said in the notification was not what it actually meant.
Both the sub clauses Of section 4 having been brought into force at the same time by the same notification, they applied to all dealers together and contemplated a situation in which the liability of a dealer under sub cl.
(1) might arise.
It was apparent from the scheme of the Act that sub cl.
(2) was not intended to have any operation till a date was appointed under sub cl.
(1) and a liability under it might have arisen.
|
Summarize this legal judgement text concisely | Appeal No.130 of 1958.
Appeal by certificate granted by the Madras High Court against its judgment and order dated November 1, 1957, in W. P. Nos. 623 and 624 of 1957.
April 30.
May 1.
A. V. Viswanatha Sastri, T. R. Venkatarama Iyer, K. R. Sharma and K. R. Choudhri, for the appellant.
The petition is liable to be dismissed for non joinder of Muthu and Meganathan who were candidates as defined in section 79(b) of the Representation of the People Act, 1951.
The allegation is that Meganathan accepted a gift of Rs. 10,000 and in pursuance thereof withdrew his candidature, and also that Muthu accepted a gratification of Rs. 5,000 and in pursuance thereof, he retired from 869 the contest.
On the language of section 123(1) of the Act, such acceptance constitutes a corrupt practice '.
The words I by a candidate or his agent or by any other person ' in the section are to be read with the words offer or promise ' and not with gift '.
In view of the provisions of the Transfer of Property Act, a I gift ' is a bilateral Act and it includes both the giving of the gift and the acceptance of that gift.
Section 99 of the Act shows that a receipt of a bribe is a corrupt practice.
See sections 82 (b), 98 and 99 of the Representation of the People Act, 1951.
Under section 99 the Tribunal has to record a finding whether a corrupt practice has been committed with the consent of any candidate.
When a candidate accepts a gift with the object of inducing him to withdraw his candidature, he consents to the corrupt practice of bribery being committed and such a candidate is liable to be named under the section.
Alternatively, the term gratification in section 123 is very wide and includes the withdrawal of candidature by a candidate to induce another candidate to stand at an election.
Affording of such gratification amounts to a corrupt practice within section 123.
Section 82(b) talks of I allegations of any corrupt practice ' and it, therefore, contemplates any allegation relating to or concerning, a corrupt practice.
C. K. Daphtary, Solicitor General of India, A. N. Sinha and N. H. Hingorani for respondent No. 1.
A candidate who accepts a gift from a returned candidate does not commit corrupt practice ' within the meaning of section 123(1) and therefore is not necessary party to the election petition under section 82(b) of the Act.
The section defines the corrupt practice of bribery and the words I gift, offer or promise by a candidate or his agent or by any other person ' clearly contemplates the making of a gift.
Further, section 123(1) does not include the acceptance of a gift as a corrupt practice.
This is also apparent from consideration of section 124(3) of the Act which was deleted by the amending Act XXVII of 1956.
Section 124(3) made receipt of gratification by candidate or intending candidate a minor corrupt practice and section 123 (1) made bribery by a candidate or his agent, a major 870 corrupt practice.
The amending Act has done away with the classification of major and minor corrupt practices.
Some of the minor corrupt practices have been retained as corrupt practices and the rest dropped altogether.
The amending Act has dropped the provision making acceptance and agreement to accept a bribe, a corrupt practice with no material change in section 123(1) to bring within it these cases.
By omitting section 124(3) from the Act Parliament, therefore, intended that acceptance of a bribe was no longer to be treated as a corrupt practice.
Section 99 does not purport to define a corrupt practice mentioned in section 82(b) ; section 99 read in the light of definition section does not support the appellant.
May 20.
The Judgment of the Court was delivered by SARKAR J.
In the 1957 general elections, nine persons filed nomination papers for election to the Madras Legislative Assembly from the Sathankulam constituency all of which were found on scrutiny to be valid.
Among these persons were the appellant, the respondent Kandaswami and two others called M. R. Meganathan and G. E. Muthu.
Meganathan, Muthu and three others whom it is not necessary to name as they are not concerned with this appeal, did not go to the poll and dropped out of the election earlier.
At the end the election was actually contested by the appellant, the respondent Kandaswami and two other candidates with whom also this appeal is not concerned.
The appellant was successful at the poll and was on March 6,1957, declared elected.
On April 15, 1957, the respondent Kandaswami whom we will hereafter refer to as the respondent, preferred an election petition under the provisions of the Representation of the People Act, 1951, for a declaration that the election of the appellant was void.
The appellant was made the first respondent to the petition but Meganathan and Muthu were not made parties to it at all.
Some of the other candidates at the election were also made parties to the petition but 871 it is unnecessary for the purpose of this appeal to refer to them.
The petition was referred to an Election Tribunal for trial.
The appellant then made an application to the Election Tribunal which was marked I. A. No. 1 of 1957 for the dismissal of the petition under section 90(3) of the Act.
That section provides that, " The Tribunal shall dismiss an election petition which does not comply with the provisions of section 81, section 82 or section 117 ".
The appellant 's case was that the petition had not complied with the provisions of section 82.
Section 82 states: " A petitioner shall join as respondents to his petition (b) any other candidate against whom allegations of any corrupt practice are made in the petition.
" The appellant contended that allegations of corrupt practice were made in the petition against Meganathan and Muthu and they should, therefore, have been made parties to the petition under section 82 and as that had not been done, that section had not been complied with and so the petition had to be dismissed under section 90(3).
It is not in dispute that non compliance with the provisions of section 82 entails the dismissal of an election petition.
The respondent 's answer to the application was that no allegation of corrupt practice had been made in the petition against Meganathan or Muthu.
The Tribunal accepted the contention of the respondent and dismissed the application of the appellant.
The appellant then moved the High Court at Madras by two applications, one for the issue of a writ of certiorari quashing the, order of ' the Tribunal dismissing his application and the other for the issue of a writ of prohibition directing the Tribunal not to proceed with the hearing of the election petition.
The High Court by its judgment dated November 1, 1957, dismissed both the applications, taking the same view as the Tribunal.
Hence this appeal.
872 It is not in dispute that Meganath an and Muthu were candidates.
A candidate has been defined in section 79 of the Act as meaning among others, a person who has been duly nominated as a candidate at any election and both Meganthan and Muthu had been so nominated.
The only question that arises in this appeal is whether allegations of corrupt practice are made against them in the election petition.
The statements in the petition which are said to constitute such allegations are in these terms: " IV A.
The returned candidate has committed the following act,% of bribery corrupt practices according to section 123(1) of Act 43 of 1951 : (2) Sri M. R. Meganathan was candidate for Sattankulam and Tiruchandur Assembly Constituencies at the election.
The first respondent and his election Agent paid him a gift of Rs. 10,000 to induce him to withdraw from being a candidate at the election from Sattankulam Constituency and in pursuance thereof Sri M. R. Meganathan withdrew his candidature at the election from Sattankulam Constituency,. . . . . . . . (4) One Sri G. E. Muthu, candidate at the election in this Constituency was paid a gratification of Rs. 5,000 by the first respondent and his Election Agent for the purpose of making him retire from contest and in pursuance thereof he retired on the contest Putting it shortly, the allegations in the petition are that the appellant and his election agent paid Meganathan Rs. 10,000 and Muthu Rs. 5,000 to induce them to drop out of the election and they accordingly abandoned the election contest.
So all that is said here against Meganathan and Muthu and we are concerned only with allegations against them is that they accepted money paid to them to induce them 873 to abandon the contest and actually abandoned the contest.
Is an allegation then, that a candidate accepted money paid to him to induce him to drop out of the election test and actually so dropped out, an allegation of corrupt practice against such a candidate ? The High Court field that it was not and that only the giving of a bribe was a corrupt practice and not an acceptance of it.
We are in agreement with this view.
T he Act contemplates various kinds of corrupt practices and defines them in section 123.
We are concerned with the corrupt practice of bribery which is the corrupt practice alleged in the petition.
Bribery again is of several varieties.
We are concerned with a gift to a candidate for inducing him to abandon his candidature.
This form of the corrupt practice of bribery is thus defined in the Act: "Section 123 The following shall be deemed to be corrupt practices for the purposes of this Act: (1) Bribery, that is to say, any gift, offer or promise by a candidate or his agent or by any other person, of any gratification to any person whomsoever, with the object directly or indirectly of inducing (a) a person to stand or not to stand as, or to withdraw from being, a candidate, or to retire from contest, at an election; Explanation.
For the purposes of this clause the term " gratification " is not restricted to pecuniary gratifications or gratifications estimable in money and it includes all forms of entertainment and all forms of employment for reward; but it does not include the payment of any expenses bona fide incurred at, or for he purpose of, any election and duly entered in the account of election expenses referred to in section 78.
" is an acceptance of a bribe, by which word we mean a gift made with the intention specified, a corrupt practice within this definition ? We do not think it is.
What this definition makes the corrupt practice of bribery is a " gift, offer or promise by a candidate or his agent or by any other person, of any gratification" made with the object mentioned.
The words " gift, 874 offer or promise by a candidate or his agent or by any other person " clearly show that what is contemplated is the making of a gift.
These words are wholly inappropriate to describe the acceptance of a gift.
The words " with the object, directly or indirectly, of inducing" also indicate that only the making of a gift is contemplated, for the object is of the person making the gift, and clearly not of the person accepting it.
Mr. Sastri who appeared for the appellant contended that the words " by a candidate or his agent or by any other person " are not to be read with the word " gift " but only with the words " offer or promise ".
It seems to us that this is an impossible reading of the section as it is framed.
Even on this reading, the section would still contemplate a gift " to any person " and therefore only the giving and not an acceptance, of it.
That section 123(1) does not contemplate the acceptance of a gift to be a corrupt practice is also apparent from a consideration of section 124 of the Act which was deleted by an amendment made by Act XXVII of 1956.
Under el.
(3) of that section the receipt of or an agreement to receive a gift with substantially the same object as mentioned in section 123 was a corrupt practice.
As legislative provisions are not duplicated, such a receipt of or an agreement to receive a gratification was clearly not a corrupt practice within section 123(1) as it stood before the amendment.
The amending Act has dropped the provision making acceptance and an agreement to accept a bribe, a corrupt practice but has made no change in section 123(1) to bring within it these cases.
Section 123(1) cannot therefore be read as including within the definition of a bribe contained in it an acceptance of it.
By omitting section 124(3) from the Act therefore the legislature intended that acceptance of a bribe was no longer to be treated as a corrupt practice.
In view of this clear indication of intention, it would be idle to enquire why the legislature thought fit to exclude the acceptance of a bribe from the definition of corrupt practice.
If the omission is accidental, then it is for the legislature to take the necessary action in that behalf.
We cannot allow any 875 consideration of the reason for the omission to affect the plain meaning of the language used in section 123(1).
Mr. Sastri then contended that in view of the provisions of the Transfer of Property Act, there can be no gift without an acceptance of it by the donee, and therefore whenever a gift is mentioned both the giving and the acceptance of the thing given are necessarily simultaneously contemplated.
He said that, it followed from this that the corrupt practice of bribery by a gift mentioned in section 123(1) included the acceptance of the gift.
It is true that a gift contemplates both a giving and an acceptance; but these are none the less different acts and it is open to the legislature to attach certain consequences to one of them only.
It was therefore open to the legislature in enacting section 123(1) to provide that the making, that is to say, the giving of a gift alone should be a corrupt practice.
This is what it has done: it has not made the receipt of a gift a corrupt practice.
It has deliberately omitted the acceptance of a gift from corrupt practices described in the Act.
Though a gift cannot be mad(,, without an acceptance of it, such acceptance has not been made a corrupt practice.
Mr. Sastri also contended that section 99 of the Act showed that the receipt of a bribe was a corrupt practice.
Section 98 states that at the conclusion of the trial of an election petition the Tribunal shall make one or other of the orders therein mentioned.
Then comes section 99 which states that in certain circumstances besides these orders, certain other orders have also to be made by the Tribunal.
The material portion of this section is in these terms: " section 99 (1) At the time of making an order under section 98 the Tribunal shall also make an order (a) Where any charge is made in the petition of any corrupt practice having been committed at the election, recording (i) a finding whether any corrupt practice has or has not been proved to have been committed by, or with the consent of, any candidate or his agent at the election, and the nature of that corrupt practice; and 876 (ii) the names of all persons, if any, who have been proved at the trial to have been guilty of any corrupt practice and the ture of that practice;and.
Mr. Sastri contended that under this section the Tribunal has to record a finding whether a corrupt practice has been committed with the consent of any candidate.
He said that when a candidate accepts a gift made to him with the object of inducing him to withdraw his candidature, he consents to the corrupt practice of bribery being committed and such a candidate is liable to be named under the section.
He added that in order that such a candidate can be Bo named a charge of the corrupt practice has to be made against him in the election petition.
The result, therefore, according to Mr. Sastri, is that a candidate who consents to a bribe being paid to him to withdraw his candidature is guilty of a corrupt practice and therefore an allegation of such a corrupt practice can be made in the petition if it is intended to have him named under section 99 and once such an allegation is made in the petition, section 82(b) would be attracted and the candidate has to be made a party to the petition.
He says such allegations were made against Meganathan and Muthu.
This contention seems to us to be clearly fallacious.
Section 99 does not purport to define a corrupt practice.
The definition of corrupt practice occurs in section 123 and the corrupt practice mentioned in section 99 has to be a corrupt practice as so defined.
A corrupt practice committed with the consent of a candidate is not in itself a new kind of corrupt practice.
When section 99 talks of a corrupt practice having been committed with the consent of a candidate it means a corrupt practice as defined in section 123 having been committed and a candidate having consented to its commission.
The consent by a candidate to the commission of a corrupt practice by some one else whatever its con sequences under the Act may be, is not itself a corrupt practice.
Therefore, to say that a candidate consented to a corrupt practice being committed by accepting a gift made to him to induce him to withdraw his 877 candidature, is not to say that he himself committed a corrupt practice.
Such a statement in an election petition is not an allegation of corrupt practice against the consenting candidate.
Hence section 82(b) does not require that he should be made a party to the petition.
We wish to make it clear that we are not to be understood as holding that a candidate accepting a gift made to him to induce him to withdraw his candidature is one who consents to a corrupt practice being committed.
We do not think it necessary to say anything on that question in this case.
Mr. Sastri then said that the term gratification in section 123 was very wide and would include the withdrawal of his candidature by a candidate to induce another candidate to stand at an election.
He contended that the affording of such a gratification would amount to a corrupt practice within section 123.
He submitted that such corrupt practices had been alleged in the petition against Meganathan and Muthu and they should therefore have been made parties to the petition under section 82(b).
We are wholly unable to agree that the withdrawal of his candidature by a candidate to induce another candidate to stand at an election would be gratification within section 123.
But assume it is so.
That does not help the appellant at all.
Here, there is no allegation in the petition that Meganathan and Muthu with drew their candidature in order to induce the appellant to stand at the election, so there is no allegation in the petition of corrupt practices having been committed by them by so withdrawing their candidature.
It was therefore not necessary to make Meganathan and Muthu parties to the petition under section 82(b).
Lastly, Mr. Sastri contended that section 82(b) talked of allegations of any corrupt practice " and it therefore contemplated any allegation relating to or concerning, a corrupt practice.
He said that the election petition contained allegations against Meganathan and Muthu, relating to a corrupt practice inasmuch as it stated that they accepted the gratifications paid to them to withdraw their candidature and actually withdrew 878 such candidature.
Hence, he said, section 82(b) required that they should have been made parties to the petition.
We are of opinion that when section 82(b) talks of allegations of corrupt practice against a candidate it means allegations that a candidate has committed a corrupt practice.
Allegations can hardly be said to be " against " one unless they impute some default to him.
So allegations of corrupt practice against a candidate must mean that the candidate was guilty of corrupt practice.
We are also unable to appreciate how an allegation that a candidate accepted a gratification paid to him to withdraw his candidature is all allegation relating to a corrupt practice.
The acceptance of the gratification does not relate to any corrupt practice, for we have earlier shown that the corrupt practice consists in the giving of the gift and riot in the acceptance of it.
In the result this appeal fails and it is dismissed with costs.
Appeal dismissed.
| After the poll the appellant was declared elected to the Madras Legislative Assembly.
Respondent No. 1 filed an election petition praying that it be declared that the election of the appellant was void.
In the petition it was alleged that two of the candidates at the election accepted money paid to them by the appellant and his election agent to induce them to abandon the contest and they actually abandoned the contest.
These two candidates were not made parties to the petition.
The appellant applied to the Election Tribunal to dismiss the petition under section 90(3) Of the Representation of the People Act, 1951, for non compliance with the provisions of section 82 of the Act on the ground that allegations of a corrupt practice were made against the two candidates and Respondent No. 1 had failed to make them parties to the petition as required by section 82: Held, that the acceptance of gratification is not a corrupt practice within the meaning of section 123(1) Of the Act and consequently it could not be said that allegations of corrupt practice had been made against the two candidates.
There was thus no non compliance with the provisions of section 82 and the election petition was not liable to be dismissed under section 90(3).
|
Summarize this legal judgement text concisely | ivil Appeal No. 251 of 1954.
Appeal from the judgment and decree dated April 22, 1952, of the Punjab High Court in Civil Regular First Appeal No. 1/E of 1947 arising out of the judgment and decree dated July 1, 1947, of the Court of SubJudge, Ambala in Suit No. 239 of 1946.
Tarachand Brijmohan Lal, for the appellant.
Hardayal Hardy, for respondent No. 1. 1958.
May 1.
This is a plaintiff 's appeal against the judgment and decree passed on April 22, 1952, by a Division Bench of the Punjab High Court reversing the decree passed on July 1, 1947, by the First Class Subordinate Judge, Ambala in favour of the plaintiff and dismissing the plaintiff 's Suit No. 239 of 1946.
The appeal has been preferred on the strength of a certificate granted by the ]Division Bench on December 19, 1952.
The facts material for the purpose of this appeal may now be shortly stated: One Lala Beni Pershad died in the year 1910 leaving him surviving his widow Mst.
Daropadi (defendant respondent No. 2) and ' two sons by her, namely, Gokul Chand (defendant respondent No. 1) and Raghunath Das (plaintiff appellant) who was then a minor.
Lala Beni Pershad left considerable moveable properties including many G. P. Notes and also various immoveable properties including agricul tural land, gardens and houses.
After his death the family continued to be joint until disputes and.
differences arose between the two brothers in 1934.
Eventually oil November 12, 1934, the two brothers executed an agreement referring their disputes relating to the partition of the family properties to the arbitration of Lala Ramji Das who was a common relation.
813 It is alleged that the respondent Gokul Chand had disposed of part of the () 'F. P. Notes and that at the date of the reference to arbitration G. P. Notes of the value of Rs. 26,500 only were held by Gokul Chand, as the Karta of the family.
On June 21, 1936, the arbitrator made an award which was signed by both the, brothers statedly ill token of their acceptance thereof.
The award was registered on July 28, 1936.
By that award the arbitrator divided the imoveable, properties and shops as therein mentioned.
As regards the G. P. Notes the arbitrator directed and awarded that out of the G. P. Notes of the value of Rs. 26,500, which then stood in the name of Gokul Chand, G. P. Notes of the value of Rs. 13,300 should be entered into the names of Gokul Chand and Mst.
Daropadi and the remaining Notes of the value of Rs. 13,200 should be endorsed in the names of Raghunatb Das and Mst.
Daropadi and that till her death Mst.
Daropadi should alone be entitled to the interest on the entire G. P. Notes of the value of Its. 26,500 and that after her death Gokul Chand would be the owner of the ("X. P. Notes of the value of Rs. 13,300 and Raghunath Das of G. P. Notes of the value of Rs. 13,200.
The arbitrator further directed Gokul Chand to pay to Raghunath Das a sum of Rs. 20,000 in four several instalments together with interest thereon as mentioned therein.
On August 31, 1936, Gokul Chand applied to the District Judge, Ambala under paragraph 20, of Schedule 11 to the Code of Civil Procedure for filing the award.
During the pendency of those Proceedings the two brothers entered into a compromise modifying certain terms of the award which are not material for the purpose of the present appeal.
By an order made on November 18, 1936, the District Judge directed the award as modified by the compromise to be filed and passed a decree in accordance with the terms of the award thus modified.
On November 15, 1939, Raghunath Das made an application to the court of the District judge for execution of the decree.
The District Judge transferred the application to the court of the Subordinate Judge 814 who directed notice of that application to be issued to Gokul Chand.
Gokul Chand filed objection to the execution mainly on the ground that the decree had been passed without jurisdiction in that the District Judge had no power to pass a decree for partition of agricultural lands.
The Subordinate Judge on December 23, 1942, accepted Gokul Chand 's plea and dismissed the execution application.
On appeal by Raghunath Das to the High Court a learned Single Judge on April 5, 1944, accepted the appeal, but on Letters Patent Appeal filed by Gokul Chand the Division Bench on March 15, 1945, reversed the order of the Single Judge and restored the order of dismissal passed by the Subordinate Judge.
Having failed to obtain the relief granted to him by the decree passed upon the award on the ground of defect of jurisdiction in the court which passed the decree and consequently for want of jurisdiction in the executing court, Raghunath Das, on August 21, 1945, instituted Suit No. 80 of 1945 against Gokul Chand for the recovery of Rs. 7,310 11 3 being the balance with interest remaining due to him out of the said sum of Rs. 20,000, awarded in his favour.
Gokul Chand raised a number of pleas but eventually all his pleas were negatived and the senior Subordinate Judge, Ambala, by his judgment pronounced on December 22, 1945, decreed the suit in favour of Raghunath Das.
Gokul Chand did not file any appeal therefrom and consequently that decree became final and binding as between the parties thereto.
On June 5, 1946, Raghunath Das filed in the court of the Senior Subordinate Judge, Ambala a suit being Suit No. 239 of 1946 out of which the present appeal has arisen.
In this suit Raghunath Das claimed that Gokul Chand be ordered to transfer G. P. Notes of the value of Rs. 13,200 out of the G. P. Notes of the value of Rs. 26,500 to Raghunath Das and Mst.
Daropadi by means of endorsement or some other legal way, to get them entered into the Government registers and to make them over to Raghunath Das, the plaintiff.
Particulars of the numbers, the year of issue, the face value and the interest payable on all the said G. P. 815 Notes were set out in the prayer.
There was an alternative prayer that Gokul Chand be ordered to pay Rs. 13,200 to the plaintiff.
Gokul Chand filed his written statement taking a number of pleas in bar to the suit.
Not less than 12 issues were raised, out of which only issues Nos. 2 and 3 appear from the judgment of the Subordinate Judge to have been seriously pressed.
Those two issues were as follows: " (2) Is the suit within time ? and (3) Is the suit barred by Order 2, Rule 2 of the Civil Procedure Code?" The Subordinate Judge decided both the issues in favour of the plaintiff.
He held that article 49 of the Indian Limitation Act had no application to the facts of this case and that there being no other specific Article applicable, the suit was governed by the residuary article 120.
The learned Subordinate Judge also took the view that the period from November 15, 1939 to March 15, 1945, spent in the execution proceedings should be excluded under section 14 of the Indian Limitation Act in computing the period of limitation under article 120.
The learned Subordinate Judge also held that the cause of action in the earlier suit for the recovery of the sum of Rs. 7,310 11 3 was not the same as the cause of action in the present suit and, therefore, the present suit was not barred under 0. 2, r. 2, of the Code of Civil Procedure.
The learned Subordinate Judge accordingly decreed the suit in favour of Raghunath Das.
Gokul Chand appealed to the High Court.
The appeal came up for hearing before a Division Bench of the Punjab High Court.
Only two points, were pressed in support of the appeal, namely, (1) whether the suit was barred by time and (2) whether the suit was barred under 0. 2, r. 2, of the Code of Civil Procedure.
Learned counsel appearing for Gokul Chand urged that the suit was one for the recovery of " other specific moveable property " that is to say specific moveable property other than those falling within Arta.
48, 48A and 48B of the Indian Limitation Act and was accordingly governed by article 49.
Article 49.
provides three years ' period of limitation I04 816 for a suit for " other specific moveable property or for compensation for wrongful taking or injuring or wrongfully detaining the same " and this period of three years begins to run from " when the property is wrongfully taken or injured or when the detainer 's possession becomes unlawful ".
In the opinion of the High Court the suit was for the recovery of specific Government promissory notes and this, according to the High Court, was plain from the perusal of para.
18 of the plaint which set out the reliefs claimed by the plaintiff in the suit.
The reference to the numbers, value and the year of issue of G. P. Notes and the rates of interest carried by them appeared to the High Court to be decisive on this point.
The High Court held that the suit was governed by article 49 and that, as the plaintiff would be out of time even if the period between November 15, 1939, and March 15, 1945, was excluded, the High Court did not think it necessary to consider the question of the applicability of section 14 of the Indian Limitation Act.
As its finding on the issue of limitation was sufficient to dispose of the suit, the High Court did not discuss the other issue founded on 0. 2, r. 2, of the Code of Civil Procedure but allowed the appeal and dismissed the suit as barred by limitation.
We are unable to accept the decision of the High Court as correct.
The High Court overlooked the fact that so far as the G. P. Notes were concerned the decree upon the award only declared the rights of the parties.
Under the decree Raghunath Das was entitled to have G. P. Notes of the value of Rs. 13,200 endorsed in the names of himself and Mst.
Daropadi out of the G. P. Notes of the value of Rs. 26,500.
The award or the decree thereon did not actually divide the G. P. Notes by specifying which particular G. P. Notes were to be endorsed in the names of Gokul Chand and Mst.
Daropadi or which of them were to be endorsed in the names of Raghunath Das and his mother.
Until the G. P. Notes were actually divided, either by consent of parties or by the decree of the court, neither of the brothers could claim any particular piece of G. P. Notes as his separate property or 817 ask for delivery of any particular C. P. Notes in specie.
Gokul Chand not being agreeable to come to an amicable division of the G. P. Notes, Raghunath Das had perforce to seek the assistance of the court and pray that the entire lot of C. P. Notes of the value of Rs. 26,500 be divided by or under the directions of the court into two lots and one lot making up the value of Rs. 13,200 be endorsed in favour of him (Raghunath Das) and his mother by or on behalf of Gokul Chand and then delivered to him, the plaintiff.
He could not in his plaint claim that particular pieces of G. P. Notes making up the value of Rs. 13,200 be delivered to him in specie.
This being the true position, as we conceive it, Raghunath Das 's suit cannot possibly be regarded as a suit for a " specific moveable property ".
That expression is apt only to cover a suit wherein the plaintiff can allege that he is entitled to certain specific moveable property and/or of which he is presently entitled to possession in specie and which the defendant has wrongfully taken from him and/or is illegally withholding from him.
That is not the position here.
It should be remembered that the two brothers were entitled to the G. P. Notes of the value of Rs. 26,500 originally as joint coparceners and thereafter, when the decree upon the award had been passed, as tenants in common.
Until actual partition by consent of the parties or by court Gokul Chand, who held the custody of the G. P. Notes, could not be said to have taken them wrongfully from Raghunath Das and his possession of them could not be said to be or to have become unlawful.
These considerations clearly distinguish this case from the case of Gopal Chandra Bose vs Surendra Nath Dutt (1) on which the High Court relied because in that case the defendant had no right to or interest in the G. P. Notes in question and had no right to retain possession thereof.
Therefore, to the present situation the terminus a quo specified in the third column of article 49 can have no application.
It is now well established that a suit by an heir against other heirs to recover his share of the moveable estate of a deceased person is not one for (1) (1908) XII C. W. N. 1010 818 specific moveable property wrongfully taken such as is contemplated by Art 49, but is governed by article 120.
See Mohomed Riasat Ali vs Mussumat Hasin Banu (1).
The only difference between the facts of that case and those of the present case is that here the rights of the parties had been declared by the decree upon the award but that circumstance does not appear to us to make any material difference in the application of the principle laid down by the Judicial Committee.
The substance of the plaintiff 's claims in both cases is for separating his share out of the estate and for allotment and delivery to him of his share so separated.
In short such a suit is nothing but a suit for partition or division of the moveable properties held jointly or as tenants in common by the parties and there being no specific Article applicable to such a suit it must be governed by article 120.
The period of limitation fixed by article 120 is six years from the date when the right to sue accrues.
In order, therefore, to be within the period of limitation the plaintiff claims to exclude the period November 15, 1939, to March 15, 1945, spent in the execution proceedings.
Section 14 (1) of the Indian Limitation Act runs as follows: " 14 (1) In computing the period of limitation prescribed for any suit, the time during which the plaintiff has been prosecuting with, due diligence another civil proceeding, whether in a Court of first instance or in a Court of appeal, against the defendant, shall be excluded where the proceeding is founded upon the same cause of action and is prosecuted in good faith in a Court which, for defect of jurisdiction, or other cause of a like nature is unable to entertain it.
" The respondent contends that the above section has no application to the facts of his case.
We do not think that such contention is well founded.
The execution proceedings initiated by Raghunath Das were certainly civil proceedings and there can be no doubt that he prosecuted such civil proceedings with due diligence and good faith, for lie was obviously (i) (1893) L. R. 20 I. A. 155.
819 anxious to have his share of the G. P. Notes separately allocated to him.
He lost in the execution court but went on appeal to the High Court where he succeeded before a Single Judge, but eventually he failed before the Division Bench which reversed the order the Single Judge had passed in his favour.
Therefore, there can be no question of want of due diligence and good faith on the part of Raghunath Das.
In the next place the section excludes the time spent both in a court of first instance and in a court of appeal.
Therefore, other conditions being satisfied, the entire period mentioned above would be liable to be excluded.
The only questions that remain are (1) whether the proceedings were founded upon the same cause of action and (2) whether he prosecuted the proceedings in good faith in a court which for defect of jurisdiction ",as unable to entertain it.
The execution proceedings were founded upon his claim to enforce his rights declared under the decree upon the award.
The cause of action in the present suit is also for enforcement of the same right, the only difference being that in the former proceedings Raghunath Das was seeking to enforce his rights in execution and in the present instance he is seeking to enforce the same rights in a regular suit.
There is nothing new that he is asking for in the present suit.
That he prosecuted the execution proceedings in the Subordinate Court as well as in the High Court in good faith cannot be denied, for the Single Judge of the High Court actually upheld his contention that the court had jurisdiction to entertain his application.
The execution proceedings failed before the Division Bench on no other ground than that the executing court had no jurisdiction to entertain the application, because the decree sought to be executed was a nullity having been passed by a court which had no jurisdiction to pass it.
Therefore, the defect of jurisdiction in the court that passed the decree became, as it were, attached to the decree itself and the executing court could not entertain the execution proceeding on account of the same defect.
The defect of jurisdiction in the executing court was finally determined when 820 the Division Bench reversed the decision of the Single Judge who had entertained the execution proceeding.
In our opinion Raghunath Das is entitled to the benefit of section 14 (1) of the Indian Limitation Act and the period here in before mentioned being excluded, there can be no doubt that the suit was filed well within the prescribed period of limitation and the judgment of the Division Bench cannot be sustained.
In the view it took on the question of limitation the Division Bench did not consider it necessary to go into or give any decision on the other issue, namely, as to whether the suit was barred by 0. 2, r. 2.
The suit should, therefore, go back to the High Court for determination of that issue.
The result, therefore, is that we accept the appeal, set aside the judgment and decree of the High Court and remand the case back to the High Court for a decision on issue No. 3 only.
The appellant will get the costs of this appeal as well as the costs of the hearing in the High Court resulting in the decree under appeal and the general costs of the appeal and the costs of further hearing on remand will be dealt with by the High Court.
Appeal allowed.
Case remanded.
| The words " specific moveable property " occurring in article 49 Of the Indian Limitation Act can mean only such specific items of moveable property in respect of which the plaintiff is entitled to claim immediate possession in specie from the defendant who has either wrongfully taken or is wrongfully withholding them from him.
A suit by one heir against the others for recovery of his share of the moveable property of a deceased person is not one for a specific moveable property wrongfully taken such as is contemplated by article 49 and must, in the absence of any other specific provision in the Act, be governed by article 12o and not article 49 of the Indian Limitation Act.
Mohomed Raisat Ali vs Musummat Hasin Banu, (1893) L,R. 2o I,A. 155, relied on.
Consequently, in a case where the decree passed upon an award, without specifying any particular G. P. Notes or dividing them, directed the elder brother to transfer G. P. Notes of the value of Rs. 13,200 to the younger brother from out of the G. P. Notes of the total value of Rs. 26,500 left by the father in the custody of the former, and the younger brother, failing to obtain relief by way of execution of the decree, brought the suit, out of which the present appeal arises, against the elder brother for a division of the G. P. Notes and a direction on him that G. P. Notes of the value of Rs. 13,200 might be transferred to him and claimed that the entire period covered by the execution proceeding from its inception till the final disposal by the High Court should be excluded in computing the period of limitation : Held, that the suit in substance was one for the division of moveable property held in joint ownership and not for possession of any specific.
item of moveable property and as such was governed, not by article 49, but by article 120 of the Indian Limitation Act.
Gopal Chandra Bose vs Surendra Nath Dutt, (1908) 12 C.W.N. 1010, distinguished and held inapplicable.
812 As the facts and circumstances of the case satisfied the requirements of section 14(1) Of the Indian Limitation Act in computing the prescribed period of limitation the time covered by the execution proceeding from its inception till its final disposal by the High Court must be excluded.
|
Summarize this legal judgement text concisely | ivil Appeal No. 381 of 1956.
Appeal by special leave from the judgment and order dated February 24, 1955, of the Bombay High Court in Income Tax Reference No. 52/X of 1954.
N. A. Palkhivala (with him, Jamshedji B. Kanga), section N. Andley, J. B. Dadachanji, P. L. Vohra and Rameshwar Nath, for the appellant.
H. N. Sanyal, Additional Solicitor General of India, G. N. Joshi and R. H. Dhebar, for the respondent.
May 12.
The Judgment of the Court was delivered by VENKATARAMA AIYAR J.
This is an appeal against the judgment of the High Court of Bombay in a reference under section 66(1) of the Indian Income tax Act, 1922, hereinafter referred to as the Act.
The appellant is a private limited company incorporated under the Indian Companies Act, and is carrying on business as marine engineers and ship repairers.
Its registered office is in Bombay and it is resident and ordinarily resident in India.
Its entire share capital is beneficially owned by two British companies, the P. & 0.
Steam Navigation Co. Ltd., and the British Indian Steam Navigation Co. Ltd., whose business 850 consists in plying ships for hire.
Under an agreement entered into with the two companies aforesaid, which will be referred to hereinafter as the non resident companies; the appellant repairs their ships at cost, and charges no profits.
Now, the point for determination is whether, on these facts, the appellant is chargeable to tax under section 42(2) of the Act.
That sub section runs as follows: " Where a person not resident or not ordinarily resident in the taxable territories carries on business with a person resident in the taxable territories, and it appears to the Income tax Officer that owing to the close connection between such persons the course of business is so arranged that the business done by the resident person with the person not resident or not ordinarily resident produces to the resident either DO profits or less than the ordinary profits which might be expected to arise in that business, the profits derived therefrom, or which may reasonably be deemed to have been derived therefrom, shall be chargeable to income tax in the name of the resident person who shall be deemed to be, for all the purposes of this Act, the assessee in respect of such income tax.
" The Income tax Officer, Bombay who dealt with the matter took the view that the appellant company had so arranged its business with the non resident companies that it did not produce any profits to it, and that was because it was those companies that really owned its share capital, and that therefore the profits which it could ordinarily have made but for their close financial connection were liable to be taxed under section 42(2), and he computed the same at Rs. 6,80,000 for the account year 1943 1944, at Rs. 4,67,559 for the account year 1944 1945 and at Rs. 4,68,963 for the account year 1945 46.
On the basis of the above findings, orders of assessment of income tax were made for the account years 1944 1945 and 1945 1946 and of excess profits tax for the account years 1943 1944, 1944 1945 and 1945 1946.
Against these five orders, the appellant preferred appeals to the Appellate Assistant Commissioner, who by his 851 order dated July 3, 1952, confirmed the same.
Then there was a further appeal by the appellant to the Appellate Tribunal, and the Bench which heard the same having been divided in its opinion, the matters came up for hearing before the President, who by his order dated March 19, 1954, held that section 42(2) was inapplicable and he accordingly set aside the orders of assessment of income tax and excess profits tax made on the appellant.
On the application of the Department, the Tribunal referred the following question for the opinion of the High Court of Bombay: " Whether on the facts and in the circumstances of the case any income falls to be included in the appellant 's assessment under section 42(2).
" The reference was heard by Chagla C. J. and Tendolkar J. who by their judgment dated February 24, 1955, held that, on the facts found, section 42(2) was applicable and that the appellant was liable to be assessed to income tax and excess profits tax under that section.
The appellant applied under section 66(A) for leave to appeal against this judgment to this court, and that application was dismissed.
The appellant thereafter applied for and obtained leave to appeal to this Court under article 136, and hence this appeal.
It must be mentioned that on December 31, 1948, an order of assessment bad been made in respect of the income tax payable by the appellant for the account year 1943 1944, and therein, the profits chargeable under section 42(2) had not been included.
But subsequently, the Income tax Officer took action under section 34 of the Act, and on May 29, 1953, made an order assessing the appellant to tax for that year on the profits deemed to have been made by it under section 42(2), and against that order, an appeal is pending before the Appellate Assistant Commissioner.
That order is not the subject matter of the present proceedings, which are concerned only with the assessment of income tax for the account years 1944 1945 and 1945 1946 and of excess profits tax for the account years 1943 1944, 1944 1945 and 1945 1946.
Now, the sole point for determination in this appeal is whether on the facts found the appellant is chargeable to tax under section 42 (2) of the Act.
Mr. Palkhivala, 852 learned counsel for the appellant, contends that it is not, and urges two grounds in support of his contention: (1) that section 42(2) imposes a charge only on a business carried on by a nonresident, and that therefore no tax could be imposed under that provision on the business of the appellant who is a resident; and (2) that it is a condition for the levy of a charge under s.42 (2) that the non resident must carry on business with the resident, and that in the instant case it is not satisfied.
The first ground does not appear to have been put forward in the Court below, but before us it has been presented with great elaboration and pressed with considerable insistence.
The argument in support of it may thus be stated: section 42 (2) imposes a charge on profits of a business, actual or notional, when the conditions specified therein are satisfied; but the section does not, in terms, say who the person is whose business is liable to be taxed, but that that can only be the non resident is clear from other parts of the section.
Thus, the tax is imposed under section 42 (2) on profits " derived " from business, which must mean profits actually made therein.
Ex hypothesi, the resident has so arranged his business that it produces little or no profits to him.
If it has produced some profits, then they are taxable in his hands even apart from this provision, and if he has made no profits, then the word " derived " would be inapplicable to his business.
Therefore, the profits " derived " and taxable under the section can have reference only to the business of a non resident.
Then again, the profits are chargeable under this section in the name of the resident.
If the profits chargeable under section 42(2) accrue from a business of the resident, he would be the person who would, even apart from the section, be liable for the tax, and in that situation, the expression " in the name of the resident " would be inappropriate.
It would make sense if, in fact, the profits accrued in a business carried on by a person other than the resident, and the legislature sought to tax them in his hands.
The true intention behind the legislation, it is said, is that the profits of the non resident should be taxed, but that the tax should fall on the resident by reason of his 853 close connection with the nonresident.
Support for this contention is sought in the provision in section 42 (2) that the resident shall be deemed to be the assessee for all purposes of the Act.
The word " deemed " imports, it is argued, a legal fiction, and if it was the, business of the resident that was intended to be taxed, then he is, in fact, the assessee, and it would be ' inconsistent with that position that he should be treated as an assessee by a legal fiction.
It is also urged that sub sections
(1) and (3) of section 42 deal with the profits of a nonresident and prescribe the conditions under which and the manner in which the tax could be imposed and collected, and section 42 (2) must in this setting, be construed as referring to the business of the nonresident.
There would have been considerable force in this argument, had there been any ambiguity or undertainty in the wording of section 42 (2) as to whether it is the business of the resident that is sought to be taxed or that of the nonresident.
But that is not so.
The language of the enactment imposing the charge is too plain to admit of any doubt.
Now, section 42 (2) is, it may be noted, in two parts.
The first part commencing with the opening words " Where a person not resident " and ending with the words " which may reasonably be deemed to have been derived therefrom " prescribes the conditions on which the charge arises.
It does not of itself impose the charge.
That is done by the second part, which provides that "the profits derived therefrom or which may reasonably be deemed to have been derived therefrom shall be chargeable to income tax.
" The word " therefrom " is very important for the purpose of the present discussion.
In the context, it can refer only to the business of the resident, and it is this business therefore that is the subject of the charge under section 42 (2) It was suggested for the appellant that the word therefrom " has reference to the arrangement between the nonresident and the resident, but apart from the fact that such a construction would, on the grammar of it, be untenable, :it is impossible to conceive how an arrangement relating to the conduct of business can, as such, be the 854 subject matter of income tax, apart from the business in which profits or gains are made.
The language of the section is clear beyond all reasonable doubt as to what it is that is sought to be taxed under this section.
That is only the business of the resident and not that of the nonresident.
In this view, it is only necessary to consider whether there is anything in the wording of the other parts of section 42 (2) relied on for the appellant, which precludes us from giving effect to the plain import of the word " therefrom ".
It is on the expression "profits derived" in the charging part of the enactment that the appellant leans heavily in support of his position that it is the business of the non resident that is really intended to be taxed.
But then, those words do not stand alone.
They are associated with the words " or which may reasonably be deemed to have been derived ", and this association has its origin in the preceding clause produces to the resident either no profits or less than the ordinary profits which might be expected to arise in that business ".
This clause contemplates two classes of cases, one where the business of the resident produces no profits and the other where it produces less than the normal profits.
The charge is imposed on both these classes of cases, and the word " derived " has reference to the latter, while the words " profits which may reasonably be deemed to have been derived " relate to the former.
That both these clauses relate to the business of the resident is clear from the words " to the resident " occurring therein.
The word " derived " in section 42 (2) must therefore be interpreted as referring to the business of the resident.
The respondent sought further support for this conclusion in the words " which may reasonably be deemed to have been derived" in section 42(2), and contended that those words could apply only to a business which does not yield profits, and that will fit in, in the context, only with the business of the resident and not of the non resident.
The answer of the appellant to this contention is that the words in question should be construed as meaning not notional profits but such proportion of the actual profits of the nonresident as 855 could reasonably be apportioned to the business in India.
Reliance was placed in support of this contention on Rr. 33 and 34 of the Indian Income tax Rules, 1922.
Rule 33 provides for the determination of the profits of a non resident in cases falling within section 42(1), and one of the modes prescribed for such determination is to fix an amount which bears the ' same proportion to the total profits of the non resident as the Indian receipts bear to the total receipts in the business.
Rule 34 then provides that "the profits derived from any business carried on in the manner referred to in section 42 (2) may be determined for the purposes of assessment to income tax according to the preceding rule ".
Now, the argument of Mr. Palkhivala is that the interpretation put on section 42 (2) by the rule making authorities as manifest in R. 34 is that the business chargeable under section 42 (2) is that of the non resident, and that the words " which may reasonably be deemed to have been derived therefrom " had reference to the apportionment of the Indian, out of the total profits.
We see no force in this contention.
There is nothing in R. 34 to justify the assumption that the rule making authorities considered either that section 42 (2) applied to the business of a non resident or that the words " which may reasonably be deemed to have been derived therefrom " meant apportionment of the Indian out of the world profits of the non resi.
And even if those.
be the assumptions on which the Rule is based, that can have no effect on the true interpretation of section 42 (2).
And whatever doubts one migt have had as to the meaning to be given to the words " derived therefrom or which may reasonably be deemed to have been.
derived therefrom " if they had to be construed in isolation, in the context.of the section and read in conjunction with the. words " to the resident " and " therefrom ", there cannot be any doubt that they have reference to the business of the resident and not that of the non resident.
The word " or " in the clause would appear to be rather inappropriate, as it is susceptible of the interpretation that when some profits are made but they log 856 are less than the normal profits, tax could only be imposed either on the one or on the other, and that accordingly a tax on the actual profits earned would bar the imposition of tax on profits which might have been received.
Obviously,that could not have been intended, and the word " or " would have to be read in the context as meaning " and ".
Vide Maxwell 's Interpretation of Statutes, Tenth Edn.
238 239.
But that, however, does not affect the present question which is whether the word " derived " indubitably points to the business of the nonresident as the one taxable under section 42 (2), and for the reasons already given, the answer must be in the negative.
The appellant also relied on the clauses in section 42 (2) that the profits shall be chargeable to tax in the name of the resident ' and that he shall be deemed to be the assessee for all purposes of the Act ' as indicating that it is not the business of the resident that is really sought to be taxed.
But these clauses are explainable with reference to the fact that the profits taxed are not actual profits but what are deemed to be profits.
It was argued that if it was the intention of the legislature that what was not profits should be deemed to be profits, that should have been independently provided for before the tax is imposed, and that in the absence of such a provision, the word " deemed " must be construed as referring not to notional profits being treated as actual profits, but to a person who is not, in fact, an assessee, being treated as an assessee.
We see no substance in this argument.
There is no reason why an enactment should not both declare notional profits as taxable profits and at the same time impose a charge on the resident in respect of those profits, and that, quite clearly, is what section 42 (2) has done.
It may be that its language is not felicitous.
But there can, however, be no mistaking its sense that it is the resident that is to be dealt with as assessee in respect of profits which he had not, in fact, made.
Nor do we see much force in the argument that section 42, sub sections
(1) and (3) relate to income of the nonresident and that section 42(2) which is wedged in between them should therefore be interpreted as having 857 reference to the profits of the non resident.
If the language of section 42(2) is clear that it is the resident who is chargeable to tax, it is of no consequence that under section 42, sub sections
(1) and (3) it is the non resident that is taxed.
It should be remembered that section 42 occurs in Ch.
V headed " Liability in Special Cases ", and section 42(2) is a liability which is out of the ordinary run, and it is not inappropriate to deal with it in section 42, because while section 42(1) seeks to bring within the ambit of taxation the profits of a non resident which accrue in India, section 42(2) seeks to tax the resident in respect of profits which he would have normally made but for his business association with a non resident.
On the other hand, on the construction contended for by the appellant section 42(2) would become practically useless because a non resident whose profits could be taxed under section 42(2) could also be taxed under section 42(1), as also the resident if he were the agent.
None of the considerations put forward by the appellant is of sufficient weight to displace the conclusion to be drawn from the words " to the resident " and " therefrom " in section 42(2), and we must hold that the business which is the subject matter of taxation under that provision is that of the resident and not of a non resident.
This contention must accordingly be found against the appellant.
We shall next consider the second ground urged in support of the appeal that it is a condition for the levy of a charge under section 42(2) that a non resident should carry on business with the resident, and that, on the facts found, that condition is not satisfied, and that therefore the tax is unauthorised.
It is argued that the business of the non resident companies is to ply ships for hire, and that the appellant has no concern with that; that the business of the appellant is to repair ships and that the non resident companies have no connection with that business; and that all that the non resident companies do is to get their ships repaired by the appellant, and that does not amount to carrying on any business with the appellant.
A person who regularly purchases his goods from a particular dealer does not, it is said, carry on business with 858 that dealer, and on the same analogy, in getting their ships repaired by the appellant the non resident companies cannot be said to carry on business with them in the real sense of that word.
We are unable to agree with this contention.
The word "business" is, as has often been said, one of wide import and in fiscal statutes, it must be construed in a broad rather than a restricted sense.
Discussing the connotation of the word trade", Scott L. J. observed in Smith Barry V. Cordy (1): " The history of judicial decisions has been similar, showing a strong tendency not to restrict the scope of Schedule D; a tendency which was, we think, in sympathy with the general social and economic outlook of the country.
There is hardly any activity for gaining a livelihood and not covered by the other Schedules, which does not seem to us to be swept into the fiscal net by the Schedule D." 'The word business ' connotes", it was observed by this Court in Narain Swadeshi Weaving Mills vs The Commissioner of Excess Profits Tax (2), "some real, substantial and systematic or organised course of activity or conduct with a set purpose.
" Now, it may be conceded that when a person purchases his requirements from a particular dealer, he cannot without more be said to carry on business with him.
But here there is much more.
The non resident companies send their ships for repair to the appellant, not as they might to any other repairer but under a special agreement that repairs should be done at cost.
And further unlike customers who purchase goods for their own consumption or use, the non resident companies get their ships repaired for use in what is admittedly their business.
These are clearly trading activities, organised and continuous in their character and it will be difficult to escape the conclusion that they constitute business.
We are not even concerned in this appeal with the larger question whether the activities of the nonresident companies in connection with the repair of the ships amount to carrying on of business.
What we have to decide is whether having regard to the (1) , 259.
(2) , 961. 859 course of dealings between the non resident companies and the appellant it can be said of the former that they carry on business with the latter within the meaning of section 42(2).
Now, it should be observed that section 42 speaks not of the nonresidents carrying on business in the abstract but of their carrying on business with the resident, and in the context, it must include all activities between them having relationship to their business.
That is the view taken by the learned Judges in the Court below, and we are in agreement with it.
In this connection, reference may be made to section 42(1) under which a charge is imposed on income, profits or gains accruing to a non resident through any business connection in the taxable territories.
In Commissioner of Income tax vs Curimbhoy Ebrahim & Sons (1), it was observed by the Privy Council that business connection in section 42(1) is different from business as defined in section 4(2) of the Act.
" The phrase business connection ', observed Sir George Rankin, " is different from, though not unrelated to, the word business ' of which there is a definition in the Act ".
And in Anglo French Textile Co., Ltd. vs Commissioner of Income tax, Madras (2), this Court has observed that " when there is a continuity of business relationship between the person in British India who helps to make the profits and the person outside British India who receives or realises his profits, such relationship does constitute a business connection".
Vide also the observations in Bangalore Woollen, Cotton and Silk Mills Co. Ltd. vs Commissioner of Income tax, Madras (3 ).
The words "where a person not resident in the taxable territories carries on business with a person resident" in section 42(2) must be similarly interpreted, and a non resident should be held to carry on business with a resident, if the dealings between them form concerted and organised activities of a business character.
We are accordingly of opinion that, on the facts found, the non resident Companies must be held to have carried on business with the appellant as provided in section 42(2).
(1) (2) ; (3) [1950] 18 ; 433. 434.
860 It was argued that the result of this arrangement was only to reduce the repairing charges and enable the non resident Companies to thereby make a saving; that that was not profit or gains of a business liable to be taxed under the Act, and the decisions in Tennant vs Smith (1) and In re Major John(") were cited in sup.
port of this position.
But, as already held by us, the subject matter of the tax under section 42(2) is the business of the resident and not that of the non resident, and what we have to decide is not whether the nonresident Companies made profits in their dealings with the appellant but whether what they did was business, and for that purpose it is immaterial that the business was carried on by them in such manner that no profits could accrue to them therefrom.
Vide the observations of Coleridge C. J. at p. 113 in Commissioners of Inland Revenue vs Incorporated Council of Law Reporting (3 ).
The fact therefore that the nonresident Companies could derive no profits from the dealings with the appellant would not detract from their character as business with the appellant.
This contention must, therefore, be rejected.
It was finally contended that the profits chargeable under section 42(2) must be separately assessed and not added on to the other profits or income of the appellant.
This contention is based on the assumption that section 42(2) imposes on the appellant, a vicarious liability, the charge being in reality on the profits of the nonresident.
On our finding that the charge is on the business of the appellant and not of the non resident Companies, this contention does not survive.
In the result, the appeal fails and is dismissed with costs.
Appeal dismissed.
| Under section 42(2) Of the Indian Income tax Act, 1922, " Where a person not resident or not ordinarily resident in the taxable territories carried on business with a person resident in the taxable territories, and it appears to the Income tax Officer that owing to the close connection between such persons the course of business is so arranged that the business done by the resident person with the person not resident or not ordinarily resident produces to the resident either no profits or less than the ordinary profits which might be expected to arise in that business, the profits derived therefrom, or which may reasonably be deemed to have been derived therefrom, shall be chargeable to income tax in the name of the resident person who shall be deemed to be, for all the purposes of this Act, the assessee in respect of such income tax The appellant, a private limited company carrying on business as marine engineers and ship repairers had its registered office in Bombay and was resident and ordinarily resident in India, but its entire share capital was beneficially owned by two non resident companies whose business consisted in plying ships for hire.
Under an agreement between them the ships plied for hire by the non resident companies were to be repaired by the appellant company at cost, charging no profits.
The Income tax Officer made an assessment on the appellant company under section 42(2) of the Indian Income tax Act, 1922.
It was contended for the appellant (1) that section 42(2) imposed a charge only on a business carried on by a non resident and that therefore no tax could be imposed on the business of the appellant, and (2) that it was a condition for the levy of a charge under that subsection that the non resident must carry on business with the resident and that in the instant case it was not satisfied, as all that the non resident companies did was only to get their ships repaired by the appellant company: Held, (1) that the business which is the subject matter of taxation under section 42(2) Of the Indian Income tax Act, 1922, is that of the resident and not of a non resident.
The expression 849 " derived therefrom " in that sub section refers to the business of the resident.
(2)that a person can be said to carry on a business with another if the dealings between them form concerted and organised activities of a business character.
Where, as in the instant case, the nonresident companies got their ships repaired by the appellant, not as they might by any other repairer but under a special agreement that repairs should be done by the appellant at cost, the non resident companies must be held to have carried on business with the appellant within the meaning of section 42(2) Of the Act, even though the non resident companies might have derived no profits from the dealings with the appellant.
Narain Swadeshi Weaviing Mills vs The Commissioner of Excess Profits Tax, and Commissioners of lnland Revenue vs I corporated Council of Law Reporting, , relied on.
|
Subsets and Splits